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Wednesday, June 12, 2013

Super powers defeat bad faith

By Lawyer Michelle Freeman

In a recent Federal Court appeal against a decision by a delegate of the Registrar of Trade Marks, Justice Bennett ordered that registration of the word mark 'superman workout' be refused on the ground of bad faith under the Trade Marks Act 1995 (Cth) (the TMA).

Cheqout Pty Limited sought to register the mark in Class 41 in relation to 'conducting exercise classes; fitness and exercise clinics, clubs and salons; health club services (exercise)'. The appellant, DC Comics, originator of the well-known 'Superman' character and associated media and merchandise, had never registered any iteration of its 'Superman' marks in relation to such services. Nonetheless, DC Comics sought relief under TMA sections 43, 60 and/or 62A. DC Comics succeeded on the s62A ground.

Deception and confusion

Sections 43 and 60 both concern deception and confusion, but differ in that s43 is a ground for rejection of an application and s60 is a ground for opposition to a registration. DC Comics conceded that a failure on the s60 ground would also constitute failure under s43, allowing Justice Bennett to make judgment on s60 alone.

Her Honour considered definitions of the word 'superman' (and 'superwoman', and also associated plural forms) and concluded that the terms are descriptive of 'values' associated with the DC Comics' character (without suggesting the character itself) or descriptive of German philosopher Nietzsche's conceptual 'super man' (or the Ubermensch). Without the associated 'get-up' of the DC Comics' character (such as the distinctive blue-and-red suit), Justice Bennett found that no 'real, tangible risk of confusion' for the consumer existed when the words 'superman' and 'workout' were used together. DC Comics' appeal on these grounds failed.

Bad faith

Section 62A provides that a trade mark registration may be opposed where the application was made in bad faith. DC Comics argued that use of the mark 'superman workout', in combination with a shield device containing the letters 'BG' on Cheqout's website and a DVD cover, demonstrated that the original application to register was made in bad faith. The court considered the shield device to 'closely resemble' the well-known 'S' shield device owned by DC Comics.

Justice Bennett considered the 2012 case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2), in which Justice Dodds-Streeton clarified that the bad-faith intention of the registrant must exist at the time of registration, the onus of proving bad faith rests with the opponent to registration, and the standard of proof required is the balance of probabilities. Section 62A has only been in operation since 2006, and there has been little consideration of the provision by the courts. In Fry, Justice Dodds-Streeton cited UK authority in noting that dishonesty is not a prerequisite to a finding of bad faith, although it may indeed be present, and bad faith can be 'conduct falling short of the standards of acceptable commercial behaviours observed by reasonable and experienced persons'.

Justice Bennett considered that an inference could be drawn from the use of the 'BG' shield and the word mark together that Cheqout intended to 'strengthen the allusion to [DC Comics'] Superman' and thereby gain an advantage. Accordingly, this use was evidence that the application to register the word mark had been in bad faith.

Future guidance

'Bad faith' is not defined in the TMA, and judicial consideration of s62A has been scant. In combination with the principles extracted by Justice Dodds-Streeton in Fry, this decision provides helpful guidance as to when bad faith may be found to exist.

The decision also demonstrates that the question of whether or not the use of a mark causes deception or confusion is irrelevant to the consideration of whether an application was made in bad faith under s62A.

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