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Online Use in an App

A decision of the UK High Court of Justice raises interesting issues relating to the online use of a trademark in association with applications relating to digital watch faces. Montres Breguet S.A. v. Samsung Electronics Co. Ltd. [2022] EWHC 1137 (U.K. Ch.).


The Claim

The plaintiffs were a group of associated Swatch companies (“Swatch”) which owned a series of trademarks that included SWACH, TISSOT, and LONGINES registered for use with watches and, in some cases, smartwatches. The claim related to digital watch faces (“apps”) that could be downloaded to Samsung’s smartwatches from the Samsung Galaxy App store (the “SGA store ). Swatch claimed that 23 of their trademarks were infringed by 30 watch face apps being offered for sale in the SGA store; the apps were downloaded around 160,000 times in the U.K. and E.U.


Although each of the apps was developed by a third party (the “app developers”), Swatch maintained that Samsung was intimately involved in, and controlled, the whole process by which the apps were provided to consumers.


Samsung denied liability. Its defences included that it has not used the marks, that the marks on the apps were not used to indicate there was any connection with Swatch, and that the conditions for joint liability did not establish. Nevertheless, the action proceeded to trial.


The Facts

There was no dispute that the conventional location of a trademark on a watch, whether in word or figurative form or both, is generally the centre of the upper portion of the dial. The Judge used the term “Dial Branding” to refer to the appearance of a mark or sign on the watch face.


A smartwatch was described by Samsung’s witness as a wearable electronic device with a digital interface that provides operational controls through software apps. Smartwatches tell users the time but also come with several additional features not provided by traditional watches, such as the ability to make calls, listen to music, read messages or emails, make payments and track health and activity levels. The face of a smartwatch consists of a digital display switched on when prompted, whether by motion or tapping the screen. Samsung smartwatches allow significant flexibility for the consumer to configure the software on their smartwatch as they choose, including by accessing the SGA store to download apps.


Samsung produces and markets the smartwatches pre-installed with a comparatively small number of apps designed by Samsung. This includes around 20 watch faces that the consumer can choose from. Samsung also offers some further apps developed, including watch face apps, in the SGAstore. However, a substantial majority of apps available in the SGA store are developed and provided by third-party app developers.


Samsung has a sophisticated process to control apps developed by a third party. Any third party who wished to upload an app to the SGA store was first required to obtain an account by registering with Samsung’s SGA Seller Portal by providing their name, email address, country of residence and bank account, and agreeing to Samsung’s term, Each third-party app uploaded to the SGA Store was subject to both a technical and a content review before being offered to consumers. The technical review was limited to checks for viruses and to ensure the app’s functionality and compatibility with Samsung’s operating system. The manager of the SGA at the time admitted that it was a mistake to have allowed the apps in dispute through the review process and explained that at the time, the team had little knowledge of luxury brands.


Infringement

To establish infringement in this case, Swatch had to establish the existence of six conditions: (i) there must be the use of a mark or sign by the defendant within the territory; (ii) the use must be in the course of trade; (iii) the use must be without the consent of the proprietor of the trademark; (iv) the use must be of a sign identical to the trademark; (v) the use must be in relation to goods or services which are identical to those for which the trademark was registered, and (vi) the use must be such as to affect or be liable to affect the functions of the trademark.


On reviewing the evidence, the Judge concluded there was dynamic behaviour by Samsung in relation to the apps and control by it of their availability. Samsung was using the apps and the signs or marks contained in them in its commercial communications. There was nothing in the relevant legislation that was prescriptive as to the form of use.


The watch face apps in issue were similar goods to smartwatches, in particular, based on complementarity. They are intended to be used together and are essential for each other’s operation. The apps were specifically designed for the Samsung smartwatch and appeared in the “official” Samsung store; they would appear to the average consumer to have a common commercial origin. Both could be obtained from Samsung, directly in the case of the apps in the SGA store, and either directly or indirectly via another retailer in the case of the smartwatch.


The average consumer would understand the use of a trademark in an app name seen in the SGA store through a consumer’s phone or smartwatch to be used in relation to that app and what it will represent once downloaded. For example, an app with the name “Tissot Watch Face” would be understood to denote that the app will produce a Tissot watch face when downloaded to the smartwatch. It is used in relation to the software, being the app, including in particular the watch face that the app will produce once downloaded.


There was a likelihood of confusion in relation to the watch face designs and the app names in dispute. Swatch established infringement of its marks regarding apps that reproduced the marks on the watch face only and for apps that produced the marks in an app name.


Comment

Like the legislation applicable to this decision, there is nothing prescriptive in the Canadian Trademarks Act as to the form of trademark use in the U.K. As a result, a similar conclusion would likely apply to use in Canada.


If you have questions, please contact me at mckeown@gsnh.com.


John McKeown

Goldman Sloan Nash & Haber LLP

480 University Avenue, Suite 1600

Toronto, Ontario M5G 1V2

Direct Line: (416) 597-3371

Fax: (416) 597-3370


These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.


A version of this article originally appeared in the Lawyer’s Daily published by LexisNexis Canada Inc.


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