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…and ONE MORE THING, an intention to parody is not (necessarily) bad faith

14 July 2021. Published by Ben Mark, Partner and Sarah Mountain, Senior Associate

In 2017, Apple successfully opposed two trade mark applications for the words 'SWATCH ONE MORE THING' and 'ONE MORE THING' (the OMT Applications). The OMT Applications were filed by Apple's long-time adversary, Swatch. Apple alleged that the phrase “ONE MORE THING” had come to be associated with it and that Swatch had filed the OMT Applications with the intention of parodying Apple.

In March 2021, the High Court overturned the oppositions, finding that the Trade Mark Registry had been wrong to uphold them on grounds of bad faith: There was no evidence that Swatch intended to parody Apple and even if there had been, where marks are not offensive, the mere fact that they might be used to parody another is not a ground for refusal.

Background

In November 2015, Swatch filed the OMT Applications for a variety of goods, including watches and consumer electronic products.  Apple opposed the OMT Applications on two grounds. Firstly, that under s5(4)(a) of the Trade Marks Act 1994 (TMA), Apple could prevent Swatch from using the signs through passing off. Secondly, that the OMT Applications had been filed in bad faith, due to Swatch’s knowledge of Apple’s reputation in the phrase and Swatch’s likely intention to use the marks to parody Apple.

In the background, there was a long running dispute between the parties. This, along with other Swatch trade mark applications, had generated what the judge referred to as "bad blood”.

Hearing Officer

At first instance, the Hearing Officer rejected Apple’s opposition under s5(4)(a) TMA (i.e. passing off).  Whilst he accepted that a non-trivial number of people in the UK would be aware of Apple’s use of 'ONE MORE THING', he did not consider this sufficient to turn a common phrase into a “distinguishing sign”, capable of indicating the trade origin of Apple’s goods. 

The oppositions were however upheld under s3(6) TMA, the Hearing Officer having considered it no coincidence that the OMT Applications had been filed at a time when the parties were “already at loggerheads”.

Grounds of appeal

Swatch appealed the first instance decision on three grounds. Firstly, that Apple’s case under s3(6) TMA was predicated on the proposition that it owned enforceable unregistered rights in 'ONE MORE THING' and that the Hearing Officer, having rejected the oppositions under s5(4)(a) TMA, should also therefore have rejected the oppositions under s3(6) TMA.

Secondly, that the Hearing Officer did not have adequate evidence for his findings regarding Swatch’s intentions when it applied for the marks, at all or in relation to parody.

Thirdly, that an intention to parody was not sufficient to constitute bad faith, particularly bearing in mind the principle of freedom of expression. 

Decision

Bad faith

'Bad faith' has no prescribed definition under English law. The Court considered that it requires consideration of the applicant's state of mind and intentions regarding their application. It referred to Sky v SkyKick, noting that bad faith arises where:

“…the proprietor of a trade mark has filed the application for registration of that mark not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties."

No evidence of intention to parody

On the above basis, the judge was clear that the Hearing Officer had been wrong to uphold the opposition under s3(6) TMA.  Whilst he had no difficulty finding that the OMT Applications were at least partially designed to “upset” Apple, he was unconvinced that that led to the conclusion that parodic use was intended. Indeed, he noted that any attempt to register the marks (regardless of intention) would have likely upset Apple and that the simple fact that Swatch wanted to annoy Apple could not alone amount to bad faith.

There was also a distinct lack of evidence that Swatch intended to parody Apple when the OMT Applications were filed. Swatch stayed silent on the point and Apple placed heavy reliance on online commentary. Since the authors of the comments had no knowledge of Swatch’s intentions or any apparent expert insight, the judge considered them of no evidential value. Whilst the Hearing Officer was entitled to be unimpressed by Swatch's failure to explain its intentions, that alone did not prove anything.

Ultimately, the judge found no evidence to support Apple's assertion that Swatch intended to use the OMT Applications to undermine Apple by parodic use.  That was sufficient for Swatch’s appeal to succeed, but the judge was also clear that even a proven intention to “poke fun at Apple in a manner akin to parody”, would not, of itself, amount to bad faith.  It was not an inherently dishonest practice to use a sign which brings another trader to mind in an amusing but inoffensive way, albeit the judge did accept that parody might transgress the boundaries of honest business practices in certain circumstances.

Comment

The decision is the latest in a spate of recent cases concerning 'bad faith' but as the first reported case to consider parody in the context of bad faith, it offers some interesting insights.

Unlike some jurisdictions (such as the US), when applying to register a UK trade mark, there is no requirement for the applicant to confirm that its mark is either already in use or will be used in the near future: A bona fida intention to use the mark is sufficient. With this in mind, the judge considered it perfectly reasonable (and consistent with the evidence) to suppose that Swatch had not given much thought to exactly what it would do with the marks, if they achieved registration. 

To succeed in establishing bad faith, a party typically has to evidence that the applicant had a dishonest state of mind or intention when its applications were filed. Whilst the Court acknowledged that each case turns on its facts and suggested that the severity and offensiveness of the parody is a relevant factor, the decision suggests that a light-hearted intention to parody would be unlikely to result in a finding of bad faith.

It is interesting to consider whether the outcome would have been different, had this been a claim for passing off, which required the parties to undergo disclosure. Here, the complete lack of evidence regarding Swatch's intention to use the mark to parody Apple was a decisive factor, albeit it seems Apple may have struggled to evidence the necessary goodwill in 'ONE MORE THING' to establish a claim in passing off.

It is also interesting to consider whether Apple would have been successful, had it pleaded a 'blocking' case. The OMT Applications will now proceed to registration but that may not be the end of the story. Under s47(1) TMA, a registered trade mark may be declared invalid on the ground that it was registered in breach of s3 (including s3(6)). This, in effect, means that Apple may decide to have another bite at the cherry (or perhaps the apple is more apt!) and to challenge the registration on grounds of bad faith. If Apple does so, it will also be at liberty to formulate its case as one of 'blocking' or so-called 'trade mark squatting', which the judge intimated could well have better prospects of success.

Swatch AG v Apple Inc [2021] EWHC 719 (Ch). The High Court's full decision can be read here. A fuller article, which takes a more in depth look at the decision, will appear in Entertainment Law Review in due course.