• In the UK Office

    Yet More on Bad Faith

    A number of recent UK Trade Mark Office decisions have dealt with the thorny issue of bad faith. We discuss some of the most interesting briefly below.

     

    D J Robb v. Molewood Garage

    The name Molewood Garage was associated with the premises of the same name. Mr Robb, the main lessee and later owner of the garage, granted a sub-lease to a Mr Edwards to operate a car repair business from the same premises, making clear that use of the garage name was to be shared with Mr Robb who operated a car sales business. On discovering a year later that Mr Edwards had registered Molewood Garage Ltd as a limited company, Mr Robb gave him notice to quit. Mr Edwards had also registered Molewood Garage as a trade mark in Classes 12 and 37 and Mr Robb applied for invalidation of the registration on the ground that it had been applied for in bad faith.

    Although Mr Edwards appeared to believe that he was the owner of the goodwill in the name Molewood Garage, the appropriate test for bad faith is principally objective. In deciding the application had been filed in bad faith, account was taken of the following:

    • Mr Edwards had been trading from Molewood Garage for less than one year,
    • He was aware there was longstanding goodwill in the garage name and had been told that his use of the name was to be shared with Mr Robb,
    • Mr Robb filed evidence to show he was using the garage name for his own side of the business,
    • There was some dispute as to where the goodwill in the garage name lay but Mr Edwards could not really believe that it lay with him alone so it was unreasonable for him to think he was entitled to sole ownership of the trade mark,
    • He did not challenge any of the assertions in Mr Robb’s evidence.

    The Hearing Officer felt that the surrounding circumstances of this case allowed him to infer that the application for Molewood Garage had been filed in bad faith.

    V. Niemczyk v. G W Evans

    The two parties had traded together during 1997 and 1998 as a partnership under the name Abacus High Quality Painters And Decorators Limited in stylised logo form. The relationship broke down in 1998. Both parties continued to use the Abacus name but Mr Niemczyk, in particular, continued to use the full stylised logo. In March 1999 Mr Evans applied to register the aforementioned logo in Class 37. After receiving a letter from Mr. Evans’ solicitors advising that his use of the logo amounted to infringement, Mr Niemczyk applied for a declaration of invalidity of Mr Evans’ registration on grounds of bad faith. The action failed.

    The decision took account of the following issues:

    • The logo had been used by the original partnership and was partnership property,
    • On dissolution of the partnership, in the absence of any agreement to the contrary, each partner acquired the right to continue trading under the logo provided he did not hold out his former partners as still connected with his business or expose them to risk of liability. There was nothing to suggest any of the original partners contravened this proviso.
    • The registration was applied for after dissolution of the partnership at which point Mr Evans was entitled to claim to be the owner, even if not the exclusive owner, of the mark and to register it in his own name.

    Taking the above facts and circumstances into account, it was found that Mr Evans had not acted in bad faith in applying for registration of the trade mark.

    Teton Valley Trading v. K Harrison

    Teton Valley owned a nightclub Chinawhite. They instructed their barman, Mr Rymer, to develop a recipe for a house cocktail to be called Chinawhite and gave instructions on the flavour and colour to be achieved.

    Mr Rymer meanwhile approached a third party, Mr Harrison, saying he had developed a cocktail called Chinawhite a derivative of which was to be served at the new Chinawhite club and, although he would be working there as a barman, he was not bound by any formal contract regarding the drink or its name. Company name and trade mark searches were carried out, after which Mr Rymer and Mr Harrison together set up a company China White Ltd to commercially exploit the drink and Mr Harrison filed a trade mark application in his own name for China White for beverages in Classes 32 and 33. He believed that the drink itself was in the sole proprietorship of Mr Rymer.

    Shortly after the drink went on sale in the nightclub Mr Rymer advised Teton Valley of his discussions with Mr Harrison. Discovering the trade mark application in the name of Mr Harrison, Teton Valley dismissed Mr Rymer and filed opposition to the application, one ground of opposition being bad faith

    In finding the application had been filed in bad faith the following points were noted:

    • Mr Rymer had mis-represented himself to Mr Harrison as the true owner of the drink’s recipe and name and although his actions were not an issue in this matter they were important as part of the background circumstances,
    • Mr Harrison believed, on the basis of Mr Rymer’s assurances, that he was acting in good faith in filing the trade mark application. However, bad faith may be found even where the party believes he has done nothing wrong,
    • Bearing in mind the background facts concerning Mr Rymer of which he was aware, should Mr Harrison have accepted Mr Rymer’s assurances at face value and was it the action of a reasonable and experienced man to do so? The Hearing Officer felt the answer on both counts was “no”.
    • Knowing what he did, Mr Harrison should have questioned Mr Rymer further and made further enquiries of his own. Not to do so fell short of the standards of acceptable commercial behaviour.

