The Appeal - Sky v Skykick
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| Royal Courts of Justice Author Dr Neil Clifton Licence CC BY-SA BY-SA 2.0 Source Wikimedia Commons |
Court of Appeal (Lord Justice Newey, Lord Justice Nugee and Sir Christopher Floyd) Sky Ltd and others v Skykick, UK Ltd and another (Rev2) [2021] EWCA Civ 1121 (26 July 2021)
The issue before the Court of Appeal in Sky Ltd and others v Skykick, UK Ltd and another (Rev2) [2021] EWCA Civ 1121 (26 July 2021) was whether Sky Ltd., Sky International AG and Sky UK Ltd. could prevent Skykick UK Ltd and Skykick Inc. from using the sign SKYKICK in relation to email migration and cloud storage services. I summarized the dispute as follows in Trade marks - Sky v Skykick, The Final Chapter on 9 May 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 litigation led to no less than four first instance judgments and a reference of the Court of Justice of the European Union.
After the case returned from Luxembourg Lord Justice Arnold (i) declared the claimants' UK and EU trade marks to be invalid to the extent specified in a schedule to his order; (ii) dismissed their claim for passing off; (iii) dismissed the defendants' counterclaim alleging lack of clarity and precision in the wording of the lists of goods and services covered by the trade marks; and (iv) (save to the extent provided for in the Schedule referred to in (i)) made no order on the counterclaim alleging bad faith in filing the trade marks. His lordship considered that the defendants' email migration and cloud storage services did infringe the trade marks in their restricted form. He accordingly granted the claimants an injunction to restrain the defendants from infringing the trade marks (as well as any post-Brexit UK trade mark equivalent to any of the EU trade marks), and monetary relief for past infringement.
The judge gave both sides permission to appeal on various issues. Sir Christopher Floyd gave Sky and its subsidiaries further permission to appeal. They appealed against the finding of partial invalidity and consequent restriction of the trade marks, and the dismissal of their passing-off claim. The SkyKick companies cross-appealed against the findings of infringement and sought further restriction of the goods and services in respect of which the claimants' marks could be used. The appeal came on before Lords Justices Newey and Nugee and Sir Christopher between 25 and 27 May 2021. The hearing was videoed and the recording can be seen on the Court of Appeal's YouTube channel. Sir Christopher delivered the lead judgment on 26 July 2021. Lords Justices Newey and Nugee delivered short concurring judgments. Their lordships allowed the Sky companies' appeal in relation to the partial invalidity of the trade marks for selected goods and services, but not further or otherwise. They also dismissed the Skykick companies' cross-appeal.
Sir Christopher said at para [104] of his judgment that he had reached the conclusion that Sky's appeal on the issue of invalidity on grounds of bad faith should be allowed partly for substantive and partly for procedural reasons. The trade marks upon which the Sky companies had relied, namely EU3 166 352, EU3 203 619, EU5 298 112, EU6 870 992 and UK2 500 604, had been registered for a very wide range of goods and services. The Skykick companies had argued that the claimants could not possibly have intended to use those marks in respect of all those goods and services and therefore the applications for registration of those marks had been made in bad faith.
As I said in Trade marks - Sky v Skykick, The Final Chapter, the Court of Justice had rejected that argument in Case C‑371/18, Sky plc and others v Skykick UK Ltd and another [2020] Bus LR 1550, [2020] EUECJ C-371/18, ECLI:EU: C:2020:45, [2020] WLR(D) 54, EU: C:2020:45, The Court had ruled:
"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."
"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."
Following that ruling, Skylick's argument that the registrations were invalid in their entirety could no longer be maintained. Nor could Skylick argue that an entire category of goods or services be declared invalid because there was bad faith in relation to only some of the goods or services which fall within it. It followed that the cross-appeal that the selected goods and services in the schedule to Lord Justice Arnold's order of 2 July 2020 should be deleted in their entirety had to be rejected.
