14. November 2023
Brands Update - November 2023 – 4 von 6 Insights
The burden of proof to establish bad faith remains a high bar to meet and the burden will not always be reversed.
Whether the Supreme Court agrees that the burden of proof should not be reversed lightly when it considers bad faith in the context of Sky v SkyKick appeal remains to be seen.
D&M – the trade mark applicant - is the owner and landlord of the former Coleburn Distillery. It does not produce any whisky on the site but sells and stores whisky, hosts events there and provides management services. D&M had plans to develop the site to create a hotel and restaurant and to recommence whisky production, with the hope of using the name "Coleburn" as part of the development, given its history.
One of the warehouses on the site is leased by D&M to Aceo Ltd who runs a cask management service and hosts tours at the site. CDL and Aceo share the same controlling entity, and CDL owns the trade mark "COLEBURN" in classes 33, 39 and 40. It also owns a comparable UK trade mark (created from its EUTM registration at the end of the Brexit transition period). Aceo had spent considerable time and money redeveloping the distillery for whisky production.
D&M applied to the UKIPO in February 2021 to register the word "COLEBURN" in classes 32, 33, 39, 40, 41, 43 and 44. CDL opposed D&M's application on various grounds including its prior registration and that the application was filed in bad faith. We consider the bad faith ground only here.
The UKIPO hearing officer held that CDL's evidence was enough to rebut the presumption of good faith so that the onus should move to D&M to prove its intentions when applying to register the mark.
While not completely clear from the decision, the evidence of bad faith relied on by the hearing officer to reverse the burden of proof seemed to be:
That D&M did not communicate such an intention to CDL at the time CDL entered into the lease.
In finding bad faith, the hearing officer added that D&M had provided no evidence of the commercial rationale or logic for the filing and that filing the application fell below the acceptable standards of commercial behaviour given that CDL had entered into a 25-year lease of the site and spent considerable effort and money (£350,000) refurbishing the site and launching its Coleburn whisky brand.
D&M appealed the decision to the Court of Session in Edinburgh.
The appeal was brought on various grounds including that the hearing officer had been wrong to find bad faith.
Much of the appeal hearing focussed on what the standard of review should be for an appeal of this type. The method agreed was a re-hearing, which should not be interpreted as a full re-hearing. Certain key cases were cited when considering the agreed legal principles on which to consider the appeal, one being the principle laid out in Vaporized, that the Court of Session should not interfere with decisions of a hearing officer unless there was an error of principle or the decision lies outside the bounds within which reasonable disagreement is possible.
The Court agreed with the approach of the hearing officer on all points except bad faith, in respect of which it was critical of the reasoning and ultimately held the decision was incorrect. The Court held that the hearing officer had mixed up the issues of:
whether the trade mark application itself was made in bad faith.
The Court held that there is nothing dishonest with establishing a business in competition with another. In effect, the hearing officer had mixed up commercial (or contractual issues) with bad faith. It ultimately concluded that the hearing officer's decision relating to bad faith was outside the bounds of reasonable agreement. The hearing officer had been wrong to reverse the burden of proof and to find bad faith.
In the recent Lidl v Tesco case (article here), the burden of proof was also reversed. This was on the basis of evidence:
That Lidl had not used the marks in fact.
The above evidence seems stronger than that in the D&M case and more relevant to whether there was bad faith at the time of filing the applications.
14. November 2023
von Louise Popple
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14. November 2023
14. November 2023
von Munir Suboh, Louise Popple
von Louise Popple
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