In its ruling in Case C 371/18, Sky and Others the EU Court of Justice (ECJ) provided welcomed guidance in relation to the concept of bad faith and the requirement of clarity and precision of the specification of goods and services.
The proceedings originated from a trade mark infringement action brought by Sky Plc and Others ("Sky") against SkyKick UK Ltd. and Others ("SkyKick") before the High Court of England and Wales (Chancery Division). Sky relied on trade mark registrations claiming, among others, goods in class 9 including "computer software" and services in class 38. SkyKick offers Software as a Service (SaaS) and Cloud Migration, Backup and Management.
SkyKick counterclaimed that Sky's registrations were invalid as the specification of goods and services lacked clarity and precision and the High Court requested a preliminary ruling to the ECJ, referring the following questions:
- Can a trade mark be declared invalid, wholly or in part, on the grounds that the specification of goods and services lacks clarity and precision?
- If the answer to the first question is yes, are terms such as "computer software" considered to lack clarity and precision?
- Can a trade mark be declared invalid on grounds of bad faith if the applicant does not have any intention to use the mark in relation to the specified goods and services?
- If the answer to the third question is yes, is it possible to conclude that the trade mark was only partly filed in bad faith as regards the goods for which there was no intention to use the mark?
The ECJ's response to the first question was negative: an EU or national trade mark cannot be declared wholly or partially invalid on the ground that the terms used to designate the goods and services in respect of which that trade mark was registered lack clarity and precision. As a consequence, the court did not provide an answer to the second question.
Answering the third question, the ECJ confirmed that the application for a trade mark without any intention to use it for the goods and services claimed can constitute bad faith, provided "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".
The Court clarified that "The bad faith of the trade mark applicant cannot, therefore, be presumed on the basis of the mere finding that, at the time of filing his or her application, that applicant had no economic activity corresponding to the goods and services referred to in that application". This is consistent with the fact that applicants are not required to know precisely, at the time of filing an application, the use they will make of their trade mark.
The ECJ also gave a positive answer to the fourth question referred by the High Court: a trade mark can be declared invalid on the ground of bad faith only in relation to those goods and services for which the applicant lacked intention to use a trade mark in accordance with its essential function.
In relation to the concept of bad faith, the Court of Justice's decision is consistent with its ruling last year in Case C-104/18 Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO and it provides further guidance in relation to those cases where an applicant has no genuine intention to use its trade mark without specifically targeting third parties. The underlying interest, on this point, is to protect competition by ensuring the scope of a trade mark application does not extend beyond the applicant's genuine commercial interests.
While the lack of clarity and precision has been ruled out as an invalidity ground, broad "catch-all" specifications may give rise to challenges on the ground of bad faith. Therefore, applicants will need to be more careful in designating the goods and services claimed in their application, selecting those for which they have a genuine intention to use their trade mark.
Our trade mark practitioners would be delighted to discuss the impact of this case with you. If you feel it is relevant to your business, or if you have any trade mark queries, please do not hesitate to contact us.