On 29 January 2020, the CJEU handed down one of the most important trade mark judgments in recent years – Sky v SkyKick– which answers questions on invalidity for both lack of clear and precise specifications and applications made in bad faith. However, the judgment fails to properly address some key issues and at times diverges from previous opinions.

BACKGROUND

As reported here, the Defendant, SkyKick Inc offered a range of cloud-based IT solutions. 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.

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 [174]; 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, as he was then, made a reference to the CJEU on the following points:

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 to enable the competent authorities and third parties to determine on the basis of those terms alone the extent of the protection conferred by the trade mark?

2. 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 compatible with the trade mark’s function as an indication of origin for that term to be sufficiently clear and precise to enable the competent authorities and third parties to determine on the basis of that term alone the extent of the protection conferred by the trade mark?

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?

4. If the answer to question (3) is yes, is it possible to conclude that the applicant made the application 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, but no intention to use the trade mark in relation to other specified goods or services?

These points were then considered in yesterday’s judgment.

QUESTIONS 1 AND 2: CLARITY AND PRECISION

SkyKick argued that the specifications in Sky’s marks were not “clear and precise”, which included “computer software”, itself a broad and indistinct definition.

The CJEU’s ultimate position is at [71]: “the answer to the first and second questions is that Articles 7 and 51 of Regulation No 40/94 and Article 3 of First Directive 89/104 must be interpreted as meaning that a Community trade mark or a national trade mark cannot be declared wholly or partially invalid on the ground that terms used to designate the goods and services in respect of which that trade mark was registered lack clarity and precision”.

The argument made by the Defendants was that specifications should be “clear and precise” given the decision in Chartered Institute of Patent Attorneys (C307/10, EU:C:2012:361), see [64]. The judgment recognises this authority at [33]:

an applicant for a trade mark must designate with sufficient clarity and precision the goods and services in respect of which protection for the trade mark is sought in order to enable the competent authorities and third parties to determine the extent of the protection conferred by the trade mark. If the applicant fails to do so, the national office or the European Union Intellectual Property Office (EUIPO) should refuse to allow the application to proceed to registration without the specification being amended to make it sufficiently clear and precise”.

However, the CJEU makes an important distinction. In Chartered Institute of Patent Attorneys, the specifications in the application were required to be “clear and precise”, whilst in SkyKick, the Sky marks had already been registered and could therefore not be invalidated following registration for that reason.

Importantly, the CJEU clarify that the list of grounds for absolute grounds for invalidity as under Article 7(1) and Article 51(1) of Regulation No 40/94 are exhaustive [58]. The list includes where a trade mark is devoid of distinctive character, becomes customary in the current language as well as contrary to public policy or as t deceive the public.

As lack of clarity and precision are not included in the list, the CJEU confirms this cannot be a ground for invalidity.

Skykick also argued that any lack of “clarity and precision” may be contrary to public policy under Article 7(1) and Article 51(1) of Regulation No 40/94 which was reinforced by the Advocate General’s opinion here at [143(2)]:

“[t]he requirement of clarity and precision may be covered by the ground for refusal or invalidity of marks which are contrary to public policy, as laid down in Article 3(1)(f) of First Council Directive 89/104 of 21 December 1988 to approximate the laws of the Member States relating to trade marks and Article 7(1)(f) of Council Regulation No 40/94 of 20 December 1993 on the Community trade mark, in so far as registration of a trade mark for ‘computer software’ is unjustified and contrary to the public interest. A term such as ‘computer software’ is too general and covers goods and services which are too variable to be compatible with the trade mark’s function as an indication of origin for that term to be sufficiently clear and precise to enable the competent authorities and third parties to determine on the basis of that term alone the extent of the protection conferred by the trade mark”.

The CJEU failed to consider this point in any depth at [65 to 67] of its judgment, noting “public policy” cannot be construed as relating to the “characteristics of the trade mark application itself”. Given this point is both genuine and in desperate need of discussion, it is disappointing that the CJEU did not deal with it properly.

The judgment suggests that so long as the mark is registered, precise and clear or not, that mark cannot be attacked as invalid.

QUESTIONS 3 AND 4- BAD FAITH

SkyKick also sought to argue that Sky’s trade marks were registered in bad faith, given that their specifications included goods and services which Sky did not have any intention of using, including using the Sky mark to designate fire extinguishers, animal skins and Christmas decorations (see [246] of the 2018 hearing here).

As to question 3, the CJEU recognises the difficulty in defining bad faith under Article 51(1)(b) of Regulation No 40/94 and Article 3(2)(d) of First Directive 89/104, noting:

[73] “it must be borne in mind that those provisions state, in essence, that a trade mark may be declared invalid where the applicant was acting in bad faith when he or she filed the application for the trade mark. Neither that regulation nor that directive provides a definition of the concept of ‘bad faith’…

[74] the concept of ‘bad faith’ presupposes the presence of a dishonest state of mind or intention, regard must be had, for the purposes of interpreting that concept, to the specific context of trade mark law, which is that of the course of trade. In that regard, the EU rules on trade marks are aimed, in particular, at contributing to the system of undistorted competition in the European Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin”.

The CJEU were therefore required to define “bad faith”, at least in the context of the legislation, and recognised “the applicant for a trade mark is not required to indicate or even to know precisely, on the date on which his or her application for registration of a mark is filed or of the examination of that application, the use he or she will make of the mark applied for and he or she has a period of 5 years for beginning actual use consistent with the essential function of that trade mark”.

Since Sky were accused of never having an intention to use their marks at the point of making the application for those goods and services as defined in their specification, and in any case within the initial five year period from registration, SkyKick attempted to invalidate those marks on the basis of bad faith registration.

The CJEU determined that bad faith can “be established only if there is objective, relevant and consistent indicia tending to show that, when the application for a trade mark was filed, the trade mark applicant had the intention either 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” [77].

This definition narrows the scope of bad faith registrations and ultimately may allow  companies to continue registering a wide scope of registrations, on the basis that “bad faith of the trade mark applicant cannot, therefore, be presumed on the basis of the mere finding that, at the time of filing his or her application, that applicant had no economic activity corresponding to the goods and services referred to in that application” [78].

As to question 4, the CJEU has confirmed that “ the trade mark is sought to be registered, the trade mark is to be declared invalid as regards those goods or services only” [80].

This is in direct contravention to the Attorney General’s Opinion in Koton (Case C‑104/18 P) in which he noted  “…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” [59].

The CJEU’s judgment may therefore set a dangerous precedent, allowing wide registrations, putting the burden on opposers to prove bad faith registrations.