Legislative framework and causes of action

Trademark law, rules and regulations

In Sweden, the Trademarks Act 1877/2010 sets out the framework for trademark protection. The legislation is based on the EU Trademark Directive (2008/95/EC), which has direct effect in Sweden.

Trademark protection can be acquired either by registration or by establishing well-known status based on use. However, for a trademark to have well-known status it must be considered ‘established on the market’. A trademark is established on the market if it is known by a significant part of the relevant public as an indication for the goods or services it represents. The ‘relevant public’ varies depending on the goods or services for which the trademark is being used. If the trademark is established on the market only in part of the country, the rights are limited to that territory.

Registration can be made either at the Swedish Patent and Registration Office (PRV) or by an international registration in accordance with the procedures of the Madrid Protocol. In addition, EU trademark registrations are protected in Sweden. An EU trademark registration can be made through either the PRV or the EU Intellectual Property Office.

The owner of trademark rights (registered or unregistered) may use court proceedings and administrative procedures to enforce its rights against infringers.

The framework for litigation is laid down in the Code of Procedure 740/1942, the Arbitration Act 116/1999, the Patent and Market Courts Act 118/2016 and the Rules of Arbitration Institutes.

Causes of action

An application for trademark registration will normally be assessed within two months. If the PRV deems that there are obstacles for registration, or if the application is incomplete, the applicant will normally be given the option of filing additional arguments or evidence. After the PRV has completed its assessment of the trademark, the application will be announced. Any objection to the trademark application must be submitted within three months of the date of announcement.

If a party claims to be the formal or correct owner of an applied-for trademark, the PRV may require that party to bring an action before a court within a certain time period. The objection may be disregarded if it is not submitted within the stated timeframe. If a party can prove its right to the applied-for trademark, the PRV will transfer the application to that party.

Under Section 7 of the Trademarks Act, the PRV may refuse the registration of a trademark based on the common interest. A registration will be refused if the trademark:

  • violates any law, other statutory instrument, standard practice or the public order; or
  • misleads the general public in respect of the nature, quality, geographic origin of the goods or service or any other circumstance in respect thereof.

Under Sections 8 to 10 of the Trademarks Act, the PRV may refuse the registration of a trademark based on other rights, including other registered or well-established trademarks or company names used in commercial activities. In principle, all PRV refusals can be appealed to the Patent and Market Court.

Oppositions may be filed on both relative and absolute grounds. For an opposition based on relative grounds, the opponent must have a legitimate interest in relation to the opposition. Oppositions must be filed within three months of publication of the disputed trademark.

After the three-month opposition period has expired, it remains possible to file for an administrative revocation. An administrative procedure can be used to revoke trademarks which are no longer used, among other things. A trademark owner whose registration has been revoked by the PRV may apply to the Patent and Market Court for recovery.

The Patent and Market Court was established in 2016 and is located in Stockholm. The court administers many different kinds of cases, including:

  • damages and injunctions deriving from trademark infringement;
  • matters involving trademark registrations;
  • matters involving granting of patents;
  • patent nullification;
  • cases related to anti-competition fines and merger restriction;
  • misleading marketing practice cases;
  • information injunctions and infringement investigations under the Copyright Act;
  • appeals of trademark registration decisions;
  • criminal IP cases (eg, trademark falsification); and
  • cases involving unfair or misleading marketing.

Alternative dispute resolution

Arbitration

Arbitration is the most widely used alternative dispute resolution mechanism in Sweden. The Arbitration Act provides a functioning and well-established framework for carrying out arbitration proceedings; however, an even more well-established procedure is arbitration under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). The SCC has obtained extensive experience in dispute resolution over a period of nearly 100 years. It has developed into one of the premier institutions globally for East-West-related disputes, and is today an international centre for dispute resolution, where parties from up to 40 different countries choose to have their disputes settled each year.

