Sky v SkyKick: Big brands get signal boost from EU Court

Author: Ben Milloy

In October last year the EU Court’s Advocate-General (AG) caused a stir in the IP world with an opinion heralding a seismic shift in EU trade mark law and practice. Cue collective breath-holding amongst trade mark owners with either purposefully broad goods and services specifications (including terms like “computer software”), or specs comprising sprawling lists of seemingly irrelevant items (see “artificial snow for Christmas trees” for a company specialising in telecommunications). The real fear for these owners was that their registrations could now be challenged under grounds aimed at curbing these land grab-type strategies. Last month, however, the EU Court (Court) delivered its binding judgment in the case, and it turns out they probably had little to worry about.

The case in question started as a UK trade mark dispute between TV broadcaster Sky (owner of several such broad and far-reaching “SKY” registrations ranging from “computer software” to “poles for pole vaulting”) and SkyKick, a cloud management software provider. The UK court found that some of the issues raised by the case – concerning Sky’s (not uncommon) practice of adopting the most extensive possible specification in order to obtain the greatest level of protection and distinctiveness for its mark – raised questions to which clarification from the Court was needed.

The UK Court had asked 5 questions in total, but the two key issues were:

1. Could a registered EU or UK mark be declared invalid on the ground that some or all of the goods or services were lacking in sufficient clarity and precision to determine what was protected?
2. Could a registered EU or UK mark be declared invalid on grounds of bad faith simply because an application had been made without any intention to use the trade mark in relation to the specified goods or services?

The AG’s opinion – in what might be likened in broadcasting terms to the “4K Ultra On Demand” option – had suggested that the answer to both of these was a, somewhat revolutionary, “yes”. However, when it came to the crunch, the judges of the Court decided that they were happy to make do with the basic package.

On the first question, the AG had found that a requirement for “clarity and precision”, which had been established as a requirement for trade mark applications in the landmark IP TRANSLATOR decision, could also apply to trade marks after they had registered. The AG considered that this requirement could be incorporated by dint of the “public policy” invalidity ground, which was contained in the relevant EU trade mark Regulation (EC) No 40/94 (Regulation). The Court, however, did not accept this novel argument, stating that public policy could not be “construed as relating to characteristics concerning the trade mark application itself”. The Court also rejected a more speculative suggestion by SkyKick that the requirement for clarity could be implied into the Regulation’s requirement for trade marks to be “graphically represented” (which the Court held to apply exclusively to trade mark signs). In looking only at the invalidity grounds contained in the Regulation, and adopting a strict interpretation of those grounds, the Court did not conclude that a requirement for clarity and precision could be implied as a means of invalidating a registered mark.

On the second question, the AG had found that “abusive” filing strategies similar to those adopted by Sky – by which goods and services were included in specifications without any intention to use them (but instead to stop third parties from entering the market with a similar sign) – could constitute bad faith. However, the Court emphasised that bad faith presupposed “the presence of a dishonest state of mind or intention”. Accordingly, this ground would only arise where there was such a dishonest intention to undermine the specific aim of the EU trade mark registration regime; namely, to facilitate a landscape of “undistorted competition”, where owners can register trade marks to distinguish their goods and services. The Court had particular regard for the fact that existing EU rules provide a 5 year “grace period” from registration for use of a mark in trade, and that an applicant is not therefore not required, at the time of filing, “to indicate or even to know precisely…the use he or she will make of the mark applied for”. Accordingly, the Court rejected the idea that bad faith could be presumed on the basis that, at the time of filing, the “applicant had no economic activity corresponding to the goods and services referred to in that application”.

The judgment is good news for monopolisers, setting the bar for bad faith applications as relatively high, and likely to make challenges on this ground as difficult as ever, if not more so. It may be seen as tacitly encouraging the practice adopted by some major brands of “refreshing” their trade mark registrations every 5 years (thereby benefiting from a renewed grace period, and no requirement to actually use their mark for that period).

Conversely, the decision will be a source of frustration to any new market entrants who are trying to find a space for their marks, even for a very specific piece of software, in an increasingly crowded market.

The fact that the EU and UK trade mark registries are, following the IP TRANSLATOR case, required to consider the clarity and precision of specifications at the application stage, but registrations cannot be challenged by third parties at a later date, does appear to create an unjustifiable and, ultimately unsustainable inconsistency. It may now be a question of whether the trade mark registries take a harsher line on terms such as “computer software” than they do currently. We will need to stay tuned.

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