Harrison v Teton Valley Trading Co

For the purposes of section 3(6) of the Trade Marks Act 1994, bad faith is not confined to dishonesty and cannot be assessed by a purely subjective standard. The court must consider all the circumstances and apply a combined test: whether, in light of the applicant’s knowledge, the application would be regarded as in bad faith by persons observing proper standards of acceptable commercial behaviour in the relevant commercial area. A genuine belief in entitlement does not preclude bad faith where the circumstances called for further enquiries before seeking a monopoly capable of interfering with another’s existing business. The approaches in Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] RPC 367 and Twinsectra Ltd v Yardley [2002] UKHL 12 were applied.

The appellant applied to register CHINA WHITE for beverages and alcoholic drinks. The opponents relied on sections 5(4)(a) and 3(6) of the Trade Marks Act 1994. A hearing officer dismissed the section 5(4)(a) ground but upheld the bad-faith objection and refused the applications. Pumfrey J dismissed both the appellant’s appeal and the opponents’ cross-appeal on 19 December 2002. The appellant appealed to the Court of Appeal, arguing that bad faith required dishonesty or, at least, depended solely on his genuine belief that another person owned the name and recipe. The central issue was whether that belief prevented a finding of bad faith in the surrounding circumstances.

The appeal was dismissed unanimously. Sir William Aldous gave the leading judgment. Arden LJ and Pill LJ agreed with the result and the principal reasoning.

1. Meaning of bad faith. Section 3(6) of the Trade Marks Act 1994 does not confine bad faith to dishonesty. The court must apply a combined test. It must consider the applicant’s mental state, knowledge and all material circumstances, and then ask whether the application would be regarded as in bad faith by persons adopting proper standards. The objective benchmark is acceptable commercial behaviour observed by reasonable and experienced persons in the relevant commercial area. A purely subjective standard is insufficient. The formulation in Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] RPC 367 and the combined test stated by Lord Hutton in Twinsectra Ltd v Yardley [2002] UKHL 12 were correctly applied.
2. Application to the evidence. The applicant knew of the existing nightclub called CHINAWHITE and knew that a cocktail of that name was being served there. Although he believed Mr Rymer owned the name and recipe, a person adopting proper standards would not have sought a monopoly capable of preventing the opponents from continuing to sell their cocktail and drinks under that name. The absence of evidence that the applicant deliberately avoided questions, or that further enquiries would have revealed the truth, did not prevent the finding. The finding resulted from the whole factual context and the failure to make further enquiries.
3. European Union context. Arden LJ emphasised that bad faith is an autonomous concept of European Union law, to be construed consistently with article 3(2)(d) of Council Directive 89/104/EEC. The existing decisions of the First Cancellation Division provided sufficient guidance. No reference to the European Court of Justice was necessary. Arden LJ expressed less concern about the reasoning in Daawat Trade Mark [2003] RPC 187; Pill LJ agreed with the reservation that care was needed in applying that reasoning.
4. Order. The appeal was dismissed with costs. The outstanding issue whether costs for one period should be standard or indemnity costs was reserved for determination in writing.

1. Court of Appeal (Civil Division): On 27 July 2004, the appeal was dismissed with costs.
2. High Court, Chancery Division: Pumfrey J dismissed the appellant’s appeal and the opponents’ cross-appeal on 19 December 2002.
3. Registrar of Trade Marks: The hearing officer dismissed the section 5(4)(a) objection but upheld the section 3(6) bad-faith objection and refused the applications on 22 August 2002.