This post by Clíodhna Kelleher of Monckton Chambers discusses the Supreme Court’s judgment in Skykick v Sky Ltd [2024] UKSC 36, a mammoth trade mark dispute with an interesting EU law dimension.
The bulk of the judgment is concerned with the proper approach to allegations of bad faith in the registration of trade marks. However, the judgment also addresses a question arising from the Brexit transition period, namely, whether UK courts have retained certain pre-Brexit powers in trade mark disputes under the UK-EU Withdrawal Agreement (“WA”). In that context, the judgment offers an alternative, principled approach to the question of how Brexit affects the resolution of claims that arose before the UK’s withdrawal from the EU to that provided by the same court in Lipton.
Background and context
Understanding the issues in this case requires a quick excursion into EU intellectual property law. Under the EU Trade mark Regulation (“EUTMR”) the EU operates a unitary system of trade marks that are valid throughout the common market. The regime permits applicants to secure trade mark protection across EU member states with a single application for an EU trade mark, or “EUTM”. EUTMs serve an important function in the common market as they provide uniform protection across EU member states, reducing barriers to trade, enhancing market integration and hence enhancing competition in the EU.
The EUTMR also grants jurisdiction to certain specified national courts to act as EU trade mark courts in the adjudication of disputes involving EUTMs. A domestic court acting as an EU trade mark court has wide-ranging powers, including the ability to grant an EU-wide injunction, a valuable form of relief that serves as a key attraction of obtaining an EUTM as opposed to a purely national trade mark. In the UK, the specified national courts were the High Court and the county courts at what are now the seven regional Business and Property Court centres.
After the end of the Brexit transition period, EUTMs no longer had effect as such in the UK. However, Article 54 of the WA required the UK to ensure that holders of certain EU-derived intellectual property rights, including EUTMs, would become holders of a comparable registered and enforceable intellectual property right in the UK.
This was effected by the introduction of a new Schedule 2A to the Trade Mark Acts 1994 by secondary legislation, and in practical terms led to the UKIPO populating the UK register of trade marks with a further 1.4 million trade marks mirroring EUTMs, registered against the same goods and services to which the original EUTM related and with the same original application date. These are referred to as “comparable marks” or “UK clones”. In different proceedings (EasyGroup v Beauty Perfectionists [2022] Bus LR 146, “Beauty Perfectionists”, [16]), Sir Julian Flaux described the regime thus:
“The comparable trade mark (EU), also known as ‘the UK Clone’, is a new right which has been created and granted automatically to all EUTM proprietors under Article 54 of the Withdrawal Agreement. Since EUTMs are enforceable only in the EU, when the EU ceased to include the United Kingdom, the scope of protection of EUTMs reduced from 28 states to 27. The UK Clone is a politically agreed solution to this so that the scope of protection afforded to EUTM proprietors did not change. On exit day or IP completion day every proprietor of an EUTM was in possession of a new comparable trade mark (EU) in the United Kingdom.”
The proceedings
Sky claimed that the appellants, SkyKick, a cloud services provider, had infringed a number of Sky’s registered trade marks. Four of the five trade marks at issue were EUTMs. Each mark was for the word “sky” or a stylised figure of the word “sky” for use in connection with an “enormously wide range of goods and services” (para 71) including computer software, computer services for accessing and retrieving information, telecommunications services, and electronic mail services.
Sky complained of the use by Skykick of the marks “SkyKick”, “skykick” and figurative marks comprising those words. Skykick contended that Sky had applied for certain of its trade mark registrations in bad faith as it had no intention of using its marks in connection with all of the goods and services against which those marks had been registered.
The key issue before the Supreme Court was whether the registration of a trade mark could be invalidated on the basis that it had been made in bad faith because the applicant for registration had no intention of using the trade mark in relation to some of the categories of goods and services against which it had been registered. The procedural history of the claim is complex and involved a reference to the CJEU that was determined in January 2020. In short, the CJEU determined that an application made without any intention to use the trade mark in relation to the goods and services covered by the registration was made in bad faith if the applicant had the intention of undermining the interests of third parties or obtaining an exclusive right other than that falling within the functions of a trade mark.
