On January 29, 2020, the CJEU ruled on two key issues concerning trademark registrations: (i) the lack of clarity and precision in the designation of goods and services covered by the registration, and (ii) the lack of intention to use the trademark for the designated goods and services.
The eagerly awaited decision in case C-317/18 (the “Decision”) was finally issued by the Court of Justice of the European Union (“CJEU”) on January 29, 2020.
The Decision is the result of a reference by the High Court of Justice of England and Wales (the “High Court”) in the context of proceedings between the well-known pay-tv broadcaster Sky and the cloud service provider SkyKick, concerning the alleged infringement by SkyKick of four EU trademark filings and a national UK trademark filing belonging to Sky (collectively, the “Trademarks”). In the context of the national proceedings, SkyKick filed a counterclaim for a declaration of invalidity of the Trademarks based on two main grounds:
- the Trademarks were registered in respect of goods or services that were not specified with sufficient clarity and precision;
- the Trademarks were filed in bad faith, because Sky did not intend to use the Trademarks in relation to all the designated goods and services.
Therefore, SkyKick demanded that the High Court order the cancellation of all the Trademarks or, at the very least, their partial cancellation as regards the goods and services for which Sky had no intention of using them.
Considering SkyKick’s demands, the High Court referred to the CJEU five questions that can be summarized by the following three matters:
- whether a trademark may be declared wholly or partially invalid on the grounds that the terms used to designate the goods and services in respect of which that mark was registered are lacking in clarity and precision;
- whether a trademark application made without any intention to use the trademark in relation to the goods and services covered by the registration constitutes bad faith within the meaning of the applicable EU legal framework;
- whether a provision of national law under which an applicant for the registration of a trademark must state that the trademark is being used in connection with the goods and services in relation to which it is seeking to register the trademark, or that the applicant has a bona fide intention that it will be so used—such as a provision of the UK Trade Marks Act 1994 in the referred case—is compatible with the applicable EU legal framework
The CJEU examined these questions in light of the provisions of Directive 89/104[1] and Regulation 40/94[2] on Community trademarks (collectively, the “Applicable Provisions”)—now replaced, respectively, by Directive 2015/2436[3] and Regulation 2017/1001[4] on EU trademarks—which were in force on the date of filing of the Trademarks.
The lack of clarity and precision in the designation of the goods and services covered by the registrations is not grounds for trademark invalidity
As to the first question, the High Court considered the registration of a trademark for “computer software” too broad and, therefore, contrary to the public interest. This, the High Court argued, would grant the trademark owner a monopoly of immense breadth that cannot be justified by commercial interests.
However, the CJEU found that the list of grounds of invalidity of trademarks set out in the Applicable Provisions is exhaustive, yet includes no mention of the lack of clarity or precision in the designation of the goods and services covered by the registration of a trademark.
As a consequence, Trademarks may not be declared invalid due to the wide and generic nature of their designations of goods and services, nor can such a lack of clarity and precision be considered contrary to public policy and, therefore, be considered to fall under one of the sets of grounds for invalidity expressly provided by the Applicable Provisions.
Without prejudice to the conclusions summarized above, the CJEU still remarked that the protection of a trademark is inextricably linked to its usage: as a matter of fact, lack of “genuine use” within a continuous period of five years can lead to the revocation of a trademark registration.[5] In other words, although it may not be subject to invalidity per se “a national or Community trade mark registered for a range of goods and services designated in a manner which lacks clarity and precision is, in any event, capable of being protected only in respect of the goods and services for which it has been put to genuine use”[6] (emphasis added).
Bad faith cannot be presumed, and the lack of intention to use the trademark in relation to (all) the designated goods and services is not sufficient grounds for invalidity
Regarding the second question, the Applicable Provisions state that a trademark may be declared invalid where applicants were acting in bad faith when they applied for the trademark. However, the concept of “bad faith” is not defined in the law.
Based on the Decision[7], “The Court has held that in addition to the fact that, in accordance with its usual meaning in everyday language, the concept of ‘bad faith’ presupposes the presence of a dishonest state of mind or intention, regard must be had, for the purposes of interpreting that concept, to the specific context of trademark law, which is that of the course of trade”.
In this respect, the CJEU held that bad faith can act as grounds for invalidity only where there is sufficient evidence that a trademark owner filed the application “with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark, in particular the essential function of indicating origin.”[8] It follows that bad faith cannot be presumed “on the basis of the mere finding that, at the time of filing his or her application, that applicant had no economic activity corresponding to the goods and services referred to in that application.”[9]
Therefore, the CJEU found that the registration of a trademark by an applicant without any intention to use it in relation to the designated goods and services at the time of filing may constitute bad faith insofar as there is no commercial rationale behind that registration, because it was aimed at either unfairly hampering the commercial activity of others or gaining an unjustified monopoly of one’s own.
Room is left for national provisions on procedure
Lastly, the CJEU ruled that, even though under the Applicable Provisions Member States cannot introduce in national legislation grounds for refusal or invalidity other than those provided at EU level, they may nonetheless fix the provisions of procedure that appear to be inappropriate.
Thus, the procedural provision laid down in the UK Trade Marks Act 1994, pursuant to which applicants must state that the trademark that they are seeking to register is being used in relation to the designated goods and services, or that they have a bona fide intention that it shall be so used, is compatible with the EU legal framework.
Conclusions
Based on the Decision, trademark owners may hold off invalidity claims against their registrations in spite of the broad and generic terms used therein, or their lack of intention to use those trademarks for (all) the designated goods and services, insofar as they can prove such registrations had an actual commercial rationale. However, they will also need to consider the impact of the Decision on the (increased) likeliness of proceedings (or counterclaims), as well as on the actual enforceability of their own registrations; in both cases, the outcome may heavily rely on evidence and may be less favorable to trademark owners in cases of prolonged lack of use.
[1] First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks.
[2] Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark.
[3] Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks.
[4] Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark.
[5] Pursuant to Article 50(1) of Regulation 40/94, as recalled in the Decision, paragraph 68.
[6] Decision, paragraph 70.
[7] Decision, paragraph 74.
[8] Decision, paragraph 75.
[9] Decision, paragraph 78.
