M.Z. Berger & Co., Inc., v. Swatch AG (Swatch SA) (Swatch Ltd.), ___ F.3d ___ , 114 U.S.P.Q.2d 1892 (Fed Cir. 2015)
On June 4, 2015 by the Court of Appeals for the Federal Circuit sustained an opposition against an intent-to-use application because the applicant, M.Z. Berger & Co., Inc. (“Berger”), a manufacturer of watches and clocks, could not prove by objective evidence that it intended to use the applied-for mark iWatch for a range of over thirty different goods, all in the categories of watches, clocks, and accessories for watches and clocks (such as clock dials, watch bands, and watch straps). M.Z. Berger & Co., Inc. v. Swatch AG, ___F.3d ___, 114 U.S.P.Q.2d 1892 (Fed. Cir. 2015).
The case arose because Swatch AG opposed Berger’s intent-to-use application for the mark iWatch, contending that this mark was confusingly similar to its SWATCH mark. The opposition was later amended to include a separate ground of lack of bona fide intent to use the mark.
The Board found that the marks were not confusingly similar, but granted the opposition on the basis that Berger could not establish by objective evidence—in the form of documentary evidence or testimony—that it had a bona fide intent to use the mark for the listed goods at the time the application was filed (Slip. Op. p. 8). The Federal Circuit affirmed on the lack of bona fide intent ground, and thus did not address the issue of likelihood of confusion.
The court first confirmed, in a matter of first impression for the Federal Circuit, that lack of bona fide intent is a proper statutory ground for an opposition (Slip. Op. p. 11). Not only can this claim be raised in oppositions and cancellations, but examiners at the United States Patent and Trademark Office (“USPTO”) also have authority to question the applicant’s bona fide intent if the evidence of record clearly indicates that the applicant does not have such an intent to use the mark (Slip. Op. p. 19).
Next, the court addressed the meaning of “bona fide intention” under Section 1(b) of the Lanham Act. Although “bona fide intention” is not specifically defined, Section 1(b) specifies that a bona fide intention must be determined “under circumstances showing the good faith of such person.” From this language, the court concluded: “The reference to ‘circumstances showing the good faith’ strongly suggests that the applicant’s intent must be demonstrable and more than a mere subjective belief” (Slip. Op. p. 12).
Moreover, the objective good faith must be based on firm and uncontroverted documentary and/or testimonial evidence, and not merely the declaration contained in the application that attests to the applicant’s bona fide intent to use the mark. Otherwise, every opposition and claim could be defeated by an officer of the applicant saying, “Yes, we intended to use the mark” (id.).
Lastly, the bona fide intent to use the mark, along with the requisite evidence to do so, must exist at the time of the filing of the application; it is insufficient if the intention arises after the filing date (Slip. Op. p. 16).
Berger argued that it was in the watch and clock business, and that although it intended to use the mark iWatch only for watches, it had filed for its usual range of business products so as to have a mark ready when it decided to move forward with a smart watch (Slip. Op. pp. 3-4). However, this testimony was construed as an admission that Berger did not have a firm intention to use the mark for specific goods at the time of filing (id.); rather, its plans were merely aspirational. Although Berger was in the watch business, the fact that it had never made a watch with the technological features of a smart watch also weighed against it. Berger’s argument that it made use of the marks i-Kidz and iMove for watches three years later was not persuasive because “there was no nexus between Berger’s general capacity to produce watches and the capacity required to produce a ‘smart’ watch” (Slip. Op. p. 17).
The court was troubled by the complete lack of documentary evidence of Berger’s intentions to use the iWatch mark at the filing date. The Court noted that all of the documents produced during the Board proceeding pertained to the trademark application, and not to any plans to use the mark. The testimony given by Berger’s employees as to its intent was inconsistent and thus disregarded.
What can we learn from this case?
- This case was decided by the Court of Appeals for the Federal Circuit, and is thus binding on the Trademark Trial and Appeal Board as well as the USPTO Examiners.
- After the Federal Circuit’s opinion in In re Bose Corporation, 91 U.S.P.Q.2d 1938 (Fed. Cir. 2009), setting a very high bar for the requirements to prove fraud by an applicant, this case reopens the door for third parties to challenge intent-to-use applications that contain implausible or overly-broad listings of goods.
- Applications based on home-country registrations and Madrid extensions into the U.S. both require that the applicant have a bona fide intent to use the mark in U.S. commerce, so these same requirements would apply to applications filed under Sections 44(e) and 66(a).
- Applicants should keep a file for each mark, documenting the products for which it might be used, as well as the intended purchasers, markets, price points, and any other customary information used in product development. Contemporaneous memoranda, along with product sketches or information about proposed services, would also be helpful.
- Applicants should not include plainly implausible goods or services in the identification of goods or services as doing so may provoke further inquiry, as was the case here. Long listings of goods or services similarly invite attack. In this case, the list of more than thirty goods, including clocks and clock accessories (bearing in mind that the mark was iWatch) likely provoked the attack on the bona fide intent of the applicant, despite the fact that the applicant was in the business of making watches and clocks.
Of course, as a general matter, intent-to-use applications can be filed broadly if the applicant is unsure about the full scope of use, but even then each item listed should be defensible, in line with the applicant’s existing or planned business, and included in a marketing plan. The Federal Circuit cited with approval Research in Motion Ltd. v. NBOR Corp., 92 U.S.P.Q.2d 1926, 1931 (TTAB 2009), holding that “applicant’s stated belief that the mark would be ‘a good mark for future use’ does not establish a bona fide intent to use” (Slip Op. p. 16).
For a U.S. application based on a home-country registration, there typically are no serious issues preventing registration. Issues will only arise if a later applicant challenges the mark because it is cited against its application, or the mark is deemed to be confusingly similar to a third party’s mark, or because the owner of the overly-broad registration challenges a third party’s mark. It is in these circumstances that the principles under the Berger case will come into play.
As we frequently advise, a simple, accurate application is very difficult to challenge.