FRIDAY, 12 JANUARY 2018
The Acacia decision: the repair clause strikes back

The CJEU recently ruled on the scope of the repair clause in the Design Regulation. In a guest post, Fabio Angelini of the MARQUES Designs Team and his colleague Domenico Demarinis analyse the judgment in the Acacia cases

 

On 20 December 2017 the European Court of Justice (CJEU) ruled on joined cases C-397/16 and C-435/16, referred to the CJEU by the Court of Appeal of Milan (Italy) and by the Bundesgerichtshof (Germany). These cases concern proceedings brought by Audi and Porsche against Acacia Srl, an Italian manufacturer of wheel rims for cars allegedly infringing Audi’s and Porsche’s Community designs.

Three main issues

Acacia wheel rims for Audi cars

The CJEU was called to decide three main sets of issues.

First it had to decide whether or not the “repair clause” (Article 110(1) of the Community Design Regulation) is dependent upon the appearance of the complex product. In other words, is it applicable only to those components of a complex product whose shape is necessarily dictated by such product (for instance the hood of a particular kind of car, or the arm of a pair of sunglasses) or does it include other parts, such as wheel rims, which may be manufactured in all possible ways since their shape does not necessarily depend on that of any particular kind of car?

Audi and Porsche, with the support of the German Government, argued that the repair clause should only apply to those parts whose shape is determined by the complex product. Acacia, with the support of the Italian government, argued instead that the application of the repair clause could not be so limited.

The CJEU held that the repair clause is not subject to the condition that the design is dependent upon the appearance of the complex product.

To reach this conclusion the CJEU observed firstly that although Recital 13 states that the repair clause should be applied to those parts whose shape is determined by the complex product, such language had not made its way in the literal text of Article 110(1) and that while a preamble to an EU law may explain the latter’s content, it cannot be relied upon as a ground for derogating from the actual provisions of the law.

Subsequently, recognising that the rationale of the repair clause is to avoid the creation of captive markets and, in particular, to prevent a consumer from being indefinitely tied, for the purchase of external parts, to the manufacturer of the complex product, the CJEU held that the scope of the repair clause is not limited to component parts of a complex product upon whose appearance the protected design is dependent, but must apply to any component parts of a complex product regardless of the extent to which the appearance depends on such part.

A revolutionary holding

Acacia wheel rims for Porsche cars

This is a somewhat revolutionary holding which could open vast possibilities for replica makers. Indeed one may apply the repair clause to many different sectors: all kinds of (car) parts, but also handles for handbags and arms of glasses, watchbands and single components of any given item of furniture, as well as the actual body of such handbags (minus the handles, of course ), or the sunglasses frames (minus the arms), and so forth.

But could it really?

The CJEU had thus to resolve whether or not, in practice, a “wheel rim” qualifies for the repair clause exception and whether, if it does, the repair clause is only applicable for identical parts or also to all “standard variants”.

Audi and Porsche argued that a wheel rim should not be covered by the repair clause, which in any case would only apply in regard to an exact replica, while Acacia argued that any replica wheel rim falls in the scope of the repair clause, as also should “standard variants”.

The CJEU noted that the Regulation does not define the concept of “component part of a complex product”. However, Regulation Articles 3(b) and (c) define what a ‘product’ is; accordingly the CJEU held that “component parts of a complex product” must be interpreted as meaning multiple components, intended to be assembled into a complex industrial or handicraft item, which can be replaced permitting disassembly and re-assembly of such an item, without which the complex product could not be subject to normal use.

Therefore, a wheel rim must be considered a component of the complex product “car” because without such component the car (being without wheels) could not run, i.e. be subject to its normal use. The same would thus apply for, say, a steering wheel, the fender, the engine grill and so forth, but also for sunglasses arms, handbag handles and watchbands.

No limits then? Well, not entirely. Since the “repair clause” implies that the repair must restore the complex product to its ‘original’ appearance, it follows that the reference is to the “appearance” the product had when it was placed on the market, and thus any use of a component for reasons of preference such as for aesthetic purposes or customisation falls outside the “repair clause”. In other words, if the car A had been placed on sale with the wheel rims A, the owner could only replace the rims (say if damaged while driving the notoriously pot-holed Rome streets) with a “replica” rim A but if instead the owner got bored and wanted to replace with rim B, the repair clause would not apply, and only the “original” should be used.

Should be …. but how to make sure? This takes us to the third and final issue.

A duty of diligence

The CJEU was asked to decide whether a proper interpretation and application of the repair clause also entailed that manufacturers/sellers of a component part must ensure that such part can only be purchased for repair purposes. Audi and Porsche argued that the repair clause was irreconcilable with direct sales to consumers and could only apply to repair shops and, in any case, manufacturers/sellers ought to ensure that the part can only be sold for repair and not for other purposes, such as customisation. Acacia, on the other hand, argued that informing customers in advance and in writing would be sufficient.

The issue required balancing different interests (including those of consumers) and the CJEU recognised that manufacturers cannot be expected to guarantee that the parts they make or sell will be used in accordance with the repair clause because, ultimately, these parts are used by end users. Nonetheless, it held that to benefit from the repair clause manufacturers/sellers are “under a duty of diligence as regards compliance by downstream users with those conditions”.

What does this duty mean in practice?

First, manufacturers/sellers must inform downstream users, on the product, packaging, catalogues or sales documents, that the component incorporates a design and is intended exclusively to be used for the purpose of repair/restoration. This is possible, although it requires consumers to understand the subtle nuances of design law.

Second, manufacturers/sellers must, through appropriate means, in particular contractual means, ensure that downstream users use the component parts in compliance with the repair/restore conditions. Does it mean that manufacturers/sellers have a duty to check what their customers are doing with that component and if necessary should sue their own customers? And what will happen to commerce when to buy any single component means also having to sign contracts regarding what that part will be used for?

Finally manufacturers/sellers must refrain from selling where they know or ought to reasonably know that the part in question would not be used in accordance with the repair/restore conditions. However, this sounds a little like wishful thinking since it is like requiring, say, a hardware store to interrogate customers to make sure it is not selling tools that may be used in a burglary or a crime.

Perhaps the CJEU meant well, but what it came up with seems somewhat unrealistic. We’ll have to wait and see what and how all of this will really work.

Fabio Angelini and Domenico Demarinis are both of counsel with De Simone & Partners in Italy. Fabio is a member of the MARQUES Designs Team. Thanks to both of them for contributing this blog post!

Posted by: Blog Administrator @ 09.43
Tags: Acacia, repair clause, Article 110(1), Audi, Porsche,
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