Bad faith doesn’t require dishonesty: 3 recent TM office decisions

Bad faith doesn’t require dishonesty: 3 recent TM office decisions

Bad faith doesn’t require dishonesty: 3 recent TM office decisions

Up until the introduction of the Trade Mark Amendment Bill 2006, it was not possible to oppose an Australian trade mark application on the basis that the application had been made in bad faith. This Bill introduced section 62A to the Australian Trade Marks Act and the section provides that “the registration of a trade mark may be opposed on the ground that the application was made in bad faith”. The inclusion of a bad faith ground of opposition was a welcome addition to the Trade Marks Act, but the difficulty for practitioners lay in interpreting what circumstances would give rise to a successful claim of bad faith. The Australian Trade Marks Office has now decided several cases where bad faith has been a ground of opposition and three recent cases are illustrative of at least how the Trade Marks Office is interpreting this new section.

The HardCoffee opposition

Opposition by Hard Coffee Pty Limited to registration of trade mark applications 1199357(30), 1199358(43), 1200636(43) and 1200637(30) HARDCOFFEE MAIN BEACH and HARDCOFFEE – filed in the name of Hard Coffee Main Beach Pty Limited (1 April 2009)

Facts of the case

The Applicant applied to register the Trade Marks “HARDCOFFEE MAIN BEACH“ and “HARD COFFEE“ for coffee and other beverages in class 30 and coffee shop services in class 43. The Opponent relied on several grounds of opposition, mainly relating to its prior use of and reputation in the trade mark HARD COFFEE, but the Opponent also alleged and strenuously argued at the hearing that the applications had been made in bad faith.

The Opponent was the owner of several coffee shops in Queensland which operated under the name “Hard Coffee”. From the date of first use in November 1996, some of the businesses were sold and the evidence showed that one of these sales was to M B Raymond & Co Pty Limited on 25 June 2004. The “Special Conditions” of the contract of sale stipulated that the Purchaser acknowledged that the sale did not involve any Intellectual Property such as the name HARD COFFEE and further, that the Vendor retained all right, title and interest in the name.

In September 2007 the Applicant applied for the opposed marks and the evidence showed that Mr Montague Benjamin Raymond, a director and secretary of the Applicant was also a director of M B Raymond & Co Pty Limited and at the relevant time executed the contract to purchase the Main Beach business.

The decision

The Hearing Officer found in favour of the Opponent under section 62A.

The Hearing Officer noted that for an assessment of bad faith to be found “there would need to be an element of intentional dishonesty or a deliberate attempt to mislead the Registrar in some way in the claim made by means of the application”.

The onus of demonstrating bad faith falls on the party making the allegation, on the balance of probabilities. In this case the strength of the Opponent’s evidence was sufficient to shift the onus to the Applicant to respond. The Applicant chose to be silent and this strongly influenced the Hearing Officer’s decision. The Hearing Office noted that “[s]uch a silence, as observed in Hugo Boss v Jackson International, goes toward a failure to address the issue of ‘bad faith”.

The Hearing Officer also acknowledged that there is no formal requirement for the Opponent to have used a similar trade mark in order to establish a bad faith ground of opposition. However, in a case where an Opponent alleges that its mark has been misappropriated, the Opponent would need to show use of at least a confusingly similar mark, even if it is not registered. In this regard the Hearing Officer commented that, “the ‘conflicting’ trade marks would need to be sufficiently similar to produce deception or confusion for the purchasing public in a similar manner to that assessed under section 44 of the Act (whether the Opponent’s trade mark is on the Register or not)”.

The Hearing Officer concluded that the applications were made in bad faith. The evidence indicated that the Applicant was aware of the Opponent’s legal position in relation to the trade marks as a result of prior dealings and could therefore not proceed in making the applications without doing so in bad faith; “In the particular facts of the current case I consider that the reasonable man in the Applicant’s position should have considered himself constrained from applying for the four presently opposed trade marks n the basis of the previous dealings (including the Contract of Sale of the Main Beach coffee shop) between the Opponent and the Director of the Applicant company.”

The Bombala opposition

Opposition by Bombala Council to registration of trade mark applications 1165437, 1165438, 1165439, 1165441 and 1165443 – PLATYPUS COUNTRY SERIES – filed in the name of Peter Wilkshire (26 May 2009)

Facts of the case

The Peter Wilkshire (“Wilkshire”) filed five applications all incorporating the term PLAYTYPUS COUNTRY, a platypus device under an arch together with non-distinctive geographic words such as “Bombala NSW”, see below:

The Opponent had developed a platypus logo in collaboration with Australian Geographic in 1997 which was identical to the platypus mark applied for by Wilkshire, see below:

                

The applications made on 11 March 2007 by Wilkshire in relation to retailing goods in class 35 were opposed by Bombala Council, citing several grounds of opposition including section 62A.

The Opponent and the Applicant both served evidence. Despite being present at the hearing to observe, the Applicant was otherwise unrepresented.

The Hearing Officer considered the chronology of events leading to the opposition, including the long history between the parties. Most notably the parties were involved in Federal Court proceedings in 2007, settlement of which resulted in Wilkshire agreeing “not to threaten the Opponent or the Opponent’s licensee with any form of action in relation to the use of Bombala Council’s 942740 mark.” Moreover, the Applicant’s evidence indicated that Wilkshire harboured ill will (characterised as a “vendetta” by counsel for the Opponent) towards the Opponent.

The Opponent submitted that the Applicant applied to register the series of PLATYPUS COUNTRY “after agreeing to the terms of settlement with the Opponent but before the Federal Court had a chance to make the consent orders.”

