In one of the most eagerly-awaited decisions on trade mark law in recent years, the Court of Justice of the EU (CJEU) has handed down its decision in Sky v SkyKick (C-371/18). Here’s all you need to know about this important case.
A brief history
The case centered on a dispute between Sky (the UK TV broadcaster) and SkyKick (a cloud management software company), in which Sky sued for the infringement of UK and EU trade marks consisting of the word SKY in relation to the use of the sign “SkyKick” for downloadable software products and other services.
SkyKick counterclaimed that Sky’s marks were invalid because the specifications of goods for the registrations Sky relied on lacked clarity and precision. It also claimed that they were registered in bad faith because Sky did not have any commercial intention to seek protection for all of the goods/services covered, which included products as diverse as “whips” and “bleaching preparations”. While the High Court in the UK found that SkyKick had infringed Sky’s marks, Arnold J (as he was then) referred the questions regarding the validity of the registrations to the CJEU.
The key takeaways
Interestingly, the Court declined to follow the advice of last October’s Advocate General, deciding that trade mark specifications which cover broad terms such as ‘computer software’ cannot be invalidated on the basis that they are imprecise or contrary to public policy.
The Court then went on to say that 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.
The concern, following the Advocate General’s opinion, was that trade mark owners may have needed to amend existing trade mark specifications that cover broad terms, or even change their overall EU trade mark filing strategies — now, to the relief of many trade mark owners, this will not be necessary.
CJEU v Advocate General
The CJEU, against the advice of the Advocate General, has decided that a lack of clarity and precision in a trade mark specification cannot, on its own, be considered a ground of invalidity in relation to an EUTM or national mark. Furthermore, a lack of clarity and precision in a trade mark specification does not render a trade mark registration contrary to public policy. The Court took into account the provisions which allowed a trade mark to be revoked after five years if it has not been put to genuine use in connection with the goods or services for which it is registered. However, if the use was only in respect of some of the goods or services for which it is registered, only those would remain on the register.
The result of this finding is that a mark which covers a very broad term — for example, ‘computer software’ — cannot be declared invalid for being imprecise, unclear or contrary to public policy. However, once a mark had been on the Register for more than five years, it may be open to challenge on the grounds of non-use if it has not been used in respect of the full range of computer software. Following such a challenge, the specification may be narrowed to specific types of software (such as ‘payment software’ or ‘word processing software’). The Court’s decision on this point will be a relief to many trade mark owners, who will still have five years after registration to decide how to use the mark in the EU without it being open to a challenge. The Court also confirmed that even where a revocation action is filed, a mark can be partially revoked, and the trade mark owner will retain protection for their mark in respect of the goods and/or services for which it has been used.
The Court then went on to consider the issue of whether applications filed with overly broad specifications of goods and services should be seen as having been filed in bad faith — and therefore, are inherently invalid. The CJEU decided 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 were “objective, relevant and consistent indicia” that suggest, 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”.
This means that bad faith cannot simply be presumed because the applicant had no economic activity corresponding to the goods and services covered by the specification at the time of filing. Interestingly, the Court also decided that if bad faith exists in respect of only some goods or services, the trade mark will only be invalidated with regard to those goods or services — and that the whole registration would not be tainted by ‘bad faith’, in that it would be liable to be removed from the Register in its entirety.
The case will now go back to the English High Court and it will be interesting to see whether it decides that Sky has acted in bad faith by applying to register its marks in relation to some of the more exotic goods covered by its registrations. The High Court will, however, need to be satisfied that Sky was acting dishonestly at the time the applications were filed, thereby undermining third parties or attempting to obtain a monopoly that was inconsistent with the functions of a trade mark. What remains unclear from the CJEU decision is what these criteria actually mean and how the High Court interprets and applies the guidance given by the CJEU — especially since the current threshold for establishing bad faith is exceedingly high.
The CJEU decision has established that the UK requirement for all UK trade mark applicants to confirm that they are either using a mark or have an intention to use a mark in relation to the goods and services covered by the application is in-line with EU law. The Court held that while a breach of this obligation may constitute evidence of bad faith, on its own this is not sufficient to invalidate a registration, as additional elements of bad faith must be established.
In terms of what this decision means for trade mark owners, it certainly removes the need for significant changes in filing practices, which many felt could have been needed if the Advocate General’s opinion had been followed. This decision should not signal an increase in challenges to the validity of existing trade marks covering general terms such as ‘computer software’, ‘financial services’, ‘telecommunications services’ or ‘pharmaceutical preparations’ for at least the first five years after registration.
In addition, there is no immediate need to amend any existing trade mark specifications, allaying concerns about the CJEU following the Advocate General’s opinion. This means that general filing strategies do not need to be reconsidered. In particular, the Court has not taken the opportunity to change the way in which trade mark specifications are drafted in the EU to follow more precise specifications used in countries like the United States. This may have avoided cluttering up the Register with marks filed purely for defensive purposes. However, this case does remind trade mark owners that such defensive strategies may only have a limited life, as broad specifications that do not reflect commercial reality can still be revoked for non-use after five years.