The UK Supreme Court’s SkyKick ruling confirms trademark applicants can no longer file unjustifiably long specifications
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“More immediately for brand owners, [the decision] is likely to result in a marked increase in invalidity action as a defense and counterclaim to trademark owners bringing infringement proceedings.”
On November 13, 2024, after almost 17 months of anticipation, the UK’s Supreme Court finally handed down its decision in SkyKick (Appellants) v. Sky (Respondents).
What began as a (relatively) simple claim by Sky for trademark infringement of various SKY trademarks (the “SKY Marks”) by SkyKick, ultimately resulted in four High Court judgments, a referral to the CJEU, a Court of Appeal ruling and ended in a significant Supreme Court decision. In particular, the Supreme Court was asked to consider whether a trademark registration can be invalidated on the basis that the application was made in bad faith if the applicant did not intend to use the mark in relation to the breadth of goods/services for which it sought protection.
In allowing Skykick’s appeal from the Court of Appeal, the Supreme Court confirmed that a UK trademark may be held to have been registered in bad faith if it has a specification that goes beyond commercial justification for lack of genuine intention to use for the full range of goods and services, for the reasons explained below. The Court of Appeal’s findings on infringement were upheld (and not addressed further in this article as the sea change comes from the implications of the decision upon trademark filing practices).
Case History
After four judgments and a referral to the CJEU, the High Court had concluded at first instance that the SKY Marks were partially invalid and had been made in bad faith to the extent that the specifications included an unduly broad specification using general terms or specific sub-categories to describe goods or services in relation to which Sky never had any intention to use their mark (for example, bleaching preparations in class 3). In other words, Sky had sought protection beyond what was justifiable having regard to their commercial interests.
This ruling was overturned by the Court of Appeal, who held that Sky had not acted in bad faith and restored the SKY Marks to their full specification. SkyKick’s cross-appeal against the finding of infringement was dismissed by Court of Appeal. SkyKick appealed further to the Supreme Court.
Supreme Court Judgment
The Supreme Court unanimously allowed SkyKick’s appeal in relation to the bad faith validity challenge.
We set out below a summary of the key general principles arising out of EU law which are relevant to this appeal and were discussed at length by the Supreme Court. While the impact of this decision is on UK trade marks, EU courts and laws have direct jurisdiction and effect in the UK in the context of proceedings which were pending before Brexit.
General Principles
- It is an absolute ground of invalidity if an application for a registered trademark was made in bad faith; and the date for assessing whether an application was made in bad faith is the date the application for registration was made.
- While bad faith presupposes a dishonest intention at the time of filing an application, the concept must have regard to the objectives of EU trade mark law, namely: (1) the establishment and functioning of the internal market, (2) a system of undistorted competition in which undertakings must attract and retain custom by the quality of its goods/services, and (3) the ability to have a registered mark which enables consumers, without risk of confusion, to distinguish those goods/services from those which have a different origin.
- The bad faith objection will be made out where the proprietor made the application without an honest intention to engage fairly in competition and (1) with the intention of undermining the interests of third parties, or (2) with the intention of obtaining an exclusive right for purposes other than those falling within the functions of a trademark, in particular the essential function of indicating origin.
- Intention is subjective but must be capable of being established objectively by the competent authorities having regard to the objective circumstances.
- The burden of proving that an application was made in bad faith is on the party making the allegation. However, where circumstances lead to a rebuttal of the presumption of good faith, the proprietor must provide a plausible explanation of the objectives and commercial logic pursued by the application for registration.
- A bad faith assessment is the subject of overall assessment taking into account all relevant factors.
- The applicant is not required to indicate or know precisely when the application is filed the use that will be made of the mark. In the absence of any rationale or explanation, the registration of a trademark by an applicant with no intention of using it in relation to goods/services covered may be considered bad faith. Bad faith may be established only where there are objective, relevant and consistent factors showing that, at the time of application, the applicant had the intention either of undermining in a manner inconsistent with honest practices, the interests of third parties, or of obtaining an exclusive right for purposes other than those falling within the functions of a trademark.
- It follows that bad faith cannot be presumed on the mere basis that at the time of filing the application, the applicant had no economic activity corresponding to the goods/services referred to in the application.
- When the absence of intention to use the mark in accordance with the essential functions of a trademark concerns only certain goods/services referred to in the application, that constitutes making the application in bad faith in so far as it relates to those goods/services.
The Grace Period
A key feature of UK trade mark law is that a registration is liable to be revoked if there has been a continuous period of five years after the completion of registration in which the mark has not been put to genuine use, and there are no reasons for that non-use. This five-year period, known as the “grace period”, allows the owner to use the registered mark for the goods/services within that time frame. The Supreme Court stated that the grace period could cause problems for traders if applications to register trademarks are made by people who never intend to use them. The Supreme Court’s decision makes it clear that the applicant may have intended to obtain an exclusive trademark right for purposes outside of those covered by the essential functions of a mark. This inference of bad faith may be displaced by an explanation of an appropriate commercial rationale but a failure to provide any satisfactory explanation (with supporting evidence) may provide support for a finding of bad faith for those goods/services.
