One More Thing – Swatch takes a bite out of Apple

In the recent trade mark case of Swatch AG v Apple Inc. [2021] EWHC 719 (Ch) the High Court has upheld Swatch’s appeal that the Hearing Officer was wrong to find that ONE MORE THING had been registered by Swatch in bad faith, as parodic intent was not supported by any evidence. The case is also a reminder of the importance of carefully pleading Notices of Opposition. Here, Apple was unable to run a stronger ‘blocking application’ argument as it had not been sufficiently pleaded in the Notice of Opposition.

Background

Apple and Swiss- watchmaker Swatch have been involved in long running trade mark disputes in relation to several marks, notably ‘I-WATCH’ and ‘I-SWATCH’.  In the latest dispute, in 2015 Swatch filed international registrations for the signs ‘SWATCH ONE MORE THING’ and ‘ONE MORE THING’ in classes 9 and 14 for a wide range of goods, including watches and consumer electronic products.

Apple had long used the phrase ‘ONE MORE THING’ at its annual product launches, where just prior to leaving the stage the Apple founder, Steve Jobs, would famously introduce a new Apple product. His successor, Tim Cook, revived the slogan in 2015 for the launch of the Apple Watch.

Apple filed the following oppositions against the registrations under the Trade Marks Act 1994 (‘TMA’):

• An objection under s5(4)(a) TMA that the use of the mark should be prevented under the law of passing off by reason of the goodwill which Apple had acquired in connection with the phrase ONE MORE THING (the ‘Unregistered Rights’ opposition); and
• An objection under s3(6) objection that Swatch’s application was made in bad faith, with Swatch aware of Apple’s reputation in the phrase, and the circumstances in which the marks were applied for and Swatch’s likely intentions to use of the marks. (the ‘Bad Faith’ opposition).

The decision of the Hearing Officer

The UKIPO Hearing Officer rejected the opposition based on Unregistered Rights, as the phrases had never been used by Apple to indicate the origin of Apple’s products or services. He found that whilst a minimal number of consumers may have been aware of Apple’s use of ONE MORE THING, this was not sufficient to turn a common phrase in the English language into a ‘distinguishing sign’. The Hearing Officer also considered that consumers would not be deceived by Swatch’s use of the phrase, and so there could be no passing off.

The Hearing Officer upheld the Bad Faith opposition. Apple had contended that Swatch’s application was most likely made as a blocking application. However, this was not pleaded in Apple’s Notice of Opposition, and so Apple was not able to advance it. The Notice of Opposition had only stated that Swatch had sought to hijack ONE MORE THING, either to (i) parody Apple, (ii) divert trade, or (iii) make use of the reputation subsisting in the mark.

The Hearing Officer noted that all three pleaded purposes require actual use of the mark, unlike an allegation of a blocking application.  The Hearing Officer upheld the Bad Faith opposition, considering that it was likely that Swatch may be planning to troll Apple, and that the timing of Swatch’s applications in relation to other disputes between the parties was also a relevant factor. As part of the Bad Faith opposition, Apple had contended that the ongoing ‘bad blood’ generated in relation to the ‘I-WATCH/I-SWATCH’ dispute was connected with SWATCH aggressively filing its application for the ONE MORE THING mark.

In summary, the Hearing Officer found that Swatch had fallen short of the standards of acceptable commercial behaviour.

The High Court’s decision

The findings of the Hearing Officer were appealed to the High Court. Whilst the Deputy Judge, Mr. Iain Purvis QC, agreed with the Hearing Officer’s findings in relation to the Unregistered Rights opposition, he found that the Hearing Officer had been wrong to uphold the Bad Faith opposition.

Although the Deputy Judge found that the timing of Swatch’s applications supports a finding that they were made in part to ‘upset’ Apple, that was not sufficient to find a prima facie case of an intention to parody Apple. The Deputy Judge agreed with Swatch that the Hearing Officer had gone beyond inferential findings and had engaged in speculation as to how Swatch intended to use ONE MORE TIME. The Deputy Judge also noted that the failure of Swatch to provide any evidence of its intentions was not determinative by itself. After all, an applicant is not required to state its intentions at the time of filing a trade mark application, and revocation for non-use is only possible from five years following registration.

The Deputy Judge also found that parodic use of the phrase in and of itself would not necessarily meet the very high threshold for a finding of bad faith. On the facts, there was no evidence that Swatch had a habit of parodic advertising. Furthermore, as the Hearing Officer had found that the phrase was only associated with Apple by a small number of people, it was unclear how any parodic use by Swatch would be effective in any event.

Comment

We are unlikely to have heard the last of this dispute. Unless the High Court’s decision is overturned on appeal, Apple will require permission from Swatch to use the ONE MORE THING registered trade mark. The lesson here therefore is for brands to consider if phrases used in part of their marketing or sales go beyond mere incidental use, and start to form something core to their identity or goodwill. It is therefore sensible to make sure that any phrases used in relation to marketing and operations are also considered as part of trade mark strategy, alongside logos, product and company names.

This interesting decision provides useful guidance on what does, and does not, constitute bad faith in connection with parodic use. It is clear that a bad faith objection involves a consideration of the state of mind of the applicant and in particular their intentions with respect to the application. This may be difficult to evidence. The Deputy Judge made it clear that parodic use in relation to bad faith can be a freestanding ground of opposition that does not depend on either diversion of trade or making use of reputation. However, the threshold is a high one.

The decision serves as a reminder that oppositions should be carefully pleaded. Here, Apple’s counsel was prevented from running the ‘blocking application’ argument as Apple had not pleaded it in its Notice of Opposition.

A copy of the High Court’s decision can be found here.