Chinawhite
This article was taken from the Venner Shipley Newsletter edition 19.
An interesting decision has been reached in the UK Court of Appeal in a case concerning a well-known London nightclub, and which helps to explain the basic principles of what constitutes ‘bad faith’* in a trade mark context.
In November 1998 the CHINAWHITE nightclub commenced trading. Prior to opening, the bar manager Matt Rymer was asked to develop a recipe for a signature cocktail for the club ¬ it had to be white in colour and oriental in flavour - called CHINAWHITE. In December 1998 the drink was produced and sold, and a Confidentiality Agreement was signed in that month by Rymer to maintain the confidentiality of the recipe for the cocktail.
One month prior to launch of the cocktail, Rymer had discussed the CHINAWHITE cocktail with Karl Harrison, who subsequently carried out company name and trade mark searches, and on 18 March 1999 incorporated a company called China White Limited, appointing Rymer as Director. On 19 March 1999 he applied to register the mark CHINAWHITE in the UK for various alcoholic and non-alcoholic drinks, including cocktails.
The application was opposed by the owner of the CHINAWHITE nightclub, Teton Valley Trading Ltd., on the grounds that the application was applied for in bad faith. In his defence Harrison stated that he thought the drink was owned solely by Rymer.The Hearing officer concluded that the applicant believed what he had been told by Rymer and ‘saw nothing wrong in his own behaviour’. However, the Hearing Officer felt that Harrison's actions fell short of acceptable commercial behaviour and rejected his defence.
Harrison appealed. At the Court of Appeal he argued that bad faith was the same as dishonesty. He had believed that the recipe and name was owned by Rymer and this meant that the application was applied for in good faith; the test for bad faith was subjective.
The opponents argued that the test for bad faith was objective and that the court should examine the facts. The fact that Harrison had believed Rymer did not mean that the application had been made in good faith.
LJ Aldous held that:
1. The test of bad faith was a combined test. The words ‘bad faith’ suggested a mental state, and that when considering whether there was bad faith in an application all circumstances were relevant.
2. A study of other cases showed a consensus that seeking to monopolise another's trade mark would render an application invalid.
3. A person in the position of the applicant adopting proper standards (despite believing Rymer) would not have applied for a monopoly, which would have enabled him to prevent the opponents carrying on their business of selling their CHINAWHITE cocktail, and drinks under that name.
It was concluded that Harrison's application was made in bad faith, and the appeal rejected.
This case demonstrates that it is not acceptable to apply for a mark knowing that it is already used by another on the goods of interest, even if the mark appears to be free to register. It also helps to explain some of the criteria to be considered in the context of a ‘bad faith’ claim, and clarifies points not covered by earlier cases dealing with these issues.
* S3(6) of the Trade Mark Act 1994 states that ‘a trade mark shall not be registered if or to the extent that the application is made in bad faith.’