Third judgment in Sky v SkyKick –
Louise Foster and Sarah Darby provide some take-away thoughts

Third judgment in Sky v SkyKick –
Louise Foster and Sarah Darby provide some take-away thoughts


Following the answers from the CJEU in its judgment of 29 January 2020 (C-371/18) to the five questions referred to it by the UK court concerning the Sky v SkyKick Case, there is now a third judgment in this trade mark case epic ([2020] EWHC 990 (Ch).

Summary:

  • SkyKick were found to have infringed Sky’s registration. This is not surprising given the CJEU’s judgment that a registration cannot be found invalid on the basis the specification lacks clarity and precision, and that claiming some goods and services in bad faith does not result in the entire registration being infected by bad faith.
  • The judge found some of the terms included in Sky’s registration had been made in bad faith, as the purposes for which they had been registered fell outside the function of a trade mark, and he cut those terms down to what he considered a ‘fair’ specification. That assessment involved a consideration of Sky’s business generally, as well as the use it had proved to the court.
  • The court held that it is justifiable to register a mark for a specification that extends slightly beyond what the mark will actually be used for, but the extra margin allowed cannot extend to other categories or subcategories of goods or services.
  • Further guidance was given on the interpretation of specifications, finding that the term ‘telecommunications’ was not uninterpretable so as to require it to be disregarded, nor so imprecise as to require a narrow interpretation. The court decided that the interpretation of it should therefore be confined to the core of its possible meanings as “services consisting of or relating to telecommunication per se”.

 

Brief background to the dispute

Sky sued SkyKick for infringement in the UK High Court for use of the word SKYKICK and SKYKICK logos in relation to a cloud migration service. Sky relied on four EU TMS and one UK TM covering the following goods and services (the “Selected Goods and Services”):

  • computer software (Class 9);
  • computer software supplied from the internet (Class 9);
  • computer software and telecoms apparatus to enable connection to databases
  • and the internet (Class 9);
  • data storage (Class 9);
  • telecommunications services (Class 38);
  • electronic mail services (Class 38);
  • internet portal services (Class 38); and
  • computer services for accessing and retrieving information/data via a computer
  • or computer network (Class 38).

SkyKick counterclaimed that Sky’s registrations:

  • are invalid in their entirety for lack of “clarity and precision”; and
  • are invalid in their entirety as they are registered in bad faith because Sky lacked an intention to use the mark SKY in relation to the broad spectrum of goods/services applied for.

Due to the timing of when Sky’s marks were filed, the applicable legislation is Regulation No 40/94 concerning the EU TMs and First Directive 89/104 concerning Sky’s national TM in the proceedings. However, had the current legislation been applicable the decision would not have been affected.

A summary of the five questions that Arnold LJ referred to the CJEU in the main judgment ([2018] EWHC 155 (Ch)) can be found here: https://www.aathornton.com/sky-v-skykick-a-closer-analysis/.

The Selected Goods and Services are those on which Sky have focused their infringement claim, although Sky had not at the time of the decision withdrawn the claim of infringement for the remaining goods and services. The court gave Sky seven days in which to withdraw that part of the infringement claim.

 

Decision

Lack of clarity and precision

Following the CJEU answer, the Court quickly and easily dispensed with the question as to whether Sky’s registrations were invalid on the basis of lack of clarity and precision of the specifications, unsurprisingly finding that they were not.

 

Bad faith

The next point to determine was the extent of invalidity of Sky’s marks on the basis of bad faith. Following the CJEU answer, bad faith in respect of part of Sky’s marks does not render the entire mark invalid on that basis.

SkyKick had not alleged at trial that “telecommunications services” or “electronic mail services” had been applied for in bad faith. SkyKick was refused permission to amend its case to include these services in its bad faith challenge, given how late in the day it was to raise a further serious allegation of bad faith.
As this does not impact the decision on infringement the court dealt more briefly with the extent of validity of the remaining Selected Goods and Services. The findings of the court will however be of more practical interest to trade mark proprietors.

