Registration of Trademarks in Bad Faith: Recent Developments in the UK and Nigeria

This article by Ayanfeoluwa Sanni,  discusses bad faith in trademark applications, and additionally, examines two recent cases in the United Kingdom and Nigeria, to identify the convergence and divergence in the courts’ approaches to bad faith in trademark registration

Any registration procedure, is susceptible to potential abuses and ulterior motives. This is no different for trademark registration, which can be tainted by individuals seeking to exploit it in an unethical manner. Such (mis) conduct is often characterised as acting in bad faith. Defining bad faith is a difficult endeavour, but it has largely been determined by assessing the ‘wrongdoer’s’ actions in line with their state of mind. 

Definition of Bad Faith in Trademark Applications 

Bad faith, with regard to trademark applications, manifests when an application is carried out in a dishonest, improper, or deceitful way or with ulterior motives or similar intentions. An illustrative example, is when an applicant seeks to register a mark with no genuine intention of using it. Also, when the proposed mark is strikingly similar to an existing mark, aiming to take undue advantage of the reputation of the brand/company or to confuse its customers. Another common scenario is known as “Trademark Squatting”, where a third party deliberately files a trademark application for an existing trademark in a country where the original owner has yet to secure registration. Bad faith can also come into play, if a trademark applicant intends to tarnish or dilute the distinctive character of another trademark.

Determining the ‘well-foundedness’ of a trademark registration lies, to a great extent, in the applicant’s intention. This aspect will be examined in greater detail below. 

British Context

In the UK, Section 3(6) of the UK Trademarks Act 1994 (TMA) provides that a trademark should not be registered “if or to the extent that the application is made in bad faith”. Section 47(1) of the TMA further invalidates any trademark registered in breach of Section 3 TMA. Similarly, in Nigeria, Section 11 of the Trade Marks Act makes it unlawful to register any matter that is likely to deceive or cause confusion. In an early case addressing bad faith, Justice Lindsay in Gromax Plasticulture Ltd v Don and Low Nonwovens Ltd [1998] EWHC Patents 316, [1999] RPC 367, expressed that bad faith includes dealings that fall short of the standard of acceptable commercial behaviour observed by reasonable experienced individuals in the area being examined. He stated that such dealings should be construed by reference to the Act and material surrounding circumstances. More recently, the court in Swatch AG v Apple Inc [2021] EWHC 719 (Ch) articulated that determining bad faith requires an “assessment of those intentions against certain norms, in particular (i) what would be considered honest and fair behaviour by a business and (ii) the proper purpose of obtaining trademark protection.” 

A notable example of bad faith played out in a recent case in the UK between two supermarket giants – Lidl v Tesco [2023] EWHC 873 (Ch).  Lidl accused Tesco of attempting to take unfair advantage of its reputation, by using a similar mark for their Tesco Clubcard. These Clubcards were designed with a yellow circle on a blue background, which Lidl argued was similar to their wordless mark and main logo also sporting a yellow circle on a blue background. Lidl sued Tesco for trademark infringement, and won the case. They relied on Section 10(3) of the UK TMA, which seeks to protect marks with a reputation. Tesco was held liable for trademark dilution and unfair advantage, because their actions were held to be detrimental to the distinctive character of Lidl’s mark, and capable of taking advantage of its repute. 

Upon an examination of the Court’s ruling, it is noteworthy that the issue of bad faith did not arise at the time when Tesco was being accused of trademark infringement. This shows that proof of bad faith, especially in the eyes of the courts, may extend beyond ‘wrongdoing’ in a sense, to the intentions of the interested party at the time of registering the trademark. In the case of Sky Ltd & Ors v Skykick, UK Ltd & Anor (Rev 2) [2021] EWCA Civ 1121 (EWCA (Civ)), the court referencing another case (Case C-529/07 Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH [2010] Bus LR 443),  established that the date for the assessment of bad faith was at the time of filing the application. It was on this premise that Tesco raised the counterclaim, questioning the intention behind Lidl’s registration of its Wordless Mark. They argued that the registrations were filed in bad faith, because there was no intention for use at the time of each application. Tesco prevailed on this point because Lidl could not provide evidence to rebut this argument, and prove its intention to use the mark at the time of its registration. Lidl attempted to provide evidence of ‘good faith’ and, Justice Smith had this to say, “The fact that a registered mark is later found to have been used as a component part of another mark, does not (without more), evidence the existence of the necessary subjective intention”. Thus, it was not merely enough for Lidl to prove good faith, but to show evidence of this intention for use at the time of registration.

Nigerian Context

Turning to the Nigerian context, the recent Domitilla case sheds light on the importance of intention behind trademark registration. In this case, a Respondent, Anne registered a Domitilla trademark in her name, without ownership of the movie production. She was also not a part of the cast or crew. Zeb Ejiro, the Producer and owner of the movie, successfully challenged her trademark on the basis of bad faith. The court held that the Respondent’s intention behind registering the trademark was exploitative, and so the act was deemed to have been done in bad faith, in breach of Section 11 of the Nigerian Trade Marks Act. Here again, we see the important reference to the intention behind the trademark registration. This is always assessed, taking into account all the relevant factors of the case. 

Although bad faith dealings may have nuanced manifestations, the intention always reveals itself. From the decisions examined above, one can infer that the reasoning of both courts converged on the determination of bad faith. Of course, this would have to be up to them to determine based on the facts of each case, and keeping in mind the essential function of trademarks. The court in Sky Ltd v Skykick (Supra) stated that the dishonest state of mind presupposed by bad faith, must be understood in the context of trademark law which is the establishment of trade between parties who must be able to attract and retain customers by distinguishing its goods and services. The crucial takeaway from this is that, a trademark registration which extends beyond the intention of distinguishing between goods and services, possibly to secure a wider legal monopoly, may be indicative of an element of bad faith.

Conclusion 

In all, the issue of bad faith in trademark registration is multifaceted and hinges on the intentions of the registrant, at the time of applying. The UK and Nigerian cases provide valuable insights into how courts evaluate and address this complex matter, within their respective frameworks. While the courts do their best in sifting through the laws and evidence presented by both parties, some of the work of combatting the prevalence of these bad-faith dealings, rests with the trademark owners. First, trademark applicants are advised to avoid dishonest intentions, when registering a trademark. Additionally, existing trademark owners with reputable marks are encouraged to go to any lengths required to register their marks with the relevant body, keep detailed records of such registration, and take the necessary steps for the protection of their mark. This can be through taking ample advantage of the objection period of a trademark application, for similar marks registered. Finally, aggrieved trademark owners seeking to take the matter to the courts, are encouraged to make a satisfactory case proving the existence of bad faith, because good faith is generally presumed, unless the contrary is proved.

Ayanfeoluwa Sanni, LLB, LLM