In one of the most – if not the most – hotly anticipated and significant trade mark cases of the year, the EU Advocate General, Evgeni Tanchev, on 16 October 2019, handed down his Opinion in the Sky v Skykick case, following a reference by the English High Court to the Court of Justice of the European Union (CJEU). Click here to read the full Opinion.
The Opinion is significant as the question of whether a registered trade mark may be invalidated on the basis of a lack of clarity and precision in the specification of a trade mark has not previously been adjudicated on. Underlying the AG’s Opinion are policy considerations around the importance of balancing the monopoly granted by trade mark rights and the potential for foreclosure of the market by permitting overly broad trade mark protection/anticompetitive practices. If the Opinion is followed by the CJEU, it may have wide reaching implications for EU trade mark law.
Sky, a well-known broadcaster and telecoms provider, sued SkyKick, a US cloud migration software provider, in the English Courts for infringement of five of its UK and EU SKY trade marks through SkyKick’s use of the sign SKYKICK. SkyKick denied infringement and counterclaimed for a declaration that the trade marks were invalidly registered on grounds that:
- the specification of goods and services lack clarity and precision;
- the applications were made in bad faith as Sky had no intention to use the trade marks across some of the broader specification of goods and services.
Sky’s trade marks were registered for goods and services in a number of classes and numerous goods and services within those classes. Sky made extensive use of the trade marks in a range of the goods and services, particularly in relation to goods and services in its core business areas of: (i) television broadcasting; (ii) telephony; (iii) broadband (such that SkyKick accepted that by November 2014 SKY was a household name in the UK and Ireland in those areas). However Sky did not use the trade marks for certain goods and services for which the trade marks were registered – namely, Sky did not offer any email migration or cloud backup goods or services, nor was there any evidence that it planned to do so in the immediate future.
Referral and AG’s Opinion
Arnold J in the English Court referred five questions to the CJEU, which the AG opined as follows:
Question 1: Can an EU or national trade mark be declared invalid, in whole or in part, on the grounds that the specification of goods and services lack sufficient clarity and precision?
There is no provision in EU trade mark law providing for a trade mark to be invalidated on the grounds that the specification of goods or services lacks clarity and precision alone. The AG stated that grounds for invalidity set out in the EU Trade Mark Regulation were clear and exhaustive. Hence this was a matter for the competent trade mark office to deal with at application stage.
Question 2: If the answer to (1) is yes, are terms such as ‘computer software’ too general and variable such that they lack clarity and precision?
Notwithstanding the AG’s Opinion in relation to Question 1 (above), the AG considered whether terms such as ‘computer software’ were clear and precise. On the one hand, ‘computer software’ may be ‘clear’ in that it comprises computer code. On the other hand however, ‘computer software’ is not precise as it covers goods and services of an immense breadth and variability in function and fields of use, such that a trade mark registration would confer a broad monopoly which could not be justified through use being made of it. The AG stated that if registration could be obtained too easily/widely, the supply of suitable trade marks would be diminished, thereby increasing costs which may be passed on to consumers. Hence although lack of clarity and precision in a specification is not a ground in and of itself for invalidity, it would be contrary to public policy, which is a specified ground for invalidity under EU trade mark law. The AG also mentioned ‘telecommunication services’ and ‘financial services’ as being imprecise.
Question 3: Can it constitute bad faith to apply to register a trade mark without an intention to use the mark in relation to specified goods or services?
Considering this issue in another way, the AG considered the third question: whether a lack of intention to use a trade mark across the breadth of the trade mark registration could constitute bad faith and result in the trade mark being declared invalid. The AG opined that lack of intention to use a trade mark may constitute an element of bad faith, however this was a matter for the referring court to decide on a case by case basis. An example of where lack of intent to use may constitute bad faith is where the application is anticompetitive in that its purpose is to prevent third parties from using the mark.
This question hits on one of the pitfalls of the current trade mark system – where a trade mark specification is overly broad and may not be challenged within the first five years of the life of the trade mark, even though there is clearly no intention to use it.
Question 4: If yes, is it possible to conclude that the application to register a trade mark was in part made in bad faith as the applicant had no intention to use the trade mark in relation to certain of the goods or services?
Where there is a finding of bad faith in relation to the application to register for certain goods and services, the trade mark is liable to be invalidated in respect of those goods and services specifically. It does not expose the whole registration to a declaration of invalidity.
Question 5: Is section 32(3) of the UK Trade Mark Act 1994 compatible with the EU Trade Marks Directive?
Section 32(3) of the UK Trade Mark Act 1994 provides “The application shall state that the trade mark is being used, by the applicant or with his consent, in relation to those goods or services, or that he has a bona fide intention that it should be so used.” The AG opined that it is compatible with the EU Trade Marks Directive, provided that it is not the sole basis for a finding of bad faith.
It remains to be seen whether the CJEU will follow the AG’s Opinion. The Opinion is not binding on the CJEU, but is influential and is followed in the majority of cases. If it is followed, the decision will have significant implications for EU trade mark law.
The case is an opportunity for the CJEU to address a problem in the current trade mark system and redress the balance between trade mark owners and third parties looking to enter a market, in circumstances where trade marks are not used and mount barriers to entry to the market. It may mark a move towards a more US-style system where applicants are required to adduce evidence of use at application stage.
Applicants/brand owners will need to carefully consider their filing strategies as an overly broad specification may be rejected by the relevant trade mark offices on the basis that the application is contrary to public policy and/or there is a lack of a bona fide intention to use the mark across the breadth of the specification. Insofar as what evidence is required to demonstrate intent to use the mark (or lack thereof amounting to bad faith), it remains to be seen whether the CJEU will provide guidance. Insofar as applicants decide to file an application covering a broad specification of goods and services and the mark is registered, it may also be vulnerable to challenge once registered – either in invalidity proceedings or by way of counterclaim to any claim for infringement.
It is important to note that the AG made clear that an overly broad specification of goods and services will not render the whole trade mark invalid; rather, only that portion which is contrary to public policy or where there is a lack of intent to use amounting to bad faith, is liable to be declared invalid.
With respect to registered trade marks, proprietors may wish to audit their portfolios and consider any areas of exposure, in particular prior to taking enforcement action.
Brand owners will need to carefully navigate these issues and consider what their core areas of use are and where the business is likely to expand.
If the CJEU hands down its judgment prior to Brexit or during any transition period, the decision will (likely) be binding in the UK.
If however the UK leaves the EU prior to a decision, it is unlikely that the CJEU will proceed to hand down a judgment in this case. The AG’s Opinion is still likely to be influential both in the English Courts and any future case presented to the CJEU.