UK Supreme Court Skykick v Sky decision: What does the SkyKick decision teach us about bad faith in trade marks?

The recent Supreme Court decision in SkyKick UK Ltd & Anor v Sky Ltd & Ors [2024] UKSC 36 (“the Decision”) has shone light on courts navigating bad faith claims. The decision points to there being a greater chance of trade mark registrations being deemed invalid due to bad faith where the trade mark’s specification of goods and/or services are too broad. But whether bad faith can be inferred from the width and size of the specification would depend on all the circumstances of the case. The difficulty that can stem from having too broad of a scope is the trade mark owner’s inability to prove that it had a genuine intention to use the trade mark in relation to those applied-for goods and services at the time of filing. Such lack of intention can constitute bad faith and result in the trade mark registration to be found, at least partially, invalid in respect of those goods/services which lacked an intention of use.

Overview of SkyKick v Sky

In 2016, Sky commenced proceedings against SkyKick for trade mark infringement. SkyKick counterclaimed and argued that Sky’s relied-upon goods and services included extensively broad categories such as ‘bleaching preparations’, ‘computer software,’ and ‘insulation materials.’ SkyKick argued that this pointed to there being a lack of intention to use the marks in relation to such goods and services, and so evidenced bad faith on Sky’s part. The High Court agreed with SkyKick’s arguments and ruled that Sky did not intend to use the marks in relation to all the goods and services covered by the specifications and that Sky could not and did not intend to use the trade marks across the breadth of the category. Sky’s actions highlighted a deliberate strategy of seeking broad protection of marks even where it was not commercially justified.

Sky appealed this, and the Court of Appeal found in favour of Sky and were critical of the High Court’s decision. The Court of Appeal held that it does not constitute bad faith when registering a trade mark without intention to use it in relation to the goods and/or services. However, there will be bad faith if there is the intention of “undermining a third party’s interests, in a manner inconsistent with honest practices” or to seek protection “for purposes other than those falling within the functions of a trade mark”.

SkyKick then appealed to the Supreme Court who unanimously upheld the High Court decision that seeking protection for a trade mark in extensive categories without commercial rationale to use the mark for all goods and services applied for amounts to bad faith. The Supreme Court supported the High Court and found that this applied particularly for those applying for the registration of 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” (emphasis added).

Important takeaways from the Decision in regard to bad faith claims

• Going forward, applicants should be cautious when filing UK trade mark applications for broad specifications of goods and services as they could be confronted with claims of bad faith. The key is to obtain evidence to demonstrate that, at the time of the application, there was a reasonable intention to use the mark for the goods and services covered by the registration. Thus, if you consider that you need to protect a broad range of goods and services in the future, we encourage you to record evidence of the justification for such decision.
• Applicants should be mindful when drafting specifications to prevent exposure to bad faith claims. Time will need to be spent when drafting specifications. Where relevant, broad terms should be restricted to distinct sub-categories for which a genuine intention to use can be shown.
• For existing trade mark registrations covering a broad set of specifications, trade mark owners can expect an increased number of bad faith based invalidity actions by way of a counter-attack from defendants.
• The Decision highlights that applicants should not attempt to utilise goods and services that they have no intention or rationale for using as this creates a monopoly over a broad range of categories of goods and services and can result in unnecessary disputes. Here, Sky narrowed down the goods and services it relied upon several weeks before trial, and then further narrowed the basis of its claim during closing submissions. Such conduct by Sky pointed to the argument that Sky had no intention of ever utilising the goods and services, but rather to “deploy the full armoury” of those marks against another trader whose activities are not likely to cause confusion or amount to passing off.

The Decision and the differences between UK vs EU law

• Despite the occurrence of Brexit, in the Decision, EU law still applied. The Supreme Court held that the UK Courts continue to act as EU trade mark courts where proceedings were issued and are pending prior to the end of Brexit and the transition period on 31 December 2020.
• Following Brexit, the Decision can be seen as an indication of a potential divergence from EU trade mark law in how ‘bad faith’ claims are considered. Before the Decision, trade mark law in the UK and EU allowed for trade mark registration of reasonably broad specifications. However the Decision highlights a move away from this approach and could signal a move towards the US trade mark system whereby goods and services are more prescriptive and reflect the business’ activities in use exactly.
• It will be interesting to see how this move plays out in practice. Unlike in the UK and EU, trade mark owners in the US are expected to frequently prove the use of their mark in order to obtain and/or maintain a trade mark registration.  In the UK and EU, trade mark owners have at least five years before their marks could be attacked by way of cancellation for lack of ‘genuine use.’ However, the Supreme Court has stated, “the grace period has the potential to compound the problems for traders caused by applications to register marks by those who have never had any intention to use them.” It is evident from the Decision that a lack of genuine intention to utilise or attempt to establish a mark under the goods and/or services during the grace period suggests an obstructive intention of the applicant to obtain an exclusive right and this can point to a case of bad faith.

If you have any questions or would like to discuss any of the topics in this article, please contact Karen Lee or any member of our Intellectual Property team.

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