Recently, the Federal Court of Canada issued a decision, Beijing Judian Restaurant Co. Ltd. v. Meng, 2022 FC 743, which is the first decision in Canada that expunged a registered trademark on the new “bad faith” ground that was codified in the Trademarks Act in 2019.
Summary
A trademark troll lost his/her trademark registration because the trademark was registered in bad faith.
However, the reasoning of the court suggests that the earlier user of the trademark should apply to register the trademark as early as possible.
In particular, the court states that “[t]he intentional filing of an application for the” earlier trademark user’s “mark in and of itself, however, is not sufficient to invalidate the … Mark” in paragraph 42.
As such, to avoid the burden of proving other evidence to show the bad faith, it is preferable for the original user of the trademark to apply to register the trademark as early as possible.
Facts
Beijing Judian Restaurant Co. Ltd. was established in 2005 and operates a restaurant chain in China. In 2018 and 2019, it opened two restaurants in Vancouver and ran a restaurant in Toronto during May 2018 and Sept., 2019.
The restaurants in Canada uses the following trademark:
On November 24, 2017, it filed an application to register the JU DIAN Characters trademark in Canada.On June 27, 2017, the registrant applied to register the following trademark：
This trademark is identical to one of the trademarks that the restaurant used in China, in association with “restaurant services; take-out restaurant services” and “beer”. This trademark was later registered on April 25, 2019.
On April 21, the Registrant approached the restaurant in Vancouver, alleging that the restaurant stole the trademark. On May 1, 2019, the Registrant demanded the restaurant to pay CAD 1.5 million to acquire use of the registered trademark and refused to give up the ownership.
Subsequently, the registrant advertised the trademark for sale at a online marketplace and asked the restaurant for CAD 100,000 a year for licensed use of the registered trademark and open a franchise of the restaurant.
In October 2020, the Registrant opposed the restaurant’s application to register the JU DIAN Characters Mark in Canada.
Reasoning
The court reasoned in paragraph 42 that “[t]he intentional filing of an application for the” earlier trademark user’s “mark in and of itself, however, is not sufficient to invalidate the … Mark.”
However, there was evidence that the restaurant had some reputation amongst Canadians. Meantime, the registrant’s actions showed that the registrant was aware of such reputation, and registered the trademark in order to extort the restaurant. These evidence, in addition to the fact that registrant also apply to register trademarks associated with different Chinese restaurants, supported an inference of bad faith on the part of the registrant.
The court concluded that the registrant registered the trademark “without a legitimate commercial purpose” and deemed the trademark invalid.
Conclusion
In conclusion, the court appears to arrive at the conclusion of bad faith on the basis of the following factors:
- The registered trademark is identical to one of the restaurant’s trademarks used in China.
- The restaurant’s trademarks had some reputation in Canada, and the registrant knew of such reputation.
- The registrant tried to register trademarks associated with other Chinese restaurants.
- The registrant tried to extort money from the restaurant.
- The registrant did not use the trademark, nor did there appear to be intention to use the trademark on his own.
As can be seen, multiple factors are needed to establish bad faith such that a registration can be invalidated.
To avoid the burden to prove all the necessary factors, it is beneficial to apply to register the trademark early. Failing that, the earlier user of the trademark should monitor the advertised applications, and oppose registration if necessary.
Disclaimer: The content of this article is only provided for general information with respect to the subject matter. Please seek advice from a specialist regarding your specific circumstances.