SkyKick v Sky: UK Supreme Court Confronts Bad Faith in Trade Mark Applications

On 13 November 2024, the UK Supreme Court delivered a landmark judgment on SkyKick UK Ltd's ("SkyKick") appeal against the Court of Appeal's decision that it had infringed Sky Ltd's ("Sky") trade marks. This pivotal ruling addressed the issue of bad faith in trade mark registrations, ultimately siding with SkyKick on the issue of bad faith and reinstating the High Court's earlier ruling. 

The dispute between Sky and SkyKick began in 2016. Sky, a well-known provider of television and broadband services, sought to prevent SkyKick, a U.S.-based technology business, from using the SkyKick brand for electronic mail migration and cloud storage services. In defending Sky's infringement claim, SkyKick argued that Sky's trade marks should be invalidated because they were registered for goods and services that Sky had no intention of trading under. The case was brought in relation to four EU trade marks and one UK trade mark relying on Sky's prior rights in the Sky brand.

Legal Framework

Countries that are parties to the Nice Agreement (including the United Kingdom) use the Nice Classification to define the scope of the trade mark for which they are applying. This requires an applicant to indicate the goods and services for which they wish to register the trade mark, within a series of defined classes. 

The legal framework for assessing bad faith in trade mark applications is derived from both EU and UK law. Under EU law, Article 51(1)(b) of Regulation 40/94 and its successors provide that a trade mark can be declared invalid if the application was made in bad faith. Similarly, under UK law, Section 3(6) of the Trade Marks Act 1994 states that a trade mark shall not be registered if the application is made in bad faith.

The concept of bad faith is not explicitly defined in the legislation, leading to varied interpretations by courts. The EU Court of Justice ("CJEU") has provided guidance through several decisions, emphasising that bad faith involves conduct that departs from accepted principles of ethical behaviour or honest commercial practices. The intention of the applicant is a subjective factor but must be established objectively by considering all relevant circumstances.

The Court's Decision

The Supreme Court overturned the Court of Appeal's decision, finding that while SkyKick had indeed infringed Sky's trade marks, Sky's registrations contained an excessively broad range of goods and services, which was sufficient to establish bad faith. The Supreme Court noted that the Court of Appeal had adopted an unduly restrictive approach to the scope and content of the bad faith objection.

In a clear restatement of the principles of bad faith, Lord Kitchin explained that the date for assessing whether an application was made in bad faith is the date of the application itself. Bad faith must be understood contextually, with due regard to the objectives of the law of trade marks: to protect the functioning of undistorted competition by allowing customers to identify the origin of different goods and services. 

Consequently, bad faith will be established where either the application is made to undermine third parties or, as was found to be the case for Sky's applications, with the intention of obtaining the trade mark "for purposes other than those of a trade mark". The burden for proving such an intention rests with the alleging party (SkyKick, in this instance), but the proprietor must be able to explain the commercial logic for an application where there are "objective, relevant and consistent indicia" that the application was made with an intention of undermining others or seeking illegitimate advantage from the registration of an exclusive right. 

The Supreme Court considered at length whether the width and size of a specification of goods and services relative to those provided by the business is a factor relevant to a finding of bad faith. They determined that, whilst inconclusive alone, the contrast can be considered to support a finding of bad faith where a business lacks alternative rationale for such a registration. It is notable that the Court was keen to maintain its support for the five-year implementation "grace period" before a mark needs to be put into use for any particular registered good or service, recognising that businesses are not always able to predict the scope or direction of their business, and often wish to allow for flexibility when protecting their intellectual property. 

The Supreme Court's conclusion on these facts rested on two key findings:

1. The Court determined that Sky had no genuine intention to develop or provide certain goods and services under their trade marks, which notably included "whips" under class 18 and "bleaching preparations" under class 3; and
2. Relatedly, Sky's broad registrations were not aligned with the legitimate purposes of a trade mark, in particular to indicate the origin of the goods and services traded under it. This misuse of the trade mark system lead to the conclusion that the trade marks were registered in bad faith for those specific goods and services which Sky had no plausible intent to develop. Notably, the Court did not decide that such a finding should have the effect of rendering the entire class, or the mark as a whole, as invalid.

Brexit 

Additionally, the Court addressed its jurisdiction to hear cases involving EU trade marks post-Brexit. After thorough examination of the relevant legislation, the Court unanimously concluded that it retains the authority to oversee cases which were "pending on IP completion day" and its findings will continue to apply across the EU as they would have previously in respect of such cases.

Summary

This judgment underscores the importance of genuine intent in trade mark registrations and highlights the Court's commitment to preventing abuses of the system. It serves as a significant precedent for large international organisations, emphasising the need for careful and honest trade mark practices.

Where a broad description of goods and services includes distinct categories or subcategories of goods or services, such as "computer programs" and "computer services", the proprietor may be found to have acted in bad faith in relation to one or more of those. The court held that "it would be manifestly unjust if [the proprietor] escaped that consequence simply because it had framed its specification using general terminology".

The Supreme Court acknowledged that it was relevant in the first judgment that Sky had not disclosed any contemporaneous documents explaining the rationale of its filing strategy and in particular why it sought such broad protection for its registrations. Whilst an adverse inference was not drawn, the High Court judge considered it necessary to "look elsewhere" for evidence of Sky's intentions.

SkyKick and Sky had, in fact, settled this case prior to it reaching judgment in the Supreme Court, and jointly requested that judgment not be rendered. Where there is a public interest in a particular legal issue being resolved, this case demonstrates the Court's wide discretion and willingness to override the wishes of the parties.