The High Court in London has curbed the scope of trade marks owned by Sky after it ruled the broadcaster and telecoms giant had partly registered them in "bad faith".
Sky owns both EU and UK trade marks covering goods and services falling within a number of technology categories. However, the company's rights in relation to some of those classes of goods and services, including 'computer software' and 'data storage', are now limited after the court held that Sky's trade marks covering those classes are partially invalid.
The court reached that view after finding that Sky had deliberately registered trade marks for goods and services they had no intention of using their rights for.
Florian Traub
Partner
The message to brand owners is clear. While there is no need to adopt an overly cautious approach to trade mark specifications, brand owners should file for protection that they can commercially justify as part of current or genuine future business strategy
In a judgment of mixed outcomes for Sky, the court upheld the full scope of its trade mark rights for internet portal services, telecommunications services and email services, and found that SkyKick, a US supplier of cloud migration software, had infringed Sky's trade rights for email services in relation to its email migration service.
The High Court reached its decisions in the case after applying case law relevant to the dispute that was established by the Court of Justice of the EU (CJEU) earlier this year.
Trade mark law expert Florian Traub of Pinsent Masons, the law firm behind Out-Law, said: "The CJEU set what was generally agreed to be a high bar for establishing that a trade mark application had been made in bad faith. Nevertheless, in this judgment, Lord Justice Arnold was clear that Sky’s conduct had exceeded that bar, by its 'deliberate strategy' of seeking very broad trade mark protection 'without any commercial justification', and intending to use the marks as a 'legal weapon' against third parties. As a consequence, the scope of a number of its registrations was restricted so as to reflect the extent of the bad faith proved."
"Sky will be relieved that the finding of bad faith did not result in the entirety of each of its registrations being declared wholly invalid, so it has retained its core trade mark protection. Nevertheless, the message to brand owners is clear. While there is no need to adopt an overly cautious approach to trade mark specifications, brand owners should file for protection that they can commercially justify as part of current or genuine future business strategy," he said.
Traub said it is possible that more businesses that face claims of infringement by trade mark holders before the courts in England could counterclaim that the rights were registered in 'bad faith' in light of this case in future.
"Big brand owners who may hold registrations that are arguably overly broad should take advice before launching infringement proceedings," Traub said. "However, the risk to them may only be relatively low anyway given that they will still retain their essential core trade mark protection even if the counterclaim succeeds."
A Sky spokesperson said: "We welcome the High Court’s judgment that SkyKick infringes valid trade mark rights of Sky. However, we disagree that Sky’s trade marks were even partly filed in bad faith. We have always acted in accordance with our understanding of trade mark law as interpreted by legal tribunals, and consistently with other companies seeking to protect their valuable trade marks. In January, we welcomed the EU Court of Justice’s clarification of the applicable legal test, which in our view supports Sky's case that we did not act in bad faith."
According to the CJEU, trade mark applications made without any intention to use the trade mark in relation to the goods and services specified will be considered to have been registered in 'bad faith' and subject to revocation "if the applicant for registration of that mark 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". However, the court said that trade marks cannot be declared wholly invalid where bad faith only affects part of the specification.
In the latest High Court ruling in the case, Lord Justice Arnold set out guidelines for determining more precisely what goods and services trade marks will apply to.
According to "the applicable principles of interpretation" outlined by the judge, generic terms used by trade mark applicants to describe goods and services will apply to "the goods or services clearly covered by the literal meaning of the terms", but not to "other goods or services".
The judge said that terms used to describe services specifically "should not be interpreted widely, but confined to the core of the possible meanings attributable to the terms".
He also said that "unclear or imprecise" terms should be "narrowly interpreted as extending only to such goods or services as it clearly covers", and that any term "which cannot be interpreted" should be "disregarded".
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