In Sweden, the so-called principle of unlawfulness (Sw. lagstridighetsprincipen) is well-established in national marketing law. The principle establishes that marketing activities must be lawful, meaning that such activities must not violate another law. The principle is deemed to manifest the consumers’ rights to neither be exposed to unlawful activities nor to be misled to conduct such unlawful activities themselves.[1]
In relation to the intellectual property laws, the Swedish Market Court has traditionally been reluctant to apply this principle in cases involving violations of these laws. The Market Court has not considered intellectual property law aspects when it has conducted marketing law assessments. Accordingly, a marketing activity under the Swedish Marketing Act (the “Marketing Act”) has not been prohibited solely based on the ground that the activity constitutes an intellectual property infringement.[2] The restrictive approach may be explained by the fact that most of the cases relating to the Marketing Act were previously handled in the Market Court whereas the intellectual property law cases were handled in the general courts and that the different laws had somewhat different purposes and structures. The divided court system was deemed unsatisfactory and in order to streamline and improve the handling of these types of cases, the Swedish Patent and Market Courts were established.[3] As from September 2016, the Market Court ceased to exist and the Patent and Market Courts, which deal with both marketing law cases and intellectual property law cases, were established instead.
Nevertheless, recent marketing law cases demonstrate that the Market Court’s original restrictive approach may have slowly shifted.[4] This may be due to the increased influence of EU law in this area and the reform of the special court system.[5] On 14 April 2020, the Patent and Market Court of Appeal delivered a new judgment in this regard[6] and this judgment is of particular interest as it pertains to the issue of whether an alleged intellectual property infringement may constitute an unlawful marketing activity under the Marketing Act and thus be prohibited.
The principle of unlawfulness has been developed by marketing case law and is considered to fall within the scope of the general clause stipulated in Section 5 of the Marketing Act.[7] This provision states that marketing shall be in accordance with good marketing practices. It is supplemented by Section 6 of the Marketing Act which provides that the marketing as referred to in Section 5 is deemed unfair if it influences, or is likely to influence, the average consumer’s ability to make a well-founded transactional decision.
Further, Directive 2005/29/EC on Unfair Commercial Practices[8] (the “Unfair Commercial Practices Directive”), including Annex I (the “EU blacklist”) to the Unfair Commercial Practices Directive, has been implemented through the Marketing Act. The EU blacklist specifies the commercial practices which are in all circumstances considered unfair and thus prohibited. Examples of such blacklisted commercial practises are: displaying a trust mark, quality mark or equivalent without having obtained the necessary authorisation (Item 2); and falsely stating that a product will only be available for a very limited time or on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice (Item 7). In addition, Item 9 of the EU blacklist provides that stating or otherwise creating the impression that a product can legally be sold when it cannot, is also prohibited. This provision is deemed to be a special case of the principle of unlawfulness[9] and will be further described in the sections below.
As mentioned above, the Market Court has historically been reluctant to apply the principle of unlawfulness in cases involving violations of the intellectual property laws. However, recent marketing law cases indicate that the Market Court’s original restrictive approach has taken a new turn. The Patent and Market Court of Appeal delivered a new judgment in this respect on 14 April 2020. In this judgment, which will be further described below, the court addressed the issue of whether an alleged infringement of an intellectual property right may constitute an unlawful marketing activity which falls within the scope of the provisions regulating the principle of unlawfulness, i.e. Item 9 of the EU blacklist and Section 5 of the Marketing Act.
The Finnish company Vannetukku.fi Oy (“Vannetukku”) had produced a product catalogue in Swedish which contained different advertisements of, inter alia, the company’s car rims. The German car manufacturer Bayerische Motoren Werke Aktiengesellschaft (“BMW”) became aware that one of the advertisements included, inter alia, pictures of BMW’s cars, the car rims “Blaukreuz Mi6” and “Blaukreuz Sport-M” (the “Car rims”) which were similar to BMW’s design protected car rims as well as the marks Mi4, Mi5, Mi6, Mi7, Mi8 and Sport-M (the “Marks”) which were similar to BMW’s registered trademarks. The advertisement also included the following text: “The car rims are not original car rims from BMW, but they are fully compatible with BMW cars.” (authors’ translation).
