English Court of Appeal Rules that Dishonesty not Required to Establish Bad Faith in Trade Mark Applications

In Harrison v Teton Valley Trading Co [2004] EWCA Civ 1028, the English Court of Appeal upheld the decision of the Registrar of Trade Marks to reject an application for the trade mark CHINA WHITE on the basis that the application had been made in bad faith. The Applicant had applied to register the trade mark for a cocktail drink. The Opponents, the owners of a London night club named CHINAWHITE, argued that the registrations should be refused under section 3(6) of the Trade Marks Act 1994 which states that "a trade mark shall not be registered if or to the extent that the application is made in bad faith". The operators of the CHINAWHITE night club had instructed the bar manager, Mr. Rymer, and other employees to develop a recipe for a cocktail called CHINAWHITE, which was to be sold at the night club as a house cocktail. After developing the drink, Rymer and the other employees signed a confidentiality agreement to protect the recipe. Despite the agreement, however, Rymer later approached the Applicant and told him that he had developed a cocktail called CHINAWHITE and a derivative of it was to be served at the night club. Rymer told the Applicant that he was not bound by a formal contract with the night club and represented that he was the sole proprietor of the name and the recipe. The Applicant then incorporated a company, China White Limited, with Mr. Rymer as a director, and sought to register the trade mark. The hearing officer for the Registrar of Trade Marks concluded that the opposition should succeed and refused the application. The Applicant's appeal to the High Court was dismissed. The Court of Appeal rejected the Applicant's argument that the words "made in bad faith" required that the application should be made "dishonestly": The Court held that the test was whether the knowledge of the Applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards. In this case, the proper standard was held to be that of "acceptable commercial behaviour" observed by reasonable and experienced persons in the particular commercial field. In the Court's view, a person in the position of the Applicant would not, despite believing Rymer, have applied for a monopoly which would have enabled him to prevent the Opponents from carrying on their business as they presently were. In addition, bad faith had been established because the Applicant made no further enquiries to question Rymer about his assertions. For the text of the decision, see: http://www.courtservice.gov.uk/judgmentsfiles/j2719/harrison-v-teton.htm. For a related news story, visit the following site: http://lawzone.thelawyer.com/cgi-bin/item.cgi?id=111762. Summary by: Nick Wong