This article was first published in World IP review, June 2020.

In Sky v SkyKick, the English High Court applied the rulings of the Court of Justice of the European Union (CJEU) to find Sky’s trademarks partially invalid in relation to certain goods and services as they had been applied for in bad faith. Nevertheless, the High Court held that parts of the trademarks remained valid and had been infringed by SkyKick.

Sky, the famous media and telecommunications corporation, issued trademark infringement proceedings in the High Court against SkyKick, a US software provider. Sky relied on a number of EU and UK national marks, all including the word “Sky” and all registered for a very large number of goods and services.

SkyKick filed a counterclaim for invalidity, submitting that: (i) the trademarks were registered for goods or services that are not specified with sufficient clarity and precision; and (ii) the trademarks were filed in bad faith, as Sky had no intention to offer some of the goods and services under the trademarks.

The High Court stayed the proceedings and referred five questions to the CJEU.

CJEU

The CJEU answered the referred questions as follows:

• The lack of clarity and precision in the terms used to describe the goods and services covered by a national or EU trademark is not a ground of invalidity, as it does not fall within the exhaustive list provided in Directive 89/104 and Regulation 40/94 (which were the relevant Regulation and Directive in force at the date Sky’s trademarks were filed, although lack of clarity and precision does not appear in the list of grounds for invalidity contained in the current EU Trade Mark Regulation 2017/1001 and Directive 2015/2436 either). Nor does the lack of clarity and precision fall within one of the existing grounds for invalidity. Accordingly, a national or EU trademark cannot be declared wholly or partially invalid on the basis of lack of clarity and precision.
• Bad faith applies where an application is filed not with the aim of engaging fairly in competition but instead with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining an exclusive right for purposes other than those falling within the functions of the trademark. Bad faith cannot be presumed purely on the basis that the applicant was not active in the field at the time of filing the application, but if the applicant had no intention to use the mark for certain goods and services, and there is no rationale for the application, then that may constitute bad faith.
• It is possible for an applicant for a trademark to make an application partly in good faith and partly in bad faith. trademarks covering a very large number of goods and services may be found partially invalid in respect of the goods and services an applicant has no intention of using, but valid in relation to the remaining goods and services.
• Section 32(3) of the Trade Marks Act 1994, which provides that a trademark application must state that the mark is being used in relation to the applied-for goods and services, or that the applicant has a bona fide intention that it be so used, is compatible with EU law.

The case was then referred back to the High Court.

High Court

• Validity – lack of clarity or precision

As the CJEU had confirmed that trademarks cannot be declared wholly or partially invalid on the basis that their specifications lack clarity or precision, the High Court quickly dismissed that part of SkyKick’s counterclaim.

• Validity – bad faith

Turning to the counterclaim relating to bad faith, the High Court held that Sky did not intend to use the trademarks in relation to some of the goods and services covered by the specifications at the application dates and that there was no foreseeable prospect that they would start using the trademarks in this way (e.g. bleaching preparations and whips). Moreover, the court considered that Sky had made these applications in order to seek a very broad protection, regardless of whether it was justified, and to use the registrations as a “legal weapon” against third parties. The court regarded the fact that Sky had made a false section 32(3) declaration in order to obtain such protection as further evidence that the applications had been made in bad faith.

Lord Justice Arnold noted that SkyKick had not alleged that the trademarks had been applied for in bad faith in relation to “telecommunications services” and “electronic mail services”. An application to amend SkyKick’s case to include this allegation was dismissed, as it was too late in the proceedings to raise this serious allegation.

The High Court then considered the other goods and services for which the trademarks were registered. SkyKick argued that the court should adopt a similar approach to the one adopted in the context of revocation for non-use. The court rejected this argument, as the purpose of the exercise is different in each case. In the non-use context, the court seeks to devise a fair specification having regard to the use of the trademark during the relevant period, while in this context the court must determine the extent to which it is necessary to cut down the specification, having regard to the bad faith of the trademark proprietor. The burden of proving bad faith rests with the opposing party, unlike in non-use cases, where the burden to prove genuine use rests with the trademark proprietor. The specification must be left unchanged to the extent that bad faith is not proven. In relation to the broad description “computer software”, the Judge stripped the protection back to:

“computer software supplied as part of or in connection with any television, video recording or home entertainment apparatus or service; computer software supplied as part of or in connection with any telecommunications apparatus or service; electronic calendar software; application software for accessing audio, visual and/or audio-visual content via mobile telephones and/or tablet computers; games software”.

The Judge took a similar approach with the other terms used to describe the goods and services covered, amending them to remove any part that was applied for in bad faith.

• Infringement

The High Court held that the combined effect of: (i) the CJEU’s ruling that trademarks cannot be declared invalid for lack of clarity or precision; (ii) the CJEU’s ruling that trademarks cannot be declared wholly invalid where bad faith only affects part of the specification; and (iii) SkyKick not having attacked the validity of the trademarks in so far as they are registered in respect of “telecommunications services” and “electronic mail services” on bad faith grounds, was that the trademarks remained partially valid in relation to those services.

In its previous 2018 judgment, the High Court had already found that SkyKick’s email migration service was identical to the “electronic mail services” covered by the trademarks, and that a likelihood of confusion existed. As the trademarks remained valid in relation to these services, SkyKick was found to have infringed.

Although he did not need to since he had already found infringement for electronic mail services, the Judge went on to briefly consider the interpretation of specifications on the issue of infringement, and summarised the law as follows:

1. General terms are to be interpreted as covering the goods or services clearly covered by the literal meaning of the terms, and not other goods or services;
2. In the case of services, the terms used should not be interpreted widely, but confined to the core of the possible meanings attributable to the terms;
3. An unclear or imprecise term should be narrowly interpreted as extending only to such goods or services as it clearly covers; and
4. A term which cannot be interpreted is to be disregarded.

Applying that to “telecommunication services” (a phrase which often causes debate as to the extent to which it can be used to cover things on the internet), he concluded that it was capable of being interpreted under the second principle above as meaning services “consisting of or relating to telecommunication per se”.  This means that the mere fact that services are supplied via the internet does not mean that they are even similar to telecommunication services, since many goods within Class 9 and different services are provided via the internet.

What impact will this have?

The High Court’s ruling indicates that the CJEU decision may well have a noticeable impact on the breadth of future trademark specifications going forwards. It will be interesting to see whether prolific trademark filers with a penchant for very wide specifications, such as Sky, will change their filing strategies. At the very least, one would expect that the majority of those that file trademark applications regularly will give more thought to the scope of their specifications in order to avoid unwanted attacks on their trademark registrations which could cast doubt over their enforceability.

Although there is no need to limit an application to only those goods and services that are currently offered, applicants should ensure that there is a commercial rationale behind all the selected goods and services – and not be tempted to over-claim. For those accused of trademark infringement, it would be prudent to give some attention to the breadth of the goods and services covered by the relevant trademarks to see if they can be challenged on the ground of bad faith. It is to be expected that most EU member states will follow the approach taken by the English High Court in this case.