SkyKick – takeaways for trade mark owners

In a lengthy legal battle, the media and telecoms giant Sky Ltd (formerly Sky Plc) sued computer software company SkyKick UK Ltd for trade mark infringement and passing off. In SkyKick UK Ltd and Anor v Sky Ltd and Ors, the Supreme Court allowed SkyKicks’s appeal in part, agreeing with the High Court that Sky Ltd’s SKY marks were partly applied for in bad faith. Does this mean that the holders of trade marks with broad specifications should panic? 

Sky’s trade marks were incredibly broad. Its house mark extended to, among other goods and services, bleaching preparations, fuel additives for enhancing combustion of fuels and even whips. While other parties will no doubt have covered terms they have no intention of ever using, the Supreme Court took into account Sky’s behaviour in the lead-up to the trial. Sky had not only secured extremely broad registrations covering goods and services which it never had any intention to offer, but it was also prepared to rely on the full remit of their specifications against third parties.

In the UK, a trade mark applicant only requires an intention to use the mark. Once the registration is granted there is a five-year grace period to commence use, after which the registration may become vulnerable to revocation on the grounds of non-use. The result is that a UK registration can provide a broad monopoly right for five years without any use.

While this ruling does not find that a broad specification is prima facie evidence of bad faith, it does seek to reduce the abuse of the trade mark system. A trade mark applicant does not need to have a clear commercial strategy for every item covered, but the use of broad terms needs consideration. SkyKick shows that if a strategy of broad terms is coupled with enforcement of the resulting registration across that broad specification, this could be bad faith. A strategy described in the High Court decision as Sky obtaining broad registrations as ‘purely a legal weapon’ to use against third parties.

The UKIPO has yet to issue guidance about any change in procedure following this decision. It seems unlikely that existing registrations will require amendment (bar any third-party challenges). That would be a significant task and arguably disproportionate. However, SkyKick should inform behaviour for future applications. Applicants should consider their motive for filing for broad terms and expect additional scrutiny at the examination stage where an application contains an eclectic list of goods and services. It remains to be seen if the UKIPO raises the issue of bad faith at this stage and where it draws the line at what constitutes a specification that is too broad and what is regarded as acceptable.

Any intention of obtaining an exclusive right for purposes other than those falling within the functions of a trade mark may open the application, and resulting registration, to scrutiny. According to the Supreme Court decision, bad faith is likely to be found when the trade mark system is not used for its primary purpose: ‘no intention (conditional or otherwise) to use the mark as a badge of origin constitutes an abuse – that is to say, a misuse of the system’.

This does not mean broad terms and varied specifications cannot be covered. It also does not mean that an applicant cannot cover terms they do not use the mark on.  This remains permitted, and indeed can be important for encouraging growing businesses to protect IP; however there should be a commercial rationale for the terms covered. At paragraph 235 the decision states ‘a failure to provide any satisfactory explanation may reinforce the inference and provide further support for a finding of bad faith’. It would be wise to have a paper trail documenting the commercial justification for seeking such wide protection.

When enforcing rights based on a broad specification, careful consideration should be given to the goods and services relied upon. A reliance on all terms covered in such a scenario could open rights-holders up to a bad faith challenge.

It remains to be seen if a new wave of challenges or counterclaims relying on the ground of bad faith arises from this decision.

The important points for trade mark owners to take away from this decision are:

1.    Broad specifications are permitted, and registrations cannot be invalidated solely on the basis that they are broad.

2.    However, where a broad term has natural subcategories, with the examples of ‘computer programs’ and ‘computer services’ provided in the decision, the selection of such wide terms must be carefully considered and justifiable, otherwise the subcategories should be used.

3.    Where such broad terms are justifiable, it is worth also including narrower sub-categories where possible. This can be useful to ensure that future challenges to third-party use or applications can be more easily based on subcategories and help with the specification that may be retained if the registration is challenged.

4.    If a third party challenges a specification that it considers to be too broad, and demonstrates that the owner had no established or intended use for its mark for goods and services covered, there could be a finding of bad faith and the specification may be significantly narrowed by the court. This may have unintended consequences.

5.    If some terms within a specification are found to have been filed in bad faith, this does not mean the whole registration was filed in bad faith and there may be terms that remain valid.

6.    As the UKIPO was proactive in these proceedings it would not be surprising if guidance were issued as to changes in practice relating to broad specifications, most likely at the examination stage but possibly covering post-registration challenges too.

Clearly, trade mark owners need to receive sound advice to understand the legal and commercial exposure of filing a broad or narrow specification. Broad specifications may still be justified, but where such terms are covered, there should be documented commercial justification for seeking such wide protection.

Charlotte Duly is head of brand protection at Charles Russell Speechlys, London