Sky plc and Others (Sky), with a core business in television broadcasting, telephony and broadband provision, objected to SkyKick’s use of its name in connection with Software as a Service (SaaS) and cloud migration services in the UK Court. Sky relied on trade mark registrations which contained very broad terminology, such as “computer software”. SkyKick counterclaimed that Sky’s registrations were invalid because (i) some terms were too broad and lacked clarity and precision, and (ii) at the time of filing its applications, Sky acted in bad faith as it had no intention to use its SKY mark for all of the goods and services covered by its registrations. Since the UK Court felt that pertinent EU law was unclear on the point, it referred various questions to the Court of Justice of the European Union (CJEU) for guidance. The CJEU’s judgment was handed down on the 29 January 2020.

Questions referred to the CJEU

It is highlighted in the judgment that, in the course of the UK proceedings, “there is evidence showing that, at the time of registration of the trade marks at issue in the main proceedings, Sky and Others did not intend to use them in relation to all of the goods and services covered by the registrations. Those registrations cover goods and services for which Sky and Others had no commercial rationale for seeking protection, so that the inclusion of such goods and services formed part of their strategy of seeking very broad protection of trade marks” (paragraph 46; emphasis added).

The questions referred by the UK Court to the CJEU can be summarised as follows:

1. Can a trade mark be declared wholly or partially invalid on the ground that some/all of the terms of the specification lack clarity and precision?
2. If yes, is a term like “computer software” too general to be considered “clear and precise”?
3. Is it bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods/services?
4. If the answer to (3) is "yes", is it possible to conclude that an applicant made an application partly in good faith and partly in bad faith, where they had intention to use the trade mark for some goods/services but not for others?
5. Is the "intention to use" declaration requirement under UK law compatible with EU law?

CJEU’s answers to questions 1 and 2 – as clear (and precise) as mud

"Lack of clarity and precision" became a hot topic thanks to the IP Translator case (which concerned the interpretation of Nice Class Headings). Its impact was to promote the filing of specifications which clearly indicated the goods/services the trade mark owner intended to cover with their mark.

When making its reference to the CJEU, the UK Court opined that “computer software” is too broad and thus contrary to public interest as it confers on the proprietor a monopoly of immense breadth which cannot be justified by a commercial interest. However, the UK Court’s view was that it does not necessarily follow that the term lacks “clarity and precision”.

The CJEU dealt with the first and second questions together, and looked at the provisions for seeking invalidity on absolute grounds. It was noted that the EU Directive (on which national trade mark law in each member state is for the most part based) provides a list of grounds which does not include a "lack of clarity and precision". Moreover, the grounds which are listed are exhaustive, even if some of them are optional for member states to implement (paragraph 56). The provisions of Regulation No 40/94 (in place at the time of Sky’s applications), which governs EUTMs has almost identical wording. Further, the provisions in the Regulation concerning counterclaims indicate that invalidity could only be based on grounds mentioned elsewhere in the Regulation. As such, the CJEU concluded that there was an exhaustive list of absolute grounds of invalidity, and lack of clarity and precision was not one of them.

Further, the CJEU issued a reminder that IP Translator does not have retroactive effect – Sky’s registrations predated the IP Translator decision, so would not be affected by the "clarity and precision" fallout from that case in any event.

SkyKick argued that the requirement for clarity and precision could be relevant when assessing graphic representability (the Sieckmann case stated that "clarity and precision" are two criteria a sign must meet in order to be considered a trade mark, otherwise the sign will be refused on absolute grounds). However, the CJEU reiterated that the Sieckmann requirements of "clarity and precision" related to signs only and did not extend to the wording of the goods/services.

The CJEU also considered whether lack of clarity and precision could give rise to invalidity on absolute grounds where the vagueness of a specification was "contrary to public policy". The CJEU’s reasoning is somewhat lacking on this point. The decision merely states “the concept of public policy…cannot be construed as relating to characteristics concerning the trade mark application itself, such as the clarity and precision of the terms used to designate the goods or services covered by that registration…”. (paragraph 66).

