UNDERSTANDING THE CONCEPT OF BAD FAITH IN TRADE MARK LAW

Introduction

Bad faith is not a concept uncommon to trademarks. In fact, trademark squatting and crowding of trademark registers has become an international issue now. In cases involving the concept of monopoly, bad faith applications with an aim to free ride upon the reputation and credit of another person’s trademark are inevitable.

In the simplest of words, bad faith can be defined as to include dishonesty and behaviour which falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined.[1]

What constitutes ‘bad faith’?

The European Court of Justice in Lindt & Sprüngli vs Franz Hauswirth had held that the question of bad faith is to be assessed in its entirety; considering all of the factors of significance in each individual case.

Keeping in mind several precedents, the following is a compilation of factors that are likely to indicate bad faith:

Knowledge of the prior user’s use of an identical and/or deceptively similar mark for identical and/or deceptively similar goods or services:

One of the most relevant and common factors of assessment would include the knowledge that the trademark proprietor had or is deemed to have about a prior user already using an identical and/or deceptively similar mark for identical and/or deceptively similar goods or services.

Dishonest intention to trade upon the goodwill of the prior user:

It is a well-settled principle that in order to determine whether the application was made in bad faith, the intention of the Applicant at the time of the application has to be analyzed. There have been several cases where the Applicant’s intention to register a mark is for a purpose other than its function as an indication of origin i.e. (i) to block use or registration by other entities, and (ii) for speculative purposes - characterized by simultaneous filing claims for compensation and forcing entities using the trademark to make concessions or buy back the disputed signs.

A good example for the same would be the recent case of HT Media Limited versus Brainlink International Inc., wherein the Delhi High Court restrained the latter from using the domain name www.hindustan.com or any other mark similar to “Hindustan” and “Hindustan Times”. The dishonest intention of Brainlink International was clear from the fact that it had not used the domain name since 2000, and further, Brainlink’s unsuccessful attempt to sell the domain name to HT Media Limited at an exorbitant price.

Well-known trademarks:

Well-known trademarks enjoy the highest level of protection across all classes. Thus, apart from filing for confusingly similar trade marks for identical goods, it was found that marks confusingly similar to the well-known marks were being adopted by third-parties for dissimilar goods in order to take unfair advantage of the prior trademark owner’s goodwill. Thus, in cases where an application is made for a well-known mark, without any justifiable reason for adopting the same, the Applicant must submit evidence to explain and justify the said application. Failure to submit such evidence is likely to lead to a finding of bad faith.

A good example of this is the SONY versus abt SONY[2] case, wherein the IPAB observed that incautious, ignorant and upcountry consumers were likely to be deceived by the Respondent’s mark abt SONY. The Tribunal held that the main concept of both the marks hinged on SONY and therefore it was clear that the Respondents were trying to take unfair advantage of the well-known mark SONY to the detriment of the reputation of the Appellant and were going against the honest practice in industrial or commercial matters.

Business relationship:

In the recent Koton Magazacilik Tekstil Sanayi ve Ticaret v. EUIPO case[3], it was held that the fact that the application was originally filed for a mark for goods and services where the Registered Proprietor knew or should have known, due to his earlier business relationship with the Petitioner, that identical or similar trademarks existed, was an important indication that the application to register the same mark was filed in bad faith. Additionally, if there have been formal or informal dealings between the parties previously, they shall also be taken into consideration which deciding upon the question of bad faith.

The policy of re-filing trademark applications at five-yearly intervals:

It has often been observed that bad faith Applicant’s repeatedly indulged in re-filing of earlier trademarks to avoid the consequences of the genuine use requirements. Thus, multiple applications for the same mark in the same class at five-yearly intervals may be considered in order to assess whether the Applicant acted in bad faith.

Other trademark Applications filed by the Applicant may also aid in the finding of bad faith:

It has been observed that the background of the Applicant is also taken into account while assessing the bad faith on the part of the Applicant. In Carlos Moreira v. EUIPO[4], the General Court while upholding the invalidation proceedings on account of bad faith on the part of the Applicant in applying for the mark NEYMAR, also took into account another bad faith application filed by the Applicant for the mark ‘CASILLAS’.

