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News - 22 November 2018

A recent decision of the Federal Court has confirmed that descriptive trademarks are not entitled to a broad ambit of protection.

The Facts

Swatch AG is a Swiss company that designs, manufactures, sells and distributes watches and other horological instruments, and related jewelry on a worldwide basis. Swatch AG applied for registration of the trademark iSWATCH design as shown below:


in association with horological and chronometric instruments, namely watches, chronographs and alarm clocks and other goods.

The Opposition

Hudson Watch Ltd. opposed the application on the basis, among others, that the applied for mark was confusing with its registered trademark iWATCH registered for use in association with men’s and ladies’ wristwatches.

The Trademarks Act provides that the use of a trademark causes confusion with another trademark if the use of both trademarks in the same area would be likely to lead to the inference that the goods associated with those trademarks are manufactured, sold, leased, hired or performed by the same person, whether or not the goods are of the same general class. In determining whether trademarks are confusing, the court or the Registrar shall have regard to all the surrounding circumstances including:

•    the inherent distinctiveness of the trademarks and the extent to which they have become known;

•    the length of time the trademarks have been in use;

•    the nature of the goods, services or business;

•    the nature of the trade; and

•    the degree of resemblance between the trademarks in appearance or sound or in the ideas suggested by them.

Neither party to the opposition filed detailed evidence with the Trademark Opposition Board and the only evidence consisted of certified copies of the relevant registrations. The burden of proof was on Swatch AG to show, on a balance of probabilities, that there was no reasonable likelihood of confusion.

The Hearing Officer found that the balance of probabilities between finding there was no reasonable likelihood of confusion and finding there was a reasonable likelihood of confusion, to be evenly balanced. As a result the opposition was allowed. However, the Hearing Officer said had Swatch AG filed evidence sufficient to show acquired distinctiveness of its mark or the ownership of a family of SWATCH trademarks, this may have shifted the balance of probabilities in its favour.

The Appeal

Swatch AG appealed to the Federal Court. On such an appeal the appellant can file additional evidence. In this case Swatch AG filed evidence of its sales, the existence of watch and clock products on the market, the great many stores selling Swatch products, points of sale dedicated to these products and its large-scale advertising which showed the notoriety the mark has acquired since Swatch AG began operations in Canada in 1984. In addition there was evidence of three related Swatch registrations which had been registered before Hudson Watch applied for its registration. Two of the registrations consisted of the word SWATCH and this word was the dominant component of the third.

The Standard of Review

Where additional evidence is filed in the in the Federal Court that would materially affect the Hearing Officer’s findings of fact or exercise of discretion, a judge must come to his or her own conclusion as to the correctness of the Hearing Officer’s decision. In this case the judge found that the new evidence was substantial and significant, and certainly not evidence presented to the Board. This conclusion was reinforced by the Hearing Officer essentially asking for this evidence.

The Review of the Evidence

As a result the judge reviewed the evidence before him in light of the statutory factors. Regarding factor (a) the judge observed that distinctiveness is the essence of and cardinal requirement of a trademark. Distinctiveness may be inherent or acquired. The distinctiveness of the iWATCH mark was weak since it was a generic word and descriptive. In addition’ there was no evidence of its acquired distinctiveness before the court.

Marks are inherently distinctive when nothing about them refers the consumer to a multitude of sources. Where a mark is only descriptive of the goods, less protection will be afforded to it. Conversely, where the mark is a unique or invented name, so it could refer to only one thing, it will be extended a greater scope of protection.

The judge found that the iSWATCH design mark had more inherent distinctiveness than the iWATCH mark and was not descriptive. In addition, it had acquired distinctiveness through the promotion and sale of watch and clock products in Canada, as demonstrated by the Swatch AG’s additional evidence, but also by the use of the graphic design, which because of promotion and market penetration, has attained a profile that the iWATCH mark did not have.

When a mark is weak, as with iWATCH mark, small differences are sufficient to distinguish it from other marks as otherwise its owner could monopolize common and descriptive words of the English language.

While the goods of the respective marks overlapped, the judge did not think that the other statutory factors favoured Hudson Watch in a compelling way. Because of the additional evidence filed the inherent and acquired distinctiveness of Swatch AG’s mark was given great weight.

The judge said the test to be applied under the Act was a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the iSWATCH design mark on the Swatch AG goods when he or she has no more than an imperfect recollection of the mark, and does not give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks. The judge concluded that such a casual consumer who sees the iSWATCH design mark, without separately considering each part of the mark, will probably not confuse it with a product bearing the iWATCH mark, especially since the latter was not entitled to a wide ambit of protection. The dominant impression originates from SWATCH component, a mark well known in Canada.

Finally there was a significant period of concurrent use of the respective marks but no evidence of any confusion between them.

The appeal was allowed and the application allowed to proceed to registration.

The Supreme Court of Canada has stated that each of the statutory factors need not be given equal weight. However resemblance, although the last factor listed, is the statutory factor often likely to have the greatest effect on the confusion analysis. If the marks or names do not resemble one another, it is unlikely that even a strong finding on the remaining factors would lead to a likelihood of confusion. The other factors become significant only once the marks are identical or very similar. A consideration of resemblance is where most confusion analyses should start.

In this case the judge did not follow this approach but instead focussed on distinctiveness since his findings concerning this factor influenced his approach concerning resemblance.

Comment

The decision emphasizes the importance of the acquired or inherent distinctiveness of a trademark and the importance from a brand owner’s viewpoint of taking steps to maintain and increase acquired distinctiveness.

Gathering the evidence to support an opposition can be time consuming and expensive. Because of the nature of the appeal process frequently brand owners attempt to get by with limited evidence knowing that problems can frequently by addressed on appeal.

It will be interesting to see what the Government has to say about this practice when the latest promised amendments are presented to Parliament.


John McKeown

John McKeown

Firm: Goldman Sloan Nash & Haber (GSNH) LLP
Country: Canada

Practice Area: Trademark