M.Z. Berger & Co., Inc. v. Swatch Ag
34 U.S.P.Q. 2d (BNA) 1892, 787 F.3d 1368, 2015 U.S. App. LEXIS 9276 (2015)
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Rule of Law:
Under the Lanham Act, a 'bona fide intention to use a mark in commerce' requires objective evidence demonstrating a firm intent to commercialize a product, not merely a subjective desire to reserve a right in the mark for potential future use.
Facts:
- M.Z. Berger & Co., Inc. (Berger) is a business that manufactures and sells watches and clocks.
- On July 5, 2007, Berger filed an intent-to-use trademark application for the mark 'iWatch' for over thirty goods, including watches, clocks, and related accessories.
- The application contained a sworn declaration stating Berger had a 'bona fide intention' to use the mark in commerce.
- Berger's CEO, Bernard Mermelstein, later testified that the company never intended to use the mark for any goods other than watches.
- A Berger paralegal testified that the broad list of goods in the application was 'standard' and used to 'leave all doors open.'
- The only documents related to the 'iWatch' mark were created for the trademark application process itself, including a trademark search and digitally created images of watches bearing the mark that were submitted to the PTO.
- Testimony from Berger employees about the 'iWatch' product was inconsistent regarding its features, whether physical mockups existed, and if discussions with potential buyers occurred.
- Mermelstein stated he came up with the mark because 'if we decided to do a— either a technology watch or information watch... that would be a good mark for it.'
Procedural Posture:
- M.Z. Berger & Co., Inc. filed an intent-to-use trademark application for 'iWatch' with the U.S. Patent and Trademark Office (PTO).
- The PTO approved the application for publication.
- Swatch AG filed a Notice of Opposition with the Trademark Trial and Appeal Board (Board), initially claiming confusing similarity with its own 'Swatch' mark.
- Swatch later amended its opposition to add the claim that Berger lacked a bona fide intent to use the mark in commerce at the time of filing.
- The Board sustained Swatch's opposition, ruling that Berger lacked the requisite bona fide intent to use the mark.
- Berger, as appellant, appealed the Board's decision to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Does an applicant's intent to reserve a right in a trademark, unsupported by consistent documentary or testimonial evidence of a firm plan to commercialize a product, satisfy the Lanham Act's 'bona fide intention to use the mark in commerce' requirement for an intent-to-use application?
Opinions:
Majority - Chen, Circuit Judge.
No. An applicant's intent to simply reserve a right in a mark does not satisfy the Lanham Act's requirement for a 'bona fide intention to use the mark in commerce.' The determination of 'bona fide' intent is an objective one, based on the totality of the circumstances, and requires evidence of a firm plan that goes beyond the mere prosecution of the trademark application. The court found that Berger's evidence failed to meet this standard. The documentary evidence, such as the trademark search and product images, was deemed to be prosecution-driven rather than evidence of a commercial plan. Furthermore, the testimonial evidence was undermined by internal contradictions among Berger's employees and the CEO's own admission that the company had not firmly decided to produce such a watch at the time of filing. The court concluded that Berger’s actions demonstrated an intent to reserve a right in the mark, not a bona fide intent to use it, which is precisely what the intent-to-use system was designed to prevent.
Analysis:
This decision clarifies the evidentiary standard for the 'bona fide intent' requirement in intent-to-use trademark applications. It establishes that courts will conduct an objective inquiry based on the totality of the circumstances, and a mere subjective statement of intent is insufficient. The ruling serves to curb the practice of 'trademark warehousing' or 'squatting,' where entities file applications to reserve marks they have no concrete plans to use, thus preventing legitimate businesses from using them. Future applicants are now on notice that they must be able to produce some objective, corroborating evidence of a firm commercial plan, such as business plans, product development documents, or market research, that is independent of the application process itself.
