Sky brought proceedings for trade mark infringement and passing off against Sky Kick on the basis of its earlier trade marks covering a wide range of goods and services, from “bleaching preparations” to “computer software”. In return, Sky Kick sought invalidity of Sky’s trade marks on the basis that they had been filed in Bad Faith. In essence, the basis of the Bad Faith claim was that Sky’s trade marks allegedly covered a range of goods and services for which it could have had no commercial intention to use its trade marks, and that through this it had obtained an unfair monopoly.
Of particular interest to trade mark professionals and brand owners alike, was the question of whether the term “computer software”, the standard definition of which encapsulates a variety of goods with different purposes and across an array of industries, was applied for in Bad Faith. Sky Kick’s argument was that Sky could not have intended to use its trade marks on all “computer software” type goods, and that the Bad Faith would have ‘infected’ Sky’s trade marks in their entirety, and that they should be invalidated in full.
In the High Court decision issued on 29 April 2021, Lord Justice Arnold held that while Sky’s trade marks were not totally invalid, they were partially invalid on grounds of Bad Faith in so far as they covered goods and services for which “there was no foreseeable prospect” that Sky had an intention to use the trade marks, and were part of a strategy “seeking very broad protection of the Trade Marks regardless of whether it was commercially justified”. The term “computer software” was consequently limited on the basis that it covered a range of goods for which Sky did not have an intention to use its trade marks. Nevertheless, Sky Kick was still held to have infringed Sky’s trade marks, although Sky’s passing off claim was dismissed.
The Court of Appeal Decision
Both parties appealed the High Court judgement, Sky against the dismissal of its passing off claim and the restriction of its trade marks, and Sky Kick against the finding that it had infringed Sky’s trade marks, and against the broad interpretation the court took in restricting Sky’s trade marks.
On 26 July 2021, the Court of Appeal handed down its judgement and overturned the earlier decision of the High Court, by finding that Sky’s trade marks had not been filed in Bad Faith, and could not therefore be partially invalidated on such a basis.
The Court of Appeal identified the crux of the lower court’s reasoning on Bad Faith to be as follows:
“First in relation to “some goods and services covered by the specifications” Sky did not intend to use the trade marks at the application dates and there was no foreseeable prospect that they would ever do so (“the no prospect of use conclusion”).
Secondly, the marks were applied for pursuant to a deliberate strategy of seeking very broad protection, regardless of whether it was commercially justified (“the broad strategy/no justification conclusion”).”
In addressing the first point, the Court of Appeal recognised that this rationale for a finding of Bad Faith could apply in circumstances where the trade mark proprietor had no intention to use its trade mark for the goods or services in question whatsoever. Sky’s application for the term “bleaching preparations” being potentially such an example, as Sky did not appear to have shown evidence of an intention to use its trade marks on these goods. However, in relation to terms such as “computer software” in which Sky did have an intention to use its trade mark, although not for the full spectrum of goods, the court held that Sky’s intention to use its trade mark did not have to extend to every conceivable sub-division of goods in that category. It was therefore not an indication of Bad Faith that Sky did not have such an intention at the outset when it filed its trade marks.
It was further reasoned that taking the High Court’s approach would be unfairly restrictive to trade mark proprietors, and also place undue pressure on legal professionals, who are often required to draft trade mark specifications and file trade marks on behalf of clients. This is because trade mark proprietors do not necessarily know how their businesses will develop in the future, and to which goods and service categories the use of their trade mark will ultimately extend, and that third party legal professionals cannot be expected to have the degree of knowledge of a client’s business, which is required to draft a trade mark specification that covers the exact goods or services that the client will provide.
In relation to the High Court’s second point regarding Sky’s overall commercial strategy, the Court of Appeal confirmed that a trade mark applicant “does not have to formulate a commercial strategy for using the mark in relation to every species of goods or services falling within a general description” and that a lack of commercial rationale, in so far as this means an intention on the part of the trade mark proprietor to use the trade mark for every category covered by particular goods or services, is not relevant to an assessment of Bad Faith.
The High Court decision raised the possibility that rights holders could have the scope of their trade marks ‘trimmed’ through invalidity filings on the grounds of bad faith, to the extent that the trade marks included terms such as “computer software” for which there could not have been an intention to use the mark for the entire category in question.
The Court of Appeal decision confirms that this is not the case, and that trade mark specifications are not required to have a precise degree of exactitude with the underlying business in question. This will reassure brand owners who may have been concerned about future invalidity attacks.
Notwithstanding the above, brand owners must still be aware that their trade marks could still be vulnerable for invalidity on Bad Faith grounds, if they had no intention whatsoever to use the mark on any of the goods or services covered by a particular term. Further, it remains possible to revoke trade marks once they are over 5 years old, if they have not been put to genuine use for the goods and services for which they are registered.