In his opinion in the Sky vs SkyKick case (Case C 371/18), the Advocate General (AG) of the Court of Justice of the European Union (CJEU) on 16 October 2019 advised the CJEU that it should rule trade mark registrations covering broad and imprecise terms such as "computer software" provide their owner with an unfair monopoly and are contrary to public policy.
Should the CJEU follow the AG's opinion, this could have far reaching ramifications for trade mark registrations covering "computer software" and similarly broad terms. In the view of the AG, a registered proprietor could be regarded as acting in bad faith if there was no genuine intention to use the mark on the full range of applied-for goods or services, even in cases where a very broad specification term might also cover goods or services for which there is a genuine intention to use.
Sky, a well-known broadcaster, brought infringement proceedings against SkyKick (a US supplier for cloud migration software) on the basis of prior registrations in the UK and EU for SKY. SkyKick counterclaimed, alleging that Sky's registrations were invalid and registered in bad faith because of the very broad specifications and a lack of any intention to use SKY in relation to the range of goods/services applied for. This included some goods for which there was obviously no intention to use (e.g. "whips" and "bleaching preparations"), as well as more relevant, but very broad, goods such as "computer software". In their invalidity claim, SkyKick pointed out the differing nature of both parties businesses and questioned why Sky should be allowed to exert rights over other industries, purely because they are using SKY in relation to some forms of software.
The Advocate General's Opinion
The key points of the AG opinion and potential implications are set out below:
- Lack of clarity and precision of a specification is not, on its own, a ground for invalidity under EU trade mark law. It is, however, relevant when assessing the scope of protection of a registration.
- Trade mark specifications including terms such as "computer software" are considered too broad and not in the public interest. This means that, if the opinion is followed, applications including such terms are likely to encounter objections and require a more precise description of the goods/services for which protection is sought in order to be accepted for registration.
- It also raises the possibility for registrations already on the national or EU trade mark registers to be challenged on grounds of bad faith (notably, the opinion states that partial invalidity on grounds of bad faith is permissible) as registering a mark for a broad scope of goods / services without a genuine intention to use on the full scope of the specified terms may constitute bad faith. The opinion does not envisage that this is a point which would need to be questioned at the examination stage, unless a specific term is so broad as to be considered imprecise. It would, however, leave open the possibility for registrations to be challenged on validity on this basis post-registration.
What could be the consequences if the CJEU follows the AG?
While the AG opinion is not binding on the Court, the CJEU in many cases follows the AG opinion, which is therefore often a good indication of the final outcome. Should the CJEU decision accord with the AG opinion, then this could have potentially be far-reaching consequences on filing practices and strategies and it appears prudent to plan ahead now.
It is likely that trade mark offices in the EU would tighten their approach as regards "imprecise" terms, should the CJEU follow the AG's line of argument. In the short term, we recommend to consider changing filing strategies concerning "computer software" and similarly broad terms limited by specific fields of use.
If the CJEU were to adopt such a strict stance, then this would also change the assessment of clearance risks, due to the large number of marks registered in the EU in class 9 for broad computer software goods. Going forward, such registrations may only have a narrower scope of protection, limited to specific types and fields of use, which could in turn lower the legal risk of such prior rights cited in trade mark availability advice.
Defensive filing strategies, which often include broad categories of goods and services, should also be reviewed to ensure that the risk of a bad faith challenge is minimised. Reviews and audits of existing registered marks may also be advisable in the longer term.
Trend of lowering the bar for "bad faith" and Brexit
This case, in combination with the recent EUIPO's Board of Appeal decision in Monopoly, suggests a trend in the EU towards expanding the scope, and at the same time lowering the bar, of bad faith in the EU. This appears to be particularly the case in the context of intention to use at the point of filing or where re-filings are made to circumvent the need to prove use in enforcing registered rights.
Finally, it should be noted that this case is a referral from the English High Court and thus may be affected by Brexit: if the UK leaves the EU without a Withdrawal Agreement before the decision issues, the CJEU case will in all likelihood fall away. However, the AG's opinion may nonetheless be seen an indication of how the CJEU may decide if a similar case was referred to the CJEU in the future, so would be likely to result in these grounds being raised more widely and in an inevitable ruling by the CJEU at some point in the future. Should the decision issue before the UK leaves the EU, or during the transition period proposed under the current draft Withdrawal Agreement, the decision will form part of UK and EU case law.
We will report on further developments concerning this intriguing case and the anticipated considerable impact on EU trade mark practice.