Life after SkyKick: UKIPO's Appointed Person applies landmark Supreme Court decision

Since the Supreme Court's judgment in Sky v SkyKick, there has been speculation as to how the decision would be applied in practice. The Supreme Court's decision has already been applied in two opposition decisions from the UK Intellectual Property Office (UKIPO). It has also prompted the UKIPO to release statutory guidance updating its examination practice.
The Supreme Court's decision has now been applied by the Appointed Person in an appeal against an opposition decision at the UKIPO. The decision underscores the ongoing relevance of bad faith.

Overly broad specifications where there is no intention to use may not survive examination following the UKIPO's recent guidance and, in any event, could still be vulnerable to opposition or cancellation. Bad faith is also being raised more frequently in response to trade mark infringement claims. Brand owners should now be cautious in filing overly expansive specifications and should be prepared to provide reasonable explanations and justifications of their filing strategy to rebut any bad faith claims.

CNVRG: Appointed Person decision

In the UKIPO's CNVRG trade mark decision, an appeal was brought by a trade mark applicant, Rui Qu, against a decision of a UKIPO hearing officer from 2023 in which she held that the opposition against the applicant's UK trade mark application for the word mark CNVRG in respect of services in class 42 (UKTM 251) succeeded in full under section 3(6) of the Trade Marks Act 1994. 

The hearing officer's decision preceded the Supreme Court's decision in Skykick and concluded that the entire specification had been applied for in bad faith, resulting in the application being refused in its entirety. On appeal, Daniel Alexander KC, the Appointed Person, waited until the Supreme Court handed down its decision before giving his judgment. The main question on appeal was whether the hearing officer's decision was consistent with the law and approach to bad faith set out by the Supreme Court in SkyKick.

Neither side submitted any further arguments in light of SkyKick and no submissions were made on the impact of SkyKick. The Appointed Person was very clear on the standard of review on appeal, noting that the tribunal could only interfere if the hearing officer's decision erred in law or in principle or reached a conclusion not available on the evidence. He underscored that it is not sufficient for the tribunal to intervene just because it would have reached a different conclusion.

Rui Qu's central argument was that the evidential bar was set too low for a finding of bad faith. However, a particular quirk of these proceedings was that Rui Qu did not dispute the hearing officer's primary or secondary findings of fact.

This was important because the hearing officer had held that, based on the evidence as a whole, the only conclusion that could be reached was that Rui Qu had no genuine business and no intention to use the CNVRG mark as a badge of origin in the UK. Rui Qu's practices were held to be an extension of its Chinese operations, which were said to consist of obtaining trade mark rights for the purpose of threatening legitimate users of the trade mark system to extort payment.

Rui Qu's grounds of appeal were unspecific and the Appointed Person said that "the scope for an appeal on the footing that a finding of bad faith was not properly open to the hearing officer, is necessarily, limited".

Rui Qu alleged that its explanation for filing UKTM 251 should have been accepted as the hearing officer did not have a sufficient basis for rejecting its explanation. 

The Appointed Person held that, in light of the hearing officer's unchallenged findings of fact, a conclusion of bad faith was "certainly open to her on the evidence". The hearing officer had correctly carried out an overall assessment of bad faith, including an evaluation of Rui Qu's intention at the date of the application.

The Appointed Person noted that SkyKick reinforced the importance of a satisfactory explanation for making an application where a bad faith inference is prima facie justified. Where there is evidence from which a bad faith inference can be made, an applicant can be reasonably expected to provide a "sufficiently coherent explanation for the application specifically in the UK as to its scope". If there is no adequate or sufficiently credible explanation, there may be a proper basis for a bad faith finding in whole or in part.

Rui Qu had not provided evidence of any actual business conducted under the CNVRG mark in the UK and the evidence supported the position that there was no relevant intention to do so. The Appointed Person concluded that, taking the evidence as a whole, there was a sufficient basis for the hearing officer's finding that the explanation put forward by the appellant was not enough to dispel the bad faith inference. Overall, the approach taken by the hearing officer accorded with the approach taken by the Supreme Court in SkyKick.

Osborne Clarke comment

We are now starting to see a number of decisions in the UKIPO and the courts applying the Supreme Court's decision in SkyKick – bad faith is still very much on the trade mark agenda. These decisions confirm that broad and imprecise terms continue to be problematic and may be challenged.

It is clear that brand owner's should be cautious in registering broad specifications where there is no intention to use, and they should be prepared to sufficiently justify their filing strategies if bad faith claims are made. As the Appointed Person noted in CNVRG, the importance of a satisfactory filing explanation is heightened post-SkyKick.

The Appointed Person's decision in CNVRG also provides a timely reminder of the standard that must be met for an appeal tribunal or court to interfere with a first instance decision. In that case, not challenging the hearing officer's findings of fact severely constrained the scope of the appeal. On the basis of the findings of fact and the evidence as a whole, it was open to the hearing officer not to find the appellant's explanation for making the application credible.

We'll have to watch this space to see how the UKIPO and the courts continue to apply SkyKick as there are still some unanswered questions – for example, will "repeat offenders" be punished in some way for continued bad faith filings? Despite some uncertainties, what is certain is that bad faith claims will be a mainstay in trade mark proceedings for some time to come.