However, it is uncommon for trademark disputes to be resolved by arbitration, since the nature of such disputes is often non-contractual, and arbitration requires for the parties to have entered into an agreement to arbitrate (either in a contract or ad hoc, when a dispute has arisen).

Swedish arbitration awards are widely enforceable worldwide.

Mediation

Mediation is often undertaken as a first step, before (if necessary) litigation or arbitration. The SCC has established a mediation process that has gained great popularity. Once initiated, mediation is usually completed within one or two working days, depending on the complexity of the dispute. It is a non-binding procedure controlled by the parties, which can choose to end the mediation and commence arbitration or litigation at any point during the process.

One condition for mediation is that the parties have agreed to use a mediator. This agreement may be included in a contract as a mediation clause. Any settlement reached can be confirmed in an arbitral award and thus be made enforceable.

As outlined below, the Patent and Market Court will normally take a mediating role during the preparation of the case (often in combination with a preparatory hearing). Such mediation is successful in many cases and will render a documented settlement which may be made enforceable by a declaratory judgment.

Litigation venue and formats

Court system and litigation venues

Most trademark cases before the Patent and Market Court begin with a summons application or an appeal against a decision by the PRV.

Cases before the Patent and Market Court are often settled by negotiation before a final hearing takes place. During the preparation of the case – which often includes a preparatory hearing – the court will normally take a mediating role as outlined above.

Some cases can be tried by only written procedure, without hearing. Otherwise, the court will convene a final hearing where the parties will bring forth arguments and evidence in the form of written evidence and oral statements under oath.

As determined by the court, cases may be tried by judges with specialist legal expertise as well as technical and financial experts. In certain cases only judges will appear; in other cases, the court may comprise both judges and specially appointed members.

The losing party will usually be obliged to compensate the winning party for its costs, including the costs for counsel, oral and written evidence, as well as any arbitrators’ fees. However, there are exceptions. If the plaintiff’s plea is only partially recognised by the court, the plaintiff may have to bear its own costs, and sometimes even pay part of the defendant’s costs. The costs for the court itself are limited to a small administrative fee.

Forum shopping

In practice, forum shopping is limited to the choice of court litigation or arbitration. This is primarily due to the fact that the Patent and Market Court is an exclusive forum. This means that in most cases the parties have no choice where to file a summons, either due to an arbitration agreement between the parties or because the matter can be assessed only by the Patent and Market Court.

Damages and remedies

Available remedies

The central remedy offered by Swedish law is compensation for loss in the form of damages.

In addition, the court can order the recall of infringing products from the market and destroy or amend such goods. In criminal cases, it may order the seizure of the means of infringement.

The court may also order the party that has committed or contributed to the infringement to pay pecuniary compensation to cover the costs of publicising the judgment.

Infringements committed intentionally or by gross negligence are subject to criminal penalties, namely a fine or up to two years’ imprisonment. Possible criminal offences should be reported to the public prosecutor. The prosecutor will take action only if it is seen to be in the common interest.

A relatively new such case is Designers Revolt, in which a UK-based company sold replicas of designer furniture and lamps. The company was based in the United Kingdom because the goods it sold no longer held IP protection under UK law, but it aimed its marketing at Swedish consumers. The Patent and Market Court tried four executives. Two of them were found guilty of both copyright and trademark infringement, and were sentenced to 18 months’ imprisonment and damages amounting to several million kroner. The decision is subject to appeal.

Injunctive relief

A trademark owner or licensee can file a motion to the court requesting injunctive relief, including:

  • prohibitions under penalty of fines;
  • orders for alleged infringers to provide information; and
  • initiation of an infringement investigation.

The Patent and Market Court may grant preliminary and final injunctions. In order to obtain preliminary relief, the applicant must show probable cause that the other party has committed a trademark infringement, and must also provide security for losses incurred by the other party due to the relief.

