Sky Plc & Ors v Skykick, UK Ltd & Anor [2018] EWCA Civ 2004

[2018] EWCA Civ 2004Case No A3/2018/1026
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2018] EWHC 155 (Ch)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (CHANCERY DIVISION)
EUROPEAN UNION TRADE MARK COURT
MR JUSTICE ARNOLD
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 06/09/2018
Before
LORD JUSTICE KITCHINLORD JUSTICE FLOYD
Between
(1) SKY PLCAppellants(2) SKY INTERNATIONAL AGAppellant(3) SKY UK LIMITEDAppellant(1) SKYKICK, UK LTD.Respondents(2) SKYKICK INC.Respondent
Geoffrey Hobbs QC (instructed by Mishcon de Reya LLP) for AppellantsSimon Malynicz QC (instructed by FieldFisher LLP) for RespondentsHearing Hearing date: 30 July 2018
Judgment Approved
[1]This is an adjourned application for permission to appeal from two judgments of Arnold J in an action for passing off and trade mark infringement. In the course of his main judgment Arnold J decided certain questions of fact and law, but referred questions of EU law to the Court of Justice of the European Union (“CJEU”). Those questions have been transmitted to the CJEU, who have registered the reference as Case C-371/18. At the conclusion of the oral hearing we announced our decision that permission to appeal would be refused. These are my reasons for joining in the decision to refuse permission to appeal.[2]In order to understand how the appeal comes to this court at this stage it is necessary to set out the issues, which I shall attempt to do as concisely as possible.[3]The applicants (together Sky) have made extensive use of the trade mark SKY in relation to a large range of goods and services, and in particular, in relation to(i) television broadcasting(ii) telephony and(iii) broadband provision. The mark SKY is very well known in the UK, at least in relation to those goods and services. The judge made extensive findings as to the breadth of Sky’s use of the marks, in relation to television, telephony, internet, email, online data storage, online music downloads, computer software, betting services, tickets, games, magazines, financial services, insurance, educational services, travel, installation services, and transport. By 30 June 2006 the turnover of Sky’s business was over £4.1 billion.[4]Sky own, between them, four registered EU trade marks and one registered UK trade mark either for the word SKY or for figurative depictions of that word. These marks were registered for a wide range of goods and services, either by reference to class headings of the Nice classification, or by reference to those class headings supplemented by a series of increasingly detailed descriptions of more specific goods and services.[5]For the purpose of their infringement claim Sky relied on the registration of their marks in eight descriptions of goods and services, namely: i. computer software (Class 9); ii. computer software supplied from the internet (Class 9); iii. computer software and telecoms apparatus to enable connection to databases and the internet (Class 9); iv. data storage (Class 9); v. telecommunications services (Class 38); vi. electronic mail services (Class 38); vii. internet portal services (Class 38); and viii. computer services for accessing and retrieving information/data via a computer or computer network (Class 38).[6]The respondent, SkyKick, is a small to medium sized enterprise which was set up in 2010. Its core idea was to develop a product which would largely automate the process of migrating from Microsoft Office to Office 365. As Office 365 provides access to cloud based productivity services, SkyKick considered the name SKYKICK to be appropriate, because the company’s service would “kick” i.e. migrate the client’s data into the “sky” i.e. the cloud.[7]Sky took objection to that choice of name and commenced these proceedings in May 2016. They complained of infringement under what were Articles 9(2)(b) and 9(2)(c) of Regulation 207/2009. In return, SkyKick contended that the marks should be declared partly invalid on the ground that they were registered for goods and services that are not specified with sufficient clarity and precision. This is a contention which derives from the decision of the CJEU in Case C-307/10 Chartered Institute of Patent Attorneys v Registrar of Trade Marks (IP Translator) [2013] Bus LR 740, but it has never been recognised that the contention gives rise to a ground of invalidity. SkyKick also contended that the trade marks were registered in bad faith because, at the date of the application for registration, Sky did not intend to use the marks for all the goods and services which fell within the specification. The consequence was that the marks were either invalid in their entirety, or alternatively invalid to the extent that there was no genuine intention to use. Although a trade mark can be declared invalid for non-use when five years have elapsed from the date of registration, there is no express ground of invalidity based on lack of intention to use at the date of registration.[8]SkyKick’s first point, based on IP Translator, raised two issues. The first was whether lack of clarity or precision could be a ground of invalidity of a mark once registered. The second was whether the specification of any of the marks were objectionable on that ground. Sky accepted that the first point was not acte clair. They contended, however, that the present case was one where it could be decided that the specifications were not objectionable on this ground, even if such a ground were available.[9]The judge considered the second issue at [162] to [173] of his first judgment. He recited SkyKick’s contention that the terms “computer software”, “computer software supplied from the internet”, and “computer software and telecoms apparatus to enable connection to databases and the internet” were lacking in clarity and precision, and Sky’s contrary contention that they were not. He accordingly decided to refer two questions to the CJEU:
“(1) Can an EU trade mark or a national trade mark registered in a Member State be declared wholly or partially invalid on the ground that some or all of the terms in the specification of goods and services are lacking in sufficient clarity and precision to enable the competent authorities and third parties to determine on the basis of those terms alone the extent of the protection conferred by the trade mark? (2) If the answer to (1) is yes, is a term such as “computer software” too general and [does it] cover[s] goods which are too variable to be compatible with the trade marks’ function as an indication of origin for that term to be sufficiently clear and precise to enable the competent authorities and third parties to determine on the basis of that term the extent of the protection conferred by the trade mark?”
