The CJEU judgement in the case of Sky v Skykick (C-371/18), issued on 29th January 2020, addresses some fundamental aspects of trade mark law. Most significantly, it finds that the inclusion of broad terms within a specification can be considered bad faith if there is no intention to use but insufficient clarity and precision within a specification is not in itself a ground for invalidity.
This case arose from a dispute between SkyKick, a US start-up offering cloud migration software, and Sky Plc, the well-known broadcaster and telecommunications company. Sky sued SkyKick for trade mark infringement and passing off, relying on registrations which contained very broad terms, such as “computer software”, and a number of items in which Sky would seem to have no obvious commercial interest (e.g. “bleaching preparations” and “whips”). SkyKick counterclaimed on the grounds of invalidity due to (i) Sky’s specification lacking clarity and precision; and (ii) bad faith, as they asserted that Sky had no intention of using its marks for all of the goods and services registered.
Questions to the CJEU
The High Court of Justice of England and Wales referred several questions to the CJEU, summarised as follows:
- Can a trade mark be declared wholly or partially revoked on the grounds that some or all of the terms in the specification lack clarity and precision?
- If yes, is a term like “computer software” too general to be considered sufficiently clear and precise?
- Can it constitute bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services?
- If yes, is it possible that an application can be made partly in good faith and partly in bad faith, where the applicant had an intention to use the trade mark for some goods and services but not others?
The CJEU dismissed the suggestion in the first question that a lack of clarity and precision could be a ground for invalidity. As an alternative strategy, trade mark owners may well have to rely upon non-use actions after five years’ of registration, where there is a different question as to whether a trade mark has been used sufficiently to maintain the full scope of protection afforded by such a broad term.
In relation to the second question, the CJEU surprisingly ruled that general terms, like “computer software”, were not too wide-ranging to be considered insufficiently clear and precise. This decision goes against the view taken by the Advocate General in his Opinion issued on 16 October 2019, which stated that broad terms were contrary to the public interest because they allowed for a “monopoly of immense breadth which cannot be justified”. To some readers, it may appear that the CJEU missed an opportunity to tighten up on the use of unclear and imprecise terms which can give rise to difficulties in clearing new trade marks for use. However, it does provide comfort to brand owners knowing that their existing trade mark registrations which contain broad terms will not face a barrage of invalidity actions.
The Court went on to comment on the bad faith issues outlined in questions three and four, stating that a lack of intention to use a mark could amount to bad faith if there was no rationale for the application. To define the scope of this ground, the Court set out a new test, namely that such a lack of rationale could be established only where there is evidence to show that when the application was filed the applicant either:
(i) had the intention of dishonestly undermining the interest of a third party; or
(ii) had the intention of obtaining an exclusive right for purposes other than those falling within the functions of a trade mark (regardless of third party interests).
It was further confirmed that when this lack of intention only concerned certain goods and services, the application would only constitute bad faith in so far as it related to those specific goods and services. This would allow for part of a specification to be invalidated, with the rest of the registration remaining valid. This appears to be a sensible clarification, avoiding draconian effects stemming from the inclusion of a single term.
It remains to be seen how the English Courts will apply the CJEU decision to the Sky v SkyKick case.
We believe that the decision presents a double-edged sword for brand owners. On the face of it, the judgement is good news for proprietors because their existing registrations will not suddenly become vulnerable to invalidation because they contain terms which lack clarity and precision. However, confirming the status quo means that the trade mark registers will continue to remain a minefield with regards to assessing conflict risks due to expansive specifications which clutter already overcrowded registers. The decision also leaves the burden on third parties to contest overly broad specifications.
Furthermore, although a lack of clarity and precision may not yet constitute a distinct ground for invalidity, we could see the EUIPO and UK IPO pay increasingly close attention to broad terms, perhaps operating more restrictively in future. It will be interesting to see whether Brexit results in the UK classification system deviating from the EU system, bringing it closer to a US-style practice where terms must be specified to define the nature or commercial field of the goods and services in question. Although we are nowhere near that kind of restrictive practice yet, as trade marks continue to increase in popularity, there may be greater arguments for the scope of these rights to be more clearly defined.
The ruling on bad faith provides positive clarification for brand owners because it gives them another weapon in their arsenal when trying to invalidate dishonestly filed trade marks. However, the new test presents a high threshold because the intention (or lack thereof) of the trade mark owner may be difficult to prove. We will have to wait for the test to be interpreted by the courts to find out exactly what amounts to such a lack of rationale.
Going forward, brand owners should take this as a reminder to review the products and services included in their specifications, ensuring that they have an honest intention to use their mark in relation to the same.
Amelia Skelding 10 February 2020