Horological Horror Show for Swatch, while Panavision has a Ball

In its decision yesterday, the General Court of the European Union warmed up with a case on reputation in what is expected to be a hot week for trade mark decisions. The Court was requested to interpret and to apply Article 8(5) of Regulation 40/1994 (as superseded by Regulation 207/2009).

The indisputably well known Swiss watch manufacturer Swatch SA failed before OHIM to protect its rights in the word SWATCH and for figurative Community trade marks (CTMs) and international registration for the sign SWATCH, all registered for, inter alia, goods in class 14 “precious metals and their alloys and goods in precious metals or coated therewith (excluding cutlery, forks and spoons); jewellery, precious stones, horological and chronometric instruments”.

Swatch’s opposition was directed against Panavision Europe Ltd‘s application to register the word mark SWATCHBALL for various goods and services in classes 9, 35, 41 and 42, in relation to electronic publications and computer software in the field of creation and selection of lighting, optical, lighting and photographic equipment and other visual effects in the cinematographic, television, video, and other visual and performing arts and lighting. Panavision expressly excluded protection in respect of goods and services relating to timekeeping.

Both the Opposition Division and the Board of Appeal rejected Swatch’s claims that the word SWATCHBALL created a likelihood of confusion with its well-known SWATCH marks and that at the same time it was taking unfair advantage of them and was detrimental to their reputation and the distinctive character. In particular, the Board of Appeal held that the relevant consumers would make no link between the conflicting marks, despite the reputation of the SWATCH marks in France, Germany and Spain, in that the goods and services respectively identified by them were too different. Moreover, Swatch failed to prove one of the requirements for protection under Article 8(5), as it could not demonstrate that the use of the SWATCHBALL mark could ‘cause a dilution of the earlier marks through the dispersion of their identity and their hold upon the public mind or take unfair advantage of the reputation or distinctive character of the earlier marks’.

On appeal to the General Court, Swatch pleaded the misapplication of Article 8(5), thus permitting the Court to review the construction of the rules on granting protection to trade marks with a reputation. In such instances, three cumulative conditions must be met: first, the respective marks must be similar or identical; secondly, the earlier mark must have a reputation; thirdly, there must be a risk that the use, without due cause, of the later mark could take unfair advantage of or be detrimental to the distinctive character or the repute of the earlier mark.

In the present case the General Court recognised that the first and the second conditions of Article 8(5) were fulfilled: the opposing marks were similar to an average degree, in that SWATCHBALL included the whole of the word mark SWATCH.  However, in respect of the risks stipulated in the third condition, those risks are based on the similarity of the marks and become real when the relevant public creates a link between the marks so that the later mark recalls the earlier one, without it being necessary for them to be confused. In any event, similarity between the marks is only one of the relevant factors to be considered in the overall assessment of the link’s existence. Due attention must be paid to how much the goods and services are similar or dissimilar, to the relevant public’s perception and the existence of the likelihood of confusion, to the strength of earlier mark’s reputation, to the degree of its inherent or acquired through use distinctiveness. Even when such a link exists, it may not be sufficient to conclude that one of the risks inferred by the later mark might materialise: it is for the proprietor of the earlier mark to prove them.

Limited degree of closeness

This being so, Swatch had not satisfied the burden of proving that the Board of Appeal had misapplied Article 8(5), said the General Court. No link between SWATCH and SWATCHBALL could be retained in the mind of their relevant publics. While SWATCHBALL’s public was specialised in the field of lighting, optical, lighting and photographic equipment and other visual effects, while it would know of the SWATCH marks, the latter addressed the general public. The goods and services protected by the respective marks were too different in their nature to lead to the creation of the required link between the marks. They had different distribution channels and purposes, they belonged to separate market sectors so that they were neither interchangeable nor in competition, all of which ruled out the closeness between the goods and services concerned.

In conclusion, the General Court stopped Swatch’s time for revenge without assessing the existence of the risks contained in Article 8(5), insofar as it had already excluded the necessary connection between its well known marks and the contested SWATCHBALL mark.