Saving face
[2022] EWHC 1127 (Ch), Montres Breguet SA and others v Samsung Electronics Co Ltd: Catherine Byfield tells how a big watch brand won the day on the issue of watch-face apps.
[2022] EWHC 1127 (Ch), Montres Breguet SA and others v Samsung Electronics Co Ltd, High Court, 20th May 2022: Catherine Byfield tells how a big watch brand won the day on the issue of watch-face apps
Key points
- The Judge found there was infringement of the Claimants’ marks under s10(1), s10(2) and s10(3) of the Trade Marks Act 1994
- Use in app names was found not to be use in relation to smartwatches. However, watch‑face apps are similar to smartwatches and have some level of similarity with watches themselves
- Samsung did not have a defence under the e-Commerce Directive
- Samsung did use the signs in relation to watch-face apps when it facilitated their sale through its online store
The Claimants in this case are all members of the Swatch group of watch makers (Swatch).
Their brands range from Swatch in what is considered a basic range (costing around £175) to Breguet in the prestige market. The Defendant is Samsung, the well‑known technology group. The claim relates to the alleged infringement of 23 of the Claimants’ trade marks by 30 watch‑face apps that were sold on Samsung’s online store (SGA Store).
The alleged infringements occurred between October 2015 and February 2019 and involved some apps that were downloaded as many as 160,000 times in the UK and EU.
The earlier rights in question were word and figurative registrations for the brand names, which featured on the watch‑face images.
The apps were developed by third‑party developers. However, the Claimants’ position was that Samsung was intimately involved in and controlled the whole process by which the apps were made available.
Samsung denied liability, with defences on the basis that it had not used the marks and that there was no indication of any connection with Swatch. It further relied on Article 14 of the e‑Commerce Directive.
First awareness
The Claimants started monitoring the SGA Store in December 2018, when they first
became aware of the alleged infringements.
They wrote to Samsung on 21st December 2018, demanding the apps be taken down and details of the developers disclosed.
The apps identified were taken down by 9th January 2019. The Claimants issued proceedings in February 2019. The alleged
infringement in question in this case had therefore ceased well before this decision was issued.
For the sake of clarity, the Judge identified that the conventional position for a trade mark on a watch face is in the centre of the upper portion of the dial.
She referred to this as “dial branding”. The instances of use on online marketplaces, including Google France, L’Oréal v eBay and Coty, were all discussed.
Swatch took the position that there was both active behaviour and control by Samsung, as well as use in Samsung’s commercial communications.
Samsung’s position was that it simply provided a vehicle for the marks to be used, in the form of the SGA Store. It was the developers, not Samsung, that uploaded the apps to the store.
After considering Samsung’s behaviour as a whole, the Judge found it did use the signs in the course of trade. Samsung had orchestrated the provision of the apps to its consumers.
Its activities could be described as offering or stocking the goods in the SGA Store under s10(4)(b), or affixing signs included in any dial branding to the smartwatch under s10(4)(a).
Commercial choice
Persuasive were the fact that Samsung markets its smartwatches as “truly watch‑like” and its references to the many watch‑face apps available from the SGA Store.
Samsung made a commercial choice in deciding to provide a limited number of such apps itself, allowing third parties to develop the majority. This was supported by the evidence given by a witness.
It was in Samsung’s commercial interests to have free apps. These apps allow or highlight the use of functions or interfaces that are unique to Samsung devices.
This relationship is mutually beneficial, because promotional opportunities are provided by Samsung in relation to the developers’ other apps.
Samsung provides a tool for use by developers and all but one of the apps in dispute in this case was developed using this tool.
Samsung also hosts developer conferences to showcase apps built on Samsung devices.
The relationship between Samsung and the developers was crucial in highlighting Samsung’s active role in the provision of the alleged infringing apps. Also key to this is the review process for the approval of the apps.
Samsung reviews all apps for functionality and content before they can be uploaded to the SGA Store. The Judge felt that purchasing an app from this store would be considered “official”, as opposed to downloading one from another site.
It is reasonable to assume consumers expect these apps to carry an assurance from Samsung as to their functionality with their devices.
Conversely, if an app was of poor quality, it would reflect negatively on Samsung.
Samsung conceded that smartwatches are a form of watch. It referred to them as comprising a “very specialised sub‑category”.
The Judge concluded that smartwatch apps are not identical but similar to smartwatches.
