Sky ruling brings a sigh of relief from brand owners

Trade mark owners will be relieved to find that the Court of Justice of the European Union (CJEU) has not taken the tough line proposed in the advice of the Advocate General in a dispute over the trade marks of the Sky group of companies.

The Sky group had brought an action against the SkyKick companies for infringement of certain EU and UK trade marks including the word “Sky”.

SkyKick’s business is not in the media sector – it provides B2B cloud management and email migration services – whereas the Sky group operates in media and telecommunications sector. There is no obvious conflict between these businesses but the trade mark registrations of the Sky group extended beyond its core activities to cover broad categories of goods and services, like “computer software” and “telecommunications services”.

Predictably, SkyKick responded with a validity challenge. Referring to earlier CJEU rulings, SkyKick argued that Sky plc had not defined the goods and services it wanted to claim for the SKY marks with sufficient clarity and precision.

Many commentators were expecting SkyKick’s arguments to succeed. Indeed, the opinion given by the CJEU’s advisor, the Advocate General, identified a lack of clarity and precision in the specification of goods and services, if not as a ground for invalidity of the trade mark, at least as a reason for assessing the scope of protection it should have. In his view, a trade mark that fell short of the requirement for clarity and precision could be struck down as being contrary to the public interest. He observed that applying to register a trade mark without any intention to use it for the goods and services covered may amount to bad faith, especially where the trade mark owner was trying to stop another business from entering the market.

The prospect of a ruling along these lines worried many brand-owners.   Were their trade mark specifications drafted tightly enough to avoid invalidity on this basis?

As it turned out, the CJEU’s decision (Case C‑371/18) was less alarming than expected.

Can lack of clarity lead to revocation?

Beginning with the point that the relevant EU law sets out an exhaustive list of all grounds for trade mark invalidity, the CJEU noted that lack of clarity and precision of the terms used to designate the goods and services is not one of them. So a lack of clarity alone will not invalidate a trade mark.

The CJEU referred, in passing, to the possibility of partial revocation after the initial five year post-registration period allowed for owners to get use of their trade mark “up and running”.   To the extent that a trade mark had not been used for a continuous period of 5 years after registration, for the full range of goods and services covered, it would be vulnerable to being revoked for the unused goods and services.

What amounts to bad faith?

The CJEU looked at the concept of “bad faith” at the time of filing. This is specified in the legislation as a ground for invalidation of a trade mark registration. While the court recognised that filing an application for a trade mark with no intention to use it in relation to specified goods and services could amount to bad faith, bad faith cannot be presumed on the basis of the mere fact that, at the time of filing the application, that applicant had no economic activity corresponding to the goods and services covered.  For there to be bad faith, the trade mark applicant must also have had either 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”.

This is a tough test, which sets a high and difficult evidentiary hurdle to clear.   Also, even if bad faith were to be proved, the registration would not be invalidated as a whole – only for the goods and services to which the bad faith related.

The UK’s declaration of intention to use requirement

Applicants for UK trade marks must declare in their application the trade mark is being used, by the applicant or with his consent, in relation to the goods or services covered, or that it has a bona fide intention that it should be so used

The CJEU held that this is permissible under EU law but a false declaration does not constitute, in itself, a ground for invalidity of a trade mark already registered.

Take away points

The CJEU ruling is less alarming than brand owners had been expecting. A cautious trade mark applicant will want to think carefully before including everything but the kitchen sink in the list of goods and services it seeks to cover.    A well-drafted trade mark specification will set out goods and services in detail rather than using broadly worded categories. But this is not the anticipated body blow for owners of trade marks with broad specifications.

The main risk faced by trade mark owners with broad specifications is an application for revocation to the extent that the trade mark is not, for five years after registration, used for the goods and services covered.

However, without clear evidence of egregious or anticompetitive intent, it now seems unlikely that even trade marks covering every good and service under the sun, will be vulnerable to being invalidated  on the ground of bad faith.

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