Bad-faith test clarified by Supreme Court

The Supreme Court has issued a ruling on a case involving the use of a red and white lifebuoy as a trademark by Norwegian and Swedish insurance companies, namely Vesta Forsikring AS (Vesta) and Trygg Hansa AB (HR-2006-01978 - Case 2006/614, November 23 2006).

The Norwegian insurance company Vesta started in 1952 to place red and white lifebuoys along the coast of Norway. The lifebuoy was soon associated with Vesta and it was gradually included into the company's logo - officially from 1970. Vesta owns several trademark registrations of the lifebuoy, which today is recognized as a well-known sign for Vesta in Norway.

The Swedish insurance company Trygg Hansa started a similar scheme in Sweden a few years after Vesta. The lifebuoy was included in the company logo as early as 1965. Trygg Hansa has several trademark registrations covering the lifebuoy and this sign is associated with Trygg Hansa in Sweden.

In 1993 Trygg Hansa filed a trademark application in Norway for a combined mark containing a lifebuoy. This application was registered in 2002 under registration number 213450 - TRYGG HANSA (lifebuoy). Shortly after the expiry of the term for filing an opposition, Vesta filed a nullity suit claiming that the registration in question was confusingly similar to Vesta's trademark rights to the lifebuoy design pursuant to Section 14(6) of the Norwegian Trademarks Act. In its defence, Trygg Hansa filed a cross-action stating that the invoked registered trademark rights were invalid due to its alleged prior use of the lifebuoy as a trademark under Section 14(7) of the Trademarks Act.

The City Court of Oslo found for Trygg Hansa in the main lawsuit, while the cross-action was in favour of Vesta. This decision was appealed to the Court of Appeal, which reversed the earlier findings on both the main action and the cross-action. Thus, the court cancelled some of Vesta's marks. It held that Trygg Hansa had commenced use of its mark (in Sweden) prior to Vesta's first use of the lifebuoy design as a trademark. The court concluded that Vesta was aware of Trygg's earlier use and there was an element of bad faith in its decision to use an identical mark. The bare act of placing lifebuoys along the Norwegian coast was not trademark use.

The case came before the Supreme Court, but was limited to the cross-action. The Supreme Court first noted that Vesta was aware of Trygg Hansa's use of a lifebuoy as a trademark prior to the application date for its own mark. However, in contrast to the Court of Appeal and previous case law, the Supreme Court found that the mere knowledge of Trygg Hansa's use did not necessarily mean that it had registered its own marks in bad faith. Applying a standard of good business practice, the Supreme Court held that Vesta's registrations for a lifebuoy design were not in breach of this standard and concluded that they had been validly registered.

The Supreme Court also considered the alleged non-use of the lifebuoy as a trademark with reference to Section 25(a) in the Trademarks Act. It found that the relevant use during the past five years was sufficient and Trygg Hansa's allegations concerning non-use could not prevail.

With this decision, the Supreme Court has moved away from earlier case law. This change of direction is in accordance with established case law with regard to bad-faith registration under both the Community Trademark Regulation and the First Trademarks Directive. The change was necessary in order to bring Norwegian law into compliance with this interpretation.

For background discussion of this case, see Insurance companies sunk by lifebuoy logo mark ruling.

Felix Reimers, Advokatfirmaet Grette DA, Oslo