The much-anticipated Court of Justice of the European Union (CJEU) decision in C-371/18 Sky v. SkyKick was delivered on 29 January 2020. While a source of relief to trademark owners enabling them to continue to file broad specifications on the one hand without having to fear US style sanctions, the decision raises questions as to the practical implications in respect of bad faith being grounds to either wholly or partially invalidate a registered trademark, which is absent an intention to use goods and services encompassing very broad terms.
A Quick Recap
Sky Plc, the well-known broadcaster, is the owner of a large worldwide portfolio of trademarks, which it actively enforces based on particularly broad specifications of goods and service, with some registrations containing specifications with a word count of 8,000+ words and for an extremely wide range of goods and services from software to bleaching products to whips (para 4).
SkyKick is a software company offering small- and medium-sized businesses email migration and cloud backup Software as a Service (SaaS) products. Sky initiated a claim against SkyKick for trademark infringement and passing off in the UK.
While Sky’s infringement claim was held to be partially successful on the basis that “SkyKick” is sufficiently similar to Sky’s “Sky” mark for goods and services covered by its registrations, SkyKick counterclaimed by way of a validity attack resulting in the then Mr Justice Arnold (now Lord Justice Arnold) referring a series of questions to the CJEU focusing primarily on the following:
- Is a lack of clarity and precision in a trademark specification a ground to invalidate a trademark?
- Is it bad faith to register a trademark without any intention to use it in relation to the specified goods and services?
The ECJ Decision
In response to the first question, the CJEU held that EU or national trademarks cannot be declared wholly or partially invalid on the grounds that terms used to designate the goods and services lack clarity and precision. In addition, the Court’s decision concluded that such a lack of clarity and precision in specifications cannot be considered to be contrary to public policy concerning Article 7 (1)(f) of Regulation No 40/94 and Article 3(1)(f) of First Directive 89/104 and cannot be capable of invalidating a trademark.
Regarding the second question concerning whether a trademark application filed without any intention to use the mark in relation to the goods and services claimed constitutes bad faith, the Court notes that bad faith is an autonomous concept of EU law with no clear definition provided. The Court associates the concept of bad faith as pre-supposing a presence of a dishonest state of mind or intention specific to abusing trademark law and working against the source indicating function of trademarks. Accordingly, the CJEU does not deem a trademark application to have been made in bad faith where an applicant had no economic activity corresponding to the goods and services at the time they applied for the mark. Unsurprisingly, the bad faith threshold thus remains high and will apply:
if there is objective, relevant and consistent indicia tending to show that, when the application for a trade mark was filed, the trade mark application 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. (para. 77)
When an absence of intention to use only concerns certain goods and services, bad faith only applies in so far as it relates to those goods and services.
The ECJ comes as a bit of a surprise as it negates the opinion from Advocate General Tanchev’s opinion from October 2019, where he expressed the view that general specification terms like “computer software” are unjustified and contrary to public interest because they confer on the proprietor a monopoly of immense breadth which cannot be justified by any legitimate interest of the proprietor (para. 79 of the AG’s opinion).
An initial interpretation of the ECJ decision suggests that trademarks registered for a range of goods and services designated in a manner lacking clarity and precision can be revoked only after the 5-year period in so far as they have not been put to use. Such rationale is good news to trademark proprietors.
Of note is the Court’s silence on how the decision will affect trademark practices such as re-registering trademarks after the expiry of the 5-year term with identical details to earlier registrations, thus circumventing the obligation to prove use (so-called evergreening). In this respect, the ECJ decision should not be regarded as an invitation for trademark owners to continue to re-register and rely on very broad specifications with terms such as “computer software” and “telecommunications services” but rather to closely keep an eye on broad terms which become increasingly vulnerable for attack after the 5-year period.
For sure, the definition of “bad faith” filings will continue to challenge the trademark community. And as we will probably not receive much more guidance from the ECJ, it will be up to the Boards of Appeal of the EUIPO and to the national courts to develop a helpful check-list.