The Court of Appeal has given its judgment in Sky v SkyKick, a case widely recognised as one of the most important IP cases in recent years, and which has involved consideration of a range of issues relating to the scope of protection of registered trade marks.
Stating that he was in 'no doubt' that Sky's appeal on this issue should be allowed, Sir Christopher Floyd determined that Sky had not acted in bad faith when it had filed its trade mark applications. Accordingly, the decision of the trial judge (Arnold LJ) to restrict the specification of certain goods and services in Sky's trade marks, such as notably 'computer software', to cover what he considered a fair degree of protection in light of the use Sky had in fact made, should be set aside. Whilst Arnold LJ's decision of partial invalidity had, in fact, not impacted on his ultimate finding that SkyKick's Cloud Migration and Cloud Backup products infringed Sky's trade marks, the reversal of his decision on bad faith provides welcome clarity and reassurance for brand owners in relation to their brand protection and enforcement strategies.
We have previously written about the earlier stages of the case, including Arnold LJ's decision in 2020, following the decision of the Court of Justice of the European Union (CJEU). The CJEU's decision was made in response to an earlier referral by Arnold J (as he then was) seeking answers to various questions of interpretation of trade mark law.
The main focus of the Court of Appeal decision is on its reversal of Arnold LJ's conclusion on, and his approach to, the assessment of bad faith. SkyKick argued that Sky's trade marks had been applied for in bad faith without any genuine intention to use them in relation to all of the goods and services in the registrations – for example, in relation to 'computer software', it argued Sky had not intended to use the mark in relation to all computer software.
In its decision, the CJEU had determined that lack of intention to use could, in some circumstances, be relevant to and evidence of bad faith. In the Court of Appeal, Sir Christopher stressed further that lack of intention to use does not, on its own, amount to bad faith – it is instead a factor which may be relevant to the bad faith assessment when there is no rationale for the application, and there are objective, consistent and relevant indicia of bad faith.
The CJEU had suggested that relevant indicia of bad faith would be those which show that an applicant intended, when filing its application, to undermine, in a manner inconsistent with honest practices, third parties' interests or to obtain, without targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark. Whilst this would involve consideration of the facts in each case, an applicant would not be acting in bad faith simply because it had no economic activity corresponding to the goods or services applied for at the time of filing the application.
Arnold LJ had made two principal conclusions in his decision as to Sky's intentions when it filed its applications:
- In relation to some goods and services covered by the specifications, Arnold LJ concluded that Sky did not intend to use the trade marks at the application date, and there was no foreseeable prospect that they would do so. However, in relation to Arnold LJ's 'no prospect of use conclusion', the Court of Appeal countered that it was important to assess the relevant goods and services. In relation to 'computer software', Sky may have had no prospect of using the mark in relation to 'every conceivable sub-division' of computer software, but that was not a relevant or objective indication of bad faith. Further, a finding that an applicant had no intention to use a mark for a specific category at all might support a finding of bad faith, but a finding that it did not intend to use the mark across the breadth of the category would not.
- Arnold LJ had also concluded that the applications represented a strategy of seeking very broad protection for what he termed no commercial justification. However, the Court of Appeal concluded that an absence of a commercial rationale or strategy, i.e., a plan under which the mark is to be used for all goods or services within a category of registration, was an irrelevant consideration when assessing bad faith. On the contrary, it was not necessary for a trade mark applicant to have formulated a commercial strategy for using the mark in relation to every species of goods or services falling within a general description. Again, focusing on 'computer software', there was an obvious commercial justification for Sky in applying for protection for 'computer software', namely its very substantial business in computer software.
The decision provides reassurances for applicants in relation to their brand filing strategies. A wide or long specification or a finding of lack of intention to use will not, in itself, amount to bad faith. Instead, the extent to which a wide claim can be justified will depend upon the relevant good or service – and may involve a consideration of factors such as those that applied in this case, namely the evidence of Sky's reputation and brand recognition, and its prolific expansion.
Mishcon de Reya act for Sky in these proceedings