decision on injunctive relief in relation to tm infringement in sweden

21 September 2004

Staffan Boström, John Kadelburger, Sara Eliasson

The Svea Court of Appeal recently handed down a decision in relation to the requirements for an injunction in trade mark infringement disputes and the interpretation of Council Regulation (EC) No 40/94 of 20 December 1993 on the community trade mark (“the Regulation”).

In this case the defendant, a Mr. Wärdell, had imported from the Phillippines, mobile telephone equipment (so called “flash stickers”) bearing Nokia’s trade mark which is a registered community trade mark. The Swedish customs authorities discovered that approximately one third of the “flash stickers” bore Nokia´s trade mark.

Nokia was notified by the Swedish customs and immediately initiated negotiations with Mr. Wärdell who claimed that he had not, in fact, ordered the “flash stickers” with Nokia´s trade mark and that he was unaware that the exporter had shipped them. Mr Wardell claimed that he was the victim of a mistake and on that basis, he refused to sign up to the settlement agreement proposed by Nokia in which Mr.Wardell would be obliged to pay Nokia a substantial fine in the event of future infringements, inadvertent or otherwise. The settlement negotiations therefore fell through.

Nokia then brought an action for trade mark infringement against Mr.Wardell in the City Court of Stockholm. The court ruled in favour of Nokia and granted a prohibitive injunction against Mr. Wardell despite Mr. Wardell’s argument that there was no risk that the infringement would be repeated because it had been a simple mistake.

Mr. Wardell appealed to the Svea Court of Appeal claiming, inter alia, that the infringement was a “one-off” in that it had resulted from a mistake, that there was no risk of recurrence and that an injunction was therefore unnecessary. The Court of Appeal upheld the judgment on the merits but decided that there was no proper basis for an injunction because Nokia had not established that the infringement was ongoing or that there was any real risk of the infringement being repeated. Further, Mr.Wardell had not previously been involved in similar activities and he had acted without intent. The fact that Mr. Wärdell had admitted that he might have cause to import “flash stickers” in the future was not sufficient to convince the Court of Appeal to uphold the injunction.

Nokia has now been granted leave to appeal to the Swedish Supreme Court. Nokia is claiming that the judgment is incompatible with the Regulation which states that where a court finds that a defendant has infringed or threatened to infringe a trade mark, it shall, unless there are special reasons for not doing so, issue an order prohibiting the defendant from continuing with the infringement. The Court of Appeal had taken the view that there must be special reasons for granting the injunction. Further, Nokia contends that according to the Regulation, the court is obliged to take such measures in accordance with its national law to ensure that the prohibition is complied with.

The point at issue is what conditions must be fulfilled before a court can order a permanent injunction in relation to trade mark infringements: is it sufficient that an infringement has occurred or does there have to be an on-going infringement or risk of a repeat infringement? The City Court of Stockholm thought the former and the Svea Court of Appeal thought the latter. Nokia is arguing that if the Svea Court of Appeal is correct then there will not be any difference between the conditions for a permanent injunction and the conditions for an interim injunction. In the case of an interim injunction, infringement has to be ongoing. According to Nokia, the prerequisites for a permanent injunction have not been properly reviewed by the Swedish courts or the European Court of Justice and the decisions of the Swedish courts are inconsistent in this respect. Nokia maintains that the attitude of the Swedish Court of Appeal represents a marked deviation from the current trend of protecting intellectual property rights and must therefore surely contradict legislative intent.

The Swedish Supreme Court is expected to hand down its judgment in spring 2005. We will keep you informed of any developments.