Following seven years of litigation, the Supreme Court issued its decision in the Sky v SkyKick case on 13 November 2024. The decision addressed ‘Bad Faith’ in the context of broad specifications of goods and/or services filed solely for enforcement purposes, and without genuine intention to use the mark for all the goods and/or services.
You can read the Supreme Court’s full judgment here.
SKY V SKYKICK: THE BACKGROUND
In 2016, Sky initiated legal action against SkyKick, alleging infringement of Sky's registered trade marks (the "SKY Marks") and for passing off of their products and services as those of Sky by using the SkyKick mark for email migration and cloud storage products and services. Sky's claims were based on four registered EU trade marks and one registered UK trade mark.
SkyKick denied these claims. They counterclaimed that the specifications covered by the SKY Marks (i) lacked clarity and precision; and (ii) were applied for in ‘bad faith’ (on the basis that Sky had no genuine intention to use its marks in relation to all or some of the goods and/or services covered by the registrations).
In 2018, Arnold J (as then) found that if the Sky Marks were valid, then SkyKick’s use was an infringement. Arnold J also dismissed Sky’s claim for passing off.
As the validity of the Sky Marks raised issues of EU law, a referral to the European Court of Justice (CJEU) led to guidance that a lack of intention to use the mark could lead to a finding of bad faith, in instances where the applicant intended for (1) either of undermining, in a manner inconsistent with honest practices, the interests of third parties; or (2) of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark”.
When the case returned to the High Court in April 2020, the Court ruled that the SKY Marks has been filed in bad faith in part, as it had no intention to use the mark in relation to some of the goods (for example, “bleaching preparations” in class 03 and “whips” in class 18).
The High Court found that even though the specification covered by the SKY Marks had been filed with no genuine intention to use the mark (and narrowed by LJ Arnold), SkyKick had infringed through its use of the SkyKick mark. The High Court also dismissed Sky’s claim for passing off.
The parties then appealed to the Court of Appeal. Sky appealed the finding of bad faith and the dismissal of the passing off action and SkyKick appealed against the finding of infringement and the specification of one of Sky’s marks (to be further narrowed).
The Court of Appeal overturned the partial invalidity of Sky's Marks but maintained its decision against the passing off claim. It also dismissed SkyKick’s appeal against infringement and for greater restriction of the specifications.
THE SUPREME COURT JUDGMENT
With regards to bad faith, The Court of Appeal had held that there were “legitimate reasons” connected with Sky’s “particularly prolific” expansion and desire to protect its brand” for its filing strategy, signifying that the breath of the specification of the Sky Marks was justified.
The Supreme Court disagreed with the Court of Appeal’s finding against bad faith and instead determined that the High Court’s decision to narrow the goods and services covered by the SKY Marks was correct. Therefore, bad faith can be inferred from the breadth of specification of the Sky Marks.
Within the judgment, the Supreme Court stated that broad terms (categories) that can include subcategories of goods and services (for example “computer programs” and “computer services”) but where the proprietor decided to use the more broader term, could lead to the proprietor being found to have acted in bad faith.
The Supreme Court also addressed the impact of Brexit in proceedings.
It confirmed that, for cases pending before the end of the Brexit transition period (i.e. the 31st December 2020) the UK courts “retain the status and retain the jurisdiction to decide these cases”.
WHAT IS THE IMPACT OF SKY V SKYKICK ON TRADE MARK OWNERS?
- The case signifies the importance for businesses to consider the scope of protection required, particularly avoiding extensive specifications of goods and/or services to avoid any possible bad faith claims. Ideally, applicants should keep a record of its consideration of filing strategy and scope of protection. If no reasonable explanation can be provided for including a specification term, particularly where there are “red flags”, this could indicate no intention to use which might constitute bad faith.
- There is also a risk of a finding of bad faith where the specification includes broad terms or categories (which could be subcategorised), particularly where these broad terms are not connected to the business. Where a broad term (such as ‘computer software’) is included in the specification, it is more difficult to establish that use for a narrower range of goods or services constitutes a lack of intention to use for the broad term. However, from a specification drafting perspective, this difficulty might be avoided by including reference, either instead of or in addition to, further sub-categories.
- The risk of an invalidity action being brought based on bad faith is greater as a counterclaim for invalidity if the rights are enforced.
- However, if a registration is found to be invalid due to bad faith, the registration will only be invalidated for those goods and/or services for which bad faith is found.
- On the face of the trade mark registration details alone, it might not necessarily be apparent if an earlier right is fully enforceable and valid for the relevant goods and/or services. This could enable the continued enforcement (or threat of enforcement) of questionable rights, particularly in an online environment, where take down procedures do not scrutinise validity.
WHAT DOES THIS CHANGE?
This decision confirms that there is a risk of bad faith invalidity if a trade mark registration provides overly broad or expansive protection. There are certain “red flags” that indicate potentially invalid registrations, including overly long lists of goods and/or services, expansive general categories where sub-categories might be more usefully employed (e.g. “computer software”) or repeated ‘evergreen’ filings.
The risk of invalidity is further heightened upon enforcement of those rights against third parties which could attract a counterclaim for invalidity. If such counterclaims are based on bad faith, they are likely to complicate and prolong enforcement action and introduce uncertainty over the scope of protection for the mark in question.
If bad faith is found, the scope of protection would only be limited by removing the offending terms of the specification. Therefore, for trade mark applicants, there is no need to review existing specifications and there is still some benefit conferred in obtaining wide protection where the size and scope of the applicant’s business gives credibility to the statement of intention to use.
However, when on the receiving end of an enforcement action, there may be greater scope to challenge the earlier rights relied on if they might have been filed in bad faith. Once a registration is more than five years’ old, it may be subject to challenge for non-use and so it remains good practice to file trade mark applications with sufficient specificity and precision to allow a list of goods and/or services to be accurately assessed against the genuine use made of the mark for the purpose of full or partial revocation.
