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Behind the scenes: a watch design war

INTELLECTUAL PROPERTY

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July 2020


Behind the scenes: a watch design war

On an object that measures just a few centimetres across – a watch – the shapes and lines can sometimes end up looking disturbingly similar... even when it’s not a case of outright copying, or criminal counterfeiting. Given the financial and strategic stakes, many disputes arise. In a branch that is fond of discretion, these differences are generally resolved behind the scenes. We interviewed an intellectual property specialist working in the watch industry, Emmanuel de la Brosse, founder of the IP Board consulting firm.

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ntellectual property is one of the hot topics of the 21st century, which has seen the emergence of a knowledge economy alongside the unprecedented dissemination of information via digital channels. The ongoing patent wars between Apple, Samsung and Huawei, as well as other tech giants, are only a foretaste of what lies ahead.

In watchmaking too, the issue of intellectual property is gaining in importance. It is often played out behind the scenes in an industry that prides itself on discretion. However, horological intellectual property was recently brought into the limelight with Panerai’s legal action] against Chinese company Awsky. Looking further back, the naming dispute between Swatch and Ice-Watch led to a saga with many twists and turns between 2008 and 2014, which was finally settled out of court ->https://trends.levif.be/economie/entreprises/exclusif-ice-watch-pactise-avec-swatch/article-normal-180779.html?cookie_check=1593719411. Apple has lost IP battles against the Swiss Federal Railways (SBB) and Swatch (see below).

Blatant copying, vague inspiration or general trend? It’s often difficult to tell.

“Amnesiac designers satisfy unscrupulous CEOs,” watch designer Alexandre Peraldi recently noted on LinkedIn, illustrating his commentary with several strikingly similar watches. “How can lawyers defend the original designs?”

Watch design, a cluttered field with a reduced diameter!
Watch design, a cluttered field with a reduced diameter!
Post on Linkedin by designer Alexandre Peraldi

“With a watch, you’re dealing with a dial measuring a few centimetres across, on which major financial and strategic issues are played out.”

This is the question that needs to be answered. We contacted a specialist in design protection and copyright to find out more. Emmanuel de la Brosse began his career as an industrial property attorney in France, where it is a regulated profession. He worked for several Parisian law firms before joining Richemont in 2008, as head of intellectual property for several of the group’s brands. For the past two years, he has managed his own consulting firm, IP Board. The expert kindly answered our questions.

Europa Star: In more than ten years of experience in the watch industry, what aspects of intellectual property do you most often come across?

Emmanuel de la Brosse: The initial legal theme is very often “copying”, which covers a number of different situations. With a watch, you’re dealing with a dial a few centimetres in size, on which major financial, innovation and strategic issues all play out. In watchmaking, you see many players positioned in the same niche, and competition can exist even between brands of the same group. It is important to understand that intellectual property depends not only on strictly legal elements, but also on strategic, commercial and political elements. However, the basic right remains the freedom to copy.

Really? That’s pretty surprising!

Yes, the concept of intellectual property is actually an exception to the freedom to copy, because it creates a monopoly. Therefore, several specific conditions must be met. In terms of the design of a watch, two types of protection can be combined. On the one hand, a large number of countries protect copyright resulting from the creative process – this is often an automatic right. On the other hand, it is possible to actively protect designs, which is usually an expensive process.

“The concept of intellectual property is actually an exception to the freedom to copy, because it creates a monopoly.”

A rare case: in April 2020, a Chinese court issued a favourable opinion to Panerai in a lawsuit against a Chinese company, Awsky, for infringement of its intellectual property rights.
A rare case: in April 2020, a Chinese court issued a favourable opinion to Panerai in a lawsuit against a Chinese company, Awsky, for infringement of its intellectual property rights.
©Panerai

What does the procedure for protecting watch designs look like?

In Switzerland, the first step is to date the documents, which can be performed at a notary’s office. This can be done regardless of whether or not the designs subsequently result in the launch of an actual product. In France, the National Institute of Industrial Property offers a specific tool known as the “enveloppe Soleau”, formerly a purely physical object but now also available digitally. New tools are appearing to facilitate these procedures, such as digital dating via blockchain. The World Intellectual Property Organisation (WIPO), headquartered in Geneva, has recently launched a global digital dating tool using cryptographic technologies, which provides protection. This tool is called “WIPO Proof”.

