The 2019 changes to the Trademarks Act (the “TMA”) introduced a requirement that trademark applicants not file applications (nor obtain registrations) in “bad faith”. Though this has been part of Canadian trademark law for nearly 3 years, courts had yet to use the provision empowering them to cancel a trademark registration obtained in bad faith. This has now changed, thanks to a recent decision by the Federal Court, in Beijing Judian Restaurant Co. Ltd. v. Meng (2022 FC 743).
The case at issue basically stems from an individual becoming aware of a well known trademark, as used in China for restaurant services, and managing to secure a registration for that mark, before the actual owner really brought the mark to Canada. Yep, this is a story of good old fashion trademark piracy.
Fortunately for the good guys, given the 2019 additions to the TMA, brand owners now have a new tool with which to combat such high-handed attempts to squeeze and essentially defraud them. If they are reasonably quick, the first thing they can do, once a fraudulent application is advertised in Canada, is to oppose the application, based on the new ground of bad faith. Alternatively, if they fail to oppose and the mark actually gets registered by the bad guys, the real owner may attack the resulting registration, by relying on paragraph 18(1)(e) of the TMA, which now allows for cancellation of any registration that resulted from an application filed in bad faith.
In the case at issue, Mr. Meng filed the application at issue along with about 20 other applications reproducing famous marks relating to restaurants. Then, after securing actual registration, he contacted the legitimate Chinese business’ partners in Canada, and initiated what can only be described as a shakedown. Basically: you pay me or I sue you in Canada to stop your (legitimate) operations, because I now own a trademark registration for your mark -Ha ha ha [insert cartoon villain evil laugh here].
Well, too bad for this genius extortionist (alleged, should I say, right?), the TMA now allows us to cancel registrations like these, which is exactly what the real owner did, after refusing to pay the ransom, err, I mean the “price” which Mr. Meng asked for.
Given the portfolio of clearly fraudulent applications in his name and a request for 1.5 Millions dollars from this trademark pirate, the court had little difficulty finding bad faith here. Consequently, it ordered cancellation of the registration at issue.
As a result, we (at least) now have a first case of jurisprudence confirming that, yes, in clear cases of crass registration and extortion attempts, the new provisions of the TMA as to bad faith may be used to cancel a registration outright. As to other cases where facts will be less clear-cut, we’ll just have to see, including all eventual cases where pirates are not stupid enough to demand money outright and/or file tens of fraudulent applications in their own names.
For now, let’s just call it progress, and not dwell too much on the fact that this kind of situation now exists partly because the Canadian legislator, in its infinite wisdom, decided to do away with most rules relating to actual use, to file and register trademarks.