Norgesgjerde case
Bank Norwegian case
Comment
In December 2021, the Norwegian Supreme Court concluded in the Bank Norwegian case that purchasing competitors' trademarks and names as Google keywords does not violate the Norwegian Marketing Control Act, and is thus legal. Just a week later, however, the Borgarting Court of Appeal concluded that a similar practice was contrary to trademark law, and thus illegal and subject to compensation. In light of such different outcomes, the question remains: is it really legal to purchase competitors' names as Google keywords?
In the 21 December 2021 Borgarting Court of Appeal judgment, Vindex AS and Norgesgjerde AS upheld their claim against Kystgjerdet AS after the latter purchased "Vindex" and "Norgesgjerde" as Google keywords. The Court awarded Vindex and Norgesgjerde a total compensation of approximately 2.5 million kroner (approximately $280,000).
An important premise for the Court's conclusion was that it found that both VINDEX and NORGESGJERDE were distinctive and established trademarks. This gave them protection against other parties' use of identical or similar signs that could be confused with "Vindex" and "Norgesgjerde", respectively. In its assessment of distinctiveness, the Court concluded that "Norgesgjerde" did not linguistically describe a fence that is erected or produced in Norway, but that it appeared to be a word that had been created specifically for the party's products.(1) This is somewhat surprising, as it could be argued that the word "Norgesgjerde" refers precisely to Norwegian-produced fences or fences set up in Norway, and thus appears to be descriptive of the products in question.
Once the Court established that the relevant marks were covered by trademark protection, it then had to decide whether the competitor's purchase and use of them as keywords was legal. Here, the Court pointed out that the purchase and use of competitors' trademarks is not in itself contrary to trademark law; on the contrary, it is an acceptable act of competition. However, the Court concluded that the purchase and use of such trademarks would be illegal if, through their use, there was a risk of confusion between the relevant competitors – for example, if the competitor's trademark also appeared in the ad text in Google.
In such situations, the use of Google ads and similar services would contribute to weakening of the competing brand's function as an identity bearer and guarantee of origin, and thus constitute a violation of the competitor's exclusive right to its trademark. Such practice attacks the core of trademark protection, and the Court's assessment in this regard aligns completely with European case law in this area.
As the ruling has recently been appealed, the Supreme Court is expected to eventually provide a useful clarification of Norwegian law principles, even though it will probably not resolve all the legal challenges associated with the purchase and use of trademarks as keywords – for example, with regard to the increasingly dynamic and algorithm-driven bidding strategies offered by Google. Although such issues usually have to be considered specifically, the objective and rigid rules of trademark law dictate that parties should at least avoid their competitors' names ending up in the headline or otherwise appearing in their Google ad.
Unlike the Norgesgjerde case, the Bank Norwegian case concerned the use of keywords where the competitor's name or trademark did not appear in the ad text itself, and where there was thus no risk of confusion.
The Supreme Court had to decide whether the action was nevertheless contrary to good business practice under the Marketing Control Act, even though the case was considered to be a fair act of competition under trademark law. Legally, this has been a controversial topic for several years, and the outcome was by no means obvious, especially because long-standing practice from the the Norwegian Industry's Committee on Competition has assumed that such practice must be contrary to the Marketing Control Act.
The Supreme Court did not allow itself to be influenced by established industry practice, and concluded that what is acceptable under trademark law must necessarily also be acceptable under the Marketing Control Act. The practice was thus considered legal even in accordance with the Marketing Control Act's requirements for good business practice.
Purchasing competitors' trademarks as keywords is not in itself contrary to the Norwegian Trademarks Act or the Marketing Control Act.
However, the use of competitors' trademarks in the actual ad text in Google may violate Norwegian trademark law. It is nevertheless important to note that a mark must have a sufficient degree of distinctiveness or incorporation in the market in order to be able to assert an exclusive right to a name or a word. There is little doubt that descriptive names, such as "Norwegian fences", as well as those that have not been incorporated in the market, can be purchased by anyone who has paid for them and used in ad text. If, on the other hand, there are other, aggravating circumstances, such as previous collaboration, systematic imitation or other reprehensible circumstances, this may nevertheless constitute a breach of the Marketing Control Act after an overall assessment, even if the keyword purchased in isolation is not illegal.
For further information on this topic please contact Thomas Flo Haugaard or Sebastian Stigar at Bryn Aarflot by telephone (+47 46 90 30 00) or email ([email protected] or [email protected]). The Bryn Aarflot website can be accessed at baa.no.
Endnotes
(1) In Norwegian, "Norge" means "Norway", while "gjerde" means "fence".