Following the CJEU’s judgment, the proceedings returned to the High Court. The High Court concluded that the applications had been made in bad faith by Sky. This was overturned by the Court of Appeal. Skykick accordingly appealed to the Supreme Court on the issue of bad faith.
The jurisdiction of the UK courts in relation to EUTMs
There was no dispute in relation to the court’s jurisdiction to determine whether the comparable marks had been infringed. However, Sky contended that the UK courts no longer had jurisdiction to determine whether the EUTMs at issue had been infringed. Sky argued that since the end of 2020 the “…guillotine has come down…” and the EU regime under the EUTM Regulation in the EU, and the regime of comparable marks in the UK were now independent of one another:
“454. all EU trade mark rights in and relating to the United Kingdom were extinguished; jurisdiction over infringement and validity of EU trade marks protected by ongoing registration at the level of the Union now lay exclusively with EU trade mark courts in the European Union (that is to say, the territory of the EU27); and that neither the United Kingdom nor the European Union has legislated for any European Union court or tribunal to exercise any jurisdiction over or in relation to any comparable trade mark (EU), or for any court in the United Kingdom to exercise any jurisdiction over or in relation to any European Union trade mark protected by registration at the Union level for the territory of the EU27 under the EUTM Regulation.”
The same issue had been considered by Sir Julian Flaux in Beauty Perfectionists. He determined that the UK courts retained jurisdiction as an EU trade mark court in relation to cases pending before the end of the transition period, including the ability to grant remedies effective across the EU. This approach was followed by Mrs Justice Bacon in EasyGroup Ltd v Nuclei Ltd [2022] FSR 23.
The Supreme Court agreed with the outcome in those cases and rejected Sky’s arguments on this point.
The key provision relied on by Lord Kitchin was Article 67 WA, which governs the procedure that applies to, amongst other things, certain intellectual property claims that were pending before the UK courts prior to the end of the Brexit transition period. It mandates that those claims remain subject to the rules of jurisdiction that applied under the EU law. In the case of proceedings involving EUTMs, Article 67 WA mandates that the jurisdictional provisions of the EUTMR remain applicable to those pending cases. These jurisdictional provisions include the obligation to designate or maintain the designation of certain courts as EU trade mark courts, governed by the same rules of jurisdiction and with the same powers as any other EU trade mark court. Accordingly, properly interpreted, Article 67 WA required the UK to maintain the designation of certain domestic courts as EU trade mark courts, with the accompanying panoply of powers available to any EU trade mark courts, including the ability to order EU-wide injunctive relief in relation to EUTMs.
Lord Reed gave a short concurring judgment: “… I have reached the same conclusions as Lord Kitchin, for essentially the same reasons…”. The purpose of his judgment was, however, to explore the effect of the UK’s withdrawal from the EU, which he noted was of wider significance than the issues in these proceedings.
The key element of Lord Reed’s short concurrence for the purposes of this blog is the emphasis placed by him on legal certainty:
“511. Another, and in a sense more fundamental, answer is that it would have been highly unfortunate if the United Kingdom’s withdrawal from the EU had been other than on terms which enabled pending legal proceedings to be decided on the basis of the preexisting law. It is a basic principle of legal certainty, and an aspect of the rule of law, that the legal consequences of events are, in general, determined in accordance with the law in force at the time of those events, rather than a different law introduced at a later date. Proprietors of trade marks who had brought infringement proceedings in designated United Kingdom courts before the end of the transition period had accrued causes of action under the EU Trade Mark Regulation (to which defendants with grounds for challenging the validity of the marks in question had a counterclaim). Whether the proceedings were concluded before the end of the transition period could depend on wide variety of factors, including, in the present case, the fact that there was a preliminary reference to the Court of Justice of the European Union, and an appeal to this court. It would be incompatible with the values I have mentioned if the time taken by the judicial process were to have the effect of depriving the parties of the remedy to which they were entitled. It would also mean that identical cases would be decided differently, depending on the vicissitudes of litigation, and on whether they happened to be brought in the courts of this country or in the courts of the remaining EU member states.”
