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Blue sky thinking: can lack of intention to use a trade mark constitute bad faith?

Date: 21 May 2018

In this latest instalment in the trade mark battle between the media company Sky and the cloud management provider SkyKick (Sky Plc & Ors v Skykick UK Ltd & Anor (2018 EWHC 155), Mr Justice Arnold decided to refer questions to the CJEU on the issue of clarity and precision of specifications in light of the IP Translator case (see page ?), and also on what constitutes filing an application in bad faith because, in his words, “[t]he case raises important issues of European trade mark law”.  Arnold J found that, if the European trade marks for the word SKY were validly registered, then the defendants’ use of signs containing SKYKICK had infringed the SKY marks pursuant to Article 9(2)(b) of the Regulation/Article 10(2)(b) of Directive 2015/2436.  The CJEU's response may have significant implications for trade mark owners – particularly those holding very broad registrations.

 

THE ARGUMENTS

The claimants (collectively “Sky”) owned four European trade marks (a mixture of “SKY” word marks and the figurative marks shown below) and one UK trade mark (a “SKY” word mark) which covered a wide variety of goods and services (including “computer software”):

 

Sky complained that SkyKick had infringed the SKY trade marks under Article 10(2)((b) and Article 10(2)(c) of Directive 2015/2436 by using the signs “SkyKick”, “skykick” and the figurative signs shown below:

 

SkyKick argued that the SKY trade marks were wholly or partly invalid on the grounds that the specification of the goods and services lacked clarity and precision (in particular, “computer software”), and that Sky had applied for the SKY marks in bad faith because it had not intended to use the marks across the full width of the specifications, contrary to its declaration under s 32(3) of the Trade Marks Act 1994. 

 

THE DECISION

 

In Judge Arnold J’s view, registration of a trade mark for “computer software” was too broad. In short, registration of a trade mark for “computer software” was unjustified and contrary to the public interest because it conferred on the proprietor a monopoly of immense breadth which could not  be justified by any legitimate commercial interest of the proprietor. 

 

In the IP Translator case, the CJEU provided guidance on how EUTM owners are required to specify the goods and services covered by their trade mark applications, particularly if they adopted the broad class headings for specifications under the Nice classification system.

 

However, IP Translator concerned the rejection of EUTM applications which lacked clarity.  The point regarding clarity which had been raised in the present case related to a different point, as it concerned marks that had already been granted and whether such marks could be declared invalid for lack of clarity.

 

Given that it could make a real difference to the outcome of this case if SkyKick were correct that the SKY marks were partly invalid on the basis that the relevant parts of the specifications were lacking in clarity and precision, Arnold J concluded that this was an issue of interpretation of the Directive on which it was necessary to seek guidance from the CJEU.

 

On the evidence, Judge Arnold concluded that Sky had not intended to use the marks in relation to all of the goods and services covered by the specifications and, in the case of the UK trade mark, Sky’s declaration in accordance with section 32(3) of the 1994 Act, namely that it intended to use the mark in relation to the specified goods and services was, in part, false.  Whether Sky made the applications for the EU trade marks in bad faith within the meaning of Article 51(1)(b) of Regulation 40/94, and if so whether the consequence was partial or total invalidity of the EU trade marks, depended on the resolution of questions referred to the CJEU.

 

Reference to the CJEU

 

Arnold J decided to refer questions to the CJEU concerning whether:

 

a)   an EU or national trade mark registered in a Member State could be declared wholly or partially invalid on the ground that some or all of the terms in the specification lacked sufficient clarity or precision to enable the competent authorities and third parties to determine the extent of the protection conferred by the trade mark;

 

b)  if so, a term such as “computer software” lacked sufficient clarity or precision to enable the competent authorities and third parties to determine the extent of the protection conferred by the trade mark;  

 

c)   it constituted bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services;

 

d)  if so, an applicant could be found to have made an application partly in good faith and partly in bad faith if the applicant had intended to use the mark in relation to some of the specified goods or services, but had no intention to use the trade mark in relation to other specified goods or services; and

 

e)  s 32(3) of the 1994 Act was compatible with the Directive and its predecessors.

 

Nonetheless, Arnold J went on to consider the issue of infringement assuming that the SKY marks were validly registered in respect of the goods and services relied upon by Sky, and concluded that, if that was the case, then SkyKick had infringed the SKY marks pursuant to Article 9(2)(b) of the Regulation/Article 10(2)(b) of the Directive. 

 

Arnold J found that the distinctive character of the SKY marks and the identity of SkyKick’s goods and services with some of those covered by the SKY marks supported the existence of a likelihood of confusion.  The similarities between the signs were such that the average consumer was capable of perceiving SKYKICK as a sub-brand of SKY, but whether that was likely depended in particular on the degree of care and attention exercised by the average consumer. In his judgment, IT professionals were unlikely to be confused given the fairly high degree of care and attention they would exercise, but there was a likelihood of confusion in the case of IT personnel and end users who downloaded the SkyKick Outlook Assistant, given the lower degrees of care and attention they would exercise. 

 

However, Arnold J found that Sky failed to establish that SkyKick took unfair advantage of or diluted the distinctive character of the SKY marks so as to constitute infringement under Article 10(2)(c) of the Directive.

 

Comment

 

Although the IP Translator decision did not prevent the use of class headings, it did state that some were too vague to meet the requirements for clarity and precision necessary for users to understand the extent of the right claimed in any given registration.  Subsequent discussions between the Trade Mark Offices forming the European

Trade Mark and Design Network (“TMDN”) (namely, EUIPO, the Offices of the Member States and the Norwegian Office) and users of the system resulted in the identification of a list of 11 class headings or parts of them (known as “General Indications”) that were not clear and precise, and so could not be accepted without further specification of the goods or services.  “Computer software” is not currently on that list.  However, in the present case, Arnold J expressed this view that the term “computer software” was too broad.

 

Hopefully, the references to the CJEU will answer the question of whether lack of clarity and precision of the specification be asserted as a ground of invalidity, as well as providing some much needed clarity on the issue of bad faith.

 

 

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