On 20 December 2017, the European Court of Justice (CJEU) ruled on the important repair clause in the Community Design Regulation in two cases referred from Italy and Germany (C-397/16 and C-435/16). Both disputes concerned the question: when does Article 110 of the Regulation limit the rights of the design holder for a component when competitive products of the same design are used as spare parts?
This decision will have a huge impact on EU registered designs for components of complex products, and will increase competition in markets for spare parts.
What was the case about?
The defendant in both proceedings, Acacia, manufactured and sold car wheel rims for use on cars manufactured by Audi and Porsche. The wheel rims were identical to the original wheel rims, which were protected as a Registered Community Designs.
According to the German court at first instance, the wording of Article 110 of the Community Design Regulation was to be narrowly interpreted and restricted to parts or components which depend on the design of the complex product they are used for (like body parts of a car). Car wheel rims are not such components as their design does not strictly depend on the design of the whole car. Therefore, according to the German Court, wheel rims would not fall under Article 110. The German Federal Court of Justice stayed the proceedings and referred the matter to the CJEU.
The Italian court interpreted the Regulation in a wider sense and found that such close interdependence between the design of the complex product and the component was not required by Article 110. In its view, car wheel rims offered by third parties identical to the original equipment but offered for repair purposes only, would be permitted under Art. 110, as the use of a registered design for repair purposes would be the sole requirement.
The CJEU finds in favour of spare parts suppliers
In its decision, the CJEU agreed with the Italian courts and rejected the need for any interdependence between the design of the component (used for repair) and the complex product. In its reasoning, the court referred to the legislative history and ruled that the sole requirement would be “the purpose of permitting the repair of a complex product so as to restore its original appearance.” As long as the component offered by a third party is exclusively offered and used for such purpose, the repair clause would keep the design holder from enforcing his design rights against spare parts. However, although the CJEU widened the scope of Article 110 thus far, the European judges also imposed onto every manufacture and commercial reseller of such components a duty to ensure “through appropriate means, in particular contractual means” that the components are offered in a way that complies with the conditions prescribed by Article 110: that is, for repair purposes only.
Who is affected?
The practical impact of this ruling is enormous and, of course, not limited to car wheel rims. For instance, from now on, a community design for an original equipment bicycle light, registered as a community design, can no longer be enforced against third parties offering identical lamps for repair purposes only, although the bicycle owner has various design alternatives and does not need to use a lamp identical to the original equipment of his bike.
In the past, in many European countries like Germany, the courts would have permitted the design holder to use their registered designs to prevent sale of such spare parts. The CJEU has now put an end to this and the courts in Europe will have to follow this new “freedom of free repair” approach.
The next contested question is likely to be what exactly third parties have to say in their communication towards customers or end users to ensure their products are offered and used for repair purposes only and what else is needed to comply with this requirement along the supply chain.