Trademark Applications – New ‘bad faith’ ground of opposition

When the Trademarks Act (R.S.C., 1985, c. T-13) (the “Act”) was amended in 2019, Section 38(2)(a.1) was added to include bad faith as a ground for the invalidation of a trademark registration and as a ground of opposition to a trademark application. This new ground permits an application to be opposed on the basis that it was filed in bad faith, and is intended to provide recourse against trademark squatting and the over-crowding of the Canadian trademark register.

The Act does not define “bad faith” and, as these changes are so recent, this section of the Act has not yet been adjudicated upon. However, the concept of bad faith has been explored in past Trademarks Opposition Board (the “Board”) opposition proceedings in the context of the opposition ground of non-compliance with Section 30(i) of the former Act (which required an applicant to confirm that it was entitled to use the mark) and in addressing the bona fides of claims to use or proposed use in Canada (Sections 30(b) and (e) of the former Act).  We can, therefore, look to these past decisions to provide guidance on how the Board may choose to interpret and apply the new ground of opposition. We can also look to decisions in other common law jurisdictions, as well as the Canadian Internet Registration Authority’s (“CIRA”) domain name Dispute Resolution Policy.

Trademarks Opposition Board

Section 30(i) of the former Act required an applicant to attest that it was entitled to use the mark.  This section was used to address situations wherein the applicant must have been aware of another’s prior rights in a confusingly similar mark, as well as situations where the adoption and use of the mark involved “bad faith”.  In Restaurant Development Group LLC v Vescio Group Inc. (2016/05/31), the Board concluded that a person may file an application for a trademark in Canada which it knows has been used in another country, and this does not necessarily constitute bad faith.  In this case, the opponent was not able to provide sufficient evidence that the Applicant would have known that the opponent’s identical trademark had been used, made known or had a reputation in Canada, such that the applicant could not have stated it was entitled to use the mark in Canada.[1]

In Arcadia Group Brands Limited and Top Shop / Top Man Limited v Isaac Bennet Sales Agencies Inc. (2018/01/19), the Board determined that the fact that the applicant might have been aware of the opponent’s use and registration of its trademark elsewhere was not sufficient by itself to suggest bad faith.  However, the opponent pointed to several cases where the application was found to have been filed in bad faith, one of which being Cerverceria Modelo SA de CV v Marcon.[2]  In that case, the grounds of opposition included confusion grounds, and the opponent specifically pointed to the applicant’s pattern of filing, by raising non-compliance with Section 30(i), and stating that the applicant did not “have a belief that he was entitled to use given that in and about the time he filed the application he also filed a number of other applications for trade-marks which are well known both in Canada and worldwide and are the subject of existing trade-mark registrations in Canada”.

The Board underwent a detailed analysis of what factors could indicate the presence of bad faith.  Specifically, the Board considered:

• The prior use and registration of the identical mark for identical goods by the opponent in Canada;
• The applicant’s knowledge of the opponent’s mark and of its prior use in Canada;
• The applicant’s pattern of applying for a series of third party, and arguably well-known, registered marks in Canada for related goods with no or minimal commencement of use for any of them; and
• The lack of professional experience and concrete business plans related to the applied for goods and services.

CIRA’s domain name Dispute Resolution Policy CDRP)

Under CIRA’s Dispute Resolution Policy, whether the registrant registered the contested domain name in bad faith is one of the elements that must be established in order to prevail in a domain name dispute.  Specifically, Section 3.5 of the Dispute Resolution Policy lists a number of circumstances, any one of which will be evidence that the domain name was registered in bad faith.  These include: intent to traffic, intent to usurp legitimate rights, intent to disrupt business and intent to create confusion/divert traffic to the registrant’s website.[3]

As mentioned above, we can also look to other common law jurisdiction that have ruled on the opposition of bad faith in the context of trademark registrations for insight on how the Board might interpret this new section of the Act moving forward.

United Kingdom

“Bad faith” is not defined in the equivalent legislation in the UK.  However, in a 1999 decision, the court identified some elements of bad faith, including ‘dishonesty’ and ‘dealings which fall short of the standard of acceptable commercial behaviour’.[4]

When an applicant applies for a trademark in the UK, it must make a statement such that the trademark is being used by the applicant (or with his or her consent), in relation to those goods or services listed, or that the applicant has a bona fide intention that it should so be used.[5]  Therefore, if an applicant makes an application (i) in which the applicant has no intention to use the mark, (ii) that is broader in scope than the intended use of the mark, or (iii) in order to block others from making use of the mark, then a bad faith application may be found.[6]

In a 2018 UK decision, the plaintiff’s trademarks were found to be registered in bad faith because the plaintiff did not intend to use the trademarks in relation to all of the goods and services specified in the application.  The judge reasoned that if a trademark can be registered with no intention to use it in relation to all or some of the specified goods and services, and the registration cannot be attacked or limited on bad faith grounds, then the system will be open to abuse.[7]

European Union

The Court of Justice of the European Union has stated that when determining whether there was bad faith present in the context of a trademark application, consideration must be given to the applicant’s intention when the applicant applies for registration.   For example, the intention to prevent a third party from marketing a product can, in certain circumstances, be an element of bad faith, especially if the application was filed without intending to use the trademark with the sole objective of preventing a third party from entering the market.

Trademark professionals will be keeping a close eye as the case law in Canada develops and we begin to see whether this new bad faith ground of opposition will be effective in contending with ill intentioned applicants.

At Sotos LLP, we have acted for hundreds of trademark owners in every aspect of protecting their intellectual property for more than 40 years. We have extensive knowledge of intellectual property issues, and regularly act in the procurement and licensing of trademarks, as well as in defending our client’s trademarks rights and opposing trademark applications on our client’s behalf.

Please contact the writer at athompson-amadei@sotosllp.com or John Yiokaris at  jyiokaris@sotosllp.com to discuss your intellectual property and trademark issues.

[1] https://decisions.opic-cipo.gc.ca/tmob-comc/decisions/en/item/221761/index.do?q=Restaurant+Development+Group+LLC+v+Vescio+Group+Inc.+%282016%2F05%2F31%29

[2] Cerverceria Modelo SA de CV v Marcon (2008) 70 CPR (4th) 355 (TMOB)

[3] https://www.cira.ca/policy/domain-name/cira-domain-name-dispute-resolution-policy

[4] Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] RPC

[5] Trade Marks Act 1994 c.26, s.32 (3) TMA

[6] DEMON ALE Trade Mark [2000] RPC, Ferrero SpA’s Trade Marks [2004] RPC 29, HTC Corp v One Max Ltd (O/486/17)

[7] http://www.bailii.org/ew/cases/EWHC/Ch/2018/155.html