Taking an example (advocated for on behalf of the Comptroller-General at the hearing), if an applicant were to apply to register a mark in all 45 classes, the width and size of the specification would, absent a satisfactory explanation, justify a finding of abuse on the basis that the applicant had intentionally taken advantage of the rules by seeking to obtain a registration with unduly wide protection. It is a question of degree as to whether the objective circumstances are in accordance with the rules. It is not true that bad faith cannot be established solely on the basis of the size of the list of goods and services (as was the case in the General Court rulings in Psytech and Pelikan). That is not to say that there will be cases where bad faith cannot be established solely on the basis of the size of the list of goods and services (as was the case in the General Court rulings in Psytech and Pelikan).
The question is whether, “
absent an explanation and rationale consistent with the functions of a trade mark, it is reasonable to infer from the size and nature of the list of goods and services the subject of the application and all the other circumstances, including the size and nature of the applicant’s business, that the application constituted, in whole or part, an abuse of the system and was for that reason made in bad faith“.Sky’s lack of evidence to rebut a finding of bad faith
Sky had for a number of years been very active in enforcing their trademarks globally against other traders and in doing do sought to enforce the full scope of their registered marks. The parties agreed that Sky relied on positive decisions in which they successfully opposed applications to register marks for goods and services in which Sky had not traded or had never traded.
This informed the trial judge’s (Arnold J In addition, he also placed key weight on the following factors:
Sky initially relied in this claim upon all of the goods and services for which the marks were registered without limitation;
- it was not until around five weeks before trial that Sky indicated that they would limit their infringement case to a subset of the goods/services;
- during closing submissions at trial, Sky limited their case further to a yet smaller set of goods/services (referred to in the judgment as the Selected Goods and Services);
- crucially, Sky had not disclosed any contemporaneous documents setting out (let alone explaining or justifying) their filing strategy or the reasons for seeking such broad protection. Arnold J recognised (fairly), that it was necessary to seek evidence of Sky’s intention insofar as relevant. And
- none Sky’s witnesses could give first-hand evidence about Sky’s filing strategies or reasons Evidence was given about the circumstances in which the last three SKY Marks came to be filed, which was that Sky did not intend to use the SKY Marks in relation to all of the goods/services covered by the specifications.
- The Supreme Court agreed that Arnold J was therefore entitled to find that the SKY Marks were applied for in bad faith (and to modify the specification). His findings involved a thorough assessment of the scope and extent the specifications of goods or services of the SKY Marks, the circumstances under which the applications were filed, and Sky’s intentions in making and pursuing applications in the manner that they Ultimately, the Supreme Court found that Arnold J made no error of principle and the Court of Appeal had failed to identify any flaw or omission in reasoning which would justify interfering with his conclusions.
In addition, the Supreme Court found that the Court of Appeal failed to take into account the significant facts set out above – that Sky, at various stages throughout proceedings, gradually narrowed the range of goods/services for which the SKY Marks were registered. The High Court had enough evidence to conclude that SkyKick was correct to claim that Sky had applied and was willing to take enforcement actions in respect of goods and services that were so broad and varied that it was unlikely that Sky would intend to provide them in The judge was entitled to find that the SKY Marks had been applied for (in part) in bad faith and that the specifications should be limited.
Findings on broad classification headings
In relation to Sky’s use of general terms in their specification and the impact of this finding, it is worth noting that an “applicant does not have to have a commercial strategy to use a mark for every possible species of goods or services falling within the specification. It is not an objection that the applicant applied for a broad range of goods and/or services under class headings.
Where, however, the broad description includes distinct categories or subcategories of goods or services,
the proprietor may be found to have acted in bad faith in relation to one or more of those, and it would be manifestly unjust if it escaped that consequence simply because it had framed its specification using general terminology.”[…]Comment
The Supreme Court’s decision has a significant impact on practices relating to trademark applications and portfolio management. More immediately for brand owners, it is likely to result in a marked increase in invalidity action as a defense and counterclaim to trademark owners bringing infringement proceedings.[…]Brand owners should take the opportunity to review their portfolios for any potential exposure. If they have trademarks that are registered for a particularly broad ranges of goods and services that don’t have a clear commercial rationale that they can evidence, then they should consider limiting their specification to what can be justified in relation to their business activities.
Evidence will be key. Brand owners should record and keep track of the decisions made around their trademark applications, and the plans associated with their brands. This evidence will be crucial in rebutting future allegations of bad will. The Supreme Court’s ruling will help smaller businesses and traders to break into or expand new markets. Providing they don’t step on the toes of other brands with legitimate trademark specifications, they now have the comfort of being able to meet any unwarranted enforcement attempts with a bad faith invalidity counterclaim.
Sarah Stephens and Emma Dixon co-authored this article.
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