[10]Next the judge turned to SkyKick’s second ground of attack on the trade marks based on whether the marks were registered in bad faith because Sky did not intend to use the marks in relation to all the goods and services for which they were registered. Sky’s response was that the act of applying for trade marks without any intention to use them cannot constitute bad faith, and even if it does, it cannot result in total as opposed to partial invalidity.[11]The judge conducted a wide-ranging survey of EU and domestic cases, none of which had gone as far as to hold that a mere intention not to use a trade mark could amount to bad faith. He summarised the position at [224] to [229]:
“224. I draw the following conclusions from this review of the case law. 225. First, although there is no express requirement of an intention to use in either the Regulation or the Directive, and a registered trade mark cannot be revoked for non-use until five years have expired, the jurisprudence of the CJEU and the General Court suggests that, at least in certain circumstances, it may constitute bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services. 226. Secondly, the case law indicates that it is not sufficient to demonstrate bad faith that the applicant has applied to register the trade mark in respect of a broad range of goods or services if the applicant has a reasonable commercial rationale for seeking for such protection having regard to his use or intended use of the trade mark. Nor is it sufficient to demonstrate bad faith that the applicant only has a contingent intention to use the trade mark in relation to certain goods or services in the future. 227. Thirdly, although the court or tribunal must exercise caution for the reasons given in the preceding paragraph, the case law suggests that, in an appropriate case, it may be possible to conclude that the applicant made the application partly in good faith and partly in bad faith if the applicant had an intention to use the trade mark in relation to some of the specified goods or services, but no intention to use the trade mark in relation to other specified goods or services. 228. Fourthly, provided that section 3(6) of the 1994 Act is interpreted and applied consistently with European law, then it appears probable that section 32(3) is compatible with European law. 229. Neither side contended that the law on these points was acte clair, and in my judgment they were right not to do so. As counsel for Sky submitted, however, it does not necessarily follow that questions should be referred to the CJEU. That depends on whether SkyKick’s case is factually well-founded. Before turning to consider the facts, however, I must first consider a distinct, although related, issue of law.”
[12]The judge next considered whether the legal consequence of a finding of bad faith in relation to some of the goods covered by the registration was total or alternatively partial invalidity. He concluded at [234] that the better view was that the trade mark could be held partly invalid, but the matter was not acte clair given that there was at least one statement in a judgment of the General Court to the contrary effect.[13]The judge then turned to the facts on this issue. The conclusion which he drew from the evidence was that Sky did not intend to use the trade marks in relation to all of the goods and services covered by the specifications. Sky was already using the trade marks in relation to some and had concrete plans in relation to others. There was a reasonable basis for supposing Sky might wish to use the marks in relation to others, but there remained a category for which Sky had no reasonable commercial rationale for seeking registration: see the judgment at [250]. The judge said that he was forced to conclude that Sky had a strategy of seeking very broad protection of the trade marks regardless of whether it was commercially justified.[14]The judge found this to be the case in three different ways. First the specifications included specific goods such as “bleaching preparations” and “insulation materials” for which Sky could not justify an intention to use the marks. Second the specification included goods such as computer software which Sky could not intend to use the marks across the breadth of the description. Third, the specifications were intended to cover all the goods in relevant classes such as class 9.[15]At [252] the judge dealt with a submission by SkyKick that it was impossible to distinguish between the parts of the specifications which covered goods and services in relation to which Sky intended to use the marks and the parts where Sky had no such intention. The judge rejected this submission. Although drawing a line would be a labour-intensive task, it would in principle be possible. He did not propose to undertake it at this stage, however, since the questions of whether it was necessary to undertake it and the test to be applied when placing the line depended on resolution of the legal issues.[16]Sky submitted that even if the issues of law were determined in SkyKick’s favour, this would not affect the infringement case. The judge rejected this submission. Firstly, if bad faith affects the registration so as to result in total invalidity, then that would carry the infringement case with it. Secondly if terms like “computer software” and “telecommunications services” were held to be “too broad on bad faith grounds” this would affect the infringement case: see judgment [257].

