Two recent decisions in the UK High Court by the same Judge have considered similar questions concerning registered trade mark specifications in the UK and EU and the possible impact if (i) an unclear and imprecise term is contained in the specification, and (ii) the applicant does not have an intention to use the mark on all the goods and services contained in the specification.
The specific terms under the spotlight were, respectively, computer software, financial services and insurance services but the principles under review could apply equally to other broad terms such as telecommunications services.
Sky Plc v SkyKick UK Limited
Can a trade mark be validly registered for computer software?
Mr Justice Arnold referred four questions up to the Court of Justice of the European Union (CJEU) here. The term computer software was pivotal to the case and was therefore considered in some detail.
Trade marks are registered for a specified list of goods and services and this specification goes a long way to defining the scope of protection of the mark. For example, the identical word POLO has been registered by VW for vehicles, by Nestlé for confectionery and by The Polo/Lauren Company for clothing. None of these businesses can claim exclusivity in POLO across all goods but, provided the trade mark specifications and corresponding commercial use are suitably well delineated, both the register and the marketplace should be able to withstand POLO coexistence without consumer confusion.
Sky objected to the use of the trade mark SKYKICK by SkyKick. Sky owns various registrations for SKY in word and stylised word format. The Judge decided that, provided they were validly registered, the SKY marks would be infringed by use of SKYKICK.
The Judge noted that some of Sky’s registrations had specifications which exceeded 8,000 words, were very broad and went way beyond Sky’s core business areas.
He stated that trade mark registrations are powerful tools which confer exclusivity in the registered mark in relation to the registered goods and services. The specification must, as a matter of policy, be sufficiently clear and precise so that anyone viewing the Register can understand the extent of the registered rights.
Some of Sky’s registrations covered computer software. The Judge considered this term "unjustified and contrary to the public interest because it confers on the proprietor a monopoly of immense breadth which cannot be justified by any legitimate commercial interest of the proprietor". His view was that software covers such a wide variety of applications that it is not credible one business would engage in all possibilities. There are two issues here. Firstly, is the term computer software sufficiently clear and precise, and, if not, what is the consequence? Secondly, what is the consequence (if any) of a finding that Sky could not have intended to use its mark across the entire breadth of computer software possibilities?
i) Sufficiently clear and precise?
1. Can an EU trade mark or a national trade mark registration within the EU be declared wholly or partially invalid on the ground that some or all of the terms in the specification are lacking in sufficient clarity or precision to enable the competent authorities and third parties to determine the extent of the protection conferred by the trade mark?
In other words, might an imprecise term jeopardise the registration in part (i.e. strike out the term from the registration) or in whole (i.e. strike out the whole registration)?
2. Is a term such as computer software lacking in sufficient clarity or precision?
The Judge expressed his personal view in the decision that computer software does have sufficient clarity and precision.
ii) Intention to use – bad faith?
Under the UK Trade Marks Act 1994, an applicant for trade mark registration must either be using the mark in relation to all the goods and services applied for or else it must have a genuine intention to do so. If the applicant lacks this intention at the point of application, this is "bad faith" and can be the basis of an invalidity action in the UK. An invalidated registration is struck from the Register as though it never existed.
Proving lack of intention is difficult. However, after cross-examination of a Sky witness, the Judge concluded that certain goods and services were included within Sky’s registrations purely as a strategy to seek very broad protection for their marks, regardless of whether it was commercially justified. On this basis, he was prepared to infer a lack of intention on the part of Sky to use its registered marks in relation to certain goods, including bleaching preparations and whips. He made the same inference where computer software was concerned because Sky’s marks had not and could not have been used across the entire breadth of the category.
Unlike the UK, there is no express legislative requirement for the applicant of an EU mark to have a genuine intention to use it. However, some case law suggests that such a lack of intention may constitute bad faith. In order to clarify the EU perspective, the Judge asked the CJEU:
- Can it constitute bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services?
- If yes, is it possible to conclude that an application was made partly in good faith and partly in bad faith if the applicant had an intention only to use the mark in relation to some of goods/services but not in relation to others?
The second question is important in order to determine whether a registered mark could be partially invalid or wholly invalid once a finding of a lack of intention to use has been made against any one or more product or service.
A link to the Judgment is here: http://www.bailii.org/ew/cases/EWHC/Ch/2018/155.html
Fidelity v Fidelis
Can a trade mark be validly registered for financial services?
This was another infringement case in the High Court before Mr Justice Arnold. Fidelity claimed that Fidelis had infringed its rights in the trade mark FIDELITY by use of the mark FIDELIS. Fidelis counterclaimed that the FIDELITY registrations were wholly or partially invalid due to inclusion of the broad phrase financial services within the registered specification. Fidelis also claimed Fidelity had registered their marks in bad faith due to inclusion of the general term insurance services when the marks had only been used in relation to pension-related insurance services. Fidelity could not have had an intention to use their mark across the whole spectrum of insurance services. Other issues were addressed in the case but are not relevant to this article.
The Judge restated the position on the interpretation of trade mark specifications, namely that terms are to be ascribed their ordinary and natural meaning. Services are considered inherently less precise than goods, and should not be interpreted so liberally that they lose clarity and precision.
Here, financial services were considered to be "less objectionable than computer software" insofar as the term may possess clarity and precision. However, the Judge still concluded this point was arguable and there remained the possibility that the FIDELITY registrations were invalid. This would depend on the response to the questions he referred to the CJEU in SkyKick.
The bad faith claim relating to insurance services was also held to be arguable. The key question was whether Fidelity had a reasonable commercial rationale for registering the general term or whether it was only justified in registering a narrower term such as pension-related insurance services, insurance bonds, life insurance. There is a presumption here of good faith unless the contrary is proven and the burden of proving bad faith lay with Fidelis. On the facts, the Judge considered it unlikely that Fidelity had acted in bad faith but, in the current uncertain state of the law, the point was arguable. It is noteworthy as a separate issue that he cut down the FIDELITY specifications so that insurance services were reduced to pension-related insurance services because, when required to prove use, Fidelity was only able to do so in this specific area. There had been no use in other categories such as car insurance, home insurance, travel insurance and so on.
A link to the Judgment is here: http://www.bailii.org/ew/cases/EWHC/Patents/2018/1097.html
Venner Shipley’s trade mark opinion:
It would be very surprising if the CJEU rules that computer software is not sufficiently clear and precise to be a validly registered term. Multiple EU trade marks are registered for computer software and it would be a radical change in practice with serious consequences. That said, it may be unrealistic for trade mark owners to claim exclusivity in their registered marks in relation to software across all possible applications. After a period of five years on the register, a UK or EU trade mark becomes subject to a use requirement. If attacked, it can be revoked to the extent that it has not been used in relation to any of the registered goods and services in the absence of proper reasons for non-use. It is likely that, if attacked for some reason, registered specifications which include computer software as a broad term will be trimmed down to a more specific type of software on which the mark has actually been used, e.g. computer games software. This also applies to other broad terms such as financial services and insurance services. However, for the first five years of the registration, it may remain possible to retain very broad protection.
From a practical perspective, there are advantages and disadvantages to broadly registered trade mark specifications and each case should be taken on its merits. What is clear from the SKYKICK decision, however, is that unrealistically broad specifications which lack business credibility may not be accepted at face value as having been filed with a genuine intention to use the mark across the full spectrum of goods and services. In certain scenarios, such as the SKY registration which covered whips and bleaches, the validity of some or even all of the registration could be called into doubt.