There have been several recent developments concerning "bad faith'" and it seems just a matter of time before we face this issue in Canada.
When the Government implemented its 2018 intellectual property strategy, the Trademarks Act was amended to add bad faith as a ground for the invalidation of a trademark registration and as a ground of opposition.
The registration of a trademark is invalid if the application for registration was filed in bad faith. Similar considerations apply in the opposition of a trademark application. To date no Canadian decisions have considered "bad faith" under the amendments.
In Europe there have been several recent decisions which have considered "bad faith" allegations. There seems to be a definite trend.
What Is Bad Faith?
In the European Union the concept of "bad faith" is undefined as it is in Canada. The Court of Justice of the EU Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO has said that the meaning and scope of the words must be determined by considering their usual meaning in everyday language, while considering the context in which the words are used and the objectives pursued by the legislation. In ordinary terms the concept of "bad faith" assumes a dishonest state of mind or intention but the concept must be understood in trademark law which deals with the course of trade.
Trademark law in the EU is intended to contribute to a system of undistorted competition in which each competitor must, in order to attract and retain customers by the quality of its goods or services, be able to obtain a registered trademark which enables the consumer without confusion to distinguish the goods of each competitor from those of other traders. If an applicant applies not for the purposes of engaging fairly in competition or in a manner inconsistent with honest practices to obtain rights for purposes that do not fall within the functions of a trademark these will be potential acts of bad faith.
Finally, the intention of an applicant is a subjective matter which must be determined objectively by the court and any claim of bad faith must be subject to an overall assessment of all the factual circumstances of the case
When has Bad Faith been Found?
A recent decision of the Board of Appeal of the EU intellectual property office considered the five-year grace period available to registrants in the EU. During this period, they do not have to prove that they have commenced to use the mark but after five years must show genuine use. The trademark owner had adopted the practice, which many others had, of filing a new application just before the expiry of the five-year period to avoid the prohibition.
When the practice was attacked based on bad faith the Board of Appeal concluded it was up to the trademark owner to show it was not acting in bad faith. It was found that the refiling strategy was an abuse and the registration to the extent that it included the same goods and services as a prior registration was invalid on the grounds of bad faith.
Another recent decision involves the Sky PLC v. SkyKick UK LTD case. Sky is a well-known media and broadcasting company. SkyKick is a much smaller software company. Sky has a reputation for vigorously enforcing its trademark rights and commenced an action for infringement against SkyKick in the UK. Sky owned trademark registrations that extended to the provision of software although it did not actually carry on business in this area. A reference was made by the trial judge to the Court of Justice of the EU.
In such proceedings before the Court of Justice of the EU it is typical that an opinion from the Advocate General is provided to the court. Based on the finding of the UK court that Sky had a deliberate intention to acquire rights it had no intention of using, potentially to prevent third parties from using the registered mark for the sale of those goods and services, the opinion concluded there was bad faith. The deliberate seeking of registration in respect of goods and services for which there is no intention to trade reflects an intention to abuse the trademark system.
While the opinion is not binding on the Court it is typically given significant weight when the court issues its final judgement.
Other cases have found that the existence of bad faith in more conventional situations, such as blocking the legitimate activities of a well-known brand owner or an application filed by a disgruntled ex-business partner.
The approach adopted by the EU courts in determining what is bad faith and when it exists has considerable merit and it is possible that a Canadian court could take a similar approach although there are significant differences between the trademark laws of Canada and the EU.
One of the concerns with the recent reform of the Trademarks Act was that it encouraged cluttering. Cluttering refers to the existence of trademark registrations of marks which are not actually used. It has been assumed that the government introduced the concept of bad faith to address the cluttering problem, among others. We may well have our own trend of cases dealing with allegations of "bad faith".
This article originally appeared on The Lawyer's Daily website published by LexisNexis Canada Inc.
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