The Supreme Court rules on compensation for online trademark infringement

| Insight

On November 17, 2022, the Supreme Court of Norway rendered its decision in Kystgjerdet v. Norgesgjerde and Vindex regarding its assessment of damages and the level of compensation for an already established trademark infringement via Google and Microsoft Ads.

On appeal, the trademark infringement was no longer in dispute. Still, the decision has a fundamental interest in the intellectual property legal space. The judgement deals with principal issues related to compensation claims for trademark infringement where the infringement and alleged damage merely relates to a subpart of the infringer’s ads and turnover.

Norgesgjerde and Vindex (the original plaintiffs) claimed total damages and compensation in excess of NOK 10 million. This sum was primarily based on their hypothetical calculations on prior and future alleged losses due to Kystgjerdet’s online ads. The Supreme Court awarded the plaintiffs’ compensation equaling less than 20 percent of their claim. In doing so, the Supreme Court reduced the Appellate Court’s compensation award by approximately 13 % and 30 % for Vindex and Norgesgjerde, respectively.

The Supreme Court rejected the plaintiffs’ primary allegations. The Supreme Court concluded the plaintiffs failed to substantiate a correlation between their decline in revenue and Kystgjerdet’s disputed ads. Similarly, the plaintiffs failed to substantiate profits resulting from the disputed ads on Kystgjerdet’s part. The Supreme Court furthermore rejected the plaintiffs’ compensation claim for alleged goodwill loss and market disturbances.

As argued by Kystgjerdet, the Supreme Court reasoned the relevant legal basis for measuring compensation in this case was “reasonable license fee” in accordance with the Trademark Act, sections 58(1)(a) and 58(2).

Kystgjerdet documented the relevant number of views and clicks on its online ads. This method is not appropriate for extrapolating the actual extent of suffered loss/damage by the plaintiffs or gained profits by Kystgjerdet, but it clearly provides a reference point for hypothesizing such loss/damage or profit.

The most accurate approach would be to calculate reasonable license fees by multiplying the average sales sum with the number of customers generated by the disputed ads. The problem was that the parties’ documentation did not suffice in determining the actual number of generated customers with a sufficiently clear degree.

The Supreme Court ultimately decided on a discretionary award of reasonable license fee. In reducing the awards from the lower courts, the Supreme Court refers to several of Kystgjerdet’s arguments, including the proportionality between the insignificant number of disputed ads compared to Kystgjerdet’s total legal ads. Furthermore, Kystgjerdet’s online marketing was also far more comprehensive than the plaintiffs. The fact that Kystgjerdet was a new competitor on the market is also a plausible reason behind the plaintiffs’ negative development in turnover.

Simonsen Vogt Wiig’s senior lawyer Nicholas Foss Barbantonis represented Kystgjerdet.

Read the judgement (Norwegian only)