If a trader has imported goods that turn out to be pirated, or if it has received original goods that have been the subject of illegal parallel imports from outside the European Economic Area (EEA), is it possible to cover or remove the original manufacturer's trademark and thus avoid trademark infringement claims based on subsequent marketing and sales?
This is an important question as it is lucrative to import original products from low-cost markets outside the EEA with a view to subsequent sales in the EEA (eg, in Norway). Without the rights holder's consent, however, this would constitute an illegal parallel import under section 6 of the Trademarks Act (as well as the corresponding provision of the EU Trademarks Directive) if the goods bear the rights holder's trademark. Several decisions from the European Court of Justice and the Norwegian Supreme Court in recent years have shed light on this question – which, in the deepest sense, is a question of where the line is drawn for what is considered trademark use under section 4 of the Trademarks Act.
In one such recent decision, the Supreme Court found that pirated iPhone screens infringed Apple's trademark rights, despite the fact that Apple's trademark (on the screens) had been covered with a black marker and would have been invisible to the end user. The Supreme Court emphasised that the cover could be removed and that the screens were otherwise identical to the original screens, which could lead to uncertainty about the origin of the products. This was thought to be especially the case among repairers and dealers, who are considered to be a fundamental part of the spare parts market. This ambiguity entailed a risk of damage to the functions of the original trademark (in particular, the guarantee of origin function).
The importer tried unsuccessfully to argue that competition in the spare parts market was important from a sustainability perspective, but the Supreme Court stated that was irrelevant to the case, which concerned only the trademarks on the screens (and not the screens themselves). As the Supreme Court pointed out, in principle, Norwegian trademark law does not prevent the import of iPhone-compatible spare parts as long as Apple's trademark is not affixed to them.
There are probably unresolved questions relating to the lower limit of trademark use, but the Supreme Court's decision in the above case is not of great interest in this context – many might think that this result was obvious. However, it is reassuring to see that the judgment was so clear and unambiguous, as the question of covering trademarks is rather relevant.
In the aforementioned decision, the Supreme Court referred extensively to its own judgment in the Ensilox case(1) and the European Court of Justice's decision in Mitsubishi.(2) In the first case, the Supreme Court confirmed that it is sufficient to constitute danger of damage ("a clear possibility") to one of the trademark's functions to consider the trademark infringed. Subsequently, it is not necessary for the rights holder to document such damage in order to prove that the trademark had been infringed.
In the second case, an importer had purchased original Mitsubishi forklifts from outside the EEA and imported them into the EEA without Mitsubishi's consent, which therefore constituted an illegal parallel import. Before the forklifts were formally cleared through customs in the EEA, however, the importer removed all of Mitsubishi's trademarks and replaced them with its own. Despite the fact that Mitsubishi's trademarks were no longer affixed to the forklifts, the European Court of Justice nevertheless found that Mitsubishi's trademark rights had been violated. It was particularly emphasised that the goods could still damage significant functions of Mitsubishi's trademarks (the origin, investment and advertising function), and that such circumvention of trademark protection was contrary to the purpose of ensuring fair competition. The decision illustrates that an assessment of trademark use within the meaning of the law is complex.
To answer the question posed at the beginning of this article: no, covering or removing trademarks does not necessarily mean that the trademark is not "used" within the meaning of the law. In situations such as those outlined here, such use would infringe the rights holder's trademark right and thus, as a general rule, would also be subject to compensation.
For further information on this topic please contact Mikkel Lassen Ellingsen at Bryn Aarflot by telephone (+47 46 90 30 00) or email ([email protected]). The Bryn Aarflot website can be accessed at baa.no.