Bad faith means no trademark protection

In the rectification petition, BPI Sports LLC v Saurabh Gulati and Anor before Delhi High Court, the petitioner, a prominent company in the dietary and nutritional supplements sector, succeeded in cancelling a registered mark on the grounds of bad faith. The petitioner sought rectification of trademark registration, claiming that the respondent, fraudulently obtained the registration for the trademark BPI Sports in India. The company argued that the respondent engaged in trademark squatting intending to prevent the petitioner from acquiring rights in India.

The petitioner asserted their entitlement to common law rights over the mark BPI Sports based on their prior adoption and use of the mark in the United States. They contended that it had become a well-known source identifier for their products, and the respondent’s adoption of an identical mark would create confusion in the market. The petitioner alleged that the respondent was aware of its mark and reputation from their prior business relationship as an importer of the petitioner’s goods. The petitioner argued that even a single act of using the mark was sufficient to establish common law rights. To support their claims, the petitioner referred to email correspondence, invoices, and the international reputation of their mark, which had gained recognition in the Indian market through various channels.

The petitioner relied on section 11(3) of the Trade Marks Act, 1999 (act). This prohibits the registration of a mark if its use is likely to be prevented by passing off, which involves deceptive similarity between marks. The provision aims to prevent consumers being misled. Where a mark is mainly used abroad, passing off against a mark requires demonstrating that the mark’s reputation abroad has spilt over into India, as passing off involves deceiving customers into believing that the defendant’s goods are those of the plaintiff. The plaintiff must possess sufficient goodwill or reputation to support their claim.

However, the court, applying the principles set out in the Supreme Court Toyota case, found the evidence of trans-border reputation unconvincing. The evidence was a single invoice demonstrating the importation of goods bearing the petitioner’s mark, while other invoices represented sales within the United States with no goods being sold in or to India. As a result, the court held that the petitioner had not adduced sufficient evidence of trans-border reputation in India, making it unable to establish passing off against the respondent’s mark. Section 11(3) did not therefore help the petitioner.

The court then addressed the issue of bad faith adoption of a trademark under section 11(10)(ii) of the act. Although the act does not explicitly prevent an applicant from registering based on bad faith, the court interpreted the section purposively and analysed the concept of bad faith in trademark law. Bad faith generally involves dishonesty, fraud, or an intention to mislead or deceive another, as well as unfair practices that violate the rights of a third party. Trademark squatting, a form of bad faith, is registering a third party’s mark before the legitimate rights holder can secure their rights.

The court also referred to bad faith in the context of domain name registration, and involving such actions as selling the domain name to the trademark owner or disrupting a competitor’s business.

In this case, the respondent was accused of trademark squatting by registering the mark BPI Sports despite its prior registration by the petitioner in the US. The respondent, as an importer of the petitioner’s goods, intended to capitalise on the petitioner’s reputation and block their attempt to register the mark. The court found these actions to be trademark squatting and constituted bad faith, within the scope of section 11(10)(ii).

The court ordered the removal of the respondent’s mark from the register of trademarks, highlighting its wrongful inclusion. This decision highlights the importance of preventing bad faith registration and protecting the rights of legitimate trademark owners.

The decision emphasises the significance of bad faith in trademark registration and has set a precedent. It reinforces the need to uphold the integrity of trademark registration and to promote fair practices through the protection of intellectual property.