Sky v SkyKick: CJEU provides relief to trademark owners

On 29 January 2020, the Court of Justice of the EU (CJEU) handed down its long-awaited decision in the SkyKick case. The ruling helpfully clarifies the effect of broad trademark filings.

Defining the scope of trademark protection

The scope of a trademark's protection is limited to the goods and services specified at the time it's applied for (unless it is a well-known mark enjoying broader protection because of its reputation). 

It can be difficult to choose the appropriate scope of protection when applying for a trademark. In the fields of tech and software, drafting an accurate specification can be particularly challenging – being too specific may lead to insufficient protection if new products are developed that are outside of the trademark's scope. 

In the 'IP Translator' decision of 2012 (C‑307/10), the CJEU held that a trademark application must identify the goods and services covered by the mark with 'sufficient clarity and precision' to enable others (such as competitors) to determine the mark's scope of protection. 

Despite this trademark owners typically draft their trademarks very broadly, even (and especially) if they are not certain at the time of application whether they will use the mark for all specified goods and services.

The original claim

Sky, a well-known British media company, had brought an infringement claim against SkyKick, a US cloud management software company, in the English courts relating to SkyKick's use of the 'Skykick' marks based on Sky’s earlier rights. 

SkyKick counterclaimed, arguing that Sky's registrations were:

• invalid as they lacked clarity and precision in respect of registered goods, such as 'computer software' or 'internet portal service'; and
• made in bad faith because Sky had no genuine intention of using the ‘SKY’ trade marks on all the goods and services covered by the registration.

The England and Wales High Court (EWHC) found that Skykick infringed Sky’s trademarks.

But in one of the most anticipated and significant referrals in European trademark law over the past few years, the EWHC asked the CJEU to determine whether trademark registrations could be declared invalid if the protected goods and services lack clarity and precision.

'Lack of clarity and precision' as an absolute ground of invalidity

The CJEU overturned the October 2019 opinion of Advocate General Tanchev, ruling that a trademark 'cannot be declared wholly or partially invalid on the grounds that terms used to specify the goods and services, in respect of which that trade mark was registered, lack clarity and precision'. 

The CJEU reasoned that the list of absolute grounds for invalidity must be interpreted exhaustively, and there is no provision that includes a ground for invalidity for lack of clarity and precision in respect to registered goods and services. Secondly, lack of clarity and precision does not fall within the scope of the absolute ground of Art.7(1)(f) of the 2017 EU trademark regulation (EUTMR), which states that a trademark must be declared invalid if it is contrary to public policy. 

The court ruled that the concept of public policy cannot be construed as relating to characteristics concerning the trademark application itself. This is, in our opinion, convincing and helps maintain legal certainty: Trademark owners can rely on the grounds for invalidation of trademarks that are being only those listed in the EUTMR. 

'Bad faith' as a ground for refusal/invalidity

In contrast, the CJEU confirmed that the registration of a trademark without any intention to use it in relation to the goods and services covered by the registration may constitute bad faith. 

However, 'bad faith' is only established if there is an objective, relevant and consistent indication suggesting that, when the trademark application was filed, the applicant had the intention of either:

• undermining the interests of third parties in a manner inconsistent with honest practices; or 
• obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark. 

In practice, this will be difficult to prove and so it will still be hardto cancel a trademark due to bad faith. And even where it is possible, it will - the CJEU said - affect only the part of goods and services covered by the abuse and not necessarily the entire trademark. 

What are the practical implications?

For trademark owners, the CJEU's decision is good news: there is no need to change filing strategies. 

As for applicants, they will not have to indicate or even know precisely at the time of filing if and to what extent the trademark will be used for all the goods and services included in its specification. 

In many cases, it will still be advisable to include a broader set of goods and services in the application if the eventual use of the trademark is uncertain.

As before, trademark owners will have a grace period of five years to begin using a mark for the goods and services for which it is registered. 

After five years, a mark isnot at risk just because its specification of goods and services is too broader than the mark's actual use. The CJEU seems confident that the cancellation action for non-use after five years mitigates any unreasonable monopoly that a trademark with unclear and imprecise specifications might enjoy.

However, trade marks are at risk if and insofar as the opponent can establish 'bad faith' – but this will require proving a dishonest intention by the trademark owner. 

To avoid this risk, trademark owners should, at the time of filing, consider and document their intention to eventually use the trade mark for all specified goods and services.