The UK Supreme Court recently handed down its judgment in the long-running SkyKick v Sky trade mark battle. The court considered the key issue of ‘bad faith’ applied to the over-claiming practice and its implications for trade mark infringement matters.

This decision will have important implications on trade mark filing and enforcement strategy for brand owners. In particular, when filing UK trade mark applications, applicants will have to consider that the goods and services claimed have a commercial justification to avoid vulnerability to bad faith claims.

Background

In the underlying case, Sky, a British broadcaster, sued SkyKick, an email and cloud storage company, for trade mark infringement. In response, SkyKick alleged Sky acted in bad faith by claiming protection for goods it does not operate in or has no commercial interest in. The High Court initially found that Sky acted in bad faith and that Sky’s marks were partially invalid, but also found that SkyKick’s infringed Sky’s (remaining) trade mark rights.

The case was referred to the Court of Justice of the European Union, where it was held that over-claiming could be considered bad faith if there are “objective, relevant, consistent, indicia” leading to conclude that there is no commercial justification to use the mark for those goods. However, findings of bad faith for some of the goods/services should not invalidate the entire registration. Specifically, bad faith is established when:

“The applicant had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or 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”.

In turn, the Court of Appeal ruled Sky had not acted in bad faith and dismissed SkyKick’s cross-appeal in relation to infringement, leading to this week’s long-awaited judgment.

Supreme Court Decision

The Supreme Court allowed the appeal in part. It upheld the High Court’s decision to find that the Sky trade marks were partially applied for in bad faith. Sky had adopted an over-claiming strategy and was not able to show any commercial interest in or intention to use the marks for some of the specifications.

The decision highlighted that lengthy specifications per se will not lead to a finding of bad faith, but that this is dependent on all the relevant circumstances. These circumstances may include the length, scope and the nature of the specifications, also in consideration of the trade mark owner’s brand or business, their evidence of intended use and overall filing strategy, if these are able to show that:

“The motive or intention of the applicant was to engage in conduct that departed from accepted principles of ethical behaviour or honest commercial practices having regard to the purposes of the trade mark system”.

In addition, specifications may be found partially invalid in relation to broad claims, when these claims may be divided into sub-categories and the trade mark owner cannot show a genuine intention to use or commercial interest for all the sub-categories that fall within that broad term.

With respect to trade mark infringement, Sky’s infringement claim focused on two types of services offered by SkyKick, namely ‘cloud migration’ and ‘cloud backup’ services. The Supreme Court held that the Court of Appeal was wrong to find that SkyKick did not infringe Sky’s marks in relation to the ‘cloud backup’ services.

If specifications are defined by vague claims, these specifications should be limited to claims that are precise and evidently covered by the goods or services offered under the mark. In this case, the Supreme Court argued that the claim ‘electronic mail services’ did not cover ‘cloud migration’. Therefore, albeit similar, ‘cloud migration’ was not the same as the services covered by the Sky trade marks, and did not constitute trade mark infringement. With respect to SkyKicks ‘cloud backup’ services, these could be considered falling within the scope of the specifications for which the Sky trade marks was registered.

Lastly, the decision touched upon the jurisdiction of the UK courts after Brexit and confirmed that UK courts are acting as EU trade mark courts until the conclusion of the pending cases involving EU trade marks before them.

Conclusion

Following this decision, we expect a renewed focus on bad faith claims in enforcement and litigation involving trade mark registrations covering a wide range of goods and services in particular for older registrations. This issue should be considered in both offensive and defensive contexts going forward and may provide right holders with alternative strategic angles to consider on both side of a dispute.