CANADA: First Canadian Court to Invalidate Trademark for Bad Faith

A May 2022 Federal Court decision, Beijing Judian Restaurant Co., Ltd. v. Wei Meng, 2022 FC 743, sets out criteria for invalidation of a Canadian trademark registration on the ground that it was filed in bad faith. This is the first court decision in Canada to invalidate a trademark registration on this basis, a relatively recent addition to the Trademarks Act.

Canadian trademark registration no. TMA102005 (depicted below) was registered by Wei Meng (respondent) on August 25, 2019, for use in association with “beer” and “restaurant services.”

Beijing Judian Restaurant Co. Ltd. (applicant) had been operating restaurants in Canada since 2018 and China since 2005. It used various JU DIAN trademarks, including one in China that was well-known and identical to the JU DIAN & Design mark registered by the respondent.

The applicant initiated an invalidity proceeding based on the ground that the application was filed in bad faith. The respondent filed a Notice of Appearance but did not file evidence or participate in the hearing.

The evidence demonstrated that the respondent had applied to register the trademarks of other well-known Chinese restaurants in Canada. There was no evidence the respondent used the JU DIAN & Design mark in Canada.

The evidence also demonstrated that the respondent demanded CAD $1.5 million for the applicant to use its JU DIAN trademarks in Canada. No payment was made. The respondent then advertised on an online marketplace offering to sell the JU DIAN & Design trademark registration. When contacted, the respondent requested CAD $100,000 per year to license the mark and open a franchise restaurant.

Canadian trademark legislation does not include a definition of “bad faith,” so the court took note of the interpretation of similar provisions in EU and UK trademark law.

The court found that bad faith was established and declared the JU DIAN & Design mark registration to be invalid. The following were key factors:

• The respondent’s awareness of the applicant’s restaurants and the respondent’s pattern of filing for trademarks of well-known restaurants;
• The applicant’s reputation associated with the JU DIAN trademarks in China and with the Chinese-Canadian community in Canada;
• The respondent having no legitimate commercial intention to use JU DIAN & Design mark, but an intention on its part to benefit from the applicant’s reputation through sale or licensing of the mark; and
• The respondent’s direct reproduction of the applicant’s unique mark.

The decision provides Canadian trademark owners with greater certainty regarding the position that courts will take in applying the relatively new ground to invalidate a trademark registration on the basis of bad faith. The analysis in this case is relevant not only in invalidity proceedings, but also trademark opposition proceedings, which can also be based on the ground of bad faith.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. Law & Practice updates are published without comment from INTA except where it has taken an official position.

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