The judge accordingly resolved to refer the following three further questions to the CJEU:

[17](3) Can it constitute bad faith simply to apply to register a trade mark without any intention to use it in relation to the specified goods or services? (4) If the answer to question (3) is yes, is it possible to conclude that the applicant made the application partly in good faith and partly in bad faith if and to the extent that the applicant had an intention to use the trade mark in relation to some of the specified goods or services, but no intention to use the trade mark in relation to other specified goods or services? (5) Is section 32(3) of the UK Trade Marks Act 1994 compatible with Parliament and Council Directive 2015/2436/EU and its predecessors?[18]Section 32(3) (a home-grown provision) requires the applicant for a UK trade mark to state that the trade mark is either being used by the applicant or with his consent or that he has a bona fide intention to use, but there is no comparable provision in the Directive or its predecessors.[19]The judge then went on to consider Sky’s infringement claim. There were issues as to whether SkyKick’s goods and services were identical to the goods for which the mark was registered, and as to likelihood of confusion. The judge concluded that SkyKick’s goods and services were identical to some but not all of the goods and services for which the mark was registered. He concluded that if the marks were validly registered then SkyKick had infringed under Article 9(2)(b), because of a likelihood of confusion amongst at least some classes of average consumer.[20]The judge next considered the case under Article 9(2)(c) on the assumption that there was no confusion. He held that the necessary link was made out, but on the assumed basis that there was no likelihood of confusion, there was no real risk of detriment to the distinctive character of the marks.[21]Next the judge rejected an own name defence, and a further defence concerning the compatibility of an amendment to Regulation 207/2009 which was alleged to be out of conformity with EU law.[22]Finally, in a single paragraph, the judge dismissed Sky’s alternative claim in passing off.[23]The judge’s order consists of the order for reference to the CJEU. He has not made a final order in relation to any aspect of the claims before him, even in relation to the claim in passing off. Nevertheless Sky are dissatisfied with the judge’s order and seek permission to appeal to this court. They also make contingent applications for a stay of the order for reference and an expedited hearing.

The application for PTA

[24]Although the grounds of appeal are discursive, they divide Sky’s complaint into four broad sections given the labels A-D, before turning to the questions referred to the CJEU under section E.[25]Ground A is a complaint that the judge decided the issue of Article 9(2)(c) infringement on the basis of an assumption that there was no likelihood of confusion. Instead, he should have held that there was infringement under Article 9(2)(c), subject to the validity issues.[26]Ground B points to the fact that the claim to passing off is dealt with in a single paragraph of the judgment. Sky contend that a conclusion that there was passing off should have flowed inevitably from the judge’s conclusion that SKYKICK was likely to bring SKY to the average consumer’s mind, that SKYKICK is a sign which the average consumer is capable of perceiving as a sub-brand of SKY, and that customers and end users were likely to be confused.[27]Ground C deals with the IP Translator objection. If I may be forgiven for paraphrasing the (xvii) sub-paragraphs of this ground, it is that it is for the national authorities, in this case the court, to determine whether the list of goods and services for which the trade mark is registered is sufficiently clear and precise to enable the competent authorities to determine the extent of protection. In this case the judge could and should have held that the terms were sufficiently clear and precise. In addition it is argued that, even if a claim for invalidity can be based on failure of clarity or precision, the failure can only result in partial invalidity.[28]Ground D deals with the bad faith objection. It asserts that the judge was bound by Article 59(3) to determine whether the bad faith objection applied in respect of some of the goods or services, so as to render the objection valid only in relation to those goods and services. The judge had wrongly declined to draw the line between those goods and services for which an intention to use was established and those for which it was not.[29]Then it is said that the judge should have found, in the circumstances of this case (which include the fact that SKY was a household name in at least its core areas), that there was no relevant objection on the ground of bad faith given the following factors: i) The mandatory requirement of Article 59(3). ii) The fact that the CJEU has said in a number of cases that it is possible to apply for registration of a mark in respect of all the goods or services falling within a class, or in respect only of some. iii) The absence of any provision making it a condition or requirement that an application for registration be filed with a bona fide intention to use. iv) The decision by the EU legislator not to proceed with a proposal to impose such a condition or requirement. v) The need to abstain from imposing a more onerous requirement for use than that which is imposed by the provisions of the legislative scheme. vi) The consistent case law of the CJEU that one cannot equate the existence of bad faith with the absence of an intention to use. vii) The impermissibility of interpreting section 32(3) of the Trade Marks Act so as to result in a finding of bad faith not otherwise countenanced by EU law.