The CJEU had answered the Court’s question on the concept of bad faith for the purposes of Article 51(1)(b) CTMR No 40/94 and Article 3(2)(d) of First Directive 89/104 as follows:

  • a trade mark application made without any intention to use the trade mark constitutes bad faith, if the applicant 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.

The main judgment had concluded at paragraph 251 that Sky had applied for the trade marks in bad faith in three ways: i) the specifications cover goods and services for which Sky had no intention to use the Trade Marks at all; ii) the specifications covered categories of goods and services so broad that Sky could not, and did not, intend to use the trade marks for the entire category; and iii) the specifications were intended to cover all of the goods and services in relevant classes. Overall, it was held that Sky “had a strategy of seeking very broad protection of the Trade Marks regardless of whether it was commercially justified”.

Given these findings, the Court held that Sky had applied for the trade marks with the intention to obtain an exclusive right for purposes other than those falling within the functions of a trade mark.

Further, the CJEU had held in its judgment that a provision in national law such as that under s32(3) UK Trade Marks Act (1994), that requires a declaration that an applicant is using or has a bona fide intent to use the mark in connection with the goods and services being applied for, is not incompatible with the directive. Such a provision cannot however constitute a separate ground for invalidity. The Court decided that Sky’s partially false declaration under s32(3) in its application for the UK TM relied on in the proceedings was “plainly inconsistent with honest practices in industrial and commercial matters”. Thus, this added to the evidence that the UK TM had been applied for in bad faith.

Take Away thoughts on Bad Faith

SkyKick’s last minute request to plead further bad faith allegations is a reminder that such an allegation is a serious one and cannot be introduced at the final step. Parties should think carefully about the basis for pleading bad faith and be given adequate opportunity to respond.

While the s32(3) UK TMA cannot, according to CJEU’s answer, act as its own ground for invalidity of a mark, this in the UK court’s view added weight to the notion that Sky had not acted in accordance with honest practices. However, the court did not have trouble in finding that Sky’s EU TMs to have been applied for in bad faith, despite there being no provision equivalent to s32(3) applicable to those marks. Therefore, it is questionable how much s32(3) might actually add to an argument of bad faith.

One could believe that, where a mark is found to be partially applied for without an intention to obtain that right for purposes that fall within the function of a mark, surely that is likely to be sufficient to also consider the actions of the applicant to be inconsistent with honest practices?

The decision did not unfortunately go into any more detail on the possible motivation for Sky to cover whips and bleaching preparations in its marks, but the inclusion of those goods is perhaps an indicator of more blatant dishonesty on filing in this case. There could be less blatant situations where the fact the applicant knowingly made a false declaration under s32(3) when filing a UK TM does make the difference between a finding of bad and good faith.

What is a “fair” specification?

The court then had to decide what would be a fair specification for Sky’s TMs that were found to have been applied for partially in bad faith.

The principles adopted by the Court in reducing the Selected Goods and Services can be summarised as:

 

  1. Just because Sky had not intended to use a mark across an entire broad category of goods or services did not mean that the entire broad category was applied for in bad faith.
  2. ii. Devising a fair specification in the context of a challenge of a registration on the basis of bad faith is a different exercise to that of a non-use action.
  3. However, the identification of subcategories of goods and services capable of being viewed independently, as per the principles adopted in Merck KGaA v Merck Sharp Dohme Corp , is relevant in the context of assessment of the extent of bad faith.
  4. It is legitimate for proprietors to register marks for goods and services, for which they may wish to extend use of the mark to in future. Further, the Court allowed a “modest penumbra” of extra protection beyond the goods and services of actual use, but which should not stretch to other distinct categories or subcategories of goods and services.
  5. Not bad faith to seek to protect a type of software as a good and a service, even where it will only in practice be offered as one or the other.

