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The concept of Bad Faith involves the disputed party intentionally refusing to fulfil any legal or contractual obligation, or entering into a contract without intending or having the means to complete it. With regard to trademarks, registration of identical or deceptively similar marks can become problematic for the registered and prior users of the mark. Trademark squatting denotes a situation wherein a brand other than the original brand owner obtains a trademark on the brand.
A trademark application filed for registration that is deceptively similar to an already registered mark with an intention to trade upon reputation and goodwill of the already registered trademark would amount to bad faith.
Bad Faith and its Ingress into Trademark Laws-
As under the Trade Marks Act, 1999 there is no explicit definition provided for the concept of Bad Faith. However, in accordance with Section 11(10)(ii) of the Act, which pertains to the relative grounds for the refusal of trademark registration, there is a mention of Bad Faith as a reason for registration refusal.
Zooming out of trademark law with an expanded vision would provide an insight into the concept of bad faith. There are several judicial precedents that underline and mention the concept. In the case of Manish Vij v. Indira Chugh¸ the court has propounded on the concept of bad faith as an intentional/conscious doing of a wrongful act with a dishonest motive.
Further, in the case of Gromax Plasticulture v. Don & Low Nonwovens Ltd., the Court had held that the concept of bad faith pertains to dishonesty and behaviour which would fall short of the set standard of commercial behaviour that is considered to be acceptable by reasonable men of expertise in the specified niche.
As under Section 11(10)(ii) of the Trademarks Act, following cases could likely result in bad faith-
- Application of registration of a mark that is already existing and is use by some other person or company- Assessing the presence of similar marks is one of the primary steps that is undertaken when one seeks to register their mark. Despite knowing the presence of a similar mark in prior use, if one seeks to go ahead with registration, then that would amount to bad faith.
- Such an applicant is aware about the existence and use of such a mark and still undergoes with the process of registration- Awareness of the presence of such a mark being in use and going ahead with registration substitutes to intention. In trademark law, the intention for utilizing a trademark plays a relevant role to conduce if there has been an infringement or not.
With regard to this, in the case of J.N. Nichols (Vimto) Ltd. v. Rose and Thistle and Anr., the use of a mark as under Section 2 (2)(c), does not include just sales and advertisement but also includes the intention of the person to use the mark. The use of the mark must be bonafide and not malafide. If the use of the mark is malafide, then that would amount to infringement of the mark.
- Acquiring registration by provision of false documents and provision of false sales figures- Inorder to obtain registrations in a brisk and speedy manner many applicants furnish distorted documents to elaborate on their claims for application which would amount to bad faith.
There are some pertinent judgments that have elucidated upon the concept of bad faith with a specific frame of reference to Intellectual Property Rights, as enlisted below-
- In the case of Swatch AG v. Apple Inc., the concept of bad faith has been illuminated upon, although the final High Court judgment would come out to be quite surprising. In this case, the phrase “ONE MORE THING” which is oftentimes associated with Steve Jobs was revived by Apple CEO Tim Cook during the launch of Apple Watch.
Swatch AG, a popular watch brand filed trademark applications for the same phrase which was subsequently opposed by Apple. Apple was successful in establishing that the mark sought to be registered was in bad faith and was done with the aim of creating a parody of Apple. However, on appeal to the High Court, it was held that since there was no clear-cut evidence to signify that Swatch had sought to undermine the business of Apple, and therefore, there was no performance of bad faith by Swatch. With regard to bad faith, reliance was placed on Lindt v. Hauswirth, the notion of bad faith can be established if there is a satisfaction of the following four conditions-
- Intention to file a similar sign.
- Existence of deceptively similar sign.
- Timing of such an application.
- Nature of such an application.
These conditions are illustrative in nature and not exhaustive per se, as the concept of bad faith is a question of fact.
- In the case of Societe Des Produits Nestle v. Swaraj Industrial and Domestic Appliances Pvt. Ltd. and Ors., the mark in question was “Maggi”. The appellants had used the mark in question since 1984 and the respondents had adopted the trademark by putting it to use. The appellants mark, over the years has gained strong reputation and goodwill amongst the public. Therefore, it was deemed that the respondent’s adoption of the mark was to profit from the goodwill that the appellants have established for themselves in the market. This act was considered to be Bad Faith by the court.
- In the case of H&M Hennes & Mauritz AB & Anr. v. HM Megabrands Pvt. Ltd. & Ors., the court has placed heed on the ordinary intelligence of a consumer and their perception of the mark. The present case involved a dispute between the H&M mark of the plaintiffs and HM Megabrands mark of the defendant. The court passed the ruling in favour of the plaintiff thereby prohibiting the defendants from putting to use any mark that depicts HM or its variations such as a trademark, service mark, website, domain name and so on.
- In the case of Hindustan Pencils (P) Ltd. v. India Stationery Products Co. and Ors., the court had propounded that if it is deduced that the party’s adoption of the mark has not been truthful and honest, then the court would be justified in granting an order of Injunction.
Bad faith as a concept has constantly evolved and has sustained to be an issue for businesses not just in India but across many jurisdictions. The concept has seen its evolvement over the years. With specific pertinence to trademark law, there has been a raise in bad faith cases across jurisdictions as there are regional/national applications as well as international applications. One preventive measure is that the owners of trademark have to ensure that their marks are duly registered before seeking to expand the brand globally.
Author: Haritha Dhinakaran, a student of Symbiosis Law School (Pune), currently an intern at Khurana & Khurana, Advocates and IP Attorney, in case of any queries please contact/write back to us via email email@example.com.