Swatch AG v. Beehive Wholesale, LLC, No 12-2126

Decided: January 7, 2014

The Fourth Circuit held that the district court did not err in finding that the marks at issue in this trademark infringement case were not confusingly similar and therefore affirmed the district court’s order dismissing all claims.

This trademark infringement claim arose out of a dispute between a well-known Swiss watchmaker, Swatch AG (“Swatch”), and Beehive Wholesale, LLC (“Beehive”), a Louisiana company engaged in wholesale and retail sales of a variety of products including watches and watch parts. Swatch is the owner of three U.S. registrations for the mark SWATCH. Beehive produces and sells watch bands and faces under the mark SWAP. Beehive’s products are defined by the fact that the parts are interchangeable. Swatch brand watches, on the other hand, do not include interchangeable components. And, are typically sold at a higher price point. Beehive applied to register its mark in mid-2004. The application was preliminarily granted and published for opposition on December 26, 2005. Swatch filed a notice of opposition in April 2008, primarily arguing that the similarity between the two marks in combination with the similar character of their products was likely to result in confusion among customers as to the origin of the goods. It also argued that SWAP was too generic to be registered. The Trademark Trial and Appeal Board (“TTAB”) held a hearing on the opposition and dismissed all counts.

Swatch then filed suit and added new claims for trademark infringement and federal unfair competition under the Lanham Act; trademark dilution under the Trademark Dilution Act; state trademark infringement under Virginia law; and common law unfair competition.  Though Swatch presented documentary evidence not presented to the TTAB, the district court affirmed the TTAB, holding that there was no likelihood of confusion between the two marks and no likelihood that SWAP would dilute SWATCH. It dismissed Swatch’s infringement and unfair competition claims as a matter of law. It also concluded that Beehive’s mark is registrable because it is suggestive, not merely descriptive. This appeal followed.

On appeal, the Fourth Circuit first noted that the district court articulated its standard of review erroneously; stating de novo review of the entire record is required where new evidence is submitted. The district court, however, stated it would apply a hybrid review to its analysis. This was incorrect because the district court had evidence available that was not considered by the TTAB. Nonetheless, the court found that the district court recited sufficient facts of its own to support its opinion.

Addressing Swatch’s first challenge, the Fourth Circuit held that the district court committed no error in determining that the SWAP mark was suggestive rather than descriptive. In so doing, the court noted that the district court found that SWAP was suggestive because merely showing the mark and the product together would be insufficient to convey its attributes. Next, the court addressed Swatch’s challenge that the district court erred in holding that there was no likelihood of confusion. Rejecting this contention, the court found that the lower court properly found that despite the name of SWATCH and the similarity of the goods, the lack of similarity between the marks, lack of predatory intent, lack of similar advertising and only minimal similarity in facilities, in combination with the most significant factor, actual confusion, resulted in no likelihood of confusion between SWATCH and SWAP. In addition, because there was no likelihood of confusion between the marks, the court held, as a matter of law, that Swatch’s federal, state, and common law trademark infringement and unfair competition claims were properly dismissed. Similarly, because the two marks were found not to be confusingly similar, Swatch’s dilution claim was also properly dismissed.

Full Opinion

– W. Ryan Nichols

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