Alice Xie is an IPilogue Writer and a 1L JD Candidate at University of Western Ontario’s Faculty of Law.

Can you file a trademark application for a restaurant and proceed to demand 1.5 million dollars to sell that mark? The May 2022 Federal Court of Canada decision, (“Judian”), finds you cannot because the application would be filed in bad faith. Beijing Judian is a reputable barbeque bar restaurant with over 40 locations in China with established Ju Dian character marks, including the JU DIAN & Design Mark. The defendant, Meng, resides in Richmond British Columbia. Upon learning that Beijing Judian was planning to open locations in Canada, Meng raced to file trademark applications for the identical mark in Canada. Two years after filing the application, Meng went to the newly opened Vancouver location of the restaurant and demanded $1.5 million dollars for Beijing Judian to purchase the mark from him. Beijing Judian refused. A month later, the restaurant found an advertisement posted by Meng for the sale of the registration of the JU DIAN & Design Mark for $100,000. Beijing Judian subsequently brought a claim to court arguing that the identical mark registered by Meng is invalid because it was obtained in bad faith.

Two sections recently added to Canada’s Trademark Act of 1985 (“t��� Act”) mention bad faith. In a December 2018 amendment, the Act added , which states that a trademark registration is invalid if the application was filed in bad faith. Similarly, a 2019 amendment included bad faith in as a new ground of opposition that individuals can file in response to an application. Although the law does not precisely define bad faith, the two inclusions of bad faith in trademark legislation advance the idea that .

A closer look at the Judian case shows what the court had to say about the bad faith ground. The judge found the JU DIAN & Design Mark filed by Meng to be from the Canadian trademark database. It was reasonable to infer that Meng knowingly obtained the trademark registration associated with Beijing Judian in China to leverage the restaurant’s reputation for his own economic interests. Meng’s advertisement revealed Meng’s knowledge of Beijing Judian’s reputation. Meng also had no evidence of using the mark for any legitimate commercial purpose, as the only use was the sale of the identical mark online. Looking at the timeline, the judge found that Meng’s intention for filing the trademark application was to either extort money from Beijing Judian or to sell the mark to others. All of these factors combined in this case constitute bad faith.

Since the Act does not explicitly define what constitutes an application filed in bad faith, more bad faith cases ��will slowly clarify the meaning of bad faith in Canadian trademark law. ��Although Beijing Judian successfully won the trademark battle, this case follows two 2021 decisions in Norsteel Building Systems Ltd. v. Toti Holdings Inc. and Yiwu Thousand Shores E-Commerce Co. Ltd. v. Lin where the to invalidate trademark applications based on bad faith. Parties seeking to invalidate a trademark application using this claim would likely need to meet a higher standard. With the bad faith ground still developing in case law, foreign reputable establishments looking to expand into Canada should actively file trademark applications as early as possible and not rely entirely on bad faith to fend off imposters or extortionists.

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Anita Gogia is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.

On May 18, 2022, the Federal Court of Canada released its for Beijing Judian Restaurant Co. v Wei Meng. That marked the �� that the Court invalidated a trademark for reasons of bad faith (TMA). That case centered around the of whether the applicant’s “JU DIAN & Design Mark” was obtained in bad faith contrary to or was otherwise invalid per .

Background

The applicant, Beijing Judian Restaurant Co (“Judian”), has operated restaurants in Vancouver and Richmond since 2018, along with numerous well-known () restaurants in China since 2005. Judian opened locations specifically in metro Vancouver for the large Chinese Canadian population in this area who would recognize the Beijing Judian trademarks. The family of JU DIAN character trademarks have been heavily used in China to promote their restaurants.

, on June 27, 2017 the the JU DIAN & Design Mark shown below in association with “restaurant services; take-out restaurant services”, and “beer”.��

The evidence before the Court included . The first affidavit was of Jiantao Zou, the co-founder and general manager of Judain, and the second of Lai Lam Sing, a consult for Judian and employee of a Judain subsidiary operating the restaurant in Vancouver.

The respondent appeared at the Vancouver restaurant and insisted that he did not care about the Chinese trademarks as he had the Canadian paperwork. On May 1, 2019 the respondent met with Mr. Sing and . On June 3, 2019, Judian became aware of an advertisement for sale of the trademark on an online marketplace, VanSky. When the applicant’s contact made inquiries about purchasing the mark, the respondent asked for $100,000 per year to license the registration.

