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Sky, Skyscape, declarations of non-infringement and costs in the IPEC

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21/07/2016

The case [1] concerned Skyscape Cloud Services Ltd, a company proving cloud computing services to public authorities in the UK, and the telecommunications giant Sky.  Initially, Sky, a company renowned for the meticulous presentation and protection of its brand image, wrote to the claimant presenting allegations that the company had infringed numerous Sky trade marks. In a pre-emptive response, Skyscape sought a declaration of non-infringement (DNI) against Sky.

This tactic proved unsuccessful, with the Court finding in Sky’s favour.

The Court considered the circumstances in which it could grant a DNI noting that it was able to do so where it was “appropriate and useful” to do so, notwithstanding the absence of an express provision for the grant of a DNI in UK trade mark law. The proposed DNI was tested against three principles:

  • the question of whether to grant the negative declaration is one of discretion, rather than one of jurisdiction
  • there must be a useful purpose to the DNI
  • the underlying issue must be sufficiently clearly defined in order for it to be rendered justiciable.

In this case, the judge (HHJ Hacon) considered that while the first two conditions were satisfied, it was far from clear that the third was met. This was because the draft DNI presented by Skyscape was very wide.  In view of the scope of the draft DNI, the judge considered that Sky only needed to prove that one claimed use was infringing.  On this, the central question was whether the average consumer would be confused by the branding of both Sky and Skyscape.

Skyscape argued that their average consumer, a well-informed civil servant in possession of a substantial budget, would able to differentiate between the two brands. However, Skyscape’s draft DNI referred to the public sector as a whole as Skyscape’s typical consumer as opposed to the above. As there are over 29,000 listed public bodies on the Government website, it was held that the average consumer would likely share the same attributes as a typical person on the street, thus considerably widening the prospect of a likelihood of confusion.  The likelihood of confusion was enhanced by the prevalence of Sky products and services embodying the name “Sky” followed by the description of the product or service (SkyGo would be an example of this).  Additionally, Sky was known to be active in the provision of internet services as well as television services.  The judge considered that the average consumer, confronted with the sign “Skyscape”, would consider this to refer to a service operated by Sky.

On the question of infringement, the judge considered that Skyscape had failed to submit satisfactory evidence proving it had not benefited from the use of the word ‘Sky’ in its branding nor as to the effect of its branding on Sky.

As a postscript to this case, it is worth noting that Sky was also – at least partly – successful on costs. Sky attempted to dispute the £50,000 IPEC costs cap.  Sky submitted that as its overall costs were in excess of £108,000, it should be able to recover such costs in light of what it perceived to be the vexatious case pursued by Skyscape.  Sky also argued the cap costs of £3,000 and £6,000 caps on strike out applications and preparation of witness statement costs respectively should be raised.

On the question of raising the overall costs cap beyond £50,000, the judge considered that although Skyscape’s conduct had been far from ideal, it was not such as to constitute an “abuse of process” that warranted the removal of the costs cap.  On the issue of lifting the stage caps on costs, the judge noted that he was able to do so as this would not affect the overall cap of £50,000.  In the circumstances, he considered that it was appropriate to lift the cap on stage costs and award an extra £5,000.

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[1] Skyscape Cloud Services Ltd v Sky Plc and others [2016] EWHC 1340 (IPEC)

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