How to claim compensation for trademark infringement in Norway

When are you entitled to compensation – when is there infringement in Norway?

For the question of damages or remuneration to arise, there needs to be a trademark infringement first.

Trademark protection is the exclusive right achieved by registering or establishing a trademark through use. The exclusive right includes the trademark owner’s right to use the mark (insofar as others’ rights are not an obstacle), and the right to prohibit other businesses from using a mark without consent that:

• ·Is identical and for identical goods or services
  
• ·Or can be confused (directly or indirectly) with the owner’s trademark.
  
• ·For well-known marks, an association between the marks can be sufficient to constitute an infringement.

See an unofficial translation of the Norwegian Trademark Act here (external link to patentstyret.no).

A business generally cannot use a competitor’s trademark on similar products or services in advertising, on websites, in Google ads, as a domain name, or in other forms of marketing communication, without first obtaining consent from the trademark owner.

If you discover that someone is using your client’s trademark in their commercial activities in Norway, there may be grounds to act.

Feel free to contact us for an assessment of your case.

When is it lawful to use someone else’s trademark?

In some instances, the party wishing to use another’s trademark in Norway may invoke certain exceptions under Norwegian trademark law and thus avoid having to obtain the owner’s consent. The following uses of competitors’ trademarks are generally considered acceptable (loyal use):

• ·Word marks or names may be used in a loyal manner to reference the competitor’s business to the extent necessary, and so long as the trademark is not highlighted or used in a way that might lead a customer to mistakenly believe there is an economic connection between the competitors. Such trademark use is often relevant in comparative advertising. Comparative advertising is subject to stringent requirements for truthfulness, including objectivity, documentation, and loyalty between competitors.
• ·If one has purchased an item, it may be resold with the brand name and a self-produced image of the item to identify the product. Beyond what is strictly necessary to identify the product being resold, one should not use someone else’s trademark.

The following uses of competitors’ trademarks are NOT accepted (disloyal use):Using a competitor’s logos and figurative trademarks are generally not allowed. In most cases, it is sufficient to reference a competitor using the word mark - the brand name itself.

• ·Using competitors’ names in domain addresses and metatags is considered disloyal use of their trademarks.
• ·Using a competitor’s trademark as a verb may be considered disloyal use because it can weaken the distinctiveness of the mark.
• ·Using abbreviations or personal variations of someone else’s trademark constitutes disloyal use of the mark.
• ·If there is a risk of confusion concerning something or someone not regarded as a trademark, this may also be a violation of the Marketing Act. Misleading consumers or acting in conflict with good business practices is a breach of the Marketing Act.

Some trademark owners (especially well-known ones) may have significantly broader protection than what is outlined above.

How much can be claimed in compensation for trademark infringement?

The Trademark Act leaves any party responsible for trademark infringement liable for whichever of the following options is most favorable to the infringed trademark holder:

• ·The compensation should correspond to a reasonable license fee for the exploitation, plus damages for losses caused by the infringement that would not have occurred under a proper licensing agreement.
• ·Damages for the losses caused by the infringement.
• ·Remuneration corresponding to the profit gained through the infringement.

It can be difficult to prove economic loss due to the infringement of industrial rights. To ensure that compensation is granted even in these cases, the rights holder may receive compensation based on factors other than economic loss. This can be done by awarding a reasonable license fee or awarding damages equal to the infringer’s profits.

A fourth option – double license fee

If the infringement is committed intentionally or with gross negligence - as is often the case - it is possible, as a fourth option, to claim an amount corresponding to twice the reasonable license fee .

The same rules apply to contributory infringement, meaning that distribution channels, stores, or any other party indirectly using the trademark may also incur liability for damages. The trademark owner can usually choose whom to bring legal action against.

In trademark infringement cases, double the reasonable license fee is frequently the preferred option for the rights holder, because it is difficult to determine other measures of damages.

While the legal framework should allow for effective enforcement in relation to compensation and damages, the amounts awarded by Norwegian courts in trademark infringement matters are usually quite moderate. With the exception of the example of doubling the fair licence fee, no punitive damages are awarded. In accordance with the general legal principles for damages in Norway, one can seek compensation only for actual economic loss and the loss must be documented or at least proven on a balance of probabilities.

But what constitutes a “reasonable license fee”?

Remuneration claim – what is a “reasonable license fee”?

According to preparatory works for the Norwegian Trademark Act, one should take as a starting point the common industry standard or practice in the relevant field. The compensation cannot be set lower than what the infringer would typically have paid if an actual license had been obtained for legitimate use of the mark. The degree of fault or other subjective factors is more or less irrelevant for this assessment.

If the rights holder has a licensing agreement or a similar agreement specifying a license fee for the mark, it follows from the preparatory works, case law, and legal theory that a similar level of fees may be applied in the calculation of damages.

