Life after SkyKick: UKIPO applies Supreme Court's ruling and issues examination guidance

Since the Supreme Court handed down its judgment in Sky v SkyKick towards the end of last year, there has been anticipation as to how the ruling might be applied by the UK Intellectual Property Office (UKIPO), particularly given that it suspended a number of cases pending the Supreme Court's decision.

There have now been two recent opposition decisions in which bad faith was alleged and in which the UKIPO applied the Supreme Court's decision in SkyKick. Following these decisions, the UKIPO has also issued statutory guidance immediately updating its examination practice to actively raise bad faith objections during the examination procedure.

This means that applicants should avoid overly expansive trade mark specifications and they should be prepared to justify their commercial reasons for broad specifications if challenged by the UKIPO. Overly broad specifications where the applicant does not have an intention to use may no longer survive examination and, in any event, could be vulnerable to opposition or cancellation. Bad faith is also being raised more frequently in response to trade mark infringement claims.

The current law on bad faith: what happened in SkyKick?

The Supreme Court's decision was one of the most important UK trade mark cases in recent times, providing clarity on the consequences of filing a trade mark with a lack of intention to use, whether that amounts to "bad faith", and the consequences if bad faith is found.

The Supreme Court unanimously held that the High Court had been correct to find that Sky had acted in bad faith in filing trade marks with overbroad terms, terms it never intended to use, and using their marks as a "legal weapon" to stop others applying for goods and services they had no intention to use.

The Supreme Court also endorsed the Court of Justice of the EU's judgment that it is bad faith to make an application without an intention to use if the applicant "had the intention of either undermining in a manner inconsistent with honest practices…the interests of third parties…or obtaining an exclusive right for purposes other than those falling within the functions of a trade mark".

It was also confirmed that the consequences of a bad faith finding will depend on the circumstances of the case. An entire term may be struck out or narrowed to exclude overbroad protection. The court or registry can assess the nature of the specification applied for and the nature of the applicant's business. It can also look at contemporaneous evidence from the application as to the applicant's intentions.

UKIPO applies SkyKick in suspended cases

Unite Faith Workers' Fellowship

This application was made in the name of the Anglian Foundation for "United Faith Workers' Foundation". While the application only covered class 35 services, the list of terms ran to 47 pages, including terms such as "accounting services relating to costs for farming enterprises" and "model recruitment agencies".

It was opposed by Unite The Union on a number of grounds, including bad faith under section 3(6) of the Trade Marks Act 1994. The opponent claimed that the applicant had acted in bad faith by applying for a trade mark for a broad range of services which it did not have a bona fide intention to use and that the application was made with the illegitimate intention of undermining the opponent's and third-party interests.

The applicant only provided a short paragraph denying bad faith, which was described as "vague", and it did not provide any evidence of its actual business activities. The hearing officer inferred that its business was theological research/events.

The hearing officer concluded that the opponent's evidence pointed to the applicant having an intention to undermine the opponent's business without any actual intention to use the mark for legitimate business purposes, which raised a prima facie case of bad faith. The burden of proof then switched to the applicant, but it made no further submissions post-SkyKick and did not dispel the prima facie case against it.

The hearing officer concluded that the application had been made in bad faith for all of the services applied for and therefore the opposition was successful in full.

Enerjo

In this case, the application for "Enerjo" was made by Cashflow Corporation. The application covered 13 classes, and the list of terms spanned 120 pages, which were described as "disparate" and included terms such as "police batons", "ski goggles" and "taxidermy".

The mark was opposed by SE Bicycles Company, again on a number of grounds, including bad faith. The opponent claimed that the applicant had acted in bad faith by seeking to apply for such a broad specification with a dishonest state of mind and in a manner inconsistent with honest practices and the interests of third parties or with the intention of obtaining a trade mark for purposes other than indicating trade origin.

The Hearing Officer stated that the sheer breadth of the specification alone was enough to call into question the applicant's intention. Although the applicant made an initial statement that the application was genuine, the hearing officer described this as "somewhat vague" and it did not indicate an actual and reasonable business intention.

The applicant did not file any evidence as to its actual commercial activities, but it did file further submissions post-SkyKick. Again, the hearing officer said these were vague and imprecise and that they did not assist the applicant in proving an intention to use.

The hearing officer also found a prima facie case of bad faith against this applicant because they intentionally sought to take advantage of the trade mark system by seeking unduly wide protection with no justification. The prima facie bad faith case was not rebutted by the applicant's statements.

This application was also held to have been made in bad faith in its entirety and the opposition was successful in full.

UKIPO examination guidance

In response to the SkyKick judgment and following these decisions, the UKIPO has released statutory guidance setting out the behaviour expected of applicants (and opponents and cancellation applicants), as well as updates to examiners' examination practice.

Required behaviour

The UKIPO has been clear that applicants must ensure specifications represent fair and reasonable claims for their business. Applicants should be cautious when filing for large numbers of goods and services across multiple classes. Consideration should also be given to whether broad terms, such as "computer software", "pharmaceuticals" or "clothing", truly reflect their intended use or whether sub-categories might be more appropriate. Applicants should also ensure that they are ready to explain their commercial reasons for their application if its scope is challenged.

Examination practice

The main change brought about by the guidance is that examiners are now instructed to actively raise bad faith objections for overly broad specifications. This had not been the case previously and this change has taken effect immediately.

If an examiner does raise a bad faith objection, applicants will be given two months to respond by either providing an explanation of their commercial reasons for the broad specification or restricting the goods and/or services to reflect their business more appropriately.

The guidance notes that there will be some cases in which examiners will always raise an objection – for example, a claim covering lists of goods and services in all 45 classes, or a claim covering all goods in class 9.

Osborne Clarke comment

What is interesting about the UKIPO's approach in these two opposition decisions is that it has shown that it is prepared to go further than the Supreme Court in SkyKick by finding that both applications were made entirely in bad faith, as opposed to reducing the specifications' scope or reducing the scope of specific terms. However, in both cases the applicants were unrepresented and their statements regarding their intentions and the lack of information regarding their businesses meant that the hearing officer (the same in both cases) had little information to work with.

Brand owners should take note that the UKIPO's examination practice has changed with immediate effect and we can expect to see examiners raising bad faith objections of their own volition in the case of overly broad specifications. If this does happen, brands should be prepared to justify their commercial reasons for their specifications.

During opposition or cancellation proceedings, the UKIPO will also expect applicants of broad and lengthy specifications to provide reasonable explanations and justifications to rebut any bad faith claims.

However, the scale and the nature of an applicant's business will be assessed when considering the scope of the application. As such, brand owners should be prepared to provide evidence demonstrating the extent of their commercial activities to support a broad and lengthy specification. Generalised statements will not suffice.

It remains to be seen just how frequently the UKIPO will raise bad faith objections at the examination stage, how frequently oppositions or cancellation actions based on bad faith will be commenced going forwards, and whether bad faith becomes a default allegation in response to trade mark infringement proceedings. However, brand owners should now be cautious in filing overly expansive applications.

Stefano Schahbasi, a trainee solicitor with Osborne Clarke, contributed to this Insight.