Indian Context: Analyzing case laws

Currently, the Trade Mark Act, 1999 (‘the Act’) does not include the definition of ‘bad faith’. In fact, the only reference to bad faith is under Section 11(10)(ii)[5] of the Act as one of the relative grounds for refusal of registration. However, the Delhi High Court in Manish Vij vs. Indira Chugh[6], very succinctly defined bad faith as something that does not merely imply bad judgment but “the conscious doing of a wrong with a dishonest purpose.” Interestingly, despite of not being defined in the statue, bad faith is an absolute ground for invalidity.

In the absence of an explicit definition of bad faith under the current Trade Mark laws, keeping a track of the decisions of various courts in cases of alleged bad faith can help gain clarity on the concept of bad faith filings.

In Volvo versus Volvo[7], the Court passed an order restraining the Defendants from use of the trademark VOLVO with respect to mixers, grinders, juicers and their parts. The Court also directed the Defendant to withdraw the trademark application so filed before the Trade Marks Registry seeking registration of the trademark VOLVO on account of the same being dishonest and taking unfair advantage of the reputation of the trademark of the Plaintiff. The Court observed that the mark VOLVO enjoyed tremendous goodwill as a result of use since 1915. Further, it being an invented mark, the Defendant had no justifiable reason for using the same except to trade upon the said established goodwill of the Plaintiff. The Court also observed that there was a strong probability that a consumer on coming across mixers, grinders and juicers being sold under the name VOLVO would assume that the same are being manufactured and/or sold by the Plaintiff, which are likely to be of a superior quality.

In Jaguar versus Jaguar[8], the Appellant contested the validity of the mark JAGUAR of the Respondent before the IPAB for goods under Class 14 i.e. watches. The Appellant coined the mark JAGUAR in 1938 and filed an application for watches in 1996. The Appellant held over 800 registrations worldwide for cars and other merchandise including watches under the trademark JAGUAR. As per the Appellant, the trademark 'JAGUAR' had been upheld as a well-known mark in numerous cases. The Tribunal observed that the strength of the mark JAGUAR was not in dispute but pondered upon the question of its reputation extending to products other than cars and automobiles. The Tribunal observed that the Act seeks to protect the commercial value of a mark. The Tribunal held that the use of an identical mark would lead to the Appellant’s mark losing its capacity to signify a single source. Further, it held that the use of the mark JAGUAR by the Respondent was a good example of free riding on someone else’s established reputation and goodwill.

In Maggi versus Maggi[9], the Appellant had initiated opposition proceedings against 4 applications of the Respondent for the mark MAGGI in Classes 07, 08, 11 and 21. On the receipt of an unfavorable argument by the Senior Trade Marks Examiner, the Appellant filed an appeal before the IPAB, which while ruling in favor of the Appellant observed that the Appellant had established their business under the trademark MAGGI in India and abroad, thus acquiring a good reputation and goodwill among the public and in trade. The IPAB held that permitting the Respondent to carry on business under the impugned mark would be approving their dishonest conduct and further would amount to encouraging the Respondent to practice fraud against the public.

Conclusion

Bad faith applications remain challenging for businesses across jurisdictions. Over the years, the concept of bad faith has evolved. With more and more countries moving towards the territoriality doctrine and away from the universality principle, there has been a rise in bad faith trademark applications across jurisdictions. In cases of international applications, proprietors/brand owners are recommended to file applications as soon as possible, i.e. proprietors should indulge in taking preventative measures before speaking with potential local distributors/partners regarding the expansion of their brands.

Also, one of the most common and efficient strategies that can be adopted by proprietors/brand owners it to hire law firms and opt for watch services which provide the proprietors/brand owners an efficient way to be notified of potential third party filings so that they may be tackled at the grass-root level.

[1] Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [(1999) RPC 367 at 379]

[2] OA/49/2007/TM/KOL

[3] Case C-104/18P (CJEU, September 12, 2019) (EU:C:2019:724

[4] Case T-795/17 (2019)

[5] Section 11(10) While considering an application for registration of a trademark and opposition filed in respect thereof, the Registrar shall- (ii) take into consideration the bad faith involved either of the applicant or the opponent affecting the right relating to the trade mark.

[6] 2002 (24) PTC 561 (Del)]

[7] CS (OS) No. 1492/2005

[8] OA/21/2008/TM/KOL

[9] OA/12 to 14 & 19/2010/TM/MUM and M.P. No. 29/2010

The article was originally published on www.lexology.com on September 17, 2020 and can be accessed here.