Burges Salmon LLP - UK
Swatch AG has successfully appealed to the UK High Court against a 2017 opposition decision, which had found in favour of Apple Inc in relation to the watch company’s application for the marks SWATCH ONE MORE THING and ONE MORE THING on the grounds of bad faith. Apple’s complaint arose from the inclusion of the catchphrase ‘One more thing’, which Apple CEOs had used as a marketing hook in new Apple product launches.
Swatch, the well-known watch company, and Apple had been involved in a UK opposition over the marks I-WATCH and I-SWATCH. That opposition was won by Swatch in 2016, based on its I-SWATCH international registration in Class 14. Apple was refused registration for I-WATCH for “ Monitors and monitoring devices; cameras; computers; computer hardware; wireless communication devices; radios; audio and video devices; global positioning system devices; accessories, parts, components, and cases for all of the foregoing goods” which covered smart watches (U.K. Opp.No. O-307-16). In 2015Swatch subsequently filed trademark applications for the marks SWATCH ONE MORE THING and ONE MORE THING, as well as the mark TICK DIFFERENT (reminiscent of Apple’s slogan ‘Think Different’). Apple interpreted these filings as retaliatory tactics and Swatch’s evidence did not explain the purpose behind the applications.
The first ground of opposition, Section 5(4)(a) of the Trademarks Act 1994 (that use of the opposed marks would be prevented under the law of passing off), was rejected on the basis that there was limited awareness of the use of the catchphrase ‘One more thing’ in the United Kingdom and the public would not be deceived. This finding was not appealed.
However, the hearing officer upheld Apple’s opposition under Section 3(6) of the act (that the application had been filed in bad faith), ruling that Swatch had attempted to secure an exclusive trademark right for the apparent purpose of parodying Apple’s association with the phrase.
On appeal, the UK High Court confirmed that Section 3(6) is a freestanding right, which did not require Apple to establish that it had an enforceable trademark in the United Kingdom. The court accepted that Swatch had likely filed the applications with some aim of upsetting Apple due to the similar timing of two ‘Apple-targeted’ applications and the lack of any alternative explanation provided by Swatch for the filings. However, it could not accept the hearing officer’s conclusion that Swatch’s objective was to parody Apple simply because the applications were intended to upset Apple.
The court found Apple’s evidence of online comments to be unreliable and stated that it could not establish Swatch’s intention. Swatch’s silence on its motivation did not prove anything either. There was no evidence that Swatch had engaged in parodic advertising in the past. Further, the court could not see how using the opposed marks for parody would be effective when only a limited number of people would be likely to associate the catchphrase with Apple. However, it accepted that Swatch must have regarded these applications as being of some use in its broader dispute with Apple.
While Swatch provided no reason for the filings in its evidence, the applications were made at the UK Intellectual Property Office with a stated intention of using the marks. The fact that Swatch may not have had a settled idea as to their use at the date of filing did not amount to bad faith. Indeed, applicants enjoy a five-year post-filing period to commence use of a mark.
Overall, the court found that the evidence did not support the hearing officer’s conclusion that Swatch’s intention was to parody Apple. It held that a motivation to annoy Apple did not constitute bad faith and that annoyance of a business is not a concept capable of objective analysis. Harmless or amusing parody per se is not an inherently dishonest practice, if it is not offensive. Good faith on the part of an applicant must be presumed until the contrary is established. Equally, the court should not speculate about the future use of a mark. The court stated that a mark could function as a trademark while still having a parodic character. The decision under appeal rested on the conclusion that the marks would be used in an unfair and undermining way, without any evidence to support that conclusion. The court therefore concluded that the hearing officer had been wrong to uphold the opposition under Section 3(6) and allowed Swatch’s appeal.
The decision recognises that establishing bad faith on the part of a trademark applicant remains a difficult hurdle to jump, as it relies on assessing the state of mind of the applicant and its intentions for the mark both against the norm of normal honest and fair business behaviour and at the date of the application. Bad faith would arise where the application was made without the intention to use the mark to fulfil its essential function to indicate origin (eg, if the applicant’s aim in filing was to block other parties from use of the mark while having no intention to use it at all). However, in this case, Swatch’s motivation to annoy Apple was insufficient for a finding of bad faith.