CJEU judgment in Skykick: rights holders can breathe a sigh of relief

On 29 January 2020, the CJEU in the Skykick case (C-371/18) ruled on two important areas of trade mark law: (1) the validity of broad terms contained in registered marks, and (2) the validity of registrations filed with no intention to use. The ruling is significant because:

• The CJEU has confirmed that trade mark registrations containing broad terms such as 'computer software', 'financial services' or 'telecommunications services' cannot be invalidated in whole or in part due to an alleged lack of clarity and precision of such terms.
• Despite the earlier AG opinion, the inclusion of broad terms in trade mark specifications cannot be regarded as contrary to public policy.
• The CJEU also confirmed that applying for a trade mark with no intention to use may constitute bad faith, but only if the applicant intended to undermine the interest of third parties or to obtain a monopoly for purposes other than to fulfil the functions of a trade mark.
• If bad faith is made out in such circumstances, only the goods and services that constitute bad faith will be invalidated, rather than the entire registration.

What was the case about?

In the underlying UK proceedings (Sky v Skykick [2018] EWHC 155 (Ch)), Sky, the well-known satellite and digital television broadcaster, sued Skykick, a start-up company that supplies cloud migration services, for trade mark infringement for use of the word 'Skykick' and other similar signs. Skykick denied infringement and counterclaimed for a declaration that Sky's trade marks were invalidly registered, either wholly or partially, because (i) Sky's specifications of goods and services lack clarity and precision; and (ii) Sky's marks were applied for in bad faith because Sky had no intention to use the mark for all the protected goods and services.

The UK High Court referred the following questions to the CJEU:

On point 1:

• Can a trade mark be declared invalid in whole or in part for having a specification that lacks "clarity and precision" i.e. broad specification?
• If yes, is a term such as "computer software" too broad?

On point 2:

• Is it bad faith to register a trade mark with no intention to use?
• If yes, is the registration wholly or partially invalid?

The CJEU's view on broad specifications

The legislative framework on which a trade mark registration may be invalidated, includes such grounds as a lack of distinctive character, descriptiveness and trade marks that are contrary to public policy. The CJEU explored this framework and ultimately concluded that it provided an exhaustive list of grounds and a lack of clarity and precision of a specification is not one of them. The court considered Skykick's argument, that the requirement of clarity and precision of a specification could be inferred because trade marks per se i.e. their graphical representation must be clear and precise, following the CJEU's own decision in Sieckmann (C-273/00). However, the CJEU was not prepared to read an additional ground of invalidity into the legislation on this basis. The court stressed that considerations concerning the clarity and precision of a trade mark only apply to the sign comprising the mark and it cannot be inferred from this that a requirement of clarity and precision should also apply to trade mark specifications.

The CJEU also confirmed that the inclusion of broad terms in trade mark specifications cannot be regarded as contrary to public policy. In pithy comments on this point, the CJEU said that the concept of public policy in this context concerns the characteristics of the sign comprising the mark – in other words, the trade mark itself and not the characteristics concerning the trade mark's specification. The CJEU noted that a trade mark registration is vulnerable to cancellation for non-use after five years and the court seems to be content that this provision of trade mark law mitigates any undue monopoly a trade mark with a broad specification might enjoy.

The CJEU's view on bad faith

The CJEU reiterated the that the concept of ‘bad faith’ presupposes the presence of a dishonest state of mind or intention and that trade mark law is aimed at facilitating a system of undistorted competition. With this in mind, the CJEU went on to decide that a lack of intention to use a trade mark or a lack of trading activity in relation to the goods or services sought does not in and of itself constitute bad faith. What is required is something more, and that, the court went on to explain, is if the applicant intended to undermine the interests of third parties or to obtain a monopoly for purposes other than to fulfil the functions of a trade mark. Crucially though, even if bad faith is found, the CJEU confirmed that the entire registration will not be invalidated, but only those goods and services for which there was no intention to use and that amount to bad faith.

Implications for brand owners

The decision is good news for brand owners because it effectively maintains the status quo for trade mark registrations and there is no need to spend time and money narrowing broad terms down. However, the question remains whether national offices during examination of new applications will continue to accept terms such as "computer software" because the CJEU failed to address whether such terms are inherently too broad. What we know from this ruling is that there is no ability for brand owners to challenge trade mark applications or registrations on the basis the specification might be "insufficiently clear and precise", so it will be down to the national offices to decide the matter from an inherent registrability point of view, pending further guidance from the CJEU.

In respect of bad faith, while the court's comments build on existing case law and provide further guidance on the general concept of what constitutes bad faith, the court failed to give any specific examples. Most notably it did not expressly address the hot topic of re-filing (or "ever greening") trade marks every five years to avoid proof of use requirements – although it is certainly arguable that such practices fall within the test set out by the CJEU for those goods and services where there is no intent to use. Definitive guidance is required, which will hopefully come if the recent Monopoly case (Kreativni v Hasbro) progresses to the CJEU.

Lastly, because the CJEU ruled that any finding of bad faith on the basis of a lack of intention to use does not invalidate the entire registration, brand owners will not generally have to worry that the use of broad specifications could invalidate or weaken their rights to the extent they cover goods and services where they do have an intent to use. We can therefore expect the practice of using broad terms and specifications to continue.