In a recent case, the High Court has ruled that Samsung infringed Swatch’s trade marks by including them in digital watch faces, despite the fact that the digital watch faces were created by third-parties and not Samsung.
We look at the key intellectual property issues behind the judgment and highlight key takeaways for other companies to bear in mind.
Facts of the case
The digital watch faces were available to download via the Samsung Galaxy App store by owners of Samsung smartwatches. These digital watch faces were then able to be displayed as the interface on a Samsung smartwatch. While Samsung did not itself create the apps (this was left to third party developers) it was still found to have infringed trade marks.
Reasons for trade mark infringement
1. Active behaviour by Samsung – Samsung does not provide an online marketplace for developers simply to upload digital watch faces and consumers to download them.
Instead, these digital watch faces or “apps” were judged to be important in the smartwatch’s design and function, not simply a background. Samsung had a “clear commercial interest” in the “availability, presentation and use” of the apps.
Further, the apps were specifically created for Samsung smartwatches and a Samsung tool could also be used to help developers create the watch face apps.
Samsung had a review process before apps were added to its store and it shared revenue from the apps and helped advertise the apps. There was active behaviour by Samsung.
2. Samsung’s use – Samsung claimed it was not infringing as it was not using Swatch’s trade marks in relation to smartwatches or watches and instead if there was use “it was use in relation to apps or smartwatch face design”.
Samsung argued the apps were backgrounds for smartwatches and for private use by consumers and Samsung provided smartwatches as hardware and services for downloading watch faces rather than the software from developer third parties.
The judge decided use of the trade marks in app names would be use in relation to software as, for example, an app called “Tissot Watch Face” would mean downloading the app would show a Tissot watch face. Likewise, the preview of the digital watch face would show the digital watch face’s appearance after it had been downloaded. The average consumer would know that the app was for a smartwatch.
Finally, the digital watch face design would appear to show the watch’s origin. Therefore, there was use by Samsung in relation to smartwatches.
3. Double identity infringement – Samsung argued the use of the trade marks were descriptive of the app name or designs rather than affecting the ability of consumers to know that Swatch goods in the trade marks come from Swatch. This is the badge of origin function, which was an element of the double identity trade mark infringement claim here.
The judge decided the digital watch face design was to be seen as branding and as indicating origin and the names would be understood similarly as something that would work as a watch face.
The apps themselves were on Samsung’s store and consumers would assume there was a licensing arrangement with Swatch that allowed the marks to be used. Therefore, this would affect the ability of consumers to know that the Swatch goods in the trade marks come from Swatch.
4. Likelihood of confusion infringement – One of the necessary elements for this is that the goods/services for which Samsung used the marks, were identical or similar to those registered by Swatch.
Samsung argued the watch face apps were not smartwatches or watches and the judge found the watch face apps were not identical goods to “computers worn on the wrist”, “electronic apparatus incorporating a time display”, “smartwatches” or “smartphones in the shape of a watch”.
Nevertheless, the watch face apps were found to be similar goods to smartwatches, as they were complimentary and needed each other.
In addition, smartwatches were “at least highly similar” to watches and the watch face apps could be similar to watches as they worked as watches (you could check the time on your wrist) and were made to look like watch faces of normal watches.
A likelihood of confusion was found including because there would likely be an assumption that there was a licensing or other agreement with Swatch.
5. Hosting defence – Samsung also argued this defence, which is used by online marketplaces such as eBay. This applies where an information society service provider has information stored on its server by a third party but has no actual knowledge of this or when it becomes aware of this it acts expeditiously to remove it. However, this defence did not apply.
The question was “whether a diligent economic operator should have identified the illegality by reference to facts or circumstances of which it is (actually) aware”. Having procedures for notice and take-downs did not satisfy this.
Samsung had quite a small team of reviewers with not much brand recognition training. However, Samsung had an active role (see above) and the reviewers (and Samsung) would have become aware of app names and the look of the watch faces. It was also pointed out that some of the apps were promoted as Editor’s Picks.
Analysis
Previously, online marketplaces such as eBay have not necessarily been liable for infringing content of third parties on their sites. However, this case concerned app stores. It was different because Samsung helped generate and had control over the products of third parties created for Samsung products and sold on the Samsung store.
What are the key takeaways?
- App store developers and other businesses should consider whether they have processes in place to ensure that they are not posting or incorporating infringing content without permission.
- Businesses should review their processes and whether more work needs to be done to identify potential infringements before products are sold online. For example, there could be written instructions and training for trade mark searches to be run if there is a risk a trade mark may be included.
- Businesses should have terms in place with providers of content in relation to such content not infringing the rights of third parties.
Contact us
If you have any questions about these issues in relation to your own organisation, please contact a member of the team or speak with your usual Fox Williams contact.
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