In 2006, the Trade Marks Act was amended to include a new grounds of opposition to a trade mark application where "the application was made in bad faith" under section 62A. It was thought that the new ground might cater for situations where opponents otherwise had no remedy, including deliberate misappropriation of overseas marks (where the opponent could not establish a reputation in Australia for the purposes of section 60), bad faith use of marks which were not sufficiently similar to marks in which opponents could claim rights, or bad faith use of marks for different goods/services to those of the trade mark owner. 

Subsequent interpretation of the "bad faith" opposition ground in the few cases at the Trade Marks Office in which the ground has been successfully argued suggest that it does not really add much to the existing body of opposition law. In particular, most of the opposition cases would arguably have had the same result under a number of existing opposition grounds. The Trade Marks Office has also tended to limit the application of the "bad faith" ground to situations in which someone has "applied to register a mark which he has previously recognised as the property of another with whom that person has a course of dealing or some other relationship" (William Leith New Century Marquees (SRISO/018/00, UK Registry). This is consistent with the UK approach, but at the same time it arguably renders the ground of opposition redundant.

However, a recent case indicates that the Trade Marks Office may be prepared to apply the "bad faith" ground where no other ground of opposition would be available. It is hoped that the Trade Marks Office will take a more flexible approach to the interpretation of the ground in future, to expand its field of application and make it a more meaningful addition to opposition law.

Prior cases

In Hard Coffee Pty Ltd v Hard Coffee Main Beach Pty Ltd [2009] ATMO 26, the applicant had purchased a coffee store from the opponent, who operated a chain of stores under the HARD COFFEE mark. The sale agreement provided that the HARD COFFEE and HARD COFFEE MAIN BEACH business names and all related intellectual property were not included in the sale and the vendor/opponent retained all title in those names.  The applicant was only given a limited licence to continue using those marks until the store signage was changed.  However, the applicant continued to trade using the HARD COFFEE mark, and filed several applications to register the mark. These applications were opposed by the original vendor. The hearings officer found the applicant had filed the applications in bad faith, in particular because given the previous contractual dealings between the opponent and the applicant's company, it was held that a reasonable man in the applicant's position would have considered himself constrained from applying for the trade marks. The result was obviously a positive one for the vendor opponent, but the same fact scenario would also have led to success for the opponent on the basis that:

  • the use of the trade marks would be contrary to law under section 42 (either contrary to the law of contract, as the applicant was in breach of the sale agreement in applying to register the marks, or contrary to the then-Trade Practices Act (now replaced by the Australian Consumer Law) which prohibited misleading or deceptive conduct, as the applicant's ongoing use of the mark would misleadingly suggest a connection with the opponent which no longer existed, or contrary to the law or passing off, for the same reasons); and
  •  that the applicant was not the owner of the marks under section 58 (since ownership of a mark in Australia is established through authorship and use, and the opponent's prior use of the marks for its own coffee stores made it, and not the opponent, the owner of the mark).

In Bombala Council v Peter Wilkshire [2009] ATMO 33, the applicant had been engaged in a dispute with the opponent Council which had been settled on the basis that the applicant not threaten the opponent or opponent's licensees in respect of their trade marks. Before the Federal Court had the opportunity to issue consent orders reflecting the terms of settlement, the applicant filed a number of applications featuring the same mark. The council opposed the registration of the marks. The hearings officer found that the applications had been filed in bad faith. Prior knowledge of the council opponent's use of identical trade marks and conduct in respect of lodging applications contrary to settlement agreement led to a finding that the applicant had clearly "applied to register a mark which he had previously recognised as the property of another with whom [he] has a course of dealing or some other relationship".  The hearing officer found that a reasonable person 'standing in the shoes of the applicant would have been aware of the interference with the opponent's rights and 'ought not to have' applied for registration of the mark. Again, the Council was no doubt pleased with the result, but it appears that the evidence filed would arguably at least have established a basis for an opposition on the grounds that:

  • the use of the trade marks would be contrary to law under section 42 (either contrary to the law of copyright, as the hearings officer appeared to accept that the applicant had copied the platypus logo element of the opponent's own trade marks, or the law of contract, as the applicant was in breach of the settlement agreement); and
  • that the applicant was not the owner of the marks under section 58 (since ownership of a mark in Australia is established through authorship and use, and the hearings officer appeared to accept that the opponent had used the mark first).

In Hobbs v T Tree Pty Ltd and others (2009) 83 IPR 395, a company of which the applicant was a director had purchased a bakery business which operated under the mark BRYANT'S from one of the opponents (the remainder of the opponents were licensed to use the same mark, and are hereafter referred to collectively as "opponent"). The purchase did not entitle the applicant to any rights in the BRYANT'S name but did allow the applicant's company to use the name BRYANT'S PIES AND HOT BREAD or any other name incorporating the word BRYANT'S except BRYANT'S WHOLESALE PIES. This licence was subsequently terminated, but the applicant's company continued to use the names BRYANT'S PIES and BRYANT'S BAKERY CAFÉ and applied to register a trade mark including the BRYANT'S mark in a basic stylised format, and issued a veiled legal threat to the opponent in relation to the opponent's use of the mark.

