Sky trademark ruling suggests strategy tips for brands
In a judgment handed down in SkyKick UK Ltd. v. Sky Ltd. on Nov. 13, the U.K. Supreme Court held that various trademarks for "Sky" owned by Sky were partially invalid due to their having been filed in bad faith, on the basis that Sky lacked a genuine intention to use the marks in all the classes for which they had been registered.
This decision overturned an earlier Court of Appeal ruling holding that a lack of intention to use a trademark did not automatically mean it had been filed in bad faith.
Sky's broad trademark registrations contributed to the finding of bad faith. Although this could lead to a change in the way that brands seek protection for their marks, including ushering in a new era of lean specifications, brand owners should take comfort in the fact that they can still rely on a trademark's reputation to prevent others from using it, even in circumstances where the registration does not cover the specific goods or services in question.
Case Background
Primarily known as a media and telecommunications company, Sky had registered a number of trademarks for its brand name in 22 classes of goods and services.
Sky's trademark protection covered its core services, as well as a large variety of subcategories of goods not necessarily connected with its main services, including picnic baskets, earmuffs, dishwashers and diving suits. In some cases, Sky's registrations covered the entire class of goods for which it was registered.
The dispute between Sky and SkyKick, a cloud computer software provider, first arose in May 2016, after Sky issued trademark infringement proceedings against SkyKick over its use of the trademark "SkyKick." The claim primarily related to SkyKick's use of "SkyKick" in relation to computer software (Class 9), for which Sky had a broad registration encompassing the entire class.
SkyKick countered Sky's claim, seeking to invalidate many of Sky's trademarks on the basis that Sky had acted in bad faith by registering the Sky trademarks for an excessively wide range of goods and services, many of which were unrelated to Sky's core business. Under Section 3(6) of the Trade Marks Act of 1994, a trademark should not be registered if it was filed in bad faith, and can be revoked on such a ground.
At first instance, the High Court of Justice considered Sky's trademark registration for "computer software" and determined that Sky had no commercial justification for having filed such a broad mark. Although it was true that Sky did provide services in some subcategories of computer software for which it held the registration, the High Court held that this did not justify Sky's seeking to prevent other businesses from using the mark in relation to other forms of computer software that Sky did not have a bona fide intention of providing.
"Computer software" is just one trademark class that was the subject of the litigation, but the principle, according to the High Court, could apply across categories.
It was decided that a trademark should be partially invalidated for bad faith if filed for a broad range of goods and services without a bona fide intention to use them, and Sky's trademarks were reduced to only the classes in which the company could show genuine use. In any event, SkyKick was found to have been infringing the trademarks.
SkyKick subsequently appealed the decision to the Court of Appeal, which overturned the partial invalidation of Sky's trademarks. The Court of Appeal ruled that although the goods and services had been registered for a broader category than were intended for use, this should not necessarily lead to an inference of bad faith if the trademark holder had substantial current or future trade in part of that broader category.
In the case of the computer software services, this meant that Sky's use of its "Sky" mark in relation to certain niche subcategories of computer software could remove any inference that the application had been made in bad faith. Without a bad faith finding, there could be no invalidation.
This decision aligned U.K. law with European Union trademark law, which allows applicants to have broad registrations for their trademarks. SkyKick appealed this decision further to the Supreme Court, arguing that the Court of Appeal's decision would lead to a cluttering of the register.
The Supreme Court trial took place last year.
The Supreme Court's Analysis
The Supreme Court considered four main legal issues.
What is the test for determining "bad faith" in the Trade Marks Act of 1994?
The Supreme Court held that the Court of Appeal was wrong to reverse the High Court's finding that Sky's overly broad trademark registrations (in classes including "computer software" in Class 9 and "electronic mail services" in Class 38) amounted to bad faith. Therefore:
- Applicants must have a "commercial justification" for filing a trademark in specific classes.
- If an applicant cannot prove that it has a genuine intention to use the trademark in relation to specific classes, the court may infer that the filing was made in bad faith.
- Although filing a trademark in "extremely broad" terms or in a high number of classes does not indicate that the filing was made in bad faith per se, it will support an inference.
- Once an inference of bad faith is drawn, the trademark is vulnerable for whole or partial invalidation.
If bad faith is found, how should a court determine the trademark specification that the owner can retain?
The Supreme Court held that where an application has been made in bad faith, the broad specification should be narrowed, confirming that partial invalidity of a trademark is possible:
- If bad faith is established for only some goods and services within the specification (i.e., if the applicant can show that it had a genuine intention to use the trademark for some goods and services, but not others), the registration should be declared invalid only for the goods and services for which it cannot show a genuine intention to use.
- The specifications applied for in "good faith" can be retained.
Did SkyKick ultimately infringe Sky's trademarks?
The Supreme Court held that SkyKick had infringed Sky's trademark registration for "cloud backup" services, but not for "cloud migration" services (i.e., confirming the Court of Appeal's decision). Although Sky had a registration for "electronic mail services," this could not cover "cloud migration," as those services were a confined subcategory of services.
What is the impact of the U.K.'s withdrawal from the EU on cases involving EU trademarks?
The Supreme Court confirmed that the U.K. courts continue to act as EU trademark courts, for all proceedings that were pending before a U.K. court (designated as an EU trademark court) before the end of the Brexit transition period on Dec. 31, 2020. This meant the Supreme Court's decision has effect across all the EU trademarks Sky relied on, not just its U.K. mark.
Commentary
It is fair to say that the legal landscape on bad faith has been uncertain for some time following the referral of the Sky v. SkyKick claim to the Supreme Court. However, the judgment does not require brand owners to have an immediate radical rethinking regarding their trademark portfolios per se. Invalidation actions against trademark registrations are typically, albeit not exclusively, commenced as a defense mechanism to counter trademark infringement allegations.
Going forward, brand owners should strike a balance between a specification broad enough to meet business requirements but not so broad as to invite unnecessary counterattacks for bad faith.
Increased care should therefore be taken when drafting trademark specifications — for example, by using subcategories of goods and services as opposed to broad categories, or limiting broad specifications. Also, at the time of filing, it would certainly be prudent for brand owners to record in writing their rationale for the trademark filing in order to refute any potential future bad faith allegations.
In circumstances where trademark protection for specific goods and services is not sought at the point of filing, but a brand owner's business expands into such goods and services, all is not lost. A brand owner can still make additional trademark applications to cover those goods and services.
If a third party is using a trademark on an unrelated product for which the brand owner does not have use or a registration, Section 10(3) of the Trade Mark Act can be used.
This enables a trademark owner to bring infringement proceedings where a mark that is identical or similar to a prior registration is used by another party for goods and services that are dissimilar, and in circumstances where such a trademark has an established reputation and the use might damage the trademark holder's reputation or cause confusion.
This article was originally published on Law 360
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