‘Bad-faith’ Trademarks in SkyKick UK Ltd and Another v Sky Ltd and Others

In a decision passed on 13 November 2024, the Supreme Court unanimously held that media and telecommunications conglomerate Sky had applied for protection of their registered trademark in ‘bad faith’. This ruling concludes an eight-year long dispute between Sky and software company Skykick. The decision also provides some clarity over the ability to invalidate a trademark registered in ‘bad faith’.

Background and the Lower Courts

In 2016, Sky brought a claim against the software company, alleging that use of the sign SkyKick, infringed on five registered trademarks, four of which were registered as EU trademarks (EUTM). Further, they alleged that SkyKick had committed passing off – a claim brough against a company attempting to pass off, typically, ‘inferior’ products or services, as those of another, more reputable, provider.

SkyKick denied these allegations and subsequently issued a counterclaim for a declaration that the trademarks were wholly, or partly invalid as they had been made in bad faith. These claims were considered in the course of four judgements by the High Court.

As the infringement claims also pertained to EUTM, following the second judgment, Arnold LJ referred questions regarding the application of EU regulation in determining ‘bad faith’ registrations, to the Court of Justice of the European Union (CJEU). The judgement passed in May 2019 provided guidance which are summarised here as two primary points:

i. Article 51 of (EU) Regulation No 40/94 (as amended by No 1891/2006) and Article 3 of First Directive 89/104 applied to case at hand; and

ii. Hence broad specification does not preclude a trademark from being in ‘bad faith’ where it applies to goods and services for which there is no intended use.

Following this reference to the CJEU, in his fourth and final judgement, Arnold LJ ruled that Sky had ‘applied for the trademarks with the intention of obtaining an exclusive right for purposes other than those falling within the functions’ of the registered trademark. Therefore, they were partly applied in bad faith, and were consequently, partly invalid.

However, in 2021 the Court of Appeal reversed this judgement, finding that the approach adopted by the judge in the High Court was unfair; hence Sky’s trademarks were restored to the full, yet broad, specification of goods and services that they initially were registered for. 

Decision of the Supreme Court

On appeal from SkyKick, the Supreme Court considered the central issues in the judgement to be:

i. Whether the trademark been made in bad faith because Sky did intend to use the mark for the good or services for which it sought protection; and

ii. Whether SkyKick had therefore infringed on the registered trademark.

In an evaluation of the legal framework in place, Lord Kitchin stated that the ‘essential function of trademarks is, in particular, to guarantee the identity of the origin of the goods or services in relation to which it is used… to permit the consumer, without any possibility of confusion, to distinguish the goods or services of one undertaking from those of another.’

Further, it was outlined that an application to register a sign as a trademark may be in bad faith:

i. Where the application was made, not with the intention of engaging fairly in competition but to undermine the practices of third parties; and

ii. Where the application was made with the intention of obtaining an exclusive right for purpose other than those falling within the function of the trademark

The court also considered whether broad terms such as ‘computer software’ could permit the protection of a wide range of goods and services, deciding not to depart from the guidance of the CJEU.

In the circumstances, the Supreme Court found that the Sky had applied for the trademarks in bad faith and the Court of Appeal had erred in reversing this finding. Sky did not intend to use the trademarks for a protected purpose, therefore, the application was not made with the intention of engaging fairly. 

However, the judgement concurred in part with the Court of Appeal on the issue of infringement where the goods and services fell within the ‘relevant’ specifications.

The decision in this case is significant as it has provided much clarity on two formerly ambiguous areas, namely:

i. When a registered trademark can be challenged in bad faith; and

ii. When the use of broad terms in registration do not allow for the protection of specific goods and services.

The implications for smaller businesses are likely to be positive as they will have more breathing room where there is a fear their goods and services are infringing an existing trademark. Further, larger brands, including household names, will have to give a lot of thought to whether the goods and services to which their trademarks apply are justifiable. Although, the applications of this decision, particularly, whether any guidance will be issued for change in procedure, remains to be seen.

If you have any queries about trademarks and the impact of this recent decision, please do not hesitate to get in touch by telephone on 0207 052 3545 or by email info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice.

Please contact KaurMaxwell for advice before taking any action in reliance on it.