Use of competitors trademarks as ad words – is the leeway shrinking?

English

Newsletter

Published 12 January 2021
News image

In case 19-192181TVI-OTIR/06, Oslo District Court considered whether Kystgjerdet AS' ("Kystgjerdet") use of its competitors Vindex AS' ("Vindex") and Norgesgjerde AS' ("Norgesgjerde") trademarks and company names, as paid ad words from Google Ads, violated the provisions of the Norwegian Trademarks Act or the Norwegian Marketing Control Act. On 15 December 2020, the District Court decided in favour of Vindex and Norgesgjerde, finding that Kystgjerdet's use of the "VINDEX" and "NORGESGJERDE" as paid ad words infringed upon Vindex and Norgesgjerde's trademarks.

By Jenny O. Nondal & Thomas Hagen

In 2018 and 20109, Kystgjerdet had used two different kinds of use of paid ad words from Google Ads, both consisting of text from Vindex' Trademark and Norgesgjerde's Trademark. For the first kind of use, the paid search word ("NORGESGJERDE" or "VINDEX") was visible in the headline of the ad, together with Kystgjerdet's name. For the second kind of use, the paid search word was not visible in the headline of the ad together with Kystgjerdet's name, but only visible in Google's search field. Oslo District Court found that the use of both kinds of use of ad words violated Norgesgjerde and Vindex's trademarks.

The finding that the first kind of use of ad words violated the Trademarks Act, Section 4, is not controversial, given that the search words are protected as a trademark. The finding that the second kind of use of ad words violated the Trademarks Act is more controversial, as it seems to be contrary to decisions by the Court of Justice of the European Union in similar cases. Furthermore, Oslo District Court's finding, with respect to the second kind of use of ad words, is arguably also in conflict with Asker and Bærum District Court's decision of a similar question under the Marketing Control Act (the Bank Norwegian case decided 4 January 2019). However, Oslo District Court's reasoning has five weaknesses:

  1. The scope of the protection for registered, text and device trademarks;
  2. the assessment of distinctiveness and descriptiveness;
  3. the bar for finding a trademark established by use;
  4. the relation between the Trademarks Act and the Marketing Control Act;
  5. the calculation of the compensation to be paid by Kystgjerdet to Vindex and Norgesgjerde.

Thus, in our opinion, it is not unlikely that an appeal to Borgarting Court of Appeal will lead to a different result, more in line with the case law from the Court of Justice of the European Union.

The scope of the protection for registered, text and device trademarks

Norgesgjerde has registered the following trademark for fences (the "Norgesgjerde Trademark"):

image6kn2c.png

The Norgesgjerde Trademark is registered as a text and device trademark. Although it is the totality of the device elements and text elements ("NORGES GJERDE Like fint hele tiden"), which has obtained trademark protection, the trademark protection also extends to use of solely the dominant elements of the trademark. However, the District Court did simply state that the text "NORGESGJERDE" (incorrect quote by the court, as the trademark splits the word in two as "NORGES GJERDE") is the dominant element of the Norgesgjerde Trademark, without conducting a proper assessment of the various elements of the Norgesgjerde Trademark and the mark as a whole.

It can be argued that the due to the device and illustrative elements, and the fact that "NORGESGJERDE" is highly descriptive ("NORGES GJERDE" – in two words – translates to "Norway's fence"), the text "NORGESGJERDE" should not be deemed as the dominant element of the Norgesgjerde Trademark. If so, the trademark protection for the Norgesgjerde Trademark would not apply to the use of solely "NORGESGJERDE", and Kystgjerdet's use of this ad word would not infringe upon the Norgesgjerde Trademark.

The assessment of distinctiveness and descriptiveness

The District Court stated that the dominant elements of the Norgesgjerde Trademark is "NORGESGJERDE", and that this text is sufficiently distinctive to be covered by the trademark protection of the Norgesgjerde Trademark. However, the District Court did not consider that the text "NORGESGJERDE" is arguably descriptive of the goods covered by the Norgesgjerde Trademark and the geographical origin of the goods, nor the implications of the descriptiveness for the scope of the trademark protection.

The District Courts seems to have applied a lower bar for finding a mark, with descriptive character, as distinctive, than applied by the Supreme Court of Norway in Rt. 2005 s. 1601 (GULE SIDER (translates to "YELLOW PAGES")), and by the Court of Justice of the European Union in similar cases. In Rt. 2005 s. 1601 (GULE SIDER), the Supreme Court of Norway stated that a descriptive mark may be obtain distinctiveness if the mark is well known to the average consumer as a distinguishing mark for the relevant goods, prior to the registration of the trademark.

The bar for finding a trademark established by use

Although Vindex' text and device mark from 2003 (the "Vindex Trademark") is not registered for fences, the District Court concluded that Vindex had acquired trademark protection for the Vindex Trademark for fences by use with reference to the Trademarks Act, Section 3, third paragraph.

 

image5b2obt.png

 

However, for a trademark to obtain protection by use under the Trademarks Act, Section 3, third paragraph, the mark must be well known to the average consumer as a distinguishing mark for the relevant goods. In its reasoning for finding the Vindex Trademark as protected for fences, the District Court merely referred to testimonies from Vindex' chairman of the board and CEO and document evidence on the use of "VINDEX" for fences in 2008-2012. The District Court did refer to any other evidence proving that "VINDEX" was well known to the average consumer as Vindex's trademark for fences.

The Trademarks Act vs. the Marketing Control Act

Norgesgjerde and Vindex asserted the Trademarks Act as primarily legal basis for their claims, and the Marketing Control Act as alternative legal basis. The District Court decided the case on the grounds of the Trademarks Act. Nevertheless, in its reasoning the District Court's took into account Kystgjerdet's use of a slogan ("Mal mindre - lev mer" (which translates to "paint less – live more")) similar to a slogan used by Norgesgjerde ("Lev mer – Mal mindre" (which translates to "live more – paint less")) and Kystgjerdet's advertisements of discounts in the headline of the ad. These features are not relating to the trademark infringement issue, but touches upon the unfair competition arguments of Norgesgjerde and Vindex. However, the District Court did not discuss the relationship between the Trademarks Act and the Marketing Control Act in its reasoning.

The measurement of the compensation to be paid by Kystgjerdet to Vindex and Norgesgjerde.

The District Court ordered Kystgjerdet to pay remuneration to Vindex equivalent to two times a reasonable license fee, cf. the Trademarks Act Section 58, second paragraph, amounting to NOK 1,717,680. To Norgesgjerde, Kystgjeredet was ordered to pay compensation to Norgesgjerde's for losses, cf. the Trademarks Act Section 58, first paragraph litra b, amounting to NOK 2,500,000.

The District Court's assessment of Norgesgjerde's losses and the revenue Vindex's license fee should be based on appears quite simple calculations and unbalanced in favour of Norgesgjerde and Vindex as right holders. We note that this is in line with what could be a trend of increasing compensation for intellectual property infringement, cf.  TBERG-2019-145093 (Loen Skylift v. Voss Gondol and Resort).