If you were browsing for watches or watch accessories and saw a watch brand, SWATCH, sitting aside another watch brand, SWAP, would it be plausible to think the two were in some way related? The District Court for the Eastern District of Virginia doesn’t think so, and the Court of Appeals for the Fourth Circuit agrees.
Swiss Plaintiff and Appellant, Swatch AG (Swatch), owns three registered trademarks for their SWATCH mark, which appears on “watches, clocks, jewelry, and various materials for watch collectors.” Defendant and Appellee, Beehive Wholesale, LLC (Beehive), is a Louisiana-based company which sells watches and watch accessories under the SWAP mark.
Beehive filed an application for this mark in 2004. According to Circuit Judge Duncan, “Beehive’s application was preliminarily granted and published for opposition on December 26, 2005.” During the length of the publication, a party may challenge or oppose the pending trademark registration by submitting an official opposition notice to the USPTO. A year into the publication, Swatch did just that, filing their opposition to the SWAP mark in 2006 (though the amended opposition in question is from 2008), citing three issues:
1) Priority of Swatch’s mark and likelihood of confusion;
2) Mere descriptiveness of Beehive’s mark; and
3) Dilution of SWATCH by Beehive’s use of SWAP.”
Swatch found that the SWAP mark was far too generic and common a term to be trademarked, and that registration of the SWAP trademark would confuse customers and render the SWATCH mark less effective. The Trademark Trial and Appeals Board (TTAB) quickly dismissed each of Swatch’s arguments.
Dissatisfied with the TTAB’s dismissal, Swatch sought civil reprieve through a Virginia district court, this time amending their complaint to also include violations of the Lanham Act and Trademark Dilution Act, as well as claims of infringement and unfair competition. Just as surely as the TTAB, the district court countered each of SWATCH’s arguments, refusing to cancel the registration.
Most recently, Swatch appealed the District Court’s decision to Virginia’s Court of Appeals for the Fourth Circuit (the Court). The Court decided to “review the district court’s factual findings for clear error and its legal conclusions de novo.” In other words, the Court decided it was necessary to determine whether or not the district court erred in deferring to the TTAB.
Citing Fregeau v. Mossinghoff, the Court found that the district court was required to evaluate the merits of the trademark opposition claim de novo (without deference to the findings of the TTAB) since the TTAB is not a tribunal. The Court opined that the district court incorrectly interpreted the standard of review for the opposition, but did not clearly “improperly defer to the factual findings of the TTAB,” meaning their ruling was valid.
Additionally, the Court found that, contrary to the claims of Swatch, SWAP is not just a generic and descriptive mark, but also a suggestive one. SWAP was so named because of the interchangeability of its watches’ faces and wristbands. As a mark suggesting but not describing the watch’s feature, the Court deemed Beehive’s SWAP mark eligible for trademark protection.
Furthermore, on the issue of customer confusion, the Court agreed with both the TTAB and district court, stating:
SWATCH and SWAP: 1) look different when written; 2) sound different when spoken; and 3) have completely different meanings in common usage… [Also], Swatch almost exclusively appears accompanied by a Swiss flag both on products and in advertisements, while SWAP is generally accompanied by the phrase ‘by Beehive.’… [Similarly], there was a substantial difference in the fonts used by the two marks… [Lastly, the district court] found no evidence in the record that the parties’ products had ever been sold in the same store, and found that both parties’ internet sales were limited to their own brand websites.
It is unclear whether Swatch plans to further appeal the decision. However, if the district and appeals court opinions are any indication of what is to come, SWAP is here to stay and there is next to nothing Swatch can do about it.
Law Clerk at
JAFARI LAW GROUP®