Bad faith: Squatting on domain names
Companies wishing to register domain names need to do so for the purpose of using them for their own business activities, not as bargaining tools
Registering domain names to use as bargaining tools, or to sell to other parties, can be a sign of bad faith in a trade mark opposition proceeding. When clients reserve domain names before acquiring business assets (e.g. intellectual property), they need to do so in good faith.
What is bad faith?
Briefly put, “bad faith” is conduct falling short of the standards of acceptable commercial behaviour and involves dishonesty.
The recent decision (Decision 2014 ATMO 84, 12 September 2014) is an interesting recent example of the Australian Trade Marks Office finding that a trade mark application was made in bad faith on the basis of domain name squatting. The trade mark applicant, John Mells, was a former employee of Save My Bacon. Relations between John Mells and SMB broke down. John Mells filed an application to register a trade mark SAVE MY BACON on behalf of his company, Marking Intelligence Limited. Shortly after, SMB filed applications to register two trade marks, SAVE MY BACON and SAVE YOUR BACON, which the ATMO refused because they resembled MIL’s trade mark too closely and were for similar services. SMB then opposed MIL’s trade mark application on the basis that MIL made it in bad faith.
The ATMO saw the following actions by John Mells and MIL as evidence of bad faith:
- the general practice of registering trade marks and domain names to sell
- the registration of an Australian domain name (www.savemybacon.com.au) before SMB’s incorporation
- failure to disclose the existence of the Australian domain name to SMB during John Mells’ employment, although John Mells knew that SMB intended to expand its business internationally, including in Australia, and to register a trade mark in Australia.
Consequently, ATMO refused MIL’s trade mark application on the basis that it had been made in bad faith under the Trade Marks Act 1995 (Cth). In particular, the ATMO decided that MIL had applied for the registration of the trade mark as a negotiations tactic against SMB for payments allegedly owed to John Mells or as a way to undermine SMB’s business activities in Australia.
Lessons learnt
Companies wishing to register domain names need to do so for the purpose of using them for their own business activities, not as bargaining tools or to undermine a competitor’s business.
By Sonia Sharma
Keep up to date with our legal insights and events
Sign upRelated articles
New phoenixing laws put to the test
By Sam Kingston, Cara Thompson, Michael Wells
We outline the impacts that the new phoenixing laws will have on insolvency practitioners, companies and directors.
The importance of marketing – developer liable for misleading and deceptive conduct
By Robert Gregory, Viviane Karoumbalis
We outline the impacts of a case where a developer had deceived purchasers by marketing an off-the-plan development...
Probuild and beyond: Insolvency issues for construction projects
By Sam Kingston
This article gives a high level summary of the issues that commonly arise and some relevant considerations.
Build to Rent – 3 ideas to build our way out of a rental shortage
By Blake Dyer, Breellen Warry, James Beauchamp
We consider three ideas around the build-to-rent development planning pathway recently introduced by the NSW Government.
Partner
Sydney