IP Insight: Fourth Judgment in Sky v SkyKick … “Keep the Faith”

IP Insight is a series from Virtuoso Legal the intellectual property specialists. This entry reviews the significance of the 4th judgment from Lord Justice Arnold in relation to Sky v SkyKick and it's significance to trade mark registrants.

Written by Razvan Popa and Charlie Bond

Background

On 6 February 2018, Justice Arnold (as he was) issued his first judgment on Sky’s dispute with SkyKick. In order to resolve the dispute, Justice Arnold considered it necessary to refer five questions to the Court of Justice of the European Union. On 27 April 2018, Justice Arnold handed down a second judgment with issues that came out of the first judgment. The third judgment came out on 29 April 2020 following the CJEU’s decision of 29 January 2020. On 2 July 2020, Lord Justice Arnold handed down the fourth judgment.

The Infringement

Lord Justice Arnold concluded in the third judgment that SkyKick had infringed Sky’s trade marks:

"at least in so far as SkyKick have used the signs complained of in relation to their email migration service [Cloud Migration] and in so far as the Trade Marks are registered in relation to 'electronic mail services'".

The parties argued as to what “at least” meant in the judgment, with Sky claiming it meant that SkyKick may have infringed its trade marks for goods/services other than email, while SkyKick made its submissions based upon the Lord Justice Arnold decision dismissing the claim in relation to goods/services other than email.

Lord Justice Arnold stated, however, that SkyKick have infringed Sky’s trade marks in relation to their cloud back up service.

Injunction

Given Lord Justice Arnold’s third judgment, Sky now sought an injunction to stop SkyKick from continuing to infringe Sky’s trade marks. SkyKick, however, opposed this, stating that an injunction must be refused due to Sky’s partial bad faith and that an injunction would be disproportionate in this case.

As per Article 130 of the Trade Mark Regulation, where trade mark infringement is found, and unless there are any special reasons for not doing so, the EU courts must issue an order stopping the defendant from infringing the trade mark. After having considered previous CJEU decisions, Lord Justice Arnold had to decide here whether there were any special conditions to warrant not ordering an injunction. SkyKick’s counsel asked the judge to sanction Sky for applying partly in bad faith for their trade marks. Lord Justice Arnold, however, stated that such a sanction was provided by invalidating the trade marks in respect of the goods/services that were not used by Sky. He Arnold also stated that he would go against the CJEU’’s judgment if he was to find that bad faith affected all of the goods and services provided under Sky’s trade marks. SkyKick’s counsel also stated that under the doctrine of “clean hands” the injunction should not be granted. However, the judge held that this is not a special reason as defined by the CJEU and is therefore not applicable here.

In terms of proportionality, SkyKick contended that granting an injunction would be disproportionate because:

“i) requiring SkyKick to stop using the signs complained of in the EU would have massive consequences for the business;

1. ii) in particular, requiring SkyKick to stop using the signs in the EU would require a rebrand of all their products in all markets;

iii) this would be a very costly and disruptive exercise, which would jeopardise the survival of the business because SkyKick are still start-up companies which have yet to make a profit;

1. iv) the problem has been compounded by the Covid-19 pandemic;
2. v) there has been no confusion to date;
3. vi) SkyKick are willing, if the court deems it necessary, to take steps to minimise the likelihood of confusion in the future; and

vii) SkyKick are also willing, if the court deems it necessary, to pay an ongoing royalty of 0.5%.”

Lord Justice Arnold, however, held that none of the factors show that an injunction would be disproportionate. In short, SkyKick could have:

1. Adopted a different trade mark once Sky notified them of the infringement claim; and
2. Simply stopped offering their services in the EU.

SkyKick have been “loss-making” since their incorporation so an injunction would not put in danger its existence.  Therefore, Lord Justice Arnold granted Sky the requested injunction. However, due to Sky’s partial trade mark invalidity and broad claim, Lord Justice Arnold made an order for the parties to bear their own costs.

Both parties have now received permission to appeal and should the case not settle, we can expect an interesting decision from the Court of Appeal.

Our Insight

Large companies are using broad specifications including many goods and services to protect their interests, which may result in them obtaining a monopoly on a certain good/service under a name. However, even if their trade mark is partially invalidated on bad faith grounds, this does not mean that they will be unsuccessful in trade mark infringement claims in relation to their “good faith” goods/services. ​

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