The Court of Justice of the European Union (“CJEU”) recently handed down its preliminary ruling in Case C-371/18 Sky plc and others -v- SkyKick UK Ltd and another.
Some commentators have stated that this case is the most important trade mark case in the EU in the past 10 years. But why is this and what is the case all about?
In summary, Sky (the well-known television and broadband internet service, fixed line and mobile telephone service provider) is the proprietor of several EU registered trade marks and a UK registered trade mark for the word "SKY"/figurative marks which include the word "SKY". Those trade marks are registered in respect of a very large number of goods and services, in particular in classes 9 and 38. The registration covers, inter-alia, such broad terms as "computer software" and "telecommunications services".
Sky brought an action for registered trade mark infringement in the High Court of Justice in England and Wales against SkyKick. The SkyKick companies filed a counterclaim for a declaration that the trade marks in issue were invalid, because they are either registered in respect of goods/services that are not specified with sufficient clarity and precision, or they were filed in bad faith, due to the extraordinary breadth of the goods and services covered by them.
The High Court of England and Wales held that it considers that registration of a trade mark for "computer software" is too broad and thus contrary to the public interest, because it confers on the proprietor a monopoly of immense breadth, which cannot be justified commercially. However, as the Court considered the law in this area to be unclear, it referred certain questions to the CJEU for clarification.
What Was the CJEU Asked to Decide?
The High Court of Justice in England and Wales asked the CJEU to determine various questions, including the following:-
- Whether an EU trade mark or a national trade mark registered in an EU Member State could 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.
- If the answer to question 1. is yes, is a term such as "computer software" too general and covers goods which are too variable to be sufficiently clear and precise?
- Can it constitute bad faith to register a trade mark without any intention to use it in relation to all the specified goods and services? If yes, can an application be made partly in good faith and partly in bad faith, to the extent that the applicant intended to use the mark for some goods/services?
What did the CJEU decide?
The Court decided that an EU trade mark or a national trade mark filed in an EU Member State cannot be declared invalid or partially invalid on the ground that terms used to designate the goods and services in respect of which the trade mark was registered lacked clarity and precision. In other words, even if a term like "computer software" lacks clarity and precision, a trade mark cannot be declared wholly or partially invalid because of that. Furthermore, it is not contrary to public policy to allow such registrations to exist.
In addition, the Court held that when an applicant files an application to register an EU or national trade mark without any intention to use it in relation to all the goods/services covered by the application, this can constitute bad faith. There are two circumstances where this might arise. First, if the applicant filed the application purely to prevent a third party from registering and using that mark. The second scenario is where the applicant did not file the application because it wants to prevent a specific third party from using and registering the mark for certain goods/services, but the applicant itself had no intention of using the mark for those goods/services. This would be the case where there is no rationale for the application for registration. This might cover the situation where the applicant applied to register a trade mark in respect of a very broad range of goods/services and yet the applicant had no reasonable commercial rationale for seeking such projection (e.g. because the goods and services are very far removed from the goods and services for which, viewed objectively, the applicant would need to register its trade mark). But the judgment is unclear in this regard.
What are the implications of the case for brand owners?
Commentary to date has declared the ruling a "big win for brand owners". This is primarily because the Court has held that registrations for such broad terms as "computer software" are not contrary to public policy and cannot be invalidated on such grounds.
Moreover, many commentators have taken the line that it will be very hard to invalidate a trade mark registration based on bad faith simply because it covers a broad range of goods/services. The CJEU said that bad faith cannot be presumed merely because, at the date of filing, the applicant had no economic activity corresponding to the goods and services covered by the application. Bad faith can only be established if there are "objective, relevant consistent indicia tending to show that, when the application for a trade mark was filed, the trade mark applicant had the intention…of obtaining, without even targeting a specific third party, an exclusive right other than those falling within the functions of a trade mark". Quite how you prove this was not addressed by the CJEU.
That said, it is the writer’s personal opinion that when this case comes back before the English High Court there is still a real possibility that the Court will declare Sky's trade mark registrations to be invalid in part on the ground of bad faith. This is because the Court has already held that the specifications for the registered trade marks include categories of goods and services that are so broad in scope and coverage that Sky "could not and did not" intend to use the trade marks across the breadth of the categories. The paradigm example of this is "computer software".
As readers will appreciate, a broad term such as "computer software" covers an enormous range of different types of software, including those purely for entertainment purposes (e.g. computer games), software used to operate an aeroplane and software used to operate medical devices.
Even if the writer is wrong in his conclusion (and the High Court concludes that, based on what the CJEU has said, it is not able to invalidate marks in whole or in part on the ground of bad faith, simply because they are registered for goods/services which are very broad in scope), because of Brexit, at the end of this year the UK will no longer be bound by EU trade mark law. Thus, what the CJEU said in the SkyKick case may no longer have relevance to UK trade marks filed after the end of this year. It is the writer’s view that any applications filed thereafter for categories of goods and services that are very broad in scope (e.g. computer software) may well be held by the English Courts to have been filed in bad faith and/or their registration would be contrary to public policy.
The writer suspects that, in the coming years, EU and UK trade mark law will diverge on this important issue. Whilst trade mark owners may continue to be able to obtain registrations for very broad terms at EU level, this may become harder to achieve in the UK.