Dating the design doesn’t mean it will be protected...

A distinction must be made between this initial notarised dating process, which allows a copyright to be defended, and a design registration with the authorities, a procedure which, in Switzerland, requires the payment of a fee and the fulfilment of fairly strict conditions in the category of “arts applied to industry”. In the event of a dispute, the burden of proof is not the same: in the case of a simple dating, it is you who must prove that you hold the intellectual property rights; with a registered design, it is up to your “opponent” to nullify the design that you have registered. For the major watchmaking companies, although all designs are generally dated and notarised, only the most important pieces (produced on a large scale, iconic designs, or watches used in communication) will benefit from a formal design registration in Switzerland and internationally.

So there’s no “universal” procedure for registering a design?

No. Action must be taken on a country-by-country basis; legislation remains national even if the issues are global. However, the filing of an international design at WIPO makes it possible to designate several countries or territories by carrying out a single filing procedure. It is also possible to file a design with the European Union Intellectual Property Office (EUIPO), which is valid for all EU Member States. But in practice, today, the industry protects its rights in the most “important” nations.

In addition to designs, disputes may also arise over names. Probably the most famous case in watchmaking is the one between Swatch and Ice-Watch, which lasted from 2008 to 2014. The case, brought before the courts in Switzerland, eventually resulted in an amicable settlement.
In addition to designs, disputes may also arise over names. Probably the most famous case in watchmaking is the one between Swatch and Ice-Watch, which lasted from 2008 to 2014. The case, brought before the courts in Switzerland, eventually resulted in an amicable settlement.

What about trademark registration?

In this case, we’re not just going to settle for a few countries, we’re going to try to get much more comprehensive coverage, given the importance of what’s at stake. A trademark can be many things: a word, a logo, a word with a logo, a slogan, a musical tune, a smell, an animated image... These are all real examples! As a general rule, a trademark registration can be renewed every 10 years – it varies from one country to another – indefinitely. A design is protected for 5 years, but for a maximum of 25 years.

Is it possible to protect a design for longer than 25 years?

Yes, by registering a design... as a trademark! You have to argue that the public perceives the design as a distinctive sign. This is a trend we’re observing for many companies. But the process is not guaranteed to succeed: one of the conditions for the validity of a trademark application is that the registered sign must not be descriptive or consist exclusively of the shape of the product. In my experience, the European Union Intellectual Property Office can fairly quickly rule out a trademark application on this criterion – it may be easier to register it in the Gulf countries or in Asia... Today, the design of certain iconic watches is therefore no longer protected. There remains, of course, the possibility of defending oneself on the grounds of copyright infringement or unfair competition. All luxury houses are facing this challenge.

“Today, the design of certain iconic watches is no longer protected. There is still the possibility of defending oneself on the grounds of copyright infringement or unfair competition. All luxury houses are facing this challenge.”

Another important aspect when filing a design is to make sure that it does not already exist – to avoid being attacked later. How do you go about verifying this?

We use a number of tools, starting with online searches and access to databases – free and public in the case of WIPO or EUIPO, or paid for with private providers. Some firms specialising in intellectual property, such as Griffes Consulting in Geneva, have their own databases dedicated to watch and jewellery research. Currently, we work mainly using keywords, which makes it difficult to be exhaustive. We use these different resources to get as close as we can to what it’s possible to know. Interesting developments are taking place in the realm of artificial intelligence, with a view to integrating visual recognition into searches. However, as far as I know, the technology is not yet sufficiently advanced to be legally usable.

In 2017, Hamilton filed a lawsuit in the United States against Vortic. This American startup specialises in selling watches that recycle components from vintage models, including old Hamilton dials and movements.
In 2017, Hamilton filed a lawsuit in the United States against Vortic. This American startup specialises in selling watches that recycle components from vintage models, including old Hamilton dials and movements.

What are the most common IP disputes that emerge between established watch brands?

The problem is often “lookalikes” – two watches with a highly similar design. The lawyer’s approach is first to establish a general overview according to the processes I have described to you. Basically, the approach is similar whether you’re defending or attacking a copyright: you first need to check the strengths and weaknesses of you own design, and the design you’re opposing.

How are these disputes usually resolved?

