Case-law: Norwegian Air Shuttle ASA vs. Scandinavian Airlines System

Case: Norwegian Air Shuttle ASA vs. Scandinavian Airlines System

Civil suit – Claims for economic compensation after industrial espionage.

Late 2007, the Norwegian Supreme Court upheld an earlier decision to fine the Norwegian arm of Scandinavian Airlines System (SAS), 4 million kroner (USD 740.000) for industrial espionage against rival Norwegian Air Shuttle ASA. After the first ruling, Norwegian filed a civil suit, demanding 350 million kroner ($ 70 million) in losses, due to the unlawful use of sensitive information.

In its decision on the 19^th of May 2008, the court awarded Norwegian the amount of 132 million kroner ($ 26.4 million) in damages, including interests. SAS was also ordered to pay costs of 6.8 million kroner ($ 1.36 million).

The case is actually filed on the basis of two separate incidents – the so-called Amadeus-case, and the BTI-case. The first mentioned case arose after it became clear that SAS have had unauthorized access to Norwegians portal on the Amadeus PNR (passenger, name, record) computer system. The second case came after an e-mail containing sensitive information, was by mistake sent to a SAS-employee.

A legal basis for the claim of economic compensation was established by the aforementioned criminal cases against SAS. The main issue for the court was therefore, to establish to whether – and to what extent, Norwegian suffered an economic loss. The court first briefly commented on the duo-polar market situation, stating that the competitive advantage gained by use of the information “indirectly caused Norwegian a loss, because this allowed SAS to compete as an even stronger player” [my translation].

Putting a number on this indirect loss was the courts next task. Most of the sentence evolves around the Amadeus-case, it by nature being more complex. Only brief comments where made to the BTI-case specifically.

During the course of the trail, several experts and professors of finance and economics presented their view on how this loss could be measured. The different approaches varied around economic theories on commercial markets, the effect of asymmetrical distribution of information in these markets, and more empirical based calculations. After briefly commenting on the advantages and flaws of the approaches presented, the court finds that a more concrete assessment of the various areas where a loss might have been gained, is the most accurate way of calculating the damages. The court then divides the effects into six factual areas, dedicates a few comments to each of them, and decides individually whether losses have been sustained. Lastly, finding it hard to assign each post an individual number, the court seems to struck somewhat of a compromise with itself, when an amount of 100 million kroner ($ 20 million) is awarded.

For the misuse of sensitive information in the BTI-case, Norwegian was awarded 10 million kroner ($ 2 million) in damages.

The total amount of damages awarded was a record high for industrial espionage-cases in Norway. The sentence has been appealed by SAS, and the case will very likely eventually end up in the Supreme Court.

Oslo, 16.06.2008

Nicolai R. Nielsen

Student of Law