Facts

Ten companies in the Swatch group of watch makers issued trade mark infringement proceedings against Samsung Electronics Co Ltd in relation to digital watch face apps that could be downloaded to Samsung’s smartwatches from the Samsung Galaxy App store (the SGA Store).

Swatch claimed that Samsung was infringing 22 of their EU trade marks (and one UK trade mark) for various brands, including “Tissot”, “Omega” and “Breguet”, by making available in the Samsung SGA Store 30 watch face apps (downloaded around 160,000 times), which used signs that were either identical or similar to Swatch’s trade marks. Swatch claimed infringement on the grounds that the signs were identical or similar to the trade marks and used in either identical or similar goods (Article 9(2)(a) and (b) of the Trade Mark Regulation), or were taking unfair advantage of Swatch’s reputation (Article 9(2)(c)).The judge largely agreed.

The term “Dial Branding” was used to refer to the appearance of the sign on the watch face. See below:

Decision

Use in the course of trade

Samsung contended that it did not use the signs at all and that it simply provided a vehicle, in the form of the SGA Store, through which app developers provided apps. It relied on L’Oréal v eBay, which stated that the use and display of signs on the website of an electronic marketplace was not use by the operator. Meanwhile, Swatch argued that there was both active behaviour and control by Samsung and use in its own commercial communications.

Mrs Justice Falk found that Samsung did use the signs in the course of trade. Samsung smartwatches were marketed as “truly watch-like”, specifically referring to the wide variety of watch face apps available in the SGA Store. The SGA Store was not simply an online marketplace such as eBay.

The average consumer would understand the watch face apps were “official” Samsung products given they were made available in the SGA store. Their function was to adorn the smartwatch and tell the time. The app was not just a simple background but something that had an active role in both design and the mechanism of the smartwatch.

Article 9(2)(a) and 9)2)(b) infringement

Identity/similarity

Swatch relied on marks registered in Class 9 for “computers worn on the wrist”, “smartwatches” or “smartphones in the shape of a watch”. It also relied on marks registered in Class 14 for “watches”, and “smart watches with extended functionality and connected watches”. Falk J found that many of the signs used by Samsung in the watch face apps and the app names were identical to Swatch’s trade marks. Where they were not identical, she found them to be similar.

For example, Falk J held that the watch face apps were similar to smartwatches, particularly in terms of complementarity. They were not only intended to be used together but were essential for each other’s operation. Smartwatches are a form of watch and, therefore, were highly similar to watches. She also found watch face apps as similar to watches due to having similar features to conventional watch faces.

Use “In relation to” goods

Falk J found that the average consumer would understand the use of a sign in an app name seen in the SGA Store to be use “in relation to” that app and “in relation to” what it would represent once downloaded. For example, an app named “Tissot Watch Face” would be understood to mean that the app would produce a Tissot watch face when downloaded to the smartwatch.

As for the use of Dial Branding, third parties seeing the downloaded watch face on someone’s smartwatch would understand that the Dial Branding was intended to denote the origin of the watch/smartwatch. That was what the smartwatch owner aimed to achieve, as did the app provider. Accordingly, Falk J considered that use of the Dial Branding was also use “in relation to” smartwatches, which were at least highly similar to watches.

Trade mark function and descriptive use

Falk J noted that infringement under Article 9(2)(a) requires the use to be liable to affect the functions of the mark. A purely descriptive sign is not “use” for infringement purposes. This also affects infringement under Article 9(2)(b).

Swatch relied on the origin function, which is affected if the average consumer cannot (without difficulty) ascertain whether the goods or services originate from the trade mark owner (or an undertaking economically connected to it) or from a third party.

Samsung’s argument that the apps simply produced a depiction of a watch face was dismissed. When downloaded to a Samsung smartwatch, the apps produced a watch face that looked like and functioned as a watch. The Dial Branding would be understood by the average consumer as branding. Similarly, where used in the app name, it would be understood as something that would function as a watch face.

Further, Falk J held that, given the apps’ availability in the “official” SGA Store, the average consumer would be likely to assume that there was some licensing or other economic arrangement with the watch maker that permitted use of the sign. The fact that the third-party developer’s name appeared in the app details was insufficient to displace that assumption.

