Sky Ltd & Ors v Skykick UK Ltd & Anor

An injunction to restrain infringement of an EU trade mark must ordinarily be granted. Under Article 130(1) of the Regulation, refusal requires a strictly construed “special reason” arising from the specific facts. Disproportionality and failure to strike a fair balance between competing fundamental rights may constitute such a reason. Partial bad faith in obtaining a registration is not, without more, a special reason where the bad faith concerns a distinct part of the specification and has no immediate relation to the relief sought. Damages in lieu may be considered when assessing proportionality, but the court must be cautious not to create a compulsory licence where such licensing is unavailable.

The judgment determined consequential issues following earlier judgments after a reference to the Court of Justice of the European Union. The court had found partial bad faith in applications for the trade marks and subsequently found infringement in relation to Cloud Migration. It was necessary to decide whether Cloud Backup also infringed, whether injunctions and publicity orders should be granted, how costs should be apportioned, and whether stays and permission to appeal were appropriate.

The central issues were whether Cloud Backup infringed the surviving specifications, whether partial bad faith or the commercial consequences of an injunction justified withholding injunctive relief, and what consequential orders should follow.

1. Infringement. Cloud Backup was identical, or very similar, to the relevant Class 38 services. Use of the signs therefore infringed under Article 9(2)(b) of the Regulation and Article 10(2)(b) of the Directive. The Article 9(2)(c) and Article 10(2)(c) claims technically succeeded but added nothing.
2. Injunction. Article 130(1) requires an injunction unless a strictly construed “special reason” exists. The court reconciled that rule with the Enforcement Directive and the Charter: disproportionality, or failure to strike a fair balance between the fundamental rights engaged, may constitute a special reason where it arises from the specific facts. Partial bad faith did not qualify because it affected a distinct property right and had no immediate and necessary relation to enforcement of the valid rights.
3. In assessing proportionality, the court considered the effect on business, rebranding costs, the absence of proved confusion, proposed undertakings and a royalty. Those matters did not outweigh the proprietor’s legitimate interests. Damages in lieu were relevant, but the court had to be cautious before making an order tantamount to a compulsory licence. An injunction was granted.
4. No publicity order was appropriate. Sky were the overall winners, but had succeeded on a substantially narrower case and SkyKick had succeeded on important issues. Each side was ordered to bear its own costs.
5. Permission to appeal was granted on specified infringement and bad-faith issues. A three-month stay was granted, conditional on payment of 2% of SkyKick’s gross EU revenues into a joint account pending appeal.

The judgment records earlier stages in the same litigation:

• High Court (Chancery Division): Main Judgment, [2018] EWHC 155 (Ch); Second Judgment, [2018] EWHC 943 (Ch); and Third Judgment, [2020] EWHC 990 (Ch).
• Court of Justice of the European Union: reference answered in Case C-371/18, [EU:C:2020:45], also reported at [2020] ETMR 24.
• High Court (Chancery Division): the present consequential judgment granted an injunction, made costs and stay directions, and granted permission to appeal on specified issues.