Bad faith trade marks: an explanation

One case which has caught the attention of the helpline team earlier this month relates to the requirements which need to be met for a trade mark to be declared invalid because it was registered in bad faith. 

Imagine that you are a business based in one country and finding certain success with your brand which you have registered in this country. You are planning on expanding your business to new markets in the future, but have not yet made the step to actively protect your brand in these new countries – remember: trade marks are territorial in nature, meaning that they are only valid and enforceable in the territories in which they have been registered. And to you horror you realise that someone else has decided to file a trade mark registration in these new territories before you do. Worse, they might even now try to use this trade mark registration against you, either by trying to sell it to you or by claiming that you are infringing their trade mark through your activities.

 If you have suspicions that they did so with the sole intent of stopping you from doing so, or to interfere with your business strategy, you may be able to have their application struck down on the ground that this trade mark application was registered in bad faith.

Under EU trade mark rules, the “first-to-file” principle applies, meaning that the first party to file a trade mark application has, in theory, a presumptive preference to that mark even if others have also been using it previously. This presumption can however be countered, and one of the to do so is that the trade mark application was filed in bad faith.

There are however certain requirements for bad faith to be found. Indeed, this is not a broad argument which covers all cases in which a party files a trade mark application knowing that there already exists, in other countries, an identical registered trade mark. Rather, bad faith in EU law relates to acts which are made departing from accepted principles of ethical behaviour or honest commercial and business practices. In other words, it is necessary to show that the trade mark was filed with explicit intention of undermining the interest of someone else or without the intention of actually using the trade mark as a trade mark (i.e. to indicate the origin of the products or services covered). 

As such, there are three main factors which must be shown for the “bad faith” argument to prevail:

• the trade mark must be identical or similar to the pre-existing sign;
• knowledge on the part of the applicant that the pre-existing sign existed and was being used by a third party – this can be proven when, for example, there was a business relationship between the applicant and the owner of the pre-existing sign, and can be presumed when the sign is so specific that the similarity cannot be due to chance or when the pre-existing sign has a reputation which makes it very unlikely the applicant was not aware of its existence;
• dishonest intention on the part of the applicant.

The last requirement is absolutely necessary: mere knowledge of the existence of the pre-existing sign is not enough – you actually have to show that there was indeed bad faith (which will not be presumed on its own). The question then is how do you demonstrate bad faith?

Courts have found bad faith where applicants seek to exploit the reputation of existing marks—whether registered or lapsed—or to "free-ride" on the commercial success of others. A lack of genuine intent to use a mark for some or all of the goods and services applied for may also indicate bad faith, particularly when the aim is to interfere with third-party interests or to monopolise trade mark rights without intending genuine commercial use. However, if there is credible commercial logic—such as market expansion in additional EU Member States—this can rebut allegations of bad faith. Pre-existing relationships between the parties may also support a finding of bad faith if the trade mark owner attempts to appropriate a sign in breach of good faith or established commercial practices. Lastly, seeking financial compensation with the knowledge of an earlier similar sign, in anticipation of being paid off, can also be evidence of bad faith. Across all these scenarios, the common thread is the misuse of trade mark rights in ways inconsistent with honest commercial behaviour and the proper functioning of the EUTM system.

If you ever find yourself in the situation in which you see that another party has filed a trade mark in bad faith with the sole intent of going against your interests, note that the onus is on you to demonstrate that this is the case, and typically the examiner which will assess the situation will do so exclusively based on the arguments and evidence which you bring to the table. Keep in mind that an impression of “unfairness” or suspicion that trade mark registration was used strategically to go against your interests is not enough: it is necessary to demonstrate actual bad faith.

If you can actually demonstrate this, then you can have the trade mark struck down from the registry by having it declare invalid.