Supreme Court issues controversial decision on ‘genuine use’ of company name

Sweden

The Swedish Supreme Court has issued its decision in a dispute between NonStop Television, which manages a television channel called TV 7, and a company registered as TV 7 Stockholm AB over the latter's use of its company name (Case 1408-09, December 29 2011).

In 2008 NonStop Television, a company owned by Turner Broadcasting System TBS Inc, acquired the television  channel TV 7 from Aftonbladet, Sweden’s largest tabloid. After getting involved in a dispute with TV 7 Stockholm AB regarding the latter’s use of the company name TV 7, in March 2011 NonStop Television changed the name TV 7 to TNT 7. NonStop Television then filed an action for the cancellation of TV 7 Stockholm AB's registered company name.

According to the Swedish Company Law, a company must remain active in order to keep its company name registration. The law further states that a registered company may be revoked if the proprietor has not “put the company name to genuine use” in Sweden, in respect of its registered activity or activities, within a period of five years from the date of registration or within a period of five consecutive years. NonStop Television claimed that TV 7 Stockholm AB was inactive and, therefore, the company registration should be revoked. However, the Supreme Court ruled in favour of TV 7 Stockholm AB.

The existing case law from the Swedish Supreme Court and the Court of Justice of the European Union (ECJ) on the obligation to use company names should have provided the necessary guidance in this case. In Ansul BV v Ajax Brandbeveiliging BV (Case C-40/01), the ECJ explained the meaning of the term 'genuine use' under the First Trademarks Directive (89/104/EEC). With regard to company names, the 'genuine use' requirement will be fulfilled when the owner uses the registered company name not only in different contexts (eg, advertising and entering into contracts) during the relevant time period, but also within its registered activity. Using the company name is not sufficient: there must be a connection between the use and the registered activity. 

In this case, it was undisputed that the company name TV 7 Stockholm AB was registered in 1994 for television broadcasting, which was in line with its registered activity; moreover, the obligation to use the name within the relevant five-year period (ie, 2002 to 2007) had been met. TV 7 Stockholm AB provided annual reports, invoices, correspondence with the authorities and a contract dated April 14 2002 with Lotsatorgruppen Company Sverige AB, part of Plaza Publishing, to prove that the company had been active during the five-year period.

The Supreme Court concluded that TV 7 Stockholm AB had been conducting its business as required. The 'genuine use' requirement was met when TV 7 Stockholm AB entered into a contract with Lotsatorgruppen. Additionally, the company name was used during the relevant time period in financial statements (with an insignificant annual turnover of Skr44 - approximately €5), and in contacts with the authorities.  

Accordingly, the Supreme Court found that TV 7 Stockholm AB had used its company during the relevant five-year period and within its registered area of activity, and upheld the Court of Appeal’s decision finding that TV 7 Stockholm AB was not in breach of the Swedish Company Law and the Trademarks Directive.  

The Company Law was amended in 2011, and is now almost identical to the trademark rules and provisions on 'genuine use' so as to ensure a uniform interpretation of the term under the two laws. However, in this particular case, the Supreme Court highlighted that there are vast differences between trademarks and companies with regard to the 'obligation to use'. The guidelines set forth by the Supreme Court in this case establish a fundamentally new approach to 'genuine use' for companies. In the past, use of the company name in financial statements and in contact with the authorities was not considered sufficient to fulfil the criteria of 'genuine use'.  The decision of the Supreme Court thus provides a new way of looking at 'genuine use' for business law practitioners in Sweden.

In February 2012 NonStop Television filed a new lawsuit against TV 7 Stockholm AB requesting that the company be revoked since the contract with Lotsatorgruppen was entered into 10 years ago; therefore, according to NonStop Television, TV 7 Stockholm AB has not been active during the past five years, as the law requires. The dispute continues. 

Tom Kronhöffer and Mervat Abdelbary, von lode advokat ab, Stockholm

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