The Latest Word on Bad Faith
Updated: Nov 1, 2021
There have been numerous recent decisions in the U.K. and the E.U., relating to bad faith by an applicant for a trademark. In addition, the Canadian Trademark Act has been recently amended to add bad faith as a ground of invalidity, so it makes sense to follow these decisions.
Sky Plc v. Skykick UK Ltd
In the last comment about bad faith, it was suggested that the decision of Justice Richard Arnold in Sky Plc v. Skykick UK Ltd  EWHC 990 had brought some finality to determining what constitutes "bad faith" in the context of a trademark application or registration in England. Justice Arnold is an intellectual property specialist, his Decision was well reasoned, and he had just been appointed to the U.K. Court of Appeal. However, an appeal from his Decision was partially allowed on invalidity.  EWCA Civ 1121
The Most Current Appeal
In this Decision, the Court said it is necessary to proceed with caution when applying findings about a trademark as a whole to the question of whether specific goods or services were applied for in bad faith. For example, the lack of intention to use in relation to some of the goods and services covered by the application for a trademark was not a ground for supposing there was a lack of intention to use regarding other goods and services. Each category needs to be considered specifically. The breadth of the terms used was not enough to lead to a finding of bad faith.
The reasons for allowing the appeal on this point are specific to the system of registration of trademarks in the U.K. This system differs from the Canadian system. However, this Decision may not be the last word, particularly as two Judges of the U.K. Court of Appeal have different views on this subject, which may make it a good candidate for an appeal to the U.K. Supreme Court.
What We Can Learn From The Decision
Leaving aside the issue mentioned above, the Court of Appeal summarized the jurisprudence, which should help determine what is required to show bad faith in a broader context. The applicable principles are as follows:
The concept of bad faith presupposes the existence of a dishonest state of mind or intention, but dishonesty is to be understood in the context of trademark law, i.e. the course of trade and having regard to the objectives of trademark law. Reference should be made to the establishment and functioning of the internal market, contributing to a system of undistorted competition, in which each undertaking must attract and retain customers by the quality of its goods or services, be able to have registered as trademarks signs which enable the consumer, with no possibility of confusion, to distinguish those goods or services from others which have a different origin.
The concept of bad faith relates to the subjective motivation of the applicant, namely a dishonest intention or other sinister motives. It involves conduct that departs from accepted standards of ethical behaviour or honest commercial and business practices.
It is for the party alleging bad faith to prove it. Good faith is presumed until the contrary is proved.
Where the Court or tribunal finds that the objective circumstances of a particular case raise a rebuttable presumption of lack of good faith, it is for the applicant to plausibly explain its objectives and commercial logic relating to the trademark.
Whether the applicant was acting in bad faith must be the subject of an overall assessment, considering all the relevant factors.
For that purpose, it is necessary to examine the applicant's intention when the mark was filed, which is a subjective factor that must be determined by considering the objective circumstances.
Even where there exist objective indicia pointing towards bad faith, it cannot be excluded that the applicant's objective related to a legitimate objective, such as excluding copyists.
Bad faith can be established even where no third party is specifically targeted if the applicant's intention was to obtain the mark for purposes other than those falling within the appropriate functions of a trademark.
It is relevant to consider the extent of the reputation enjoyed by the sign when the application was filed. The extent of that reputation may justify the applicant's interest in seeking wider legal protection for its sign.
Bad faith cannot be established solely based on the size of the list of goods and services in the application for registration.
The principles set out above seem to have been accepted both in the U.K. and the E.U. Therefore, it makes sense for a Canadian court or the Trademark Opposition Board to consider their application in a Canadian context.
Toronto August 2021
Goldman Sloan Nash & Haber LLP
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Toronto, Ontario M5G 1V2
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared in the Lawyer's Daily published by LexisNexis Canada Inc.