Court of Appeal in Sky v SkyKick reduces scope of bad faith and confirms trade mark infringement

England and Wales

The Court of Appeal on 26 July 2021 has overturned the High Court’s ruling that Sky’s trade marks were partially invalid for bad faith, and confirmed that SkyKick infringed Sky’s trade marks.

High Court judgment

On 29 April 2020, Arnold LJ (sitting as a High Court judge) held that SkyKick’s cloud email migration service infringed Sky’s trade marks in so far as the marks were registered for the identical term “electronic mail services”.  Sky’s passing off claim was unsuccessful.

In relation to SkyKick’s counterclaim that Sky’s trade marks were invalid, SkyKick accepted in light of the CJEU’s ruling that Sky’s trade marks could not be declared wholly invalid on the basis of bad faith, and there was only scope for the registrations to be declared partially invalid, i.e. in relation to those goods and/or services in respect of which it could be proven that the applications were made in bad faith.  The infringement claim, and scope of the invalidity counterclaim, had been limited to an abbreviated list of eight goods/services in Sky’s trade marks that were closest to SkyKick's activities (the “Selected Goods and Services”).  The Selected Goods and Services included some relatively broad terms, including “computer software” and “electronic mail services”.

Arnold LJ held that Sky’s trade marks were partially invalid, and pared down several of the Selected Goods and Services, on the basis that:

  1. in relation to some of the Selected Goods and Services, Sky did not intend to use the trade marks at the application dates and there was no foreseeable prospect that they would ever do so (the “no prospect of use conclusion”); and

  2. the marks were applied for pursuant to a deliberate strategy of seeking very broad protection, regardless of whether it was commercially justified (the “broad strategy/no justification conclusion”).  

Court of Appeal

Sky appealed against the finding of partial invalidity and consequent restriction of the trade marks, and the dismissal of the passing-off action.  SkyKick cross-appealed against the finding of infringement, and contended for a more extensive restriction of Sky’s trade marks.

The headline points of the Court of Appeal’s finding are as follows:

  • Sky’s appeal was successful in relation to the partial invalidity of its trade marks for the Selected Goods and Services:

    • In relation to the “no prospect of use conclusion”, whether Sky had a prospect of using the mark in relation to the entire breadth of the Selected Goods and Services was not relevant to bad faith.  Using computer software as an example, Floyd LJ stated: “It is true that Sky had no prospect of using the mark in relation to every conceivable sub-division of computer software, but that fact is not, in my judgment a relevant or objective indicator of bad faith”.  Sky had made substantial use of the trade marks in relation to the Selected Goods and Services, and in many cases had expectations of further use.  Sky plainly had a commercial justification for applying for each of these terms and, as such, the “no prospect of use conclusion” did not apply to the Selected Goods and Services.

    • In relation to the “broad strategy/no justification conclusion”, an applicant does not have to formulate a commercial strategy for using the mark in relation to every sub-section of goods or services falling within a general description.  It is entitled to apply for protection of sufficient breadth to cover some further, as yet unformulated, goods and services within categories in which it has an interest.  The absence of a commercial rationale or strategy for a mark to be used for all goods or services within a category of the registration, is not relevant to the enquiry about bad faith.  By way of example to illustrate his point, Floyd LJ stated that an applicant with only one item of computer software can apply in good faith for computer software as a whole.  Sky had an obvious commercial justification for applying for the Selected Goods and Services, namely that it had a very substantial business in some sub-sections of each of those terms which their trade mark would protect in accordance with the proper functions of a trade mark.  The “broad strategy/no justification conclusion” therefore did not apply to the Selected Goods and Services.

  • The first instance decision in relation to passing off was upheld.  Whilst other judges might have assessed the matter differently, there was no basis on which the Court of Appeal could interfere with the judge’s evaluation of the passing off claim.

  • In relation to the finding that SkyKick’s cloud email migration service was identical to “electronic mail services” and infringed Sky’s trade marks insofar as they covered that term, the judge erred in construing electronic mail services as extending to services “related to” electronic mail.  By interpreting the term as such, the core meaning was extended to an unclear and indeterminate range of services connected to email.  SkyKick’s cloud email migration service would not be regarded as an ancillary feature of an email service, but as a different service, and is therefore not identical to the term.  Assessing whether the service was identical to the term would require factual investigation which the judge did not undertake.

  • The first instance decision was upheld insofar as the judge concluded that SkyKick’s cloud email migration service was identical to “computer services for accessing and retrieving … documents via a computer or computer network” in the Selected Goods and Services from the perspective of the average consumer.  Access and retrieval of data via a computer was an integral part of a backup service, which the average consumer would know about and understand.

  • Given the finding of infringement under Article 9(2)(b) of the EU Trade Mark Regulation, there was no purpose in the Court of Appeal assessing and/or supplementing the judge’s findings on whether: (i) there was in fact infringement under Article 9(2)(c) of the Regulation (i.e. that Sky’s marks had a reputation in the EU and that use by SkyKick without due cause took unfair advantage of, or was detrimental to, the distinctive character or repute of the mark); or (ii) the judge should have made specific findings in relation to infringement of other categories from the Selected Goods and Services.