CJEU Gives Guidance on Intention to Use and Bad Faith

In C-371/18 Sky PLC v SkyKick UK Ltd the Court of Justice for the European Union (CJEU) gave important guidance on both whether a trade mark can be invalidated for having an inappropriately wide specification and on whether a specification that contains goods or services for which there is no intention to use is invalid for bad faith...

Sky had brought trade mark infringement proceedings against SkyKick on the basis of Sky’s EU and UK trade mark registrations for the word SKY or stylised version thereof which, amongst others, covered a wide range of goods and services in classes 9 and 38. SkyKick operate a niche SaaS business limited to Microsoft Resellers involving cloud migration of Microsoft Office Outlook data into Microsoft Office 365 format and cloud backup for Office 365 generally. They originated in the US and changed their name to SkyKick in 2012 and expanded into the EU in late 2014. Sky brought trade mark infringement proceedings against SkyKick on 23rd May 2016.

In the main proceedings before a Chancery Division High Court Judge SkyKick argued for the invalidity of Sky’s registrations on account of their specifications including goods and services that are too broad, lack clarity or precision, or for which there was no intention to use. SkyKick did not seek partial invalidation on the basis of non-use since Sky’s registrations had been registered for less than 5-years when their pleadings were filed. However, given that all but one of the registrations passed the 5-year registration threshold during the proceedings, the Judge considered that SkyKick had the opportunity to make non-use invalidation applications.

While Sky’s marks were registered relatively recently, the applications were filed from 2003 to 2006 for the EU marks and in 2008 for the UK mark. Consequently, the proceedings were considered under Council Regulation 40/94 in respect of the EU marks and the implementation of Directive 89/104 in the UK Trade Marks Act 1994 for the UK mark. Sky’s infringement action was based upon a range of goods and services in the class 9 and 38 specifications. The High Court Judge, though, considered as representative the following items in class 9: computer software; computer software supplied from the Internet; and computer software and telecoms apparatus to enable connection to databases and the Internet. The Judge was inclined towards finding that these terms are too broad on account of claiming too wide a monopoly, but considered that it did not follow that they also lack clarity and precision. However, on account of its relevance to the question of infringement, the Judge referred to the CJEU the question of whether lack of sufficient clarity or precision in a trade mark registration can be a ground for invalidity and if so whether terms such as ‘computer software’ are lacking in that respect.

After considering EU and UK legislation and jurisprudence the Judge found that in limited scenarios a finding of bad faith based upon no intention at the time of filing to use the mark can and has been made, but that the law in that respect is not acte clair. The Judge went on to hold that for some of the goods and services Sky had no intention at the time of filing of using them. For similar reasons the Judge also referred to the CJEU the questions of whether it constitutes bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services and whether a finding of bad faith can be made in respect of only some of the goods or services?

The Judge went on to find that if Sky’s specifications are valid, then the claim for infringement would be made out and that SkyKick cannot avail themselves of the ‘own name’ defence, since either it is not a ‘natural person’ or the use of its name is not in accordance with honest practices in industrial and commercial matters.

Regarding clarity and precision the CJEU noted that under both Council Regulation 40/94 in respect of the EU marks and Directive 89/104 in respect of the UK mark there is an exhaustive list of grounds for invalidity, which neither includes lack of clarity or precision as a ground and nor does it fall within one of the grounds. The CJEU further noted, in line with the referring Judge’s comments, that the CJEU’s 2012 C-307/10 CIPA v Registrar of Trade Marks decision on the requirement for trade mark application specifications to be stated with sufficient clarity and precision does not extend to registrations.

Regarding bad faith, the CJEU noted that it is not defined in the relevant legislation, but readily found that it presupposes the presence of a dishonest state of mind or intention. In the context of trade mark law bad faith was found to involve seeking to register a mark with the intention of undermining the interests of third parties in a manner inconsistent with honest practices, or with the intention of obtaining an exclusive right for purposes other than the essential function of indicating origin. While use is not required for 5-years from registration bad faith can still be found to apply at the time of filing if there is objective evidence that the making of the application was inconsistent with honest practices or for purposes other than indicating origin. A lack of economic activity in the relevant field at the time of making the application is insufficient to make a finding of bad faith. Where a finding of bad faith affects only some of the goods or services only those goods or services would be invalid on the basis of bad faith.

Author: Quinn Miller

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