Wednesday, 16 October 2019

Case 371/18, Sky v Skykick: Advocate General on trade marks as a tool of monoplisation

The breadth of trade mark specfications, in part driven by the use of general, highly abstract, expressions, is a massive problem - not for trade mark owners, who often like to extend their monopolies, nor for registries which need fee income, but for new entrants who face problems with depletion of the stock of available trade marks and consequent foreclosure of the market. The issue was discussed critically in the otherwise rather smug and self-satisfied (and badly-translated, or perhaps written in the first place in bad English) Study on the overall functioning of the European Trade Mark System carried out by the Max Planck Institute for the Commission in 2013.

SkyKick is in the software business, and in particular migrating SMEs to cloud-based computing: its founders had worked at Microsoft on Office 365. When Microsoft lanuched a service under the name SKYDRIVE they ran into trouble with Sky, and unsurprisingly the same happened with SkyKick (despite clearance searches carried out by my old friends, Seattle's largest law firm, Perkins Coie, although I don't think any of my actual old friends are still there). Sky eventually sued SkyKick for trade mark infringement in the English High Court, and SkyKick counterclaimed for invalidity. The judge, Arnold J, who delivered a characteristic 358 page judgment ([2018] EWHC 155 (Ch)), sought guidance from the Court of Justice on two issues raised in the counterclaim.

The first concerned the requisite clarity and precision in the specification of goods. Sky's registration employed broad expressions such as "computer software". This the judge observed conferred a very wide monopoly on the owner, but it did not necessarily follow that it lacked clarity and precision: and it was not clear whether a lack of clarity and precision would be grounds for a declaration of invalidity, whether wholly or partly.

The second issue was whether a lack of intention to use a trade mark on some of the goods for which it was registered amounted to bad faith: and would bad faith invalidate the trade mark, either in its entirety or for the excess goods or services?

Five questions were put to the Court, and on 16 October Advocate General Tanchev gave his opinion.

First, he said that the list of absolute grounds for refusal is exhaustive. A lack of clarity and precision cannot in itself be an additional absolute ground. However, there could be an argument that an unclear or imprecise specification is contrary to public policy or public order, which is an absolute ground for refusal and also grounds for a declaration of invalidity. The register has to be clear and uncluttered: over-broad and general specifications dissuade competitors from entering the market. The trade mark owner can make itself appear bigger in the market than it really is - a variant of the angora cat problem in patent law. Unclear or imprecise terms in the specification can therefore be declared invalid - but not the whole registration, provided of course that some elements of the specification are sufficiently clear and precise. That said, the term "computer software" does not meet the standard. It confers on the proprietor "a monopoly of immense breadth', and is contrary to the public interest. The term is too general, and the goods or services covered too variable. Laddie J reached much the same conclusion, back in 1995 in Mercury Communications v Mercury Interactive [1995] FSR 850.

If the Court follows the Advocate General this could make a lot of registrations vulnerable, and it would not be limited to computer software.

The next two questions concern bad faith. The Advocate General suggests that, "in certain circumstances", registering a trade mark with no intention to use it in connection with goods or services within the specification, could amount to bad faith, which would be an absolute ground for refusal. This could be the case, the AG said, where there is no commercial logic behind the inclusion of goods or services, or where it is filed simply to stop a third party.

In answer to the fifth question, the AG said that s.32(3) of the Trade Marks Act 1994 (which requires a declaration as part of the application process) is compatible with the Directive, but that a false declaration in itself does not amount to bad faith. That looks like a very nuanced distinction.

The AG seems to be grasping an opportunity to to shift the balance of trade mark practice in favour of new entrants to markets, who suffer the problems of depletion and foreclosure that arise from cluttering of the register. In the introduction to his opinion, he comments critically on the state of the
law. Trade mark owners will have to rethink their filing strategies or risk invalidity, and the commercial logic of their registrations will require careful thought. Have the Royal Marines Commando really got a commercial interest in bird tables (class 20)?

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