(1) Skyscape Cloud Computing Limited v Sky Plc, Sky (UK) Limited and Sky International AG [2016] EWHC1340 (IPEC) (2) Karen Denise Millen v Karen Millen Fashion Limited and Mosaic Fashions US Limited [2016] EWHC 2104 (Ch)

 

Both of these cases were primarily concerned with applications for declarations of non-infringement (‘DNIs’).

Skyscape v Sky

In Skyscape v Sky (the ‘Skyscape case’), Skyscape applied for a wide ranging DNI relating to a large number of its word and logo marks in connection with 10 types of service. English trade mark legislation does not expressly provide for DNIs but they are possible provided that the following three principles, as identified by Pumfrey J in Nokia v IntelDigital, have been established:

  1. The question of whether to grant a DNI is one of discretion rather than jurisdiction;
  2. The use of DNIs should be scrutinised and their use rejected where it would serve no useful purpose, but where such a declaration would help ensure that the aims of justice were achieved, the court should not be reluctant to grant a DNI; and
  3. Before a court can properly make a DNI, the underlying issue must be sufficiently clearly defined.

Although the basic question was whether it was acceptable for Skyscape to use the word “SKYSCAPE” in connection with cloud computing for the public sector in the UK, there were a lot of theoretical combinations for each name or logo and service.

The logic of Skyscape's application was that in the event that the judge was not prepared to accept their proposed wide-ranging DNI in full form, he should ring fence all of the combinations of Skyscape's signs and services encompassed by the proposed order in respect of which he was prepared to grant a DNI. However the variables were such that there was an enormous number of possible outcomes to consider. On the second day of the trial, Skyscape handed up a table to assist in this exercise. However, this attempted simplification process ran into a number of problems. The table was only concerned with similarity between Skyscape's services and the goods and services specified in the cited marks. It ignored whether, and the extent to which, each of Skyscape's many signs identified in the draft DNI order were identical or similar to each of the cited marks. Nor did it take into account whether there might be different average consumers through whose eyes the comparison of mark and sign would have to be made.

The real problem with the table, though, was that it was produced far too late. The categorisations of goods and services as being similar, complementary or dissimilar was Skyscape's. Sky was entitled to challenge the table, to direct evidence to those categorisations and to cross-examine Skyscape's witnesses. None of that was possible because the table emerged only after cross-examination was over. Further, Skyscape filed two additional forms of DNI order at the start of the second day of the trial but the judge did not permit them because it did not give Sky sufficient time to explore them and cross-examine witnesses on them.

The judge considered whether the Sky word mark would be infringed by Skyscape’s marks under Articles 9(1)(b) and/or (c) of the EU Trade Marks Regulation. Despite ‘Skyscape’ being one word, the judge believed there was a likelihood that a significant proportion of the relevant public and thus the average consumer, encountering the sign ‘Skyscape’ used for an email service, would take it to be yet another service offered by Sky. If the average consumer was already familiar with Sky email, they would probably take it to be a replacement or modified Sky email service. Consequently, Skyscape did not manage to prove that the “SKY” Mark would not be infringed pursuant to Article 9(1)(b) by the use of ‘Skyscape’ for email services.

In respect of the Article 9(1)(c) infringement, the only material consideration available to the court which did not require evidence, is that SKY is a very well known mark. The judge said it was likely that a significant proportion of all those interested in email services, and thus the average consumer, regard the mark favourably as denoting a large and competent supplier of TV and related services. On balance the judge took the view that the link between ‘Sky’ and ‘Skyscape’ in the mind of the average consumer would enable Skyscape to benefit from the Sky's undoubted reputation and goodwill. Consequently Skyscape failed to establish that unfair advantage would not be taken of the distinctive character or repute of the SKY Mark.

Based on all of these factors Skyscape’s application for a DNI was dismissed.

