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One thing is almost inevitable when it comes to famous, consumer-facing brands. The names and other easily-identifiable elements of the identity of these marketplace entities will be co-opted by bad actors looking to piggyback on and profit from such established appeal. With that universal truth in mind, the notion of bad faith has becoming an enduring issue in connection with trademark law, prompting countries across the globe to reflect on their own laws either via legislation or case law. That was precisely the case in 2018 when the Canadian government implemented its intellectual property strategy.

In 2018, the Canadian 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 but it is just a matter of time before this occurs. Similarly, in Europe, the topic of bad faith filings has been on the rise. To be exact, there have been several recent decisions which have considered “bad faith” allegations.

These decisions have clarified how the concept will be applied in the European Union and may be helpful in applying the Canadian provision, as well as similar provisions in other jurisdictions.

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, the EU’s highest court, in 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 applied 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, 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 to engage 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

The Sky PLC Decision

In Sky plc v. SkyKick UK Ltd, the Court of Justice further clarified its approach. Sky PLC is a well-known media and broadcasting company. SkyKick UK Ltd is a much smaller software company. Sky has a reputation for vigorously enforcing its trademark rights. It 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 to answer questions relating to the action and bad faith.

In answering the questions referred to it, the Court applied the approach described in its Koton decision. The Court said that the registration of a trademark by an applicant with no intention to use it in relation to the goods and services covered by the registration may constitute bad faith, where there is no rationale for the application, given the functions of a trademark as set out in the Koton decision. 

Such bad faith may be established only if there are objective, relevant and consistent indicia showing that, when the application for a trademark was filed, the applicant had the intention either of: a) undermining, in a manner inconsistent with honest practices, the interests of third parties, or b) obtaining, without targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trademark.

The court also concluded that where the ground for invalidity exists regarding only some goods or services for which the trademark is sought to be registered, the trademark should be declared invalid only for those goods or services.

John McKeown is counsel at Goldman, Sloan, Nash and Haber LLP. He focuses on providing advocacy and advice concerning intellectual property and related matters, including protecting trademarks, copyrights, patents, confidential information and misleading advertising and claims under the Competition Act.