The Supreme Court's Judgment in SkyKick v Sky


UK Supreme Court
By Dietmar Rabich, CC BY-SA 4.0,
https://commons.wikimedia.org/w/index.php?curid=52871829

 













Jane Lambert

Supreme Court (Lords Reed (President), Lloyd-Jones, Kitchin, Hamblin and Burrows) SkyKick UK Ltd and another  v Sky Ltd and others (Rev1) [2024] UKSC 36 (13 Nov2024)

This was an appeal against the judgment of the Court of Appeal in Sky Ltd and others v Skykick, UK Ltd and another (Rev2) [2021] EWCA Civ 1121 (26 July 2021) which I discussed in The Appeal - Sky v Skykick on 10 Sept 2021. It was heard by Lords Reed, Lloyd-Jones, Kitchin, Hamblin and Burrows on 28 and 29 June 2023. Judgment allowing the appeal in part was handed down on 13 Nov 2024 (see SkyKick UK Ltd and another v Sky Ltd and others (Rev1) [2024] UKSC 36 (13 Nov 2024)).  While waiting for judgment to be delivered the parties settled their differences. The appellants applied with the respondents' agreement for leave to withdraw their appeal and the parties asked the Court not to deliver judgment.

The Issues

The Supreme Court rejected the application and request because of the importance of the following issue which Lord Kitchin summarized in para [2]:

"The central issue is whether a registration of a trade mark can be invalidated in whole or in part on the basis that the application to register the mark was made in bad faith because the applicant did not, at the time the application was made, have a genuine intention to use the mark in relation to some or all of the goods or services for which it sought protection."

His lordship set out the policy considerations in the following paragraphs:

"[3] ........... There are undoubtedly advantages in permitting a person to apply to register a trade mark without having made any use of it prior to the date of the application. It allows such a person to obtain fair protection for the mark for particular goods and services before starting to use it in the course of trade. It also makes the registration system for an unobjectionable mark simpler, quicker and cheaper for traders to use.
[4]   If, on the other hand, a person applies to register a mark without having made any use of it and without intending to use it in the course of trade in relation to the goods or services for which protection is sought, it may leave the trade mark system open to abuse. It may, for example, permit a person to apply to register a mark, not with the intention of using it to indicate the origin of any goods or services for which that person is responsible, but simply to block or undermine the otherwise innocent and unobjectionable activities of third parties."

Understanding the Judgment

This is an important decision but not an easy one to understand.  For those who are not already familiar with this litigation, the best place to start may be the video of Lord Kitchin's summary of the Court's judgment on YouTube.   There is also a press summary and case summary on the Supreme Court's website and video recordings of the hearing.  Readers may also find my case notes on the proceedings before Lord Justice Arnold and the Court of Appeal helpful.

The lead judgment was delivered by Lord Kitchin with the agreement of the other Justices of the Supreme Court,  It consisted of 475 paragraphs divided into 11 sections together with a 4-part appendix.  Those sections are as follows: 

The Appendix discusses the provisions on jurisdiction in Regulation (EU) 2017/1001 on the EU trade mark ("EUTM Regulation") and implementing regulations.

Lord Reed, the President of the Supreme Court, delivered a concurring judgment with the agreement of the other Justices in relation to the effect on those proceedings of the United Kingdom's withdrawal from the European Union.

The Claimants' Marks

As I said in my case note on the Court of Appeal's judgment in Sky Ltd and others v Skykick, UK Ltd and another (Rev2) [2021] EWCA Civ 1121 in NIPC Law on 26 July 2021, Sky Ltd. was the registered proprietor of the following European Union and United Kingdom trade marks:  EU3 166 352, EU3 203 619, EU5 298 112, EU6 870 992 and UK2 500 604, Lord Kitchin described them in more detail in para [14] of his judgment. 

The Trial

"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."

I added:

"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."

Lord Kitchin discussed the trial in greater detail between paras [78] and  [91] of his judgment.

