In a common-sense decision that will be welcomed by brand owners[i], the English Court of Appeal has confirmed that the common industry practice of registering trade marks in respect of broad specifications of goods and services does not, in itself, result in invalidity on the grounds of bad faith. But bad faith, and hence invalidity, may arise if there is a dishonest intention, for example if a company registers a trade mark in order to block use by a third party rather than for its own use.
The dispute
SkyKick originated in the US, providing cloud migration and cloud back-up services. Expansion of the business to the UK under the SkyKick name resulted in Sky commencing trade mark infringement proceedings in the English High Court in May 2016 for infringement of its SKY trade marks. The High Court held that SkyKick would infringe Sky’s marks, provided that these were valid.
SkyKick’s bad faith argument
SkyKick argued, essentially, that Sky’s marks were invalid because it had acted in bad faith by registering them in relation to overbroad specifications of goods and services, which went well beyond what Sky had any intention of using the marks for. This, said SkyKick, amounted to bad faith, which is a ground of invalidity under UK and EU trade mark law. SkyKick had some success before the High Court, which concluded that Sky’s marks were invalid in respect of some goods and services[ii]. However, the Court of Appeal has now overturned the High Court’s decision on this point, so restoring validity to the SKY marks.
The importance of the decision – five years to decide
The Court of Appeal’s decision confirms that trade mark owners are entitled to register broadly in order to cover possible future expansion without needing to show that they have concrete plans to expand in particular ways. It recognises that at the time of application a business may not even know how it might wish to use the mark in the future. This is a commercially important aspect of the UK and EU trade mark systems, because it allows trade mark owners to reserve trade marks for use in the future for up to five years whilst they decide how to use them. After this initial grace period - under the principle of use it or lose it - the marks may become wholly or partially vulnerable to cancellation for non-use if they have not been used for relevant goods or services.
The importance of the decision – broad categories of goods/services
The Court of Appeal decision also addresses the controversial issue of broad categories of goods and services such as “computer software” or “telecommunications services”. Many existing trade mark specifications include such broad categories, and there has been uncertainty about whether they are valid. The Court of Appeal indicated that such broad categories can be valid even where the applicant could not have intended to use the mark in relation to all goods or services covered by that broad description – e.g. all types of computer software. This will come as a relief to many established brand owners whose trade mark specifications contain such broad categories.
Are there pitfalls to be aware of?
Although simply registering a trade mark without the intention to use it is not bad faith in itself, the lack of intention to use may be relevant to a finding of bad faith in some situations. This could arise, for example, if the mark is registered in order to thwart or block a competitor rather than to use the mark as a trade mark oneself. A recent example of bad faith referred to by the Court of Appeal is the case of Hasbro, where the mark MONOPOLY was re-registered in order to circumvent the non-use provisions in trade mark law by securing a fresh grace period. Please see our discussion of this decision here.
SkyKick is reported to have said that it intends to appeal to the Supreme Court, so this is a space to watch.
Tom Lingard