Clarity on ‘bad faith’ in UK trade marks from the UK Supreme Court: Sky v SkyKick

In November 2024, the UK Supreme Court unanimously agreed UK trade marks could be invalidated or reduced in scope if found to have been applied for in bad faith.

This judgment in a trade mark dispute between Sky (a British broadcaster and telecommunications group) and SkyKick (a US based global provider of cloud management software) has resulted in clearer guidelines in English law for declaring a mark invalid (in whole or in part) due to bad faith registration.

Background on Sky v SkyKick

In 2016, Sky held many trade marks which were valid in the UK (some UK-only, and some EU), many of which were in wide ranges of classes, or included a significant number of sub-categories within each class. SkyKick, looking to expand its existing cloud-based services business into the UK, applied to register its marks in the UK. Sky opposed the registration, stating the marks were too similar to its own marks, and related to the same goods/services. SkyKick counterclaimed, arguing Sky’s marks should be invalidated for non-use, and claimed the marks had clearly been applied for in bad faith.

The judgment from the Supreme Court was handed down in 2024, 8 years after the dispute began. In that time, there has been a referral to the Court of Justice for the European Union (CJEU), High Court judgments, and a judgment of the Court of Appeal. Sky and SkyKick also settled the matter between themselves, and applied to the Supreme Court to withdraw the appeal. However, the application was rejected, with the Supreme Court stating the issues involved were of general public importance, and so judgment would be given regardless of the parties’ intent to withdraw.

Previous court findings in Sky v SkyKick

The High Court (then Mr Justice Arnold) initially referred the matter to the CJEU, to determine its position on bad faith trade marks. The CJEU noted there are two categories of bad faith trade marks, which lead to different outcomes when challenged:

• Category 1: trade marks registered with the intention of deliberately undermining or weakening a third party. These marks should be revoked.
• Category 2: trade marks registered by a party who has no intention to use them, to restrict any notional or potential third party in the future. These marks should be restricted (i.e. their classes or sub-categories cut back).

With these categories in mind, the High Court found Sky’s marks to be overly broad, and there having been no intention to use their marks in several areas, though this was without any direct intention to undermine. The marks were registered, the Court found, to be used as a legal weapon, and so not for the function of a trade mark, which is to identify goods and services as those of the mark-owner. As such, Sky’s marks were not wholly revoked, but had several classes restricted.

The Court of Appeal rejected this approach, and reinstated Sky’s marks in their entirety, deciding that having a broad range of mark categories does not constitute bad faith if there is a commercial rationale for doing so.

Both courts, however, agreed SkyKick had infringed on Sky’s marks (even when the marks were restricted).

Supreme Court findings in Sky v SkyKick

Trade mark infringement

The Supreme Court allowed the appeal in part. It held the previous judgments that SkyKick had infringed.

However, on the topic of bad faith, the Supreme Court found the High Court judgment to have been correct, reversing the Court of Appeal decision.

The Supreme Court began the judgment on bad faith by noting the EU position set out above, as well as the position on registration of a mark set out in section 3(6) of the Trade Mark Act 1994, which states “a trade mark shall not be registered if or to the extent that the application is made in bad faith”. This is backed up by section 47, which states an existing mark may be declared invalid if it was registered in breach of the aforementioned section 3. Sub-section 47(5) notes when only some of the goods or services would be invalidated, the declaration of invalidity will only apply to those sections, i.e. the mark will still exist, but will be restricted.

Clarification on ‘bad faith’

The Court then turned to the pressing question of what constitutes bad faith; it is not a term defined in the Trade Mark Act 1994, and pre-existing case law had been limited in this regard. The Court cited the CJEU categorisation as a “useful guide”, and worked from the second category as the foundation of the judgment.

The Court made clear a mark does not have to be in actual use to be registered – with nothing in the EU or UK law which requires use as a prerequisite for registration. However, the court noted  while registration without use was not an issue, the issue at the heart of this matter was different – it related to whether there was ever any intention to use the marks. On this, the Court held that applying for a wide range of trade mark classes was not enough to be seen as bad faith, but it could be used as evidence of bad faith, should the trade mark be challenged. For a challenge to be successful, bad faith has to be evidenced at the point of registration.

Further, the Court emphasised the importance of a grace period for a trade mark owner to begin using the mark before it would ordinarily be declared invalid for non-use. The 5-year period in the UK is not affected by the Supreme Court judgment, because it only applies to validly registered trade marks. Those registered in bad faith against section 3(6) of the Trade Mark Act 1994 are open to being declared invalidly registered, and this declaration can be made prior to the expiry of the 5-year period.

Sky’s UK trade mark, and one of its EU marks, were registered in 22 of the 45 NICE classes, and included all of the goods and services set out under each of those classes. Sky also has a history of using this broad range of marks in litigation – previous successful claims for infringement against third parties included claims for goods including automatic vending machines, fire extinguishers, animal skins, footwear, motor vehicles and synthetic gemstones.

What to consider when challenging a trade mark

Any brand owner looking to challenge an existing trade mark on the grounds it was applied for in bad faith will need to clearly set out the classes or categories of goods/services being challenged, and show that, at the point of registration, the trade mark applicant/holder had no intention of using the mark in relation to those specific goods/services. While applications covering a broad spectrum of goods/services can be used as evidence, a claim solely on that evidence is unlikely to succeed, as it does not evidence the intention of the rights-holder. As such, further evidence, such as existing business or any proof of intentions, would assist the challenger in an application.

Ultimately, if there are other grounds for invalidating a mark (i.e. for non-use for a period of 5 years), these may be easier for a challenger to establish. Bad faith allegations can be included in the same application, providing there is evidence of the same. The Supreme Court’s judgment is arguably, therefore, more likely to be seen as another tool in an applicant’s arsenal, though there will be instances where it will be used as the basis for a stand-alone claim.

What to consider when applying for a trade mark

Whether to apply for a broad or narrow range of classes or categories is a commercial choice. The broader the coverage of the mark, the more protection it may offer, but this can result in higher application costs and increased likelihood of third party opposition. Potential rights-holders need to beware: without the intention to use a mark in a class or category, there is now a clear precedent for removal of that class or category from the registered mark.

The cost of registering a trade mark is determined by the number of classes. It is, therefore, possible that having paid for a mark in several classes, those classes can be stripped from the registered mark, without refund. While the cost is relatively low, this is a double-loss, as there may also be a bad faith finding against the rights holder, should the matter reach court.

Ultimately, and as is often the case with potentially litigious matters, it may be a cheaper and more suitable option for the parties to reach an agreement and settle the claims, rather than have the matter determined in court.

If you are considering applying for a trade mark, concerned about the rights you hold with an existing mark, or considering challenging a mark, our Commercial and Tech team can help. We can also assist with UK, EU and international trade mark applications to help you adopt a global perspective for your brand protection strategy.

Get in touch to find out how we can help.