Swatch AG v Apple Inc

For bad faith under section 3(6) of the Trade Marks Act 1994, the applicant’s state of mind and intended use must be assessed against honest commercial behaviour and the essential function of trade mark protection. Bad faith must be proved by cogent evidence. Facts equally consistent with good faith do not suffice, and the court must avoid speculation about an unproved intended use. An intention to annoy or parody another trader is not inherently bad faith. The assessment depends on the nature of the proposed use, its intensity and its impact on the other trader’s business interests.

Swatch applied to designate the United Kingdom with two international registrations for the signs SWATCH ONE MORE THING and ONE MORE THING, covering goods including watches and consumer electronics. Apple opposed under sections 5(4)(a) and 3(6) of the Trade Marks Act 1994.

The Registrar rejected the passing-off objection but upheld the bad-faith objection, finding that the applications were intended to support a parody of Apple. Swatch appealed. Apple also challenged the Registrar’s finding that the phrase lacked trade mark distinctiveness. The central issues were whether the evidence established an intention to parody Apple and whether such an intention could amount to bad faith.

1. Appeal allowed. The Registrar’s decision under section 3(6) of the Trade Marks Act 1994 was set aside. Apple’s challenge concerning distinctiveness was rejected.
2. A bad-faith objection is free-standing. It does not require the opponent to establish an enforceable United Kingdom goodwill or other actionable right in the sign.
3. Bad faith requires an assessment of the applicant’s state of mind and intentions at the application date against honest and fair commercial behaviour and the proper purpose of trade mark protection. The applicant is presumed to have acted in good faith. The allegation must be distinctly proved on the balance of probabilities, with cogent evidence. Facts which are equally consistent with good faith are insufficient.
4. The Registrar was entitled to find that the applications were intended to annoy or upset Apple. That finding did not establish an intention to parody. The evidence, including third-party online comments, did not prove Swatch’s particular intended use and the Registrar had impermissibly moved from a broad finding of retaliatory purpose to a specific finding of parodic use.
5. The possibility that the marks might later be used for parody was speculative. An applicant need not know precisely how a mark will be used when applying for registration. Nor is it inherently dishonest to use a sign which brings another trader to mind in an amusing or inoffensive way. Whether parody crosses the boundary of honest business practice depends on the nature of the humour, the intensity of the use and its impact on the other trader’s business interests.
6. Annoying a business, without more, is not an objectively analysable basis for bad faith. A mark may have a parodic character while remaining capable of functioning as a trade mark.

• High Court (Chancery Division) — Appeal from the Registrar of Trade Marks allowed. The section 3(6) opposition was not made out.
• Registrar of Trade Marks — On 19 October 2017, the Hearing Officer rejected the section 5(4)(a) opposition but upheld the section 3(6) opposition. The distinctiveness finding was challenged by Apple on a Respondent’s Notice.
• Court of Appeal — Permission to appeal was ultimately permitted by consent, as described in the judgment; no citation is stated.