Trade marks - Sky v Skykick, The Final Chapter
Chancery Division (Lord Justice Arnold) Sky Plc and others v Skykick UK Ltd and another [2020] EWHC 990 (Ch) (29 April 2020)
On 23 May 2016 Sky PLC and its subsidiaries Sky AG and Sky UK Ltd. ("Sky") issued proceedings against Skykick UK Ltd and Skykick Inc.("Skykick") for infringement of their EU and UK trade marks and passing off. Skykick denied infringement and passing off and counterclaimed for declarations that the trade marks were wholly or partially invalid on the grounds that the specified goods and services were unclear and imprecise and the applications for those trade marks had been made in bad faith.
The Proceedings
The action and counterclaim came on for trial before Mr Justice Arnold as he then was. In Sky Plc and others v Skykick UK Ltd and another [2018] EWHC 155 (Ch), [2018] ETMR 23, [2018] RPC 5 the learned judge dismissed the claim for passing off but took the view that the trade marks would be infringed if they were valid. He said at paragraph [358] of his judgment that he could not rule on the marks' validity because Skyjack had raised issues that required a reference to the Court of Justice under art 267 of the Treaty on the Functioning of the European Union. Those issues were whether a registered trade mark could be declared invalid on the grounds that the goods or services in the specification were unclear or imprecise and whether it constitutes bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or service.
The Reference
Mr Justice Arnold referred the following questions to the Court:
"(1) Can an EU trade mark or a national trade mark registered in a Member State be declared wholly or partially invalid on the ground that some or all of the terms in the specification of goods and services are lacking in sufficient clarity and precision to enable the competent authorities and third parties to determine on the basis of those terms alone the extent of the protection conferred by the trade mark?
(2) If the answer to question (1) is yes, is a term such as “computer software” too general and covers goods which are too variable to be compatible with the trade mark’s function as an indication of origin for that term to be sufficiently clear and precise to enable the competent authorities and third parties to determine on the basis of that term alone the extent of the protection conferred by the trade mark?
(3) Can it constitute bad faith simply to apply to register a trade mark without any intention to use it in relation to the specified goods or services?
(4) If the answer to question (3) is yes, is it possible to conclude that the applicant made the application partly in good faith and partly in bad faith if and to the extent that the applicant had an intention to use the trade mark in relation to some of the specified goods or services, but no intention to use the trade mark in relation to other specified goods or services?
(5) Is section 32 (3) of the UK Trade Marks Act 1994 compatible with [Directive 2015/2436] and its predecessors?’
S.32 (3) provides:
On 23 May 2016 Sky PLC and its subsidiaries Sky AG and Sky UK Ltd. ("Sky") issued proceedings against Skykick UK Ltd and Skykick Inc.("Skykick") for infringement of their EU and UK trade marks and passing off. Skykick denied infringement and passing off and counterclaimed for declarations that the trade marks were wholly or partially invalid on the grounds that the specified goods and services were unclear and imprecise and the applications for those trade marks had been made in bad faith.
The Proceedings
The action and counterclaim came on for trial before Mr Justice Arnold as he then was. In Sky Plc and others v Skykick UK Ltd and another [2018] EWHC 155 (Ch), [2018] ETMR 23, [2018] RPC 5 the learned judge dismissed the claim for passing off but took the view that the trade marks would be infringed if they were valid. He said at paragraph [358] of his judgment that he could not rule on the marks' validity because Skyjack had raised issues that required a reference to the Court of Justice under art 267 of the Treaty on the Functioning of the European Union. Those issues were whether a registered trade mark could be declared invalid on the grounds that the goods or services in the specification were unclear or imprecise and whether it constitutes bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or service.
The Reference
Mr Justice Arnold referred the following questions to the Court:
"(1) Can an EU trade mark or a national trade mark registered in a Member State be declared wholly or partially invalid on the ground that some or all of the terms in the specification of goods and services are lacking in sufficient clarity and precision to enable the competent authorities and third parties to determine on the basis of those terms alone the extent of the protection conferred by the trade mark?
(2) If the answer to question (1) is yes, is a term such as “computer software” too general and covers goods which are too variable to be compatible with the trade mark’s function as an indication of origin for that term to be sufficiently clear and precise to enable the competent authorities and third parties to determine on the basis of that term alone the extent of the protection conferred by the trade mark?
(3) Can it constitute bad faith simply to apply to register a trade mark without any intention to use it in relation to the specified goods or services?
(4) If the answer to question (3) is yes, is it possible to conclude that the applicant made the application partly in good faith and partly in bad faith if and to the extent that the applicant had an intention to use the trade mark in relation to some of the specified goods or services, but no intention to use the trade mark in relation to other specified goods or services?