Falk J concluded 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 no economic link between the app provider and Swatch.

Likelihood of confusion

Where Falk J had found similarity between the app name and/or the sign on the watch face with the mark in question, she also found a likelihood of confusion, largely based on findings relating to an average consumer’s perception of the apps. The post-sale context was of particular importance in this case, she said (see below). Where she found no similarity between the two, she found no likelihood of confusion.

Article 9(2)(c) infringement

Reputation and link

Falk J was satisfied that Swatch had provided sufficient evidence to establish a reputation in respect of each of the marks in the relevant territories.

Falk J was also satisfied that in respect of all signs found to be identical or similar to the marks, the necessary link was established, bearing in mind the context of the use of the signs in both the Dial Branding and the app name, and the reputation and distinctiveness of the Swatch marks as watch brands. It was also clear that it was the app developers’ intention to create a link.

Injury

Falk J was satisfied that the use of signs identical or similar to the marks in watch face apps (whether Dial Branding, or app name) was capable of having a detrimental effect on the reputation of the marks and of amounting to unfair advantage.

There was an obvious impact on the brand reputation of the ‘prestige’ Swatch brands. The products in this range were intended to be exclusive, produced in limited numbers and with an emphasis on heritage and longevity. In contrast, the Samsung smartwatch was a commoditised gadget with a short life and, despite work on its aesthetics, in a wholly different league as a product. The damage was essentially a form of dilution or tarnish.

Falk J also said use of signs identical or similar to the marks in watch face apps could amount to free riding. Swatch had cultivated a reputation of its brands’ authentic “Swissness”. Samsung marketed its smartwatch as a “true watch”. The availability of images of “Swiss” watch faces on Samsung smartwatches and in the apps would clearly have benefitted Samsung commercially.

However, Swatch had not shown any change in economic behaviour in relation to all the apps. Whilst some were downloaded in large numbers, others were not, and Samsung had taken them all down from the SGA Store. Swatch could not demonstrate a serious risk of future injury as actual injury could not be shown. The conclusion was that injury was only shown in respect of three of the apps in dispute.

The “hosting defence” under Article 14 of the E-Commerce Directive (2000/31/EC)

Falk J found that Samsung did not have a defence under Article 14. She noted that protection under Article 14 is limited to activity that “consists of the storage of information”, and that this was interpreted in Google France and L’Oréal  as being limited to conduct of a “technical, automatic and passive” nature rather than an active role that would give the relevant person “knowledge of, or control over” the data.

On the evidence, Falk J said that it was far from clear that what Samsung did was limited to acts of a “mere technical, automatic and passive nature” such that it lacked knowledge of or control over the data. Before an app was uploaded to the SGA Store, Samsung always performed a detailed content review. Further, Samsung took active steps, including in relation to facilitating and encouraging the design of apps, and marketing its smartwatches by reference to the availability of watch face apps in the SGA Store. The commercial benefit it derived from doing so was from sales of its products, rather than any form of charge for storage. It had also promoted some of the apps.

Falk J was satisfied that Samsung’s content review process would have resulted in Samsung becoming aware of the app name and the appearance of the watch face, including any Dial Branding on it. This would have alerted a diligent economic operator to the infringement. The steps that Samsung had taken since the dispute started went some way towards meeting that requirement, but there was further to go.

‘Post-sale context’

Falk J was keen to point out that post-sale confusion was important for several reasons:

• A smartwatch owner who had downloaded the app from the SGA store would assume there was an economic arrangement between Samsung and the watch maker e.g. collaboration between Apple and Hermes (as referenced in evidence)
• When downloaded to a watch, any Dial Branding would appear to average consumers as being shown on the face of a watch (as opposed to a smartwatch)
  • As such, the average consumer would consider they were looking at a watch rather than a smartwatch
• The Dial Branding would have been intended to at least appear to denote the origin of the watch, and both the smartwatch owner and the provider of the app would have aimed to achieve that effect

Despite the controversial nature of findings relating to post-sale context , the court did note that evidence of actual confusion need not be established as the test is one of likelihood of confusion.

(Montres Breguet SA v Samsung Electronics Co Ltd [2022] EWHC 1127 (Ch) (20 May 2022) — to read the judgment in full, click here).