• IN THE UK OFFICE

    Another Case of Bad Faith

    This case (A1 Trading Ltd v L.T. Overseas Ltd) involved an application to invalidate a trade mark registration for Daawat covering a wide variety of goods in Class 30, including rice, biscuits, coffee, ketchup, mustard, peanut confectionery, tomato sauce and tea. The application, under Section 47(1) of the 1994 Act, was made on the basis that the application upon which the registration was based, had been filed in bad faith (Section 3(6)).

    The facts in this case were these. L.T. Overseas had sold Daawat basmati rice in India since 1989. In 1994, they had extended their trade in this product to the USA. In March and August 1995, the sales director of A1 Trading, a person who was experienced in the rice industry, visited India and through a third party was informed about L.T. Overseas and their desire to find customers for their products in Europe. In September 1995, A1 Trading filed a UK trade mark application for Daawat in Class 30. On the same day, they also filed UK applications for the marks Sona and Chand. The marks Sona and Sona Chandi were trade marks applied by L.T. Overseas to other grades of rice product in India. In October 1995, A1 Trading’s sales director visited L.T. Overseas in India with a view to establishing some kind of economic arrangement between the two companies. What exactly happened at this meeting was disputed. However, A1 Trading did subsequently purchase basmati rice from L.T. Overseas. In February 1996, A1 Trading wrote to L.T. Overseas indicating that they were willing, in principle, to transfer the Daawat brand in the UK to them provided the basis for future commercial dealings between the parties could be agreed. The economic relationship between the two companies, although uneasy, continued until July 1997 when it broke down irretrievably. In February 1998, L.T. Overseas applied to invalidate A1 Trading’s registration.

    The Hearing Officer ruled as follows on the disputed facts and the Section 3(6) objection:

    • The filing of a trade mark owned abroad by a foreign company on the basis of a vague suspicion that the foreign proprietor might wish to extend its trade to the UK was insufficient to found an objection under Section 3(6). However, if an applicant for a registration had reasonable grounds to believe that a foreign user of the trade mark was making plans to extend its trade to the UK, his application might be deemed to have been made in bad faith, particularly in the absence of any use of the mark by the applicant prior to the UK filing date. The applicant’s purpose in making the application might be highly relevant to the issue of bad faith.

    • In order to make out a prima facie case of bad faith, L.T. Overseas must show that A1 Trading,

     

    had knowledge of L.T. Overseas’ use of the mark Daawat in India prior to the UK application date (September 1995);

    had reasonable grounds to believe that L.T. Overseas intended to sell Daawat rice in the UK; and

    applied to register Daawat in order to take unfair advantage of their knowledge of L.T. Overseas’ plans.

    • Given the background to A1 Trading’s sales director’s visits to India in March and August 1995, it was overwhelmingly likely that he knew of the sale of Daawat rice in India by September 1995.

    • The meeting between the two companies in India in October 1995, took place to discuss the importation of L.T. Overseas’ products by A1 Trading to Europe. It was therefore highly probable that A1 Trading was aware of L.T. Overseas’ plans to begin exporting its Daawat basmati rice to Europe before they applied for their UK trade mark application.

    • A1 Trading’s application for Daawat in respect of rice and similar goods was a tool to improve their prospects of obtaining an agency or distribution agreement for the Daawat rice product in the UK and/or Europe. The application took unfair advantage of A1 Trading’s prior knowledge of L.T. Overseas’ plans.

    • The test for bad faith under Section 3(6) was an objective one. Viewed on an objective basis, the application filed by A1 Trading, although falling short of outright dishonesty, was unacceptable commercial behaviour. In short it was unfair to the point of bad faith. The Section 3(6) ground for invalidation therefore succeeded in relation to rice and similar products.

    • Whether an application was filed in bad faith must be judged at the date of application. To the extent that an application was filed in bad faith, the defect could not be cured by establishing that, at a later date, the same applicant could have made the application in good faith.

    • The fact that L.T. Overseas had unsuccessfully opposed a CTM application for Daawat filed by A1 Trading was not relevant to the Hearing Officer’s decision. A CTM application could not be opposed on the ground of bad faith.

    • In an invalidation action, the onus to prove that the original application, in so far as it covered goods that were not similar to rice, was also filed in bad faith, rested with L.T. Overseas. They had failed to prove their case in relation to such dissimilar goods and therefore the registration would only be partially invalidated. It would be allowed to stay on the Register for "Biscuits, coffee, ketchup, mustard, peanut confectionery, tomato sauce, tea".

     

    Comment

    There have now been a number of decisions made by the UK Trade Mark Office and the English Courts on the question of bad faith filings and it is becoming clearer which types of behaviour constitute bad faith and which do not. These decisions fall into three broad categories: the ownership of the mark applied for, whether the applicant had a bona fide intention to use the mark at the date of application and whether the list of goods and/or services claimed is unjustifiably broad. In this comment, we shall deal with only the first of these categories.

    It appears that the ground of bad faith has a reasonable chance of succeeding in the UK if the opponent can show one or more of the following:

    • The UK applicant has had business dealings with the opponent and has subsequently filed for the opponent’s trade mark or a similar mark. The bad faith applicant could be a competitor, a former employee, an agent or distributor, a licensee or just a potential business partner with whom commercial discussions came to nothing. Whether the opponent owns earlier UK or foreign trade mark rights does not appear to be relevant. For examples of UK cases where this type of argument has been successful, see (in addition to the above case) Travelpro (1997 RPC 864) and the unreported cases William Leith v Anchor Industries (Make Your Mark, Spring 2000), W.F. Webb v Coffee Time Donuts and R.A. Gore v Foresure. The argument was also run successfully in the OHIM cancellation case between Surene Pty and Multiple Marketing (Make Your Mark, Spring 2001).

     

    Even if such a prior business relationship exists, however, it is not certain that an attack on the ground of bad faith will succeed. The outcome will depend on the factual situation. See, for example, Gromax Plasticulture v Don & Low Nonwovens (1999 RPC 367).

    Furthermore, if a business relationship breaks down and a former licensee or distributor files for a mark that takes only part of the originator’s mark such that the mark applied for does not encapsulate the distinctive character of the originator’s mark, then a bad faith objection may not succeed. See, for example, the unreported case Mattey v Goodnight Products where the opponent, who owned the mark Dahm’s Original Goodnight for an anti-snoring product, was unsuccessful in opposing (under Section 3(6)) an application for the mark Goodnight-Stopsnore in relation to identical or similar products.

    • The applicant has consistently filed UK trade mark applications for marks owned by third parties. See, Kundry SA’s application (1998 ETMR 178) involving the trade marks Harvard and Jarvard and the unreported case between Ivana Inc and Suleman Tahir (Make Your Mark, Spring 2001), where the applicant had filed a UK application for Ivana, having previously filed UK applications for a Disney character (Percy the Dog) and Visachi.

    • The original owner of a trade mark abandons the mark and then, once a third party has begun to use the same (or similar) mark in relation to the same or similar goods, attempts to recover his position by filing an application for the mark. See The Supremes decision at p.19 of this edition of Make Your Mark. The opponent produces a reasonably strong case as to its prior ownership of the mark, particularly if it is a stylised word mark or a device mark, and the applicant either does not make any attempt to rebut the allegations or produces an unconvincing case. See Team Lotus (1999 ETMR 669) and the unreported case of Punjab Textiles v Touchwood Boutique.

     

    In the absence of one or more of the above criteria, it becomes extremely difficult to sustain a Section 3(6) objection to the registration of a mark.