Sky judge kicks bad faith questions to the ECJ

In a significant decision in Sky v Skykick [2018] EWHC 155, Mr Justice Arnold has referred a number of questions to the CJEU on bad faith and the clarity and precision of trade mark specifications. The CJEU's response may have significant implications for trade mark owners – particularly those holding very broad registrations.

Background

The claimants, Sky, claimed that Skykick had infringed four of their EU trade marks and one UK trade mark (a mixture of "SKY" figurative and word marks) (the Trade Marks) and had also committed passing off by using the sign "Skykick" in relation to its provision of cloud management products. In response, Skykick sought a declaration that Sky's Trade Marks were wholly or partly invalid on the basis that the specifications of the goods and services lacked sufficient clarity and precision and that the applications had been made in bad faith.

For the purposes of its infringement claim against Skykick, Sky relied on specific registrations in classes 9 and 38 (including "computer software" and "telecommunications services"), however Arnold J noted that the full Trade Mark specifications were extremely broad covering a number of classes and with some registrations stretching to over 8,000 words.

Skykick pointed to the breadth of Sky's Trade Mark specifications to argue that the applications had been made in bad faith because Sky had no intention to use the Trade Marks in relation to all of the specified goods or services. In particular, Skykick highlighted Sky's registration for "whips" and "bleaching materials" which, on cross-examination, Sky was unable provide any commercial rationale for registering. Skykick also argued that Sky's registrations for goods such as "computer software" lacked sufficient clarity or precision (as required by the IP Translator case). For these reasons, Skykick argued that Sky's Trade Marks were invalid either in whole or in part.

Decision

Trade mark infringement and passing off

Arnold J dismissed Sky's claim for passing off but held that, if the Trade Marks were validly registered for the goods and services relied on by Sky (ie in classes 9 and 38), Skykick had infringed them. This was because the "average consumer" (i.e. customers or end users of Skykick's cloud management products) was capable of perceiving "Skykick" as a sub-brand of SKY. The question therefore turned to the validity of Sky's Trade Mark registrations.

Clarity and precision of the specification

Whilst Arnold J commented that registration of a trade mark for "computer software" is contrary to public interest (because it confers on the owner a monopoly which can't be justified by any legitimate commercial interest), he held that it did not necessarily follow that such a term lacked clarity and precision. Further it was unclear whether insufficient clarity and precision was a legitimate ground for invalidating a trade mark either in whole or in part. For these reasons Arnold J sought guidance from the CJEU (see below).

Bad faith

On the bad faith allegation, Arnold J concluded that at the date of filing the Trade Mark applications, Sky did not intend to use the Trade Marks in relation to all of the goods and services covered by the applications. Further, it was unclear from recent case law whether a trade mark application could be found to have been made partly in good faith and partly in bad faith and, if so, what the legal implication was of this - whether such a finding would invalidate the entire registration or just the part made in bad faith. For these reasons Arnold J proposed a reference to the CJEU (see below).

Reference to the CJEU

Arnold J has indicated that he will refer the following questions to the CJEU:  

1. Can an EU or a national trade mark be declared wholly or partially invalid on the ground that some or all of the terms in the specification are lacking in sufficient clarity or precision?

2. If yes, is a term such as “computer software” lacking in sufficient clarity or precision

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 or services?

4. If yes, it possible to conclude that the applicant made the application partly in good faith and partly in bad faith if the applicant had an intention to use the trade mark in relation to some of the specified goods or services, but no intention to use the trade mark in relation to other specified goods or services?

Commentary

Arnold J's references to the CJEU leave open the possibility that where part of a trade mark application is found to have been made in bad faith the whole registration could be invalidated. This would clearly have significant implications for trade mark owners holding wide registrations as these could become vulnerable to wholesale strike out as a result of invalidity challenges for bad faith.

A response from the CJEU on this point isn't likely to be returned for some time, and certainly not before the UK leaves the EU on 29 March 2019. Whist referrals to the CJEU may stay in motion after we leave the EU and may not be deemed withdrawn, it is unclear at this stage what weight the English courts could give to any judgment of the CJEU post-Brexit. In the meantime, trade mark owners should review their existing registrations and their current use of their marks to identify any potential areas of vulnerability. They should also consider the potential benefits of filing new (narrower) applications now covering just essential goods and services to ensure that these, at the very least, are protected regardless of the CJEU's decision.