The Decision

The Court evaluated many definitions of “bad faith,” as it was not defined in Bill C-86, which introduced the new . The is described as to “hinder the registration of a trade-mark for the sole purpose of extracting value from preventing others from using it.”

The in EU and UK trademark law that have been adjudicated. Under UK and EU law, bad faith includes applying for a trademark or when an applicant seeks a trademark as an .

The Court also considered : “[t]he bar vindicates the fundamental legal and moral principle that nobody should benefit from their wrong,” which, as applied to trademarks, may be defined as attempting to use registration as a means to gain rights “in an improper manner or for an improper purpose.”

The Court agreed that it is implausible that the respondent created the same original design on his own, but rather intended to obtain the trademark associated with Beijing Judian restaurants in China. Further, the respondent’s awareness of the applicant’s reputation is established by his text message to the potential purchaser of the trademark on VanSky. Additionally, at around the same time, the associated with Chinese restaurants that he had no affiliation with. This made it more difficult for the court to rebut the inference of bad faith.

The Court held that since the respondent’s mark was registered and the of using the trademark for extortion and economic advantage, the respondent’s registration of the mark constituted bad faith and was therefore and . ��

Other issues

The of whether the use of the mark by the respondent constituted passing off was dismissed. Since there had been no commercial use of the trademarks, there was in the marketplace as required by the 3 part test to prove there had been passing off per common law or .

The of whether the applicant is entitled to punitive damages of $15,000 was also considered. In consideration of and , the Court there was no basis to grant punitive damages because allegations of bad faith are .

Notably, this decision provides guidance on the applicability of a fairly new provision in the . The case also illustrates that courts have a conscience are moved to consider concepts of morality and circumstantial evidence alone to make a just decision.

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Photo Credit: Banksy (https://www.flickr.com/photos/major_clanger/4894673199)

Tugce Kucukali is an IPilogue Writer and incoming LL.M Candidate at University of British Columbia.

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Under , a trademark registration filed in bad faith may be subject to a request to invalidate the trademark. However, since the term “bad faith” is not precisely defined in EU law, bad faith is identified by assessing the facts of each case. In several decisions released in April, the Court of Justice of the European Union (CJEU) and the European Union Intellectual Property Office (EUIPO) made evidentiary assessments regarding bad faith and the purpose of interfering with the registration of famous persons’ names and works.

France Agro v EUIPO - Chafay (Choumicha Saveurs)

The trademark registration for the “Choumicha Saveurs” mark was by the General Court of the CJEU in light of the reputation of Choumicha Chafay, better known as Choumicha. When assessing bad faith, the Court considered Choumicha's line of business, the goods covered by the application, and the fact that the applicant company's manager is Moroccan.

Choumicha argued that while she does not possess rights to her brand or trade name in the EU, she is well-recognized in France and commercially uses her brand, the Choumicha mark, and her image in Morocco. Specifically, the Moroccan community in Belgium and France have known Choumicha as a chef since the 2000s. The applicant, who used an Arabic word in the trademark to target the Arab-speaking community in Europe, undoubtedly knew her reputation ��at the time of application. Even the goods under the impugned trademark relate to the culinary industry.

Banksy’s Laugh Now Trademark

One of Banksy’s works, registered as a figurative trademark, was subject to an . As emphasized in , a known example of trademark filing in bad faith is to file an application without intending to use the trademark.

Banksy's anonymity hinders the copyright protection for his works of art. The trademark owner, the company presumed to be Banksy’s legal representative, argued that the filing has the legitimate objective of securing the rights granted through copyright protection. However, the applications filed lacked the necessary purpose of using the trademarked goods and services and additionally, trademark law is not meant to substitute copyright protection. Banksy's attitude towards intellectual property rights is well-known; the ruling cited a quote from Banksy’s book, ‘Wall and Piece’, where he remarked “copyright is for losers.” Although the EUIPO stated that his attitude does not preclude Banksy of claiming his rights, it is relevant by showing Banksy’s intention for filing the trademark.

In recent years, Banksy has permitted third parties to use his works for non-commercial purposes. However, the EUIPO disagreed with the trademark owner that Banksy reserved the right to use his works for commercial purposes. In addition, Banksy has not taken any legal action against such uses by giving consent or negotiating licenses, and no serious trademark use by him was identified prior to the application date.