Against this background (and after having sent a letter before action to Vannetukku), BMW commenced proceedings in the Patent and Market Court and requested that the court should prohibit Vannetukku subject to a default fine from marketing its car rims and other car spare parts on the basis of unfair marketing. According to BMW, BMW was the holder of certain registered Community designs and Vannetukku’s Car rims thus infringed these rights. Consequently, the marketing activity violated Item 9 of the EU blacklist and should therefore be prohibited. As an alternative ground for injunctive relief, BMW asserted that the marketing activity breached the principle of unlawfulness stated in Sections 5 and 6 of the Marketing Act. Similarly, the request for an injunction prohibiting Vannetukku from using the Marks in its marketing was based on the ground that the use of the Marks infringed BMW’s registered trademark rights. BMW thus alleged that the marketing activity violated certain provisions under the Marketing Act, including the principle of unlawfulness stipulated in Sections 5 and 6 of the Marketing Act.[10]
The Patent and Market Court ordered that Vannetukku was prohibited subject to a default fine from, inter alia, using certain assertive statements and pictures of BMW’s cars in its marketing. However, the court rejected BMW’s requests for prohibiting Vanetukku from marketing the Car rims and using the Marks in its marketing. Hence, BMW appealed the Patent and Market Court’s judgment in relation to its rejected claims.
The Patent and Market Court of Appeal emphasised by way of introduction that the Marketing Act had implemented the Unfair Commercial Practices Directive. Thus, the provisions under the Marketing Act should be interpreted in conformity with the aforementioned directive.
The court further stated that it was clear that there was a connection between the intellectual property rights and the provisions under the Marketing Act in some cases. As regards the subject-matter of the appeal, the Patent and Market Court of Appeal referred to previous marketing case law in which the Market Court had laid down that a prohibition of a marketing activity could not be ordered on the sole ground that a certain activity constituted an infringement of, e.g. a trademark.[11] The court also referred to a judgment from 2012[12] in which it was held that the previous case law did not prevent the court from prohibiting such marketing activities that were in breach of good marketing practices and unfair, on the basis of the principle of unlawfulness [emphasis added]. However, the Patent and Market Court of Appeal affirmed that the judgment from 2012 did not concern the special case of the principle of unlawfulness which was manifested by Item 9 of the EU blacklist.
Furthermore, the Patent and Market Court of Appeal held that according to the wording of Item 9 of the EU blacklist and the manner in which it had been applied in previous cases, the provision mainly applied to marketing of products which were illegal to sell. In other words, Item 9 of the EU blacklist applied to a product type which was completely banned from sale, required a special selling permit, or could not be sold since the product did not fulfil certain requirements under law. The court confirmed that the provisions of the EU blacklist should be interpreted restrictively. Thus, according to the Patent and Market Court of Appeal, the scope for interpreting that Item 9 also included marketing of products which constituted an infringement of another party’s intellectual property (in the manner contended by BMW) was limited. Accordingly, the court concluded that although Vannetukku may have infringed BMW’s design and trademark rights, BMW’s requests for injunctive relief could not be sustained on the basis of Item 9 of the EU blacklist.
As regards the issue of whether Vannetukku’s activities could fall within the scope of the general clause set out in the Marketing Act, the court referred to the judgment from 2012 and stated that it was not excluded per se that such activities could be considered to be in breach of good marketing practices. However, the court stressed that the marketing activity must also be deemed as unfair pursuant to Section 6 of the Marketing Act, meaning that it had to influence, or was likely to influence, the average consumer’s ability to make a well-founded transactional decision. In this respect, the court also emphasized that the latter requirement constituted a central aspect of the overall assessment.
In this particular case Vannetukku had expressly stated in its advertisement that the car rims were not original car rims from BMW. According to the Patent and Market Court of Appeal, the consumer was thereby clearly informed of the fact that the marketing did not concern BMW’s original car rims. Thus, irrespective of whether Vannetukku’s marketing activity was deemed to have infringed BMW’s registered designs and trademarks or not, the court held that the average consumer’s ability to make a well-founded transactional decision was not influenced in such a way as required under Section 6 of the Marketing Act. Accordingly, the Patent and Market Court of Appeal concluded that BMW’s requests for injunctive relief prohibiting the marketing activity could not be sustained either on the basis of Item 9 of the EU blacklist or on the basis of Sections 5 and 6 of the Marketing Act.
