A new lease of life for bad faith?

15th May 2020

Emmy Hunt and Edwina Fitzhugh summarise the most recent High Court decision. Sky v SkyKick, C-371/18, 29th April 2020

This High Court decision of Lord Justice Arnold applies the CJEU decision following the UK referral of five questions. 

The questions relate to trade mark specifications and the inclusion of broad or imprecise terms and the inclusion of a broad range of goods and services, and their impact on the validity of the trade mark registration.

Key findings 

To reiterate the key findings of the CJEU applied here by Arnold LJ:

1. A trade mark registration cannot be declared wholly or partially invalid on the ground that the specified goods and services lack clarity and precision. It was therefore not necessary for the CJEU to fully consider the validity of the term “computer software” and whether this lacked clarity and precision;
2. A trade mark application made without any intention to use the trade mark in relation to the goods and services covered by the registration does constitute bad faith if the applicant, at the time of filing the application  “had the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark”.  Such bad faith would need to be established by objective, relevant and consistent indicia. Where a trade mark registration was invalid on the basis of bad faith, the invalidity could affect only some of the goods and services and would not infect the entire registration; and
3. The national requirement to provide a declaration of intention to use the mark at the time of application would not, in itself, provide a ground of invalidity.

Invalidity 

Consequently, SkyKick’s counterclaim for invalidity of Sky’s marks could only succeed if the High Court found that the specific goods and services relied upon by Sky were filed in bad faith and invalid.

Arnold LJ, in applying the CJEU’s decision found that Sky’s trade mark registrations were partially invalid for bad faith for the following reasons:

1. the lack of intention to use the marks for all the goods and services covered by its registrations;
2. Sky had no foreseeable prospect that they would ever use the marks for those goods and services; and
3. Sky had adopted a deliberate strategy of seeking broad protection in order to use the registrations as “purely a legal weapon” against third parties. Arnold LJ went on to further criticise Sky by stating that its declarations of ‘intention to use’ on its trade mark application forms were “inconsistent with honest practices”, further supporting the bad faith finding.

Bad faith

In considering Sky’s inclusion of the broad term “computer software” in class 9, and for which Arnold LJ found that there had been use for certain types of computer software, the term was cut down to a more limited range of goods.

Sky resisted this and did not provide their own restriction to this specification wording. Therefore, Arnold LJ took the view that Sky’s application to register its mark for “computer software” had been proved to be filed in bad faith, and so he penned his own revised wording “computer software supplied as part of” followed by a list of Sky’s particular services. Arnold LJ also narrowed down “data storage” to read “storage of audio, visual and/or audio-visual content and documents.”

The finding of validity and infringement in respect of the remaining broadly specified goods and services covered by Sky’s registrations would only be made subject to Sky’s withdrawal of the infringement claim in relation to the full range of goods and services. 

The numerous practice issues arising from SkyKick had therefore relegated the central infringement dispute to a mere side-show.

For anyone looking for confirmation of the almost inevitable outcome of the infringement claim, Arnold LJ found that there was an infringement, on the basis that Skykick’s migration service was identical to Sky’s “electronic mail services” and also that some of Skykick’s products were similar to those covered by Sky’s “telecommunications services”.

Conclusion

Overall, whilst brand owners with broad specifications may be breathing a sigh of relief, a relaxed approach should not be taken when drafting trade mark specifications.

Best practice is now even clearer – draft clear, precise specifications which reflect a company’s genuine business plans and endeavours, because they may well need to withstand intense scrutiny later down the line.

Key points

1. Enforcement of broad registrations should be initiated with care – as the use history of any prior rights may be closely examined in case they can be challenged for bad faith;
2. This decision should make trade mark applicants and practitioners think twice before filing an application for the extremely popular term “computer software” (or other similarly broad terms such as “financial services” or “telecommunication services”) without limitation;
3. Arnold LJ’s judgment clearly illustrates the implications of the CJEU’s reluctance to discourage broad filing practices – reaching this decision on merely some of the infringement claims required a laborious and detailed examination of the specification terms and the scope of use made and realistically envisaged by Sky since the time of filing. Use could therefore become a complex but determinative issue in many infringement claims, regardless of whether they are based on young or old registrations. We pity the new brand entrant who attempts to assess the pre-launch clearance risks with any certainty.
4. It is interesting that Arnold LJ decided to draft his own alternative wording for “computer software” which was deemed to have been filed in bad faith by Sky. This suggests it would be sensible for any trade mark owners who may find themselves in this position in future to provide the Court with their own alternative wording in advance, in order to try and guide the Court to their own preferred wording and thereby avoid an amended specification they might be unhappy with.

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