Proving "Bad Faith" in Trademark Proceedings

In July 2016, the Delhi High Court restrained two Indian auto-spare parts manufacturers from using Toyota’s trademark TOYOTA, the Toyota Device Mark, TOYOTA INNOVA and/or any other identical name on their products as well as passing off their goods under the trademark/name PRIUS on the grounds of bad faith.

As per the Honourable Court’s observation, the defendants’ adoption and usage of the mark PRIUS was found to be “blatantly dishonest”, “unauthorized and unlawful” amounting to dilution and passing off of the plaintiff’s reputed trademark.

Way back in 2001 famous Punjabi pop star Daler Mehndi had challenged registration of the domain name ( before the Delhi High Court and had succeeded. In recent times, many domain names have come under the umbrella of controversy on the basis of bad faith alone owing to their deceptive similarity to existing distinct, well-known marks. Some examples are that of domain names”” (which is eerily similar to Maruti Suzuki), and “” which could easily pass off as “”.

From refusing registration of ‘MAGGI’ and ‘VOLVO’ for kitchen utensils, electric and electronic appliances respectively, to restraining defendants from using the PANADOL mark despite the brand’s products being unavailable in India, Indian courts have, on many instances, acknowledged bad faith as a valid ground in trademark proceedings, though the cases are few in number.

So what exactly is bad faith in trademark proceedings?

No proper definition as such has been coined for the phrase “bad faith” but it generally occurs when one party purposely adopts and uses another’s trademark (usually a well-known one) and cash in on the good will associated with the latter’s mark.

The court in Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [(1999) RPC 367 at 379]did attempt to define the same though and laid down that, “Bad faith includes dishonesty and behaviour which falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined”.

The Delhi High Court in Manish Vij vs. Indira Chugh very succinctly defined it as something that does not merely imply bad judgment but “the conscious doing of a wrong with a dishonest purpose.”

Under The Trade Marks Act, 1999 “bad faith” finds a small mention under section 11(10) (ii) as qualifying as one of the relative grounds for refusal of registration.

The onus of proving bad faith in trademark infringement proceedings usually lies with the opponent, and to succeed in such a case it is necessary that the alleged infringer’s intent to deceive be proved.

Some of the actions that constitute bad faith in trademark applications are as follows:

· Hastily applying for registration of a trademark already in use by another party (but not registered) through unfair or illegal means

· Getting a large number of trademarks registered or seeking registration on an intent-to-use basis with no bonafide intention of actually using them (absence of legitimate interest)

This includes – transferring or licensing the trademark at a high price (as happened in the domain name dispute over where defendants refused to transfer the domain name and instead asked Mr.Jaitley to purchase it at inflated rates)

slapping trademark infringement cases against the party that uses them and making false claims of losses to intimidate them, etc.

· Obtaining registration by deceptive means (such as using a false date of first use)

· Copying, imitating or translating a well-known mark, whether or not registered in the home country

· Selling of counterfeit products by the applicant and other similar fraudulent activities.

Bad faith is usually determined on the basis of the date of filing the impugned application for the trademark; later evidence is entertained only if it substantially supports the case and is visibly persuasive. Usually all applications are first presumed to be filed in good faith, hence, cogent evidence is needed to make out a case of bad faith, and this must be proven on the balance of probabilities by the alleging party.

This is a tricky ground to cover since the test for determining bad faith also involves weighing various subjective and objective elements such as:

· The applicant’s mental state at the time of filing

· Whether he had knowledge of the other party using the mark in business for a length of time

· His real intention in making the application -to block/drive the third party away from the market or to genuinely use the mark

· The degree of distinctiveness of the third-party’s mark and the extent to which it was known in the market at the date of the contested application

· Other surrounding factors such as nature of the trade/business in which both parties dealt in, the degree of similarity between the trade marks, etc. need to be taken into account.

Standards for proving bad faith are not unreasonably high, yet there is a requirement that such applications must look unscrupulous and fraudulent at the outset, to persons “adopting proper standards” mostly relevant to the particular industry in question.

It can be safely said that there is no one right way to ascertain bad faith trademark registrations; depending on what the individual case before the court is, any or all of the applicable factors and benchmarks may be used to prove if a certain application qualifies for bad faith registration

Source by PT Shravani