The European Court of Justice’s (CJEU’s) decision in Sky v SkyKick[i] had been anticipated with some trepidation by trade mark owners after the Advocate General (AG) took a highly critical view of strategies used by brand owners to secure broad protection for their brands. However, when the decision came on 29 January 2020 the CJEU took a more conciliatory approach. As a result, the fear that large numbers of trade marks would immediately become vulnerable to invalidity attacks has largely subsided and we are also unlikely to see immediate, radical changes in filing strategies. Nevertheless, the writing is now on the wall in terms of overbroad trade mark filing.
Sky had registered its SKY trade mark for a long list of goods and services, which included some very broad terms, for example ‘computer software’, ‘telecommunications services’. Although it had used its trade mark extensively in relation to broadcasting and other goods and services, it did not offer any migration or cloud back-up services, which was the area of interest to SkyKick. Nevertheless, based on its broad specifications of goods and services, Sky sued SkyKick for trade mark infringement, and the English High Court (Arnold J) held that use of ‘SkyKick’ would infringe Sky’s trade marks - but only if they were valid. SkyKick argued, essentially, that Sky had acted in bad faith by registering broad specifications which went well beyond what Sky had any intention of using the mark for and that, as a result, the marks were invalid. In response, the English Court referred questions to the CJEU about what the effect of broad specifications should be. These are the questions which the CJEU has now answered.
‘Computer software’ and similar broad terms – the CJEU’s decision
Terms such as ‘computer software’ or ‘financial services’ pose a problem in trade mark specifications because they cover such very wide areas – it is inconceivable that one company could ever offer all types of computer software, for example, so it is arguably unfair that they should be able to block others from using the mark in other areas. The AG had proposed that such broad terms might be regarded as against public policy and the mark invalidated (or narrowed down) on this basis. However, the CJEU rejected this view.
Bad faith – the Court’s decision
Where the specification includes a very long list of goods and services or very broad terms, it is likely that the trade mark owner has never had any intention to use the mark in all the areas covered. The Court agreed with Sky that there were circumstances in which filing without the intention to use could result in invalidity on the grounds of bad faith, but it put these fairly narrowly. It held that invalidity would arise first, if at the time of filing the applicant intended to “undermine third party interests in a manner inconsistent with honest practices”, and secondly, if, without necessarily targeting a specific third party, the applicant intended to obtain “an exclusive right for purposes other than those falling within the functions of a trade mark”.
What does this mean?
It will be for the English High Court to decide how to apply this to Sky’s case when it comes back for decision there. However, a key question is likely to be whether by filing a broad specification Sky was intending to block third party use of the marks across the board in areas where it had no intention to use the mark itself or whether the broad specification was part of a legitimate commercial strategy to reserve the mark for potential future use by Sky. How the High Court approaches this is likely to have a significant effect on trade mark filing strategies going forward.
Positive points for trade mark owners
First, the CJEU confirmed that invalidity resulting from absence of intention to use would only affect the goods/services concerned, not the whole registration, so the registration can remain valid in relation to the other goods and services. Secondly, the CJEU emphasised that simply registering for a broad range of goods/services beyond the applicant’s core business does not necessarily result in invalidity, acknowledging that, at the time of the application, the applicant would not necessarily know how use would develop. Given that trade marks are often filed at a very early stage in a business life-cycle this means that brand owners can still err on the generous side when making their initial application. At the same time, we can expect to see a more cautious approach to registration in future given the high reputational risk of successful invalidity attacks at the edges.
[i] Case C-371/18 29 January 2020