Notably, presumably because it did not need to consider it, having answered the first one in the negative, the CJEU did not opine at all on the UK Court’s second question about whether “computer software” is too general to be "clear and precise". Instead, the CJEU points out that trade mark registrations can be put to genuine use once they are over five years old. For now, in light of the current decision at least, revocation for non-use seems to be the most plausible route (absent any earlier rights) to attack a registration which claims very broad terms (for example, “computer software”). It seems likely that the filing of broad terminology may continue to be acceptable practice for obtaining registration; however, a trade mark proprietor may lose protection if they cannot show sufficient use for certain goods/services within a subset of a broader specification after the five year non-use grace period.

Questions 3 and 4 – "I only acted partially in bad faith, honest!"

Under national trade mark law, applicants must have a "bona fide intention to use" their trade marks in connection with the goods/services specified in their UK applications. This is not a requirement under the EU Regulation or Directive, but a quirk of the UK system. One can view the "intention to use" requirement as a "checks and balances" provision, where it encourages filers to be realistic about their commercial goals and to file specifications which delineate core business interests as well as likely future avenues for expansion.

The UK Court asked the CJEU to clarify whether filing broad specifications (such as Sky’s) could amount to bad faith, and if so, whether an applicant at the time of filing can act partly in good faith (for example, for core goods/services), and partly in bad faith (for goods/services where there is no intention to use).

When answering the third question, the CJEU flagged its decision in Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ v EUIPO (C-104/18 P) in which it held that a bad faith ground for invalidity will apply where “it is apparent from relevant and consistent indicia that the proprietor of a trade mark has filed the application for registration of that mark not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention 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, in particular the essential function of indicating origin…” (paragraph 75 of the SkyKick judgment; emphasis added)

The SkyKick decision appears to have expanded on this point slightly - a lack of intention to use a trade mark "may" constitute bad faith, but it would be dependent on “objective, relevant and consistent indicia” showing the applicant either wanted to (dishonestly) undermine third parties or obtain a monopoly right for reasons “other than those falling within the functions of a trade mark” (paragraph 77). It remains to be seen what this means in practice, though it is difficult to ascertain any reasonable rationale behind why an applicant would file for a mark without any intention to use it for the goods/services covered other than to prevent others from doing so (or from registering the same or a similar mark), thereby immediately falling foul of the bad faith proviso. Ironically (given questions 1 and 2), there is a lack of clarity and precision in this part of the decision. What would constitute such "indicia"? The lack of detail here is understandable, as bad faith in the context of trade marks is defined by case law rather than national statute, EU Regulations or Directives; bad faith allegations are assessed based on facts and evidence. What we do know from this decision is that bad faith cannot be presumed merely from a lack of economic activity corresponding to the goods/services at the time of filing the application (paragraph 78, and paragraph 76). The UK Court may give some more guidance when it applies the CJEU ruling to the facts, at least from a UK perspective.

Further, the CJEU answers question 4 in the affirmative: partial invalidation on the basis of bad faith is, in theory, possible. The concept may seem odd at first reading, though perhaps because most bad faith cases are "all or nothing", where the intentions of the proprietor are clearly dishonest. However, the answer should not be overly surprising as Art. 51 (3) of EUTMR 40/94 states: “Where the grounds for invalidity exists in respect of only some of the goods or services for which the Community trade mark is registered, the trade mark shall be declared invalid as regards those goods or services only.” (emphasis added). In the SkyKick case the position is nuanced as the goods/services covered by Sky’s registrations related to their core business interests, as well as arguably incongruent terms.

Question 5: UK’s "intention to use" – a window to bad faith, not an open door to invalidity

In answering the fifth question, the CJEU concluded that the UK’s "bona fide intention to use" requirement was not contrary to EU law. The UK (and other member states) has been given a certain level of autonomy in deciding appropriate procedures for trade mark registration (paragraph 84). Whilst a lack of "bona fide intention to use" may be a ground for claiming bad faith, the requirement does not create a standalone basis for invalidity on absolute grounds. As such, it is not incompatible with the EU Directive.

The decision does raise some interesting questions. Previous case law indicates that a broad specification is not sufficient to demonstrate bad faith “if the applicant has a reasonable commercial rationale for seeking such protection having regard to that trade mark’s use” (paragraph 43). Who is to decide what is reasonable? An applicant’s past use of its mark (and its existing activities) would provide a starting point, but brands can, and often do, diversify.