Locke Lord QuickStudy: A kicking for Sky? EU Court issues long-awaited judgment in Sky v. SkyKick: decision is ‎good news for trade mark owners

On January 29, 2020, the Court of Justice of the European Union (“CJEU”) handed down its ‎long-awaited judgment in Sky v. SkyKick (Case C-371/18).  ‎

The CJEU judgment departs from the opinion of the Advocate General (“AG”) and, overall, is ‎more ‎‎‎favourable to existing ‎trade mark owners than the AG’s decision.  The CJEU effectively ‎maintained the status quo of the ‎‎‎trade mark system in ‎the EU.  ‎

The case concerned underlying (and on-going) trade mark infringement proceedings brought by ‎Sky against SkyKick in the United Kingdom.  SkyKick filed a counterclaim, arguing that the ‎earlier marks on which Sky’s infringement action was premised were invalid, either partially or ‎totally, on the grounds that the specifications thereof lacked clarity and precision.  SkyKick also ‎claimed that Sky’s marks were filed in bad faith because Sky had no intention of using the marks ‎in relation to all goods and services for which they were filed.    ‎

‎The English High Court determined that SkyKick’s claim raised a number of issues, the answers ‎to which were not acte clair.  The High Court therefore referred five questions to the CJEU, ‎which it answered in turn as follows:‎

‎1.‎ Can an EU trade mark or a national trade mark registered in a Member State be declared ‎wholly or partially invalid on the ground that some or all of the terms in the specification of goods ‎and services are lacking in sufficient clarity and precision?‎

The CJEU, following the AG’s opinion, ruled that a registered EU trade mark or a national trade ‎mark cannot be declared wholly or partially ‎invalid on the grounds that terms used to designate ‎the goods and services in respect of which ‎that trade mark was registered lack clarity and ‎precision‎.‎

There had been a concern prior to the CJEU’s judgment that an affirmative answer to the first ‎question would have obliged trade mark owners to restrict all of their existing trade mark ‎registrations containing broad terms lacking “sufficient clarity and precision”.  While dispelling ‎any such anxiety, the CJEU’s judgment noted that, in any event, a national or EU trade mark ‎registered (for more than five years) in relation to goods and services which lack clarity and ‎precision is only capable of being protected in respect of the goods and services for which it has ‎been put to genuine use.  Accordingly, the Court felt evidently that existing legislative provisions ‎already served to mitigate any perceived imbalance caused by broad terms.  While brand owners ‎may not be compelled to make immediate amendments to their trade mark portfolios, non-use ‎attacks launched against broad terms are likely to be at least partially successful.  In those ‎circumstances, the term will be narrowed according to the goods/services for which use can be ‎demonstrated.  ‎

‎2.‎ If the answer is yes, is a term such as “computer software” too general and [does it cover] ‎goods which are too variable to be compatible with the trade mark’s function as an indication of ‎origin for that term?‎

Since the CJEU answered the first question negatively, the decision does not specifically address ‎the issue raised in the second question, namely whether the term “computer software” is too ‎general (which, notably, was the AG’s view).  However, again contrary to the AG’s view, the ‎CJEU found that a lack of clarity and precision in the wording of the goods/services covered by ‎a trade mark registration cannot be considered contrary to public policy.  ‎

As a result of the judgment, trade mark owners may therefore continue to include broad terms ‎such as “computer software”, ‎“telecommunication services” ‎and “financial services”‎ in their trade ‎mark filings in the EU without immediate risk of objection.  That said, it is possible that, when ‎examining trade mark applications, such terms may be subject to greater scrutiny in the future, ‎particularly in light of the AG’s opinion.  Therefore, alongside such broader terms, it is prudent ‎for trade mark owners to consider filing for narrower terms aligned to their specific interests.‎

‎3.‎ Can it constitute bad faith simply to apply to register a trade mark without any intention to ‎use it in relation to the specified goods or services?‎

The CJEU ruled that a trade mark application made without any intention to use the trade mark ‎in relation to the ‎goods and services covered by the registration constitutes bad faith, if the ‎applicant for registration of that mark had the intention either of (i) ‎undermining, in a manner ‎inconsistent with honest practices, the interests of third parties, or ‎(ii) obtaining, without even ‎targeting a specific third party, an exclusive right for purposes ‎other than those falling within the ‎functions of a trade mark. ‎

While the CJEU found that a lack of intention to use a trade mark at the time of filing may ‎constitute bad faith, ‎the requisite threshold for establishing bad faith conduct appears to have ‎been set ‎high.  In fact, what is ‎needed is “objective, relevant and consistent indicia” of, in ‎essence, a ‎positive intention to obtain ‎a registration for illegitimate purposes. ‎ Only time will tell ‎how this new subjective test will be applied in the future; the reference to ‘consistent’ suggests, ‎however, that a finding of bad faith may be contingent on a concerted course of conduct.‎

‎4.‎ If yes, is it possible to conclude that the application was made partly in good faith and ‎partly in bad faith if and to the extent that the applicant had an intention to use the trade mark in ‎relation to some of the specified goods or services?‎

The CJEU ruled that when an absence of intention to use a trade mark in accordance with its ‎essential ‎functions concerns only certain goods or services referred to in the ‎application for ‎registration, that application will constitute bad faith only in so far as it relates to ‎those goods or ‎services.‎

The CJEU’s judgment is therefore unlikely to seriously discourage trade mark owners from filing ‎for broad specifications, including for goods/services that exceed their current or potential ‎commercial interests.  Notwithstanding the apparently high evidential threshold required to ‎establish bad faith, in the event of a challenge by a third party the registration in question would ‎only be partially invalidated in respect of those goods and services for which bad faith is ‎established.‎

‎5.‎ Is section 32(3) of the UK Trade Marks Act 1994 [which requires applicants to state that ‎the trade mark is being used, or that the applicant has a “bona fide intention” to use the trade ‎mark] compatible with [Directive (EU) 2015/2436] and its predecessors?‎

‎The CJEU answered this question by stating that EU law does not preclude national law from ‎imposing a condition compelling a trade mark applicant to positively assert that his/her trade ‎mark is either in use for the goods/services for which registration is sought, or that he/she has a ‎bona fide intention that it should be so used, provided breach of that obligation does not ‎constitute, in itself, a ground for invalidity of ‎a registered trade mark.‎

Again, the CJEU’s answer to this fifth question favours the status quo, since it found that the ‎infringement of an obligation to make a good faith statement of intent cannot constitute a new ‎ground of refusal for invalidity under EU law.  However, any such infringement may constitute ‎evidence for the purposes of establishing possible bad faith on the part of a trade mark applicant.  ‎

It is worth noting that – subject to any extension of the transition period – the United Kingdom ‎will be under no obligation to follow the judgments of the CJEU from 1 January 2021. While the ‎English Courts and UKIPO are expected to adhere (at least in the short-term) to the CJEU’s ‎historical jurisprudence, it is not inconceivable that at some point the UK will elect to depart ‎from EU law.  While the High Court’s decision following referral is anticipated prior to the ‎expiry of the transition period, it will be interesting to see how Arnold J approaches the CJEU’s ‎‎“objective, relevant and consistent indicia” test and whether he gives any indication that it could ‎be dispensed with, or altered, in a post-Brexit future.‎