The opponent opposed registration of the application on the basis that the applicant was not the owner of the BRYANT'S mark and that the applicant had filed the application in bad faith. The opponent failed on the "not the owner" ground as the marks it had used itself prior to the applicant's filing of the application were not substantially identical to the mark at issue (Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495; 31 IPR 375), so the opponent was not the owner of that particular mark. However, the opponent succeeded on the bad faith ground on the basis that "the applicant has applied to register a trade mark which prominently features a word which he has previously acknowledged as the property of another with whom the applicant has a course of dealing or been the director of a company with whom one of the opponents has had a contractual relationship" (at [38]). But again, it seems that the applicant's conduct would also have justified opposition on the grounds that the use of the marks would be contrary to law, including the law of contract given the terminated licence, the then-Trade Practices Act and the tort of passing off, since ongoing use of the mark by the applicant could only misleadingly suggest a continuing connection with the opponent which no longer existed.

Pritchard Pacific Pty Ltd and Baltimore Aircoil (Australia) Pty Ltd v Brendon McCarrison and Breezewater Pty Ltd [2011] ATMO 46

In this recent case, the opponent had since 1920 used the mark PRITCHARD in the USA, and since 1960 various distributors, including a company of which the applicant was a director, distributed the opponent's cooling tower products and services under the PRITCHARD name in Australia. The applicant's company subsequently ceased trading. The applicant subsequently applied to register a mark including the PRITCHARD mark in a logo form. The opponent opposed registration on a number of grounds, including bad faith under section 62A, "not the owner" under section 58, and under section 60 on the basis that because of its own reputation in Australia, use of the mark by the applicant would be likely to deceive or cause confusion. The opponent failed on the "not the owner" ground because the applicant's PRITCHARD LOGO mark was not substantially identical to the marks the opponent had previously used. The opponent failed on the section 60 ground because it failed to put on adequate evidence of its Australian reputation in the mark, and indeed, rather puzzlingly, did not file evidence of prior continuous use in the opposition which it had filed in support of its own applications to register the mark in Australia in the face of the applicant's prior application. The opponent's evidence of actual confusion was also discounted as inevitable given the number of companies with similar names which had distributed its goods over the years. While the "contrary to law" ground under section 42 was not relied upon, the hearings officer's findings would have made it difficult to establish that the applicant's use of the mark was misleading or deceptive and therefore contrary to law.

However, the hearings officer did find in favour of the opponent on the bad faith ground, holding that the applicant's past dealings with the opponent (and awareness of the opponent's interest in the PRITCHARD mark), the applicant's understanding that the applicant had itself been authorised to use the mark by various of the opponent companies, coupled with instances of actual confusion in the marketplace which it appears on the evidence that the applicant may have encouraged, were sufficient that "applying for the registration of a deceptively similar trade mark would not be in good faith without the authorisation of one of the companies. A reasonable person standing in the shoes of Breezewater ought to have been aware that he should not have applied for the [trade mark]."

Pritchard is the first "bad faith" case where it appears that the opponent would genuinely have been without remedy if not for section 62A, although it appears that if it had filed more comprehensive evidence there might at least have been an additional claim under the section 42 "contrary to law" ground or that the opponent might have succeeded on the section 60 "reputation in Australia" ground. However, Pritchard still involved a clear course of dealings between the applicant and opponent companies as an essential ingredient of the finding of bad faith.

The net impact of the above line of authority is that the bad faith ground principally only applies to situations in which someone has applied to register a mark which he has previously recognized as the property of another with whom that person has a course of dealing or some other relationship. But given the availability of other grounds of opposition in most such cases as discussed above, it is hard to see how this adds much to the body of Australian opposition law.

The difficulty is that there are any number of fact scenarios where applicants who have no relationship whatsoever to the owner of a trade mark may nevertheless apply to register marks in ways which might arguably constitute bad faith. Prospective distributors register overseas-used marks with a view to forcing an exclusive distribution arrangement (independently of existing contractual arrangements). Applicants outright steal "hot marks" from overseas. Applicants find it entertaining to apply for a mark famous for one kind of good or service in a completely different field, or dissect two famous marks from different traders and mash them together. The marketplace is full of dishonest conduct which is not merely harmless "sharp practice" and which there is no obvious policy reason to allow. It is this kind of conduct, it is submitted, which the bad faith ground could address. Hopefully further cases in the area will expand the ambit of the "bad faith" ground beyond its current narrow confines.