Analysis: “Sky v SkyKick: CJEU confirms that the lack of intention to use a trademark on the date of filing can constitute bad faith” by Nuria Bermejo
On 29 January 2020, the Court of Justice of the European Union (Court of Justice) handed down its judgment in the case Sky plc v SkyKick (C-371/18), which has been considered by many to be one of the most significant trademark cases of 2019.
The judgment answers five questions referred to the Court of Justice by the English High Court on the conflict between two undertakings: Sky plc and others, a group of companies active in television broadcasting, telephony and broadband provision (‘Sky’), and SkyKick UK, Inc, a start-up company which supplies cloud migration information and technology services (‘SkyKick’).
Sky is the owner of different forms of the word mark ‘SKY’, which are registered for a large number of goods and services, in particular for products and services of class 9, including different forms of computer software, and class 38, which includes telecommunication services, electronic mail services, internet services and different types of computer services.
Sky brought an action for infringement of its trademarks against SkyKick.
According to the facts of the case, Sky companies had been making extensive use of their trademarks in relation to a range of goods and services related to its core business, but had not been offering any email migration or cloud backup goods or services and no evidence showed that they planned to do so in the immediate future.
Skykick, in turn, filed a counterclaim for declaration of invalidity of the trademarks at issue, arguing that they were registered in respect of goods and services that were not specified with sufficient clarity and precision.
The case at issue addresses the role and function of the specification of good and services in the EU trademark system, having regard to third party market access.
Arguments were developed mainly in two directions: on the one hand, the potential existence of an absolute ground for invalidity, related to the lack of clarity and precision of the specification of the goods and services for which a trademark is registered, and on the other hand, the lack of intention to use the trademark applied for in relation with the goods and services covered by the application as a manifestation of bad faith.
Clarity and precision of the specification of the goods and services for which a trademark is registered
At first sight, the first block of arguments was not difficult to address. As is known, both prohibitions of registration and grounds for invalidity are exhaustively listed in different regulations on the EU trademark and in directives to approximate national laws relating to trademarks. The Court of Justice, therefore, rejected SkyKick’s reasoning regarding the possibility to declare a trademark invalid after registration on the ground that the specification of goods and services lacked clarity and precision.
However, that answer immediately raised another question. According to the well-known case Chartered Institute of Patent Attorneys, (C-307/10, paragraph 49), the identification of the goods and services for which a trademark is registered must be ‘sufficiently clear and precise’, because it is crucial to determine the extent of the right conferred by the trademark. SkyKick took up that argument to claim that the lack of clarity and precision of the specification of goods and services in respect of which a trademark has been registered would infringe the requirement of graphic representability and be contrary to the public policy.
The Court of Justice has quickly rejected both arguments – probably, too quickly – even though Advocate General Tanchev made an interesting attempt in his Opinion to impede the registration of trademarks for specifications of goods and services lacking in clarity and precision.
The AG considered that, in these cases, registration of the trademark would be contrary to public order because it would confer a broad monopoly, which could not be justified (see paragraph 79).
In this regard, it would have been worthwhile to clarify in the judgment that the purpose of this provision is to safeguard the social and democratic order, impeding the registration of signs, which are contrary to fundamental values of the EU (in this sense, among others, see these paragraphs in General Court judgments: paragraph 15 of (PAKI) (T-526/09) and paragraph 36 of (LA MAFIA SE SIENTA A LA MESA) (T-1/17). As can be seen, this objective does not fit with the circumstances of the case.
In the same vein, it would have been of interest to explain that the solution to the problems referred by AG Tanchev – the reduction of the supply of suitable trademarks and the erosion of the public domain, which may raise barriers to entry (see paragraph 62), can be effectively addressed, in the light of the particular circumstances of the case, with another tool: bad faith. It is true that, as the General Court (see, for instance, paragraph 88 of (16PF) (T-507/08) and some scholars have properly pointed out, broad specifications of goods and services, covering a diffuse range of products and services, can be perfectly justified in many cases (namely development of merchandising or new business; creation of brand portfolios by advertising agencies, etc.). But this might not be the case in others – applications of trademarks intending to block the entry of third parties to the market. Thus, the lack of clarity and precision in the specification of goods and services could be seen as an aspect to be taken into consideration, in relation with others, in the assessment as to whether a trademark has been registered in bad faith.
The Court of Justice, however, remained silent in this regard.
Lack of intention and bad faith
The second matter at issue was to determine whether the lack of any intention to use the trademark in relation to the specified goods and services on the date of filling the registration of the trademark could be relevant to consider that it was made in bad faith.
In this regard, it is important to recall that the acquisition of the exclusive right conferred by an EU trademark is based on the registration of the sign. As was pointed out by the Board of Appeal’s Decision of 28 March 2000, in Trillium, in contrast to the solution adopted in other systems, the European system requires neither the use of the mark before the registration, nor the bona fide intention to use the mark.
However, in such a situation, the registration of the trademark might confer on the owner an exorbitant right, as he could preclude the use of identical or confusing trademarks during the first five years after the registration, even if the owner never had the intention to use the trademark for the products and services covered by the registration. As the Court of Justice pointed out in a previous judgment ‘those provisions thus confer on the proprietor a grace period for beginning genuine use of his mark, during which he may rely on the exclusive rights which the mark confers […] without having to demonstrate such use’ (Länsförsäkringar AB v Matek A/S (C-654/15, paragraph 26).
In the present judgment, the Court of Justice concludes that such a trademark application will have to be considered as made in bad faith, because it undermines the interest of third parties in a manner inconsistent with honest practices or grants an exclusive right for purposes others than those failing within the functions of a trademark.
However, it points out that bad faith cannot be presumed when the applicant had no economic activity corresponding to good and services referred to in the application.
There is no surprise in these conclusions. As AG Tanchev concedes, this line of reasoning was present to some extent in the previous judgment Chocoladefabriken Lindt & Sprüngli (C-529/07, paragraphs 43 and 44), and in some judgments of the General Court (for instance, see BIGBAG (T-33/11, paragraphs 19, 24 to 26), and SIMCA (T-327/12, paragraphs 35 and 37). Moreover, this view has been already accepted by academics. For instance, in Spanish literature, prominent scholars have pointed out recently that trademarks registered having no intention to use them in the short or medium term should be considered as contrary to bad faith.
The judgment ended by ruling that a provision of English law obliging the applicant to state that the trademark applied for is being use before the registration in relation to the goods and services covered by it or to show a bona fide intention to use the mark on the date of filing the trademark is compatible with Directive 89/104.
After Brexit, this answer will still be useful for those Member States with an interest in introducing or maintaining similar rules.
As can be seen, this judgment is not a revolution in the European trademarks system. However, it is still relevant, because of the conclusions that can be drawn from it. The five-year period is not a period of absolute immunity for trademarks owners. Trademarks can be invalidated even in the first five-year period when they have been applied for, with any intention to use them for the products and services referred to in the application.
Nuria Bermejo is currently Professor of Commercial Law at the Universidad Autónoma de Madrid, and was also a Legal Secretary (référendaire) at the General Court at the Court of Justice of the EU until 2015. Her publications include “El artículo 8.4 RMC. Anatomía de una regla de propiedad”, InDret, 2013, pp. 1-37 and “La Reforma del Reglamento de Marca de la Unión europea: por un sistema europeo de marcas más eficiente”, La Ley mercantil (2017), pp. 1-38.