Swatch Clocks iWatch for no Bona Fides in ITU Trademark Application | Practical Law

Swatch Clocks iWatch for no Bona Fides in ITU Trademark Application | Practical Law

In M.Z. Berger & Co. v. Swatch AG, the US Court of Appeals for the Federal Circuit held that the Trademark Trial and Appeal Board (TTAB) correctly sustained Swatch's opposition to Berger's intent-to-use trademark application because the evidence showed Berger lacked a bona fide intent to use the mark in commerce when Berger filed the trademark application.

Swatch Clocks iWatch for no Bona Fides in ITU Trademark Application

Practical Law Legal Update 5-616-2767 (Approx. 4 pages)

Swatch Clocks iWatch for no Bona Fides in ITU Trademark Application

by Practical Law Intellectual Property & Technology
Published on 05 Jun 2015 • USA (National/Federal)
In M.Z. Berger & Co. v. Swatch AG, the US Court of Appeals for the Federal Circuit held that the Trademark Trial and Appeal Board (TTAB) correctly sustained Swatch's opposition to Berger's intent-to-use trademark application because the evidence showed Berger lacked a bona fide intent to use the mark in commerce when Berger filed the trademark application.
On June 4, 2015, the US Court of Appeals for the Federal Circuit issued an opinion in M.Z. Berger & Co. v. Swatch AG, holding that the Trademark Trial and Appeal Board (TTAB) properly sustained Swatch AG's opposition to M.Z. Berger & Co.'s intent-to-use trademark application to register the mark iWatch because Berger lacked a bona fide intent to use the mark in commerce when Berger filed its application (No. 2014-1219, (Fed. Cir. June, 4, 2015)).
In July 2007, Berger filed an intent-to-use application seeking to register the mark iWatch for various goods belonging to one of three different categories:
  • Watches.
  • Clocks.
  • Goods related to watches or clocks.
The application included a declaration stating that Berger had a bona fide intent to use the mark in connection with the identified goods. The US Patent and Trademark Office (USPTO) approved the application in May 2008. Several months later, Swatch filed a Notice of Opposition. The grounds for the opposition were that:
  • The iWatch mark was confusingly similar to Swatch's SWATCH mark.
  • Berger lacked a bona fide intent to use the iWatch mark in commerce when it filed its application.
The TTAB determined that Berger did not have the requisite intent to use the iWatch mark because:
  • Berger's owner and CEO, Bernard Mermelstein, testified that Berger never intended for the mark to be used with any goods other than watches.
  • Berger's paralegal testified that although Mermelstein only instructed her to register the mark for watches and clocks, she sought to register the mark for the other goods as a standard practice to give the company options in the future.
  • Berger's employees failed to tell a consistent story about the company's intent when Berger filed the application.
  • The only relevant documentary evidence consisted of:
    • a trademark search report;
    • an internal e-mail memorializing a conversation between the paralegal and the examining attorney concerning the application; and
    • internal e-mails containing images of watches and a clock with the iWatch mark that were created shortly before they were submitted to the USPTO in response to a request from the examining attorney. Although certain Berger employees testified that the images were pictures of mockups of watches and clocks, this conflicted with Mermelstein's testimony that no mockups were created and the images were generated in connection with the trademark application.
  • Berger presented conflicting evidence concerning whether the mark was ever discussed with any person outside of the company.
  • Mermelstein stated that when Berger filed the application, Berger merely wanted to reserve rights in the iWatch mark if it later decided to develop a watch with certain technology or information features.
  • Berger employees testified that they had not made or taken any steps toward developing a watch with technological features either in connection with the application filing or within the following 18 months.
  • Berger's use of the marks i-Kidz and iMove for watches occurred nearly three years after the iWatch application was filed and are different marks.
On appeal, the Federal Circuit first noted that the Lanham Act allows applicants to submit an application to register a mark before the mark is actually used in commerce as long as the applicant shows a bona fide intent to use the mark in commerce at a later date (15 U.S.C. § 1051(b)(1)). However, this case presented for the first time whether an opposer may challenge an intent-to-use trademark application based on a lack of a bona fide intent to use the mark in commerce. The Federal Circuit held that an opposer may make this challenge.
The court then considered what constitutes a bona fide intent under the Lanham Act. Although there is no statutory definition of that term, the court determined that the statutory language and legislative history clearly require the applicant to have an objectively shown good faith intent to use the mark in commerce. Although this is not a high bar, the Federal Circuit concluded that the applicant must demonstrate more than just an intent to reserve a right in the mark.
The Federal Circuit then turned to Berger's arguments on appeal and rejected its attempts to focus only on the evidence that supported its position. However, the court confirmed that the totality of the circumstances concerning an applicant's bona fide intent must be considered and concluded that, taking the evidence as a whole, substantial evidence supports the TTAB's conclusion. In particular, it noted:
  • Berger's employees' inconsistent testimony.
  • The general lack of documentary support for Berger's position.
The Federal Circuit also rejected Berger's claim that the TTAB applied the wrong legal standard for a bona fide intent determination. The court noted that the TTAB did not:
  • Require Berger to have actually promoted, developed and marketed the mark when Berger filed the application.
  • State that it had applied this standard.
Instead, the court determined that the TTAB considered the totality of the relevant facts and circumstances, including those that indicated Berger's lack of intent, which is the proper standard under the Lanham Act.
Finally, the Federal Circuit concluded that the USPTO was within its discretion to allow the application to proceed based on only a verified statement of a bona fide intent to use because:
  • The applicant's intent could be at issue in an opposition or cancellation proceeding.
  • It reserved the right to make its own inquiry into the applicant's intent.