[30]On the basis of these grounds it is contended in section E of the grounds of appeal that the questions referred are either acte clair or irrelevant to the outcome: i) Questions 1 and 2 were the wrong way round. Unless and until it is concluded by the national court that the terms in issue fail the IP Translator test for clarity and precision, no undecided question of EU law arises. ii) Question 3 (does lack of intention to use equate with bad faith?) is unnecessary. It was clear that EU law requires an assessment of the objective the applicant was pursuing without simply equating the existence of bad faith with the absence of an intention to use. Sky contend that the question has been asked at an abstract level removed from the actualities of the present case. iii) Question 4 (is a partly good faith/partly bad conclusion permissible?) is unnecessary. Sky contend that the answer is yes and so much is acte clair. iv) Question 5 (is section 32(3) compatible with the Directive and Regulation?) is unnecessary. It is clear that section 32(3) cannot supplant the grounds of invalidity in the Directive; nor can it create a more onerous requirement for use; it is clear that the 1994 Act cannot establish a requirement for breach of which a finding of bad faith must inevitably follow in accordance with the EU law concept of bad faith.[31]When the application for permission to appeal came before me on the papers, it was accompanied by a request for a stay of the order for reference, and a measure of expedition. I considered that questions arose as to the approach of this court in granting permission in a case where a reference had been made by the High Court which the High Court considered needed an answer before it could give judgment. I also queried whether the court had jurisdiction to grant a stay. Finally I questioned whether the court’s approach, if it was otherwise satisfied that it should give permission, should be to expedite the hearing of the appeal. I accordingly adjourned the application to an oral permission hearing.[32]On the first question, SkyKick submitted that the court could not entertain an appeal on this basis, whilst Sky submitted to the contrary. SkyKick relied principally on the decision in Case C-210/06 Cartesio [2009] Ch 354 whereas Sky relied on two decisions subsequent to Cartesio in Joined Cases C-72/14 and C/197/14 X v Inspecteur van Rijksbelastingdienst and Case C-525/06 De Nationale Loterij NV v Customer Service Agency BVBA.[33]In Cartesio the court held:
“Where rules of national law apply which relate to the right of appeal against a decision making a reference for a preliminary ruling, and under those rules the main proceedings remain pending before the referring court in their entirety, the order for reference alone being the subject of a limited appeal, the second paragraph of Article 234 EC is to be interpreted as meaning that the jurisdiction conferred on any national court or tribunal by that provision of the Treaty to make a reference to the Court for a preliminary ruling cannot be called into question by the application of those rules, where they permit the appellate court to vary the order for reference, to set aside the reference and to order the referring court to resume the domestic law proceedings.”
[34]In Nationale Lotterij the Rechtbank van koophandel te Hasselt (a Dutch first instance court) had referred questions on whether certain national rules were compatible with EU law to the CJEU. Subsequent to the reference, Nationale Lotterij successfully appealed the case to the Hof van beroep te Antwerpen (the Court of Appeal, Antwerp) which held that the national rules in question were compatible with EU law and that the answer to that question was clear. It accordingly gave judgment in relation to the entire proceedings in the appeal.[35]The court reminded itself of the principle that Article 234 does not preclude decisions of a court by which questions are referred to the CJEU from remaining subject to the remedies normally available under national law, citing Case 146/73 Rheinmühlen Dusseldorf [1974] ECR 139 and Cartesio paragraph 89. The principle in Cartesio was not relevant, because in that case the proceedings before the national court remained pending before the referring court in their entirety, the order for reference alone being the subject of appeal. In the present case the proceedings were no longer pending before the referring court. The Court of Appeal had itself adjudicated on the dispute between the parties, “thereby assuming responsibility for ensuring compliance with Community law”.[36]In Inspecteur van Rijksbelastingdienst the court affirmed the principle in Nationale Lotterij see paragraph 62, applying it by analogy in a case where the question was whether a supreme court was obliged to refer a question to the CJEU where a lower court had decided to refer such a question in another case.[37]Mr Geoffrey Hobbs QC, who appeared at the hearing for Sky, reminded us of the very general terms of CPR 52.20:
“Appeal Court’s powers 52.20 (1) In relation to an appeal the appeal court has all the powers of the lower court...”
