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Trade Mark Applications made in Bad Faith - Decision of the Court of Appeal

Applications for a trade mark in the UK require the applicant to have bona fide intention to use the mark as a badge of origin. Intended uses for an ulterior motive, such as to prevent another from using the trade mark may be called into question.

Bad Faith and the Trade Marks Act

The Court of Appeal in Harrison v Teton Valley Trading Co [2004] EWCA Civ 1028 has provided a clear and practical explanation of the meaning of the word "bad faith" under section 3(6) of the Trade Mark Act 1994.

The section states that a "trade mark shall not be registered if or to the extent that the application is made in bad faith."

Trade Mark Application

In Harrison an application was made to register the trade mark CHINA WHITE for ‘beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages’ in Class 32, and ‘alcoholic beverages (except beers) including cocktails’ in Class 33.

This application was opposed by the proprietors of a night club named "CHINAWHITE" (the "Opponents"), who had used the name since 1998 and enjoyed much reputation and goodwill in the name. A signature cocktail of the night club was a drink named CHINAWHITE. It was a drink created by the bar manager of the Opponent, at the instructions of the Opponents.

Breach of Confidentiality

In breach of his confidentiality agreement with the Opponents, the bar manager supplied information about the drink to the Applicant of the trade mark under dispute. The Applicant clearly intended to capitalise on the goodwill and reputation in the name and to bottle the drink and hence the exclusive trade mark application.

As the drink was created in the course of the bar manager’s employment it was found that the owners of the drink were the Opponents.

Decision of the Trade Mark Registry

The hearing officer at first instance found that (i) the Applicant knew that the bar manager was the bar manager of the club called CHINAWHITE; (ii) he had developed a drink called CHINAWHITE; and (iii) a derivative of which was served at the club. He concluded that these three facts should have led a reasonably informed businessman in the relevant field to question the bar manager as regards the proprietorship of the cocktail. He should not have 'deliberately not asked questions, lest he learn something he would rather not know and then proceed regardless'.

On that basis the hearing officer held that the application was filed in bad faith and that the Opponents ground of objection under section 3(6) was made out.

Court of Appeal

In the eventual appeal to the Court of Appeal, the Applicant argued that “bad faith” means dishonesty and that it could not be proven that the Applicant was dishonest. Sir William Aldous rejected this by stating that "[no] doubt an application made dishonestly will be made in bad faith, but it does not follow that if dishonesty is not established, bad faith cannot have existed."

The Arguments

The Applicant also argued that Applicant filed his application believing that the bar man owned both the recipe and the name "CHINAWHITE" for cocktails and so the hearing officer should have held that the application was made in good faith. In essence, it was contended, the state of mind of the Applicant was the only consideration. The test was, it was argued, subjective. If it was established that the applicant believed that he was entitled to make the application then there was no bad faith. It followed – according to the Applicant - that as the Applicant believed that he was entitled to make the application, the objection under section 3(6) of the 1994 Act could not succeed.

However, the Opponents submitted that the test of bad faith was objective and that the fact that the Applicant believed the bar manager did not mean that the applications had been made in good faith. To decide whether the applications were made in bad faith, the court had to look at all the facts and then decide objectively whether bad faith had been established.

Decision of of the Court of Appeal

The Court of Appeal decided that the words "bad faith" suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.

Even the Applicant accepted that despite the Applicant’s belief as to what he had been told by the bar manager, the applications would have been made in bad faith if the circumstances were such that an honest person would not have applied for registration without further enquiries.

Sir William Aldous concluded that - even though there was no evidence that the Applicant deliberately avoided asking questions, in the sense of considering and rejecting asking questions, nor that if he had the bar manager would have told him the truth – the hearing officer properly decided, taking into account the belief of the Applicant and the surrounding facts, that bad faith had been established.

The Court of Appeal concluded that the Applicant believed the bar manager when he told him that he owned the name and the recipe of a cocktail called CHINA WHITE. The Applicant knew of the club called CHINAWHITE and that neither he nor the bar manager had any right or interest in it. He knew that a cocktail called CHINAWHITE was being served at the club. With that knowledge he then applied for a trade mark registration which, would, when granted, have enabled him to prevent use by the Opponents of the word CHINAWHITE upon price lists in their club.

A person in the position of the Applicant adopting proper standards would despite believing the bar manager have not applied for a monopoly which would have enabled him to prevent the Opponents carrying on their business of selling their CHINAWHITE cocktail and drinks under that name as they presently were. To make such an application, as the Applicant did, amounted to bad faith.

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