The recent judgment by the Patent and Market Court of Appeal provides further guidance on how the Swedish courts apply the principle of unlawfulness under the Marketing Act in relation to intellectual property infringements. Although the judgment demonstrates the continued trend of a less restrictive approach by the courts, the Patent and Market Court of Appeal’s findings in respect of Item 9 of the EU blacklist and Sections 5 and 6 of the Marketing Act differed.
In regard to the special type of the principle of unlawfulness stipulated in Item 9 of the EU blacklist, the Patent and Market Court of Appeal clarifies that an infringement of an intellectual property right does not constitute an unlawful activity which falls within the scope of Item 9. As follows from the previous judgment from 2012, it is not excluded per se to prohibit a certain activity involving an intellectual property infringement on the basis of the principle of unlawfulness. However, the Patent and Market Court of Appeal concluded that the judgment from 2012 was not applicable to the special case of the principle set out in Item 9. The court stressed that the provisions of the EU blacklist shall be interpreted restrictively and took into account the wording of Item 9 as well as the manner in which it had been applied in previous marketing cases. The strict interpretation by the court may be explained by the fact that the interpretation concerned a provision of the EU blacklist, which in all circumstances are deemed unfair and thus prohibited, and that the provision is based on EU law.
Further, the court clarifies that an alleged infringement of an intellectual property right may constitute an unlawful activity which falls within the scope of the general clause stated in Section 5 of the Marketing Act. In relation hereto, it may be interesting to note that the Patent and Market Court of Appeal’s judgment differed from the lower court’s findings in this regard. While the Patent and Market Court of Appeal confirmed the findings by the Market Court in the judgment from 2012 insofar as it relates to the principle of unlawfulness stipulated in Section 5 of the Marketing Act, the lower court had a more restrictive approach to the judgment from 2012. The lower court held that the findings in the latter judgment could be called into question due to various reasons, including the fact that there are different special laws which regulate an intellectual property infringement and a violation of the Marketing Act respectively.
As a final remark, it may be noted that an intellectual property infringement is however not per se deemed sufficient to prohibit a marketing activity on the basis of Section 5 of the Marketing Act. In order to be deemed sufficient, it is also required that the marketing activity is considered unfair pursuant to Section 6 of the Marketing Act. Consequently, to what extent the marketing activity influences or is likely to influence the average consumer’s ability to make a well-founded transactional decision may be decisive in the court’s assessment of whether to grant such a request for injunctive relief or not.
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[1] The Swedish Government Bill 2007/08:115 p. 77.
[2] See, for example, the Market Court’s judgments in case number MD 1988:6 (1988), in case number MD 1994:25 (1994) and in case number MD 2002:25 (2002).
[3] The Swedish Government Bill 2015/16:57 p. 128-131. It may be noted that the Patent and Market Courts also handle competition law cases.
[4] See the Market Court’s judgments in case number MD 2011:29 (2011) and in case number MD 2012:15 (2012).
[5] See the article written by Bernitz, Ulf, Varumärkesrätten i svensk marknadsrätt. Kommentar till svenska Marknadsdomstolens dom 2012:15, Elskling mot Kundkraft Sverige (Trademark Law in Swedish Advertising Law. A comment on the Decision by the Swedish Market Court (2012:15 Elskling vs. Kundkraft Sverige)), Nordiskt Immateriellt Rättsskydd, No. 4 (2013), p. 452 and 454-455.
[6] The Patent and Market Court of Appeal’s judgment dated 14 April 2020, case number PMT 9554-17.
[7] The Swedish Government Bill 2007/08:115 p. 70 and 77.
[8] Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council.
[9] See, for example, the Market Court’s judgments in case number MD 2009:33 (2009) and in case number MD 2011:29 (2011).
[10] It may be noted that in the subsequent proceedings in the Patent and Market Court of Appeal, BMW also added Item 9 of the EU blacklist as an alternative ground for injunctive relief.
[11] Reference was made to the Market Court’s judgments in case number MD 1988:6 (1988) and in case number MD 1994:25 (1994).
[12] The Market Court’s judgment in case number MD 2012:15 (2012).
