On October 24, 2012 the Swedish Market Court issued a judgment in case C 3/12, Apoteket AB (“Apoteket”) v. A.N.A. Datoteket Sweden (“Datoteket”). The case concerned the violation of Swedish Marketing law, i.e. the Swedish Marketing Act, through the act of passing off on Apoteket AB’s (the former monopolist on the Swedish pharmacy market) well known trademark. The case is a good example of how the Swedish court system functions when dealing with unfair marketing practices and trademark infringement.
Apoteket claimed that the Market Court should prohibit Datoteket from using its trademark “Datoteket” combined with its logo under the penalty of a fine, as it was passing off on Apoteket AB’s registered trademark “Apoteket” by using an almost identical logo and name of its trademark;
See link; http://www.marknadsdomstolen.se/Filer/Avgöranden/Bilagor/Bilaga2012-11.pdf
As Apoteket had attained the monopoly as the only pharmacy acting on the Swedish market for over 40 years until recently, it claimed to be the possessor of a well known trademark with a great amount of goodwill attached to it, accompanied with a positive reputation among consumers.
The decision of the Market Court
The Market Court agreed with the claimant’s position regarding the status of “Apoteket” as being a well known trademark. The Market Court relied in large part on the evidence presented by Apoteket stating the fact that Apoteket had been the monopolist for several years on the Swedish market. Other important parts of the evidence were executed market analyses demonstrating consumer awareness of the trademark and information about Apoteket’s market share. The Market Court also came to the conclusion that the trademark “Datoteket” combined with its logo reminded a great deal of the logo and trademark of Apoteket, creating an association with the claimant constituting unfair marketing practices in violation of the Swedish Marketing Act. The assessment of determining whether or not the actions by Datoteket were to be defined as unfair marketing was made with regard to “the likeliness of affecting the average consumer’s ability to take a well-founded commercial decision, that he otherwise would not have taken”. This so-called transactional test was implemented into Swedish marketing law as a result of Directive 2005/29/EC on unfair business-to-consumer commercial practices. The Market Court noted that there was a risk that the economic behavior of the average consumer would be noticeably affected due to the similarities between the two trademarks.
The Market Court affirmed what had been stated in Apoteket’s claim. Datoteket was in fact riding on goodwill originally established by Apoteket, it had created a false association that would mislead consumers. The judgment issued by the Market Court resulted in a prohibition of continued usage of Datoteket’s logo under a penalty of a fine of 1,000,000 SEK.
Significance of the decision from an international point of view
The above described case, Apoteket v. Datoteket, is a typical example of passing off, however it also entails the legal issue of trademark infringement through dilution. Section 1, paragraph 10 of the Swedish Trademark Act (a law which is a result of the harmonization of Directive 2008/95 /EC) provides a comprehensive protection for trademarks such as Apoteket that are considered to be well known on the market. The use of trademarks that are identical or similar in relation to any goods or services where the use of that trademark takes unfair advantage of, or is detrimental to, the distinctive character or reputation of a well known trademark is prohibited. It is from the perspective of the average consumer that the determination regarding the similarity between the two trademarks shall be made. The assessment of determining whether or not a trademark is well known on the market (according to the Swedish Trademark Act) is based upon the estimated trademark awareness amongst a significant amount of the targeted consumers for a specific service or product.
Claims involving trademark infringement are handled by the Swedish District Courts whilst the Market Court, which is a so-called specialized court, handles claims comprising unfair and misleading marketing practices. Naturally, for this reason Apoteket did not include trademark infringement in its claim before the Market Court. This division of handling of legal claims between the District Courts and the Marketing Court leads to separate procedural possibilities for rights holders. Moreover, legal proceedings before the Market Court does not exclude the possibility of initiating legal proceedings before the relevant District Court as well. An unfavourable judgment concerning unfair marketing might have a different outcome in the District Court concerning trademark infringement and dealing with the same executed marketing practices taken by the defendant.
Many times when standing before the option of choosing between the initiation of an infringement proceeding or an unfair marketing proceeding the latter appears more appealing for claimants concerning the potential outcome of the sanctions. For example, an issued injunction according to the Marketing Act may normally not be appealed. Secondly, unlike the Trademark Act there is no requirement in the Marketing Act regarding the intention behind the executed marketing practices, such as gross negligence etc. Also, the aimed effect of enforcing a prohibition may work faster when referring to the rules of the Marketing Act as the infringer has to cease with the unfair marketing practices immediately to avoid having to pay the conditional fine. Claimants using the infringement proceeding along with the Trademark Act will be able to demand damages, though the actual damage caused by the infringement is often hard to define.
From an economic point of view for rights holders, the division of handling of legal claims between the two above mentioned courts may certainly appear expensive and unnecessary, however, it can also constitute a second chance in an unsuccessful case in either of those courts.