SkyKick Episode IV: a new hope

Quite recently, in a courtroom not far away, SkyKick returned. In an unexpected twist in the context of a long-running saga, judgment #4 ([2020] EWHC (Ch) 1735), from Lord Justice Arnold, directly followed judgment #3 [how confusing].

This time, the judge was dealing with consequences of his finding that SkyKick had infringed [some of] Sky’s trade mark registrations. Here is the speed-read:

• In judgment #3, Arnold LJ held that SkyKick’s email cloud migration service infringed Sky’s trade marks at least in relation to “electronic mail services” and “telecommunications services”. However, the majority of SkyKick’s revenue in 2017 came from cloud migration, whereas now the majority of its revenue comes from cloud backup. Unsurprisingly, the parties disagreed as to whether the judge’s conclusion regarding cloud migration could also be read onto cloud backup. The answer: yes, the cloud backup services were identical to certain services in Sky’s trade mark specifications as pared down following the finding of partial bad faith. 
• SkyKick argued that the court should not grant an injunction, for two reasons. First, to reflect Sky’s partial bad faith in applying for the infringed trade marks and therefore to dissuade others from making similarly overbroad filings in future. Second, that it would be disproportionate to grant an injunction. SkyKick’s best-case scenario was that the court would simply refuse to grant an injunction, but it offered undertakings in terms more limited than the standard form of an injunction, or damages in lieu, as back-up options. To address these points, the judge considered the TRIPS Agreement, the EUTMR and Directive, the IP Enforcement Directive, the Charter of Fundamental Rights, and the usual English law principles on injunctive relief [and the analysis is well worth a read in full if you have time]. 
• The judge rejected SkyKick’s first argument for three reasons: (i) the CJEU’s judgment made clear that the only sanction for partial bad faith is partial revocation – the remainder of the specification is not “infected” (and it is possible that in the case of partial revocation the trade mark owner would be sanctioned in costs anyway); (ii) partial invalidity is not a “special reason” (for the purposes of Article 130(1) EUTMR, which must be given an autonomous interpretation) to refuse injunctive relief; and (iii) for the purposes of English law, allegedly inequitable conduct must have an “immediate and necessary relation” to the relief sought, which was not the case here (the bad faith instead related to the applications for the relevant trade marks). 
• Regarding the second argument, the judge noted that if the grant of an injunction would be disproportionate and would not achieve a fair balance between the various fundamental rights engaged, this would constitute a “special reason” not to grant such an injunction. SkyKick listed several consequences that it considered would be disproportionate, including the significant effect on its business (compounded by Covid-19); the fact that an EU-wide injunction would require SkyKick to rebrand its products in all markets; the lack of actual confusion; and willingness to take steps to minimise confusion in future and to pay to Sky a royalty of 0.5%. The judge was not convinced that any of these factors would justify the refusal of an injunction, in summary because the problem was one of SkyKick’s own making (it was warned about Sky as early as 2013 but took no action) and the remedies offered were too imprecise and unlikely to be effective relief/compensation for Sky.
• As Sky was the overall “winner” but succeeded on a much narrower claim than originally brought, the judge ordered that each party should bear its own costs. 
• SkyKick sought permission to appeal on four grounds, which was granted in respect of three: broadly speaking, infringement by way of cloud migration, and two grounds of appeal regarding the cut-down of Sky’s trade mark specifications for bad faith (which SkyKick contended should have been more severe). Sky sought permission on three grounds, which was granted only in respect of the finding of partial bad faith. [This GuestKat must be clairvoyant].