Sky v SkyKick

AG’s opinion could make thousands of trade marks vulnerable to partial invalidation and herald a new approach to trade mark filing strategies across the EU

23.10.2019

The AG’s opinion in case C-371/18 Sky v SkyKick (“SkyKick”) was handed down on 16 October. If the AG’s opinion is mirrored in the CJEU judgment which will follow, then it could have a huge impact on the filing strategies of trade mark owners. However, it could also have a beneficial outcome when defending a claim brought by a claimant who owns overly broad specifications which cannot be challenged for non-use because the registration is under five years old.

The English proceedings and the questions referred to the CJEU

In February 2018, Mr Justice Arnold (as he then was) handed down his judgment in Sky v SkyKick [2018] EWHC 155 (Ch).

Sky had brought trade mark infringement proceedings against SkyKick. SkyKick counterclaimed, attacking the validity of Sky’s trade marks. In a 358 paragraph judgment, Arnold J. concluded that two of the counterclaims pursued by SkyKick raised issues which required guidance from the CJEU.

SkyKick’s validity attacks were made on two bases:

The first basis was that Sky’s trade mark specifications lacked the requisite clarity and precision. In particular, Sky had relied on specifications such as “computer software”, which SkyKick said lacked clarity and precision because it was too broad and could encompass a huge variety of goods.

Arnold J. described a trade mark for “computer software” as being “unjustified and contrary to the public interest because it confers on the proprietor a monopoly of immense breadth which cannot be justified by any legitimate commercial interest of the proprietor.” However, he said it did not necessarily follow that a trade mark with such a broad specification lacked clarity and precision. He also considered it unclear whether or not an EU or a national trade mark could be declared wholly or partially invalid on the ground that some or all of the terms in the specification lacked clarity and precision.

The second basis on which SkyKick attacked Sky’s trade marks was bad faith. SkyKick argued that Sky’s trade marks should be declared invalid because the specifications contained certain goods and services which, it was clear from the evidence at trial, Sky had no reasonable commercial rationale for seeking registration for. By way of example, Sky’s trade mark specifications included goods such as bleaching preparations, whips, and Christmas decorations. Arnold J. said that it was unclear whether such a lack of intention to use constituted bad faith, which is a ground for invalidating a trade mark. It was also unclear what the consequences were which would flow from such a finding of bad faith; would bad faith in these circumstances invalidate the trade mark in its entirety, or just in respect of the specific goods or services which the applicant had applied for in bad faith?

Mr Justice Arnold therefore referred five questions to the CJEU. A summary of the AG’s opinion in response to those questions is set out below.

Questions 1 & 2: Clarity and precision of a trade mark specification
  1. Is lack of clarity and precision of a trade mark specification a ground of invalidity?

In AG Tanchev’s opinion, the list of absolute grounds for invalidity which are set out in EU trade mark legislation is an exhaustive list, and so it follows that a finding that the trade mark specification lacks clarity and precision cannot be considered an additional ground for invalidity.

However, AG Tanchev’s view is that a trade mark whose specification is insufficiently clear and precise could instead be declared invalid on the grounds that it is contrary to public policy or public order (which is one of the grounds of invalidity under EU trade mark law[1]). He reaches this opinion on the basis that the trade mark register needs to be precise and that “clutter” on the trade mark register which is created by overly broad and general trade mark specifications has a dissuasive effect on competitors entering the market. In essence, as a result of its broad and imprecise trade mark specifications, a company such as Sky will appear larger on the market than it is in reality, which has a harmful effect on the market place.[2]

The AG’s Opinion appears to be that in cases where a part of a trade mark specification is found to be unclear or imprecise, e.g. “Computer software”, then it is just those goods and services which should be declared invalid, rather than the trade mark as a whole.

iiiiiii.  Is the term ‘Computer software’ sufficiently clear and precise?

The AG shares Arnold J’s view that a trade mark registration for ‘computer software’ is “unjusitifed and contrary to the public interest because it confers on the proprietor a monopoly of immense breadth which cannot be justified by any legitimate commercial interest”. The AG (and Arnold J.) reached this conclusion for much the same reason that Laddie J. did in 1995 in Mercury Communications v Mercury Interactive.[3] In short, a practically limitless and diverse array of goods incorporate or are supplied with ‘Computer software’ – from smart fridges to games consoles and the Large Hadron Collider – and many of the goods supplied with computer software are far from similar to each other.