Legal certainty and Lipton
The judgment is interesting for a number of reasons. It provides another example of the muscularity of seemingly innocuous provisions of the WA. Although, as Lord Kitchin emphasised, this decision is likely to apply only to a relatively small cohort of cases (depending on the routes those cases taken to resolution), the UK courts could continue to act as EU trade mark courts granting remedies that apply across the EU for some time to come. The Supreme Court’s consideration of registrations made in bad faith is no doubt very interesting for intellectual property law practitioners. Perhaps more likely to be of interest to readers of this blog are the comments made by Lord Reed in respect of legal certainty favouring the continuation of the old approach under EU law in respect of cases that arose prior to the withdrawal of the UK from the EU.
These comments do not sit comfortably with the principle underlying the approach of the Court in Lipton, the landmark judgment setting out the law that applies to EU causes of action that arose prior to Brexit. My colleague, Jack Williams, has blogged about this case on a few occasions, here and here.
In Lipton the majority determined that the Withdrawal Act 2018 had, in effect, converted causes of action arising under EU law prior to the end of the Brexit transition period into causes of actions that, instead, arose under retained EU law. In so doing, the Supreme Court expressly rejected the “Interpretation Act analysis”, a shorthand given to the argument that the effect of section 16 of the Interpretation Act 1978 was to preserve the applicability of EU law to causes of action that arose when EU law applied to the UK.
A key plank of the reasoning for this conclusion was provided by Lord Sales and Lady Rose as follows:
“88. … The Withdrawal Act 2018, by repealing the ECA 1972 and providing for the incorporation of all EU law into domestic law, signalled a break with the past and a wholesale shift of all relevant legal regimes into a purely domestic framework. The Interpretation Act analysis would mean that a very extensive and valuable component of that new legal order – the ongoing domestic enforcement of pre Brexit accrued causes of action under EU regulations – was not expressly covered by the regime at all. It was instead silently left to the application of a very different enactment which itself had nothing to do with Brexit. …”
A different way of looking at the same issue is the point put by Lord Reed, simply and forcefully: it is a fundamental principle of legal certainty, and a key aspect of the rule of law that the legal consequences of events are determined by reference to the law as it stood when those events happened, instead of laws enacted afterwards. On this approach, the fact that the Withdrawal Act 2018 does not expressly state that accrued EU law cases are to be determined by the application of the law as it stood when the cause of action arose is nothing to the point: the default is that the law that applies to events is the law as it stood when those events happened, for the principled reason given in this judgment. Lord Kitchin’s judgment notes the pragmatic advantages of this approach:
“473. I am fortified in this conclusion by the following matters. It applies only to those cases which were pending on IP completion day, and it means that the courts in the United Kingdom previously designated as EU trade mark courts retain that status and retain jurisdiction to decide these cases… This is an entirely sensible and pragmatic solution to the problem of pending cases. It is also the solution which is least likely to have arbitrary, wasteful and expensive consequences for the parties, the authorities, other traders and the public.”
Lipton and Skykick are not formally inconsistent: in Skykick the Court was grappling with a highly specific provision of the WA that did not arise in Lipton, and the reasons given by the Court for rejecting the Interpretation Act approach in Lipton are significantly more detailed and complex than I have summarised here. Nonetheless, it is interesting that a differently constituted Supreme Court revisits a principled plank of the decision in Lipton and decides it differently. As the decision Lipton is so clear and definitive on this issue, the Skykick approach is unlikely to change how courts handle cases spanning the Brexit transition period. However, it does provide an alternative approach to a core issue in Lipton that may resonate with those who find the court’s conclusion in Lipton counterintuitive.
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