IWATCH Out: Swatch upsets the Apple Cart

Duncan J. Morgan | July 2016

Opposition No. 402874 by Swatch AG (Swatch SA)(Swatch Ltd) to British Trade Mark Application No. 3047484 IWATCH in the Name of Apple Inc.

Last summer we wrote about some prospective trade mark issues with the launch of Apple Inc.’s “Apple Watch” product. The choice of the name APPLE WATCH caught some observers by surprise, as Apple’s history of launching new products with the prefix “i” seemed to make iWatch the more likely name.                                                         

Well, a recent British trade marks decision suggests that the name was at least considered by the computer giant.  Just over a year before the APPLE WATCH was announced, British trade mark application no. 3047484 was filed for the mark IWATCH, covering the following goods:

Class 9

Computer software; security devices; monitors and monitoring devices; cameras; computers; computer hardware; computer peripherals; wireless communication devices; radios; audio and video devices; global positioning system devices; accessories, parts, components, and cases for all of the foregoing goods.

The application was opposed by Swatch AG (the Swiss company behind the SWATCH brand of watches), who argued it should not be allowed to register on the basis of earlier registrations of their own, including one for a stylised version of the word iSWATCH.  

A hearing to decide the case was held before Mr. Allan James on 26 April 2016, and his decision on behalf of the Trade Marks Registry was issued at the end of June.

Mr. James found that there was a likelihood of confusion between Swatch’s stylised iSWATCH registration and the application as regards the bulk of the goods it covered, and so refused to allow IWATCH to proceed to registration except as regards “computer software; security devices; computer peripherals; parts, components and cases for all the foregoing goods”.  The parties have until later this month to appeal the decision.

However, from a trade mark law point of view, perhaps the most interesting part of Mr. James’s decision relates not to the conflict between the parties’ respective trade marks, but to a late allegation by Swatch AG that the IWATCH application was filed in bad faith.

British trade mark law requires that, at the time an application is filed, the applicant be using the mark, have a bona fide intention to use it in the UK, or to be allowing or intending to allow others to do so. If they do not have this intention, it can be argued that the application should be refused registration and/or removed from the Register on the ground that it was filed in “bad faith”.  The issue arose because the IWATCH application was not filed by Apple, Inc., but by a company called Brightflash USA LLC, who subsequently assigned it to Apple in October 2015.

Whilst the precise legal relationship between Brightflash USA LLC and Apple, Inc. is unclear, it appears from Mr. James’s decision that the two are affiliated.  The suggestion in the case was that Brightflash acted as a “straw man” in filing the application for IWATCH, so that Apple could conceal the identity of the party behind the trade mark, presumably to reduce the chances of the notoriously secretive company’s future plans being publicised before their official announcement.

In January 2016, after both parties had filed evidence in support of their cases, Swatch applied to the tribunal to add a bad faith claim to their opposition. They argued that:

A straw man company that files a trade mark application in order to conceal another’s identity does not have a bona fide intention to use the trade mark the subject of that application

 Brightflash was always aware that the application would eventually be assigned to Apple without Brightflash ever using or licensing the trade mark, and was working towards that assignment all along …”

In March 2016, Mr. James refused to allow the bad faith claim to be added to the case as a) adding it so late in the proceedings was liable to add significant costs and delay to the case, and b) he was not persuaded there was a proper arguable basis for the bad faith claim.  He maintained and expanded upon these conclusions in his final decision.

Swatch’s bad faith allegation appears to be based on the argument that when Brightflash filed the application, they did not either a) intend to use the mark IWATCH themselves, or b) intend to give Apple permission to use the mark.  Instead, it was suggested, Brightflash’s intent at the time of filing was to work towards assigning the application to Apple.

I suspect that Mr. James’s rather robust conclusion that Swatch should not be allowed to proceed with an additional bad faith claim can be explained in part by considering the reasons why the law requires trade mark applicants intend to use the mark they file in the first place.  It can be argued that the requirement exists so as to ensure that the trade mark system is not abused by the filing of marks for the purpose of preventing others registering or using them.  

Given Apple’s predilection for ‘i’ type marks, it seems credible that at the time of filing there was, on their part at least, an intention to use the mark IWATCH, and if so, it is much harder to maintain the assertion that the system was being abused.

Further, if Brightflash were, as was argued, affiliated to and acting as a straw man for Apple, it seems credible that they would have been happy to permit Apple to us the mark had they wished to before the application was assigned. 

Whilst this does not appear to have been proven in the case before Mr. James, he accepted that it was credible, and appears unwilling to allow the matter to proceed further, stating:

“The opponent’s case was based on mere speculation about the internal thinking at Apple.  And even if the speculation is correct, I am very doubtful that concealing the identity of the ‘real’ applicant amounts to bad faith, particularly if it is done for the applicant’s own commercial purposes. Therefore, in my judgement, the proposed additional ground of opposition based on bad faith had no reasonable prospect of success.”

It will be interesting to see if Mr. James’s decision is appealed on this point, alongside or in addition to his decision on the conflict between the parties’ respective trade marks.  Watch this space.