The concept of bad faith plays an important role in trademark law. When someone registers a trademark with dishonest intentions, it can lead to invalidity. A review article.
Bona fide, in good faith, in good faith; these are all designations for one of our most fundamental legal principles. Acting in good faith means performing an action with pure motives. Article 3:11 of the Civil Code states that good faith is lacking when a person knew or should have known facts or law and yet acts against this knowledge.
Good faith provides legal protection, while bad faith – acting knowingly dishonestly – can actually attract sanctions. These principles play a role in almost all areas of law, including trademark law. Recent cases such as Koton and Sky have significantly influenced this understanding. But when is bad faith in trademark law, and why are these cases so important?
The basis of bad faith in trademark law
In 1953, the AIPPI (The International Association for the Protection of Intellectual Property) proposed to explicitly prohibit bad faith in trademark law within the Benelux. This resulted in Article 4(2) of the Trademark Directive, which states that a trademark can be declared invalid if the registration was made in bad faith. However, the directive does not define the concept, making Procedural law necessary for further delineation.
Procedural law: Lindt and the three-step test
In the Lindt case (CJEU, 24 May 2012), the Court formulated a three-step test to determine when bad faith exists in a trademark registration. This looks at:
- Whether the applicant knew or should have known that a third party was using a similar sign for the same or similar goods.
- The applicant’s intention to prevent that third party from further using the sign.
- The legal protection enjoyed by both signs.
The court stressed that likelihood of confusion alone is not sufficient to prove bad faith. The circumstances of the specific case are decisive.
Expansion in Koton case
The Koton case (CJEU, 12 September 2019) further extended the concept of bad faith. In addition to the criteria from the Lindt case, the Court introduced new elements:
- The commercial logic behind registration.
- The chronology of events surrounding registration.
- The applicant’s intention vis-à-vis the likelihood of confusion.
This case made it clear that bad faith can exist not only in relation to a third party, but also when the registration an sich is considered unfair. This is called a “dysfunctional trademark filing”.
The Sky case: intention and use
In the Sky case (CJEU, 29 January 2020), the Court addressed the question of whether the absence of a concrete plan of use for a trademark automatically leads to bad faith. The answer was in the negative. According to the Court, the depositor’s intention must be objective, relevant and consistent. Without proof of bad faith, the lack of a clear plan of use cannot lead to invalidity of the registration.
Relative versus absolute: a new dimension
Recent Procedural law has further developed the concept of bad faith. Whereas the Lindt case was mainly about dishonesty towards a third party (relatively impermissible), the Koton and Sky cases also recognise a broader form of bad faith: dishonesty towards the entire legal community (absolutely impermissible).
This raises new questions. What to do with someone who registers a trademark due to economic setbacks but is uncertain about the market launch? And how to deal with so-called trademark brokers?
