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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Tianchu Gao is an IPilogue Writer and a 1L JD Candidate at Osgoode Hall Law School.

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If you see an alternative for your favoured product—with similar quality and even cheaper prices—in a grocery store, would you consider trying it?

is an effective marketing technique, in which a company’s product or service is compared to its competitor’s. Consumers are more willing to try out new things if they are assured that the new product is comparable or superior to those made by well-known brands. Companies sometimes enhance their credibility by including that supports the comparisons in their ads. This provides consumers with more information and allows small businesses to compete with mega corporations.

Despite these advantages, comparative advertising is a dangerous field to navigate from a legal perspective. Companies that include other companies’ trademarks or products in their own advertisements are subject to from the Trademarks Act, Copyright Act, Competition Act, tort law, and the Canadian Code of Advertising Standards.

In 2019, Quebec wine producer Société de Vin Internationale Ltée (“SVI”) faced a copyright and trademark infringement claim raised by its competitor, Constellation Brands U.S. Operations (“Constellation”). In the leaflet SVI designed to promote its new product ‘Apollo Découvertes’, images of wine bottles manufactured by Constellation, as well as its registered “MEIOMI” trademark, stand alongside images of SVI’S wines. Beside the images are statements that claim the SVI wines are comparable to those from Constellation in terms of taste. Constellation brought an action against SVI based on copyright and trademark infringements and wanted to recover lost profits as calculated from SVI’S Apollo Découvertes wine sales.

One of the provisions that governs the use of third-party trademarks from Trademark Act is section 22: “[n]o person shall use a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.” The term “” encompasses all the intangible assets of a business. In the context of trademarks, it refers to the recognition and trust that consumers have with a particular brand.

This section, upon first look, may appear to be a catch-all prohibition of any use of competitor’s registered trademarks in a comparative ad. Yet, judicial interpretation of this section has effectively limited its applicability. Referencing the American Trademark Act (Lanham Act), the Supreme Court of Canada confined the use of section 22 to cases “in which the protectable interest is clear and the threat of interference is substantial” (, 2006 SCC 23). A review of the case law reveals that courts rarely prohibit the use of marks for goods or wares in comparative ads. In contrast, section 22 is more applicable to trademarks for . Therefore, it is unsurprising that both the trial and the courts denied Constellation’s claim for trademark and copyright infringements.

The result of the case indicates that the protection and benefits granted by the Trademark Act are not without limits. The use of a competitor’s trademark, “for the purpose of comparing the goods with the goods of the plaintiff [para 26],” does not necessarily amount to a trademark infringement.

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