30 January 2020 - Post by:David Stone
Today, the Court of Justice of the EU (CJEU) in Sky v SkyKick (C-371/18) has declined to follow the Advocate General and held that trade mark specifications that cover broad terms such as “computer software” cannot be invalidated on the basis that they are imprecise or contrary to public policy.
In addition, a trade mark owner will not be considered to have acted in bad faith simply because it had no economic activity corresponding to the goods or services covered by its broad trade mark specification at the time of filing. This means that trade mark owners do not need to amend existing trade mark specifications covering broad terms or change their overall EU trade mark filing strategies.
Sky, the UK TV broadcaster, sued SkyKick, a cloud management software company, for infringement of UK and EU trade marks comprising the word SKY in relation to the use of the sign “SkyKick” (and variants of it) in relation to downloadable software goods and other services. SkyKick counterclaimed that Sky’s marks were invalid because: (i) the specifications lacked clarity and precision; and (ii) they were registered in bad faith because Sky did not have any commercial rationale to seek protection for all of the goods/ services covered (e.g. “whips” and “bleaching preparations”). SkyKick was found to infringe Sky’s marks in the High Court but subject to a reference to the CJEU on the validity issues.
Imprecise Terms in trade mark specifications
The CJEU has today declined to follow the advice of the Advocate General and has instead ruled that a lack of clarity and precision in a trade mark specification cannot be considered to be a ground of invalidity in relation to an EUTM or national mark. In addition, a lack of clarity and precision in a trade mark specification does not render a trade mark registration contrary to public policy. The trade mark may be revoked after 5 year if it has not been put to genuine use in connection with the goods or services for which it is registered. However, if the non-use grounds only exist in respect of some of the goods or services for which the trade mark is registered, only those goods or services will be revoked and the rest of the mark will remain on the register.
The result of this is that a mark covering a broad term such as “computer software” cannot be declared invalid for being imprecise, unclear or contrary to public policy. After 5 years, such a mark may be challenged for non-use if it has not been used in respect of the full range of computer software and the specification may be narrowed at that point to a more-specific type of software (e.g. “anti-virus software” or “accounting software”). This will come as a relief to many trade mark owners who will still have 5 years to choose how to use the mark in the EU without the mark being at risk of challenge. Even if there is a challenge and the mark is partially revoked, trade mark protection will remain for the goods or services for which it has been used.
Bad faith – overly broad specifications
In relation to the whips and bleaching preparations point, the CJEU did rule that applying to register a trade mark without any intention of using it for all of the specified goods or services could constitute bad faith but only if there are “objective, relevant and consistent indicia” tending to show that, when the application was filed, the applicant had the “intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark”. Bad faith cannot, therefore, be presumed simply because the applicant had no economic activity corresponding to the goods and services covered by the specification at the time of filing. Again, if bad faith exists in respect of only some goods or services, the trade mark will only be invalidated as regards those goods or services.
We will have to wait to see whether the English court decides, on the facts of this case, whether Sky acted in bad faith in applying to register its marks in relation to goods such as “whips” or “bleaching preparations”. However, to do so, the High Court will need to be satisfied that Sky was dishonestly undermining third parties or attempting to obtain a monopoly that was inconsistent with the functions of a trade mark. It is not clear what these criteria mean and it will be very interesting to see the High Court’s reaction to this guidance and whether the threshold for marks in bad faith (currently high) will change. What is clear is that Sky’s lack of a commercial need for the trade marks in respect of “whips” or “bleaching preparations” will not be sufficient for a finding of bad faith.
UK requirement to confirm intention to use
Finally, the CJEU confirmed that the UK procedural requirement for all UK trade mark applicants to state that they are using the mark or have an intention to use the mark for the goods and services covered by the application is compatible with EU law. A breach of this obligation may constitute evidence of bad faith but cannot, by itself, constitute a ground for invalidity of the trade mark concerned – there needs to be additional elements of bad faith. This appears to leave the effect of the UK requirement uncertain. In general, trade mark owners do not want to state that they intend to use a mark when there is no such intention. However, there appears to be no sanction if an applicant falsely states such an intention, unless there is further evidence of bad faith.
No immediate action needs to be taken by EU and UK trade mark owners
After the Advocate General’s opinion, many practitioners considered that EU-wide trade mark filing practice would need to change. In not following the Advocate-General, the CJEU has maintained the status quo, other than in particular circumstances.
This decision does not signal an increase in invalidity challenges to existing trade marks covering general terms such as “computer software”, “financial services”, “telecommunications services” or “pharmaceutical preparations”, at least for the first 5 years after registration of the mark. There is no immediate need to amend any existing trade mark specification, as had been feared had the CJEU decided differently. There is also no need to reconsider general filing strategies. The CJEU has declined the opportunity to change the way in which trade mark specifications are drafted in the EU to align itself with US practice and to avoid clutter of the trade mark register. The judgment has also failed to signal an end to defensive trade mark strategies that involve broad specifications.
New trade mark applications should continue to be filed in accordance with the IP Translator (C-307/10) decision and broad specifications that don’t reflect commercial reality can still be revoked for non-use after 5 years.
A further note on Brexit
The case will now return to the High Court in London to decide, on the facts, whether the marks were filed in bad faith. Although the UK is about to leave the EU, it will enter a transitional period until the end of December 2020, and will still be bound by EU law and obliged to follow this ruling. Even if the national court decision is given after the end of this year, the way things stand at the moment, the High Court will have to follow the ruling (only the Supreme Court will be able to diverge from the CJEU reasoning). However, the government may legislate to change this during 2020 so that other Courts will be able to deviate from CJEU case law. If that happens, we may see the High Court providing its own opinion on these important validity issues and the related aspects regarding the function of a trade mark.
This article was co-authored by Beverley Potts.
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