Skykick: Court of Appeal endorses broad terms and clarifies the scope of bad faith

The Court of Appeal has recently handed down its decision in Sky's appeal in the ongoing Sky v Skykick trade mark battle. In a unanimous decision, the Court of Appeal has allowed Sky's appeal against the High Court's finding of bad faith and consequent restriction of Sky's trade marks; a decision that will come as welcome relief for brand owners.

As a result of this decision, an applicant is not required to have an intention of using its mark in relation to every conceivable sub-division of a broad term. Rather, it should be possible to apply for protection for broad terms in categories for which it has a commercial interest. While there were other issues decided, this Insight focuses on the hot topic of bad faith.

Re-cap

The High Court decision of April 2020 partially cancelled some of Sky's trade marks on the grounds that they had been applied for in bad faith. As a result, a number of terms including "computer software" were narrowed. Despite Sky's specification being partially limited, the High Court held that Skykick's activities amounted to trade mark infringement.

This decision was subsequent to the Court of Justice of the EU's (CJEU) decision, which ruled that applying for a trade mark with no intention to use may constitute bad faith, but only if the applicant intended to undermine the interests of third parties or to obtain a monopoly for purposes other than to fulfil the functions of a trade mark. As reported in our Insight at the time, the High Court decision created potential uncertainty for brand owners and an expectation that bad faith attacks would increase, as it went further than the CJEU's decision by holding that broad terms in trade mark specifications could be cut down to specific goods and services for which there was intent to use.

Court of Appeal decision

Sky successfully appealed against the High Court's finding on bad faith and consequent restriction of its trade marks, but its appeal concerning the dismissal of its passing-off action was not allowed. Skykick's cross-appeal against the finding that their use infringed Sky's restricted specification was therefore rendered moot, and its cross-appeal that Sky's specification should have been narrowed further was dismissed.

Sky's success followed the Court of Appeal's clarification of the law on bad faith, and its application to broadly framed trade mark specifications, as explained below.

Bad faith

Sky successfully argued that, following the CJEU's decision, a lack of intention to use cannot, on its own, amount to bad faith. Rather, an absence of intention to use might be evidence of bad faith, but not bad faith in itself.

This overturned two key findings from the High Court decision, namely that: (i) Sky had no prospect of using the mark in relation to every conceivable sub-division of computer software (the "no prospect" ground); and (ii) Sky had no commercial justification for seeking for protection for all sub-categories of goods covered by the general term (the "no commercial justification" ground).

On the contrary, the test to be applied when assessing bad faith should not be by asking whether the applicant had an intention to use the mark for every variety or manifestation of goods or services covered by a broad term. Instead, it is appropriate to consider whether the filing is by someone who has an intention to use for goods or services which are properly referred to by that description. As Sky had an intention to use goods that could be properly described as "computer software", it did not have to formulate a commercial strategy for using its mark in relation to every species of goods or services falling within that broad term.

In reaching this decision, the court considered the distinction between an applicant who makes claim to a specific/narrow term, where there is no intention of using the mark in relation to that item, and an applicant who makes claim to a category that is wider than the goods for which it actually uses or intends to use the mark. In the first case there is a potential indication of bad faith, whereas the second case is fully consistent with a good faith description of the applicant's use and intended use. In other words, the law of bad faith should not require an intention to use across all possible goods and services within a broad term.

Implications for brand owners

The Court of Appeal has endorsed the pragmatic and common UK and EU practice of filing trade mark applications for relatively broad terms to ensure adequate coverage was obtained, including forward-looking protection. Subject to a further appeal, the key implications of this can be summarised as follows:

• Broad terms in specifications ("computer software", "financial services", "pharmaceutical preparations"and others) are here to stay in the UK provided there are obvious commercial justifications for including them. The potential risk of a bad faith attack appears to have fallen away.
• Brand owners are not obliged to have a prospect of, or strategy for, using their mark in relation to every type of goods and services falling within a broad term.
• The US style of filing trade marks with more complex and tailored specifications remains unlikely in the UK.
• It's now less of a risk to rely on the latest or youngest registered mark when enforcing trade mark rights, provided that mark is not a repeat filing of the sort Hasbro admitted to in the recent Monopoly case, that is filed for the purpose to evade proof of use requirements.
• The UK trade marks register is likely to remain cluttered with marks that include broad terms, making it more difficult for newly created brands to secure effective registered protection.