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Bad blood certainly runs deep between the American Apple Inc. and the Swiss Swatch AG, a well-known wristwatch company. The two companies have indeed been facing each other in court for “trademark reasons” for a long time.
Way back in the day, Apple had failed to obtain the exclusive trademark right to “iWatch” because it was judged too similar to “Swatch”. As a matter of fact, Swatch had won the opposition against the application to register “iWatch” before the UK Trademark Office (UKIPO). As a result, Apple had then resigned to using the name “Apple Watch” for its famous technological watch.
Later on, Apple also had to give up the trademark “One More Thing“: this was the slogan with which Steve Job used to end his product launches. As it turned out, Swatch had registered an identical slogan and Apple promptly challenged the registration but ended up in losing before the English Supreme Court, failing to prove Swatch’s bad faith in registering the sign.
The third round between Swatch and Apple is the one examined in greater detail in this article.
The dispute on this occasion concerned the slogan “Think different” and its revocation for absence of genuine use. The judges of the General Court of the European Union found that the evidence produced by Apple’s lawyers to prove actual use of the disputed trademark was insufficient, thus concluding the judgment once again in favor of Swatch… Three to nil!
This third court case begins with Swatch filing three applications for revocation against three “Think different” trademarks registered by Apple, with the European Union Intellectual Property Office (EUIPO), back in 1999.
Swatch’s interest in the cancellation of the trademarks from the EUIPO Registry was prompted by its intention to use the “Tick different” trademark in a new marketing campaign to sponsor its watch products. As a result, it had been deemed appropriate to get rid of inconvenient antecedents in order to avoid challenges regarding the use of this new sign and possible subsequent infringement lawsuits.
The EUIPO’s Cancellation Division in charge of deciding the three applications had found that the contested trademarks had been revoked for absence of genuine use. Among its reasons was that Apple had been unable to prove actual use of the trademarks during the five-year period concerned (i.e., between October 14, 2011 and October 13, 2016).
The decisions of the Cancellation Division were also upheld in the following two stages of appeal: at first by the EUIPO Board of Appeal and later by the General Court of the European Union. It was precisely the latter court that confirmed that the evidence produced at trial by Apple was insufficient to prove the actual use of the challenged trademarks, thus leading to the revocation for absence of genuine use of the relevant registrations.
The rule on which the three actions introduced by Swatch were based is the one governing the revocation in the absence of genuine use of a registered trademark.
It stipulates that a trademark is revoked when it is not used in the 5 years following its registration. The institution of revocation in the absence of genuine use is regulated in the same way by both European legislation and the Italian Industrial Property Code (Art. 24 IPC). For European Union trademarks, the reference article is Article 58(1)(a) of EU Reg. 1001/2017, which provides that:
“The rights of the proprietor of the EU trade mark shall be declared to be revoked on application to the Office or:
- if, within a continuous period of five years, the trade mark has not been put to genuine use in the Union in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non- use;[…].“
The rationale for this rule is both economic and practical. Indeed, its purpose is to clear from the official registers all trademarks that have not been intended for actual use in the marketplace. This is necessary to facilitate practitioners in their search for “free” trademarks that they can use and register.
Although the signs and names that can be used as trademarks tend to be infinite, the principles of commercial communication drastically reduce their number and thus the choice. As a result, the search for effective trademarks would be severely hampered and burdened if the institution of revocation in absence of genuine use were not in place.
Also, it is important to note that, in revocation actions, it is up to the owner of the challenged trademark to prove that the sign has actually been genuinely used, for the goods and services claimed, in the territory of interest (see Article 64(2) of EU Reg. 1001/2017). The burden of proof about genuine use is reportedly reversed since it is placed on the trademark owner (defendant) and not on the person bringing the claim for revocation for absence of genuine use (plaintiff).
The European Court’s decision of last July 8, 2022 (cases T-26/21 to T-28/21) is of particular interest because it provides a deeper insight into the jurisprudential interpretation of the revocation in absence of genuine use. Two legal notions in particular are analyzed in the grounds of the ruling:
The Luxembourg courts preliminarily recall that one can speak of genuine use only when the identity of the commercial origin of the goods or services for which the trademark is registered is guaranteed, thus fulfilling its essential function towards consumers. On the other hand, it is ruled out that genuine use can be ascertained in the merely symbolic or fictitious (contrary to the law) use carried out for the sole purpose of preserving the rights conferred by the registration and thus avoiding revocation.
It is further reiterated that actual use is identified with the actual commercial exploitation of the trademark, which is assessed by conducting a comprehensive analysis of all facts and circumstances relevant to the particular case, such as:
Circumstances that need not be taken into account, on the other hand, include commercial success, economic strategy, and non-large-scale commercial use of the trademark.
Turning to the evidentiary profile, genuine use must be proven by solid and objective evidence attesting to actual and sufficient use of the trademark in the relevant market, and cannot instead be proven by probability or supposition. In addition, in evaluating the evidence, an overall analysis of the available proof must be conducted in order to determine the most probable and consistent meaning.
These legal principles applied to the Think different case led the European Court to assess that Apple had failed to prove the genuine use of these trademarks within the European Union during the period of interest.
The documentary evidence provided by the U.S. company’s attorneys, which included photographs of the packaging of iMac desktop computers on which the use of the slogan “Think different” in conjunction with another trademark (“Macintosh”) could be seen, was of no use.
Despite said evidence, the Court assessed Apple’s documented use as not effective, considering the characteristics of the trademark placed on the sales box and, in particular, its size and positioning.
“Think different” was actually used only in a single, limited space on the box, i.e. below the iMac’s technical specifications and just next to the bar code. The judges also pointed out that the font size chosen to represent the trademark had to be considered too small and the sign might have escaped the attention of consumers because of this circumstance.
An important lesson can be drawn from this court case for all those who own registered trademarks. The genuine use of a trademark is an essential act for enjoying the rights conferred by registration. Failure to commercially exploit the sign, for an extended period (5 years), results in its revocation.
Even trademarks of hugely successful companies can be revoked in absence of genuine use, as precisely happened to the titles registered by the American apple brand. No matter how commercially successful the trademark has been over the years, if it is not used, even the most famous trademark risks being removed from the registers.
It is therefore necessary to carry out careful management of one’s registered trademarks to avoid losing them. If there is any doubt about genuine and continued exploitation, in lieu of renewal, you can consider registering your trademark from scratch.
Revocation also results in a significant loss to the company’s financial status. As a matter of fact, revocation follows the loss of the company’s intangible asset and thus of the value attached to it.
It is worth recalling in this regard that the use of a trademark is characterized by another peculiarity: through use, the trademark draws its lifeblood and increases its economic value. The more a trademark is used, the more it will increase in value, and conversely, the less it is used, the more its value will decrease.
On a final note, we would like to remind you that it is possible to bring actions to establish the invalidity or revocation of registered trademarks by filing the appropriate application with the relevant offices: EUIPO for European Union trademarks and UIBM for Italian trademarks.
The possibility of filing such an application, through an administrative procedure at the UIBM, was recently introduced by the Legislature and came into force only last December 29, 2022. The new measures aim to simplify and speed up dispute resolution.
As of today, in Italy there is the coexistence of two alternative systems for having the invalidity or revocation of registered trademarks established:
Relying on lawyers experienced in intellectual property law and, more specifically, trademark law can be a great commercial and business advantage.