The European Court of Justice (CJEU) on 29 January 2020 handed down its eagerly awaited decision in the Sky v Skykick case (C-371/18) answering questions referred by the High Court of Justice England and Wales. Notably, the CJEU did not follow the Advocate General's opinion but held that trademark specifications that cover broad terms cannot be invalidated on the basis that they are imprecise or contrary to public policy. The main takeaway from the decision is that brand owners do not need to review existing registrations, or change filing strategies, when it comes to broad terms like "computer software" or "financial services."
Sky, a well-known broadcaster, brought infringement proceedings against SkyKick (a US supplier of 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 enforce their rights over uses in other industries, purely because they are using SKY in relation to some forms of software.
The CJEU's decision
The CJEU has now found that there is no cause of action for invalidity of a registered mark on the ground that the specifications covered by the mark include terms that may lack clarity and precision. This is instead a matter for the Registry on examination of trademark applications. However, where a proprietor has a lack of intention to use the mark on all applied-for goods, this can be an indication of bad faith, which is a ground for invalidity of the mark. Applications filed without intent to use could create barriers to market entry for third parties, eroding the public domain. In addition, the fact that a proprietor does not have a bona fide intention to use a national mark at the application stage, if national law requires it, does not of itself invalidate the mark, but could be a factor leading to a conclusion that the mark is invalid for bad faith.
The CJEU decision did not follow the Advocate General's opinion and find that broad specification terms such as "computer software" are invalid as being against public policy.
Questions referred from the UK High Court
The UK's High Court of Justice (England & Wales) had referred the following questions to the CJEU:
- Can an EU or national trademark be declared wholly or partially invalid on the ground that terms used to designate the goods and services for which that mark was registered lack in clarity and precision?
- If yes, does the term "computer software" meet that requirement of clarity and precision?
- Can it constitute bad faith simply to apply to register a trademark without any intention to use it in relation to the specified goods or services?
- If yes, does that mean that an application can be made partly in good faith and partly in bad faith, if and to the extent that 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?
Key points of the CJEU's decision
The key points and potential implications of the CJEU's decision opinion are:
1. The CJEU confirmed that the lack of clarity and precision of the terms used to designate the goods or services covered by a registration cannot be a ground for invalidity (as the list of grounds listed in the relevant provisions is exhaustive and cannot be extended).
2. The Court also held that, as the concept of ‘public policy’ does not relate to the characteristics of a trademark application itself, a lack of clarity and precision of the specification terms cannot be considered contrary to public policy and cannot give rise to the invalidity of a registration.
3. With respect to the invalidity ground of bad faith, the CJEU seems to have raised the threshold. The Court noted that a trademark application made without any intention to use the trademark in relation to the goods and services covered by the registration may constitute bad faith, which can only be established where objective, relevant and consistent indicia show that the applicant for registration of that mark had the intention either:
- of undermining the interests of third parties, in a manner inconsistent with honest practices; or
- of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark (such as the badge of origin function).
This does lay a considerable burden on those seeking to invalidate a mark filed for very broad terms or a wide specification.
4. The Court further took the view that bad faith cannot be presumed just because the applicant had no economic activity corresponding to the goods and services referred to in that application at the time of filing. Brand owners are not required to have actual/concrete plans as to the use of their trademark but they cannot positively lack the intention to use for those broad terms. A mark can be partially invalid due to bad faith if this ground only applies to certain of the specification terms.
5. The Court held that, where national law requires a statement that a trademark is intended to be used in relation to the goods and services for which protection is sought, the infringement of such an obligation does not constitute, in itself, a ground for invalidity of a trademark. However, it may constitute evidence for the purposes of establishing possible bad faith on the part of the applicant.
6. The Court did not consider the issue of whether trademark specifications that include the term "computer software," or other broad terms, lack precision or clarity. This is within the remit of the EU IPO during the application phase only and is not a ground for invalidity.
The decision pulls back from the view expressed in the Advocate General's opinion that the term "computer software" was too broad and imprecise for the purposes of registration. This means that trademark owners will not need to review prior registrations, or change filing strategies, when it comes to broad terms included within their applications, such as "computer software." This is because lack of clarity and precision in such broad terms is not a ground for invalidation. Brand owners will not risk a bad faith challenge if they do not know precisely how, and in connection with which goods or services, the mark will be used on at the point of filing.
The decision did, perhaps, miss an opportunity to improve the situation for brand owners hoping to launch new brands into crowded subsectors of the market, such as computer software or financial services. Terms such as "computer software" for example, cover a broad range of different fields of application within which consumers will not necessarily be confused. Prior marks registered for these very broad terms will not necessarily be subject to invalidity, creating risks for new entrants who may not have sufficient "objective, relevant and consistent indicia" of bad faith in the behaviours and intentions of prior rights owners. Without this evidence of a lack of intention to use the mark for the broad or wide specification, new applicants may need to wait until the expiry of the five year grace period for non-use before they can limit the specifications of third party rights to their actual area of economic activity.
Whether "computer software" will be an acceptable term for registration purposes remains unclear, because the Court did not provide any definitive guidance. It will remain a policy decision for the EUIPO and national registries within the EU as to whether they consider such a term to lack clarity and precision on examination.