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UK Court Seeks Guidance from CJEU on Issues of Broad Lists of Goods/Services and Intent to Use on Filing and Impact on Validity of Trade Marks

2018-02-21

The UK High Court recently referred some key questions to the CJEU in a trade mark infringement action brought by Sky Plc[1], the answers to which could have a significant impact on the future filing strategies of brand owners in the EU and UK.Mr Justice Arnold, acknowledging the 'general public importance' of the issues raised in this case, referred the following questions to the European Court for guidance, firstly on the issue of the clarity of broad terms in goods/services contained in a trade mark registration.

1)  Can an EU trade mark or national trade mark in a Member State be declared wholly or partly invalid on the ground that some or all or the terms in the goods/services lack sufficient clarity and precision to enable the authorities and third parties to determine the extent of protection conferred on the mark?


2) If the answer to 1) is yes, is a term such as 'computer software' lacking in sufficient clarity and precision to enable the authorities and third parties to determine the extent of protection in place?


And secondly, on the issue of the applicant's intentions on filing a trade mark and whether filing broadly may be considered to be 'bad faith':


3) Can it constitute 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 the applicant made the application partly in good faith and partly in bad faith if there was an intention to use the trade mark for some goods/services but no intention to use for others?


5) Is Section 32(3) of the UK Trade Marks Act 1994 (claiming a bona fide intention to use at the time of filing), compatible with the EU Directive and its predecessors?


Notwithstanding Brexit, the ramifications the CJEU's responses to these questions may have on the coverage of goods/services for both existing and future trade mark rights could be considerable.


Background
Sky Plc and its related companies own numerous EU and UK trade mark registrations for SKY either as a plain word or in a slightly stylised script.   Many of these registrations cover long lists of goods and services running to thousands of words, including broad terms such as 'computer software' in Class 9.
Sky relied on several of these broad EU and UK registrations in claiming SkyKick (the Defendant) had infringed its trade marks through the use of the SkyKick name in respect of software for the migration of email accounts/settings and related cloud computing services. SkyKick's products and services were offered through Microsoft Partners, specialist IT providers who offer business customers IT services, acting as resellers for Microsoft products.
In addition to infringement under Article 9(2)(b) of the EUTM Regulation[1] on the grounds that there is a likelihood of confusion between the marks and goods/services, Sky also claimed infringement under 9(2)c) in that SkyKick's use was without due cause and took unfair advantage of, or was detrimental to Sky's reputation.  Further, Sky alleged that SkyKick's use amounted to passing-off.


SkyKick's Defence
The main thrust of SkyKick's defence (other than a claim they were entitled to use their 'own name', which Mr Arnold dismissed on the facts) was a counterclaim based on two allegations concerning the validity of the EU and UK registered trade marks of Sky.    Firstly, SkyKick alleges that:
1) Sky's registrations are wholly or partly invalid as the goods/services in the long specifications lack the necessary clarity and precision required by law; and
2) Sky did not intend to use its trade marks in respect of all goods/services in the long specifications and therefore, the registrations are entirely or at least partly invalid as the trade marks were filed in bad faith.


The Ruling
Mr Arnold undertook a thorough analysis of the EU and UK case law on the issues of firstly, the use of broad terms of goods both prior to and after the key IP TRANSLATOR decision, and whether these are clear and precise ('the first point') and secondly, whether a lack of intention to use can amount to bad faith ('the second point').   Both of these points led to an assessment as to whether any invalidity, if found, would nullify the entire registration or just the parts of it where there was no clarity/no intention to use.


'Clear and Precise' Goods/Services
As to the first point, Mr Arnold considered that this raised issues as to whether this ground of invalidity can be asserted against a registered mark at all- The Regulation contains no express requirement for specifications of goods/services to be clear and precise and the case law on the issue is not conclusive.
SkyKick's position was that terms such as 'computer software' and 'computer software supplied from the Internet' lacked clarity. SkyKick relied on Laddie J's obiter comments in Mercury Communications[1] that 'there is a strong argument that a registration of a mark simply for 'computer software' will normally be too wide. In my view, it is thoroughly undesirable that a trader who is interested in one limited area of software should, by registration, obtain a statutory monopoly of indefinite duration covering all types of software..'   - Mr Arnold concurred with this reasoning but said that it did not necessarily follow that computer software lacked clarity and precision.  As a result, Mr Arnold felt it was appropriate for refer the questions 1) and 2) above to the CJEU.