    None of the relevant facts was in dispute and the Hearing Officer was able to infer bad faith from the circumstances of the case.

    Liaoning Light Industrial Products Import & Export (LLIP) v. J. Yu

    Mr Yu applied to register the mark Walklander for safety clothing in Class 9 and this was opposed by LLIP on the ground of bad faith.

    LLIP supplied safety boots in the UK under the mark Walkerland from 1996 and Mr Yu’s company was a customer of LLIP. In 1999 the two parties decided to set up a UK trading company Walkerland International Ltd. (WIL) jointly owned by Mr Zhou of LLIP and Mr Yu. The trade mark Walkerland was registered, on instruction from LLIP, in the name of WIL.

    The relationship began to deteriorate. Mr Zhou learned of safety boots being imported into the UK from Hong Kong under the mark Walklander. Mr Yu offered to visit Hong Kong to try to bring an end to what he described as infringing use of WIL’s mark. It later transpired that Mr Yu himself was behind the new “infringing” Walklander boots, that he had filed a UK trade mark application for Walklander and had overcome a citation of WIL’s earlier registration against that application by filing a letter of consent from WIL, signed by him, on paper that was not WIL authentic letterhead. There were many other aspects to this case too numerous to mention but the opposition by LLIP succeeded on the ground of bad faith and key factors were:

    • It was a fact that Mr Yu knew of the Walkerland trade mark and its use and exhibits filed showed he intended to use Walklander in a similar manner and on a similar style of footwear,
    • Choosing the mark Walklander and filing the application when he was a director of WIL represented a clear conflict of interest for Mr Yu,
    • Mr Yu did not contest that he had told Mr Zhou he would attempt to sort out the infringing use of Walklander whilst all the time being the person behind those activities,
    • The facts painted a picture of someone intentionally orchestrating a situation of confusion and Mr Yu’s actions in relation to the letter of consent, whilst not strictly a bad faith issue, assisted by adding to the picture of his behaviour,
    • Mr Yu chose not to comment on most of Mr Zhou’s allegations when he could readily have commented.

    Although Mr Yu may not have believed he was doing anything wrong this did not affect the finding of bad faith. The Hearing Officer found his actions fell short of acceptable commercial behaviour and the application was refused accordingly.

     

    Bluebird Electric v. N J Kruschandl

    The issues in this case were very clear cut. Mr Kruschandl filed an application for Bluebird-Electric with a device of a car in Classes 12, 16 and 25. The application was opposed by Bluebird Electric Ltd on the grounds that Mr Kruschandl was not the rightful owner of the mark. The witness for Bluebird Electric was a Mr Wales of the Campbell family known for their involvement with land and water speed record attempts in vehicles all called Bluebird.

    Mr Kruschandl and Mr Wales formed the company Bluebird Electric Ltd. and entered into an agreement whereby the company was licensed to use a refuelling system developed by Mr Kruschandl and design rights in the vehicle. Under the agreement, trade mark rights in the mark “bird in flight and legend Bluebird Electric” would belong to the company. Mr Kruschandl filed an application for this mark on behalf of the company. When the relationship between Mr Kruschandl and Mr Wales later came to an end Mr Kruschandl left the company and confirmed by letter that he intended to “continue with an electric land speed record attempt (obviously without the name ‘Bluebird’)”. He later withdrew the trade mark application he had filed in the company name and applied for registration of the present mark in his own name.

    A main influence on the decision that the application had been filed in bad faith was the existence of the agreement and letter. Although Mr Kruschandl had written to the company to determine their intentions before he withdrew the earlier application and may have taken their lack of response as an indication of a loss of interest, he had no authority to withdraw the application as he had already left the company. His actions in doing this fell short of acceptable commercial behaviour and added to the background circumstances affecting the decision.

     

    Comment

    Although an accusation of bad faith is treated as a serious charge by the UK Trade Mark Office which must be established by convincing evidence, the above cases show that, in the appropriate circumstances, they are willing to reject an application on this ground. The Office seems to be particularly willing to accept that a trade mark applicant has acted in bad faith if, as a present or former employee or director of a company, the applicant has acted against the other company’s interests when filing the application.