Background
Companies in the Swatch Group sued Samsung over third-party watch-face apps made available through the Samsung Galaxy App store between October 2015 and February 2019. The apps used marks belonging to brands including Breguet, Blancpain, Omega, Longines, Tissot and Swatch. They generated approximately 157,000 UK and EU downloads, most of them free, and only US$1,002.77 in direct revenue.
In 2022, the High Court held that Samsung had infringed the claimants’ trade marks through signs displayed on downloaded watch faces, app listings in its store, or both. That ruling was affirmed by the Court of Appeal in 2023. The present inquiry concerned negotiating damages: the licence fee that reasonable parties would have agreed before the infringements. The claimants’ expert proposed approximately US$170 million, while Samsung’s expert proposed US$301.
The Court’s Holding
Mr Justice Marcus Smith rejected both expert valuations. The claimants’ figure improperly treated the arrangement as a full co-branding collaboration involving Samsung’s hardware, inflated anticipated prices and sales, and attributed excessive value to infringements Samsung did not seek. Samsung’s figure, however, wrongly focused on direct revenue and measurable harm while disregarding the value of the trade marks, Samsung’s app-store ecosystem, and Samsung’s interest in operating a legally compliant business.
The court assessed negotiating damages at US$11.6 million. It awarded a flat US$10 million licence fee for infringements arising from displaying infringing app names in the store, which it regarded as the more serious threat to the brands, plus US$10 for each of approximately 160,000 downloads involving branding on watch faces, producing a further US$1.6 million.
Key Takeaways
- Negotiating damages measure the hypothetical price of permission to use the rights, not merely the infringer’s direct profit or the claimant’s provable financial loss.
- An app-store operator may derive substantial value from a broad software ecosystem even when particular apps are free and generate little direct revenue.
- The court distinguished infringements occurring through store displays from those occurring when branded watch faces were downloaded and assigned a separate fee to each category.
Why It Matters
The judgment shows that low revenue and limited evidence of actual brand damage do not reduce an intellectual-property licence to a nominal sum. Courts may assign substantial negotiating damages where valuable marks were used within a commercial platform and the hypothetical licence would have enabled the operator to conduct its chosen business lawfully.
For app-store businesses, the decision underscores the financial significance of content review and trade mark compliance. Prompt removal after notice may limit continuing infringement, but it does not eliminate liability for infringing listings and downloads that occurred beforehand.