The Reference to the CJEU

In Sky Plc and others v Skykick UK Ltd and other [2018] EWHC 943 (Ch) (27 April 2018) [2018] EWHC 943 (Ch) which Lord Kitchin discussed between paras [92] to [97] Mr Justice Arnold referred the following questions to the Court of Justice:

"(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."

The CJEU's 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."

The Further Hearing

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).

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.  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.32 (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".

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, the Sky companies had focused their claim on selected goods and services but they did not give up their claim to infringement of other parts of their specifications. 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 those companies 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.

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.

The Order

In Sky Ltd and others v Skykick UK Ltd and another [2020] EWHC 1735 (Ch) (2 July 2020) Lord Justice Arnold made his final order.  In addition to dismissing the claim for passing off, he declared Sky's marks to be invalid to the extent specified in a schedule to his order.  He dismissed SkyKick's counterclaim based on an alleged lack of clarity and precision in the wording of the lists of goods and services covered by Sky's marks.  Save to the extent provided for in a schedule to his order, he made no order on SkyKick's counterclaim alleging bad faith in filing the applications for Sky's marks. However, having found that SkyKick's email migration and cloud storage services did infringe those marks in a restricted form, he granted an injunction to restrain SkyKick from infringing the marks in that form and any comparable British mark following Brexit.

Court of Appeal

Lord Justice Arnold gave both sides permission to appeal on specific issues.  Upon an application to the Court of Appeal, Sir Cristopher Floyd gave Sky leave to appeal on other issues.  Sky appealed against the finding of partial invalidity and consequent restriction of their trade marks, and the dismissal of their passing-off claim.  SkyKick 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 Skykick's 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.  

Starting with the substantial reasons, he referred to the CJEU's ruling that when the absence of intention to use a trade mark in accordance with its essential functions concerns only certain goods or services, that application constitutes bad faith only in so far as it relates to those goods or services.  He held that 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.

In response to Lord Justice Arnold's finding of  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", Sir Christopher said 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 already made extensive use and expected to make further use of its marks in relation to software. As for 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.

Turning to the procedural grounds for allowing the appeal, Sir Christopher believed that the procedure adopted by Lord Justice Arnold following the judgment of the CJEU had been unfair to Sky because no opportunity had been given to them to ascertain or challenge the learned Lord Justice's reasoning for invalidating the selected goods and services.

The Appeal to the Supreme Court

SkyKick appealed against the order of the Court of Appeal. It contended that the Lords Justices had made a series of errors in the way they had approached the issues before them. They failed to appreciate the major significance of the trial judge's findings that Sky had framed the specifications of the goods and services for which they made their applications to register their marks far too broadly and without reference to any intention to use them as trade marks in relation to most of the goods and services in respect of which the applications were made. SkyKick also contended that the Court of Appeal had no basis to interfere with the finding of the judge that Sky had made the applications in bad faith, and ought instead to have respected and affirmed that finding. SkyKick accordingly sought a declaration of invalidity in relation to six out of the eight groups of selected goods and services. SkyKick also argued that the Court of Appeal fell into error in finding that they had wrongly failed to plead their case based on alleged bad faith filing, and fell into further error in finding that the procedure adopted by the judge was unfair.

The appellants invited the Supreme Court to:
(i) declare that each of Sky's marks was invalid on the basis that each application was made in bad faith in respect of each of the specified terms listed in Sky's selected goods and sservices save for "telecommunications" and "electronic mail services"; alternatively,
(ii) order that the specifications be amended in the manner advanced by SkyKick before the High Court;
(iii) dismiss this action in its entirety; and
(iv) award SkyKick their costs.

Sky supported the Court of Appeal's order for the reasons given by Sir Christopher in his judgment. They also argued that the order was justified because SkyKick had infringed several of Sky's marks.

Before addressing the issues Lord Kitchin observed that the action had begun while the UK was still a member of the European Union and EU trade marks applied to the UK but the appeals to the Court of Appeal and Supreme Court had been made after 31 Dec 2020 when European Union trade marks had ceased have effect in this country.  To prevent a loss of rights he noted that any EU trade mark registered before that date is treated as if it had been registered, under the 1994 Act, in respect of the same goods or services.  His lordship said that he had to deal with the implications of this migration and repopulation of the UK trade mark register and how it affects the contention by SkyKick that the applications for the trade marks in issue in these proceedings were made in bad faith. He also had to decide whether the Supreme Court had any jurisdiction to consider EU trade mark issues.

