What has happened?

• The Court of Appeal has upheld a ruling that Samsung is primarily liable for trade mark infringement through the making available of infringing downloadable watch face apps on its Samsung Galaxy app (SGA) store. The case is an important one on the liability of app stores and intermediaries, as well as on the concept of "use" for trade mark infringement.

• The infringing apps had been created by third parties and bore the claimants' (members of the Swatch group) trade marks on the watch dial face or in the app name. Samsung had assisted the app developers in various ways including by checking, certifying, arranging and advertising the apps. 

• The question was whether Samsung was liable for the trade mark infringements as a primary tortfeasor, or as a joint tortfeasor with those who developed the apps. The Court of Appeal agreed with the High Court that Samsung was primarily liable for the infringements.

• It held that Samsung had "used" the marks in the manner required for infringement and that such use was in relation to smartwatches (and not just apps). The ruling suggests that the Courts will take a flexible approach to the concept of "use" (at least in the case of intermediaries), not necessarily requiring the type of infringing use to be specified. The case also illustrates that post-sale use can be sufficient for infringement even if such use is very short-lived.

• The Court also held that Samsung could not benefit from the safe harbour provision in Article 14(1) of the e-Commerce Directive. This is interesting given that new EU provisions allowing intermediaries to undertake certain own-initiative investigations without losing the benefits of the safe harbour provision will soon come into force under the Digital Services Act.

Want to know more?

Background

The infringing apps had been created by third parties and bore the claimants' (members of the Swatch group) trade marks on the watch dial face or in the app name.

The apps were designed exclusively for, and operated only on, Samsung smartwatches. They were offered for sale on the SGA store – operated by Samsung and dedicated to apps for Samsung products. They were grouped together with other smartwatch face apps developed by Samsung. 

Samsung assisted the app developers in various ways such as by:

• Means of the Galaxy watch Studio tool.
• Undertaking technical and content reviews of the apps before their upload and then certifying the apps.

• Arranging the apps and advertising them. 

• Undertaking customer support and fielding complaints about the apps. 

The claim

The allegation was that Samsung was primarily liable for the trade mark infringements under Article 9(2)(a), (b) or (c) of the EUTM Regulation (being claims of double identity, likelihood of confusion and taking unfair advantage of reputation, respectively). 

The issues on appeal were whether there had been "use" of the marks alleged to infringe by Samsung, whether that use was in relation to smartwatches and whether Samsung could benefit from the safe harbour provision in the e-Commerce Directive.

Use of the infringing marks

Infringement under each of Articles 9(2)(a), (b) and (c) requires "use" of the mark in question by the person alleged to infringe. It was common ground that the infringing marks had been "used" by the respective app developers. The question was whether they had also been "used" by Samsung.

In the case of an intermediary – such as an app store – "use" has been interpreted by the ECJ to mean use in the intermediary's "own commercial communication". The Court of Appeal said that:

• This is a question of fact and is judged from the viewpoint of the average consumer. 

• The trial judge was correct to take into account factors relevant to how the average consumer would perceive the marks even if those factors were unknown to the average consumer. 

• It is not necessary to confine attention to the "immediate" context of use (see Specsavers v Asda).

• The trial judge took into account Samsung's activities, how the apps were presented in the SGA store, and the average consumer's perception of the marks. The judge was entitled to reach the conclusion she did – that Samsung had used the marks in question. In particular, Samsung's actions had gone "well beyond merely creating the technical conditions for use of the signs, allowing use of the signs and receiving payment". 

Use "in relation to" what

Each of the forms of infringement alleged by Samsung requires use of the sign in question “in relation to” relevant goods or services. By the time of the appeal, there was no dispute that all the signs complained of were used in relation to the respective apps. 

The Claimant contended that they were also used in relation to smartwatches. This was relevant because, if it could show such use, the Claimant would win on double identity infringement (with no need to show a likelihood of confusion and/or reputation/unfair advantage etc).

The Court noted that use of a sign “in relation to” goods or services means use “for the purpose of distinguishing” the goods or services in question ie trade mark use. It also noted that it is well established in both EU and domestic case law that it can be relevant to take the post-sale context into account when considering trade mark issues, including issues as to use.

Post sale use was relevant here because, once downloaded, the Swatch group trade marks appeared (in some cases) on the user's smartwatch in the dial branding position. The Claimant had argued that some third parties would consider (post sale) this to denote the origin of the smartwatch such that there was use of the marks "in relation to" smartwatches.

The High Court and Court of Appeal agreed with the Claimant that this was use on smartwatches. It noted that this was a question of fact and that Samsung had not demonstrated that the judge's finding was not open to her. The fact that the sign might only be visible for short periods of time (15 seconds, by default, if "always on" mode was not enabled) was deemed irrelevant.

Use in relation to smartwatches by Samsung

A subsidiary question was whether there was use in relation to smartwatches by Samsung itself.

The Court noted that use is an open-ended concept and not limited to the examples given in the EUTM Regulation. It does not matter whether Samsung affixed the signs to smartwatches provided that they used the signs in relation to smartwatches in some way. The judge held that Samsung used “the signs contained in [the apps]” and the Court of Appeal considered that she was entitled to reach that conclusion.

This aspect of the ruling suggests that the courts will take a relatively flexible approach to assessing whether there has been infringing use, at least in the case of intermediaries who are unlikely (by virtue of being intermediaries) to have undertaken one of the specified types of use in the legislation (such as "affixing the sign" to the goods).

Safe harbour

For the safe harbour provision in Article 14(1) of the e-Commerce Directive to apply, Samsung's conduct would have had to have been of a merely technical, automatic and passive nature. That was not the case here. The Court commented, "… 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. Thus they were not within Article 14(1)."

The EU's Digital Services Act provides (from 17 February 2024) that the safe harbour provision can still be available to intermediaries where they carry out voluntary own-initiative investigations or other measures aimed at detecting, identifying and removing illegal content. That is not part of UK law and is not – yet - part of EU law. On the facts of this case, even such a provision might not have saved Samsung.

What does this mean for you?

• The decision is an important one for app store operators and other intermediaries. It illustrates that the courts will consider the wider context of use in deciding whether there has been use by an intermediary in its own commercial communication. 

• It also shows that the Courts are willing to consider post-sale use and that the length of time of such use might be irrelevant.

• Factors relevant to how the average consumer would perceive the marks are relevant even if those factors were unknown to the average consumer at the relevant time.
• The Court did not see a need to specify exactly what type of use on smartwatches Samsung had undertaken – it was satisfied that there was infringing use. 

• Lastly, the case shows the limitations of the safe harbour provision of the e-Commerce Directive – as UK law stands, intermediaries will not fall within that safe harbour unless their actions are merely technical, automatic and passive; and, if an intermediary carries out any content checks, it may fall outside the defence.