In franchising the brand is a critical part of what makes a system unique and synonymous with your product/service delivery. It is vital that this is legally protected, as a central asset that the network derives value from, and as a symbol (sound or colour) that customers associate you with. Following the SkyKick v Sky TV judgment of the Supreme Court late last year, we explore the anticipated consequences which will follow for businesses and their registered trademarks.
Broad application of bad faith
This case considered whether trademark applications made by Sky TV had been submitted in bad faith. In the context of trademarks this means the application was submitted:
- so as to interfere with the interests of competitor third parties, with malicious intent or an opportunist aim; and
- inconsistently with the proper trade mark function seeking to undermine and take advantage of the trade mark registration system.
The ‘proper trade mark function’ is the function of guaranteeing the identity of the origin of the mark. The focus here is on the trade mark specification, mainly the classification and terms of the services and products the mark is to be registered against.
Skykick – The key issues
The court considered the intention of the applicant at the time of registration and balanced this with how the trade mark was used. It was determined that such intentions, although subjective, can only be assessed subjectively based on the facts of the case. Trade mark registrations do come with a grace period which allows an applicant a period of 5 years to use the registered mark, and so whilst there is no requirement to use the mark immediately upon registration, this case demonstrated that there must be a genuine intention to use the mark at some point in the near future, for instance in a business plan.
Without this intent, it is likely that the application will be considered to have been made in bad faith. The risk here is that if an application is challenged by a third party, and the applicant cannot provide sufficient evidence to back up its intention to use the mark at the time of the application (either by use or by providing a documented business plan or correspondence), the original application may be deemed partially invalid against the services and products which it had no genuine intention to associate with the marks.
Grey areas & anticipated consequences
We expect to see increasingly tailored specifications for new trade marks filed at the UK Intellectual Property Office. However, the difficulty will be in balancing being specific enough to avoid a potential bad faith challenge, whilst also ensuring a specification is wide enough to enable business growth.
It is key that when seeking to register a trade mark, a business or individual receives legal advice as to the specification, to ensure you get it right the first time and reduce the risk of losing your registration if tested. It is also important for businesses to keep a record of decision-making processes in deciding which products and services the trade mark should be granted registered protection over, so as to be ready to defend a potential bad faith claim. This is important not only for brand protection, but also for brand reputation – particularly for larger brands who the courts and media may look to make an example of.
We will be keeping a close eye out for any updates from the UK IPO for any commentary on whether there will be increased scrutiny in its review of applications and will provide further updates if this guidance is provided.
If you wish to discuss your current trade mark portfolio with us, or wish to secure trade mark registration for your brand, or if you require assistance from our trusted team of experienced franchise specialists on your franchise journey, please visit our Franchising webpage here or contact us via email at [email protected].
