May 18, 2020

The High Court had referred various questions to the CJEU in relation to a counterclaim for a declaration of invalidity brought by the defendant, SkyKick UK Ltd, which supplies cloud migration information technology services, in proceedings brought by Sky plc for infringement by SkyKick of four of Sky’s EU trade marks and one UK trade mark for ‘SKY’ registered for various services, including “telecommunications services”, “electronic mail services” and “computer software”.

SkyKick contended that the trade marks should be declared (partly) invalid on the ground that they were registered for certain goods and services (excluding “telecommunications services” and “electronic mail services”) that were not specified with sufficient clarity and precision. SkyKick also said that the trade marks were registered in bad faith because Sky did not intend to use them in relation to all of the goods and services specified, and/or where the term in the specification was broad, Sky did not intend to use them across the breadth of the category, for example, “computer software”.

The High Court asked the CJEU whether Articles 7 and 51 of the Trade Mark Regulation (40/94/EC) and Article 3 of the Trade Mark Directive (89/104/EEC) (being the relevant legislation according to the filing dates of the marks in question) meant that a trade mark could be declared wholly or partially invalid on the ground that the specification of the goods and services lacked clarity and precision. If so, the High Court asked whether the term “computer software” was sufficiently clear and precise.

The High Court also asked the CJEU whether a trade mark could be declared invalid if, when applying for the trade mark, the applicant had no intention to use it in relation to the specified goods and services. If so, the High Court asked whether a finding of partial bad faith in relation to some of the goods or services could be made.

The CJEU found that a trade mark cannot be declared wholly or partially invalid on the ground that the specification of the goods and services lacks clarity and precision. However, it also found that a trade mark application made without any intention to use the mark in relation to the goods and services specified constitutes bad faith if the applicant had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, even without targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark.

The CJEU also found that, when the absence of an intention to use the trade mark in accordance with the essential functions of a trade mark concerns only certain goods or services, the application could only be declared invalid on the basis of bad faith insofar as it relates to those goods or services. As SkyKick had only challenged “telecommunications services” and “electronic mail services” on the basis that if any of the specification of a mark was found to be invalid, it should be held to be invalid in its entirety, in the light of the CJEU’s finding, Arnold LJ was obliged to find that Sky’s marks were valid in relation to those services.

Back in the High Court, Lord Justice Arnold found that, on the question of bad faith, Sky had applied for the trade marks partly in bad faith. Not merely did it not intend to use the trade marks in relation to some goods and services covered by the specifications, and/or did not intend to use categories across their breadth, but there was no foreseeable prospect it would ever so use them. Moreover, Sky made the applications pursuant to a deliberate strategy of seeking very broad protection of the its mark regardless of whether it was commercially justified. Sky had thus applied for the trade marks with the intention of obtaining an exclusive right for purposes other than those falling within the functions of a trade mark, namely purely as a legal weapon against third parties, whether in threats of infringement claims or actual infringement claims or oppositions to third party applications for registration.

SkyKick argued that the trade marks should be declared invalid in relation to “computer software” on the grounds of bad faith, but Arnold LJ said that the fact that Sky did not intend to use the trade marks across the whole breadth of this category of goods did not mean that it did not intend to use the marks in relation to any computer software. In fact, he found that Sky had actually used the marks in relation to some kinds of software.

SkyKick argued in the alternative that a more comprehensive list of the actual software used by Sky should be substituted for “computer software”. However, Arnold LJ said that the problem with the proposed wording was that it was explicitly based upon his findings as to the use which Sky had actually made of the marks and it was well established that trade mark proprietors have a legitimate interest in seeking protection in respect of goods or services in relation to which they may wish to use the mark in future. Furthermore, he said, as the non-use cases show, even in that context proprietors also have a legitimate interest in seeking a modest penumbra of protection beyond the specific goods and services in relation to which use has been proved (but not to distinct categories or subcategories of goods and services).

In any event, Arnold LJ said that what he was required to do was to determine the appropriate scope of the specification in the light of his findings of bad faith. To the extent that bad faith was not established by SkyKick, the specification should be left intact. Arnold LJ clarified that this task differs from the task faced by the Court in non-use revocation actions, as in that case, the proprietor was required to prove use, and to the extent that it failed to do so, the mark would be revoked.

In the absence of any alternative proposal from Sky, Arnold LJ devised a specification that reflected the extent of the bad faith proved, but no more. He concluded that the marks should be declared invalid in relation to “computer software” except for certain specific categories, which he listed. Arnold LJ went through the same process in relation to the other services relied on by Sky.

In his previous main judgment, Arnold LJ had found that SkyKick had infringed Sky’s marks in respect of the services pleaded by Sky to the extent that the marks were valid under Article 9(2)(b) of the Regulation and Article 10(2)(b) of the Directive. Arnold LJ now found that there was infringement by SkyKick in respect of “electronic mail services”. As Sky’s infringement case was weaker in relation to the remaining services, Arnold LJ did not consider them in any detail (Sky plc v SkyKick UK Ltd [2020] EWHC 990 (Ch) (29 April 2020) — to read the judgment in full, click here).