Sky v SkyKick - business as usual for brand owners with broad specifications

Background

In a long-running trade mark dispute, Sky sued SkyKick for trade mark infringement in relation to a handful of its SKY marks. SkyKick denied infringement and counterclaimed for a declaration that Sky's marks were wholly/partially invalid. Mr Justice Arnold, as he was then, presided over the case in the English High Court, delivering a long and thorough judgment before making a preliminary reference on three key issues to the CJEU.

The preliminary reference

Mr Justice Arnold referred five questions, which boil down to three key issues, namely whether:

1. a trade mark can be declared invalid, partially/wholly, because some or all of the terms in the specification are insufficiently clear and precise, and if so, whether the term "computer software" falls into that category;
2. an application for a trade mark made without any intention to use the mark in relation to the specified goods/services is made in "bad faith", and if so, whether this invalidates the whole registration or merely the offending terms; and
3. the obligation on an applicant for a UK trade mark to confirm that they have "a bona fide intention" to use the mark for the applied for goods and services (found in section 32(3) of the Trade Marks Act 1994) is incompatible with EU law.  

Opinion of AG Tanchev

In October 2019, AG Tanchev handed down his preliminary opinion, and made the following points in relation to each of the three key issues.

1. A trade mark cannot be declared invalid solely on basis that its specification is insufficiently clear and precise. The grounds for invalidity are listed exhaustively in the Trade Mark Directive and Trade Mark Regulation. Although it is possible to invalidate a trade mark because the sign itself lacks clarity and precision in its representation, this does not extend to its specified goods and services. Despite this finding, applications for and registration of trade marks specified for overly broad terms are contrary to public policy under Article 4(1)(f) TMD and Article 7(1)(f) TMR. This constitutes an absolute ground for refusing or invalidating a trade mark.  

Following this approach, the AG commented that Sky's registration for "computer software" was in one sense clear, as it comprises computer code, however "it undoubtedly lacks precision in the sense of covering goods that are too variable in their function and field of use to be compatible with the function of a trade mark". Sky's registrations for "computer software" were therefore unjustified and contrary to the public interest as they gave Sky a monopoly of "immense breadth which cannot be justified by any legitimate commercial interest".

2. The AG noted that (1) a trade mark cannot be revoked for non-use until five years have passed; and (2) EU law does not require an express declaration of an intention to use when applying for an EU trade mark. Nevertheless, applying for a trade mark with the intention to acquire rights that the applicant has no intention to use should be deemed made in "bad faith" in certain circumstances. The AG recommended that the issue of bad faith be assessed on a case by case basis, and concentrate on the applicant's commercial logic for filing the application (assessed at the time of the application).

The AG then suggested that should a finding of bad faith be made (or any ground of invalidly exist) in respect of only some of the goods or services for which the matter is registered, the trade mark is to be declared invalid in relation to those goods and services only.

3. The AG opined that the obligation to confirm a bona fide intention to use a mark when applying for a UK trade mark is compatible with EU law, provided that the breach of this requirement is not the sole ground cited in an invalidity action.

Court of Justice of the European Union

1. The CJEU confirmed that a trade mark cannot be declared invalid on the basis that the specification lacks clarity or precision, as this is not included in the exhaustive list of invalidity grounds. It then disagreed with the AG's approach, and held that applications for broad specifications were not contrary to public policy. The effect of this judgment is that a trade mark cannot be declared wholly or partially invalid because terms used in the specification lack clarity or precision. The CJEU emphasised the requirement that a mark be put to genuine use as the central means of challenging a broad trade mark specification. Given this finding, the CJEU did not comment on the clarity or precision of the term "computer software".

2. The CJEU held that an application may constitute bad faith if there is "objective, relevant and consistent" indicators demonstrating that the applicant 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." Bad faith would not be presumed merely because an applicant (at the time of filing) had no economic activity corresponding to the applied-for goods and services.  The CJEU then agreed with the AG that a finding of bad faith would only affect the offending goods and services, and not the whole application.  

3. The CJEU confirmed the AG's approach, and held that section 32(3) of the Trade Marks Act 1994 was not ultra vires.

Comment

After the AG's opinion, many brand owners were preparing themselves for an IP-Translator style review of their trade mark portfolios, and carefully reviewing specifications of new applications, particularly in relation to "computer software". The finding of the CJEU is a welcome relief for rights holders with broad trade mark specifications: broad terms such as "computer software" or "telecommunications services" will not be objectionable per se, and may only be objected to on grounds of bad faith in limited circumstances.  

The saga continues as the case now returns to the UK courts for application where it will now be heard by a different judge following Arnold LJ's appointment to the Court of Appeal.

With Brexit on the horizon, the CJEU judgment will form part of "retained EU case law" after the end of the transition period (currently 31 December 2020). Following Brexit, as matters stand this decision has the precedential value of a Supreme Court judgment, and it would take a judgment from the same to overrule it, in the absence of any legislative divergence from Parliament in the form of primary legislation.

Authored by Sahira Khwaja, Emily Sharkey and Peter Elkin