Sky v SkyKick – where does a trade mark monopoly end?
Sky v SkyKick – where does a trade mark monopoly end?
Last week, the Court of Justice of the European Union (CJEU), which retains jurisdiction over the UK during the Brexit transition period, handed down its eagerly awaited judgment in Sky v SkyKick. The judgment provided clarification on a number of issues relating to the registration and validity of trademarks and has provided reassurance to brand owners maintaining broad ranging trademark protection.
An international system, known as the Nice Classification, is used by the UK and European Union Intellectual Property Offices to classify trademarks. Trademark applications must specify the most appropriate class or classes of goods and/or services. There are 45 classes - 34 goods and 11 services. Specifications for each class can contain a range of terms, often amounting to hundreds of words. For example, Apple Inc. has an EU trade mark for "AIRDROP" in classes 9 (including "headphones"), 38 (including "social networking services") and 42 (including "computer programming").
Brand owners often apply for trademarks in respect of goods and/or services they currently trade and those they intend to trade in the future. This leads to applicants seeking broad ranging trade mark protection covering ancillary markets.
Sky v SkyKick
In 2016, media and telecoms giant Sky Plc issued court proceedings against SkyKick, a US based software company providing cloud computing services for businesses, for passing off and infringement of five of its trademarks for "Sky" (the Sky trademarks).
The Sky trademarks are registered across 22 different classes and contain specifications containing thousands of words, including a vast range of broad terms such as "computer software" (class 9), "entertainment" (class 41) and "data storage" (class 9), as can be seen here. They also cover goods such as "insulation materials" (class 3) and "whips" (class 18), which do not appear commercially relevant to Sky's business.
SkyKick argued that it operated in a different market to Sky – the supply of business software, as opposed to entertainment services – and that Sky's monopoly over "Sky" was too broad, transcending multiple industries and including goods and/or services it never intended to use the Sky trademarks for. On that basis, SkyKick counterclaimed for a declaration that the Sky trademarks were wholly or partially invalid due to:
the specifications of goods and/or services being unclear or imprecise; and/or
Sky acting in bad faith because it never intended to use, or had any commercial interest in using, the Sky trademarks for certain goods and/or services they were registered for.
In 2018, the High Court in England and Wales dismissed Sky's passing off claim but referred questions on trademark validity law to the CJEU (full High Court judgment here). In short, the High Court concluded that if the Sky trademarks are valid (which would depend on the CJEU's judgment) then SkyKick has infringed them.
In 2019, AG Tanchev of the CJEU published his opinion (followed by the CJEU in the majority of cases) on the High Court's referral. It set out that trademarks for "computer software" or similarly broad terms are invalid due to being contrary to public policy, because they confer a "monopoly of immense breadth which cannot be justified by any legitimate commercial interest". The AG's opinion also set out that a lack of intention to use a mark for particular goods and/or services could constitute bad faith in some circumstances.
The AG's opinion was potentially a game changer as it indicated support for challenger brands and increased pressure on well established brands to reconsider broad trademark filing strategies.
Last week, the CJEU departed from the AG's opinion, ruling that a trademark cannot be declared invalid on the ground that specification terms lack clarity and precision. It also clarified that broad terms such as "computer software" were not so broad so as to be "contrary to public policy", noting that this concept of "public policy" focuses on the sign to be used in the course of trade (in this case "Sky") rather than the terms used in a trademark application itself.
Additionally, the CJEU ruled that a trademark may be invalidated due to bad faith where an applicant applies for a mark and specifies particular goods and/or services "not with the aim of engaging fairly in competition but with the intention of…[dishonestly] undermining…the interests of third parties, or with the intention of obtaining…an exclusive right for purposes other than those falling within the functions of a trade mark". Such a finding of bad faith would only invalidate a trade mark partially - for those particular goods and/or services only.
It was widely anticipated that this CJEU judgment would have a profound impact on brand owners, limiting the range of protection provided by trademarks and requiring brand owners to rethink filing strategies. However, the impact of the decision is more refined and generally it allows brand owners to maintain broad-ranging trademark protection.
Whilst a lack of intention to use an EU trademark for a particular class of goods and/or services is, on its own, insufficient to constitute bad faith, brand owners could face challenges in respect of trademarks covering a very broad range of goods and/or services unless there is a demonstrable commercial strategy.
The High Court in England & Wales will now apply the CJEU judgment to the facts of Sky v SkyKick - absent any Brexit-related UK legislation freeing it of this obligation. That too will be an interesting development, as it is still open to the court to make a finding that the Sky trademarks are wholly or partially invalid on grounds of bad faith.