Sky v SkyKick: Sky plc’s claim for trade mark infringement is ‘kicked’ into the long grass pending a reference to the CJEU on issues relating to bad faith and invalidity
The Sky group of companies has enjoyed a high level of success in enforcing its SKY trade mark against third parties. So, when Sky brought proceedings against SkyKick in the UK courts for trade mark infringement and passing off, they must have assumed that a further success was all but guaranteed. Far from it. SkyKick’s defence has raised questions over the validity of Sky’s registered trade marks. The importance of these issues is such that Mr Justice Arnold is to make a reference to the Court of Justice in the European Union (CJEU) for guidance. See here for the decision of Mr Justice Arnold.
For many years Sky has traded extensively in the UK under the trade mark SKY in relation to TV broadcasting, telephony and broadband services. By November 2014 SKY was considered a household name in the UK and Ireland for these services. To provide some context, in 2014 Sky’s UK marketing spend was greater than £1 billion and its turnover £7.6 billion. Sky has also used its SKY trade mark in Europe, most notably in Spain, Germany and Italy.
In addition to its core services mentioned above, Sky has offered (and in some instances continues to offer) a range of additional SKY services, including SKY WIFI, SKY branded email (as part of its broadband services), SKY software products, a range of merchandise items and some other, perhaps less well known services, including financial services, insurance services and educational services. This is relevant to the issue of the scope of the trade marks that Sky sought to register in the UK and EU.
In 2011 the defendant established a new business in the USA targeting specialised IT providers who offer their own business clients a range of IT solutions. The defendant offered cloud-based data migration services to business customers, in particular in relation to email accounts. The name SkyKick was settled upon in October 2011 and the business launched in the USA in April 2012. Some trade mark clearance searches were conducted in the USA prior to launch, which didn’t identify any third party trade marks of particular concern. Further (international) trade mark clearance searches were considered, but do not appear to have been carried out prior to launch of the SkyKick business outside of the USA.
Sky’s business targets both domestic and business customers. Sky does not offer email migration services or cloud backup services to customers, nor did their evidence indicate that they planned to offer such services in the immediate future.
UK Court Proceedings
Prior to commencement of the UK proceedings there was evidence that SkyKick had been informed by third parties of Sky taking action against other third parties for infringement of its SKY trade mark. However, SkyKick did not appear to seek advice on the risks of such action being brought against its use of SkyKick.
Sky issued proceedings against SkyKick in the UK Courts in May 2016 alleging trade mark infringement and passing off relating to SkyKick’s use of the ‘the SkyKick Marks’ for cloud-based software services (including cloud migration and cloud backup services) and related products, in particular software (‘the SkyKick Goods and Services’).
Sky’s claim for trade mark infringement relied upon several UK and EU registered trade marks (‘the Registered SKY Marks’). Sky alleged that there was a likelihood of confusion between SKY and the SkyKick Marks. It also claimed that use of the SkyKick Marks for the SkyKick Goods and Services infringed the reputation it enjoyed in the Registered SKY Marks.
SkyKick ran a number of defences, but it is the following aspects of its defence which has given rise to a reference to the CJEU. SkyKick alleged:
That the Registered SKY Marks should be declared partly invalid on the basis that the broad specifications of goods and services covered by the registrations (including ‘computer software’, ‘telecommunications services’ and ‘internet portal services’) lack the necessary clarity and precision required following the decision in IP TRANSLATOR; and
- That Sky had acted in bad faith in applying for the Registered SKY Marks for such a broad range of goods and services because at the time of filing the applications Sky did not intend to use the trade marks concerned for all of those goods and services.
With regard to the first limb of SkyKick’s above defence argument, Mr Justice Arnold agreed that registration of a trade mark for ‘computer software’ was:
“unjustified and contrary to the public interest because it confers on the proprietor a monopoly of immense breadth which cannot be justified by any legitimate commercial interests of the proprietor”
Although he thought the term ‘computer software’ was likely to satisfy the requirements of clarity and precision he considered the acceptance of this term at odds with other terms that were previously considered to lack clarity and precision following the decision in IP TRANSLATOR (e.g. ‘machines’ in Class 7).
