Monday, June 08, 2015

CAFC Affirms TTAB's "iWatch" Ruling: Applicant Lacked Bona Fide Intent

The U.S. Court of Appeals for the Federal Circuit affirmed the decision of the TTAB (TTABlogged here), sustaining Swatch's opposition to registration of the mark iWatch, in standard character form, for watches, clocks, and related goods, on the ground of lack of bona fide intent. The court ruled that the Board applied the correct legal standard and that substantial evidence supported the Board's finding that Applicant Berger's intent at the time it filed the application at issue "was merely to reserve a right in the mark, and not a bona fide intent to use the mark in commerce." M.Z. Berger & Co. v. Swatch AG, 114 USPQ2d 1892 (Fed. Cir. 2015).

Berger's owner and CEO testified that the company intended to sell only watches under the proposed mark. With regard to watches, the documents submitted by Berger related only to the prosecution of its trademark application. Bayer's testimonial evidence was inconsistent and contradictory, and its long history in the watch business did not include the capacity to produce watches with technological features. The Board concluded that the circumstances as a whole demonstrated a lack of bona fide intent to use the mark iWatch in commerce, as required by Section 1(b).

The CAFC observed that the Trademark Law Revision Act of 1988 (TLRA) amended the Lanham Act to permit the filing of a trademark application prior to the commencement of actual use of the mark, provided that the applicant had a "bona fide intention ... to use [the] mark in commerce" at a later date. Of course, and applicant is required to demonstrate actual use of the mark before a registration will issue.

The CAFC first considered whether lack of bona fide intent is a proper basis for challenging a trademark application. The TTAB has long so ruled, and the court agreed. An opposer is "entitled to rely on any statutory ground which negates appellant's right to the subject registration [.]"

The court then turned to the question of the meaning of "bona fide intention" under Section 1(b). There is no statutory definition of the term, but Section 1(b) states that such intent must be "under circumstances showing the good faith" of the applicant. This reference "suggests that applicant's intent must be demonstrable and more than mere subjective intent." Both the USPTO and the leading treatise on trademark law [McCarthy] have arrived at this same interpretation. The legislative history of the TLRA confirms that the issue of "bona fide intent" must be assessed on an objective basis.

Although "bona fide" is an accepted legal term, it can be read broadly or narrowly, subjectively or objectively, by a court or the Patent and Trademark Office. In connection with this bill, "bona fide" should be read to mean a fair, objective determination of the applicant’s intent based on all the circumstances.
Senate Report at 24 (emphasis added by CAFC).

The CAFC pointed to the definition of "use in commerce" in the Lanham Act: "[T]he bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark." And it noted the statement in the Senate report that the intention of an applicant to use the mark in commerce must be "firm." Congress declined to include a statutory definition of "bona fide" in order to permit flexibility in the operation of the trademark registration system.

[W]e hold that whether an applicant had a "bona fide intent" to use the mark in commerce at the time of the application requires objective evidence of intent. 15 U.S.C. § 1051(b)(1). Although the evidentiary bar is not high, the circumstances must indicate that the applicant’s intent to use the mark was firm and not merely intent to reserve a right in the mark. See id. §1127; see also Senate Report at 24–25. The Board may make such determinations on a case-by-case basis considering the totality of the circumstances

Viewing the evidence as a whole, the CAFC found that substantial evidence supported the Board's decision. The court agreed that Berger's documentary evidence "appears to relate only to the prosecution of the trademark application." With regard to the conflicting testimony, the court deferred to the Board's exercise of discretion in determining the weight and credibility of same.

The Board was within its discretion to disagree with Berger's bottom-line position that it possessed a bona fide intent, given the inability of the Berger witnesses to pull together a consistent story on a number of issues, e.g., would the watch be technological, did actual physical samples exist, were potential customers ever consulted.

Moreover, Berger's owner and CEO (its Rule 30(b)(6) witness) "all but conceded that Berger had not yet made a firm decision to use the mark in commerce at the time of its application."

The court also agreed that Berger's history in the watch industry was not of significance on the issue at hand because "there was no nexus between Berger's general capacity to produce watches and the capacity required to produce a 'smart' watch."

The bar for showing a bona fide intent is not high. But in our view, considering the inconsistent testimony offered by Berger employees and the general lack of documentary support, substantial evidence supports the Board’s conclusion that Berger’s intent at the time of the application was merely to reserve a right in the mark, and not a bona fide intent to use the mark in commerce.

Finally, the Berger contended that the Board applied a more stringent standard for bona fide intent that is required by the Lanham Act of by USPTO rules and procedures. The CAFC disagreed.

Nowhere did the Board state that the applicable standard requires an applicant to have actually promoted, developed, and marketed the mark at the time of the application. Nor did the Board state that it applied such a standard. To the contrary, the Board’s opinion reflects that it reached its conclusions by considering all the relevant facts and circumstances, including those that indicated Berger lacked intent. This is indeed the proper inquiry under the Lanham Act. 15 U.S.C. § 1051(b)(1) (intent to use must be "under circumstances showing the good faith of such person").

Nor was the Board's opinion inconsistent with USPTO practice. The court noted that, although a Section 1(b) application is acceptable based only on a verified statement of bona fide intent to use, the Office has statutory authority to seek further evidence of that intent. In short, the Board did not commit error in its application of the standard for bona fide intent.

And so the CAFC concluded that the Board properly sustained the opposition on the ground that Berger lacked a bona fide intention to use the mark iWatch in commerce at the time if filed its application to register.

Read comments and post your comment here

TTABlog notes: An applicant had better have some documentation to support a claim of bona fide intent. Or at least a close nexus between the new product and the old line of products (e.g., see the ROLL-X for x-ray tables case).

The CAFC declined to reach the issue of likelihood of confusion between the mark iWatch and the mark SWATCH. The Board had found no likelihood of confusion. Will Berger file a new application for iWatch?

Text Copyright John L. Welch 2015.


At 1:02 PM, Anonymous Anonymous said...

They did file again for IWATCH LIVEWELL.

There are 24 IWATCH applications, mostly dead and most for something other than a watch.


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