Australia: Lessons on bad faith from Superman, Yakult and Queensberry

Australia is moving away from and towards European law, all at the same time.

There have been three recent decisions relating to the bad faith ground of opposition and invalidity in Australia, the UK and Europe.

The Australian decision was DC Comics v Cheqout ¹, relating to the mark SUPERMAN WORKOUT in relation to fitness services. DC Comics opposed SUPERMAN WORKOUT based on its rights in the SUPERMAN mark. It also based its opposition on bad faith. Each ground of opposition failed before the delegate of the Registrar of Trade Marks and DC Comics appealed to the Federal Court.

Bennett J handed down her decision of the Federal Court in which she rejected the opposition based on reputation and thereby upheld the Registrar's decision.

On the bad faith claim, however, Justice Bennet overturned the decision of the Registrar.

Bennett J had the advantage of the decision of Dodds-Streeton J in Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) ² in which she gave a very broad interpretation of the bad faith ground under Australian law. In applying Fry, Bennett J looked at issues around the subjective intentions of the applicant, Cheqout, and also the objective circumstances, particularly whether Cheqout's conduct was acceptable based on the standards of the trade.

Bennett J took into account a number of issues in finding that there was bad faith. In particular the fact that Cheqout had adopted an insignia that was much like DC Comics SUPERMAN insignia was enough for her to infer that Cheqout had adopted its branding with the intention of trading off the reputation of DC Comics and gaining an advantage from that. That was sufficient to make out a finding of bad faith and the opposition was upheld.

The European Court of Justice handed down its decision subsequently in Malaysia Diary v Ankenaevnet for Patenter og Varemaeerker ³ on June 2013, relating to a battle between Yakult, the manufacturer of the well known milk drink and Malaysia Dairy. The two parties were battling over the use of a similar bottle shape and entered into an agreement in 1993. In 1995 Malaysia Dairy filed an application in Denmark for a bottle shape reminiscent of Yakult's bottle shape. Yakult opposed and while the legal background is quite complicated the upshot was that there was a reference to the Court of Justice in terms of whether the filing by Malaysia Dairy was made in bad faith. In particular, was it bad faith because Malaysia Dairy knew that Yakult used a mark that was confusingly similar when it filed the application?

The Court of Justice quite quickly dismissed the question referred to it as having an easy answer. The fact is that filing for something knowing that it is confusingly similar to an earlier mark simply is not enough to make out the bad faith ground on its own. The Court referred back to Lindt ⁴ and the factors espoused there in terms of bad faith and the very fact specific assessment that needs to be made.

The final decision was a decision of Mr Justice Birss in Boxing Brands Ltd v Sports Direct International Plc & Ors ⁵. That case related to a fight for the mark QUEENSBERRY in relation to clothing in Class 25. The grounds of invalidity pleaded against Boxing Brands' registration for QUEENSBERRY were based on passing off and on bad faith. The passing off ground was rejected for reasons I won't go into in detail here. What was important in the bad faith scenario was that Mr Warren, a well known boxing promoter's knowledge of the use of QUEENSBERRY by Sports Direct. The issue was whether his knowledge was enough to make the filing in bad faith when he filed for QUEENSBERRY on behalf of Boxing Brands.

However as Mr Warren independently conceived the idea of using QUEENSBERRY in relation to Class 25 goods, that knowledge of Sports Direct's use of QUEENSBERRY in relation to such goods wasn't enough on its own to make this a case of bad faith and the invalidity claim was rejected.

The DC Comic decision looks at bad faith as if it is a relative ground and particularly is redolent of language from the European case law relating to unfair advantage and dilution. Australia doesn't have a remedy for those causes of action in the opposition or invalidity phase. By giving bad faith such a broad interpretation, we may be seeing a big difference between Australian law and European law on this issue.

Practically speaking, for brand owners and particularly opponents in trademark oppositions under the new Raising The Bar provisions, opponents will need to do their homework before they oppose applications in Australia, and particularly they will need to know whether they can plead bad faith or not at the time that they file their Statement of Grounds and Particulars. They do not want to give up a potentially fruitful ground of opposition even in the absence of a likelihood of confusion between the relevant marks.

Footnotes

¹[2013] FCA 478 (22 May 2013).

²[2012] FCA 81 (15 February 2012)

³Case C-320/12 (27 June 2013)

⁴Case C-529/07 Chocoladenfabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH [2009] ECR I-4893

⁵[2013] EWHC 2200 (Ch) (25 July 2013)

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