Proving bad faith: it takes a tough cookie?

In a case centred around the iconic Dutch biscuit  – the stroopwafel – the highest trademark court of the Benelux recently gave some welcome guidance on the burden of proof for showing bad faith.

Bad faith

EU and Benelux trademark law protect against the filing of trademarks in bad faith. Although a broad term that is meant to encompass a variety of different factual situations, the concept of bad faith centres around a dishonest intention on the part of the applicant.

In recent years, the EU Court of Justice (“CJEU”) has looked at this autonomous concept of EU law several times. The concept is perhaps best explained in Koton (C-104/18). Here the CJEU held that bad faith exists when there are relevant and consistent indications that an application was not filed with the aim of engaging in fair competition, but instead either with the intention of undermining the interests of third parties in a way that is inconsistent with honest practices, or with the intention of obtaining an exclusive right for a purpose that does not align with the functions of a trademark.

Because bad faith hinges on the applicant’s subjective bad intentions, it is often difficult to establish sufficient objective circumstances demonstrating those intentions. In other words, even if everyone can sense there is something shady about a registration, actually proving bad faith is often still a high hurdle to take.

The present decision of the Benelux Court of Justice (“BCJ”) of 6 February 2024 in De Vergulde Valck v MFO.ONE (C-2022/23) provides some much-wanted relief by allowing part of the burden of proof to be shifted to the defendant.

Stroopwafel stores

At the heart of the case, lie a number of waffle stores with the trade name VAN WONDEREN STROOPWAFELS run by the G&W Group. After a few years of initial success, G&W unfortunately could not overcome the financial troubles of the Covid crisis and went bankrupt.

Mr Van Wonderen – one of the three original G&W directors – subsequently tried to restart the company as part of the bankruptcy proceedings, only to find out that the advisor to his two former co-directors had filed a Benelux registration for the word mark VAN WONDEREN STROOPWAFELS in the preceding year. And not only that, the advisor subsequently tried to enforce the trademark registration against Mr Van Wonderen’s relaunched business.

The BCJ’s decision: shifting the burden of proof

The BCJ rendered a principled decision on the concept of bad faith, highlighting a turning point in the allocation of the burden of proof.

While it is the cancellation applicant who bears the initial burden of proof to show bad faith, that burden of proof can shift to the defendant when a plausible case has been made that there is bad faith based on objective and consistent facts.

Importantly, while bad faith must be shown at the time of filing of the trademark, the BCJ also confirmed that the applicant’s dishonest intentions may equally be proven through evidence from a later date.

This shift in the burden of proof for instance applies when the cancellation applicant’s argumentation shows that there is no commercial logic behind the filing of the disputed trademark. It is then up to the defendant to show at least a start of evidence of a commercial logic behind the disputed application.

Conclusion

While it still takes a tough cookie to prove bad faith, the BCJ’s recent decision provides some assistance for parties who have to battle with less scrupulous trademark applicants trying to get in their way.