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Insight

The wheels come off for Acacia

David Knight
02/01/2018
Wheel rims form an important part of a car's aesthetic. Unsurprisingly therefore vehicle manufacturers seek to protect the design of their wheel rims, and will seek to prevent others from manufacturing and selling (usually for lower cost) identical wheel rims. What if the third party's wheel rims are sold not for the purpose of 'upgrading' a car's aesthetics, but a replacement wheel rim to enable the car's owner to have a choice when replacing a damaged wheel rim? This was the issue that the CJEU recently grappled with in two joined cases - it's decision was released just before Christmas and is discussed in our blog.

Wheel rims form an important part of a car's aesthetic.   Particularly at the premium end of the market buyers can, and do, spend large sums of money choosing rims for a new car.   Others seek to 'upgrade' their car's aesthetic by purchasing a new set of wheel rims. Unsurprisingly therefore vehicle manufacturers seek to protect the design of their wheel rims, and will seek to prevent others from manufacturing and selling (usually for lower cost) identical wheel rims.

So far, so good - if a vehicle manufacturer has design rights in a wheel rim, and someone else manufacturers and sells identical wheel rims one would expect the latter to be prevented from doing so.   But what if the self-same wheel rims from the self-same manufacturer are made and sold not for the purpose of 'upgrading' a car's aesthetics, but as a replacement wheel rim to enable the car's owner to have a choice when replacing a damaged wheel rim?   This was the issue that the CJEU recently grappled with in two joined cases - it's decision was released just before Christmas.

Facts

Acacia is an Italian manufacturer of wheel rims, including of wheel rims identical in design to OEMs' (Original Equipment Manufacturer) wheel rims.   As the CJEU's decision records, the wheel rims manufactured by Acacia are stamped with the indication ‘NOT OEM’, and the documents accompanying those products indicate that the wheel rims at issue are sold exclusively as replacement parts for the purpose of making repairs.   Audi, who hold Community design rights in certain wheel rims made by Acacia brought infringement proceedings in Italy against Acacia.   Similarly, but separately, Porsche brought infringement proceedings against Acacia in Germany.   In both cases, Acacia ran the so-called repair defence - it was questions relating to the repair defence that were referred by the respective courts to the CJEU.(Acacia Srl v Pneusgarda and another; Acacia Srl and another v Porsche AG (Joined Cases C‑397/16 and C‑435/16): see here for the decision.)

The repair defence is set out in Article 110(1) of the Community Designs Regulation (6/2002/EC).   It reads:-

"protection as a Community design shall not exist for a design which constitutes a component part of a complex product used within the meaning of Article 19(1) for the purpose of the repair of that complex product so as to restore its original appearance."

CJEU ruling

In this case the component part was the wheel rim, the complex product being the car.   The question therefore being whether the OEM's rights extended to prevent Acacia's activities - i.e. were Acacia's activities for the purpose of repairing a car so as to restore is original appearance.   This can give rise to different answers depending on the purpose.   If the purpose is to enable a car owner to purchase a wheel rim to replace an identical but damaged one on his or her car (i.e. to restore the car to its original appearance), this would not fall within the protection afforded by the OEM's Community design - indeed it is the very purpose of the repair defence to enable competition in the market for spare parts.   On the other hand, if the self-same wheel rim was to enable a car owner to upgrade his or her car that would fall within the protection afforded by the OEM's Community design as the car's original appearance would not thereby be restored, it would be changed.

This then leads into one of the questions referred to the CJEU paraphrased as:-

"in order to rely on the ‘repair’ clause [must] the manufacturer or seller of a component part of a complex product … ensure and, in that case, how [must] it ensure, that the component part can be purchased exclusively for repair purposes?"

In this respect the CJEU stated that:-

"the manufacturer or seller of a component part of a complex product cannot be expected to guarantee, objectively and in all circumstances, that the parts they make or sell for use in accordance with the conditions prescribed by Article 110(1) No 6/2002 are, ultimately, actually used by end users in compliance with those conditions."

Nevertheless the CJEU went on to state that a manufacturer or seller is under a duty of diligence as regards compliance by downstream users with the repair conditions, and they must:-

  1. Inform the downstream user, through a clear and visible indication on the product, on its packaging, in the catalogues or in the sales documents that:-
  • the component part concerned incorporates a design of which they are not the holder, and
  • that the part is intended exclusively to be used for the purpose of the repair of the complex product so as to restore its original appearance.
  1. Through appropriate means, in particular contractual means, ensure that downstream users do not intend to use the component parts at issue in a way that does not comply with the conditions prescribed by Article 110(1).
  2. Refrain from selling such a component part where they know or, in the light of all the relevant circumstances, ought reasonably to know that the part in question will not be used in accordance with the conditions laid down in Article 110(1).

Comment

The decision is consistent with the High Court's decision in BMW v Round and Metal [2012] EWHC 2099 (Pat) (another wheel rims case). In that case Arnold J held that Round & Metal's wheel rims were not usually used to restore a car to its original appearance and BMW's Community registered designs had been infringed.

For the repair to be a defence to an assertion of infringement of Community design the component part must be used so as to restore the complex product to the appearance it had when it was placed on the market. It follows that if replacement part does not correspond, in terms of its design, colour or its dimensions, to the original part, or if the appearance of a complex product was changed since it was placed on the market, the defence will not be available.

This decision makes it clear that a business such as Acacia cannot pamper to the upgrade or customisation market with designs in which OEMs have rights under the guise of facilitating an alternative supplier for genuine repair situations; and, even for the market for genuine repairs they will have to take steps to ensure that they are compliant, which steps might be easier in the saying than in the implementation.

It would take a rare sort of driver to damage and require replacement of four wheels at a time. Accordingly, if (as Round & Metal did) wheel rims are sold in sets of four, no matter how robust the contractual arrangements with downstream users, this would tend to suggest that they are being sold for the purposes of upgrade, and therefore infringing.

 

 

 

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