Supreme Court issues injunction based on Act on Supervision of Unfair Commercial Practices

In Flugleiðahótel ehf og H 57 – Flughótel Keflavík ehf v Hótel Keflavík ehf (Case 538/2012, February 28 2013), the Icelandic Supreme Court has issued an injunction, requested by the owner of the mark HÓTEL KEFLAVÍK (defendant), prohibiting the use of the name Hótel Keflavík by a competitor (appellant).

The court denied trademark protection to the name Hótel Keflavík on the basis of the Trademarks Act due to its lack of distinctiveness. It was however decided that use of the name Hótel Keflavík by the appellant constituted a violation of Article 15(a) of the Act on Supervision of Unfair Commercial Practices and Transparency of the Market.

The appellant and the defendant are competitors in the hotel market in Keflavík, Iceland, and are located very close to each other. The defendant has operated a hotel under the name Hótel Keflavík since 1986 and holds a registration for the following marks for the class heading of Class 43 of the Nice classification:

The defendant also holds registrations for the word marks HÓTEL KEF and HÓTEL KEFLAVÍK.

The Patent Office had registered the word mark HÓTEL KEFLAVÍK (No 924/2011) on the basis of acquired distinctiveness, but the appellant opposed the registration. However, the Supreme Court clearly stated that HÓTEL KEFLAVÍK does not fulfil the requirements for distinctiveness under the Trademark Act.

The Supreme Court found that, even though the defendant has used the name Hótel Keflavík for “a quarter of a century”, the name was not distinctive as it refers to the type of services provided, as well as the location of the services in Keflavík, which is a well-known geographical name in Iceland.

The defendant submitted a survey showing that 20% of respondents made a connection between the name Hótel Keflavík and his business. However, based on this evidence and other facts of the case. the court concluded that the defendant had not sufficiently proved that the trademark HÓTEL KEFLAVÍK had acquired distinctiveness through use. Consequently, the appellant had not violated any trademark rights.

The Supreme Court then considered whether use of the name Hótel Keflavík by the appellant constituted a violation of Article 15(a) of the Act on Supervision of Unfair Commercial Practices and Transparency of the Market. This article prohibits:

• the use in business operations of the name of a firm, business designation or the like without authorisation; or
• the operation of a business under a name that conveys misleading information about the operator's property right or responsibility.

It is also forbidden to use a designation to which a party is entitled in such a manner as may lead to confusion with a designation that another firm uses with full right.

The Supreme Court held that the appellant had violated this article by using the name Hótel Keflavík, and an injunction was issued accordingly.

This decision requires special consideration. The Supreme Court was very clear and specific regarding the lack of distinctiveness of the name Hótel Keflavík, and trademark protection was denied on that basis. However, the defendant was deemed to enjoy protection under Article 15(a) of the Act on Supervision of Unfair Commercial Practices and Transparency of the Market. This raises further questions, as other sources indicate that Article 15(a) includes the same requirements of distinctiveness as the Trademark Act.

Valborg Kjartansdóttir, Sigurjónsson & Thor, Reykjavík