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Trademark Applications filed in Bad Faith

With the implementation of the current amendments to the Trademarks Act set to come into force on June 17, 2019, it is interesting that one related amendment is already in force. When it was passed, the Budget Implementation Act, 2018 No. 2 implemented the Governments intellectual property strategy. The Trademarks Act was amended to, among other things, add bad faith as a ground for the invalidation of a trademark registration. This is the only amendment to the Trademarks Act currently in force.

The registration of a trademark is invalid if the application for registration was filed in bad faith. It remains to be seen how this new ground will be interpreted by the courts.

Canadian Case Law

To date there is little case law of the Federal Court dealing with bad faith concerning trademarks. There are decisions of the Trademarks Opposition Board dealing with bad faith when deciding whether an applicant was satisfied that it was entitled to use the applied for mark, but they are not that helpful.

European Union

The Court of Justice has said that to determine whether there was bad faith, consideration must also be given to the applicant’s intention when the applicant applies for registration. This is a subjective factor which must be determined by reference to the objective circumstances. The intention to prevent a third party from marketing a product may, in certain circumstances, be an element of bad faith by the applicant, particularly if the application was filed without intending to use mark with the sole objective to prevent a third party from entering the market.

The United Kingdom

The High Court recently considered this issue. The defendant contended that the plaintiff’s trademarks were 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 respective applications. The defendant claimed that the registrations were invalid in their entirety.

The judge said that the circumstances in which registration of a trademark can be obtained, and the scope of protection, are key features of any trademark system, and are critical to balancing the system. There are advantages to permitting registration of trademarks without requiring actual use, as the European system does (unlike, for example, the US system). Two of the key advantages are that it makes it easier for brand owners to obtain protection of their trademarks before a commercial launch and that it makes the registration process simpler, faster and cheaper. But if registration can be obtained too easily and/or too broadly, then the result will be mounting barriers to entry for third parties as the supply of suitable trademarks is diminished, increasing costs which may be passed on to consumers and an erosion of the public domain.

If the applicant applies to register a trademark without intending to use it in relation to the specified goods and services, there is nothing to stop the trademark from being registered (if the trademark is otherwise registrable). The only way the registration can be cancelled, or restricted in scope, prior to the expiry of the five-year period (in Canada three years) required for a non-use attack is because the application was made in bad faith. 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. As a result of its importance in the EU, the questions raised were referred to Court of Justice of the EU.


Comment

It will be interesting to see how Canadian courts interpret and apply the bad faith provision. No doubt many applications filed in response to the current amendments contain statements of goods and services that are overly broad.

John McKeown

Goldman Sloan Nash & Haber LLP

480 University Avenue, Suite 1600

Toronto, Ontario M5G 1V2

Direct Line: (416) 597-3371

Fax: (416) 597-3370

Email: mckeown@gsnh.com

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

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