In trade mark matters before the Intellectual Property Office (IPONZ), bad faith is still a relatively ambiguous, “not possible to define” term. It is commonly phrased in IPONZ decisions as being behaviour that “fall[s] short of the standards of acceptable commercial behaviour overserved by reasonable and experienced [persons] in the particular area being examined,” however what constitutes bad faith is decided on the facts of each case.
Three recent trade mark invalidation decisions shed more light on which behaviours are considered “underhand or dodgy” enough to warrant a finding of bad faith under section 17(2) of the Trade Marks Act 2002, along with the level of evidence needed to be successful.
Subjective, objective and inferred behaviour
Bad faith is considered a serious allegation, that “must be clearly pleaded and supported by evidence” requiring a “clear evidence and careful analysis to decide whether knowledge of the applicant (a subjective element) was such that its decision to apply would be bad faith by a person of proper standards (an objective element)” and should not be upheld unless it is “distinctly proved and this will be rarely possible by a process of inference.”
The cases have confirmed that Assistant Commissioners (AC) are hesitant to draw inferences that trade mark owners have acted in bad faith when there is an absence of sufficient evidence corroborating such a claim.
In Zhengtao Jian v Pit Viper, LLC  NZIPOTM 18 (29 August 2022) (Pit Viper) there was not a “pattern of behaviour sufficient to from which an inference of bad faith could be drawn”, despite an identical mark having been adopted for identical goods, by a trader suspected of dealing in counterfeit goods.
It is also not enough to prove facts which are also consistent with good faith.
In Pit Viper the AC found that the owner failing to engage with the proceedings was not in itself sufficient to find bad faith, as there may be other genuine and commercial reasons to not engage. Likewise in Ningbo Aiyou Holdings Co., Ltd v Chapter 4 Corp. DBA Supreme  NZIPOTM 21 (28 September 2022) (Supreme) the owner’s abandonment of its opposed application was not enough to infer bad faith as there “may be other reasons for abandonment”
These acts of abandonment or leaving proceedings undefended were not enough to point to a subjective intention to act in bad faith. Assumptions and/or implications about the owner’s subjective intentions are not enough. Evidence is needed to close the loop and prove the owner’s subjective intention when making the trade mark filing was in bad faith, these cases show an AC will not infer the intention.
Proven acts crystalise subjective intentions
The decision in Supreme identifies the significant level of evidence needed to be successful in pleading bad faith. Supreme (the Applicant) is another fashion brand with a significant global reputation who applied to have Aiyou’s (the Owner) mark invalidated on the basis of their prior reptation, and the mark being registered in bad faith.
The AC was quick to reiterate that mere knowledge of another’s trade mark is insufficient to amount to bad faith. However, the significance of the evidence submitted helped persuade the AC that the Owner’s knowledge of the Supreme brand goes far beyond a mere assertion that the Owner knew or should have known of the Applicant’s trade marks, including:
- multiple examples of the Owner using the Applicant’s red and white coloured “SUPREME” mark and get-up on several of their goods.
- An instance of the Owner using the Applicant’s own branded ‘moneygun’ in its advertising.
- detailed instances of misuse of the Applicant’s marks, including misleading conduct on the Owner’s website.
- false statements by the Owner that SUPREME was a signed partner, misleading consumers into thinking the two parties were associated in some way.
Most of the evidence post-dated the filing date. Meaning no evidence submitted by the Applicant helped to prove the subjective intention of the Owner when the application was filed, which is often thought to be crucial in a finding of bad faith. The AC was however prepared to infer the Owner’s intentions “regarding use at the relevant date have subsequently crystalised as shown by the actual use of the trade mark”. The AC held that from the evidence filed, the Owner’s conduct of adopting the identical or near identical mark coupled with proven misrepresentations was objectively “more than sharp or aggressive business practice” and that the “misrepresentations are a step too far, whether a calculated step or subjectively an innocent misunderstanding.”
The three cases highlight the importance of quality evidence which has actual substance when pleading bad faith, as well as confirming the hesitation AC’s have in reading between the lines when it comes to serious accusations of bad faith in New Zealand.
This article was first published in Managing IP. AJ Park is Managing IP’s international correspondent for New Zealand.