High Court sets forth 18 principles in relation to bad faith

In Marie Claire Netherlands BV v The Controller of Patents, Designs and Trademarks, the High Court has upheld an opposition to the registration of the trademark MARIE CLAIRE for clothing and headgear in Class 25.

The background to this case is as follows.

In 1960 Marie Claire SA’s predecessor (Senar SA) adopted and used the name Marie Claire for textiles in Spain. In the 1990s, hosiery, lingerie and swimwear products were supplied by Aznar (a group of Spanish companies) to Brandwell (Irl) Limited which, in turn, marketed and sold the aforementioned products in Ireland.

In 1993 Brandwell applied to register an Irish trademark for MARIE CLAIRE in Class 25 of the Nice Classification. Two oppositions were filed against the application and the oppositions were upheld on the basis that Aznar owned the rights to apply for the mark.

While the oppositions were still pending one of the opponents, Montagute, who is a predecessor of Marie Claire Netherlands BV (hereinafter referred to as 'the appellant'), filed an application in Class 25 for “clothing, headgear”. A joint opposition to this application was filed by Marie Claire SA and Brandwell (hereinafter collectively referred to as 'the respondents'). This case is concerned with an appeal to the High Court against the decision of the hearing officer in the Irish Patents Office who upheld the joint opposition by the respondents to the application.

The respondents had opposed the application on three grounds - namely:

1. that the use of the application was liable to be prevented in Ireland by virtue of the law of passing off under Section 10(4) of the Trademarks Act 1996;
2. that the application was made in bad faith and was contrary to Section 8(4)(b) of the act; and
3. that there was no good-faith intention on the part of the appellant to use the mark as applied for, which is contrary to Section 37(2) and Section 42(3) of the act.

The court upheld the decision of the hearing officer and prohibited the application from proceeding to registration. 

With regard to passing off, the court found that the first use of the trademark MARIE CLAIRE in Ireland in respect of clothing was by Marie Claire SA, previously Senar SA.

The court found that it could not infer that there had been “some sale of clothes in Ireland” by the appellant because the appellant sold a magazine in Ireland under the name Marie Claire, which included advertisements for clothing.

The court, applying the three-stage test (goodwill, misrepresentation and damage) set down in Reckitt & Coleman Products Limited v Borden Inc ([1990] 1 WLR 491 at 499 (Jif Lemon case)), found that the application should be refused registration by virtue of the law of passing off.

With regard to goodwill, the court held that it had been proved before the court that there have been direct sales and promotions of the respondent’s products that have given rise to significant and valuable goodwill in Ireland.

The appellant had argued that if goodwill was found, it should extend to only hosiery and that the market for hosiery is generally separate to the market for other clothing. The court rejected this argument stating that:

1. whilst the respondents predominantly sell hosiery, their business is not confined to hosiery and extends in part to lingerie and swimwear;
2. it had not been proved before the court that there is a generally separate market for hosiery within the wider clothing market; and
3. in any event, the respondents had acquired goodwill in a significant area of clothing and, therefore, misrepresentation and damage were likely to arise if the appellant was permitted to sell clothing under the mark MARIE CLAIRE, even if such clothing does not include hosiery, lingerie or swimwear.

Turning to to misrepresentation, the court noted that it is “difficult, if not impossible, to see how the use of the MARIE CLAIRE mark… would not be likely to lead to members of the trade or the general public” to conclude erroneously that the appellant’s goods were those of Marie Claire SA, or at least associated with those of Marie Claire SA

With regard to damages, the court noted that the concept of damages in the context of passing off involves a relatively modest threshold. The court referred to McMenamin J’s judgment in McCambridge wherein he noted that “passing off does not… require an actual or potential diversion of business from a plaintiff to a defendant. What is necessary to show, by inference or evidence, is damage to the claimant’s goodwill”.

With regard to bad faith, the respondents alleged that the application had been filed in bad faith by the appellant’s predecessor as it was aware at the time of filing that the mark MARIE CLAIRE was not free for use in relation to clothing in Ireland. Further, the respondents alleged that the appellant was aware of the Irish application by Brandwell and also the Community trademark application by Aznar SA, and that the appellant had filed the application to prevent the registration in Ireland of the application filed by Brandwell (which, as outlined above, was opposed).

The court noted that a review of the relevant case law on bad faith suggests the following principles can be borne in mind when determining if an application was made in bad faith namely:

1. bad faith includes dishonesty;
2. bad faith includes dealings that fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced people in a particular area;
3. a relevant factor when determining whether there was bad faith is whether there has been a failure by the person against whom a charge was levelled to address that charge;
4. awareness that a party has been using an identical/similar mark for an identical/similar product in at least one EU member state is not per se conclusive as to bad faith;
5. consideration must be given to an applicant’s intention at the time of filing an application for registration; intention to prevent a party from marketing a product may be an element of bad faith;
6. a key issue arising is whether a mark is being used for its essential purpose, being to aid consumers in distinguishing products;
7. the fact that a third party has long used a sign for an identical or similar product capable of being confused with the mark applied for and that such sign enjoys some level of legal protection is a relevant factor when determining whether an applicant has acted in bad faith;
8. a person is presumed to have acted in good faith unless the contrary is proved;
9. an allegation of bad faith is a serious allegation that must be proved with cogent evidence on the balance of probabilities;
10. it is not enough when seeking to establish bad faith to prove facts that are also consistent with good faith;
11. where a third party cannot maintain a relative ground of objection to registration, bad faith involves some breach of legal or moral obligation by the third applicant towards the third party;
12. bad faith may exist where an applicant has sought or obtained registration of a trademark for use as in instrument of extortion;
13. bad faith is not pertinent in a situation where there is a good-faith conflict between the trademark rights, or perceived rights, of different traders;
14. it is not bad faith for a party to seek, among other things, a trademark where third parties are using similar marks and/or are using them in relation to similar goods or services;
15. the fact that one party is aware of, and has previously clashed with, another is not the same as saying that a trademark application by one of those parties is made in bad faith;
16. seeking to protect one’s commercial interests where one considers that one’s activities do not impinge on the core activity of another is not bad faith;
17. bad faith is the opposite of good faith; it generally involves, but is not limited to, actual or constructive fraud; it may merely involve a design to mislead or deceive or some other sinister motive; and
18. in determining whether there is bad faith, a knowledge of third-party use, an intention to prevent a third party marketing a product and the lack of an intention to use a trademark, as well as the extent of the reputation enjoyed by the third party’s sign at the time of the application, are all relevant. 

Having regard to all of the above criteria, the court held that application had not been filed by the appellant in bad faith.

Finally, the court held that there was no evidence of an absence of a good-faith intention to use in this case.

Accordingly, the court upheld the decision of the hearing officer and upheld the joint opposition on the basis of passing off.

Colette Brady, DFMG Solicitors, Dublin