The European Union (the “EU”), among other purposes, aims to create a common market for intellectual property (“IP”).
However, when problems arise, the European Court of Justice (the “ECJ”) is the court entitled to clarify the conformity of national law to EU laws and principles. Its rulings are binding on all the Member States of the EU.
In the following case the ECJ has addressed a very important issue related to a specific IP, the trademarks, and such decision could have very broad impact.
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In order to understand what there is at stake, one must remember what a “trademark” is and entails.
A trademark can be defined as a particular IP that consists of a name, picture, combination of such, which is used to identify products or services.
Trademarks entail legal rights. Among others, they give the owner the power to prevent others from using the same or a similar one.
While, to a certain extent, such rights exist from the moment of first usage of a trademark, the proper way to secure them is through registration. Such registration can be filed at a national office or, in the context of the EU, at the Union office, the European Union Intellectual Property Office (the “EUIPO”), in Alicante (Spain). Such registration covers all the Member States (currently, it will cover also the UK till the 31st of December 2020).
When filing an application, the applicant or his representative must choose under which class(es) and/or subclass(es) of good or services they wish to seek registration.
For example, a FinTech company would surely register its name under class 36 (financial services) of the so-called Nice Classification. But if they intend to advertise their financial products, with the same name, they need to register under class 35. If they want to protect the software they have developed and named after the company, they need to also register under class 9.
As the EUIPO suggests on its website: be realistic.
In 2018, Sky limited, a British company founded by Rupert Murdoch, brought an action against the American company SkyKick. The latter deals with cloud-related solutions in the IT field.
Sky claimed that its trademark had been infringed by SkyKick.
While SkyKick argued that the registration of Sky was invalid due to bad faith, they registered their trademark under a very broad definition (“computer software”) and in many classes, without any real intention to use it, as proved by the fact that the trademark was registered under bleaching products (class 1) and whips (class 18).
The High Court of Justice decided to refer the case to the ECJ, in order to clarify the issue.
The Attorney General (the “AG”) Evgeni Tanchev has already provided his opinion on the case and currently, the ECJ is expected to deliver its ruling.
The main argument of the AG is that lack of clarity and precision is not a ground for invalidity of a trademark, according to the European law, but It can be used to assess the scope of the registration. It means that, while a trademark cannot be refused on that ground, the EUIPO can assess the application of trademark based also on that: it can order a restriction or a partial surrender of the trademark.
Moreover, according to the AG, “computer software” is indeed too broad and it is not in public interest to have such general definitions. Almost everything can potentially have a software integrated, especially given the growing market of smart devices (a software can be found in televisions, fridges, or even toys). Therefore, it gives a “monopoly of immense breadth” and, as such, it is in direct conflict with the interest of the internal market, which cannot be overruled by any commercial interest, even if legitimate.
Last, Sky, registering without the real intention to use its trademark in all those classes, has clearly showed that they just wanted to prevent others to use a similar trademark. Thus, it should be interpreted as a sign of bad faith and ultimately constitutes an “abusive filing strategy”.
The ECJ has recently released the judgement and it has accepted the arguments of the AG (statistically, it happens in four out of five cases). From now on, the EUIPO will most likely start rejecting or asking clarification in relation to “computer software”, which has been a broadly used (and abused) class.
While the ECJ is undoubtedly true in pointing out that many, especially huge corporations, register trademarks under a lot of classes just to annoy small business, it must be also considered that plans tend to change.
A company can have an idea for a service of a products at the beginning of a year that, due to circumstances, is forced to reconsider at the end of that year. Maybe that good or service they were planning is no longer relevant for the company, or it involves a relevant effort or just financial struggles impair the company’s capability to conduct business, such changing is not necessarily a sign of bad faith.
Last, it should always be born in mind that registering a trademark under a broad definition is more a risk than a benefit: it exposes the applicant to more risk of oppositions as other companies can see a conflict. On the other hand, high-level details in the selection of the classes mean that an applicant is forced to waste time and resources to check every single variation of long sentences in order to register every possible subclass.
It is also even possible that the EUIPO will be clogged by many requests to create new sub-classes, as companies would fear the bad faith or lack of clarity.
The SkyKick case is going to radically effect the EUIPO and its practice as. the EUIPO will most likely reduce or accept applications related to computer software.
That could lead players to leave the EU to search for better protection.
As the ECJ mentioned in his ruling, there is always the possibility to revoke a class or even a trademark for non-use. Perhaps it could have been a more appropriate solution to expand these legal tools.
The SkyKick case enlightened that registering a trademark is something that should be evaluated very carefully. Thus entrusting IP professionals is very important.
Riccardo Andrea Junior Varisco
Data protection, technology, and corporate matters.