Samsung timed out by Swatch

This article first appeared in WTR Daily, part of World Trademark Review, in September 2022. For further information, please go to www.worldtrademarkreview.com, or read the full article here.

In the recent case of Montres Breguet SA v Samsung Electronics Co Ltd ([2022] EWHC 1127 (Ch), 20 May 2022), the High Court has ruled that Samsung Electronics Co Ltd infringed 23 of the trademarks owned by the Swatch group of watchmakers.

Background

The Swatch group of watchmakers (‘Swatch’) includes well-known brands such as Omega, Longines and Tissot, as well as Swatch. Swatch’s claim related to 30 digital watch face apps which could be downloaded by members of the public from the Samsung Galaxy App store in order to customise Samsung’s smartwatches.

Swatch claimed that these watch face apps infringed its trademarks by using signs that were either identical or similar to Swatch’s trademarks in order to create replicas of its well-known brands’ watch faces, and as names for the apps on the Samsung Galaxy App store. The watch face apps were downloaded approximately 160,000 times in the United Kingdom and the European Union from the Samsung Galaxy App store.

The watch face apps were created by third-party app developers. Despite this, Swatch alleged that Samsung was liable as a primary tortfeasor due to its close involvement in, and control of, the process by which the apps were made available to the public. Swatch claimed infringement of its EU trademarks (and one UK trademark) under Article 9(2)(a), 9(2)(b) and 9(2)(c) of the EU Trademark Regulation (2017/1001).

Samsung contended that it did not use the signs at all but simply provided a vehicle, in the form of the Samsung Galaxy Appstore, through which app developers provided the watch face apps. Samsung relied on the Article 14 “hosting defence” in the e-Commerce Directive (2000/31), arguing that its acts were of a mere technical, automatic and passive nature.

Decision

It was held that Swatch had established trademark infringement in either the digital watch face, the app name on the Samsung Galaxy App store or, in some cases, both.

Samsung was held liable as a primary tortfeasor. It had played an “active” role in relation to the apps and even used them in its own commercial communications.

Use

In arguing that it did not use the signs, Samsung relied in particular on the CJEU’s judgment L’Oréal v eBay (Case C-324/09). In that case, it was established that the use and display of signs on an electronic marketplace’s website is not “use” by the operator of that website for the purposes of trademark infringement. Google France v Louis Vuitton Malletier (Case C-238/08) and Coty Germany v Amazon Services Europe (Case C-567/18) were also referred to.

Mrs Justice Falk considered the case law and, in concluding that Samsung did ‘use’ the Swatch trademarks, she took into account, among others, the following facts:

• Samsung provided assistance to the third-party app developers in the form of development materials and tools such as the “Galaxy Watch Studio”;
• The watch face apps were designed exclusively for Samsung and to be used exclusively on Samsung’s smart watches;
• Samsung had marketed its smart watches for their “watch-like” qualities, by reference to the number of watch face apps available on the Samsung Galaxy App store;
• If a user was required to pay in order to download any of the apps, Samsung was entitled to a share in the revenue raised;
• The function of the watch face apps was not to provide third-party goods or services, but rather to adorn the smartwatch, tell the time and allow interaction with other functions; and
• Samsung fielded customer complaints about the apps and provided a degree of customer support.

Defence under Article 14

The defence under Article 14 had been considered in L’Oréal v eBay. Mrs Justice Falk stated that it was clear from L’Oréal v eBay that the test under Article 14 is whether “a diligent economic operator should have identified the illegality by reference to facts or circumstances of which it is (actually) aware”.

Samsung was found to have reviewed and approved each of the watch face apps before they were added to the Samsung Galaxy App store. Mrs Justice Falk was satisfied that this would have resulted in Samsung becoming aware of the app name and the appearance of the watch face app. Under the test set out in L’Oréal v eBay, therefore, this would have alerted a “diligent economic operator” to the trademark infringement. Samsung did not have a defence under Article 14.

Comment

This case shows that the Article 14 defence is unlikely to be available to any app store operators who are assisting in some way with the creation of apps by third parties or who are involved in the way those apps are sold and marketed. For the defence to succeed, there must be no commercial benefit gained nor active role played. Samsung had not only been entitled to a share in the revenue of downloads from the apps, but had also played an “active” role, including in assisting the app developers. Its role was not “technical, automatic and passive”.

For further information regarding this topic, please contact Claire Lehr, Eleanor Showering or any member of the Intellectual Property team.