(5) Is section 32 (3) of the UK Trade Marks Act 1994 compatible with [Directive 2015/2436] and its predecessors?’
S.32 (3) provides:
"The application shall state that the trade mark is being used, by the applicant or with his consent, in relation to those goods or services, or that he has a bona fide intention that it should be so used."
In its judgment in Case C‑371/18, Sky plc and others v Skykick UK Ltd and another [2020] WLR(D) 54, EU:C:2020:45, ECLI:EU:C:2020:45, [2020] EUECJ C-371/18, the Court replied:
"1. Articles 7 and 51 of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, as amended by Council Regulation (EC) No 1891/2006 of 18 December 2006, and Article 3 of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks must be interpreted as meaning that a Community trade mark or a national trade mark 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.
2. Article 51 (1 ) (b) of Regulation No 40/94, as amended by Regulation No 1891/2006, and Article 3 (2) (d) of First Directive 89/104 must be interpreted as meaning that a trade mark application made without any intention to use the trade mark in relation to the goods and services covered by the registration constitutes bad faith, within the meaning of those provisions, 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. When the absence of the intention to use the trade mark in accordance with the essential functions of a trade mark concerns only certain goods or services referred to in the application for registration, that application constitutes bad faith only in so far as it relates to those goods or services.
In its judgment in Case C‑371/18, Sky plc and others v Skykick UK Ltd and another [2020] WLR(D) 54, EU:C:2020:45, ECLI:EU:C:2020:45, [2020] EUECJ C-371/18, the Court replied:
"1. Articles 7 and 51 of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, as amended by Council Regulation (EC) No 1891/2006 of 18 December 2006, and Article 3 of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks must be interpreted as meaning that a Community trade mark or a national trade mark 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.
2. Article 51 (1 ) (b) of Regulation No 40/94, as amended by Regulation No 1891/2006, and Article 3 (2) (d) of First Directive 89/104 must be interpreted as meaning that a trade mark application made without any intention to use the trade mark in relation to the goods and services covered by the registration constitutes bad faith, within the meaning of those provisions, 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. When the absence of the intention to use the trade mark in accordance with the essential functions of a trade mark concerns only certain goods or services referred to in the application for registration, that application constitutes bad faith only in so far as it relates to those goods or services.
3. First Directive 89/104 must be interpreted as not precluding a provision of national law under which an applicant for registration of a trade mark must state that the trade mark is being used in relation to the goods and services in relation to which it is sought to register the trade mark, or that he or she has a bona fide intention that it should be so used, in so far as the infringement of such an obligation does not constitute, in itself, a ground for invalidity of a trade mark already registered."
Interpreting and Applying the CJEU's Judgment
Although a hearing had been listed for 2 April 2020 to consider the Court's judgment, the parties agreed to make written submissions instead. After considering those submissions, Lord Justice Arnold handed down his judgment in Sky Plc and others v Skykick UK Ltd and another [2020] EWHC 990 (Ch) (29 April 2020).
Invalidity on Grounds of Lack of Clarity and Precision
In view of the CJEU's ruling that the trade marks cannot be declared wholly or partly invalid on the ground that their specifications are lacking in clarity or precision, it followed that that part of the counterclaim had to be dismissed.
Interpreting and Applying the CJEU's Judgment
Although a hearing had been listed for 2 April 2020 to consider the Court's judgment, the parties agreed to make written submissions instead. After considering those submissions, Lord Justice Arnold handed down his judgment in Sky Plc and others v Skykick UK Ltd and another [2020] EWHC 990 (Ch) (29 April 2020).
Invalidity on Grounds of Lack of Clarity and Precision
In view of the CJEU's ruling that the trade marks cannot be declared wholly or partly invalid on the ground that their specifications are lacking in clarity or precision, it followed that that part of the counterclaim had to be dismissed.
Invalidity on Grounds of Bad Faith
As to Skyjack's contention that Sky's trade marks had been registered in bad faith, the judge referred to paragraphs [74] to [78] of the CJEU's judgment and paragraphs [250] and [251] of his own before concluding at paragraph [21]]:
"In my judgment Sky applied for the Trade Marks partly in bad faith in each of the three ways referred to in the Main Judgment at [251]. Not merely did they not intend to use the Trade Marks in relation to some goods and services covered by the specifications at the application dates, but there was no foreseeable prospect that they would ever intend to use the Trade Marks in relation to such goods and services. Moreover, Sky made the applications pursuant to a deliberate strategy of seeking very broad protection of the Trade Marks regardless of whether it was commercially justified. Sky thus applied for the Trade Marks with the intention of obtaining an exclusive right for purposes other than those falling within the functions of a trade mark, namely purely as a legal weapon against third parties, whether in threats of infringement claims or actual infringement claims or oppositions to third party applications for registration (as to which, see also the Main Judgment at [69]-[72])."
