“It is true that Sky had no prospect of using the mark in relation to every conceivable sub-division of computer software, but that fact is not, in my judgment, a relevant or objective indication of bad faith.” – Sir Christopher Floyd
Followers of European trademark developments will be familiar with the Sky v SkyKick litigation, in which the UK courts and the Court of Justice of the EU have addressed questions concerning trademark invalidity (see IPWatchdog report here). In the latest twist, the England and Wales Court of Appeal has reversed one of the main first instance findings.
In its judgment, the Court allowed Sky’s appeal against a finding that its asserted trademarks for SKY were partially invalid due to lack of intention to use amounting to bad faith. The Court ruled that it was essential to determine whether the parts of the trademark registrations which were relied on were or were not applied for in good faith.
As there is no requirement of use or intent to use when filing trademark applications in Europe, many applicants file broad specifications—for defensive purposes, future proofing or nuisance value, depending on your point of view. However, the courts have ruled that in certain circumstances lack of intention to use could be relevant to, and evidence of, bad faith.
The judgment was written by Sir Christopher Floyd (now retired as a judge, but sitting in the Court of Appeal). Sky Ltd & Ors v Skykick, UK Ltd & Anor (Rev1)  EWCA Civ 1121. He identified two main errors in the first instance judgment of Mr Justice Arnold (now Lord Justice Arnold in the Court of Appeal).
No Prospect of Use
First, the first instance judge had found that Sky did not intend to use the trademarks for some goods and services covered by the specifications, and there was no foreseeable prospect that they would do so.
Sir Christopher said the problem with this conclusion was that its significance to a finding of bad faith varies depending on the goods and services being looked at: “It is true that Sky had no prospect of using the mark in relation to every conceivable sub-division of computer software, but that fact is not, in my judgment, a relevant or objective indication of bad faith.”
Second, the judge found that the marks were applied for pursuant to a deliberate strategy of seeking very broad protection, regardless of whether it was commercially justified.
Here, Sir Christopher said it was necessary to establish whether this point had traction in relation to the selected goods and services: “An applicant for a trade mark does not have to formulate a commercial strategy for using the mark in relation to every species of goods or services falling within a general description. Such an applicant is entitled to say ‘I am using the mark for specific goods falling within description X. I have no idea precisely where my business in goods of that description will develop in the next 5 years, but there will undoubtedly be more such goods than there are now.’”
He added that such an applicant could not, however, be accused of bad faith in the light of its strategy for applying for protection of sufficient width to cover some further, as yet unformulated, goods within the same category: “It follows that the absence of a commercial rationale or strategy, if by that is meant a plan under which the mark is to be used for all goods or services within a category of the registration, is not relevant to the enquiry about bad faith.”
Sir Christopher concluded that the judge’s findings “only have traction” if one treats the applicant as obliged to have a prospect of or strategy for using the mark in relation to every type of goods and services falling within a category. He said: “The applicant is under no such obligation.”
In the absence of any other factors, it was not open to the judge to hold that any of the selected goods and services was applied for in bad faith.
He also criticized the procedure at first instance as being unfair to Sky insofar as the company did not have the opportunity to demonstrate its intentions and good faith related to the selected goods and services.
There were a number of other grounds of appeal filed by both parties, but these were either dismissed or rendered moot.
Reassurance for Trademark Owners
The first instance judge had already found that Sky’s trademarks were infringed by SkyKick for email migration and cloud storage services. The decision is however notable as it provides reassurance to applicants for, and owners of, trademark registrations with broad specifications in the UK who may be concerned about bad faith attacks on their marks.
After four first instance decisions, one referral to the CJEU (one of the last before Brexit) and now a Court of Appeal judgment, this complex litigation finally looks to be resolved. SkyKick’s only remaining option is a further appeal to the UK Supreme Court.