Despite the Court of Justice's ruling, Lord Justice Arnold had held that categories of goods sn services such as "computer software" had been registered in bad faith even though Sky supplied many kinds of software on the ground that Sky had no intention of supplying all kinds of software. He concluded that there had been bad faith because Sky had "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..."
Sir Christopher pointed out the problem with that approach at para [116] of his judgment:
"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. Such an applicant is entitled to say 'I am using the mark for specific goods falling within description X. I have no idea precisely where my business in goods of that description will develop in the next 5 years, but there will undoubtedly be more such goods than there are now.' Such an applicant would always be forced to accept that there was no prospect whatsoever that it would use the mark for every variety of goods within the description. Such an applicant could not, however, be accused of bad faith in the light of its strategy for applying for protection of sufficient width to cover some further, as yet unformulated, goods within the same category. For this reason, I consider that the concession (see [102] above) that an applicant with but one item of computer software can apply in good faith for computer software as a whole to have been correctly made. It follows that the absence of a commercial rationale or strategy, if by that is meant a plan under which the mark is to be used for all goods or services within a category of the registration, is not relevant to the enquiry about bad faith."
Sir Christopher pointed out the problem with that approach at para [116] of his judgment:
"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. Such an applicant is entitled to say 'I am using the mark for specific goods falling within description X. I have no idea precisely where my business in goods of that description will develop in the next 5 years, but there will undoubtedly be more such goods than there are now.' Such an applicant would always be forced to accept that there was no prospect whatsoever that it would use the mark for every variety of goods within the description. Such an applicant could not, however, be accused of bad faith in the light of its strategy for applying for protection of sufficient width to cover some further, as yet unformulated, goods within the same category. For this reason, I consider that the concession (see [102] above) that an applicant with but one item of computer software can apply in good faith for computer software as a whole to have been correctly made. It follows that the absence of a commercial rationale or strategy, if by that is meant a plan under which the mark is to be used for all goods or services within a category of the registration, is not relevant to the enquiry about bad faith."
Sir Christopher did not think that the "no prospect of use" conclusion could apply to computer software where Sky had extensive use and expectations of further use. As to the "broad strategy/no justification conclusion", there was an obvious commercial justification for applying for computer software. Sky had a very substantial business in computer software which their trade mark for that description of goods and services would protect in accordance with the proper functions of a trade mark. It was not necessary to consider each of the other selected goods and services because Lord Justice Arnold had treated them all in the same way as he had treated computer software. Sir Christopher concluded at para [121] that he did not think that it was open to Lord Justice Arnold, in the absence of any further factor, to hold that any of the selected goods and services had been applied for in bad faith.
The other reason for allowing the appeal was that Sir Christopher believed that the procedure adopted by Lord Justice Arnold following the judgment of the Court of Justice had been unfair to Sky. No opportunity had been given to the claimants to ascertain or challenge the learned Lord Justice's reasoning for invalidating the selected goods and services.
Sir Christopher upheld Lord Justice Arnold's reasoning on passing off. He rejected Skykick's submissions in relation to cloud migration and cloud backup. Similarly, he rejected Sky's argument that it was entitled to judgment under art 9 (2) (c) of the EU trade mark regulation or s.10 (3) of the Trade Marks Act 1994.
The other reason for allowing the appeal was that Sir Christopher believed that the procedure adopted by Lord Justice Arnold following the judgment of the Court of Justice had been unfair to Sky. No opportunity had been given to the claimants to ascertain or challenge the learned Lord Justice's reasoning for invalidating the selected goods and services.
Sir Christopher upheld Lord Justice Arnold's reasoning on passing off. He rejected Skykick's submissions in relation to cloud migration and cloud backup. Similarly, he rejected Sky's argument that it was entitled to judgment under art 9 (2) (c) of the EU trade mark regulation or s.10 (3) of the Trade Marks Act 1994.
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