 

Karen Millen v Karen Millen Fashion 

In Karen Millen v Karen Millen Fashion (the ‘Karen Millen case’) the Claimant was the co-founder of the original ‘Karen Millen’ business who sold her shares to an Icelandic consortium in 2004. Under the terms of the share purchase agreement (‘SPA’) were a number of restrictive covenants as to the Claimant's future conduct. In 2015 the Claimant reached a settlement agreement with the Defendants which regulates the position between the parties in the UK and the EU as a whole and this mainly prevents the Claimant from using the marks “KAREN” or “KAREN MILLEN” in those territories. However, the 2015 settlement did not address the position worldwide, and in particular did not address the position in the USA or China; and that is what this action was about.

The Claimant sought a wide range of relief but as the judge put it, “at the heart of this dispute… is the range of negative declarations sought by [Karen Millen] to establish what she can do, before she starts to trade [in China and the US]”.

The judge analysed the effect of the SPA in detail. The main part of the SPA at issue was a set of sub-clauses which, in particular, prevented the Claimant from using the Defendants’ IP rights (the ‘IP Rights Clause’) and from using the name “KAREN MILLEN” in the UK or anywhere else in the world in relation to identical or similar businesses (the ‘Name Clause’).

The judge had to consider whether the Claimant’s acts constituted use in the course of business of the Defendants’ IP rights as at 2004. The judge concluded that the Claimant, in having applied for trade marks and in attacking the Defendants’ marks in China and the US, had not used the Defendants’ IP rights in breach of the IP Rights Clause.

In respect of the Name Clause, it was important to note that the judge was not being asked to rule on anything the Claimant has already done, but on acts which she proposes to undertake if they are found to be lawful. The Claimant sought a number of DNIs. Some related to marks containing the words KAREN and MILLEN. Others relate to marks which contain the word KAREN but not the word MILLEN. In particular, they tended to include a mark with KAREN in cursive script, and a stylised “X” which was referred to as a “kiss”, which we can refer to as the “KAREN solus” marks. The scope of goods covered by these marks was defined in the Claimant's pleadings by reference to broad terms such as “accessories” and “homewares”. Only the KAREN solus marks were relied on in relation to apparel and “accessories”.

In applying the same test for a DNI as in the Skyscape case, the judge found that the DNIs would generally serve a useful purpose as a decision before the Claimant started to trade would avoid damage to the Defendants' goodwill which would be hard to compensate, and allow the Claimant to choose a different name for her new business and get it off to a smoother start.

However, applying the third principle, regarding the underlying issue being sufficiently defined, was more problematic for the judge. He referred to the Skyscape case saying that here the Claimant has again asked for a very broad set of DNIs, and then asked for the judge to whittle them down as appropriate. The judge said the proposed DNIs did not in any way stipulate what the Claimant's intended business would be like, other than in the very broad sense of the goods and services. There was no statement about where or how it would trade, its trade dress, or which of the various marks would actually be used, separately or in combination. The judge said that it could make a great difference to his assessment of the likelihood of confusion if the Claimant were to use KAREN on women's clothes, and KAREN MILLEN on perfume, candles and eyewear.

However, the judge said he accepted the Defendants' submissions that the breadth of the declarations sought was very great. They extended to the use of the KAREN marks on clothes in close physical proximity to the Defendants' stores, along with simultaneous use by the Claimant on other goods of KAREN MILLEN. He was not willing to grant the DNIs sought for China and the US because they lacked focus and clarity, especially in relation to the types of goods and services to which they relate. The judge said that many of the acts falling within the negative declarations sought would breach the Name Clause. He also found that the intended breaches of the Name Clause would also be breaches of the IP Rights Clause.

 

 Conclusions

These cases suggest that whilst it may it can be possible to bring DNI proceedings it can be difficult to get a court to grant a DNI a fortiori in a sufficiently useful form. These cases give a useful indication of the considerations the court will take into account when making its assessment. They also show the importance of clearly defining the DNI you are seeking, and fully analyse the scope of a DNI including which marks and goods or services, prior to the CMC stage.

 

(1) Skyscape Cloud Computing Limited v Sky Plc, Sky (UK) Limited and Sky International AG [2016] EWHC1340 (IPEC)

Link to Judgment

Judgment Date: 8 JUNE 2016

(2) Karen Denise Millen v Karen Millen Fashion Limited and Mosaic Fashions US Limited [2016] EWHC 2104 (Ch)

Link to Judgment

Judgment date: 16 AUGUST 16

 

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