Bad Faith in Australia – A Brief Review of Recent Cases

The relatively new “bad faith” (section 62A) ground of opposition can be a strong basis for action against misappropriation of a trade mark owners’ goodwill, where the more commonly used grounds of deceptive similarity with an earlier mark (section 44) and likelihood of confusion due to reputation in an earlier mark (section 60) would fail.

 

Recent Trade Marks Office decisions illustrate some types of exploitative conduct that can give rise to a finding of “bad faith”.

The issue

The key issue in all cases was whether Southcorp Brands Pty Ltd (SCB) met its onus of demonstrating that the applicant had acted in “bad faith” in filing its trade mark application.

Bad faith has been described in the following way:

“… mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character

(Fry Consulting Pty Ltd v Sports Warehouse (No 2) (2012) 201 FCR 565)

The Cases

SCB’s well known Penfolds” mark

SCB is a subsidiary of Treasury Wines Estate (TWE) Limited and produces wines under various well known marks, including “Penfolds”.

SCB filed evidence of the extensive reputation and promotion of its “Penfolds” wines, which have been in existence since 1844, and are labelled with the trade mark “Penfolds” in plain script or in red cursive script.

In each opposition case below, the applicant had applied to register its mark/s in relation to wines and other alcoholic beverages.

 

Facts in each case

SCB’s “Penfolds” Label

Oppositions to “Barry Ford and “Ben Ford”
(Southcorp Brands Pty Limited v Li Li Shen [2019] ATMO 42 (26 March 2019)

 

SCB filed evidence of use of the Chinese Characters  in relation to its “Penfolds” wines sold in China. Those characters are transliterated to “Ben Fu” – the Chinese phonetic approximation of “Penfolds”.  SCB also owns Australian registrations for its  and “Ben Fu” trade marks.

The applicant had repeatedly used its mark “Barry Ford” in red cursive font (similar to SCB’s font) combined with SCB’s mark on its wine labels.  SCB also submitted evidence that the applicant had used trade dress similar to SCB’s, such as a red capsule attached to the bottle neck, red cursive font against a white label and the use of “BIN” to indicate wine vintages.

Prior to the date of filing, the Beijing High People’s Court had issued a decision regarding an application by SCB to remove one of the applicant’s Chinese trade mark registrations for non-use.  In that decision the Court recognised that the Chinese Characters  would be seen as identifying SCB’s wines.  The applicant was therefore clearly aware of SCB and its trade mark rights and reputation at the date of filing its application.

 

Opposition to “MAISON RICH”
(Southcorp Brands Pty Limited v BIN-VIN (Shanghai) Trading Co. Ltd [2020] ATMO 27 (24 February 2020)

 

The English translation of SCB’s Chinese Character version of the “Penfolds” mark is “Rush Rich”.  SCB was the owner of the trade mark MAISON DE GRAND ESPRIT.

The applicant’s mark combined the word “MAISON” with the word “RICH” – being the second word in the English translation of SCB’s Chinese Character version of “Penfolds”.

The applicant was part of a corporate group, with shared ownership and directors, which had applied to register various marks similar to SCB’s marks in the names of different, but related, entities.  SCB had opposed numerous applications filed by entities within the group and rather than defending those oppositions, new applications had been filed for additional marks similar to SCB’s in the name of different related entities.

Entities within the group had also been the subject of judgements in the Federal Court in Australia and the Shanghai Pudong District People’s Court for infringement of SCB’s marks or engaging in unfair competition through the making of false allegations. See for example Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720 (3 May 2019) for the finding of infringement by some of the entities within the applicant’s group.

Again, the applicant was therefore clearly aware of SCB and its trade mark rights and reputation at the date it applied for “MAISON RICH”.

Opposition to mark
(Southcorp Brands Pty Ltd v Shanghai Benka Wines Co., Ltd [2020] ATMO 9 (29 January 2020)

 

The applicant had sought registration of various marks identical or similar to SCB’s marks in China and Australia, and one application in China had been opposed by the Opponent well before the filing date.

It had also produced wine labelling copying SCB’s trade dress by using similar script stylisation and colour schemes.

The applicant had also used a different company name for filing the Australian application to the name it had used to file the earlier Chinese applications which had been opposed by SCB. SCB argued (successfully) that this was intended “to obscure its true identity in order to prevent detection of its activity in Australia”.

Findings

In all three cases the Hearing Officer decided that each applicant was aware of the reputation in SCB’s “Penfolds” marks at the time of filing their application.  The pattern of behaviour in each case, such as adopting similar trade dress and trade mark stylisation to that used by SCB and applying for identical or similar marks to SCB’s in Australia and China in related company names, was found indicative of a desire to exploit SCB’s trade marks and reputation and to convey an association, affiliation or endorsement by SCB that did not exist.

The Hearing Officer found that the behaviour in each case fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons and constituted “bad faith”.