Samsung smartwatch and Swatch: brand counterfeiting in the spotlight

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In a recent case, the High Court ruled that Samsung infringed Swatch’s trademarks by including them in digital watch faces, despite the fact that the digital watch faces were created by third parties and not by Samsung.

We look at the main intellectual property issues behind the judgment and highlight key takeaways for other companies to keep in mind.

Facts of the case

The digital watch faces were available for download through the Samsung Galaxy App Store by owners of Samsung smartwatches. These digital watch faces could then be displayed as an interface on a Samsung smartwatch. Although Samsung didn’t create the apps itself (that was left to third-party developers), it was still found to infringe any trademarks.

Grounds for Trademark Infringement

1. Active behavior by Samsung – Samsung does not provide an online marketplace for developers to simply download digital watch faces and consumers to download them.

Instead, these digital watch faces or “apps” were deemed important to the design and function of the smartwatch, not just a background. Samsung had a “Obvious commercial interest” in the “availability, presentation and use” apps.

In addition, the applications have been specifically created for Samsung smartwatches and a Samsung tool could also be used to help developers build the watch face apps.

Samsung had a review process before apps were added to its store and it shared app revenue and helped advertise the apps. There was active behavior from Samsung.

2. The use of Samsung – Samsung asserted that it is not infringing as it does not use Swatch’s trademarks in connection with smartwatches or watches and instead if there is any use “it was used in connection with the applications or the design of the face of the smartwatch”.

Samsung argued that the apps were backgrounds for smartwatches and for private use by consumers and Samsung provided smartwatches as hardware and services to download watch faces rather than software from third-party developers .

The judge ruled that the use of the marks in app names would be used in connection with software, as, for example, an app called “Tissot Watch Face” would mean that downloading the app would display a watch face Tissot. Similarly, the digital watch face preview would show the look of the digital watch face after downloading it. The average consumer would know that the app was for a smartwatch.

Finally, the design of the digital watch face would seem to show the origin of the watch. Therefore, there has been use by Samsung in relation to smartwatches.

3. Dual Identity Counterfeit – Samsung argued that the use of the trademarks was descriptive of the app’s name or designs rather than affecting consumers’ ability to know that the Swatch products in the trademarks are from Swatch. This is the original badge feature, which was part of the dual identity trademark infringement action here.

The judge ruled that the design of the digital watch face should be considered a mark and indicative of origin and that the names would be understood in the same way as something that functions as a watch face.

The apps themselves were on Samsung’s store and consumers would assume there was a license agreement with Swatch that allowed the marks to be used. Therefore, it would affect consumers’ ability to know that the Swatch products featured in the marks are from Swatch.

4. Confusion Offense Probability – 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 that the watch face apps were not smartwatches or watches and the judge found that the watch face apps were not identical products to “wrist-worn computers”, “electronic device incorporating a time display”, “connected watches” Where “watch-shaped smartphones”.

Nevertheless, watch face apps turned out to be similar products to smartwatches as they were complementary and needed each other.

Additionally, smartwatches were “at least very similar” watches and watch face apps could be similar to watches because they worked like watches (you can check the time on your wrist) and were designed to look like normal watch faces.

A risk of confusion was found, in particular because there would probably be an assumption that there was a licensing or other agreement with Swatch.

5. Hosting Defense – Samsung also asserted this defense, which is used by online marketplaces such as eBay. This applies when an information society service provider has information stored on its server by a third party but has no real knowledge of it or when it has knowledge of it, it acts quickly to delete it. . However, this defense did not apply.

The question was “whether a diligent economic operator should have identified the illegality by referring to facts or circumstances of which he has (actually) knowledge”. Having notice and take down procedures did not satisfy that.

Samsung had a fairly small team of reviewers with little training in brand recognition. However, Samsung has taken an active role (see above) and critics (and Samsung) have reportedly taken notice of the app names and the look of the watch faces. It was also pointed out that some of the apps were promoted as Editor’s Choice.

Analysis

Previously, online marketplaces such as eBay were not responsible for illegal third-party content on their sites. However, this case was about app stores. It was different because Samsung helped generate and control third-party products created for Samsung products and sold on the Samsung store.

What are the main takeaways?

  • App store developers and other businesses should determine if they have processes in place to ensure that they do not publish or embed infringing content without permission.
  • Companies should review their processes and determine if additional effort should be made to identify potential violations before products are sold online. For example, there could be written instructions and training for trademark searches to be carried out if there is a risk of a trademark being included.
  • Businesses must have terms in place with content providers regarding such content that does not infringe third-party rights.
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