Bad faith: The new kryptonite for opposed trade mark applications?
This just in from our correspondents at the Daily Planet: An application to register the trade mark “superman workout” in Australia in respect of “conducting exercise classes; fitness and exercise clinics, clubs and salons; health club services (exercise)” has been refused by Justice Bennett under section 62A of the Trade Marks Act 1995 (Cwlth) (“Act”) on the basis that the application was made in bad faith (see DC Comics v Cheqout Pty Limited & Anor  FCA 478).
DC Comics, the owner of a number of registered trade marks including or comprising the word SUPERMAN, opposed Cheqout Pty Limited’s application for the trade mark “superman workout” on the grounds of ss 43, 44, 60 and 62A of the Act. The delegate of the Registrar of Trade Marks found in favour of Cheqout on all four grounds and DC Comics subsequently appealed to the Federal Court pressing the ss 43, 60 and 62A grounds. Although Cheqout did not participate in the appeal proceedings, the Registrar appeared under s 196 of the Act.
It’s a bird! It’s a plane! No, it’s superman!
For this author the term “superman” is indelibly associated with a bodysuit clad superhero and Dean Cain (*swoon*). But for some of our more literary readers the term will evoke a connection to German philosopher Friedrich Nietzsche and his concept of “Übermensch”, that is “an ideal superior man of the future who transcends conventional Christian morality to create and impose his own values”[i]. It was only in the 1930s that the lycra loving character of Superman was developed by Jerry Siegel and Joe Shuster and then commercialised by DC Comics. Since then, the Superman character has appeared in comics, radio, television, movies and even a Broadway musical and has been licensed worldwide in relation to a range of products including apparel, toys, video games, stationary, housewares and sporting goods.
While Bennett J recognised the association in the public’s mind between the word “superman” and the DC Comics character, she expressed the view that the word connotes more than the superhero. Having regard to dictionary definitions and Nietzsche’s concept, her Honour found that the word is, or has become, descriptive. On this basis, she held that when the trade mark “superman workout” is used without reference to any of the well-known indicia associated with the Superman character (e.g. Superman’s image and the S Shield Device, as shown in the DC Comics trade marks below), the public would see the word as descriptive and would not be caused to wonder if “superman workout” was associated with DC Comics. Accordingly, she rejected the s 60 opposition ground (that the trade mark was similar to a trade mark that has acquired a reputation in Australia) and did not consider the s 43 ground (that the trade mark was likely to deceive or cause confusion) as DC Comics had accepted that if it failed under s 60 it would also fail under s 43.
Section 62A to the rescue
On the s 62A ground, that the application was made in bad faith, DC Comics had more luck. It submitted that Cheqout’s use of the “superman workout” trade mark together with the device of a shield containing the letters “BG” (as shown in the screenshot of the applicant’s website below, reproduced in the Statement of Agreed Facts, Annexure A to the judgment) demonstrated that the trade mark application was made in bad faith.
In considering this, Bennett J looked to the recent decision of Dodds-Streeton J in Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2)  FCA 81 (“Fry”) which concerned an application by Fry Consulting to register the trade mark TENNIS WAREHOUSE AUSTRALIA and Device. The application was opposed by American company Sports Warehouse, the owners of an online retail store called Tennis Warehouse, on the ground of bad faith (amongst others).
Justice Dodds-Streeton adopted the United Kingdom approach to bad faith: a combined subjective and objective test, where the subjective element is the trade mark applicant’s mental state and the objective element is whether the applicant’s conduct falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons. On the facts, her Honour concluded that bad faith had not been made out. Despite finding that Fry Consulting’s initial conduct had been exploitative, in that when it adopted the business name TENNIS WAREHOUSE in 2004 it knew of Sports Warehouse’s business and knew that the name would cause confusion, it had subsequently engaged in acceptable commercial behaviour. Fry Consulting had undertaken to cease using the name if Sports Warehouse provided evidence of its entitlement to it in Australia. When no such evidence was given, Fry Consulting continued to develop its business under that name before applying to register the trade mark TENNIS WAREHOUSE AUSTRALIA and Device in 2006.
Justice Bennett distinguished Fry on its facts and stressed that the decision does not exclude the possibility that exploitative conduct alone can ground a finding of bad faith. Her Honour found that Cheqout’s use, soon after the application, of the trade mark “superman workout” together with the BG Shield Device (as shown in the screenshot above) was designed to create an association between the trade mark and DC Comics’ Superman character. The close similarities between the BG Shield Device and the S Shield Device used in relation to the Superman character (see below) showed an attempt to appropriate DC Comics’ Superman indicia and the reputation of the superhero.
Her Honour concluded that an inference could be drawn that in applying to register the trade mark Cheqout intended to use it in combination with the BG Shield Device to strengthen the allusion to the Superman character.
Could bad faith become the new kryptonite for opposed trade mark applications?
In reaching her decision, Bennett J noted that s 62A was introduced into the Act as a separate ground of opposition and does not require the opponent to establish that the opposed trade mark’s use would result in deception or confusion. While such evidence may be persuasive in deciding whether a trade mark application was made in good faith, it is not determinative of that finding or a prerequisite for it. Her Honour’s approach appears to extend the application of s 62A and widen the available grounds for trade mark opponents. So where an opponent may not be able to establish deceptive similarity or a risk of passing off/misleading or deceptive conduct, based on Bennett J’s decision it seems they may still have a valid ground of opposition under s 62A if they can show that the applicant intends to use the opposed mark to allude in some way to the registered trade mark.
[i] From the definition of “superman” in the Oxford English Dictionary as quoted in DC Comics v Cheqout Pty Limited & Anor  FCA 478 at .