Evidencing the case

In almost all cases before the Patent and Market Court, evidence and arguments are brought forward in the main hearing, which is the ultimate stage of the proceedings before the court. The procedure at the Patent and Market Court can be tried without such hearing per se, but this will normally be the case only where no oral evidence is relied on and the parties agree on such procedure.

In accordance with the Code of Judicial Procedure, when it is not possible for the plaintiff to submit full proof of damages, the court may assess a reasonable amount of damages. However, the regulation includes a large number of restrictions, and does not apply if no facts or evidence of damage are presented before the court.

Investigations and first steps

If a party can show probable cause that the other party has committed trademark infringement, the court may order – on penalty of fines – that the infringing party (or a party that has contributed to or benefited from the infringement) must provide information or documentation to the applicant about the infringement. Such information or documentation can include the origin and distribution channels of the alleged infringing goods or services.

In addition, the court may order an investigation into an infringing party in order to find important relevant objects or documents. A decision to order such inquiry requires that it can be reasonably assumed that an infringement has been committed. Also, such decision will be rendered only if the applicant provides sufficient security for damages which may be suffered by the investigated party.

The question of whether the above measures should apply will be decided during the preparatory stages of the court proceedings.

Survey evidence

Survey evidence is recommended in many trademark cases. In the absence of such evidence, it may be difficult, for example, to prove before the court that a non-registered trademark has become known among the relevant public and is considered established on the market.

Survey evidence can also be used to prove that a trademark has distinctiveness in registrations or in infringement cases. However, when initialising a survey, it is important to consider carefully how the target sample will be chosen, as well as which territory will be covered by the survey and how the questions will be phrased.

Use of expert witnesses

Parties before the Patent and Market Court commonly rely on expert witnesses and the written statements of experts. Normally, a person who has issued a statement to the court must also be examined in the main hearing. Further, someone called as an expert witness must submit an expert opinion before the hearing.

Unless expert evidence is being used, it can be difficult to prove the financial value of a trademark and the economic consequences of infringement.

Available defences

The following central grounds may be raised to defend against a claim of infringement:

  • exhaustion of rights;
  • revocation due to non-use or degeneration;
  • a counterclaim of invalidity and claim for cancellation;
  • lack of legal interest in bringing the action; and
  • acquiescence.

Appeals process

Patent and Market Court judgments and decisions can be appealed to the Patent and Market Court of Appeal, which is part of the Svea Court of Appeal in Stockholm. Leave to appeal is required in almost all cases, except for certain criminal cases. Leave to appeal may be given if:

  • there may be reason to change the judgment;
  • it is needed in order for the Patent and Market Court of Appeal to assess whether the first-instance judgment is correct;
  • it is important for precedential reasons; or
  • there are other exceptional reasons to adjudicate the case.

If leave to appeal is not granted, the judgment gains legal force.

This article first appeared in World Trademark Review. For further information please visit www.WorldTrademarkReview.com.

Advokatfirman NORDIA KB

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PO Box 70389

Stockholm SE-107 24

Sweden

Tel +46 8 563 08 100

Fax +46 8 563 08 101

Web www.nordialaw.com

Mårten Stenström Partner marten.stenstrom@nordialaw.com

Mårten Stenström is a partner in Nordia Law’s corporate and IP departments. He graduated with an LLM from Stockholm University in 1990 and thereafter served in the Swedish courts. He works in the field of general business law and heads Nordia’s IP department in Stockholm. He has been named in Legal 500 Europe and contributed to the European Handbook on European Advertising Legislation (Cavendish, London). He assists Swedish and foreign clients in various areas of business law.

Evelina Rosenborg Associate evelina.rosenborg@nordialaw.com

Evelina Rosenborg graduated from Umeå University with an LLM in 2010 and undertook an internship at the European Parliament. She thereafter served in the district court and joined Nordia Law in 2012, where she works in the IP and dispute resolution departments. She assists Swedish and foreign clients in various areas of business law. She is a member of the Swedish Bar Association.