As to Skyjack's contention that Sky's trade marks had been registered in bad faith, the judge referred to paragraphs [74] to [78] of the CJEU's judgment and paragraphs [250] and [251] of his own before concluding at paragraph [21]]:
"In my judgment Sky applied for the Trade Marks partly in bad faith in each of the three ways referred to in the Main Judgment at [251]. Not merely did they not intend to use the Trade Marks in relation to some goods and services covered by the specifications at the application dates, but there was no foreseeable prospect that they would ever intend to use the Trade Marks in relation to such goods and services. Moreover, Sky made the applications pursuant to a deliberate strategy of seeking very broad protection of the Trade Marks regardless of whether it was commercially justified. Sky thus applied for the Trade Marks with the intention of obtaining an exclusive right for purposes other than those falling within the functions of a trade mark, namely purely as a legal weapon against third parties, whether in threats of infringement claims or actual infringement claims or oppositions to third party applications for registration (as to which, see also the Main Judgment at [69]-[72])."
He also found that Sky had made a false declaration under s.36 (3) of the Trade Marks Act 1994.
In view of the last sentence of the second paragraph of the CJEU's ruling, the judge could not declare the whole registration invalid because Sky had used or intended to use the marks in respect of some of the specified goods and services. Even though bad faith had been proved to the extent that Sky had applied to register the trade marks for "computer software" as part of their strategy without any commercial justification, the Sky companies were entitled to some protection that was slightly wider than their actual use.
In order to devise a specification that reflected the extent of the bad faith proved, but no more, his lordship decided that the trade marks should be declared invalid in relation to "computer software" except for
"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".
In view of the last sentence of the second paragraph of the CJEU's ruling, the judge could not declare the whole registration invalid because Sky had used or intended to use the marks in respect of some of the specified goods and services. Even though bad faith had been proved to the extent that Sky had applied to register the trade marks for "computer software" as part of their strategy without any commercial justification, the Sky companies were entitled to some protection that was slightly wider than their actual use.
In order to devise a specification that reflected the extent of the bad faith proved, but no more, his lordship decided that the trade marks should be declared invalid in relation to "computer software" except for
"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".
He limited "computer software supplied from the internet" in the same way as "computer software".
Similarly, he restricted "computer software and telecoms apparatus to enable connection to databases and the internet" to "computer software and telecoms apparatus to enable connection to databases of audio, visual and/or audiovisual content and documents; computer software and telecoms apparatus to enable connection to the internet", "data storage" to "storage of audio, visual and/or audio-visual content and documents" and "computer services for accessing and retrieving information/data via a computer or computer network" to "computer services for accessing and retrieving audio, visual and/or audio-visual content and documents via a computer or computer network".
Just before trial, Sky had focused their claim on selected goods and services but they did not give up their claim to infringement of other parts of their trade marks. Lord Justice Arnold put them to their election. He gave them 7 days from the date of the handing down of the judgment to withdraw their infringement claim in respect of those other goods and services. If Sky withdrew their infringement claim in respect of other parts of the trade marks within that period, the judge promised not to make any order on the counterclaim beyond the order he had already indicated. But he warned Sky that if they failed to withdraw their infringement claim in relation to other parts of the registrations he would consider the marks' validity and make appropriate declarations.
Just before trial, Sky had focused their claim on selected goods and services but they did not give up their claim to infringement of other parts of their trade marks. Lord Justice Arnold put them to their election. He gave them 7 days from the date of the handing down of the judgment to withdraw their infringement claim in respect of those other goods and services. If Sky withdrew their infringement claim in respect of other parts of the trade marks within that period, the judge promised not to make any order on the counterclaim beyond the order he had already indicated. But he warned Sky that if they failed to withdraw their infringement claim in relation to other parts of the registrations he would consider the marks' validity and make appropriate declarations.
Infringement under Art 9 (2) (b) of the Regulation and s.10 (2) (b) of the Act
Having found that Sky's registrations were at least partially valid in respect of electronic mail services, the learned judge found that SkyKick had infringed Sky's marks at least in so far as those marks are registered red for "electronic mail services". The fact that the marks are partially invalid in relation to other goods or services on the ground that they were applied for partly in bad faith did not affect that finding.
Conclusion
Thus endeth a lawsuit that required three hearings before Lord Justice Arnold as he now is, one to the Court of Appeal and another to the CJEU. Sky scraped home on electronic mail services but not much else. The Sky companies lost their passing off claim and part of their goods and services specification. The excursion to Luxembourg did result in a ruling that lack of clarity and precision is not fatal to a trade mark registration and that bad faith in applying for registration of some goods and services does not vitiate the whole mark. Should amplification or clarification of any part of this article be required, send me a message through my contact page.
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