Priority Entitlement Challenge from Suspicious Ownership Changes Fails

In 2019 NZIPOTM 30 Apple Inc v Swatch AG the Assistant Commissioner held that Apple’s assignment of IWATCH trade mark applications from an affiliated entity was not in contravention of the Trade Marks Act (and Paris Convention) provisions that only allow priority to be claimed from the first priority filing...

In June 2015 Apple became the assignee of trade mark application 989093 for IWATCH in classes 9 and 14, which has a filing date of 5th December 2013 and convention priority date of 5th June 2013. In May 2016 it divided out application 1042166, which also covers classes 9 and 14 and has the same filing and convention priority dates as 989093, and this proceeded to acceptance in the same month. Application 989093 proceeded to acceptance in January 2017 when the same Assistant Commissioner held that it had acquired distinctiveness from Apple’s family of i-prefix marks, given that Apple had not made use of IWATCH in New Zealand at the application date.
Swatch timely filed oppositions to both accepted applications. Priority was one of the grounds put in issue with Swatch arguing that IWATCH is deceptively similar to various Swatch marks, with the closest one being registration 986048 for iswatch Device in classes 14 and 35 filed on 3rd July 2013.

Application 989093 and the US application from which it claimed priority were filed in the name of Brightflash USA LLC, which by Apple’s own admission is an affiliate of Apple. However, on 3rd December 2012, just over 6-months prior to the US application in the name of Brightflash USA LLC, Apple had filed applications for IWATCH covering classes 9 and 14 in Jamaica and it used those applications to make convention applications in Brazil, Mexico, Russia, Japan, Chile and Colombia.

Section 36 of the Trade Marks Act 2002, which enacts the convention priority obligations under Article 4 of the Paris Convention, relevantly states:

36 Priority of application to which convention country application relates
(1) A person who has applied for the registration of a trade mark in a convention country (whether before or after it became a convention country), or his or her legal representative or assignee, is entitled to registration of his or her trade mark in priority to other applicants, and the registration has the same date as the date of the application in the convention country if the application is made within 6 months after the date of the convention country application.
(2) Subsection (1) applies only in respect of the first application for the trade mark that is made in a convention country by a person and does not apply to any subsequent applications for the trade mark by that person.

On the basis of Brightflash being affiliated with Apple, Swatch argued that the New Zealand applications are not entitled to the convention priority date, as the USA convention priority application was not the first convention priority application by the same entity. However, Apple pointed to the differences in the language used in sections 36(1) and 36(2). Whereas section 36(1) allows a person, their legal representative or assignee to claim priority, the restriction in section 36(2) to only being entitled to claim priority from the first application for the trade mark by a person only applies to that person. The Assistant Commissioner agreed with Apple’s construction of those sections and the proposition that mere affiliation does not make those entities the same legal person. Swatch had further argued that in the absence of any explanation from Apple as to why the USA convention priority application was filed in the name of Apple’s affiliate, it should be assumed that the affiliated entity was used as an attempt to circumvent a fundamental requirement of a valid priority claim. However, the Assistant Commissioner implied that the onus was on Swatch to show evidence of this rather than mere speculation and declined to make a finding that Brightflash’s applications were made in bad faith.

In the absence of being able to rely on its iswatch Device registration Swatch’s 25(1)(b) ground of opposition failed as the descriptiveness of the WATCH element led the Assistant Commissioner to hold that IWATCH is not deceptively similar to SWATCH (for the same goods).

Swatch pointed to evidence of its use of ISWATCH and iswatch Device from late 2012 for the purposes of its opposition under section 17(1)(a), which prohibits marks being registered if their use would be likely to mislead or deceive. However, the Assistant Commissioner found there to be insufficient evidence of use in New Zealand in order for Swatch to discharge its onus of establishing awareness of its reputation in those marks in New Zealand prior to 5th June 2013. Consequently the section 17(1)(a) ground was only fully considered in respect of the SWATCH marks, but despite its strong reputation in those marks, Apple’s strong reputation in i-prefix marks and the descriptiveness of the WATCH element meant that ground of opposition also failed.

Swatch also opposed the applications under section 32(2), which prohibits the registration of marks with very broad specifications that are not justified on account of use or intended use. However, it was held that the substance of Swatch’s pleadings actually concerned section 32(1), which concerns whether at the date of application the applicant intended to use the mark. In considering the plead ground of section 32(2) the Assistant Commissioner readily found that the specifications are not overly broad and that in any case Apple could be presumed to intend to use the mark on a wide variety of goods.

Although not required to the Assistant Commissioner then considered section 32(1) where Swatch argued Apple had no intention to use IWATCH as it was actually using a mark that included an Apple Device and Apple Watch. While noting that those other marks were not in use before Apple’s IWATCH application, the Assistant Commissioner found that in any case those other marks do not displace the presumption that Apple intended to use IWATCH.

Author: Quinn Miller

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