Is the SKY the limit?

Background

 

The proceedings between the parties started in 2016 with Sky issuing a trade mark infringement action against SkyKick on the basis of four of its EU trade marks and one UK trade mark. SkyKick counterclaimed arguing claiming Sky’s applications were filed in bad faith, as it was never the intention of Sky to use its marks in respect of such excessively broad specifications of goods and services.

 

The HC declared Sky’s marks invalid in respect of computer software except for “computer software supplied as part of or in connection with any television, video recording or home entertainment apparatus or service; computer software supplied as part of or in connection with any telecommunications apparatus or service; electronic calendar software; application software for accessing audio, visual and/or audio-visual content via mobile telephones and/or tablet computers; games software”. This was broader than the more limited restriction suggested by SkyKick during proceedings.

 

Sky appealed and the CoA rejected the proposed restriction as it did not take account of the legitimate interest of an owner to seek to protect goods and services in relation to which it might wish to use the mark in the future. The CoA held that an owner is entitled to seek some modest protection extending beyond the specific goods and services to which the use of the mark or intended use of the mark had been proved.

 

Bad Faith

 

The primary focus of the SC’s decision surrounds bad faith, and this is where we will concentrate our discussions.

 

The HC found that Sky’s applications were filed in bad faith in respect of certain goods and services which Sky was aware were not being used at the time of the applications. The CoA, however, overturned this decision and found that the trade mark applications were made at least partially with the intention of protecting the use of the mark in relation to goods and services in which Sky had a substantial present trade and a future expectation of trade. The CoA viewed Sky’s conduct as different from occasions where a party’s sole objective is to stop a third party using a trade mark, or to pursue any other exclusive purpose which was not in accordance with honest practice. The CoA decided that it stood to reason that bad faith in relation to some goods and services did not mean that the registrations were wholly invalid. As a result, that aspect of SkyKick’s case was rejected.

 

In assessing the HC’s finding of bad faith, the CoA deemed that the elements for making such a case were not established, specifically:

• Sky had an active business and even if Sky did not have intention to use its marks in respect of all computer software, it could not be found to be a plausible finding of bad faith;
• In the context of Sky’s intention to apply for an overly broad specification of goods and services as a legal weapon to prevent third parties from using its marks, the Judge did not specify the goods and services applicable to make such an assessment;
• The Judge did not undertake a fresh assessment of bad faith in relation to the various categories of the Selected Goods and Services put forward by Sky in its final written submissions;
• It was therefore not open to the Judge to find bad faith.

 

The SC found that this decision by the CoA could not be supported and that the HC was entitled to find that the applications were made in bad faith in the way it did and to require the modification of the goods and services in the manner identified. The SC found inter alia:

• The CoA failed to properly appreciate the scope and component elements of bad faith;
• The judge did not make any material error in applying the relevant principles to the circumstances of the case. The CoA failed to identify any flaw or omission in reasoning of the judge;
• The CoA did not take into account Sky’s reliance in its infringement case upon the full range of goods and services originally applied for. Even in the face of a bad faith claim, Sky only then restricted the goods and services five weeks before trial, having originally been prepared to deploy its “full armoury” to defend “registrations across a great range of services which it never had any intention to sell or provide”. In essence, Sky sought to rely on goods and services for which it had no ability to demonstrate any prior or intended use right up until commencement of the trial. The SC took notice of Sky’s conduct in that regard and the Court was impacted by the lack of candour by Sky when compared to the more open and consistent position adopted by SkyKick;
• At Paragraph 320, the SC decided that “the judge cannot be criticised for approaching the matter as he did; and further, that he had sufficient material before him on which properly to find that SkyKick had established that Sky had applied for and were prepared to take enforcement action for alleged infringement of the registrations of marks in respect of goods and services of such a range and breadth that it was implausible that Sky would ever provide them, or that Sky ever had any genuine intention (whether provisional or conditional) to provide them under the Sky marks.” The SC concurred with the HC in finding that the Sky marks had partially been applied for in bad faith; and further, subject to the procedural unfairness issue (below), the SC concurred with the view of the HC that the specifications of goods and services to which the claim had been limited must be modified further;
• The SC noted that the objection raised by SkyKick in relation to clarity and precision largely disappeared in light of the decision of the CJEU in the case. Where a broad description contained specific subcategories of goods and services, then the proprietor may be found to have acted in bad faith in relation to one or more of the specific categories and it would be unjust to escape that consequence as a result of being vague.

 

Procedural Unfairness

 

In the course of proceedings before the CoA, Sky alleged that the procedure adopted by the HC following the decision by the CJEU had been unfair to Sky. Where the CoA found that there had been unfairness in the procedure adopted by the judge, SkyKick argued that there was not and certainly nothing which could justify setting aside the order which the judge made.

 

The CoA found that SkyKick should have tailored its action at an appropriate stage to ensure Sky knew the case they were required to meet with regard to the goods and services at hand. This would have required SkyKick to set out the narrowed specification to which they contended Sky should be restricted to.

 

The SC held that Sky was never in any doubt about the case asserted against them. The SC referenced the fact that Sky brought and pursued claims for infringement against the Sky marks and, in that context, relied on all of the goods and services for which those marks were registered.

The SC considered the approach adopted by the HC after the CJEU gave judgment, specifically, confining the parties to written submissions, and deemed that the HC was entitled to follow such a procedure. Crucially, the SC deemed that neither side had been materially disadvantaged by the procedure adopted.

 

Jurisdiction and Brexit

 

The question of whether the UK Courts had jurisdiction to decide matters relating to bad faith in the context of EU trade mark registrations following Brexit was examined. The question also centred around the law applicable to the current proceedings and whether the governing EU Directive and Regulation, being those in place at the time Sky’s applications were filed, included a provision for national laws of Member States in the determination of bad faith.

 

SkyKick contended that the EU law was still applicable as this was the law in place at the time the applications were filed. Sky, on the other hand, contested that due to Brexit, the UK Courts could no longer decide the matters pertaining to EU trade mark registrations.

 

The SC settled any uncertainty in confirming that the UK Courts continue to act as an EU Court for any proceedings initiated in the UK Courts prior to the transition period. The bad faith ruling therefore applied to both the EU marks and UK mark held by Sky.

 

Summary

 

In this landmark decision, the SC has clarified the law pertaining to broad filing strategies and addressed scenarios which encompass excessively broad specifications for which there is no justification, even allowing for reasonable scope for the logical expansion of a business into the future.

 

The fact that the Comptroller-General invited the SC to issue a judgment despite the resolution of the substantive proceedings in advance of a decision having been made demonstrates the importance of the issues at hand.

 

The key take aways are:

• a broad specification may lead to an inference of bad faith depending on the facts of the case;
• where a specification contains a broad category of goods or services, it may be held to be partially invalid for bad faith, but again this depends on the facts of the case;
• broad terms, such as “computer software” may need to be restricted to more limited subcategories; and
• it is not up to the invalidity applicant to suggest a suitable amendment to the specification, but instead this is the responsibility of the registrant given these matters are in their knowledge.

 

Time will tell whether the UK IPO will issue clarification on broad specifications, such as “computer software”. It would be prudent to consider reviewing trade mark portfolios and specifications given the decision issued.