Inferences can be drawn in bad-faith matters

United Kingdom

In Target Fixings Ltd v Brutt Beteiligungsgesellschaft mbH, the Appointed Person has allowed the appeal brought by Brutt Beteiligungsgesellschaft mbH and other Brutt companies against a hearing officer's decision to reject their application for declarations that certain trademarks owned by Target Fixings Ltd had been invalidly registered.

Target owned the registered trademarks BRUTT HELICAL and BRUTT for goods in Classes 6 and 9 of the Nice Classification, BRUTT BAR for goods in Class 6 and BRUTT BOND for goods in Class 19. According to Brutt, Target had applied to register the marks in bad faith and/or was a "person who was an agent or representative of a person who was the proprietor of the trademarks" under Section 60(1) of the Trademarks Act 1994. Brutt claimed that:

  • Target had been its agent or distributor in the United Kingdom;

  • that relationship had since ceased; and

  • Target acted in bad faith by applying for its marks without its permission or knowledge.

In response, Target said that the opposite was true: Brutt was Target's agent or distributor.

Faced with this clash of perspectives, the hearing officer said that the onus of proving bad faith rested firmly with Brutt, as applicant for invalidation of a presumptively valid trademark; the evidence being inconclusive, that onus of proof was not satisfied and the marks therefore could not be cancelled.

Brutt appealed to the Appointed Person. In its view, the hearing officer:

  • applied an incorrect standard of proof, the correct standard being the balance of probabilities, which the officer had rejected in favour of a higher standard;

  • wrongly proceeded on the basis that he was not permitted to draw any inferences at all;

  • speculated as to a scenario that neither party had argued for; and

  • failed to consider the evidence as a whole, with the result that the decision contained no clear findings of fact based on his assessment of the evidence.

The Appointed Person allowed the appeal. His reasoning included the following points:

  • The hearing officer was correct to conclude that the burden of proof lay with Brutt as applicant.

  • Where both sides are clearly at loggerheads over the central issue, the hearing officer should try to decide what the correct version of events actually was, without being confined to having to choose between the versions advanced by the opposing parties.

  • In civil proceedings, only rarely should a tribunal have to decide a disputed issue purely on the basis that the party bearing the burden of proof had not discharged that burden - that is, where the tribunal could not reasonably have made a finding in relation to that issue despite having striven to do so.

  • Proof in civil disputes is on the balance of probabilities.

  • When proving bad faith, it may be both necessary and proper to rely upon inferences, this being a key mode of judicial reasoning - this is not the same thing as mere conjecture or guesswork.

  • Taking all the facts into account, including the fact that Brutt's business partners in other countries all believed that the mark belonged to Brutt, Target's action in applying to register the marks fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced businessmen. This was a case where a party sought to lay its hands on the marks of another party with whom it had had business dealings.

It is surprising that, given the incomplete nature of each side's evidence and the sharp contradiction between their versions of events, neither side applied to cross-examine any of the other's witnesses. One can wonder whether, if they had done, the facts would have crystallized before the hearing officer and an appeal would have been avoided.

Jeremy Phillips, IP Consultant to Slaughter and May, London

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