Swatch’s opposition sustained on grounds that no good-faith intent to use existed

United States of America

In Swatch AG v MZ Berger & Co (Opposition No 91187092, September 30 2013), although the Trademark Trial and Appeal Board (TTAB) rejected the opposition claim of likelihood of confusion solely because the marks SWATCH and IWATCH differed significantly in sound, meaning, appearance and overall commercial impression, the TTAB considered in detail the claim of lack of a good-faith intent to use the applied-for mark.  After extensive review of the documents and testimony of record, the TTAB sustained Swatch’s opposition to the application for the mark IWATCH on the grounds that the applicant had not demonstrated a good-faith intent to use the mark in commerce for watches, clocks and parts for watches and clocks.

The TTAB’s precedential decision provides a concrete admonition to applicants as to the need to have proper substantiation of their intent to use in commerce a proposed mark. The evidence of record, a trademark search and a few emails about potential use bolstered by inconclusive testimony, did not substantiate a good-faith intent.

The applicant, a family-owned business, established that it had long manufactured, imported and sold watches and clocks under many different brands, some of which it created itself. Even with this overall finding, however, at the time of its filing the intent-to-use application in 2007, the applicant was found not to have the requisite documentation to sustain a good-faith intention to use the mark in commerce as an “objective determination”.

Rather, the TTAB held that the few documents of record related “only to the trademark application”. The documents consisted of:

  1. a trademark search;
  2. an internal email recounting a discussion with the examining attorney; and
  3. internal emails forwarding images of stylized versions of the mark on one clock and one watch.   

Based on discovery depositions, the TTAB also found that the overall record supported the conclusion that the images in the documents were created to submit to the examining attorney as “samples of advertisements or promotional materials for goods of the same type”. While the TTAB held that the creation of mock-ups and renderings can be a part of the product development process, here the “samples of promotional materials” were all submitted to the examining attorney only and were not used in any way for any promotional or other purpose. On this basis, the TTAB rejected the images as evidence of a good-faith intent to use.

Given the non-existent use of the mock-ups, the mock-ups also did not support reliance on the search as substantiating intent to use the mark in commerce. The TTAB reiterated that merely filing a trademark application and prosecuting that application does not substantiate a good-faith intent to use. If it did, then the lack of a good-faith intent would not exist as a ground for an opposition.

The applicant’s own discovery testimony also served to substantiate that there was no good-faith intent to use. The TTAB found that the only possible testimony supporting a good-faith intent was the statement of one of the applicant’s employees about a discussion with a single buyer about use of the applied-for mark on a watch. That witness’s testimony, however, was undermined by the applicant’s own corporate testimony and the testimony of other employees. Under these circumstances, the TTAB held that overall the testimony more plainly substantiated the intent to reserve a mark, not a good-faith intent to use.

Further, the TTAB held that there was clear testimony that there was never any intent to use the applied-for mark for clocks and subsidiary goods. As to watches, at best there was contradictory testimony as to any effort to develop and mark IWATCH branded watches. Revealingly, once the opposition was filed in October 2008, the applicant conceded that it had stopped any work on developing a watch to be sold under the IWATCH mark. Accordingly, the TTAB found as an objective matter that the intent-to-use standard had not been met.

In the end, if a party is going to proceed with fighting an opposition, it should also proceed with its product development for the product that is to bear the applied-for mark. Otherwise, it may well risk what the applicant here did – winning the opposition on the likelihood of confusion ground, but losing it on the ground of not establishing with sufficient evidence the requisite good-faith intent to use. 

For applicants, this decision underscores the need to create and maintain documents and notes about even internal discussions to substantiate a good-faith intent to use, and the need to submit existing - as opposed to contrived - materials in responding to an examining attorney’s request for information as to how the applied-for mark will be used. 

For potential opponents, the decision outlines a possible weapon to challenge an application covering a wide range of goods and services, when only a narrow non-competitive offering might be sustainable.

Rochelle D Alpert, Morgan Lewis & Bockius LLP, San Francisco

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