The Applicant maintained an unsupported claim that he created the platypus logo on a fishing trip in 1989. The submitted evidence was devoid of detail such that its value was minimal. The Applicant also attacked the veracity of the Opponent’s evidence which included third party declarations corroborating the Opponent’s development of the design.

The decision

The Hearing Officer found in favour of the Opponent in terms of section 62A.

The Hearing Officer was not prepared to find that the Applicant had copied the Opponent’s mark, but could not accept that the adoption of an identical platypus device could be the product of coincidence. The Hearing Officer stated that “on the balance of probabilities, it is more likely that the Applicant copied the Opponent’s marks than the reverse situation”.

In assessing the issue of bad faith, the Hearing Officer referred to two UK decisions noting that “the Applicant has “applied to register a mark which he has previously recognized as the property of another with whom [he] has a course of dealing or some other relationship”, exemplifying bad faith as defined in William Leith New Century Marquees (supra)”.

The assessment of bad faith also involved a review of the decision of Aldous J in Harrison v Teton Valley Trading Co [2005] FSR 10 at [20] where it was held 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…”

In considering whether the Applicant’s conduct, including his prior dealings with the Opponent and knowledge of the mark, constituted ‘bad faith’ the Hearing Officer noted “the lodgement of the applications after the Applicant has agreed to terms of settlement with the Opponent but before the Federal Court has had an opportunity to issue consent orders, might in the circumstances also amount to an application made in bad faith”.

The Hearing Officer concluded that “I am satisfied that the evidence shows that the circumstances were such that a ‘reasonable person’ standing in the shoes of the Applicant, would have been aware that he /she ought not to apply for trade mark registration”.

The Bryant Bakery opposition

Opposition by T Tree Pty Ltd and Bryant’s Holdings Pty Limited and TBP Baking Pty Limited to registration of trade mark application 1177308- BRYANT’S BAKERY BRYANT’S CAFE BREAD BRYANTS PIES & device- filed in the name of Shane Hobbs (3 July 2009)

Facts of the case

The Applicant filed an application for BRYANT’S BAKERY BRYANT’S CAFE BREAD BRYANTS PIES & device in classes 30 and 43. The Joint Opponents have a long history of collaboration dating to the early 1970s. This was formalised in 1998 pursuant to contract between the parties granting TBP Baking the right to use the name “Bryant’s Wholesale” and appointed TBP Baking exclusive supplier of bakery items.

The Applicant is a director and shareholder of Hobbs Holdings Pty Ltd which was granted a non-exclusive licence by the Opponents to use the name “Bryants Pies & Hot Bread” and any other name using the word “Bryants” other than “Bryants Wholesale Pies” in 2000. The Hobbs contract was terminated in August 2007.

The Applicant filed trade mark No. 1106874 BRYANTS (stylised) in 2006 which was cancelled following discussions with the Opponent on 21 June 2007. The opposed application was filed on 21 May 2007 by Shane Hobbs, a Director of Hobbs Holdings Pty Ltd and was opposed jointly by T Tree Pty Ltd and Bryant’s Holdings Pty Limited and TBP Baking Pty Limited.

Various grounds of opposition were pursued by the Opponents including under s. 62A that the application has been made in bad faith. The Opponents and the Applicant both served evidence however, the Applicant was not present nor represented at the Hearing and did not file written submissions. The Opponents were represented by Counsel.

The decision

The Hearing Officer detailed the history of the Opponents adoption of the BRYANTS marks and the chronology of events leading to the opposition including the history between the parties.

The Hearing Officer noted that the Hobbs Holdings’ contract was an explicit acknowledgement by the Applicant of the Opponents ownership of the BRYANTS name. The Applicant’s arguments that the word BRYANTS is a common surname fell on deaf ears as the Hearing Officer noted that “the right of persons to register those surnames as trade marks is circumscribed by any contractual arrangements that they have made concerning its use and the public effects of the use of those surnames such as deception and confusion.”

The Hearing Officer concluded that “………the Applicant has applied to register a trade mark which prominently features a word which he has previously acknowledged as the property of another with whom the Applicant has a course of dealing or been the director of a company with whom one of the Opponents has had a contractual relationship”.

This was sufficient for the Hearing Officer to find that the application had been made in bad faith.

Commentary

The decision in Bombala Council v Peter Wilkshire suggests that an application that appears motivated by an alleged unacceptable ulterior motive may indicate the presence of ‘bad faith’. Moreover, this decision suggests that the ground of opposition under section 62A may extend to include behavior that is less than dishonest and further seems to confirm the course taken in Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd. The Bryants Pies’ decision reinforces a test along the lines that a trade mark application made in the face of prior contractual dealings where a reasonable person ought to have been aware of the trade mark rights of another will go a long way to establishing a finding of ‘bad faith’.

The decisions confirm that the onus of demonstrating ‘bad faith’ falls on the Opponent and must be proven to the requisite standard of proof, namely on the balance of probabilities. It must be shown that the conduct in question involves a degree of dishonesty and that the Applicant, as a reasonable person, ought to have known that they should not file the application.

Although these decisions give some indication of the interpretation of section 62A by the Trade Marks Office, the question as to whether bad faith will be found to exist in a situation where an as yet unused overseas trade mark is appropriated by an Australian Applicant for the purposes of registration remains open. This practice has hitherto been considered by the courts to amount to nothing more than “sharp business practice“ and therefore acceptable, but section 62A may give rise to a challenge to this position, especially if registration in Australia is sought for the express purpose of selling the trade mark to the overseas owner.