In a December 22 2016 judgment, Barcelona Commercial Court Number 7 dismissed Niled SAE's action against Sofamel SL in its entirety. The court based this decision on Niled's TTP connector terminals' lack of competitive singularity, which is required for Article 11.2 of the Unfair Competition Act to apply.
The case involved Niled and Sofamel, Spanish electrical companies dedicated to the manufacture and commercialisation of materials for the connection, anchorage and fixation of distribution network installations. Niled produced TTP terminals and Sofamel produced TTGA terminals.
By means of a cease-and-desist letter of May 2015, Niled and Ridelin (which belonged to the same company group) required Sofamel to cease the manufacture and commercialisation of its TTGA terminals, claiming that they:
- constituted a slavish copy of Niled's TTP terminals; and
- infringed the specific Ridelin patents for which Niled claimed to be the exclusive licensee.
Sofamel responded to the cease-and-desist letter, claiming – on the basis of a European Patent Office (EPO) report – lack of novelty of the patents on which Niled and Ridelin had based their claim.
When Sofamel disputed such claims, Niled sued them by exercising an action based solely on unfair competition.
Niled's main arguments were:
- the novelty of the pioneering TTP terminal on which Ridelin had filed the EU patent application (pending); and
- competition in the market with Sofamel, whose TTGA terminal constituted a slavish copy of the TTP terminal, thus making Article 11 of the Unfair Competition Act applicable.
Sofamel's main arguments were:
- the TTP terminals' lack of novelty given the lack of novelty of the patent filed by Ridelin (based on the EPO report), which entailed a lack of competitive singularity with regard to the plaintiff's product on the market; and
- a lack of risk of association due to:
- the specialisation of the terminals' target consumers;
- the fact that the terminals' attractiveness derives from their function, rather than their form; and
- the need for homologation by electric companies for the terminals' commercialisation.
Given that Article 11.1 of the Unfair Competition Act states that products or services may be freely imitated (where no exclusive rights over them exist), the court analysed the concept of unfair competition based on the confusing imitation requirements set out in Article 11.2 as an exception to the free imitation principle. To this effect, the court held that the following is required:
- the confluence of three positive requirements:
- the imitation must be a copy of an essential element that confers competitive singularity on the product;
- the imitation must be of material creations, not their form of presentation; and
- the imitation must be suitable to lead consumers to make an association with regard to the products or services and its company of origin; and
- the absence of two negative circumstances:
- products or services not covered by an exclusive right; and
- non-concurrence of the inevitability of association risk.
The court added that competitive singularity exists when products or services have features that sufficiently distinguish them from others of a similar nature in the sector. In addition, it requires the sufficient establishment and implementation in the market of the original products and services which are the object of the imitation. Further, this singularity must cause consumers to associate the imitation products or services with the original products or services in such a way that they are led to believe that they come from the same or a related company.
Based on these requirements, and after evaluating the expert evidence provided by the parties, the court concluded that Niled's TTP connector terminals lacked competitive singularity. Further, the court stated that previous documents (ie, Iberdrola 2010 and UNE Standard 2010) included figures similar to the plaintiff's product. As such, prior disclosure existed and a significant reduction in the possible competitive singularity of the plaintiffs' product was implied; thus, Article 11.2 of the Unfair Competition Act did not apply.
Finally, with regard to the risk of causing association among consumers, the court stated that the following must be considered:
- the fact that consumers of these products were specialists; and
- the fact that some consumers' technical documents described a significant part of the characteristics which the plaintiff claimed defined the singularity of its product.
The court's decision is final.
For further information on this topic please contact Paula Gutierrez at Grau & Angulo by telephone (+34 93 202 34 56) or email (email@example.com). The Grau & Angulo website can be accessed at www.gba-ip.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.