SkyKick had proposed a fair wording of the Selected Goods and Services for Sky’s marks, but based on the fourth of the above principles, the Court rejected SkyKick’s proposal on the basis it was too tied to the specific findings of the Court in the main judgment as to what Sky had actually used its marks on (see paragraphs 24 to 67 of the main judgment).

Sky had not taken the opportunity to make its own proposal as to how the Selected Goods and Services should be narrowed.

The table below sets out a) the Selected Goods and Services found to have been applied for in bad faith b) SkyKick’s proposal (to the extent it was made available in the decision) and c) the “fair” specification devised by the court having regard to the goods and services Sky had been found to have used the marks for:

 

a) Selected Goods and Services of Sky’s marksb) SkyKick’s proposed specification for Skyc) Court’s fair specification for Sky
computer software (Class 9)application software enabling access to audio-visual content live or on demand on a mobile or desktop computer device;

software for uploading and securely storing, organising, printing, viewing and sharing photographs, music, video and document files between devices;

software for presenting audio-visual content programming;

software for set top boxes;

software for the purposes of sending and receiving emails;

software for the purposes of instant messaging;

software for the purposes of downloading or streaming music;

electronic calendar software;

software for monitoring or securing broadband connections

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;</span

electronic calendar software;

application software for accessing audio, visual and/or audio-visual content via mobile telephones and/or tablet computers;

games software

computer software supplied from the internet (Class 9);Limited in the same way as “computer software”.
computer software and telecoms apparatus to enable connection to databases and the internet (Class 9);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 (Class 9);Data storage of audio, visual and/or audio-visual content and documents
telecommunications services (Class 38);Not challenged by SkyKick on the basis of bad faith.
electronic mail services (Class 38);Not challenged by SkyKick on the basis of bad faith.
internet portal services (Class 38);Court did not consider any limitation was required.
computer services for accessing and retrieving information/data via a computer
or computer network (Class 38).
computer services for accessing and retrieving information/data audio, visual and/or audio-visual content and documents via a computer or computer network

 

Take-away thoughts on the reduction of the specification

The court’s approach to this reduction of the Selected Goods and Services indicates some motivation not to overly restrict the rights of trade mark proprietors. The court noted that the first two parts of its devised specification for Sky could be considered imprecise, but that was necessary in order to give Sky a fair level of protection. It is acceptable to build into a specification a margin around what the mark will actually be used on, but this margin is small and does not extend to other subcategories of goods or services.

It will also be of comfort to trade mark proprietors to know that a single term cannot be written off as invalid just because it designates a broad category e.g. computer software, where some use within that broad category has been shown. However, it is important to remember that the fair specification is considered acceptable for Sky because the court had reviewed the scope of Sky’s business, using the evidence it had submitted. What constitutes a “fair” specification will be based on each trade mark proprietor’s commercial circumstances.

Trade mark applicants in future might try to discourage third parties from challenges on the basis of bad faith by avoiding such sweeping broad categories and providing some context in specifications. Being able to rely on a specification drafted by or for an applicant will be preferable to relying on one that has been subject to court scrutiny, at significant expense and effort for the applicant.

The advantage of keeping to subcategories in specifications is that clearance of marks for goods such as computer software using a register based search could in time become more viable to carry out than it currently is.

 

Infringement of “electronic mail services” under Article 9(2)(b) of the Regulation/Article 10(2)(b) of the Directive

Although the finding of infringement of electronic mail services had decided the dispute, the court considered the interpretation of telecommunications services, no conclusion on which had been reached by the court in the main judgment.

The Court reviewed the case law on interpreting specifications. Referring firstly to the recent decision in Alliance Pharmaceuticals Ltd v European Union Intellectual Property Office , that held that where two possible literal interpretations of a specification exist, but one would lead to an absurd result for the extent of protection of the mark, the correct interpretation is the most plausible and predictable.

However, as had been held in the decision of 6 April 2017 in the NANA FINK case, where both possible literal interpretations of a specification are both equally plausible and predictable, a trade mark proprietor should not gain from not having ensured clarity and precision in the specification. In this scenario, the narrower interpretation is correct.