If the CJEU agrees with the AG’s opinion, then hundreds of trade mark registrations covering the term ‘Computer software’ could be vulnerable to an invalidity attack.

Interestingly, AG Tanchev does not stop at ‘Computer software’. He considers that it is difficult to see why the reasoning which applies to computer software does not also apply equally to the terms ‘telecommunications services’ and ‘financial services’.[4] If the CJEU reaches the same conclusion, then it could cause a fundamental shift in filing practices across the EU.

Questions 3 & 4: Bad faith

The third and fourth questions which Arnold J. referred to the CJEU relate to the concept of bad faith and, in particular, whether it can constitute bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services.

In the AG’s Opinion, it can “in certain circumstances” amount to bad faith to apply to register a trade mark without any intention to use it in connection with the specified goods or services.

The AG’s Opinion indicates that an applicant who applies for goods or services without any commercial logic, or whose application for those goods and services was part of a strategy to prevent a third party (whether a specific third party or all third parties) from using the mark themselves, may be deemed to have acted in bad faith.

Taking the examples from Sky’s trade marks which were considered by Arnold J., it is very difficult to see what commercial logic there was for Sky to register its trade marks for bleaching preparations, whips and Christmas decorations. If the CJEU follows the AG’s Opinion, then it seems likely that the High Court will deem Sky to have acted in bad faith by registering trade marks for those goods.

Question 5

Mr Justice Arnold’s final question regarded the compatibility with EU law of section 32(3) of the UK Trade Marks Act 1994. That section requires an applicant for a UK trade mark to declare that the trade mark is either being used across the breadth of its specification or alternatively that the applicant has a bona fide intention to use the trade mark across the full specification.

AG Tanchev’s view is that the UK provision is compatible with EU law, provided that filing a false declaration under s.32(3) is not, on its own, sufficient for an applicant to be found to have acted in bad faith.

Comment

It is clear from the tone of the AG’s Opinion that he sees this case as an opportunity for the CJEU to address the balance in the trade mark system away from trade mark owners and back towards third parties who are looking to enter markets.

AG Tanchev ponders, in the introduction, to his Opinion, whether “we have arrived at a point in trade mark law that grants the trade mark proprietor a position of absolute monopoly in the face of which one can no longer defend himself in infringement proceedings — in spite of the fact that the mark has not been used, and is not likely to be used, for many of the goods and services in respect of which it was registered.”

If the CJEU follows the AG’s Opinion, then it will certainly force some trade mark owners to re-think their filing strategies.

Firstly, trade mark owners will likely move away from the practice of filing trade marks with specifications containing broad terms which catch a variety of goods or services, such as ‘Computer software’. As mentioned above, the AG also raises concerns with terms such as ‘Telecommunication services’ and ‘Financial services’. Trade marks covering such goods and services risk being declared partially invalid, either in standalone proceedings or as soon as they are asserted in infringement proceedings.

Secondly, trade mark owners will have to give more careful thought to the commercial logic of their trade mark specifications. Is a clothing brand likely to start selling bleach? Or a telecoms company going to start offering whips? Trade mark owners with specifications outside of their core business will face a greater risk of invalidation proceedings. Whilst the AG Opinion does not advocate an outcome where the entire trade mark registration is invalidated, trade mark owners will still want to avoid being embroiled in unnecessary invalidation proceedings to protect goods and services which they have no real interest in.

Whether the CJEU follows the AG’s opinion will be of great interest to brand owners.

 

[1] See, for example, Article 3(1)(f) of Directive 89/104 and Article 7(1)(f) of Regulation 40/94. Both the Directive and the Regulation have been superseded in recent years, although the new legislation contains similar provisions.

[2] AG Opinion, paragraph 73.

[3] Mercury Communications Ltd v Mercury Interactive (UK) Ltd [1995] FSR 850

[4] AG Opinion, paragraph 81.

Sean Ibbetson

Author

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