Bad Faith


Lord Kitchin said that although it had never been an absolute ground for refusal of an application for the registration of an EU trade mark that the application was made in bad faith it was and always had been an absolute ground of invalidity of a registered EU mark. That ground may be relied upon before the EU Intellectual Property Office, and by counterclaim to a claim for infringement in any designated EU trade mark court. He noted that there was no definition of bad faith in Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (codification) (Text with EEA relevance) OJ L 154, 16.6.2017, p. 1–99 but there was an extensive body of case law from the CJEU and the General Court on what constitutes bad faith. The circumstances in which an application to register a sign as a trade mark had been made in bad faith fell into two categories:

"(i) where the application was made, not with the intention of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties; or
(ii) where the application was made with the intention 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, in particular the essential function of indicating origin - and so enabling the consumer to distinguish the goods and services of one undertaking from others which have a different origin."

His lordship considered the cases that fell within one or other of those categories and discerned the following principles in para [240]:

"(i) It is an absolute ground of invalidity of an EU trade mark that the application for that registered mark was made in bad faith, and this ground may be relied upon before OHIM (or, now, the EUIPO) or by means of a counterclaim in infringement proceedings (C-529/07, Lindt & Sprüngli AG v Franz Hauswirth GmbH  EU: C:2009:361; [2010] Bus LR 443; [2009] ETMR 56 para 34).
(ii) The date for assessing whether an application to register an EU trade mark was made in bad faith is the date the application for registration was made (Lindt, para 35).
(iii) Bad faith in this context is an autonomous concept of EU law which must be given a uniform interpretation in the European Union and must be interpreted in the context of Directive 89/104 in the same manner as in the context of Regulation 40/94 (C-320/12 Malaysia Dairy Industries Pte Ltd v Ankenaevnet for Patenter og Varemaerker EU: C:2013:435; [2013] Bus LR 1106; [2013] ETMR 36, para 29; Case C-371/18, Sky Plc and others v SkyKick UK Ltd and another  ECLI:EU: C:2020:45, [2020] WLR(D) 54, [2020] Bus LR 1550, [2020] ETMR 24, [2020] EUECJ C-371/18, [2020] RPC 4, EU: C:2020:45 para 73).
(iv) While, in accordance with its usual meaning in everyday language, the concept of bad faith presupposes the presence of a dishonest state of mind or intention, the concept must also be understood in the context of trade mark law, which involves the use of marks in the course of trade. Further, it must have regard to the objectives of the EU law of trade marks, namely the establishment and functioning of the internal market, and a system of undistorted competition in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable consumers, without any possibility of confusion, to distinguish those goods or services from those which have a different origin (Lindt, para 45; C-104/18, Koton Mağazacilik Tekstil Sanayi ve Ticaret AS v European Union Intellectual Property Office (EUIPO) [2019] EUECJ C-104/18P, EU: C:2019:724, ECLI:EU: C:2019:724 para 45).
(v) Consequently, the objection will be made out where the proprietor made the application for registration, not with the aim of engaging fairly in competition but either (a) with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties; or (b) with the intention 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, and in particular the essential function of indicating origin (Koton, para 46; Sky CJEU, para 75).
(vi) The intention of the applicant is a subjective matter, but it must be capable of being established objectively by the competent administrative or judicial authorities having regard to the objective circumstances of the case (Case T-663/19, Hasbro Inc v EUIPO, Kreativni Dogaaji d.o.o. (intervening) [2021] EUECJ T-663/19, EU: T:2021:211, [2021] ETMR 39, ECLI:EU: T:2021:211 EU: T:2021:211 paras 39 and 40; Koton, para 47).
(vii) The burden of proving that an application for a registered mark was made in bad faith lies on the party making the allegation. But where the circumstances of the case may lead to a rebuttal of the presumption of good faith, it is for the proprietor of the mark to explain and provide a plausible explanation of the objectives and commercial logic pursued by the application for registration (Hasbro, paras 42 and 43).
(viii) Whether the applicant was acting in bad faith must be the subject of an overall assessment, taking into account all of the factors relevant to the particular case (Lindt, para 37).
(ix) The applicant for a trade mark is not required to indicate or to know precisely when the application is filed or examined, the use that will be made of it (Sky CJEU, para 76; C-541/18, AS v Deutsches Patent-und Markenamt (C-541/18)  [2019] WLR(D) 510, [2019] ETMR 59, EU: C:2019:725, [2019] EUECJ C-541/18, [2019] Bus LR 2248, ECLI:EU: C:2019:725, para 22).
(x) Nevertheless, the registration by an applicant of a mark without any intention to use it in relation to the goods and services covered by the registration may constitute bad faith where there is no rationale for the application in the light of the aims referred to in Regulation 40/94 and Directive 89/104 (Sky CJEU, para 77).
(xi) Such bad faith may, however, be established only where there are objective, relevant and consistent indicia tending to show that, when the application was filed, the applicant for registration had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark (Sky CJEU, para 77).
(xii) It follows that the bad faith of the applicant cannot be presumed on the basis of a mere finding that, at the time of filing the application, the applicant had no economic activity corresponding to the goods and services referred to in the application (Sky CJEU, para 78).
(xiii) When the absence of an intention to use the 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 constitutes making the application in bad faith only in so far as it relates to those goods or services (Sky CJEU, para 81).
(xiv) If, at the end of the day, the court concludes that, despite formal observance of the relevant rules and conditions for obtaining registration, the purpose of the rules has not been achieved, and that there was an intention to take advantage of the rules by creating artificially the conditions laid down for obtaining the registration, this may amount to an abuse sufficient to find that the application was made in bad faith (see, for example, Hasbro, para 72).
(xv) Directive 89/104 does not preclude a provision of national law under which an applicant for registration must state that the mark is being used in relation to the goods or services in relation to which it is sought to register the mark, or that the applicant has a bona fide intention that it should be used, provided that infringement of such an obligation cannot constitute a ground for invalidity. It may, however, constitute evidence for the purposes of establishing possible bad faith on the part of the applicant when the application was filed (Sky CJEU, paras 86 and 87)."

