A recent Fourth Circuit decision is yet another setback for the Swiss watch maker’s efforts against Beehive Wholesale, which makes and sells watches with interchangeable bands and faces. The case offers an in-depth discussion of the proper standard of review for a district court when considering an appeal from the TTAB. Swatch AG v. Beehive Wholesale, LLC, Civ. No. 12-cv-2126, 2014 WL 46454 (4th Cir. Jan. 7, 2014).

The parties’ dispute started with an opposition filed by Swatch against the “Swap” mark on likelihood of confusion grounds. Following the TTAB’s dismissal of Swatch’s opposition, Swatch had two options.   Under 15 U.S.C. § 1071(b), Swatch could either (1) appeal the decision to the Federal Circuit thereby restricting the record to that before the TTAB; or (2) file a de novo civil action in a federal district court which allowed the admission of new evidence. Swatch opted to bring a civil action in the Eastern District of Virginia.

The district court found confusion was unlikely between the “Swatch” and “Swap” marks based upon their differences in sight, sound, and meaning coupled with the real world fact that “Swatch” is almost always accompanied by a Swiss flag while “Swap” is accompanied by the phrase “by Beehive”  The court also concluded that “Swap” was not merely descriptive of Beehive’s watch parts as even retail professionals would have to use some imagination to connect “Swap” with the interchangeability function of Beehive’s watches. Helpful evidence for Beehive included postcards at tradeshows featuring arrows pointing to its interchangeable bands and faces and the inclusion of “Swap” with the word “it!”

In upholding the lower court’s finding on both likelihood of confusion and descriptiveness, the Fourth Circuit emphasized that de novo review of the entire record is required in the face of new evidence because a lower court “cannot meaningfully defer to the PTO’s factual findings” when presented with different facts. While the Fourth Circuit criticized the lower court for acting partially as an appellate court, it nevertheless determined that the district court made sufficient de novo determinations to support its decision, thereby avoiding the need for remand.