On 20 December 2011, the Court of Appeal for Western Sweden (“CoA”) rendered its judgment in the trade mark infringement proceedings between the appellant Layher AB (“Layher”) and the respondent Mon.Zon Sverige AB (“Mon.Zon”) and Jonatan Månsson. The CoA judgment follows the judgment from the Gothenburg City Court rendered in the same case on 15 November 2010.
Layher, the Swedish subsidiary of the German Layher International GmbH, manufactures, markets and sells scaffolding systems. Mon.Zon is a competitor of Layher.
Facts of the Case
In Mon.Zon’s price lists for the years 2007, 2008 and 2009, there is a banner with the Layher trade mark reproduced on a picture depicting part of a construction scaffolding. The same picture also features scaffolding products from Mon.Zon. The banner in question is marked with Layher’s registered trade mark (Layher) which is also the dominant portion of the company's Swedish trade name.
Under certain conditions, Mon.Zon’s scaffolding can be used together with other manufacturers’ scaffolding, subject to compliance with regulatory requirements. Thus, it is possible to mix Layher’s components with Mon.Zon’s pursuant to certain types of verification certificates issued by Sweden's Testing and Research Institution ("SP").
The picture at issue shows a picture from a construction site where Layher parts are combined with a Mon.Zon scaffolding system, but features no explanation or explanatory note as to under which circumstances Layher’s products can be used together with Mon.Zon’s products.
The main legal question before the CoA was whether Mon.Zon’s use of Layher’s trade mark constituted trade mark infringement.
In order to establish infringement, the question of whether the trade mark had been used as a trade mark pursuant to Article 5 of the Trademark Directive (here Directive 89/104/EEC) had to be answered. This question was answered in the negative in the City Court, and thus no infringement was found.
In this respect, the CoA notes that the Layher trade mark is clearly visible in the price lists used by Mon.Zon. This assessment differs from that of the City Court, which held the trade mark to be unclear in the materials.
Pursuant to the CoA, the positioning of the Layher sticker in the middle of the relevant picture, together with the conspicuous colour of the Layher sticker, rendered the Layher sticker more prominent on the picture than the Mon.Zon sticker.
In this context the CoA noted that the use of Layher’s trade mark must have been part of a conscious strategy from Mon.Zon.
The CoA consequently found that Mon.Zon had used Layher’s trade mark as a trademark for the purposes of Article 5 of the Directive and the Swedish equivalent provision. The fact that Mon.Zon had not affixed the Layher trade mark to its own goods, but used an actual Layher product in the picture, did not alter this conclusion.
Infringement / permissible use
Having held that the trade mark use criterion was fulfilled, the CoA proceeded to assess whether the use could be deemed as a permissible use, under Article 6.1.c of the Directive and its Swedish equivalent provision, also referred to as the “spare part” exception, or whether the use amounted to an infringement of Layher’s rights.
Citing legal precedent from the Court of Justice of the EU (“CJEU”) and the Swedish Supreme Court, the CoA established the basic parameters of permissible use, inter alia, that the use of a third party mark must be necessary to indicate the intended purpose of a product, in this case compatibility. The CJEU cases referred to were Gillette (C-228/03) and BMW (C-63/97).
In line with the wording of Article 6 of the Directive, the CoA stated that in order for use to be permissible it has to conform to honest practices in industrial or commercial matters.
Moreover, in order for use of a third party’s trade mark to be permissible under Article 6 of the Directive, the use has to constitute the only means of providing the public with comprehensible and complete information that Layher products can be used together with Mon.Zon products, provided that the conditions for such use are fulfilled.
Applying these rules to the facts of the case, the CoA questioned whether Mon.Zon’s use of Layher’s mark constituted the only means of communicating that the products are compatible to a certain extent for the purposes of Article 6 of the Directive.
The CoA notes that even though it may be difficult to show a picture of an actual construction site without the Layher sticker being visible, this does not mean that the sticker in itself must be visible. Sticker in this context must mean trade mark.
In respect of the honest practices requirement, the CoA states that in the absence of any explanatory text in respect of the picture it cannot be excluded that a reader of the price lists may perceive the picture as Layher products being available from Mon.Zon, and thus that there is a commercial connection or link between the companies. In this respect, the Court notes that Mon.Zon has not spent any efforts to ensure that these customers can distinguish between Layher and Mon.Zon (an implied requirement from Gillette).
In an important passage in the judgment, the CoA states that the Layher trade mark must be deemed to have a good reputation among scaffolding entrepreneurs and users of scaffolding systems and that Mon.Zon’s use of Layher’s mark may thus have affected the value of the trade mark.
Consequently, the CoA concluded that Mon.Zon’s use of Layher’s mark was not such as to constitute permissible use under Article 6.1.c of the Directive and was therefore an infringement of Layher’s trade mark rights. Pursuant to the judgment, Mon.Zon is prohibited by the penalty of a fine from using the Layher trade mark in the manner relevant to the case and must moreover pay compensation to Layher for its use of the trade mark.
In our opinion the CoA judgment follows EU precedent on both Article 6.1.c and Article 5. In the latter respect, the CoA cites L’Oréal (C-487/87). In respect of trade mark use, the contentious issue was really one of fact in the CoA, as the Court’s assessment of the visibility of Layher’s trade mark differed from the first instance court. It is however also one of law, as the City Court seemed to suggest that if a trade mark is not used directly in relation to the alleged infringer’s goods, so as to e.g. be affixed on such goods, there can be no trade mark use pursuant to Article 5 of the Directive. The Swedish Trade mark Act contains wording pursuant to which the scope of the exclusive right prohibits third parties from using confusingly similar marks for its goods. However, as this provision must be interpreted in light of Article 5 of the Directive, arguably such narrow reading as the City Court seems to suggest violates the Directive, as no such alleged requirement appears from the letter of Article 5 of the Directive.
In respect of Article 6.1.c of the Directive, the question was really how much knowledge about a certain set of facts can be attributed to the relevant public, or when information in respect of the intended purpose of a product e.g. in the form of an explanatory note can be dispensed with. Mon.Zon essentially claimed that the relevant public understood that Layher and Mon.Zon products were distinct and emanating from different origins and could be used together provided that the conditions therefore were fulfilled. This must be a question of fact and its answer dependent on evidence.
The CoA judgment has been appealed to the Supreme Court, where a leave of appeal is currently pending. Should the case progress to the highest instance, the legal questions will revolve around what constitutes trade mark use within the particular circumstances of the case and also whether the use at issue can be exempted under Article 6 of the Directive. A decision on leave of appeal is expected in the autumn from the Supreme Court.