Finally, where a term in a specification makes no sense and the goods or services designated cannot be interpreted, such a term should be disregarded (Case T-571/11).

The court distilled the findings of these decisions into four principles (paragraph 56 in the judgment):
In summary, therefore, the applicable principles of interpretation are as follows:

  1. General terms are to be interpreted as covering the goods or services clearly covered by the literal meaning of the terms, and not other goods or services.
  2. In the case of services, the terms used should not be interpreted widely, but confined to the core of the possible meanings attributable to the terms.
  3. An unclear or imprecise term should be narrowly interpreted as extending only to such goods or services as it clearly covers.
  4. A term which cannot be interpreted is to be disregarded.

The second of these principles was found by the court to apply to the interpretation of telecommunications services. Since SkyKick did not appear to be arguing that the term was uninterpretable there was no reason to disregard it, as per the fourth principle. Despite holding that the term had a degree of imprecision, this did not in the court’s view mean its interpretation should be narrow as per the third principle. Therefore, the interpretation of it should be confined to the core of its possible meanings as “services consisting of or relating to telecommunication per se”.

The court’s view was that “telecommunications” includes “services consisting of or relating to email”. Further, “telecommunications”, other than those related to email were held similar to SkyKick’s service.

Still, as the dispute had been decided on the identity of SkyKick’s service and electronic mail services, these findings did not add to Sky’s claim of infringement. Neither did the remaining Selected Goods and Services, none of which the court held were identical to the SkyKick service.

 

Take-away thoughts on interpretation of the specification

Interpretation of the specification is becoming more central to trade mark disputes, The decision collates the various principles that are being developed regarding correct approaches to interpreting specifications.

  • The decision reflects that the court is reluctant to be too draconian in its consideration of the scope of the specification. Although telecommunications had a degree of imprecision, the court did not feel this warranted a narrow interpretation.
  • The third and fourth principles at paragraph 56 of the decision provide some motivation for trade mark applicants to ensure clarity and precision in a specification. Unclear terms should not give a trade mark owner an advantage, and should be narrowly construed. Terms obscure to the extent they are uninterpretable should be disregarded when being enforced. However, the CJEU position that a trade mark specification cannot be invalid purely because it lacks clarity and precision means there is no clear and tangible disincentive to avoiding very broad and generic terms.
  • The court states that telecommunications covers telephony, broadband, wifi, email and instant messaging (see paragraph 30 of the decision). It is possible that these various types of communication might be considered as distinct subcategories. In a different commercial context therefore this term might not be considered commercially justified, and therefore good faith, to cover without further definition.

 

Conclusion

Given that the CJEU decision gave the court limited options as to the circumstances in which a specification can be held to be invalid, the finding of infringement is hardly surprising.

The court’s analysis of the issues that goes beyond what was necessary to decide the dispute will be of some practical assistance to trade mark attorneys in drafting and interpreting specifications. The CJEU judgment made clear the task of ensuring clarity and precision in specifications was for trade mark offices during the application stage.

Whether or not the case has consequences in how trade mark offices examine specifications will remain to be seen. Over the years we have seen a distinct shift in the UK and EU trade marks offices making the application process as simple and as accessible as possible for applicants, particularly those without legal representation. Whilst this does have clear benefits in equalising access to protection for Applicants, it does make it unlikely that the trade marks offices will now be inclined to bring in further examination or scrutiny of the commercial justification of Applicants when applying for very broad terms such as ‘computer software’ or ‘telecommunications’. Closer enquiries at the application stage into the commercial justification for protecting broad terms would involve closer, and likely lengthier, examination and may not be that practically possible, or perhaps even desirable.

In any case, post-Brexit the UK courts and trade mark office will have more scope to refine their own approach to these issues, and there are some hints throughout this case they will want to do so to some extent.


Category: News | Author: Sarah Darby, Louise Foster | Published: | Read more

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