In its decision no. 2271/2015 published on 19 February 2015, the IP Court of Milan once again tackled an issue that has pitted car manufacturers and component makers against each other for years: the scope of the so-called “repair clause”.
Audi AG, the German car manufacturer, filed a lawsuit against two Italian companies that manufactured and sold “replica” rims reproducing a number of Audi’s rims registered as Community designs. The plaintiff claimed that this activity constituted a sheer violation of its exclusive rights on the designs in question and applied for injunction, recall from the market and damages. The only company that filed appearance – the other went bankrupt in the meantime – argued that it was, on the contrary, an activity allowed under the so-called “repair clause” (Article 110 of EC Regulation 6/2002), which denies protection to designs that constitute a component part of a complex product (here, the car) used “for the purpose of the repair of that complex product so as to restore its original appearance”.
In particular, the defendant argued that the replica rim business in general by definition fell under the repair clause exemption, given the nature of “spare parts” of the products involved; and, in any event, its individual business certainly did, since the company always specified that the products it sold were meant for repair, and took several orders for single rims or for less-than-four sets (a similar line of defence got some traction a few years ago in a case concerning lights for heavy vehicles before the Turin IP Court).
This defence was based on the proposed distinction between “spare parts” and “accessories” (i.e., optional components), allegedly relevant to the repair exemption. On the same basis, the defendant prompted a reference of the case to the European Court of Justice for a preliminary ruling about the interpretation of the repair clause.
The Milan court, however, took the view that the qualification of the rim as an accessory or spare part was an irrelevant and misleading issue, and denied that the matter before it called for a preliminary ruling by the Court of Justice, deeming instead that it could be decided by ordinary interpretation of the applicable rules. The court went on to confirm its now traditional stance that the repair clause does not apply to wheel rim designs.
The reason the court gave for this position is the reciprocal independence between rim designs and car designs, confirmed, in its view, by the existence of companies specialising in the design and manufacture of rims without any ties to any automaker. The repair exemption would not apply to “… substantially free-shaped components,which fit in the overall aesthetic of the car without depending upon it and can be replaced with different-shaped components without affecting its unity”. In other words, wheel rim designs, being characterised by their own aesthetics, entirely independent of those of the car on which they are mounted, could not, by definition, affect the “original appearance” of the latter and, therefore, can not be meant to restore it. In the court’s opinion, wheel rims do not realise any restoration of the original appearance of the car even when they are de facto purchased for the purpose of repair, because “… that original appearance is identified – on an aesthetic level – by qualifying elements other than, and independent from, the outward appearance of the wheel rims“.
Even though it considered these arguments already conclusive, the court also noted that the defendant had failed to prove its contention that its business was eminently on the repair market. The data provided was not sufficient to assess the ratio of orders for odd rim numbers to total orders. Furthermore, many orders were placed by wholesalers, and the ultimate purpose for which the relating rims were used could not be accounted for. Finally, the company’s disclaimers in commercial communications that its products were meant for repair purposes were far from being univocal evidence that they were, in fact, objectively used for that purpose.
Based on these findings, the Court held that the activities of both defendants constituted an infringement of the plaintiff’s designs. Accordingly, it granted injunction from manufacturing, marketing and advertising the replica wheel rims in suit, recall from the market and destruction of the same, and the publication of the ruling in a major newspaper and a car magazine. Damages will require a supplement of the trial for their assessment.
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One of the rim designs in suit (from the OHIM’s website)