Canada: "Bad Faith" As A Ground Of Opposition

A decision of the Federal Court has dismissed an appeal from a decision of the Trademark Opposition Broad. (Spirit Bear Coffee Company Inc. v. Kitasoo First Nation 2023 FC 1185). The decision illustrates the potential impact of the recent amendments to remove some grounds of opposition from the Trademarks Act and to add that "the application was filed in bad faith" as a ground of opposition. There is also no longer a requirement to include a statement in the application that the applicant is satisfied that they are entitled to use the trademark in association with the applied for goods or services.

The Opposition

The Spirit Bear Coffee Company Inc. (SBCC) applied to register the trademark SPIRIT BEAR COFFEE COMPANY (the Mark) on September 5, 2014. The application included a statement that SBBC was satisfied that it is entitled to use the Mark in Canada in association with the listed goods and services. This statement was required under subsection 30(i) of the Trademarks Act in effect as of that date.

The opponent filed a statement of opposition based on various grounds, including that SBCC's application did not comply with subsection 30(i). The opponent argued that a license agreement signed by SBCC precluded the use of the term SPIRIT BEAR by SBCC, and instead permitted use only by a different corporate entity. SBCC countered that the entire agreement was void from its inception for various reasons and that it never considered itself bound by the contractual terms.

The Hearing Officer determined that the ground under 30(i) was sufficient to dispose of the opposition. (Kitasoo Band Council v The Spirit Bear Coffee Company Inc. 2021 TMOB 257) He found that on the filing date of the application, SBCC could not have been reasonably satisfied it was entitled to use the Mark because of the licence.

The Hearing Officer said subsection 30(i) of the Act requires an applicant to include a statement in the application that the applicant is satisfied that it is entitled to use the trademark in Canada. Where an applicant has provided the required statement, the jurisprudence suggests that non-compliance with section 30(i) of the Act can be found where exceptional circumstances render the applicant's statement untrue, such as evidence of bad faith or non-compliance with a Federal statute. Non-compliance with subsection 30(i) can also be found where contractual obligations related to a trademark would render the applicant's statement untrue.

He noted that there was an initial evidentiary burden on the opponent to adduce sufficient admissible evidence from which it can reasonably be concluded that the facts alleged to support each ground of opposition exists. He found that the Opponent satisfied its evidentiary burden for the subsection 30(i) ground of opposition by filing the License Agreement. The onus was then on SBCC to demonstrate on a balance of probabilities that, despite the License Agreement, it could nevertheless have been satisfied of its entitlement to use the Mark. After a detailed review of the evidence, he concluded that SBCC could not have been satisfied of its entitlement to use the Mark at the filing date and refused the application.

The Appeal

SBCC argued that subsection 30(i) should be applied only in exceptional circumstances and that the issue before the board should have been whether SBCC was acting in bad faith in making the declaration in the application.

The Judge disagreed. He reviewed the meaning of the subsection in English and French since the shared meaning rule for the interpretation of bilingual legislation dictates that the common meaning between the English and French legislative texts should be accepted. When both versions of s 30(i) are compared, the English version can reasonably be read to share the meaning of the clearer and narrower French version that speaks of being convinced or persuaded by evidence.

The Judge saw no error in the approach followed by the Hearing Officer. He identified and applied the correct legal principles in assessing the subsection 30(i) ground of opposition. By considering the circumstances where contractual obligations related to a trademark would render SBCC's statement untrue, the Hearing Officer properly relied on decisions in line with the broader purposes of subsection 30(i).

The Judge also considered the meaning of bad faith. He observed that bad faith in the context of applying to register a trademark is not limited to dishonest conduct and may also include dealings which fall short of the standards of acceptable commercial behaviour as observed by reasonable experienced people in the area being examined. Further assessing the conduct of the applicant involves considering the applicant's subjective intention at the time of filing as determined by reference to the objective circumstances.

The Judge was not persuaded that the Hearing Officer committed any reversible error in finding that SBCC had failed to adduce sufficient evidence to discharge its evidentiary onus The Decision was upheld, and the appeal was dismissed.

Comment

It seems that "bad faith" will likely become a popular ground of opposition .

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