',” Banksy said in 2019 in a notable UK publication, as quoted by the decision. Even though a trademark application may be deemed as an indication of a will to use the trademark, statements like these undermine that intention. Thus, the EUIPO concluded that the trademark registration was made to circumvent the law rather than to use it for commercial purposes.

The Future of Bad Faith

In both decisions, the assessments concerning the trademark applicant’s intent were made by the factual evaluation of the statements and circumstances relevant to the application. A statement made years ago or the applicant’s background could form the basis for the bad faith assessment. Although each assertion of bad faith is decided on a case-by-case basis, these recent decisions can instruct the EU Member States as they navigate EU trademark law.

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Synopsis of the Law

The new law, , or Bad Faith Assertions of Patent Infringement, is to be codified at 9 V.S.A. § 4195-4199. It is the first piece of state legislation in the United States that cracks down on patent trolling. ��of patent trolling is “the practice of making deceptive claims of patent infringement in the hopes of collecting licensing or settlement money.” Simply put, patent trolling means alleging patent infringement against an individual or business for the purpose of extorting money, where a legitimate case is not likely to exist. The new law is an amendment to the state’s ��which is, arguably, a quiet way to introduce a patent law without seeming to encroach on federal jurisdiction.��How does the new law work?�� It basically sets out a list of guidelines for judges to determine whether an assertion for a patent is legitimate or illegitimate. For example, to weed out bad faith assertions, a judge may consider whether the claimant is demanding too quick a response or too much money, or whether the potential litigant is making meritless assertions with little factual basis. Conversely, a judge may find that an assertion of patent infringement is legitimate if the claimant is the original inventor or if the individual has successfully enforced the patent in a different court. In lieu of providing hard and fast definitions, the new law essentially sets out a list of factors against which a court might assess the particulars of a case to see whether the allegation is being made in good faith.

Question of Authority – The Limits of Federalism

One of the more debated issues is whether Vermont has legal authority to regulate patent activity. On the one hand, Vermont is stepping right into federal jurisdiction. That is, due to federal pre-emption laws, states are not allowed to enact their own patent laws. As such, Vermont’s new law may be struck down in its nascent stage.�� Furthermore, the new law is arguably not entering uncharted territory either. Congress has already taken significant steps with cracking down on patent trolling at the federal level by introducing additional bills such as the , the and the .�� Simply put, if Vermont’s new law oversteps its boundaries and overlaps in purpose or effect, it may have a challenge ahead in terms of establishing its legitimacy. On the other hand, it could also be argued that the new state law fills a gap that has yet to be addressed in the existing federal legislation. Legal scholar Camilla Hrdy takes this route in suggesting that the does not directly address threats from “patent trolling” by Patent Assertion Entities (PAEs) and that the Federal Circuit has sanctioned “baseless” lawsuits in the past which indicates a potential need for a tighter net, perhaps at the state level. She argues that while federalism may benefit patent law to a certain extent, states must also be given enough autonomy to “use state law to grow local innovation ecosystems, like California has with Silicon Valley.” In short, the new VT law has created at least two distinct camps: one side seems to champion a traditional approach through federalism, whereas the other side proposes an alternative vision of federalism that is, arguably, closer to a bottom-up approach to anti-patent trolling law.

A Canadian Perspective

How might such a situation play out in Canada, which has ? Federals courts do not have inherent jurisdiction, whereas provincial superior courts do, which may potentially give the latter lee-way to overlap in subject matter jurisdiction with the federal courts. Generally though, in Canada, like in the US, patent law is under the jurisdiction of federal power and cases are decided at the federal court level which has statutory authority to hear intellectual property disputes. from Canadian IP firm, MBM Intellectual Property Law, suggests that it is generally “” the effects of a state law in the IP sphere given the lack of precedent both in the US and in Canada. Tracy points out that a likely consequence will be that cease and desist letters will become more expensive to come by, going forward, in the state of Vermont. As such, potential litigants are likely to take more time at the front-end considering whether to enforce their rights. On the one hand, the law would likely disincentive frivolous and vexatious lawsuits; on the other hand, rights holders with bona fide claims will see the cost of litigation increase, contrary to Hrdy’s prediction, as previously discussed. What is certain is that industry players, academics and bloggers on both sides of the border will keep an eye on how the new Vermont law interacts with existing federal legislation as an indicator of the way in which similar legislation might play out in other provinces and states. In the meantime, happy hunting Vermont.

Ying Cheng is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

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