It becomes more challenging if the rights holder has never entered into a comparable licensing agreement, leaving no basis for comparison. Unfortunately, this is the situation in most cases. In such a scenario, one must look to general practice.

Broadly speaking, products with high sales volumes and lesser-known items may allow for a license fee in the range of 3-5% of the total turnover. More exclusive goods and better-known brands often warrant compensation equivalent to 15-25% of turnover.

An illustrative and summarizing case on this topic is a judgment from the Borgarting Court of Appeal, where Jaktdepotet AS was found to have infringed the ammunition manufacturer NORMA’s trademark. The court stated the following concerning the determination of a reasonable license fee:

“Norma is a strong trademark that has been associated with quality over a very long period. The market share is high. This must be reflected in what constitutes a reasonable license fee for using the mark, and the costs of maintaining and upholding the mark must also be taken into account.

Jaktdepotet AS has referenced Rt. 2012 p. 1062 concerning copyright infringements involving the Tripp Trapp chair, where the Court of Appeal based its calculations on a 5% license fee. The trademark infringement, however, concerned the slogan ‘Stolen som vokser med barnet’ (‘The chair that grows with the child’), and the Court of Appeal noted in its judgment that the fee would likely have been higher if the Tripp Trapp trademark itself had been infringed. This Court of Appeal agrees. As an example of a high license fee, Norma AS has pointed to the Danish Maritime and Commercial High Court’s judgment of 4 May 2006, concerning the import of counterfeit Louis Vuitton products. There, the license fee was set at 25% of the original products’ value. Such a percentage appears too high in the present case. Given the limited case law in this field, this Court of Appeal agrees with the District Court that, citing the Norma trademark’s strong market position, attractiveness, and strength, a 17% license fee is appropriate.”

Basis for calculating the license fee

Once the percentage for the license fee is established, the next question is: what is the basis for that percentage? If the infringement involves comparative advertising, for example, do we calculate it based on the company’s total turnover, the specific product’s turnover, the campaign cost, or the effect of the comparative advertising?

If there is a batch of goods bearing the trademark, it is natural to base the calculation on the turnover of those products. If a company uses your trademark as its only house mark/main trademark, there may be strong reasons to base the calculation on the entire corporate turnover.

It becomes more complex if the infringement does not concern the sale of goods but involves use in marketing or something similar. Many businesses today use others’ trademarks as hidden “door openers” on the internet, which can be challenging to price. In such situations, you must estimate what you, as the trademark holder, would have charged in licensing fees for that particular use. There are good arguments that, at a minimum, one may use the infringer’s costs for the specific advertising campaign in which the trademark was used, assuming the company at least recoups the advertising value. However, the Norwegian Supreme Court has recently gone significantly further than that in a new ruling.

In a recent Supreme Court judgment, Vindex AS and Norgesgjerde AS succeeded in their claim against Kystgjerdet AS, after the latter purchased “Vindex” and “Norgesgjerde” as Google search terms and used the trademarks in advertisement text. The Supreme Court discussed whether one should base the calculation on sales, ad clicks, or ad views, and stated:

“Given that there are no economic factors providing a reasonable starting point for calculating the license fee, the absence of relevant examples and experience, and the fact that it seems wholly hypothetical that licenses would be granted for this kind of trademark use, I conclude that assigning the license fees as a lump sum according to judicial discretion is warranted. Under the circumstances of this case, I have no basis to establish general principles for how a reasonable license fee should be calculated for the unauthorized use of a competitor’s trademark in advertisement text when done by purchasing the competitor’s mark as a search term.

(…) Considering that the unauthorized trademark use comprised only a small part of Kystgjerdet’s marketing, I find that the license fees should be somewhat lower than those set by the Court of Appeal, and I have concluded that NOK 400,000 for each company would be a reasonable amount.

Kystgjerdet acted with gross negligence, and double the license fee for each company must then be set at NOK 800,000, pursuant to § 58(2).”

Altogether, Kystgjerdet had to pay more than three million kroner in legal costs and damages to its adversaries. In our opinion, it is a weakness of the judgment that the value of the marketing was not more precisely determined. Its general applicability is thus limited, but it illustrates that the calculation of damages involves considerable discretion and that even moderate use of a competitor’s name in marketing can become very expensive.

How to proceed with claiming compensation for unlawful use of designation or trademark in Norway?

Start with a Cease-and-Desist letter (C&D letter)

Upon discovering a trademark infringement in Norway, the first step should be to attempt to reach an amicable solution and begin by sending a letter or an email that includes the following:

• ·Identify the specific infringements of your rights and describe them in detail.
• ·Demand the immediate cessation of the infringement.
• ·Claim any compensation arising from the infringement.
• ·Specify a deadline by which you expect a response.
• ·Be prepared to take legal action if you do not receive a satisfactory reply.