The Approach of the Court of Appeal

At para [242] Lord Kitchin expressed the view that the Court of Appeal had erred in its analysis of the case law which meant that it adopted an unduly restrictive approach to the scope and content of the bad faith objection.  The Comptroller-General of Patents, Designs and Trade Marks (who had been invited by the Supreme Court to intervene in the proceedings) identified three aspects of the decision of the Court of Appeal that appeared to restrict the scope for third parties to invalidate trade mark registrations for lack of intention to use them, namely: 
(i) in respect of goods and services for which there is no prospect of use at all; 
(ii) in respect of overly broad descriptions of the owner's actual or intended goods and services; and 
(iii) the introduction of a requirement for the third party to identify precisely which goods and services the applicant should have applied for and which are the subject of the bad faith allegation
which Lord Kitchin found of great assistance.  He considered the first aspect between [245] and [248], the second between [259] amd [263] amd the third between [264] and [270].

As for applications for trade marks in respect of goods and services for which there is no prospect of use at all Lord Kitchin said in para [256] "the question in any such case is whether, absent an explanation and rationale consistent with the functions of a trade mark, it is reasonable to infer from the size and nature of the list of goods and services the subject of the application and all the other circumstances, including the size and nature of the applicant's business, that the application constituted, in whole or part, an abuse of the system and was for that reason made in bad faith." His lordship added that the Court of Appeal had said that "the extent to which Sky's reputation and brand recognition, its prolific expansion and so on, justified a wide claim would vary depending on whether one was discussing bleaching preparations or computer software." Lord Kitchin was not sure what the Court of Appeal meant by that remark but if it suggested that the extent to which Sky's reputation and brand recognition, its prolific expansion and so on, justified a wide claim would vary depending on whether one was discussing bleaching preparations or computer software he disagreed.

