The Apple of Discord, Swiss Edition

The apple for the day, just to be sure you keep the doctor away, is Apple Inc v. Federal Institute of Intellectual Property (IGE) (the original language of the decision is German; decision No 4A_503/2018 of 9 April 2019), which saw the Cupertino-based company at the centre of a trade mark registration dispute in Switzerland concerning the "APPLE" sign. By its decision, the Swiss Federal Supreme Court granted the registration of the mark after a 7-year long dispute. 

Background

In 2013, Apple Inc. sought registration of the sign "APPLE" before the Federal Institute of Intellectual Property ("IGE") for services in Class 37 (repair and installation services) and for goods in Classes 14 (precious metals, jewellery) and 28 (toys, video games). The registration for part of the goods in Classes 14 and 28 was refused on the ground that the sign belonged to the public domain and there was a descriptive reference due to the English translation of the word. Apple Inc. contested said decision by arguing that APPLE is not a descriptive indication, but rather an association of the sign with the trade mark proprietor, not with the fruit.

Case before the Swiss Federal Administrative Court

Given the persistent refusal from IGE to register the mark for part of the goods in Classes 14 and 28, in 2016 Apple Inc. lodged an appeal before the Swiss Federal Administrative Court asking for the APPLE mark to be registered for all the goods claimed in Classes 14 and 28. The Federal Administrative Court upheld part of the appeal and instructed IGE to register the trade mark APPLE for part of the claimed goods in Class 14. 

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In its decision, the Swiss Federal Administrative Court further indicated that a sign is distinctive if it is capable of functioning as a badge of origin. Distinctiveness must be assessed in an abstract manner and the impact of past or future uses on the perception of the public must be disregarded. If a trade mark is denied original distinctive character, the question can arise whether it has acquired derivative distinctiveness due to longstanding or intensive use. 

Pursuant to constant practice of the Federal Court a sign cannot be denied distinctive character only because the feature described is particularly original, but also it cannot be denied distinctive character just because the feature is not unexpected vis-à-vis the claimed goods. For example, for the  following goods of Class 14: timepieces; wristwatches; cuff/inks; key rings; decorative jewellery; pins; badges; medals; tie pins; tie holders; key rings and ornaments; decorative buttons; boxes; jewellery embellishments and sculptures, the apple motif is not common. Therefore APPLE is not perceived as a reference to a feature but it has distinctive character. For other goods in class 14 such as jewellery, necklaces and bracelets, APPLE is perceived by the relevant public as a descriptive indication of the features and ought to remain available for competitors.

The Federal Court also indicated that trade mark protection should be refused for goods made of precious metals because the APPLE mark is descriptive of at least some of the goods covered by the generic term. As regards toys, games and goods for games, electronic toys and games, musical toys and games, toy sound devices, toy music boxes, battery-operated toys and playing cards in Class 28 the apple is commonly used and is an indication of the features. Thus, it is devoid of any distinctive character and must remain available to competitors.

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Case before the Swiss Federal Supreme Court

Given the refusal by the Federal Administrative court to have the APPLE trade mark registered for all claimed goods in Classes 14 and 28, Apple Inc. appealed the decision to the Federal Supreme Court.

In its appeal, Apple Inc. claimed that the lower court based its assessment on an incorrect understanding of the sign. It is undisputed that fame or renown cannot be used in the registration procedure.

However, APPLE does not have a meaning in any of the official languages of Switzerland and it is understood in everyday language in Switzerland primarily as indicating a particular company, Apple Inc.

During the lower court proceedings it was shown that when consumers saw the sign APPLE do not make a translation into the name of the fruit in the national languages of Switzerland (namely, Apfel, pomme, or mela) but they make a connection and think about the company. According to Apple Inc. this must be taken into account into the assessment. Not doing so would amount to a denial of the importance of the public’s perception. Apple Inc. further argued that this would be a violation of Article 2 (a) of the Federal Act on the Protection of Trade Marks and Indications of Source SR 232.11 ("TmPA") which reads as follows:

Art. 2 Absolute grounds for refusal - Excluded from trade mark protection are:a.signs that are in the public domain, except where they have become established as a trade mark through use for the goods or services for which they are being claimed.

IGE rejected the argument that the APPLE mark should not be examined in connection with the goods at issue looking at the meaning of the word as a fruit. IGE stated that there is no absolute right to register a famous trade mark irrespective of the issue of protection. According to Article 2 (a) TmPA  signs that are in the public domain are excluded from trade mark protection except when they have acquired distinctiveness as a trade mark for the goods or services for which they are being claimed. The reason behind this exclusion is that signs with those characteristics must either remain available to third parties or they lack distinctiveness (or both).

According to established case law of the Federal Supreme Court, signs that amount to indications of nature, quality, quantity, intended purpose, value or other characteristics of the designated goods or services and therefore not possessing the distinctive character necessary for their identification cannot afford trade mark protection.

The descriptive character of such indications must be immediately recognisable by the relevant public without the need of further thought. English terms may be taken into consideration if they are understood by a not insignificant portion of the relevant public. The overall impression of a sign on the relevant public is key in determining whether the sign can be considered a trade mark. « A trade mark has inherent distinctive character if, based on a minimum original distinctiveness, it is capable of individualising the general range of goods and services of the same kind » (BGE 143 III 127 E. 3.3.2; 140 III 109 E. 5.3.2 S. 112; 137 III 403 E. 3.3.2; je mit Hinweisen) effects of past or future use of the sign on the perception of the public must be disregarded. The sign must « be capable on its own and independently of its use of distinguishing the goods and services of the trademark owner from those of the other providers »  (BGE 143 III 127 E. 3.3.2 S. 133; 140 III 109 E. 5.3.2 S. 112 mit Hinweisen). 

The Federal Supreme Court went on to explain that the lower instance court was correct in determining that in the assessment of the inherent distinctive character, a sign must be considered in the abstract as applied for by the applicant and the effects of past or future uses of the mark on the perception of the relevant public must be disregarded.

However, the Federal Supreme Court explained that Apple Inc. does not claim having used the mark in respect of the claimed goods and does not claim that the mark has acquired distinctiveness due to use in respect of those goods. It does not either claim that the reputation or fame must be taken directly into account. Whether a word is descriptive of the goods and services and the registration falls under the public domain depends on whether the mark has a recognisable meaning and, as the Federal Supreme Court underlines, the meaning of words is subject to linguistic change.

If in the current understanding the meaning of the word does not coincide with the verbatim meaning of the word but primarily as an indication of a particular company this cannot be ignored in the registration procedure. The relevant public to be taken into account with regard to the goods claimed in this case is the broad public which, quite effortlessly, will not think about the fruit when seeing the sign APPLE but will make the connection with the company Apple Inc.

Therefore, the Federal Supreme Court concluded that, with regard to the contested goods in class 14 and 28, APPLE is understood as a commercial indication of source and therefore APPLE is capable with regards to those goods to distinguish the claimed products of the trade mark owner from those of other suppliers. The appeal was therefore approved and the IGE was instructed to register the sign APPLE for all claimed goods in Classes 14 and 28.

This decision is particularly interesting for the Federal Supreme Court's consideration of the evolution of language and the use of foreign terms in trade mark proceedings, especially in a polyglot country like Switzerland. The interpretation of the concept of inherent distinctive character is also noteworthy.