Something More Than Parody Needed for Bad Faith

In Swatch AG v Apple Inc 2021 EWHC 719 a UK Judge has held that the Hearings Officer was wrong to find that Swatch’s trade mark application for a phrase used by Apple was made in bad faith on account of its potential parodic use.

In the Hearings Office proceeding Apple opposed Swatch’s applications for ‘SWATCH ONE MORE THING’ and ‘ONE MORE THING’ for goods in classes 9 and 14, including watches and consumer electronic products. Apple claimed to have reputation in the phrase ‘One More Thing’ as the late Steve Jobs was known within the industry for using the phrase ‘but there’s one more thing’ after seeming to finish a keynote speech at an industry presentation and then announce the launch of a new product. Apple did not claim that Jobs coined that phrase, and it was most likely that Jobs use of the phrase was inspired by the fictional TV detective Columbo, popular in the 1970s and 1980s who used the phrase ‘there’s just one more thing’ before revealing the evidence that solved the crime.

In the Hearings Office decision the Hearings Officer held that Apple’s reputation in the phrase in the United Kingdom was insufficient for it to act as a distinguishing sign. Similarly, while some people in the United Kingdom might be caused to wonder if Swatch used the phrase that was found to be insufficient for establishing deceptive use for passing off purposes.

However, Apple had also put bad faith in contention. At the hearing Apple contended that Swatch had no intended use for the phrase and that it was most likely made as a blocking application given Swatch’s awareness that Apple had some reputation in that phrase and the context of other disputes between the parties. However, Apple’s pleading of bad faith in its notice of opposition contended aspects of bad faith that are incompatible with the ‘blocking’ argument. Consequently, Apple’s bad faith opposition was restricted to the three pled arguments of parody, diversion of trade or making use of the reputation – all of which involve use by Swatch, rather than mere blocking. In light of the Hearing Officer’s above findings on deception and reputation Apple was found to be only left with parody as a basis for a finding of bad faith.

Given the context of the wider disputes between the parties including Swatch’s application around the same time to register TICK DIFFERENT despite Apple’s reputation in THINK DIFFERENT, the Hearing Officer found support for the application being a retaliatory measure where parody may be used to raise the stakes. While acknowledging that there is a place for parody in commercial communications, the Hearings Officer held that by applying to register the phrase and thereby obtain exclusive rights in a rival’s marketing signs Swatch had fallen short of the standards of acceptable commercial behaviour and so found bad faith to be established.

On appeal the Judge first confirmed that the bad faith ground is freestanding in the sense that it does not depend on any enforceable right and so was not precluded by the adverse findings on reputation and deception.

Swatch argued that the Hearings Officer had gone beyond inferential findings and indulged in speculation regarding Swatch’s intended use of the mark. The Judge agreed finding that the Hearings Officer should not have inferred from the application being likely to upset Apple that it was therefore made with parodic intention. While Swatch had led no evidence on how they intended to use the mark an applicant is not required to know that at the application date as revocation for non-use can at the earliest be made 5-years from registration.

Swatch had also argued that even if parodic use was established this was insufficient to satisfy the high threshold required for a finding of bad faith. The Judge agreed noting that not all parodic or humorous activity by a business transgresses the boundaries of honest business practices. The Judge considered the Hearing Officer was not entitled to object to Swatch attempting to obtain exclusive rights in a rival’s marketing signs as that depended on the unavailable ‘blocking’ basis for bad faith rather than having anything to do with parody. The Judge considered that without a clear idea of the type or level of parodic use that Swatch intended to make of the mark the Hearings Officer was not entitled to conclude that Swatch had transgressed the boundaries of honest business practices.

Author: Quinn Miller

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