Bad Faith
Regarding the second point, SkyKick accepted that Sky had an intention to use their marks on some of the goods/services but the marks should be invalid at least in respect of the goods/services where Sky had no such intent to use.
An EU Cancellation case from 2000, TRILLIUM[2], had ruled on this point and found that there was no bad faith as there is no 'intention to use' requirement on filing an EUTM. However, that ruling left the issue open to the possibility of bad faith being found.  The situation is different in the UK, where a statement of intent to use from the applicant is required at the time of filing.
Mr Arnold quoted decisions[3] that stated it is legitimate for a business to seek registration of a mark, not only for the goods/services they market at the time of filing, but also, considering their commercial logic for filing, to include other goods/services it may intend to market in future.  There is also, again, nothing in the Regulation stating that the length of the list of goods/services can be bad faith.
However, Mr Arnold felt that references in the cases[4] to considering the 'commercial logic' of the applicant at the time of filing, leaves the door open to the possibility that applying with no intention to use may be bad faith- Hence, a referral to the CJEU on this matter was necessary.
UK law has recognised that a 'blocking strategy' where the applicant has no intent to use, can be bad faith.  For this reason, Mr Arnold referred Question 5 to the CJEU as to the compatibility of the relevant UK provision with the EU Directive.


Extent of Invalidity
Mr Arnold also considered the issue of whether, if bad faith is found for a lack of intent to use for only some goods/services, would the registration be wholly invalid or only partly invalid.  Although both case law and the EUIPO Guidelines recognise that the existence of bad faith nullifies the entire mark, Mr Arnold felt that the situation was not clear cut and thus, a referral to the CJEU on this point was justified.
Mr Arnold concluded that, if Sky's marks were deemed valid, based on a comparison of the marks and the goods/services in issue, there would be a likelihood of confusion and thus, infringement under Article 9(2)(b). Sky's claims under Article 9(2)c) and passing-off were, however, dismissed.


Likely Ramifications
Should the CJEU rule that broad terms such as 'computer software' lack clarity and precision, rendering a mark wholly or partly invalid, the impact on existing registrations will be far reaching.  Equally, if the CJEU considers that a lack of intention to use for some goods/services may be considered as bad faith, invalidating either part or the whole of a registration, it would put a large number of registrations at risk of attack.
 It would also effectively put a stop to the practice undertaken by larger corporations, of filing marks across multiple classes and refiling every five years to safeguard those mark from a non-use action.
However, having regard to the existing EU case law and Regulation, the more likely answers to these referred questions will be 'no'- Goods lacking clarity would not lead to invalid registrations and the EU law does not allow for a finding of bad faith due to lack of intention to use.  Despite this, the UK rules on the issue of intent to use may be deemed incompatible with the EU Directive.
In this regard, it remains to be seen how Brexit would affect the eventual ruling with the likelihood of the EUIPO and Courts taking one side and the UK Office taking the other.   For example,  it is quite conceivable that post-Brexit converted UK marks deriving from EUTMs with broad  lists of goods/services will be subject to attacks on their validity.
The outcome of this ruling will be watched closely by trade mark practitioners and holders alike.

[1] Sky Plc v SkyKick UK Limited (2018 EWHC 155 (Ch)
[2] under the then Regulation 207/2009, now amended to Council Regulation 2017/1001/EU
[3] 1995 FSR 850 at 865
[4] Case C0005347/1, 28 March 2000
[5] Such as Case T-136/1 Pelicantravel.com
[6] Including Case C-327/12 Simca Europe Ltd and Case T-82/14 Copernicus Trademarks Ltd, where the General Court ruled that conduct which was not legitimate business activity amounted to bad faith and abuse of the law

Article by Rob White 21/02/2018

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UK Court Seeks Guidance from CJEU on Issues of Broad Lists of Goods/Services and Intent to Use on Filing and Impact on Validity of Trade Marks

The UK High Court recently referred some key questions to the CJEU in a trade mark infringement action brought by Sky Plc[1], the answers to which could have a significant impact on the future filing strategies of brand owners in the EU and UK.

Mr Justice Arnold, acknowledging the 'general public importance' of the issues raised in this case, referred the following questions to the European Court for guidance, firstly on the issue of the clarity of broad terms in goods/services contained in a trade mark registration.

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