Turning to overly broad descriptions of the owner's actual or intended goods and services, Lord Kitchin thought it would be "anomalous for traders who use broad terminology to describe the goods and services for which they seek protection to find themselves in a more favourable position than those who use appropriate sub-categories to describe the same goods and services" adding that he would reject any interpretation of the legislation that necessarily leads to that conclusion.  He said at [260] that he could "see no reason why a person should be permitted to apply to register a mark or retain a registration in respect of distinct categories of goods or services in relation to which it never had any intention to use the mark, simply because it chose to use a broad description of those goods and services which meant they were encompassed together with goods or services about which no complaint is made."

Responding to Sir Christopher Floyd's concern of procedural unfairness, Lord Kitchin agreed that the party alleging bad faith should set out as clearly as possible the case that it advances and the order it seeks so that the other side is not taken by surprise and has a proper and appropriate opportunity to answer that case and resist the order sought.  However, his lordship recognized that the party seeking a declaration of invalidity without knowledge of the applicant's true intentions when it made the application to register the mark, is unlikely to be able to specify with any degree of precision the particular specification of goods and services to which the registration should be restricted.  These are matters of which only the applicant will have knowledge.  Lord Kitchin proposed the following solution in para [267]:

"In such a case the party seeking the declaration of invalidity may be constrained to explain its case that the application constituted an abuse by relying on the objective facts available to it and, in that way, to establish a case that, if unanswered, is likely to be accepted as sufficient to displace the presumption that an applicant was acting in good faith. It is then for the applicant (or owner, as the applicant may by that time have become) to answer that case so far as it is able and chooses to do so. That this is a permissible and often correct approach is evident from the reasoning of the CJEU and the General Court in the cases to which I have referred."

The Findings of the Court of Appeal

Between para [272] and para [296] Lord Kitchin reviewed the findings of the trial judge. He said at [297] that he thought it was "apparent that the judge's findings involved a careful assessment of the scope and extent of the specifications of goods and services of the Sky marks, the circumstances in which the applications came to be filed and the intentions of Sky in making and pursuing the applications in the form that they did." He considered the Court of Appeal's judgment between [299] and [312] and concluded at [314] that it could not be supported and that the reasons that the Court gave for reversing Lord Justice Arnold were not sustainable.  His reasons were as follows:

"[315] First, the Court of Appeal failed properly to appreciate the scope and component elements of the bad faith objection to the validity of a trade mark that the application was made in bad faith in respect of some or all of the goods or services for which protection was sought. Here I refer to the first two respects in which the Court of Appeal fell into error as a matter of principle and which I have addressed at paras 245-258 and 259-263 above. The reasoning of the Court of Appeal related to the approach to be adopted by the tribunal to an allegation of bad faith filing and in my opinion the errors it made fatally undermined the approach that it took and the conclusions to which it came.
[316] Secondly, I do not accept the judge made any material error in applying the relevant principles to the facts in the circumstances of this case. I have considered the reasoning of the judge in some detail in addressing the findings of fact that he made, the legal principles and the way the judge applied those principles to the facts. I have also considered the reasoning of the Court of Appeal. It seems to me, however, that the Court of Appeal has failed to identify any flaw or omission in the reasoning of the judge which would justify interfering with the main conclusions to which he came.
[317] Thirdly, I have also been persuaded that the Court of Appeal did not take into account properly or at all a number of highly significant facts and matters, namely that Sky originally relied upon the full range of the goods and services for which each of the SKY marks was registered, and that this range was in each case very broad indeed; that Sky maintained that position in the face of the bad faith objection until around five weeks before trial; and only at this point did they present a narrower range of goods and services as the basis of the claim. Furthermore, it was not until the time for closing submissions that Sky narrowed the range still further, and then crystallised it in the form of the Selected Goods and Services.
[318] This sequence of events is important for it provides powerful support for the general case advanced by SkyKick, namely that Sky had applied for and secured these registrations across a great range of goods and services which they never had any intention to sell or provide, and yet they were prepared to deploy the full armoury presented by these SKY marks against a trader whose activities were not likely to cause confusion and did not amount to passing off.
[319] SkyKick, on the other hand, always accepted that Sky had a perfectly legitimate interest in securing trade mark protection for the activities they had carried out and to which I have referred, and for any reasonable expansion and development of them. Nevertheless, SkyKick also made clear the basis of their case that the applications had been made in bad faith and that the Selected Goods and Services, though a step in the right direction, did not go far enough.
[320] Fourthly, in all these circumstances, it seems to me that the judge cannot be criticised for approaching the matter as he did; and further, that he had sufficient material before him on which properly to find that SkyKick had established that Sky had applied for and were prepared to take enforcement action for alleged infringement of the registrations of marks in respect of goods and services of such a range and breadth that it was implausible that Sky would ever provide them, or that Sky ever had any genuine intention (whether provisional or conditional) to provide them under the SKY marks."

