Generalising about trade mark bad faith impossible, says ECJ advisor

ECJ Advocate General Eleanor Sharpston has published her advice to the EU's top court in a case involving chocolate maker Lindt and competitor Hauswirth. It is the first time the Court has been asked to rule on the concept of 'bad faith' in trade mark law, but if the Court follows Sharpston's view it is unlikely to provide much more clarity than currently exists.

A Europe-wide Community trade mark can be invalidated if someone shows that the person who registered it did so 'was acting in bad faith when he filed the application for the trade mark', according to The Community Trade Mark Regulation.

Swiss chocolate maker Lindt has made and sold gold foil-wrapped chocolate bunnies at easter time since the 1950s, and in Austria since 1994. Austrian chocolate maker Hauswirth has been selling gold foil-wrapped bunnies since 1962.

Machine wrapping technology introduced in the 1990s has forced the bunnies to be manufactured in increasingly similar shapes, Sharpston said.

In 2000 Lindt applied for a three dimensional Community trade mark for its bunnies, which was registered in 2001. It then took action against Hauswirth for trade mark infringement, arguing that Hauswirth's bunnies were likely to be confused with its own. Hauswirth filed a counterclaim that the trade mark should be invalidated because it was registered in bad faith.

The Austrian Supreme Court has asked the ECJ to clarify whether a company should be said to be acting in bad faith if it registers a trade mark for something it knows is in use by others in order to then use the mark to shut down other companies' activity.

The Austrian Court's question also asked that if that does count as bad faith, is the trade mark registering firm justified if it had already acquired a reputation with the public in relation to the trade marked elements and is therefore protectected by competition law.

Sharpston began by saying that a precise definition of bad faith was unlikely to emerge.

"Like a banker, bad faith is no doubt easier to recognise than to define," she said in her opinion. "It is a concept with which not merely lawyers but philosophers and theologians have grappled without quite achieving mastery. It is likely, indeed, that bad faith cannot be defined at all in the sense of determining its precise limits."

In the ECJ hearing Hauswirth said that bad faith was well defined by the English High Court in a ruling by Mr Justice Lindsay. "Plainly [bad faith] includes dishonesty and, as I would hold, includes also some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined," he had said.

The European Commission gave written evidence to the hearing. It said that "bad faith may be likened to conduct which is not ‘in accordance with honest practices in industrial or commercial matters’, of which one example would be an intention to prevent others from entering the market," said Sharpston.

The Commission and the Czech government argued in their submissions that the important factor in establishing bad faith was the intention of the registering firm. The Swedish government said that objective considerations were what defined bad faith, such as whether or not the person regsitering the mark knew of other people's use of the material in the past.

Sharpston said that subjective considerations were important but hard for a court to deal with because of their subjectivity. "Other than in the perhaps unlikely case of an admission of bad faith on the part of the trade mark proprietor, the presence or absence of bad faith must normally be inferred from all the relevant objective circumstances," she said.

Bad faith, Sharpston said, "relates to a subjective motivation on the part of the trade mark applicant – a dishonest intention or other ‘sinister motive’ – which will none the less normally be established by reference to objective criteria".

"It involves conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices, which can be identified by assessing the objective facts of each case against such standards," she said.

Sharpston said, though, that the particular circumstances of any particular case made it impossible to create a rule of thumb for bad faith.

"To sum up, the gist of my analysis is that there is no simple, decisive test for establishing whether a trade mark application was submitted in bad faith," she said. "The various sets of circumstances which have been advanced before the Court as exhaustively delimiting the notion of bad faith are in fact illustrative examples of that concept."

"An intention to prevent competitors from continuing to use unregistered signs which they have hitherto been entitled to use and to defend against competition from other such signs is indicative of bad faith. However, the assessment must take account of all relevant factual and legal elements which might justify such an intention or, on the contrary, underline its dishonest or unethical nature," she said.

Sharpston conlcuded that attempting to prevent others from using a mark which they have used to date perfectly legally may seem like bad faith.

"However, such an intention would not necessarily be incompatible with those standards if the applicant himself had enjoyed similar or greater legal protection in respect of the mark applied for and had used it in such a way, to such an extent and over such a time that the use by others of their similar signs could be considered to derive unjustified benefit from the applicant’s sign, and if those others were not constrained in their ability to choose dissimilar signs," she said.