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19 January 2015
On July 4 2014 the Supreme Court rendered its judgment (B 5484-13) in a case brought by the prosecutor general and Swedish global technology provider SKF against Christer Skult. The case concerned whether a prison sentence is the presumed penalty in counterfeiting cases based on trademark rights.
The judgments in the lower courts also addressed relief of burden of proof and facts which should be taken into account when determining damages.
SKF was the owner of the Community trademark SKF and one of the leading companies worldwide in developing bearing technologies, for which goods the SKF trademark is registered.
Transmissions Teamet i Stockholm AB, represented by Skult, traded in industrial supplies (eg, bearings and power transmission products). Under Skult's direction, Transmissions Teamet i Stockholm imported, stocked and sold industrial supplies under trademarks that were identical or similar to the SKF mark.
The prosecutor general filed criminal proceedings against Skult (as Transmissions Teamet i Stockholm's representative) for trading in counterfeit SKF products. In joint proceedings, SKF claimed compensation for damages.
In all instances, the courts held that Skult had committed trademark infringement.
Two questions are relevant in respect of penalties:
Whether a crime should be considered as punishable by imprisonment should be based on the general penal value of the crime.
In assessing general penal value, the Supreme Court concluded that in this case the business was considerable and the crime had been committed with intent to profit. The court also held that risk of harm to a third party should be considered, provided that the offender was aware of such risk.
If the penal value is less than one year, prison should be the last choice. The court found that Skult's counterfeiting had a penal value of eight months; thus, there was no presumption of imprisonment based on general penal value.
However, there are exceptions where the punishment of a crime on general preventive grounds should be a prison sentence, even though the penal value is considered to be less than one year. Thus, the court had to decide whether counterfeiting of this nature is a crime where, on general preventive grounds, the penalty should be imprisonment.
In assessing the crime's nature, the court stated that there was nothing in legislative history or established case law that indicated that trademark infringement would fall under the exception. Without such support, the court was not prepared to consider trademark infringement as a crime where the presumption was that the penalty should be imprisonment.
Section 35:5 of the Code of Judicial Procedure states that when it is impossible or very difficult to provide full proof of damage, the court may assess damages to a reasonable amount.
In this case, SKF claimed that the trademark infringement had caused market damages and damage to the trademark's reputation. The Svea Court of Appeal found that SKF had provided no facts or evidence relating directly to the actual damage caused by the infringement. It therefore concluded that chapter Section 35:5 was not applicable.
However, the appeal court stated that circumstances that are not purely financial can be taken into account. One example is damage to the trademark's reputation caused by an infringing product of inferior quality compared to a genuine product. SKF had provided some evidence in relation to quality and was thus awarded Skr50,000 in damages.
This judgment establishes that trademark infringement is not a crime where the presumption is that the penalty should be imprisonment.
However, on November 26 2010 the Svea Court of Appeal (RH 2013:26, Pirate Bay) concluded otherwise in a case relating to copyright infringement through illegal file sharing. In this case, the court stated that it is clear that illegal file sharing has quickly adopted proportions that allow for great importance to be attached to the considerations of general prevention within law enforcement. Therefore, the court concluded that the penalty for illegal file sharing will normally be a prison sentence and thereby will fall under the exception. The Supreme Court did not grant leave to appeal.
The outcome of these cases suggests that copyright infringement is a more serious crime and of greater interest from a general preventive perspective than trademark infringement. This could be considered an odd construction and it appears that legislation is the only way to iron out this abnormality.
In many cases, when there is scope for choice, it is more favourable today for a plaintiff to make a claim for copyright infringement than trademark infringement.
Finally, in order for the court to assess the damage to a reasonable amount, the plaintiff must present facts and evidence directly related to the actual damage. Otherwise, the court is left to make an assessment based on the evidence presented to it, which will result in no damages or limited compensation. Plaintiffs are warned not to present insufficient material in relation to damages.
For further information on this topic please contact Henrik Wistam at Westerberg & Partners Advokatbyrå Ab by telephone (+46 8 5784 03 00) or email (firstname.lastname@example.org). The Westerberg & Partners Advokatbyrå Ab website can be accessed at www.westerberg.com.
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