Alice Xie is an IPilogue Writer and a 1L JD Candidate at University of Western Ontario’s Faculty of Law.

Can you file a trademark application for a restaurant and proceed to demand 1.5 million dollars to sell that mark? The May 2022 Federal Court of Canada decision, Beijing Judian Restaurant Co. Ltd v Meng (“Judian”), finds you cannot because the application would be filed in bad faith. Beijing Judian is a reputable barbeque bar restaurant with over 40 locations in China with established Ju Dian character marks, including the JU DIAN & Design Mark. The defendant, Meng, resides in Richmond British Columbia. Upon learning that Beijing Judian was planning to open locations in Canada, Meng raced to file trademark applications for the identical mark in Canada. Two years after filing the application, Meng went to the newly opened Vancouver location of the restaurant and demanded $1.5 million dollars for Beijing Judian to purchase the mark from him. Beijing Judian refused. A month later, the restaurant found an advertisement posted by Meng for the sale of the registration of the JU DIAN & Design Mark for $100,000. Beijing Judian subsequently brought a claim to court arguing that the identical mark registered by Meng is invalid because it was obtained in bad faith.

Two sections recently added to Canada’s Trademark Act of 1985 (“the Act”) mention bad faith. In a December 2018 amendment, the Act added section 18(1)(e), which states that a trademark registration is invalid if the application was filed in bad faith. Similarly, a 2019 amendment included bad faith in section 38(2)(a.1) as a new ground of opposition that individuals can file in response to an application. Although the law does not precisely define bad faith, the two inclusions of bad faith in trademark legislation advance the idea that nobody should benefit from their wrong.

A closer look at the Judian case shows what the court had to say about the bad faith ground. The judge found the JU DIAN & Design Mark filed by Meng to be invalid and expunged from the Canadian trademark database. It was reasonable to infer that Meng knowingly obtained the trademark registration associated with Beijing Judian in China to leverage the restaurant’s reputation for his own economic interests. Meng’s advertisement revealed Meng’s knowledge of Beijing Judian’s reputation. Meng also had no evidence of using the mark for any legitimate commercial purpose, as the only use was the sale of the identical mark online. Looking at the timeline, the judge found that Meng’s intention for filing the trademark application was to either extort money from Beijing Judian or to sell the mark to others. All of these factors combined in this case constitute bad faith.

Since the Act does not explicitly define what constitutes an application filed in bad faith, more bad faith cases  will slowly clarify the meaning of bad faith in Canadian trademark law.  Although Beijing Judian successfully won the trademark battle, this case follows two 2021 decisions in Norsteel Building Systems Ltd. v. Toti Holdings Inc. and Yiwu Thousand Shores E-Commerce Co. Ltd. v. Lin where the courts did not accept claims to invalidate trademark applications based on bad faith. Parties seeking to invalidate a trademark application using this claim would likely need to meet a higher standard. With the bad faith ground still developing in case law, foreign reputable establishments looking to expand into Canada should actively file trademark applications as early as possible and not rely entirely on bad faith to fend off imposters or extortionists.