S T R E T C H E D credibility

It is one thing to rip off a competitor.  But filing your own lookalike design in their home market surely stretches the bounds of credibility.  We are indebted to Dr Mark Schweitzer, of Meyer Lustenberger (sorry, "meyerlustenberger"!) and even more so to Mareike Hunfeld of Hogan Lovells, for drawing our attention to German Federal Court of Justice Decision of 22 April 2010, I ZR 89/08 (Stretched limousines).  Here is a link to the excellent Hogan Lovells newsletter report of the case.
By a spooky coincidence it features the S Class stretch limo, which we covered incidentally in our "leaks" posting last week.  However, that posting concerned the updated S Class.  The German case concerned infringement of the original S Class stretch limo registration, RCD 000173166-0007.  This was applied for in May 2004 under "deferred publication" to keep it secret until the 2005 launch.  It must therefore have surprised DaimlerChrysler to see that Centigon, a competitor for limos and armoured vehicles, had applied in January 2007 to register pretty much the same thing as German design 40700389.  Perhaps unsurprisingly they sued for infringement, and, perhaps unsurprisingly, they succeeded.  The prior art cited included Daimler's own earlier models, but they overcame the kind of issues that sunk them in Sweden back in the day, and were upheld on validity. 
We have suggested several times recently that design infringement is on the up in the auto market, see here and here.  So far, the automakers seem to be winning these spats, where they have registered their designs. 

Too Like Likeabike!

I am grateful to my partner (and fellow beard wearer) Felix Rummler, of our German office, for the following summary.

The Federal High Court (the Bundesgerichthof or "BGH") has recently, in its "LIKEaBIKE" decision I ZR 124/06, taken the opportunity to illustrate some principles of the unfair competition prohibition on close imitation.

The case was concerned with a copied product consisting of a ride-on wooden vehicle for infants, resembling a bicycle. The original design had been registered back in 1997 (as International Design DM 040209), and the plaintiff later developed a "mountain bike" version which was the subject of the infringement action. The design of the product is characterised among other things by the streamlined appearance of the timber frame as well as a laminar steering wheel fork with an opening for the timber frame. These characteristics were also present - with slight modifications - in the imitation.

The Court held that imitation of a product is adverse to competition if the product has a "competitive characteristic" and the imitation is unfair. In order to have a competitive characteristic, the product must show special characteristics, which refer to its operational origin or characteristics of the product. However technically necessary characteristics cannot justify a competitive characteristic because they cannot be omitted without arriving at something technically inferior.

The imitation of a product with competitive characteristic is competition-adverse, if unfair circumstances are additionally present, for example if no suitable reasonable measures are taken in order to prevent possible confusion of the products as regards origin or characteristics.

In the infringement action the defendant pointed out the fact that some of these characteristics - in particular the organization of the fork - were technically necessary and could therefore be taken. The BGH rejected this. The characteristics were technically motivated, but the technical requirements did not dictate this particular physical arrangement. On the contrary, technically equivalent solutions existed, by use of which the danger of the deception over the origin of the product could have been avoided in a reasonable way.

This decision highlights the continuing importance of unfair competition protection for products in the civil law world.

Germany joins Geneva Act

Germany has signed up to the Geneva Act of the Hague Agreement, which will take effect on February 13th. It is hard to see what benefits this will bring German applicants, as Germany has since 1928 been a member of all previous versions of Hague, and has (via OHIM) been effectively a party to the Hague Act since January 1st 2008. However, for members of Geneva Act-only countries, it will open the "national route" to cover in Germany if that is preferred to going through the OHIM route. One reason for going the national route might be to get improved protection for spare parts since Germany has not adopted a "repair clause" under its national design law equivalent to the EU Community Design provisions of CDR Art 110.

Good news for copyright infringers, or a Trapp to Tripp designers?

This posting is by Class 99-er Henning Hartwig.

German case law isn’t famous for awarding exorbitant damages in IP infringement matters. Now, it appears as if German Courts are even going into reverse: Just published, the German Federal Supreme Court has only recently decided, in Case I ZR 98/06 Tripp-Trapp-Stuhl, that copyright infringers are not obliged to render the whole profit made with the infringing copy even when imitating one-to-one the work-in-suit (in this case, the well-known Tripp-Trapp child's chair). The court found that, in such a case, the decision of the consumer to buy the copy (and not the original) was not based “entirely on the infringement” but rather on other factors such as “functionality” or “good price” of the copy. In short, the consumer is buying the copy not only because of it being identical with the original, but because it is cheaper.

This observation doesn’t seem to be new or surprising – why should I buy a copy if it isn’t even cheaper than the original? In fact, there is most probably no copy that isn’t offered at a better price than the original. But this is no excuse for courts to let copyright infringers get away with some of their profits. Should these people really be rewarded by being allowed to keep a part of their profits because they sell their copies for less (and clearly detracting buyers from acquiring the original), whereas infringers selling their copy at the price of the original (highly unlikely, though) would have to render the entire amount of their profits? And how can a court determine and weigh factors such as “functionality”, “low price”, “imitation” etc., factors that are decisive, according to the court, for calculating the percentage to be deducted from the profits?

The decision raises more questions than it answers – including the critical question to what extent this reasoning will be transferred to other IP rights. If German courts answer this in the affirmative, Germany would indeed find itself before a change of paradigm.