Trade mark registrations : UK Supreme Court rules that the Sky isn't the limit

Last week the UK Supreme Court issued its ruling in the case of SkyKick UK Ltd and another (Appellants) v Sky Ltd and others (Respondents) [2024] UKSC 36. This is a long-standing dispute which concerns trade mark infringement and registration of trade marks in bad faith. The ruling has significant implications for businesses who seek to have their brands protected by way of trade marks and those who advise them.

Background

Sky Ltd ("Sky") raised a trade mark infringement claim in the High Court of Justice against Skykick UK Ltd ("Skykick"). Sky is a British broadcaster and telecommunications company and Skykick provides cloud management software for IT solution providers. Sky alleged infringement of its trade marks across a broad range of its goods and services under section 10(2) and (3) of the Trade Marks Act 1994 (the "1994 Act"). Skykick defended the claim and counterclaimed to challenge the validity of Sky Ltd's trade marks on the grounds of bad faith. Skykick relied on section 3(6) of the 1994 Act which sets out that a trade mark shall not be registered if, or to the extent that, the application is made in bad faith. This is a common defensive tactic in trade mark infringement disputes.

Skykick argued that Sky Ltd adopted a strategy of applying for a broad range of trade marks, across a variety of sectors, in respect of multiple goods and services (even those for which Skykick alleged Sky did not trade in its ordinary course of business and for which it had no commercial interest). This strategy, Skykick contended, was intended to block competitors and was therefore in bad faith.

At first instance, the High Court found that Sky had acted in bad faith and that its trade marks were partially invalid, but also found that SkyKick had infringed Sky's trade marks through its email migration and cloud storage services. In contrast, the Court of Appeal took a different view and allowed Sky's appeal. It held that Sky had not acted in bad faith in terms of section 3(6) of the 1994 Act.

Following that decision, Skykick appealed to the Supreme Court on the issue of bad faith. The Supreme Court was presented with the following issues to determine:

(1) What is the test for determining "bad faith" in relation to s.3(6) of the Trade Marks Act 1994?

(2) If such bad faith is found, what is the correct approach to determining the specification that the proprietor of the trademark should be permitted to retain?

The Decision

The Supreme Court (consisting of a bench of 5 Supreme Court justices led by Lord Kitchin) has now unanimously upheld the decision of the court at first instance. The Supreme Court has found that the High Court was correct in finding that the Sky trade marks were registered in bad faith to the extent that it did and that the Court of Appeal had erred in overturning that decision.

In particular, at paragraph [320] Lord Kitchin found that the trial judge 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."

The Supreme Court determined that an applicant for registration of a trade mark is not required to have a settled or developed intention to sell or supply the goods or services for which it seeks protection at the time the application is filed. Equally, it is not required to have a business in those goods and services. However, the position is different if the applicant has no genuine intention of exploring the viability of business under the mark but nevertheless intends to vigorously enforce the registration across the full range of goods and services for which it is registered (see paragraph [233]). The Supreme Court noted that in Sky's case some of the specifications of goods and services were outlined so broadly in certain instances it included all goods and services within specific classes. Ultimately, the Supreme Court concluded that Sky had sought widespread protection irrespective of whether or not it was commercially necessary.

The Supreme Court also deemed it relevant that Sky originally relied upon the full range of goods and services for each of the Sky trade marks it had registered. However, around 5 weeks before trial Sky narrowed the scope of goods and services it was relying on for its claim and narrowed it further during its closing submissions. The Supreme Court found that this sequence of events was significant as it supported the argument of Skykick that Sky had applied to register its trade marks in respect of a range of goods and services that it did not intend 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" (see paragraph [318]).

The Sky is no longer the limit

This decision will have an impact on the approach which businesses take when registering trade marks. It will no longer be acceptable to take an overly cautious, broad approach to the registration of trade marks in a range of different classes when there is no intention to use those trade marks. Moreover, there is now a risk that existing trade marks could be challenged on the basis that the specifications are far-reaching or do not align with a business's commercial practices.

Businesses should be mindful when registering trade marks to ensure that the marks are intended for genuine commercial use. It is crucial that businesses retain any contemporaneous records from the time of filing their trade marks as this may provide useful supporting evidence of its intention at the relevant time. This may serve as invaluable evidence of good faith should the mark be subject to challenge at a later date.

If you wish to discuss the impact of this decision on your business or the use of trade marks as part of your brand protection strategy more generally, please contact a member of the IP, Technology & Data team or your usual contact at Brodies.