On the question of procedural unfairness, Lord Kitchin said in [335]:

"In my view the judge was entitled to take the approach he did in all the circumstances of this case and having regard to all the steps in the proceedings that had already taken place. By this time the nature and basis for the claim for the declaration of invalidity had been signposted, each side had put forward narrower specifications of goods and services which they contended were appropriate, and the judge had made clear that if he were to find himself dissatisfied with the position taken by either side then he would have to decide for himself where in the middle the line should be drawn. No further fall back having been put forward by either side, he took that course. There was no surprise here and neither side was materially disadvantaged for any reason which could justify setting aside the order he made."

The Injunction

To determine SkyKick's appeal against the injunction that the Court of Appeal had upheld, Lord Kitchin said that the starting point was to identify the goods and services of which complaint had been made and the acts said to amount to an infringement. The next step was to identify the marks relied upon by Sky and the goods or services for which they were registered. The third step was to consider the basis for the alleged infringement.

The goods and services of which complaint was made were Cloud Migration and Cloud Backup, two "packages" offered by SkyKick to their actual and potential customers at or about the time of the commencement of proceedings.  Cloud Migration was a service that involved the wholesale migration of data from one platform to another although it was sometimes supplied with downloadable software known as the "SkyKick Outlook Assistant". Cloud Backup was also a service in that it provided cloud-based backup for users' data. Again, downloadable software was sometimes supplied. Both services were supplied to Microsoft Office 365 users.

The goods and services for which Sky had registered its marks was an electronic mail service. The Court of Appeal had held that the migration of data from one platform to another was not an email service. Lord Kitchin concluded that infringement by cloud migration in relation to electronic mail services had not been established, and the Court of Appeal was right so to hold.  As for Cloud Backup, he was satisfied that Lord Justice Arnold had made no error in determining that SkyKick's service fell within the registrations, and the Court of Appeal had made no error in declining to interfere with that conclusion.  He allowed the appeal in respect of Cloud Migration but not Cloud Backup.

Effect of Brexit

The last issue was whether UK courts retain jurisdiction to determine issues concerning EU trade marks that were pending before 31 Jan 2020 when EU law ceased to apply to the UK.  The Chancellor, Sir Julian Flaux, had decided that they did in EasyGroup Ltd v Beauty Perfectionists Ltd [2021] EWHC 3385 (Ch); [2022] Bus LR 146; [2022] FSR 8 and Mrs Justice Bacon had followed his decision in EasyGroup Ltd v Nuclei Ltd [2022] EWHC 901 (Ch); [2022] FSR 23.  In its submissions to the Supreme Court Sky argued that those decisions were wrong.  

Having considered the EU Trade Mark Regulation, the secondary legislation that facilitated the functioning of that Regulation in the UK, the European Union (Withdrawal) Act 2018 and The European Union (Withdrawal Agreement) Act 2020 and other authorities, his lordship turned to the Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community.  Art 67 (1) (b) of that Agreement provided:

"In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions that are related to such legal proceedings pursuant to Articles 29, 30 and 31 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council, Article 19 of Regulation (EC) No 2201/2003 or Articles 12 and 13 of Council Regulation (EC) No 4/2009, the following acts or provisions shall apply:
...............................................
(b) the provisions regarding jurisdiction of Regulation (EU) 2017/1001........."

