Have faith in bad faith?

In AWA Blog, Uncategorized

Swedish furniture retailer IKEA has lost the rights to its trademark in Indonesia. The Indonesian Supreme Court has cancelled the trademark registration of the Swedish company at the request of the local furniture company PT Ratania Khatulistiwa on the basis of non-use.

In 2013, the Indonesian company registered the trademark IKEA – an acronym for Intan Khatulistiwa Esa Abadi. The Swedish furniture maker registered its trademark in Indonesia in 2010, but has not used it in three consecutive years for commercial purposes. IKEA’s first and only store in the country so far was opened in late 2014. Under Indonesian trademark law, this means the registration can be deleted.

In my mind this immediately invokes the thoughts of a counter claim based on bad faith, which I expect IKEA has or is thoroughly considering. Naturally, the relevance and success for such a claim is up to the Indonesian courts.

Well-known trademarks are granted the possibility to cancel bad faith applications or registrations in the Paris Convention, but national trademark law is in need of harmonization.

INTA (International Trademark Association) did express the following general criteria for bad faith cancellation in a Board Resolution from 22 September 2009:

  1. the applicant/registrant knew of the third-party’s rights or legitimate interests in a mark identical to or substantially identical to the mark applied for/registered, where such knowledge is actual or may be inferred from the surrounding circumstances; and
  1. the applicant/registrant’s conduct in applying for/registering the mark is inconsistent with norms of reasonable, honest, and fair commercial behavior.

Bad faith cancellations generally have a huge problem, namely the burden of evidence. Generally, this lies heavily on the shoulders of the plaintiff. Ideally, the plaintiff can show some solid written evidence, such as in cases where the applicant actually has been in contact with the plaintiff concerning the trademark. This is rather common for instance with respect to local distributors, licensees or other business relations who proceed and register the trademark in their jurisdiction as a precaution, perhaps with a good intention of acting on behalf of the trademark owner. However, if the business relationship starts shaking, the local trademark right may become a cause for conflict.

However, if no such prior relation exists, the plaintiff needs to find other ways to prove to the court or other authority that the applicant in fact was in bad faith at the time of filing. Without a very well-known trademark you will certainly need some form of evidence and it may be hard to find.

You might end up filing a cancellation action against the conflicting trademark on other grounds, as I did many years ago before a small district court in the north of Sweden. I represented a well known international luxury hotel chain against a local business in the cancellation of their company name. The name was intended to be used for a hotel business, but no hotel ever actually opened. However, the company name was in fact used in contacts with local authorities, banks etc and the court was to decide if this use was sufficient to uphold the company name right.

I couldn’t believe my luck when the managing director of the Swedish company took the stand and started to tell his story with the sentence “Well, we had a lot of ambitions when we established this business and wanted to open a hotel here in the north of Sweden with the same quality and luxury level as XX (the name of my client)”. Needless to say, that company name got cancelled.

Kristina Fredlund, European Trademark Attorney

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