SkyKick: Good news for brand owners - the CJEU's ruling maintains the status quo

Summary

The eagerly awaited judgment in the SkyKick case (C-371/18) was published on Wednesday. The case relates to questions referred to the CJEU by the UK High Court in trade mark infringement proceedings brought by household name Sky (Sky Plc and Sky International AG) against SkyKick Inc, a cloud migration IT company. The key issues being considered at EU level are the need for clarity and precision in trade mark specifications and bad faith. The Court has, in large part, not followed Advocate General Tanchev’s Opinion, so many brand owners will be breathing a sigh of relief that their current trade mark filing practices can continue and there is no urgent need to revisit broadly worded specifications. The Court has also raised the bar for bad faith and confirmed that a registration can only be cancelled in limited circumstances where an applicant has acted in a manner inconsistent with honest practices with the intention of undermining the interests of third parties or sought an exclusive right for purposes other than those falling within the functions of a trade mark. Also, any trade mark registration invalidated on the basis of bad faith would only be cancelled for the terms deemed to be filed in bad faith, not in its entirety. Given last year’s AG Opinion, the IP community and brand owners were braced for the Court’s decision to mark a sea change in approach, but instead the judgment largely confirms the status quo so will be welcomed by many brand owners.

CJEU Judgment

In 2018, in the context of trade mark infringement proceedings involving Sky and SkyKick, the UK High Court referred several questions to the Court of Justice of the EU for a preliminary ruling. All of the questions, which are set out in full at paragraph 47 of the Court’s judgment, related to the requirement for clarity and precision in trade mark specifications and the extent to which trade mark registrations can be invalidated for bad faith. The Court has, in large part, chosen not to follow last year’s Advocate General Opinion in the case, but has provided some helpful guidance to trade mark practitioners and brand owners, which will be welcomed by many as it seems to confirm the status quo rather than call for a drastic change in approach to trade mark filing strategies.

Clarity & Precision Requirement

The first issue considered by the Court is whether a registration can be declared wholly or partially invalid on the ground that terms used in the specification lack clarity and precision. ‘Computer software’ was highlighted as a particular term that might not meet the requirement of clarity and precision.

The Court confirmed the Advocate General’s view that the mere fact that terms are unclear or imprecise is not, of itself, a ground for invalidating a trade mark registration. The Court disagreed, however, with the Advocate General’s Opinion in relation to public policy. In the Court’s view, a lack of clarity and precision cannot be considered contrary to public policy, so trade marks are not liable to invalidation on that basis either.

This will come as a welcome relief to the many thousands of brand owners across the EU with registrations covering ‘computer software’. The Advocate General’s Opinion indicated that trade marks covering broad terms like ‘computer software’, ‘financial services’ and ‘telecommunications’, might be liable to cancellation on the basis they are contrary to the public interest as they are too general and cover such a wide range of goods and services. The Court was clearly unconvinced by the public policy argument, so these broad and commonly used terms in trade mark specifications live to fight another day.

Bad Faith

The second issue addressed by the Court is that of bad faith and, in particular, whether a trade mark application made without any intention to use the trade mark in relation to the goods and services listed constitutes bad faith and thus a basis for invalidity.

The Court’s starting point was to confirm that, at the time of filing the application, “the applicant for a trade mark is not required to indicate or even to know precisely […] the use he or she will make of the mark applied for”. The Court goes on to state that the applicant “has a period of 5 years for beginning actual use consistent with the essential function of that trade mark”.

The Court agreed with the Advocate General that filing an application without any intention to use the mark in relation to the goods and services covered may constitute bad faith, where there is no rationale for the application. However, bad faith can only be established if there is “objective, relevant and consistent indicia” demonstrating that at the time of filing the application, the trade mark applicant had the intention of:

1. undermining, in a manner inconsistent with honest practices, the interests of third parties; or
2. obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark.

So there is no automatic finding of bad faith in circumstances where a trade mark applicant had no economic activity corresponding to the products and services listed in their trade mark application.

Finally, the Court held that where there is a finding of bad faith, this will not ‘taint’ the whole trade mark registration, just the terms in respect of which there was a finding of bad faith. The rest of the registration will survive any bad faith attack.

What does the judgment mean for trade mark owners?

The Court has not used the referral as an opportunity to move the EU towards a more US style of specification where trade mark owners are required to set out in more granular detail the goods and services they are seeking to protect. This means brand owners can rest relatively safe in the knowledge that their current broadly worded trade marks continue to be valid, including those covering ‘computer software’. Given that filing broadly has been the long-established and accepted practice amongst IP practitioners and brand owners for years, the decision will come as somewhat of a relief to many. Clearly, where a trade mark owner has no intention to use their mark for particular goods and services and the filing was, in fact, made for other potentially questionable motives, this portion of the ensuing trade mark registration is vulnerable. However, as the Court has confirmed that a registration will only be invalidated to the extent it was filed in bad faith, there is no particular incentive for trade mark owners to take any pre-emptive action to remove certain terms from their specifications even if their motives at the time of filing were less than honest.