A lawyer’s letter often leads to a “pre-litigation” phase, which opens the dialogue. Depending on the place of litigation, there are several options for bringing pressure to bear. Germany, for example, has a very efficient summary procedure, where judges can issue a ruling quickly. But for that to happen, we have to act quickly ourselves, otherwise summary proceedings are not possible. If the case goes to full litigation, it can take from one to three years to reach an initial conclusion.

However, we rarely see open conflicts breaking out between established brands. Everything seems to be settled behind the scenes.

The majority of cases between competitors are resolved out of court, between lawyers or managers. What often comes out of this is the fact that two established brands have a vested interest in making their aesthetic codes as different as possible. In many cases, one party will agree to back out without having to pay any costs or compensation.

“What often comes out of this is the fact that two established brands have a vested interest in making their aesthetic codes as different as possible. In many cases, one party will agree to back down without having to pay any costs or compensation.”

What happens if a dispute arises between two brands in the same group?

Usually, it’s a committee at group level that arbitrates, to limit the risks. However, it does happen that some houses present designs that will encroach on the codes of another house. In this case, the legal argument may count somewhat less than other factors such as the influence of the CEO within the group. In many cases, it will be a strategic decision primarily.

In 2012, Apple agreed to pay a licence fee of 21 million dollars to the SBB after using the iconic design of the station clocks designed by Hans Hilfiker without permission.
In 2012, Apple agreed to pay a licence fee of 21 million dollars to the SBB after using the iconic design of the station clocks designed by Hans Hilfiker without permission.
Read CNET’s article on this subject

Counterfeiting is the other hot topic of horological intellectual property. It’s a seemingly endless subject!

The challenge is that the world of counterfeiting is a veritable hive of activity, with a multitude of different players. This is true in both the physical and online worlds. So the challenge is to focus on the most important of them. It is possible to find them using IT tools to identify “clusters”, i.e. tens or even hundreds of counterfeiting sites put online by the same group of players.

What can be done to curb these networks?

Identification is essential, because one can generally only take legal action against a person or a company, not against a website. But we can’t always do that. Fortunately, jurisprudence is changing: nowadays, in the United States or Switzerland, you can get court decisions against a network of sites that originate from the same source, even without knowing the identity of the author. In addition to closing down the sites, punitive measures can range from seizure of property to prison terms, when the perpetrators are known.

Within groups and large companies, dedicated teams are working to combat counterfeiting. Counterfeits are increasingly being disseminated via advertisements on “official” sales platforms or via Instagram. Counterfeiters now have many more tools and communication channels at their disposal! Legal platforms and social networks are beginning to become aware of the problem and are putting in place tools to quickly remove the ads in question.

“Legal platforms and social networks are starting to become aware of the problem.”

Are you involved in the issue of the grey market as well?

This issue is on the borderline of intellectual property. Resellers are illegally distributing products they bought legally. The problem comes from the source of the supply not respecting its original contract. With regard to the final reseller, for lack of any better options, we sometimes have to resort to simply attacking the copyright of the photos put online.

Another R&D-related issue concerns the filing of patents. What is the practice in the watch industry, which is largely based on innovation?

There are very different policies in effect from one group to another. A large number of patents are initially filed defensively, more to prevent competition than necessarily to exploit them.

In 2016, a British court ruled in favour of Swatch, which opposed Apple's registration of the iWatch trademark in the United Kingdom. According to a correspondent of the BBC, this procedure may have led the Californian giant to adopt the name Apple Watch rather than iWatch.
In 2016, a British court ruled in favour of Swatch, which opposed Apple’s registration of the iWatch trademark in the United Kingdom. According to a correspondent of the BBC, this procedure may have led the Californian giant to adopt the name Apple Watch rather than iWatch.
Read the BBC’s article on this subject

What about the new IP field of smartwatches?

The world of luxury has regarded the advent of the smartwatch with a mixture of curiosity and fear, while at the same time being rather dismissive because of their different positioning. R&D groups were nevertheless set up, and we have seen some traditional houses embracing the sector and launching connected products. As with the issue of patents, our position is largely defensive. The digital world remains a very different world, which requires enormous resources for legal battles conducted on a completely different scale. It’s not the same category, and watchmaking companies are not masters of this universe. For the biggest players, the compromise solution has therefore been to bring out just a few connected models.

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