Things get frosty between the government of Iceland and ‘Iceland’ supermarket

Who: Icelandic Government

Where: European Union Intellectual Property Office

When: November 2016

Law stated as at: 15 December 2016

What happened:

The Icelandic government has surprised many by instigating legal action against ‘Iceland’ the supermarket chain. The country’s Ministry of Foreign Affairs has commenced legal action against the frozen foods retailer regarding its choice of name.  What makes this news most surprising is that such legal action comes 45 years after the retailer was founded and first started to make use of the name ‘Iceland’.  So why now?

The Icelandic government believes that the supermarket is holding Icelandic brands back from demonstrating their Icelandic identities. It has stated that it is taking this legal action on behalf of its people and businesses with the goal of “…ensuring the right of Icelandic companies to use the word “ICELAND” in relation to their goods and services“.

The supermarket chain has previously taken legal action against third parties using the name “Iceland” and, according to the Icelandic government, has brought many legal claims against Icelandic companies which use “ICELAND” in their representation or as part of their trade mark, even in cases when the products and services do not compete with those of the retailer.

What action has been filed?

Iceland, a UK company, is the registered owner of a European Community trademark for the word mark “ICELAND”. The Icelandic Ministry of Foreign Affairs has filed a legal challenge to the legality and validity of that trademark registration with the European Union Intellectual Property Office (EU-IPO).  The Ministry hopes to be successful in invalidating the registration on the basis that the term “ICELAND” is exceptionally broad and ambiguous in definition and therefore often renders businesses located in Iceland unable to describe their products as Icelandic. This is because it is concerned that Icelandic businesses “…are unable to promote themselves across Europe in association with their place of origin – a place of which we are rightly proud and enjoys a very positive national branding.”

Will the two parties come to an agreement?

Some media reports suggest that this is the most recent in a long line of clashes between the retailer and the country. Former Icelandic retail conglomerate Baugur previously held a controlling stake in the retailer until its collapse in 2009 and this stake was then passed to two Icelandic banks before it was finally acquired as part of a management buy-out led by founder and chief executive Malcolm Walker.

The Iceland government has suggested that over the last few years it has sought to negotiate with the retailer regarding references to “Iceland” to avoid legal action, but these have been fruitless.

Iceland has expressed surprise over the action and has turned to humour to make light of this PR situation. It reacted to the news via social media with a series of tongue- in-cheek tweets including one which read: ‘Hi @ILoveGreenland, can you give us a call about a business opportunity. Thanks.’

On a more serious note, the retailer has since issued a public statement asserting that it will vigorously defend its established rights where there is any risk of confusion between its business and Iceland the country. It has pointed out that it has been trading successfully for 46 years under the name Iceland and does not believe that any serious confusion or conflict has ever arisen in the public mind, nor is it likely to do so.

Why this matters:

From a trade mark rights perspective, this is going to be a case of assessing whether or not the name ‘Iceland’, as used by the retailer, has sufficient distinctive character. If the absolute ground applicable to the claim of invalidity is lack of distinctive character, descriptiveness or genericness (under sections 3(1)(b), (c) and (d) of the EUTM Regulations), then the mark will not be declared invalid if it can be shown that it has acquired a distinctive character through use in the meantime – something the retailer is bound to stress given the number of stores it has around Europe (including in Iceland) and the number of years the brand has been in use.

Article 56(1)(a) of the EUTM Regulation provides that an application for a declaration of invalidity based on absolute grounds can be made by any natural or legal person and “any group or body set up for the purpose of representing the interests of manufacturers, producers, suppliers of services, traders or consumers, which has the capacity in its own name to sue and be sued“; hence the Icelandic government has taken up the helm.  We shall have to see if the country is successful or if it is felt that local businesses referencing their Icelandic roots and Iceland the retailer seeking to prevent its brand should actually be able to trade alongside each other without treading on the toes of trade mark rights.

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