The Advocate General’s opinion in the case of Koton (Case C‑104/18 P) has suggested a resolution to some of the key issues raised in SkyKick  EWHC 155 (Ch) surrounding bad faith trade mark registrations, stating that the whole mark should be declared invalid as opposed to only the parts deemed to be registered in bad faith.
The Defendant, SkyKick Inc was incorporated in the US, offering a range of cloud-based IT solutions. Prior to its registration it carried out trade mark searches in the US which did not reveal any third party trademarks of concern and its mark was registered there.
Later, SkyKick decided to expand its business into Europe, incorporating SkyKick UK Limited. SkyKick had failed to carry out any EU trade mark searches prior to its UK launch and upon incorporation began to target customers in the UK and the EU.
Following this, Sky PLC, the broadcaster and telecoms giant and other affiliated companies, started proceedings against SkyKick UK Limited and its US entity for trademark infringement and passing off.
SkyKick denied infringement and passing off and counterclaimed for a declaration that Sky’s own earlier trade marks were invalid on the broad basis that:
– the broad specification of the goods and services covered by the registration was “lacking in sufficient clarity or precision… to determine the extent of protection” required ; and
– that Sky had filed the applications in bad faith as they lacked the intent to use the mark for all of the terms covered by the registrations.
Mr Justice Arnold concluded that further guidance was required from the European Court of Justice and referred the following questions (amongst others) for a preliminary ruling:
1. Can it constitute bad faith to apply to register a trademark without any intention to use it in relation to the specified goods or services?
2. If the answer to the above if yes, is it possible to conclude that the applicant made the application partly in good faith and partly in bad faith if the applicant had an intention to use the trademark in relation to some of the specified goods or services, but no intention to use the trademark in relation to other specified goods or services?
To put the issue in context, Sky were asked to prove why their specification for the mark SKY included protection for (amongst other things) “animal skins” [246(iii)], and “Christmas decorations” [246(vii)] to which their answers respectively were “chamois leather and chamois leather cream [are] commonly used by cyclists … so it is entirely possible we would have a Sky branded chamois of some description and chamois [comes] from Swiss deer, I believe” and ““it was “entirely plausible” that Sky might start to market them because Sky have a Christmas marketing campaign each year”.
The issue was whether registrations like this constituted bad faith in breach of section 32(3) of the Trade Marks Act 1994, which notes that “[t]he 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 argument was that there was no bona fide intention to use the mark for those goods or services.
As such it was argued that the SKY marks were registered in bad faith and should be declared invalid, and whether the invalidity should apply to the whole mark or those parts deemed to be in bad faith was a fundamental issue referred to the ECJ.
Practically, if the answer to question 2 above were that the whole trade mark should be declared invalid, this would wipe out a great deal of trade marks belonging to some of the world’s leading brands, who sought to broaden the scope of their protection beyond the means of their initial use.
Whilst the ECJ’s guidance in SkyKick is awaited, the recent decision in Koton may have provided some clarification.
The Koton dispute involved the figurative word mark STYLO & KOTON applied for by Mr Esteban in classes 25,35, and 39. The application was opposed by Koton, the proprietor of the earlier figurative marks with the word element KOTON in classes 25 and 35.
The opposition was successful in relation classes 25 and 35, but the mark was registered in class 39.
Koton applied for a declaration of invalidity on the basis of bad faith. The application was rejected by the Cancellation Division of the EUIPO and the appeals to both the Board of Appeal and the General Court were dismissed on the basis that the earlier marks did not extend to services for which Mr Esteban’s mark had been registered.
Koton subsequently filed an appeal against the General Court’s decision.
The Advocate General concluded that the General Court had erred in its decision in finding that Mr Esteban had not acted in bad faith because the contested mark was registered for services dissimilar to Koton’s earlier marks.
Importantly though at  the Advocate General stated “it is not possible to divide the application for registration for the purposes of assessing bad faith such that only one part, in this case the application for registration for Classes 25 and 35, was considered to have been filed in bad faith, while the other part, the application for registration for Class 39, was not.”
This would indicate that the answer to question 2 above would ensure the whole mark should be declared invalid if some parts of it were deemed to be registered in bad faith.
In the following paragraph, the Advocate General refers to SkyKick, noting the issue as “explosive“. He then considers the issue with severing good and bad faith specifications, noting “…dividing an application for registration into a part filed in bad faith and a part filed in good faith would offer an incentive to apply to register trade marks for a larger set of goods and services than is justified by the actual intended uses. There would be no fear of any disadvantage for the trade mark actually being used if bad faith were discovered” .
By allowing specifications which are registered in bad faith to be severed and removed from the registration itself would place an unnecessarily high burden on those wishing to oppose and fiercely encourage brand owners to register an even wider scope of goods or services, in the hope no one will challenge them.
Whilst we await the ECJ’s decision in SkyKick, this opinion suggests big brands who have registered widely and in potential contravention to section 32(3) of the Trade Marks Act 1994 may well have their entire trade mark portfolios declared invalid, and may be for good reason.
Should this happen, there may be enormous consequences, at least in that big brands would have to scramble to register new marks which may prove difficult where rivals may take advantage, and registrants would have to rethink their registration strategy and carefully pick which goods and services were to be included in their specifications, which is likely aligned with the aim of trade mark laws generally.