New Zealand expands the concept of “bad faith” in a recent trade mark opposition

New Zealand expands the concept of “bad faith” in a recent trade mark opposition

T16/2008 – Application no. 761870: Chinese Business Yearbook and Chinese characters

The Intellectual Property Office of New Zealand (“IPONZ”) has recently considered “bad faith” as an opposition ground against registration of NZ trade mark application no. 781870 CHINESE BUSINESS YEARBOOK and Chinese characters in class 35. The Opposition was successful. In finding for the opponent, the Assistant Commissioner of Trade Marks may have expanded the concept of “bad faith” as a ground upon which an opponent can reply in trade mark opposition proceedings.

Steven Wong’s application to register the trademark CHINESE BUSINESS YEARBOOK and Chinese characters in respect of “advertising and publishing of business directories” in class 35 was opposed by Ms. Catherine Kwok in July 2007. Ms Kwok’s evidence established that there was a sufficient prior awareness in the relevant market of use of the near-identical mark as that of Application No. 781780 by a company referred to as CBYL in respect of the same services as those covered by that application, such that a substantial number of persons were likely to be deceived or confused by use of the same mark by the applicant, thereby contravening Section 17(1)(a) of the New Zealand Trade Marks Act 2002 .

The Assistant Commissioner went on to consider whether or not Mr Wong’s application was made “in bad faith” in contravention of Section 17(2) of the New Zealand Trade Marks Act 2002.

Ms Kwok’s claim that the application was made in bad faith rested upon the ownership of the trade mark. Under Section 32(1) of the 2002 Act, a person “claiming to be the owner of a trade mark” may apply for its registration as a trade mark. As the Assistant Commissioner had already found that the applicant was not the first user of the identical mark and therefore was not the owner of that trade mark, the question was whether the applicant’s trade mark application was made “in bad faith”. The Assistant Commissioner applied the standard tests, assessing whether or not an application is in bad faith.

Essentially, the Assistant Commissioner confirmed that “bad faith” was not confined to dishonesty, and may be demonstrated by evidence of conduct falling short of reasonable standards of commercial behaviour. In this case, the Assistant Commissioner found that Mr Wong knew that the mark had been designed by a staff member employed by CBYL, and that there was insufficient evidence to support Mr Wong’s assertion that ownership of the mark had been transferred to another company of which he was the Sole Director.

As Mr Wong admitted in his evidence that he was not the owner of the trade mark (although he applied for its registration on behalf of a company to whom he thought ownership of the mark had been transferred), the Assistant Commissioner found that the applicant’s conduct fell short of reasonable standards of commercial behaviour, and was therefore in bad faith, contravening Section 17(2) of the Act.

This finding is an interesting one which may have broader ramifications in cases in which a third party has applied for an identical trade mark to that allegedly owned by another party. The reasoning applied in this case suggests that an honest mistaken belief as to a person’s right to apply for a trade mark, coupled with knowledge of use of that mark in New Zealand by a third party, may be sufficient to constitute “bad faith”. This case may effectively lower any requirement regarding intention on behalf of the applicant against whom “bad faith” is alleged – noting that in this case, the applicant had an honest, albeit mistaken, belief that he was entitled to register the trade mark.

It remains to be seen whether the reasoning applied in this case is supported by a New Zealand Court, or is followed in subsequent cases. As it stands however, it does appear to expand the concept of “bad faith”, potentially in support of foreign trade mark owners seeking to protect their trade marks in New Zealand.