Swatch out Samsung: High Court judgment on trade mark infringement

The High Court recently held that the tech giant Samsung Electronics Co. Ltd (Samsung) has infringed trade marks owned by Swatch Group's watch maker brands (Swatch).

This case offers a lesson for app store developers regarding trade mark infringement. It gives some useful guidance in relation to apps created and sold by independent third party app designers from an app store.

The Dispute

Swatch brought a claim of trade mark infringement against Samsung for infringements of 23 trade marks between October 2015 and February 2019. The claim relates to 30 digital watch faces that could be downloaded to Samsung’s smartwatches from the Samsung Galaxy App store (the SGA Store).

The apps were listed on the SGA Store and allowed consumers to download watch faces for their smart watch to replicate well-known brands such as Swatch and Omega. During proceedings, Samsung admitted that those apps had been downloaded around 160,000 times in the UK and the EU. 

Swatch asserted that, despite the watch faces being developed by a third party, Samsung was liable as a primary tortfeasor due to their control of the process of these apps being made available to the public.

Samsung defended the claim on the basis that:

  1. it had not used the trade marks;
  2. the signs on the apps were not used in a way that indicated that there was any connection with Swatch; and
  3. the acts were of a “mere technical, automatic and passive nature”, relying on the Article 14 defence in the 'e-commerce Directive'.

The Judgment

Samsung's conduct was considered as a whole with regard to whether it had 'used' the trade marks.

Mrs Justice Falk found that Samsung should be held liable due to the level of control it exerted over the publishing process, despite the apps in question being created by third-party developers. In this case it was shown that Samsung reviewed and approved the apps for customers to download and customise their Samsung watches before they were published on the SGA Store. Samsung also dealt with any customer complaints in-house rather than referring customers to the relevant third-party. The judge noted, "there was active behaviour by Samsung in relation to the apps and control by it of their availability, and Samsung was using the apps, and the signs contained in them, in its own commercial communications".

The judgment clarified how ‘use’ of an infringing sign, under Article 9(2) of Regulation (EU) 2017/1001, should be interpreted and the approach courts are likely to take when considering whether an app store provider should be liable for infringing third-party apps offered through its platform.

This case also draws a clear distinction between passive online marketplace operators and app store providers who offer third-party apps for use on their own goods and services. The fact that Samsung had in place notice and takedown procedures, which brand owners could use to notify Samsung of infringements, did not itself provide a defence.

Comment

The case will likely be welcomed by brand owners where app developers have very little assets as it highlights the benefit of pursuing the operator of the online app store as an alternative. Conversely, this will undoubtedly act as a warning for app store operators who could be found liable for trade mark infringement for apps created by third-party app developers. It does raise the question of what lengths operators will have to go to in order to avoid any liability and whether it is feasible to expect them to carry out comprehensive due diligence in relation to every app developed and sold in their store.

This case is an interesting contrast to Advocate General Szpunar's advice to the CJEU regarding Amazon's use of Louboutin’s trade mark in connection with third-party listings on its marketplace. Why? It indicates that the English Courts may diverge from the European Court guidance and be prepared to find online intermediaries liable for trade mark infringement, in contrast with the CJEU decisions in Google France and L’Oréal v eBay.

Some key take-aways for all brand owners and particularly app developers include:

  1. You may be liable if the content on an app infringes another third party's rights if you enlist a third-party supplier and are closely involved with its creation and operation.
  2. Always check your insurance policy
  3. Don't forget to consider and seek legal advice in relation to indemnities - noting that if you approve infringing content, you may not be able to rely on the indemnity.