A long running dispute between Sky Plc (Sky) and SkyKick has come to a head, with the UK Supreme Court providing clarity after eight years of contention on whether applying for broad specifications of goods and services is considered bad faith if there is no intention of use at the time of filing.
The UK Supreme Court has ruled that applying for a broad trade mark specification without an intention to use can constitute bad faith in the UK. The decision is likely to leave owners scrambling to review their portfolios while new market entrants will feel they can challenge overly broad specifications with more confidence.
Background
This dispute began in 2016 when British media and telecommunications company Sky brought actions against cloud software provider SkyKick for trade mark infringement, claiming that their European Union SKY trade mark registrations were being infringed by SkyKick’s use of SKYKICK for cloud migration and cloud backup services.
In response, SkyKick claimed that the SKY registrations in the EU were invalid as they had unduly broad specifications (most notably, “computer software” in class 9), and that as Sky did not genuinely intend to use their mark for all these goods and services, the marks were filed in bad faith with the deliberate strategy of obtaining broad protection to restrict other parties.
The High Court initially stated that several of Sky’s registrations were partially invalid due to bad faith, as Sky applied for broad specifications to protect their interests despite there being no foreseeable prospect that they would be used. As a result, Sky’s trade mark specifications were limited, in particular “computer software”.
However, this decision was overturned at the Court of Appeal which decided that applying for broad specifications in and of itself did not constitute bad faith. The test for bad faith meant the goods and services covered must have no commercial justification for the threshold of bad faith to be met.
This provided some comfort to trade mark owners who were concerned that their filing strategies may make them vulnerable to bad faith claims. However, SkyKick was not happy with the result and appealed the decision to the Supreme Court.
The Ruling
The UK Supreme Court issued their keenly awaited decision reversing the Court of Appeal’s ruling on the question of bad faith. The Supreme Court found that Sky’s actions in filing for broad categories in which they never intended to use the mark was bad faith. The decision concluded that applying for an overly broad specification may constitute an abuse of the trade mark system, and would be in bad faith if there was no genuine intention to use the mark for all of the applied for goods and services. In such a case, the court could restrict the broad claim for a narrower subcategory. However, any inference of bad faith will depend on the particular circumstances of the case.
Terms such as the broad and unqualified “computer software” were discussed and the Court concluded that an applicant should not be considered to have made an application in good faith for a trade mark in respect of goods or services they have no intention to use on, simply because they chose a broad term. The fact that a particular broad term may be accepted by the registry under standard classification schemes may therefore no longer be a defence to an allegation of bad faith.
The Court is also more likely to consider goods and services were applied for in bad faith when broad specifications were obtained and weaponised in their broadest sense to prevent third parties from entering the market without being used in commerce for more than the narrowest subset of those goods and services.
Relevance to NZ market
The decision is a double edged sword for New Zealand businesses.
The new precedent means that companies who have attempted to “future proof” their brand by filing broad specifications without intention to use them may find their marks vulnerable to invalidation on the basis of bad faith. Owners of UK trade marks should now review their portfolios to see which marks may be vulnerable to bad faith and should employ a narrower filing strategy moving forward.
However, the decision also means that the trade mark register is likely to be more accessible to those seeking to enter the UK market as bad faith becomes a valid avenue of challenge for unused marks, and newcomers will not have to wait five years to challenge a mark for non-use in the UK. It may also minimise potential barriers to entering that market.
While terms such as “computer software” in class 9 are already objected to in New Zealand, it will be interesting to see whether the decision has an impact on other broad terms such as “entertainment services” as well as the very high threshold currently utilised in New Zealand for bad faith proceedings.
If you need advice on your current UK marks or on protecting any new trade marks in the UK in light of this decision, reach out to our team of trade mark specialists for assistance.