His lordship said in para [451] of his judgment:

"On the interpretation of article 67 (1) (b) of the Withdrawal Agreement which I would hold to be correct:
(i) Articles 122 to 135 of the EUTM Regulation continue to have direct effect in the United Kingdom in the context of legal proceedings instituted before IP completion day before the designated EU trade mark court concerning the infringement, invalidity or revocation of an EU trade mark.
(ii) The designated court accordingly retains jurisdiction to hear and decide issues of infringement and validity concerning the relevant EU trade mark as provided for in these articles of the EUTM Regulation, and so will any courts hearing any appeals from any such decision.
(iii) Under article 130 of the EUTM Regulation, the jurisdiction in relation to EU trade marks includes the power to grant (or to continue) appropriate relief including an injunction to restrain infringement of the EU trade mark across the European Union, except where the court's jurisdiction is limited by article 126 (2). Such an injunction will normally be granted in cases where the court finds that the defendant has infringed or threatened to infringe the EU trade mark.
(iv) Where a claim or counterclaim for revocation or a declaration of invalidity succeeds, the order for revocation or a declaration of invalidity will apply and be effective across the European Union.
(v) Nevertheless, these provisions of the EUTM Regulation will not apply to the comparable trade mark (EU) which came into existence in the United Kingdom from IP completion day and is to be treated as a national mark. The court seised of the dispute in the United Kingdom will, however, in its own capacity, as a national court, have the power to grant an injunction to restrain infringement of the comparable trade mark (EU) as from IP completion day, and to order any other appropriate relief in respect of any such actual or threatened infringement of that mark within the United Kingdom. It will also have the power, where appropriate, to make an order for the revocation of the mark or to make a declaration as to its invalidity and in some cases may be bound to do so under article 54 (3) of the Withdrawal Agreement."

As I mentioned above, Lord Reed delivered a concurring judgment on the continuing jurisdiction of UK courts in respect of pending litigation concerning EU trade marks between paras [476] and [514].

Summary

Lord Kitchin summarized his decision at [474]:

"(i) Arnold J was entitled to find that the SKY marks were applied for in bad faith to the extent that he did and to make a declaration to that effect in the terms set out in his order of 3 July 2020. The Court of Appeal was wrong to reverse that finding and to set aside that part of his order.
(ii) The Court of Appeal made no error in approaching the issue of infringement on the basis of the specifications of goods and services as amended by the judge, and in finding that:
(a) infringement by the Cloud Migration service had not been established and the judge fell into error in finding to the contrary; but
(b) the judge was entitled to find that the Cloud Backup service did amount to an infringement of the SKY marks so far as they were registered for the relevant computer services."

The final paragraph of his judgment confirmed that arts 122-135 of the EU Trade Mark Regulation have direct effect in the UK in the context of proceedings pending before a UK designated EU trade mark court on 31 Jan 2020.  Those courts continue to have the jurisdiction provided for by those articles until the conclusion of the cases before them, as do any domestic courts hearing an appeal from their decisions in those cases. Further, the United Kingdom has for that purpose and by operation of the saving in para 7 (2) of Sched. 5 to the Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/269), maintained the designation of those courts as EU trade mark courts.

Comment

This is an important case for two reasons.  First, it settles the issue of whether the registration of a trade mark can be invalidated in whole or in part on the basis that the application to register the mark was made in bad faith because the applicant did not, at the time the application was made, have a genuine intention to use the mark in relation to some or all of the goods or services for which it sought protection.  Particularly useful in this regard will be the 15 principles that Lord Kitchin discerned from the CJEU case law on bad faith that he set out at para [240] of his judgment.  The second reason why this judgment is important is that it dispels uncertainty over the continuing jurisdiction of UK courts in pending litigation over EU trade marks.   Anyone wishing to discuss this article may call me on +44 (0)20 7404 5252 during UK office hours or send me a message through my contact form.

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