Bad Faith Trademark Filings in Canada: What Foreign Brand Owners Need to Know

Trademark squatting is a familiar risk for brands expanding internationally. Someone learns a foreign brand is heading to Canada, files for the same mark first, and then offers to sell it back. Since 2019, Canadian law has had a direct answer to this.

The case that set the standard

In Beijing Judian Restaurant Co. v. Meng, 2022 FC 743, the Federal Court found that the registration for the JU DIAN & Design Mark was registered in bad faith, and therefore invalid and should be expunged from the Register. This was the first time the Court had invalidated a trademark registration under the new section 18(1)(e) of the Trademarks Act on the basis of bad faith.

The facts were stark. The owner had operated two restaurants in British Columbia since 2018 and a chain of restaurants in China since 2005, using a family of JU DIAN character trademarks, including one identical to the registered mark. The respondent had filed his application in 2017 based on proposed use, and registration was granted in 2019. He then approached the owner, demanded $1.5 million for the mark, and made threats against its business when it refused.

How the Court approached bad faith

Canadian trademark legislation does not define "bad faith," so the Court took note of the interpretation of similar provisions in EU and UK trademark law. Among the principles it adopted: good faith is presumed unless the contrary is proved on a balance of probabilities; bad faith includes not only dishonesty but also dealings falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced people in the field; and the purpose of the ground is to prevent abuse of the trademark system.

The Court relied on several factors, including that the mark was identical to the one used in China, the owner's trademarks had some reputation in Canada that the respondent knew about, and the respondent had applied to register several other well-known restaurant trademarks.

What this means for foreign brand owners

The bad faith ground is a powerful tool, but it has limits. Commentators have noted that it can be used against squatters who have registered foreign marks in Canada, provided the foreign owner can establish at least some reputation in Canada. In practice, that means:

• File in Canada early, ideally before any public announcement of Canadian expansion.

• Keep records of Canadian reputation, such as Canadian customers, press coverage, website traffic, and social media following, even before launch.

• Watch the register for applications that copy your marks, since an opposition is usually faster and cheaper than a Federal Court invalidation proceeding.

• Document any approach from a squatter. Demands for payment were central evidence in Beijing Judian.

Where a Canadian application or registration conflicts with a foreign owner's mark, the available options may include opposition, section 45 non-use proceedings, or invalidation for bad faith. The best route depends on the status of the mark and the evidence available.