The Norwegian Supreme Court has determined that counterfeit products with illegally applied Apple trademarks is a trademark violation, even in the instances where attempts have been made to conceal the trademark.
On 2 June, 2020, the Norwegian Supreme Court concluded in HR-2020-1142-A that a Norwegian phone repair service provider had violated Apple’s trademark rights by illegally importing 63 counterfeit smartphone screens. The screens had Apple’s logo applied to them, but these had been covered when the Norwegian Customs Service inspected them. The issue the Norwegian Supreme Court has deliberated is whether the logos, despite being concealed, can be considered illegal use of Apple’s trademark.
The case has caused broad media attention, and some have argued that the verdict invokes an unreasonable constraint in independent phone repair service providers’ ability to repair Apple products – particularly because competiton is important in a commercial sustainability perspective. However, the Supreme Court states that this argument is irrelevant to the case:
“This point is merely ancillary. It is the appliance of the trademark on the screens, and not the screens themselves, that is the focus point in accordance with § 4 of the Trademark Act. The Trademark Act does not prohibit a Norwegian phone repair service provider to import smartphone screens compatible with Apple smartphones, as long as the imported screens are not furnished with illegal trademarks.”
As such, there is nothing in this verdict which curtails the prospect of legally importing spare parts compatible with Apple products. As long as the spare parts have not been, at any point, marked with a protected trademark, the trademark protections shall not be a hindrance for continued enterprise.
The central issue in the case concerns “whether the functions of the trademark can be harmed by this import and any generated revenue by concealing the trademark”. In the assessment, it is referred to legal practice from both the Norwegian Supreme Court and the Court of Justice of the European Union (chiefly HR-2018-110-A Ensilox and C-129/17 Mitsubishi).
Apple has postulated that their trademark has been implemented illegally when applied to counterfeit products and that this may cause harm to the trademark’s function as an assurance of its quality and origin. On the other hand, the importer has claimed that since the trademark was concealed using a marker, it no longer becomes an issue of counterfeit products, but compatible spare parts. Since the logo was concealed, there would be no risk of violating the trademark’s function and integrity.
In its assessment, the Supreme Court emphasizes the fact that the concealment was not permanent, and consequently that upon removal of the concealment by the importer or a later distribution link, the screens would then appear to be legitimate, original Apple screens:
“One cannot in general ignore the risk that the indivduals who have procured the screens will remove the concealment of the trademarks. Upon distribution, both to repair service providers and, ultimately, to end users, the selling party may actually desire to remove the concealment to obtain a higher selling price.”
Furthermore, it is also emphasized that the trademark’s functions and integrity may be harmed even if the concealment is not removed:
“The screens are ostensibly identical to Apple’s original screens, and the marker has been applied on the same spot as Apple places its trademark on original screens. The concealment, which is visible, can thus be confusing in regards to the origin of the product. For the relevant distribution parties, it becomes unclear whether these are original screens or counterfeit ones. Such uncertainty is in and of itself sufficient to recognize the risk of harm to the trademark’s functions.”
One issue which was not brought up by the Supreme Court in this instance is whether the circumstances would be different if this concerned original goods and not counterfeit ones. Initially, it would appear so, but this is not necessarily the case. Goods that have been applied with a protected trademark cannot actually be imported from outside the EEA without the consent of the proprietor of the trademark, even if it has been procured legally. This is in accordance with the Trademark Act § 4, first subsection, letter a, cf. third subsection, letter c. However, if the goods were purchased within the EEA, § 6 of the Trademark Act and corresponding EEA regulations regarding consumption of the trademark right will be applicable, and any parallell import would by and large fall within the parameters of the law.
It is also important to note that it would not necessarily be sufficient to remove Apple’s trademark permanently. Pursuant to the decision by the Court of Justice of the European Union in case C-129/17 (which has been emphasized by the Supreme Court in this case) it is evident that the market function of the trademark would also be relevant to the assessment. The case concerned original Mitsubishi forklift trucks purchased outside the EEA and imported to the EEA without the consent of Mitsubishi. While the goods were in bonded warehouse, the importer removed the Mitsubishi trademarks entirely, and replaced them with its own marks. The Court of Justice of the European Union deemed that Mitsubishi’s trademark rights were violated, even though the trademarks were completely removed before the goods had formally gone through customs and into the EEA. This was mainly due to harm to key functions of the trademarks, e.g. investment- and advertisement functions. Removing the trademarks to avoid the trademark proprietor’s right to inhibit import was also deemed to be in violation of the objective of ensuring «undistorted competition».
What we can derive from the Supreme Court’s verdict in this case is that it might not be sufficient to conceal or remove a trademark in order to avoid the trademark proprietor’s right to inhibit parallell import. As long as there is a risk of harm to the trademark’s functions, this type of use will nonetheless invoke a trademark violation, pursuant to the Trademark Act Section 4, first subsection, letter a.
For Acapo AS