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If market confusion is only defines as thinking the Swatch is made by Apple, you're right. But it extends beyond that. Trademark emulation could be taken to imply product endorsement (tacit or explicit), product collaboration, and lack of sector competition. All of these consumer assumptions both dilute Apple's brand and elevate Swatch's, or at least align Swatch's with Apple's.

Based on nothing more than intuition and some armchair research, I'm betting Apple prevails. We shall see.

Yes we will, as this doesn't even remotely qualify on any of those points, having nothing to do with the Apple campaign, or the only product they are currently applying it to. If Apple wins this, then IBM should sue Apple over their Think IBM campaign.

The determining factor is whether 12 average people on a jury think of Apple when they look at Swatch's advertisement. And I'll bet they won't.
 
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