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  • Writer's pictureRosie Burbidge

Is Samsung liable for digital watch face infringement?



The Court of Appeal has upheld a judgment finding that Samsung infringed various watch brands by making available digital watch face apps on the Samsung Galaxy App store. We reported on the first instance judgment, by Mrs Justice Falk, in May 2022.


In Arnold LJ's judgment, with which the other two appeal judges broadly agreed, he addressed three main issues: (i) use by Samsung; (ii) use in relation to smartwatches; and (iii) the article 14(1) defence.


Use by Samsung

The first question was whether Samsung used the signs, each of which was created by an app developer, in so-called Dial Branding. Arnold LJ said the judge was correct to find that it did, saying the factors she considered in her analysis were relevant: “Samsung's actions went well beyond merely creating the technical conditions for use of the signs, allowing use of the signs and receiving payment.”


Moreover, she correctly took into account matters which, even if they were unknown to consumers, affected consumers’ perception of the signs. This was consistent with the test recently set out by the CJEU in its judgment in Louboutin (see our analysis of this case here).


Samsung argued that the judge should have considered the fact that the pricing of apps was set by developers, that Samsung discouraged app developers from infringing IP rights, and the nature of the customer journey. But Arnold LJ said there was no error by the judge in her assessment of these questions.


Use in relation to smartwatches

The judge had found that the branding was not used solely to denote the origin of the app but also the origin of the watch and there was therefore use in relation to smartwatches. Arnold LJ agreed, given that many of the apps in dispute showed the brand name in “always on” mode. If this was not enabled, the sign would only show up for short periods of time.


He concluded that the apps in question created a realistic simulacrum of a watch face on a smartwatch which is designed by Samsung to be ‘truly watch-like’ and added:


“A person who sees a person wearing such a smartwatch may well not know that the watch is made by Samsung. If they are interested to know who made it, the natural place to look is the Dial Branding. The app in question will display a sign identical or similar to one of Swatch’s trade marks. Accordingly, they will be led to believe that this denotes the origin of the watch unless told otherwise. The fact that this may be a relatively infrequent occurrence is neither here nor there.”

Article 14(1) defence

Samsung argued that it had a defence under Article 14(1) of the EU E-Commerce Directive (transposed into UK law as the e-Commerce Regulations), which limits the liability of service providers in certain circumstances. Samsung argued essentially that the judge placed too great a burden on it to deal with trade mark infringements by app developers.


Arnold LJ found that “Samsung's acts of use of the disputed signs were active, and gave it knowledge of and control over that content. They were not merely technical, automatic and passive with no knowledge or control.” They were therefore not covered by Article 14(1) at all, and it was not necessary to consider whether Samsung was aware of the facts or circumstances from which the illegal activity is apparent under Article 14(1)(a).

 

What does this mean?

The Court of Appeal has firmly endorsed the first instance finding in a decision that is likely to be welcomed by brand owners but not by operators of app stores and other online marketplaces.


The analysis of Article 14(1) of the E-Commerce Directive is likely to be particularly closely analysed, as it provides a defence to claims for financial remedies in respect of the trade mark infringement.


The judges declined to rule definitively on Article 14(1)(a), leaving this question open for another case. However, Lord Justice Lewison stated that in his view the court should assess what facts and circumstances the service provider was actually aware of and ask whether on the basis of those facts and circumstances alone a diligent economic operator should have realised that there was illegality:


“In short, the first part of the test is to ask what facts or circumstances the service provider was actually aware of. That is nothing to do with a diligent economic operator. The second part of the test is to ask: on the basis of those facts and circumstances would the illegal activity have been readily identifiable by a diligent economic operator?”

He concluded that the first instance judge had erred in prescribing a series of steps that Samsung ought to have taken but did not.


No doubt this question will be analysed further in future cases!


To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - rosie.burbidge@gunnercooke.com


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