Lack of clarity and precision of goods and services cannot render a trade mark invalid and lack of intention to use can constitute bad faith

C-371/18

Sky v SkyKick

Trade marks: Validity

29 Jan 2020

The matter at hand

Sky is the proprietor of various Community and UK national trade marks of which the word element ‘Sky’ forms part. Those trade marks were registered in respect of a large number of goods and services in a number of classes, including for ‘Software’ (class 9). SkyKick offered products based on Software as a Service (SaaS) concerning Cloud Migration, Cloud Backup and Cloud Management.

Sky brought an action for infringement of the trade marks at issue against SkyKick before the referring court, the High Court of Justice (England & Wales), Chancery Division (United Kingdom). For the purposes of their action for infringement, Sky relied on the registration of its trade marks in respect of, inter alia, computer software (class 9). Sky made extensive use of its trade marks, which had become a household name in the UK and Ireland, in relation to goods and services relating to their core business areas, but not for email migration or cloud backup goods or services, nor was there any evidence that they planned to do so in the immediate future.

SkyKick filed a counterclaim trying to partially invalidate Sky's trade marks on effectively two grounds: that the registrations were so widely drawn as to lack clarity and precision, and that the marks had been filed in bad faith as Sky had no intention of using the marks for the relevant registered goods and services.

The referring court asks, in essence, first the absolute grounds of invalidity of Article 51 of Trade Mark Regulation 40/94 and equivalent articles must be interpreted as meaning that a trade mark may be declared wholly or partially invalid on the ground that terms used to designate the goods and services in respect of which that mark was registered are lacking in clarity and precision, and whether the term ‘computer software’ meets the requirement of clarity and precision.

In the second place, the referring court asks, in essence, whether the ground for invalidity of bad faith applications (Article 51(1)(b) of Trade Mark Regulation 40/94 and equivalent articles) must be interpreted as meaning that a trade mark application made without any intention to use the trade mark in relation to the goods and services covered by the registration constitutes bad faith and, if so, whether Article 51(3) of Trade Mark Regulation 40/94 and equivalent articles provide that the invalidity of that trade mark covers only those goods or services to which the lack of intention to use applies.

Finally, the referring court asks, in essence, whether Trade Mark Directive 89/104 precludes law under which a trade mark applicant must state that the trade mark is being used for the goods and services in the application, or that he or she has a bona fide intention that it should be so used.

The judgment of the ECJ

The ECJ, with regard to the first topic, states that lack of clarity and precision of the terms used to designate the goods or services covered by the registration of a trade mark cannot be considered a ground for invalidity of a national trade mark or Community trade mark in itself, since the relevant provisions provide only for an exhaustive list of the absolute grounds for invalidity which does not include a requirement of clarity and precision (paragraphs 58 to 60).

There is no indication in case C-307/10 (IP Translator) to the alternative, as it already follows from case C-577/14 P (Scooters India) that the clarifications on the requirements only relate to new EU trade mark registration applications, and thus do “not concern trade marks that were already registered at the date of that latter judgment’s delivery” (paragraph 61).

The ECJ subsequently examines whether, while not being a ground for the invalidity of a trade mark in itself, a lack of clarity and precision nonetheless falls within the scope of one of the absolute grounds for invalidity expressly provided for in Article 51 of Trade Mark Regulation 40/94 and equivalent articles. The ECJ finds that such a lack of clarity cannot be deemed contrary to the requirement of graphic representability (paragraph 64), or contrary to public policy (paragraph 67).

In relation to the second topic, the ECJ, with reference to cases C-320/12 (Malaysia Dairy) and C-104/18 P (Koton), calls into memory that ‘bad faith’ is an autonomous concept of EU law (paragraph 73), that “its usual meaning in everyday language […] presupposes the presence of a dishonest state of mind or intention [and that] regard must be had, for the purposes of interpreting that concept, to the specific context of trade mark law (which is aimed] in particular, at contributing to the system of undistorted competition in the European Union” by providing means for indicating commercial origin (paragraph 74).

The ECJ holds that the registration of a trade mark without any intention to use it for the goods and services covered by that registration may constitute bad faith, “where there is no rationale for the application for registration in the light of the aims referred to in Trade Mark Regulation 40/94” (paragraph 77).

The ECJ continues that such bad faith may only be established “if there is objective, relevant and consistent indicia tending to show that, when the application for a trade mark was filed, the trade mark 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” (paragraph 77).

Where the ground for invalidity exists in respect of only some of the goods or services for which the trade mark is sought to be registered, the trade mark is to be declared invalid as regards those goods or services only (paragraph 80).

Commentary

It was relevant to the ECJ that pursuant to Article 50(1) of Trade Mark Regulation 40/94Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, the rights of the proprietor of a trade mark may be declared to be invalid if, within a continuous period of 5 years, the trade mark has not been put to genuine use in connection with the goods or services in respect of which it is registered. However, the ECJ did not address the issue of consecutive trade mark re-filings (which in theory enables consecutively prolonging the grace period for as often as desired). There is lower case law that pertains to ‘bad faith’ in the case of re-filings (see e.g. T-136/11 (Pelikan)), but a decision from the ECJ to interpret validity in light of such circumstances is yet to come.

It follows from this decision that overbroad trade mark registrations will be subject to scrutiny, as potentially being registered in ‘bad faith’. However, it will not be easy to determine bad faith since an objective justification for the proprietor of a well-known trade mark may arguably always be found in the potential commercial activity in ancillary or plainly different commercial sectors (for example through licensing programs). Be that as it may, we expect that this decision will frequently provide the basis for a counterclaim in inter partes proceedings.

In addressing the final topic, the ECJ holds that national law under which an applicant for registration of a trade mark must state that the trade mark is being used, or that he or she has a bona fide intention that it should be used, for the goods and services applied for, is not precluded by EU law, in so far as the infringement of such an obligation does not constitute, in itself, a ground for invalidity of a trade mark already registered (paragraph 87).