Regarding the second limb of SkyKick’s defence, on the evidence Mr Justice Arnold found that Sky had no intention of using its SKY trade mark for certain goods/services (‘bleaching preparations’, ‘insulation materials’ and ‘whips’ were examples given). In addition, the breadth of Sky’s specifications were such that they included categories for which Sky did not intend to use the mark across the whole category (‘computer software’ and ‘telecommunications services’ were named examples).
Mr Justice Arnold also found that Sky had relied on its SKY trade marks, in particular parts of the registered specifications of those trade marks for which it had no intention of using its mark, to oppose third parties.
Sky’s evidence included a reference to 808 positive decisions relating to enforcement of the SKY brand against third parties in the period covering 2000-2017. Logically, a proportion of these positive decisions must have relied upon specifications that were broadly drafted and for specific goods/services for which Sky had no genuine intention to use the SKY trade mark.
Mr Justice Arnold considered that, should SkyKick’s defence succeed, it could significantly affect the outcome of the proceedings and that it also raised issues of sufficient importance to justify a reference to the CJEU. The precise wording of the reference is yet to be agreed, but the essence of the questions are as follows.
- Can an EU trade mark or a national trade mark registered in a Member State be declared wholly or partially invalid on the ground that some or all of the terms in the specification are lacking in sufficient clarity or precision to enable the competent authorities and third parties to determine the extent of the protection conferred by the trade mark?
- If the answer to (1) is yes, is a term such as “computer software” lacking in sufficient clarity or precision to enable the competent authorities and third parties to determine the extent of the protection conferred by the trade mark?
- Can it constitute bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services?
- If the answer to question (3) is yes, is it possible to conclude that the applicant made the application partly in good faith and partly in bad faith if the applicant had an intention to use the trade mark in relation to some of the specified goods or services, but no intention to use the trade mark in relation to other specified goods or services?
- Is section 32(3) of the 1994 Act [this being the declaration made at the time of filing a UK trade mark that the Applicant has a bona fide intention to use the mark] compatible with the Directive and its predecessors?
Deciding the Issues
Pending the outcome of the reference, Mr Justice Arnold decided on the infringement and passing off claims advanced by Sky.
In the event that the Registered SKY Marks are found to be valid, these were deemed to be infringed by SkyKick based on there being a likelihood of confusion and based on the reputation that Sky enjoys in these mark for TV services, TV reception equipment, telephony services and provision of broadband. Sky’s passing off claim failed.
Why does this reference matter?
The issues arising from this case have potential ramifications for many trade mark owners, in particular those that have sought registration of trade marks for broad categories of goods and services. The practice of filing for broad categories of goods/services, such as ‘computer software’ and ‘telecommunications services’ is commonplace in the UK and at the EU-wide level and complies with existing guidelines and practice.
If the CJEU’s guidance is such that the actions of Sky amount to bad faith give rise to grounds for invalidity this could render a large number of UK and EU trade marks invalidly registered (either in whole or in part). It may also lead to a change of trade mark filing practice in the UK and EU, by requiring trade mark owners to more accurately craft their specifications and avoid ‘over-claiming’. To avoid potential bad faith / invalidity issues, trade mark owners should consider protecting their trade marks for goods and services that they actually provide, or are very likely to provide in the near future.
Some might say this reference could put the UK on a path to a US-style classification practice, whereby it is necessary to indicate the intended purpose of e.g. computer software in order to satisfy the rules of classification. We’re some way off that yet, but given that trade marks are powerful intellectual property rights whose popularity is increasing there is an argument for greater clarity being needed on the scope of these rights.
We will be closely monitoring developments in this case and further updates will be provided in due course.
Link to published case: http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2018/155.html&query=(skykick)
Case No: HC-2016-001587
Neutral Citation Number:  EWHC 155 (Ch)
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.