Trade Marks: lack of clarity and precision and bad faith

Summary

The Advocate-General has opined on questions of invalidity for lack of clarity and precision in a trade mark's goods and services specification, and on whether applying to register a mark without any intention to use it for the specified goods or services amounted to bad faith.

Background

Section 32(3) of the Trade Marks Act 1994 (TMA) (section 32(3)) provides that an application for registration of a trade mark must state that the trade mark is being used by the applicant or with their consent in relation to the goods or services for which registration is sought, or that the applicant has a bona fide intention that it should be so used.

A sign may not be registered as a trade mark if it is contrary to public policy or accepted principles of morality (section 3(3)(a), TMA; Article 3(1)(f), Trade Mark Directive (2015/2436/EU); Article 7(1)(f), EU Trade Mark Regulation (207/2009/EC)) (2015 Directive) (Article 3(1)(f)) (Article 7(1)(f)).

Bad faith as a ground for invalidity may be established where the owner of the contested mark had initially sought to register it also for goods and services in other classes that corresponded to those covered by the invalidity applicant's earlier marks (Koton Mağazacilik Tekstil Sanayi ve Ticaret AŞ v EUIPO C‑104/18 P).

The European Patent Office’s Technical Board of Appeal partially invalidated Hasbro’s EU trade mark (EUTM) for MONOPOLY on the basis of bad faith and concluded that, to the extent goods and services were identical, the re-filing of an earlier registered mark improperly and fraudulently extended the five-year grace period (known as "evergreening") (Kreavtivni Dogadaji v Hasbro Inc R 1849/2017-2).

Facts

S owned EUTMs and a UK trade mark comprising the word SKY registered in relation to various goods and services including computer software.

S sued SK for infringement of the marks by the use of the sign "Skykick" in relation to downloadable software goods and other services, and for passing off.

SK denied infringement and passing off, and counterclaimed for a declaration that the marks were wholly or partly invalidly registered on the grounds that the specifications of goods and services lacked clarity and precision, and that S's trade mark applications had been made in bad faith.

The High Court referred various trade mark invalidity questions to the European Court of Justice (ECJ).

Decision

The AG opined that a lack of sufficient clarity and precision in the terms specifying the goods or services covered by a registered EU or national trade mark was not a ground for invalidity. However, the requirement for clarity and precision could be covered by Article 3(1)(f) and Article 7(1)(f), which provide for the refusal or invalidity of marks which are contrary to public policy, insofar as registration of a trade mark for "computer software" was unjustified and contrary to the public interest. A term such as "computer software" was too general, and covered goods and services which were too variable, to be compatible with the trade mark’s function as an indication of origin.

The term "computer software" lacked precision in the sense of covering goods that were too variable in their function and field of use to be compatible with the function of a trade mark. Registration of a trade mark for "computer software" was unjustified and contrary to the public interest because it conferred on the proprietor a monopoly of immense breadth which could not be justified by any legitimate commercial interest of the proprietor.

In relation to bad faith, in certain circumstances, applying to register a trade mark without any intention of using for the specified goods or services could constitute an element of bad faith (an absolute ground for invalidity), in particular where the applicant's sole objective was to prevent a third party from entering the market, including where there was evidence of an abusive filing strategy. This was for the national court to ascertain.

As S was found by the referring court to have had a deliberate intention to acquire rights it had no intention to use, potentially, to prevent third parties from using the registered mark for the sale of those goods and services, there was bad faith. The deliberate seeking of registration for goods and services for which there was no intention to trade reflected an intention to abuse the trade mark system.

Registering a trade mark without any intention to use it could constitute bad faith, at least in certain circumstances, and applying for registration of a trade mark without any intention to use it in connection with the specified goods and services could constitute bad faith, in so far as it was an abuse of the trade mark system. However, applying for registration of a trade mark in respect of a broad range of goods or services was not sufficient to demonstrate bad faith if the applicant had a reasonable commercial rationale for seeking such protection in the light of their use or intended use of the trade mark.

The trade mark should only be declared invalid for those goods or services in relation to which bad faith existed.

Section 32(3), which requires an UK trade mark applicant to state their intention to use the mark, was compatible with the 2015 Directive provided that it was not the sole basis for a finding of bad faith.

Comment

The referred questions raise points of considerable practical importance for trade mark owners and their advisers. Interestingly, the AG advised that a lack of intention to use in connection with goods and services within a specification may constitute bad faith where the sole objective of the applicant is to prevent a third party from entering the market including where there is an abusive filing strategy. This follows on from Koton where a party registered part of another party's marks, but may also encompass the type of "evergreening" in Hasbro. If followed by the ECJ it is likely to give rise to more cancellation actions based both on overbroad terms and lack of intention to use.

The issues regarding "computer software” and the breadth of its meaning, are particularly important in modern society where there are many goods which incorporate or supply software. The question of lack of clarity and precision in specifications could also be relevant in other areas, such as “telecommunications services” or “financial services”.

Case:  Sky plc and others v Skykick UK Limited and another C-371/18.

First published in the December issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.