It is important to note that you cannot initiate legal proceedings in Norway without first sending a letter (typically a cease and desist) expressly stating the prospective claim and its legal basis. This notice must also invite the defendant to respond to the claim and its grounds prior to filing a lawsuit.

Engage local counsel

We always advise clients and agents to engage a Norwegian trademark attorney as early as possible in a dispute. Hiring a Norwegian attorney in a trademark dispute is advisable because:

• ·A Norwegian trademark attorney has specialized knowledge of relevant Norwegian legislation and case law and can assess the case to determine how strong it is.
• ·A Norwegian trademark attorney can draft cease and desist letters and communicate with the opposing party in a legally precise and effective manner in the right tone, without harming the case at a later stage. We sometimes take over disputes where the relationship between the parties has soured because a trademark holder or their agent used a more aggressive tone than is customary in Norway. Involving a local attorney from the beginning can help maintain a more constructive dialogue and reduce unnecessary escalation.
• ·A Norwegian trademark attorney has experience and knowledge about negotiating favorable settlements without going to court in Norway.

The courts

If the parties cannot reach an agreement through letter exchanges or negotiations, the matter can be brought before the courts by filing a writ of summons with the Oslo District Court. The Oslo District Court has exclusive jurisdiction over matters concerning cancellation, invalidation, registration and infringement of registered trademarks (in addition to several other areas of IP law). The Oslo District Court is also the compulsory legal venue for appeals of decisions issued by the IP Appeal Board.

Norwegian courts will encourage parties in trademark disputes to consider court mediation. However, the parties are free to reject this option. If they agree to court mediation, a judge will be appointed as mediator. In Oslo District Court, there are judges with specialized knowledge of trademark law, which is both good and important, as this is a specialized field. The parties are free to bring their legal representatives. If mediation is unsuccessful, the lawsuit proceeds to trial. The judge who acted as mediator will not adjudicate the case.

What are the costs of trademark lawsuits in Norway?

The cost of a trademark lawsuit depends on the complexity of the case. In most first-instance proceedings, each party’s legal costs range between NOK 200,000 and 400,000. The prevailing party is usually awarded its full (reasonable) legal costs, meaning that the prevailing party will typically not incur any expenses other than the time invested in the case, and the losing party will have to pay double of its own legal costs.

How long does a trademark dispute take?

Most trademark disputes are scheduled for one or two days of oral hearings, but cases involving extensive evidence, typically cases regarding use-acquired rights, can take longer. The Norwegian court system is built on the basic principle of orality, and the judge may not base his or her decision on any other evidence than what is documented and reviewed during the oral hearing.

A court’s judgment can usually be expected within two to four weeks following the oral proceedings. A trademark lawsuit in the Oslo District Court generally takes about 8 to 10 months given the current case backlog. The Court of Appeal is less efficient, and it can take more than a year before an appeal is heard. A final, binding judgment may therefore take 1.5 to 2 years if you engage in litigation.

Preliminary injunctions – expedited proceedings

Preliminary injunctions are effective tools in trademark infringement cases. Under the Norwegian Trademark Act, the courts can prohibit an infringer from continuing or resuming its infringement. Given the protracted timeframes mentioned above, an injunction can be an important and appropriate measure. Courts can often issue an injunction ruling very quickly—sometimes without hearing the defendant first. The defendant can then request a subsequent oral hearing, which may result in a new decision replacing the initial one.

If a party’s request for an interim injunction is granted in a trademark infringement case, the court will usually set a deadline within which the plaintiff must initiate full proceedings over the alleged infringement.

Criminal sanctions

The Norwegian Trademark Act also provides for criminal sanctions (i.e., fines or imprisonment for up to three years) in cases of aggravated trademark infringement, although such measures are rarely applied.

What does the appeals process look like?

A decision by the Oslo District Court can be appealed to the Court of Appeal, where the case will, for all practical purposes, follow the same procedural rules as in the first instance but be heard by a panel of three judges. One may appeal further to the Supreme Court, but the Supreme Court only hears cases that have a certain principled significance beyond the specific dispute (on average, only about 15–20% of appealed cases are admitted). However, The Supreme Court has ruled on several trademark matters in the last five to 10 years, including cases concerning infringement, distinctiveness and even the assessment of the similarity of goods and services.

Bryn Aarflot can assist you

Since trademarks often represent substantial value to businesses, we recommend seeking qualified national expertise in conflict resolution. Bryn Aarflot are experts of Norwegian trademark law and procedures. Our attorneys have extensive experience assessing potential and actual trademark infringements and advising on what measures or legal remedies are necessary to resolve the conflict. We assist our clients in everything from administrative procedures and out-of-court dispute resolution to cases before various boards and tribunals, as well as court proceedings.