Trade marks: lack of intention to use

Background

An application for registration of a trade mark must state that the trade mark is being used by the applicant or with their consent in relation to the goods or services for which registration is sought, or that the applicant has a bona fide intention that it should be used in this way (section 32(3), Trade Marks Act 1994) (TMA).

A sign may not be registered as a trade mark if it is contrary to public policy or accepted principles of morality (section 3(3)(a), TMA; Article 3(1)(f), Trade Mark Directive (2015/2436/EU); Article 7(1)(f), EU Trade Mark Regulation (207/2009/EC)).

Facts

S owned EU trade marks (EUTMs) and a UK trade mark comprising the word SKY registered in relation to various goods and services including computer software.

S sued K for infringement of the marks by use of the sign "Skykick" in relation to downloadable software goods and other services, and for passing off.
K denied infringement and passing off, and counterclaimed for a declaration that the marks were wholly or partly invalidly registered on the grounds that the specifications of goods and services lacked clarity and precision, and that S's trade mark applications had been made in bad faith.

The High Court referred various trade mark invalidity questions to the European Court of Justice (ECJ). The ECJ ruled that overly broad terms in specifications are not contrary to public policy or otherwise invalid due to being unclear, but also that a specification which contains broad terms may constitute bad faith in certain circumstances (see News brief "Bad faith in trade mark applications: a question of specification", www.practicallaw.com/w-024-1621).

The High Court applied the ECJ’s ruling and held that S had had no intention of using its trade marks for some of the goods and services that it specified in its trade mark applications, and there was no foreseeable prospect that they would ever do so (“no prospect of use”). Those marks were therefore invalid in relation to those goods and services on the ground of bad faith. K had, however, infringed the marks in relation to email services when it provided an email migration service under the name "Skykick".

S appealed against the High Court’s finding that the marks were partially invalid, and against the dismissal of its passing off claim. K cross-appealed, arguing for a more extensive restriction of the trade marks and challenging the finding of infringement.

Decision

The court allowed S’s appeal on validity but dismissed its appeal on passing off and K's cross-appeal.

The High Court had been incorrect to conclude that there was bad faith where a trade mark applicant had no prospect of using the mark in relation to every conceivable sub-division of a particular good or service listed in the specification. The no prospect of use conclusion was difficult to apply to a category like computer software which included numerous types of software. Here, S had extensively used its mark for software and expected to do so further in the future.

The High Court was also incorrect to conclude that the marks were applied for under a deliberate strategy of seeking very broad protection, regardless of whether it was commercially justified, and that there was bad faith because S could not, and did not intend to, use the trade marks in relation to all of the goods and services covered by the registrations. S did not have to formulate a commercial strategy for using the mark in relation to every species of goods or services falling within a general description, and it could not be accused of bad faith just because it had a strategy of applying for sufficiently broad categories to cover further, as yet unformulated, goods within those categories. For example, an applicant that sold one item of software would be justified in applying to cover computer software as a whole. So, the absence of any commercial strategy to use the mark for all goods or services within a category was not relevant when assessing bad faith. Here, S had a substantial software business. In the absence of any further factor, it was not open to the High Court hold that any of the goods or services were applied for in bad faith.

Comment

The court acknowledged the difficulty of drafting a specification of goods and services that is broad enough to cater for future expansion as well as current business activities, but also narrow enough to shield it from successful invalidity or revocation proceedings and from needless conflicts with third-party rights that do not threaten the trade mark owner's commercial interests. A broad specification should not in itself be treated as an illegitimate weapon against third parties wishing to use a mark.

This decision will provide reassurance to owners of UK trade mark registrations that cover broad specifications of goods or services. Courts should only make a finding of bad faith where there is a dishonest intention or state of mind, such that the trade mark applicant's conduct is inconsistent with honest practices or acceptable commercial behaviour, and should give a trade mark applicant very considerable latitude before making such a finding. More guidance on the issue of bad faith can be expected if there is a further appeal to the Supreme Court, and would be welcome given the very different approaches taken by the lower courts in applying the ECJ's ruling.

Case: Sky Ltd and others v Skykick, UK Ltd and another [2021] EWCA Civ 1121.

First published in the September issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.