Eyes to the Sky

31st Jan 2020

All attention is now fixed on the CJEU, says John Coldham. C‑371/18, Sky Plc & Ors v SkyKick UK Ltd & Or, Advocate General, 16th October 2019

Most trade mark decisions focus on the marks themselves. This case, however, looks at what the trade marks cover – ie the specifications of goods and services. These are, of course, central to trade marks, as they set out the scope of the trade mark’s monopoly. Protection of the proprietor’s legitimate commercial interests must be balanced with the need to avoid the stifling of competition.

In the main UK proceedings (Sky Plc & Ors v SkyKick UK Ltd & Or [2018] EWHC 155 (Ch)), the Claimants claimed that the Defendants infringed five EU and UK trade marks comprising the word SKY, through their use of SkyKick (and variants) and had committed passing off. SkyKick denied the claims and counterclaimed a declaration that the trade marks were wholly or partly invalidly registered. This was based on terms in the specifications being insufficiently clear or precise (eg “computer software”). Furthermore, SkyKick argued that Sky’s applications had been made in bad faith, as Sky lacked intention to use the marks in relation to the full breadth of the terms within the specifications (eg “bleaching preparations”).

Mr Justice Arnold (as he then was) referred five questions to the CJEU relating to the role and function of trade mark specifications, allowing consideration of this problematic area of the EU trade mark system.

The Advocate General (AG) first considered whether a trade mark can be declared wholly
or partly invalid due to some or all terms in its specification being insufficiently clear and precise to enable authorities and third parties to determine the extent of protection conferred. The AG considered the second question at the same time, namely whether terms like “computer software” were too general and covered goods too variable to be compatible with a trade mark’s function as indication of origin and to enable determination of the extent of protection conferred.

In the infamous IP Translator case, a lack of clarity and precision was a ground for opposition but not for invalidation of a registered trade mark. The AG could not introduce this as a new ground for invalidity, as legislation provides an exhaustive list. Therefore, a lack of clarity and precision may be considered during assessment of an application, but a registered trade mark cannot be declared wholly or partly invalid on such grounds alone.

However, the AG inferred from case law that an insufficiently clear or precise trade mark
may be covered by the ground for refusal or invalidity of marks being contrary to public policy, per Article 3(1)(f) First Council Directive 89/104, 21st December 1988 and Article 7(1)(f) of Council Regulation No 40/94, 20th December 1993. Following Mr Justice Laddie’s reasoning in Mercury v Mercury, registration for “computer software” “is unjustified and contrary to the public interest because it confers on the proprietor a monopoly of immense breadth, which cannot be justified by any legitimate commercial interest”.

The AG said intention to use should mirror revocation on grounds of non-use. This would not change examination of applications, but third parties could seek declarations of invalidity after grant, or in opposition proceedings alongside objections on absolute grounds.

Intention to use

The third question concerned whether registering a trade mark without an intention to use across the full specification could constitute bad faith.

The CJEU judgment of 12th September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO (C‑104/18 P, EU:C:2019:724) ruled that the absolute ground for invalidity applies where an EU trade mark owner has filed the application with the intention of undermining third-party interests or of gaining an exclusive right “for purposes other than those falling within the functions of a trade mark, in particular the essential function of indicating origin”.

The AG considered that where an applicant lacks intention to use the mark, an intention
to prevent third parties is irrelevant: “The applicant is improperly seeking a monopoly […]. That amounts to an abuse of the trade mark system.” Therefore, a deliberate intention to acquire rights without an intention to use them could constitute an element of bad faith, particularly where registration is sought solely to exclude potential competitors and where there is evidence of an abusive filing strategy.

Risky question

The fourth question related to whether an application can be made partly in good faith and partly in bad faith where an applicant intends to use the mark in relation to only part of the specification. This question carried a lot of risk for brand owners – if it cannot be part and part, then there is a risk that an entire trade mark would be invalidated if there were just one term considered to be bad faith.
The AG said that following Article 51(3) of Regulation No 40/94 and Article 13 of Directive 89/104 the relevant mark would be declared invalid in part, in relation to those goods or services applied for in bad faith.

The fifth question concerned whether s32(3) of the UK’s Trade Marks Act 1994 is compatible with EU law. S32(3) provides that an application shall contain a statement of
bona fide intention of use in relation to the specification. No such statement is required when applying for an EU trade mark. The AG said this cannot be a ground for invalidity, but rather it is a procedural requirement for an application. The statement may assist as evidence of bad faith. Therefore, it is compatible provided it is not used as the sole basis for finding bad faith.

If the CJEU adopts this opinion, registration authorities would likely take a narrower approach towards terms used in specifications. Prospective trade mark owners could consider using a greater number of precise terms in order to obtain the required scope of protection, rather than fewer, broader terms.

The thousands of trade marks covering “computer software” could face partial invalidation. These terms are common, as are similar terms such as “financial services”. The scope of protection of such marks would therefore be narrowed. Proprietors should review their trade mark specifications and look out for other terms that might be considered insufficiently clear or precise so as to be contrary to public policy.

During the filing and prosecution of trade marks we expect to see an increase in challenges citing a lack of intention to use a mark in relation to specifications, as an element of bad faith. There would also be an increased risk of susceptibility to revocation after grant.

Trade mark owners should review their filing strategies, particularly where defensive, broad specifications have previously been adopted, without an intention to use trade marks to the extent covered by specifications, so as to assess potential risks of bad faith challenges. Meanwhile, all eyes will be on the CJEU for the resolution of this important case.

Key points

A lack of precision in a trade mark’s specification of goods and services is not a new ground for whole or partial invalidity, but may be considered during assessment of an application
However, terms such as “computer software” confer on a proprietor a monopoly of immense breadth, which cannot be justified and are therefore contrary to the public interest
A deliberate intention to acquire trade mark rights without an intention to use them could constitute an element of bad faith
A mark could be declared invalid in part where an applicant intends to use the mark in relation to only part of the specification
S32(3) TMA, in relation to the statement of bona fide intention of use that is submitted with a trade mark application, is compatible with EU law provided it is not used as the sole basis for finding bad faith