The recent decision of Mr. Justice Arnold of the England and Wales High Court in the Sky case provides more certainty to determine what constitutes “bad faith” in the context of a trademark application or registration.
Facts
Sky PLC sued Skykick UK Limited for infringement of several registrations of the trademark SKY. The listings of the goods and services were extensive and included goods which included “computer software” and services consisting of “telecommunications services”.
SkyKick contended that the Sky trademarks were invalidly registered because (i) the specifications of goods and services lacked clarity and precision and (ii) the applications were made in bad faith. As then required by U.K. legislation questions were referred to the Court of Justice of the EU.
Reference to the CJEU
The CJEU said that the laws of the Member States relating to trademarks must be interpreted as meaning that the registration of an EU trademark or a national trademark cannot be declared wholly or partially invalid because terms used to designate the goods and services lack clarity and precision.
The CJEU also said that the laws must be interpreted as meaning that a trademark application filed with no intention to use the trademark in relation to the goods and services covered by the registration constitutes bad faith, if the applicant had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark, in particular the essential function of indicating origin and distinguishing the goods and services of the applicant from the goods and services of others. When the absence of the intention to use the trademark concerns only certain goods or services referred to in the application, a finding of “bad faith” may be limited to those goods or services.
In the EU the applicant for a trademark does not have to indicate or know precisely, on the date on which the application is filed or on the examination of the application, the use made of the mark applied for as they have 5 years to begin actual use consistent with the essential function of a trademark.
The registration of a trademark by an applicant with no intention to use it in relation to the goods and services covered by that registration may constitute bad faith, where there is no rationale for the application in the light of the essential function of that trademark. Such bad faith maybe established only if there is objective, relevant and consistent indicia showing that, when the application for a trademark was filed, the applicant had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark.
The bad faith cannot be presumed based on the mere finding that, at the time of filing the application, that applicant had no economic activity corresponding to the goods and services referred to in that application.
Decision
The trial judge found that, at the dates of applying for the trademarks, Sky did not intend to use the marks in relation to all of the goods and services referred to in the applications. Sky was already using the marks in relation to some goods and services; Sky had concrete plans for using the marks in relation to some other goods and services; and Sky had a reasonable basis for supposing that they might wish to use the trademarks in relation to some further goods. But the applications included goods and services which Sky had no reasonable commercial rationale for seeking registration. The reason for including such goods and services was that Sky had a strategy of seeking very broad protection of the marks regardless of whether it was commercially justified.
The goods and services for which there was no intention to use the marks fell in three classes. First, specific goods in relation to which Sky had no intention to use the trademarks. Second, categories of goods and services that were so broad that Sky could not, and did not, intend to use the trademarks across the breadth of the category. This included ‘computer software’ but there were others. Third, the applications were intended to cover all of the goods and services in specific classes, for example Class 9.
Sky filed the applications as part of a deliberate strategy of seeking very broad protection of the trademarks regardless of whether it was commercially justified. Sky applied for the marks to obtain an exclusive right for purposes other than those falling within the functions of a trademark, namely purely as a legal weapon against third parties, whether in threats of infringement claims or actual infringement claims or oppositions to third party applications for registration.
The fact that Sky did not intend to use the marks across the breadth of the category of goods consisting of “computer software” did not mean they did not intend to use the marks in relation to any computer software. On the contrary, Sky had actually used the marks in relation to some types of software. The Judge devised a description of services that reflected the extent of bad faith established.
The judge found that Sky had shown infringement for “telecommunication services” and “electronic mail services”.
Comment
This decision seems to bring EU practice for describing goods and services in a trademark application closer to the practice in the U.S. and Canada.
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2
Direct Line: (416) 597-3371
Fax: (416) 597-3370
Email: mckeown@gsnh.com
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared on the Lawyer’s Daily website published by LexisNexis Canada Inc.