[BREAKING] A-G Tanchev finds lack of intention to use a trade mark can be indicative of bad faith & insufficiently clear and precise registrations may be contrary to public policy

Advocate-General Tanchev's eagerly awaited opinion in case C-371/18 Sky and others was handed down today [see here; prior coverage on this blog here and here]. As Arnold J remarked in his referring decision [here], the case raises important issues of European trade mark law, a sentiment shared by the A-G in the opening paragraphs of the conclusion. Par. 5 captures it nicely:

This [case] raises the question whether we have arrived at a point in trade mark law that grants the trade mark proprietor a position of absolute monopoly in the face of which one can no longer defend himself in infringement proceedings – in spite of the fact that the mark has not been used, and is not likely to be used, for many of the goods and services in respect of which it was registered.

With an introduction like that, it is no surprise that the A-G finds that trade mark registrations made with no intention to use may constitute bad faith, and that goods or services specifications which are vague and uncertain may be contrary to public policy within the meaning of Article 3(1)(f) Directive 89/104 and Article 7(1)(f) Regulation 40/94.

Those findings, if upheld by the Court of Justice EU, could have a significant impact on trade mark law and practice, so let's take a closer look.

The key issues

Sky holds a large portfolio of SKY trademarks which it actively enforces. These registrations cover a very wide range of goods and services: the referring decision notes, in paragraph 4, that two of the trademarks invoked by Sky have specifications of over 8 000 words long (!). Some of these goods, such as computer software, have a very broad scope: after all, every digital product incorporates some kind of software so potential applications of computer software are virtually unlimited.

What is more, many of the goods and services on Sky’s long specifications, such as fire extinguishers, whips and furs, go substantially beyond Sky’s core business, and Sky has no apparent intention of ever using the SKY trademarks for these goods and services.

This gave rise to the two main issues in this case:

1. Are registrations for terms with a potentially very broad scope, such as ‘computer software’, invalid for a lack of sufficient clarity or precision?; and
2. Can it constitute bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods and services?
   
   [Three other questions were also referred, see here]. 

The A-G's opinion

Lack of clarity and precision

As for precision and clarity of trade mark specifications, the A-G concludes that a lack thereof is not, in and of itself, a ground for invalidity. According to the A-G, the grounds of invalidity are listed exhaustively in the Trade Mark Directives and Regulations, and the ground that some or all of the terms in the specification lack sufficient clarity and precision is not among them (paragraph 38-39).

Nor is the CJEU's decision in IP Translator [C-307/10, here] an independent ground for invalidation for lack of clarity or precision. In this respect, the A-G finds that this decision "simply cannot be interpreted as meaning that it introduces a new ground for invalidity" (par. 57).

However, the A-G finds that a lack of clarity and precision may bring a registration within the scope of the public policy exception ("sub (f)" in the various trade mark legislative texts). The A-G concludes that registration of overbroad terms, such as 'computer software', is "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" (par. 79).

To come to this conclusion, the A-G finds that the IP Translator decision allows the inference that unclear and imprecise registrations infringe public order (par. 61); that there are strong policy reasons for refusing unclear and unprecise registrations (pars. 62, 72); and that Sky had no reasonable commercial rationale for seeking such broad registrations, because it did not intend to use the marks for all goods potentially falling within their scope (pars. 66, 68, 71, 73).

Although, in par. 82, the A-G asks the question what the relevant criteria should be for determining sufficient clarity and precision, he does not really develop the point. Rather, he refers to the General Court's case law on partial revocation for non-use under which broad registrations are divided into subcategories and only upheld for subcategories for which use can be shown [e.g. T-126/03, here].

The A-G concludes that this is a sensible approach also in cases where there is no intention to use the mark across the whole breadth of the registration (par. 86). Subcategories for which no such intention exists are liable for revocation on grounds of bad faith, following the A-G's reasoning in the rest of the opinion.

Bad faith in case of no intention to use
As regards the second key issue in the case, the A-G found that in case of a "deliberate intention to acquire rights [the applicant has] no intention to use, potentially, inter alia, to prevent third parties from using the registered mark", then there is bad faith (par. 94).

The A-G notes that a system such as the European system, whereby it is not necessary to demonstrate an intention to use at the time of applying for a mark [contrary to e.g. US trade mark law], has certain advantages: it allows for protection at an earlier stage and makes the system faster, simpler and cheaper. But it also allows the creation of unjustified barriers to use of the sign by others (par. 95).

Thus, it is "relevant" to enquire into the applicant's commercial logic for filing their registration (par. 103). This also follows from the CJEU's decision in KOTON [C104/18 P, here], which the A-G discusses in some detail (pars. 97-101). The A-G also discusses a sample of cases where the filing logic was contrary to the purpose of the trade mark system, for instance in cases of dishonesty, cybersquatting or engaging in a blocking strategy (pars. 107-108, 111-112). There is a growing body of case-law in which the General Court and national authorities have condemned such practices and revoked such registrations as having been made in bad faith.

It seems that the A-G wants to add registrations made without any intention to use to this list, as becomes apparent e.g. from par. 114:

I consider that if the applicant does not intend to use the mark, it is immaterial whether the applicant intends to prevent a specific third party from using the mark, or all third parties. In those circumstances, the applicant is improperly seeking a monopoly to exclude potential competitors from using a sign which he has no intention of using. That amounts to an abuse of the trade mark system.

Comment

The A-G's reasoning shows concern about potential abuses of the trade mark system and rightly so. In light of this, his findings as regards the bad faith issue are not surprising—and they reflect national practice that developed in response to egregious practices, which in some cases have been carried out on a very large scale [e.g. the case of mr. Gleissner, see here].

It is, however, not entirely clear whether for the A-G, the mere absence of an intention to use is enough to conclude bad faith. This seems to follow from some paragraphs (e.g. 84, 110, 114) whereas others suggest some additional requirement, such as a deliberate intention to obstruct third parties (e.g. 94).

In my view, a finding of bad faith on the mere ground that there was no intention to use would contravene a fundamental aspect of European trade mark law according to which an intention to use is not, in fact, necessary for registration of a mark. In real life situations, it can be difficult for companies to prove intention to use and exposing those companies to bad faith claims would be unjustified. It seems that something more is needed, for instance abusive filing patterns such as those at issue in the GC's decision in LUCEO [T-82/14, here], which the A-G also cites.

As for clarity and lack of sufficiency, I agree that there are strong policy reasons to oppose vague and indeterminate registrations. But I have doubts that public policy is the appropriate ground to oppose them. This ground is not intended to oppose trade mark registrations that somehow sit awkwardly with the purpose of the trade mark system and if it were so expanded, many more registrations would potentially come within its ambit, creating great uncertainty.

Instead, the better solution might be just what the A-G proposes in par. 86, whereby such vague registrations may be revoked for subcategories where bad faith exists.