They are intended to be used together and are essential for each other’s operation. The Judge went on to say that smartwatches are highly similar to watches.
And while market data was provided which showed that the two product types are not in direct competition, they must compete to some extent, since consumers wear one or the other and not both at the same time.
Essentially, the apps for sale in the SGA Store, once purchased, would function as a watch.
The dial branding appears on the watch‑face apps in the same place a consumer would expect to see it on a watch. Post‑sale context was important in determining that the marks were used in relation to smartwatches, not merely watch‑face apps.
The Judge dismissed Samsung’s position that its use was descriptive or functional, saying that “a reasonably observant user would not have been able to ascertain without difficulty that Samsung did not provide the app under an arrangement with Swatch, or that there was otherwise no economic link between the provider of the app and Swatch”.
She referred to the need for clear identification, which was emphasised by the CJEU in Google France and L’Oréal v eBay.
Likelihood of confusion
Again, post‑sale confusion was important here.
The natural assumption must be that a smartwatch displaying one of the disputed apps was either produced by Swatch, under licence or through another economic arrangement.
An interesting consideration on this point was that consumers who had gone to the trouble of downloading one of the disputed apps would likely want to show others what they had.
Reputation
The Judge accepted that Swatch had provided sufficient evidence to establish a reputation in respect of each of the marks in issue.
She went so far as to say that for some of the higher‑end brands such as Omega and Longines their reputation was “obvious”.
She also pointed to the fact that the intention to imitate on the part of the developers supported the idea that these brands did indeed have a reputation.
The Judge was satisfied that use of the signs was capable of having a detrimental effect on the character or reputation of the marks and amounted to unfair advantage.
There was also the possibility of dilution or tarnishing, particularly in light of the reputation of Swiss‑made watches as long lasting, which was in contrast to the short life of smartwatches.
Also successful was the argument put forward by Swatch that the use of the signs on watch‑face apps amounted to free‑riding. Persuasive here was Samsung’s marketing claim that its watches had a “real‑watch” aesthetic.
From the evidence it appeared that there was a trend among consumers to consider purchasing a watch‑face app for a Samsung smartwatch as a step on the ladder, with the aim being to buy a Swiss watch once they could afford it.
Samsung could not rely on a defence on the basis of the e‑Commerce Directive.
The protection conferred by Article 14 is limited to activities that consist of storage of information.
Case law tells us the behaviour needs to be “technical, automatic and passive” in nature. Samsung took many active steps in the way in which it worked with developers and the review process it conducted.
It derived a commercial benefit, unrelated to storage of data. The existence of notice and take‑down procedures does not in itself provide a defence.
Through its review process, Samsung must have become aware of the use of the dial branding. The Judge was critical of Samsung’s review process but concluded that it was sufficient for a diligent economic operator to be alerted to the infringement.
Section 10(1) or s10(2) infringement was found in respect of certain apps.
In some cases, this related to the use of the sign on the watch face only and in others to the use in an app name and, in some cases, to both. Section 10(3) infringement was also established in respect of three of the apps.
Clearly the use of the signs by the developers was of direct benefit to Samsung, and its processes, even before these were improved following this issue, were sufficient that it was surely aware of the infringing use.
It is reassuring to brand owners that simply taking down offending listings, when huge financial and reputational benefit has been garnered, is not necessarily the end of the line.
Behaviour complaints
The Defendant made a number of complaints at trial about a lack of cooperation by Swatch in identifying and resolving issues. The Judge felt none of these were strictly relevant to liability.
She did note in her judgment that because of the way in which the case was presented, the Court was required to do a significant amount of work to produce the appendices to the judgment.
She recommended that, in future, greater consideration be given in advance to what would assist the Court to determine the issues in the case.
The Defendant’s behaviour here was key.
Although it had acted very promptly in taking down the apps complained of once Swatch wrote to it, its behaviour up until that point demonstrated that it knew of the infringements, or certainly should have, and that it “orchestrated the provision of the apps to its consumers”.
It had certainly benefited from what was described as a “symbiotic” relationship with the developers.
When you look at the watch‑face apps, there are several components that are likely to be recognisable to consumers, some much more obvious than the word/logo marks that were registered.
This decision raises questions over the best form of protection for these watch faces, given the “new” value they have in relation to their electronic counterparts.
Catherine Byfield is a Chartered Trade Mark Attorney and Intangible Asset Manager at Stobbs
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