The Supreme Court strengthens trademark protection

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Published 01 July 2020
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In a judgment of 2 June 2020, the Supreme Court found that there was infringement of Apple's exclusive right to trademark. The judgment thus joins the ranks of decisions in recent years that have continuously strengthened the trademark protection.

The case involved a mobile repairman who had imported unoriginal screens to Norway with Apple's apple logo affixed, and where the logo was covered with ink. The logos were on the inside of the screens and did not appear to the end user. The question was whether the importation constituted use and infringement of Apple's exclusive right to the trademark pursuant to Section 4 of the Norwegian Trademarks Act. The District Court concluded that there was no infringement, while the Court of Appeal came to the opposite conclusion. The Supreme Court unanimously found that the trademark was infringed. The judgment thus continues the trend from the Ensilox case, HR-2018-110-A, and entails a further strengthening of the trademark proprietor's rights. Apple was represented by Schjødt by attorney Sigurd Holter Torp.

The Supreme Court's assessment

The appeal was only brought against the application of the law, and the Supreme Court thus assumed the Court of Appeal's assessment of evidence that the imported screens were not original, that the affixed trademarks were identical to Apple's registered sign, that the trademarks were not affixed by Apple, and that they were covered with ink that was removable.

The Supreme Court assumed that the importation of an unoriginal product with illegally affixed trademark is basically illegal trademark use. With reference to the preparatory works to the Act, the Supreme Court pointed out that this constituted counterfeiting at the core of trademark protection. The question was therefore solely whether the covering with ink meant that there was nevertheless no use in the sense of the law, as the mobile repairman submitted.

Pursuant to the wording of Section 4, first paragraph, letter a of the Trademarks Act and Article 5 (1) (a) of the Trademarks Directive, it may appear that trademark protection is absolute when a trademark is used on the same type of product for which the trademark is protected, so-called double identity. However, the Court of Justice of the European Union (CJEU) has established a certain restrictive interpretation, in that it is only use that is harmful to the trademark proprietor's interests in relation to the trademark's functions which is illegal, as the Supreme Court stated in the Ensilox judgment and which the Supreme Court also now assumed.

It is important to point out that the threshold for finding a risk of harm to the trademark's functions, and thus infringement, is very low. Firstly, there is no requirement for harm, as it is sufficient to demonstrate danger of harm. Secondly, the danger assessment is not isolated to the import or sales situation, but to all subsequent possible sales situations – wanted as well as unwanted – if incorrect use may expose some of the trademark's features to harm. In the Ensilox case, it is, inter alia, pointed to a case of bankruptcy, resale, random loans or that goods come astray. In that case, therefore, infringement was found, even though it was incorrect labelling of a preservative that was delivered to permanent clients who were informed of the matter, and the goods were not intended for resale. Both the District Court and the Court of Appeal had found that there was no infringement, but the Supreme Court unanimously came to the opposite conclusion. The reason why the assessment is not isolated to the relevant action of use is that, throughout the life of the product, it should generally be possible to rely on the guarantees contained in the trademark, including copyright and quality guarantee. Thus, the trademark protection does not end with a sale.

In order to assess the danger of harm, one must first determine the relevant buyers for the product. In the Apple case, the Supreme Court assumed that the purpose of establishing the buyers must be based on the purpose of the trademark rules and the pattern of trade for the product in question. Since the case involved mobile screens, it meant that the relevant buyers were repairers and professional sales teams. It was for these buyers that the trademarks were affixed, which then immediately would be able to identify this as an original screen from Apple.

The Supreme Court also took into account the judgment of the CJEU in Case C-129/17 (Mitsubishi), which was handed down after the Ensilox judgment, and which further strengthened the trademark proprietor's rights. Here, an infringement was found even though the trademarks had been completely removed before its importation to the EEA, and where the CJEU considered this infringement of the trademark's origin, investment and advertising functions. The Supreme Court points out that the judgment thus shows that the trademark protection extends beyond the trademark's functions as a copyright and quality guarantee, and that the terms of use are based on a composite assessment, which also includes the trademark's marketing situation.

The Supreme Court initiated the specific infringement assessment by stating that in this case, contrary to the Mitsubishi judgment, entailed covering of illegally affixed trademarks on unoriginal spare parts. The trademark protection could then not be weaker than if an original trademark was removed from an original product.

The Supreme Court then assumed that even though the actual act of use here was the importation, the potential for harm that may materialise later cannot be disregarded. What the importer says he intends to do is therefore not decisive, but what potential harm the trademark use potentially has in the event of subsequent sales situations.

The Supreme Court assumed that if the importer, later sales stages or others who receive the screens, remove the cover, the screens will appear to be original, with identical trademark. Then you have a situation with a classic trademark infringement. And the Supreme Court assumed that it is generally not possible to ignore the risk that those who receive the screens, will remove the cover. On the contrary, it could be a desire to remove the cover, in order to obtain a higher price when selling the screen to repairmen or end customers. The Supreme Court thus completely ignored the importer's submission that, in practice, the cover would never be removed and that there was no risk of this. The reason is that the assessment is not specifically linked to the alleged act of use, but subsequent situations that may result in a risk of harm to the trademark's functions. Such a future risk analysis across all relevant sales stages will easily lead to finding of infringement.

The Supreme Court, however, lowered the threshold for finding further infringement by assuming that there was a danger of harm to the trademark's functions even if the cover was not removed. The reason was that the covering of the trademark, which appeared in the exterior as original, could seem confusing to the origin of the product. For the relevant buyers, the cover could then make it unclear whether it was an original or a copy. Such uncertainty about the origin is in itself sufficient to establish danger of harm to the functions of the trademark, as was also found in the Ensilox judgment.

The importer had submitted that the spare parts market is important from a sustainability perspective and that Apple could not stop the right to repair and have this market alone. The Supreme Court found that this was beside the case because it was not the screens that were the topic, but the use of the trademark on the screens. The importer could therefore import compatible screens that are not affixed with illegal trademarks.

The Supreme Court then unanimously concluded that there was an infringement of Apple's exclusive right to the trademark and ordered the repairman to pay the legal costs in the case.

Summary of legal status

The judgment clearly strengthens the rights of trademark proprietors and makes an important contribution in the fight against piracy and counterfeiting.

Through the Ensilox judgment, it has been established that it is sufficient to show risk of harm to the trademark's functions, that the assessment is not isolated to the current use situation and that confusion about the copyright guarantee is sufficient for finding infringement. Through the Mitsubishi judgment, it has been clarified that it would be an infringement to completely remove an original trademark from an original item before importation. The Apple judgment makes it clear that covering a trademark on an unoriginal item also is not enough, even though the trademark is not visible to the end user and although there is no risk of the cover being removed. Covering of the trademark is itself an infringement.

Although the trademark protection at double identity in principle is not absolute, the threshold through decisions by the CJEU and the Supreme Court is, i in reality, set so low that absolute protection is near reached. In practice, there will always be infringement at the use of another's trademark on similar goods for which it is protected. Exceptions only apply if the use does not under any circumstances – in any subsequent situation, potentially may cause a risk of harm to the trademark's functions. It is not easy to see when that may be the case.