The Court of Appeal has sided with Sky in its most recent clash with Skykick, a global provider of cloud management software for IT solution providers, by overturning the High Court’s decision to restrict some of Sky’s trademarks on the grounds of bad faith.
Following a series of decisions from the High Court, Court of Appeal and a reference to the Court of Justice of the European Union (CJEU), last year the High Court held that some of Sky’s trademarks had been registered partly in bad faith and restricted certain goods and services accordingly. See our previous reports on these decisions here and here.
Sky appealed the High Court decision on the basis that its marks were not applied for in bad faith and, therefore, goods and services should not have been ‘trimmed’ from the specification.
Noting the CJEU’s conclusion that lack of intention to use cannot, on its own, amount to bad faith, the Court of Appeal held that, for goods and services that were relevant to Sky’s claim of infringement, the High Court was wrong to find these had partly been registered in bad faith.
As noted above, Skykick had maintained its submission that Sky had applied for broad terms such as “computer software” but did not intend to use its trademark for every type of computer software falling within that category.
In the view of the Court of Appeal, an applicant for a trademark 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 five years, but there will undoubtedly be more such goods than there are now”.
An applicant for a trademark is not required to have a concrete strategy for every possible type of goods falling within a certain heading in order to avoid a finding of bad faith. Sky (which the court noted had a substantial business in computer software) was not found to have acted in bad faith when applying to register a trademark for broad terms such as “computer software” for which it had an existing business and a clear commercial justification for seeking broader protection.
However, the Court of Appeal did note that the position may be different in cases where there is no intention to use the marks for a specific category at all or for which the sole purpose of registering the trademark would be to stop a third party from doing so.
Furthermore, the Court of Appeal decided that Arnold LJ had made a procedural error by removing goods and services from Sky’s marks based upon his assessment of bad faith, rather than requiring Skykick to set out the goods or services that it claimed were applied for in bad faith, and its evidence to support its claims of bad faith.
Although the Court of Appeal’s decision will be welcomed by established brand owners with extensive trademark rights, it will continue to present barriers for new entrants to the market who could find themselves prevented from offering a particular type of software, for example, under a mark which is used by another software provider operating in a different commercial field.