SkyKick ruling could herald UK and EU trade mark law divergence

It is possible that the court’s judgment in the SkyKick v Sky case, which is not anticipated for a number of months, will bring significant divergence between UK and EU trade mark law and practice. It will be relevant to businesses across all sectors and industries.

What the Supreme Court will consider

The central question that the Supreme Court will consider is what constitutes a ‘bad faith’ trade mark registration – the UK Trade Marks Act 1994 provides that a trade mark shall not be registered if or to the extent that the application is made in bad faith.

In the dispute between SkyKick and Sky, SkyKick has alleged that trade marks that Sky has asserted against it are invalid because they were applied for in bad faith. At the heart of this claim is its belief that Sky registered its trade marks for an overly broad range of goods and services – some of which fall outside the scope of its core business – with no intention to use the marks for those goods and services.

Arguments on this issue have already been considered in this case by the High Court and the Court of Appeal in London, as well as by the Court of Justice of the EU (CJEU), reflecting the fact that the proceedings commenced prior to Brexit taking effect when courts in the UK – as the High Court did in this case – were able to refer matters concerning the interpretation of EU law to the CJEU for a ruling.

What the courts have ruled so far

The CJEU said businesses applying for trade marks without any intention to use the trade mark in relation to the goods and services specified will be considered to have been registered in 'bad faith', and subject to invalidation, “if the applicant for registration of that mark had the intention either 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”.

The High Court subsequently considered how the CJEU’s interpretation of EU law applied to the specifics of the Sky and SkyKick dispute. The judge, Lord Justice Arnold, curbed the scope of trade marks owned by Sky after he ruled Sky had partly registered them in bad faith. He said Sky had deliberately registered trade marks for goods and services they had no intention of using their rights for, citing its “deliberate strategy” of seeking broad trade mark protection without any commercial justification and with the intention of using the marks as a “legal weapon”. 

However, following an appeal by Sky, the Court of Appeal said that merely applying for a mark to cover a very broad range of goods and services is not evidence of bad faith. Similarly, it said it will not automatically be bad faith if the applicant does not intend to use the marks for all of those goods and services – more is needed to demonstrate a bad faith registration.

According to the Court of Appeal, for the purposes of establishing there has been a bad faith trade mark registration, it is necessary to show that the applicant has no commercial justification for applying to cover those goods and services, meaning no intention to use the mark in respect of them, so that the sole objective of the applicant is to undermine the interests of third parties or obtain an exclusive trade mark right for purposes other than indicating that those goods and services originate from the applicant. An applicant for a trade mark 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 to avoid an accusation of bad faith.

The Court of Appeal overturned Lord Justice Arnold’s finding of bad faith. It considered Sky to have good commercial justification for applying for broad specifications of goods and services. This included high levels of recognition of the Sky brand, meaning that a broader penumbra of protection was justifiable, as well its previous prolific growth of the business and future expansion plans. 

The Supreme Court is now to consider the legal test for ‘bad faith’ trade mark registrations following an appeal by SkyKick against the Court of Appeal’s judgment.

The significance of the Supreme Court’s ruling

After Brexit, UK trade mark law and practice remains more or less unchanged from the position under EU law, which is highly harmonised across EU member states. The Supreme Court’s decision in the SkyKick v Sky case could, however, herald the first significant divergence from EU trade mark law in the UK since Brexit and change both how trade marks are prosecuted and how the concept of ‘bad faith’ registrations is treated.

The CJEU’s ruling in the context of this litigation on ‘bad faith’ remains good law in the EU, as does its findings on other points the case has raised.

Specifically, the CJEU also ruled that EU trade marks or national trade marks registered in an EU country "cannot be declared wholly or partially invalid on the ground that terms used to designate the goods and services in respect of which that trade mark was registered lack clarity and precision". That said, it found that a lack of clarity and precision could lead a trade mark to be subsequently revoked if it can be shown the marks have not been put to "genuine use" in respect of the goods or services for which they were registered.

In considering the test for ‘bad faith’ registrations in the UK, the Supreme Court may take a different view from the CJEU over the precision required in trade mark applications, as well as over the degree to which intent to use the marks is necessary or registrations require commercial justification.

Currently, trade mark law in both the UK and EU provides scope for the registration of reasonably broad specifications of goods and services at application. This contrasts with the position in the US where a greater degree of precision is necessary and must reflect the activities businesses are involved in.

Brand owners in the US are also obliged to prove, on a frequent basis, the use of their trade mark. In the UK and EU, trade mark holders effectively have at least five years from the point of registration before their marks might be revoked for a lack of ‘genuine use’. The Supreme Court may reflect on this when considering what constitutes a bad faith trade mark registration.

Pinsent Masons is hosting an interactive event at its offices in London on 6 July 2023, under the auspices of the International Trademark Association, where practising trade mark experts from the UK and EU will anticipate the Supreme Court’s decision in the SkyKick v Sky case. Attendees will hear opposing views on which way the court should rule and why, and discuss the practical implications of each outcome for brand owners around prosecution and enforcement strategy.