[38]He submitted that, if the court gives permission to appeal, the full court hearing the appeal will be seised of the entire proceeding. The Court of Appeal could conclude, in accordance with the principle in Nationale Lotterij, that the issues of EU law were either acte clair or irrelevant to the outcome and take responsibility for ensuring compliance with EU law. In the present case, if the Court of Appeal allowed the appeal, the proceedings would not remain pending before the lower court any more than they were in Nationale Lotterij. The principle in Cartesio was restricted to the case where there is an appeal limited to the order for reference, where the entirety of the proceedings remain pending before the lower court. Even in such a case, Mr Hobbs submitted, the remedies normally available under national law still applied. It was only that, when the matter returned to the lower court, the judge of that court would not be bound to withdraw the reference.[39]Mr Simon Malynicz QC, who appeared for SkyKick at the hearing, submitted that the present case was a hybrid between a full appeal and an appeal limited to the order for reference where the proceedings remained pending in the lower court. That was because the proceedings before Arnold J were stayed, and because the judge had yet to make important findings of fact.[40]I think Sky are correct that there is no obstacle to this court hearing an appeal in which the court is being asked to give judgment in their favour on the basis that EU law is acte clair, and/or that the reference is unnecessary. Given the powers of this court on an appeal under domestic procedural law, this court can do anything which the judge could have done. In this case, the judge could have declined the reference and given final judgment, it follows that this court can do so as well. The Cartesio principle is not relevant, because it is directed at an appeal where the court of first instance will continue to have the proceedings pending before it if the appeal is allowed, and will therefore be compelled to decide the proceedings without the benefit of the reference which it considered necessary.[41]It does not follow, however, from the fact that the court has the power to determine the whole matter, that the court should contemplate that the power be exercised, and grant permission to appeal, at this stage of the litigation. The litigation before Arnold J is at an interim stage. He has, so far as he is concerned, not made all the relevant findings of fact. Moreover, if we entertain an appeal at this interim stage, there is a range of possible outcomes if we do not undertake a compendious Nationale Lotterij adjudication of the entire proceedings. Thus we may conclude that it is indeed necessary to refer the questions identified by Arnold J to the CJEU, in which case costs will have been expended on an exercise which will have gained nothing, and which will have delayed (assuming a stay is granted) the resolution of the reference. Alternatively we may conclude that we do not need to refer any questions, but that we do not have the necessary findings of fact to conclude that the marks are valid, or that the likelihood of confusion is established on the basis of that part of the mark which is validly registered. The matter would then have to be remitted to the High Court for those determinations to be made, leaving open the unattractive prospect of a further appeal. All this seems to me to be inviting unnecessary procedural complexity. It is far better to let the reference take its course and, if necessary, hear an appeal to this court when the final outcome is known.[42]Mr Hobbs protested that the hitherto unrecognised objections to the validity of a trade mark which Arnold J had identified had given rise to real uncertainty for industry, and were having profound knock-on effects in trade mark cases in the United Kingdom. A green light had been given to the raising of lack of clarity and precision, and bad faith objections to the validity of countless marks which contain hitherto widely accepted designations of goods and services. If Mr Hobbs is right about that, the right course is to obtain any necessary rulings from the CJEU sooner rather than later, so that certainty for industry can be restored. Industry would not be assisted by a finding from this court that, on the assumption that such objections exist, Sky can nevertheless succeed in their allegation of infringement on the basis of partial validity of their marks.[43]It was for those reasons that I considered that, although this court would have jurisdiction to entertain an appeal at this stage, it should not do so. I therefore joined with Kitchin LJ in refusing permission to appeal. The questions of stay and expedition did not therefore arise.[44]I agree.

Cited in 2 later judgments