Bad Faith And The Importance Of Trademark Registration

• Published date: 25 July 2022
• Subject Matter: Intellectual Property, Trademark
• Law Firm: Sotos LLP
• Author: Mr John Yiokaris and Ryan McCabe

In Beijing Judian Restaurant Co. Ltd. v. Wei Meng, 2022 FC 743,¹ the Federal Court struck a trademark from the register because it was registered in bad faith. By finding the trademark was registered contrary to s. 18(1)(e) of the Trademarks Act,² ("TMA"), the Court issued its first ever decision assessing bad faith trademark registrations.

This post will explain the important takeaways that trademark applicants, and registrants, must consider when seeking to register and maintain their trademark registrations.

Background

Beijing Judian Restaurant Co. Ltd. ("BJR") operated a successful restaurant chain across China, where it used a series of marks, including the specific trademark at issue ("JU DIAN & Design Mark"). BJR expanded its business to Canada and applied to register a number of its trademarks, including the JU DIAN & Design Mark. Unbeknownst to BJR, an individual by the name of Wei Meng ("Meng") had already registered the JU DIAN & Design Mark in Canada on the basis of proposed use.

Upon learning of BJR's trademark application, Meng demanded payment of $1.5 million for the right to use the JU DIAN & Design Mark in Canada. BJR also learned of online advertisements posted by Meng in Canada to license the JU DIAN & Design Mark, which directly referenced BJR's business success in China.

BJR sought to strike Meng's registration of the JU DIAN & Design Mark, alleging that Meng only registered it with the intention of profiting from, or interfering with, BJR's business and reputation.

The Court agreed with BJR that Meng had registered the JU DIAN & Design Mark because of its international popularity associated with BJR's brand. However, the Court confirmed in its decision that copying and registering a foreign trademark in Canada is legal. Canadian courts have consistently held that where there is no reputation for a third party's mark in Canada, a party may register that exact third party's mark legitimately.³ In other words, registering someone else's trademark in Canada can be legitimate, and will not necessarily result in a finding of bad faith.

In this case, the Court struck Meng's trademark registration because it found that he only registered it to extort BJR. There was no evidence that Meng intended to use the JU DIAN & Design Mark for any legitimate commercial purpose. In fact, Meng had established a pattern of registering foreign trademarks in Canada without ever using them, having done so six times before. All of these unique facts led the...