Disputes

Competition enforcement

What competition and antitrust issues are specific to, or particularly relevant for, the automotive industry? Is follow-on litigation significant in competition cases?

In October 2019, the Netherlands Authority for Consumers and Markets (ACM) published its investigation on the role of insurance companies in the market of car damage repair services. The insurance companies offer car insurances that cover repair costs if the cars are damaged. Most of these companies refer their customers to car repair companies that are selected and contracted by the insurance companies. This investigation answered the question whether this way of doing business was harming the competition in the car damage repair services market. The ACM states that the insurance companies have the commercial freedom to negotiate with any company. They can be selective in what company they contract. This would improve the process of competition and stimulates efficiency and innovation. In addition, the ACM states that the sales power of the insurance companies is not disturbing the competition either. There are enough other parties or customers available for the car damage repair companies besides the insurance appointed or insurance contracted repair companies. The ACM, however, acknowledged that car damage repair companies (especially small companies) struggle to stay in the market. The ACM states that this is the effect of a few specific developments, namely to the quick technological developments, increasing quality standards, decrease in damages, overcapacity in the relevant market and a shortage of educated employees. Therefore, the position and role of the insurance companies is not harming the competition and the ACM will refrain from taken any measures.

Another recent development in the Dutch automotive industry is that members of the Dutch parliament suggest implementing a maximum price for charging electric vehicles. This happened after the announcement to (significantly) increase the price per kilowatt per hour. The members of parliament want the government to instruct the ACM to investigate whether cartels are present in the market of chargers for electronic vehicles. The ACM already stated that the price regarding to the charge points for electric vehicles is not transparent. The prices may differ from company by company but also per area. The ACM is still investigating the price transparency regarding the charge points for electric vehicles.

The Dutch jurisdiction is a favourable jurisdiction for follow-on civil litigation for antitrust damage claims. Under Dutch law it is possible to start collective claims on the basis of an opt-out mechanism for Dutch customers (ie, a procedure in which a claim is brought on behalf of the entire class of potential claimants without the need for them to proactively choose to participate). One of the recent cases where follow-on civil litigation is present relates to the well-known Dieselgate case involving Volkswagen. Several claim vehicles represent different customers who seek compensation. The claim vehicles consist of ad hoc vehicles, but also established claim vehicles and representative bodies.

Dispute resolution mechanisms

What kind of disputes have been experienced in the automotive industry, and how are they usually resolved? Are there any quick solutions along the supply chain available?

No specific preference for litigation or arbitration has been observed in the Dutch automotive industry. If parties agreed on arbitration in their contract the Dutch courts will declare themselves not competent to hear the case. It is possible to request preliminary injunctions at the Dutch courts. Preliminary measures available in arbitration proceedings, if Dutch law is applicable and the parties chose to be bound to the arbitration rules of the Netherlands Arbitration Institute.

Claims for damages based on defected products developed and delivered by either the OEMs or the suppliers are common disputes (article 6:185 DCC et seq). Other common disputes are those in connection with the termination of the supply contract. Especially in light of the recent events in relation to covid-19, contractual disputes have come up, more particularly on the question of whether contracts could be terminated or altered based on either force majeure clauses or unforeseen circumstances. If these are not included, parties are dependent on Dutch law and how it is interpreted. Whether parties may invoke the contractual or statutory provisions needs to be determined on a case-by-case basis.

Distressed suppliers

What is the process for dealing with distressed suppliers in the automotive industry?

First of all, the general rules of Dutch insolvency law also apply to the automotive industry. No specific provisions exist that allow for a different treatment of distressed suppliers in this industry.

Currently, the Dutch Bankruptcy Act (DBA) provides in two procedures for distressed suppliers. If a supplier foresees that it will become distressed it can request for suspension of payments. The suspension of payments aims to help debtors in financial distress to financially restructure their business and restart such business (post suspension of payments). The suspension of payments provides temporary financial relief, because it prohibits ordinary (unsecured) creditors from forcing the debtor to pay the claims when they fall due. Only the distressed supplier (debtor) may file for a suspension of payments.

In the case suspension of payments is requested too late or is not requested at all, creditors or distressed suppliers should request for a declaration of bankruptcy at the Dutch courts. The distressed supplier may be declared bankrupt at its own request or at request of its creditors. There are two criteria for such declaration of bankruptcy (article 6(3) DBA): the given circumstances summarily prove the debtor has ceased to pay its debts; and the claims of the creditors are summarily proven if the declaration is requested.

The second criterion includes a plurality requirement. A single creditor cannot request a declaration of bankruptcy. To that extent, if the debtor stopped paying a specific creditor, this creditor is considered to have other legal measures to get its claim paid. Therefore, a single creditor who is requesting for a bankruptcy of its debtor should accompany this request with supportive claims of at least one other creditor who has been left unpaid. The claims need to be sufficiently certain. If the debtor has reasonable grounds for disputing these claims, a declaration of bankruptcy will not be given. If the above-mentioned criteria are met, the distressed supplier will be declared bankrupt and a receiver (curator) will be appointed. The distressed supplier loses the power to dispose of its assets. This power is transferred to the receiver.

In addition to the two procedures mentioned above, the Dutch government is currently working on a legislative proposal called the Approved Private Composition Act. This Dutch proposal is inspired by and based upon experience with the offering of private composition plans in the United Kingdom and the United States. The proposal is scheduled to enter into force in the course of 2020.

Intellectual property disputes

Are intellectual property disputes significant in the automotive industry? If so, how effectively is industrial intellectual property protected? Are intellectual property disputes easily resolved?

The Netherlands is a frontrunner in developing technologies for the automotive industry. Its automotive industry ranges from original equipment manufacturers (OEMs) and component manufacturers to dealerships and commercial vehicle manufacturers. The companies active in those areas seem to attribute great value to collaborations throughout the automotive sector.

Traditionally, disputes mostly related to the collaboration (eg, performance under distribution or supply agreements), confusion regarding the origin of the collaboration (eg, the distinction between a commercial dealer and a specialist in certain brand of cars) and origin of parts (eg, OEM versus non-OEM). The latter two types of disputes mostly involved the enforcement of trademark rights.

These days, the government in the Netherlands is actively endorsing the development of smart mobility solutions, such as electronic, autonomous, connected, shared vehicles that can be easily updated and upgraded to satisfy customer demand. For example, truck platooning (ie, a group of trucks travelling safely and automatically in convoy, a short distance apart) is high on the agenda to satisfy increased logistic demand in an environmental responsible way.

Smart mobility solutions require innovators to go beyond traditional boundaries and explore the integration of technology from other fields. For example, some manufacturers already use mobile networks to warn their own cars about congested roads or accidents. Future developments will include standardised technology such as low latency machine-to-machine communications, which makes it possible to share sensor data, control information to allow vehicles to drive in close formation, saving road space, and to exchange vehicle trajectories to prevent collisions.

In doing so, they rely on technology developed in the telecoms sector. This is an area where much patent litigation was seen in the Netherlands in recent years between network infrastructure developers and handheld manufacturers. These disputes related to patents covering standard essential technology (ie, common protocols to ensure interoperability among devices).

An increase of patent cases in the automotive industry is expected, for example, owing to the implementation of (standard essential) technology historically not linked to the automotive industry, such as the 4G and 5G telecom standards. While the telecom industry has developed best practices to negotiate fair, reasonable and non-discriminatory terms, it remains to be seen how this will work out in the automotive industry. For example, the business model of handheld manufacturers (ie, relatively low purchase price, high percentage of profit per device) appears to be quite different from car manufacturers (ie, relatively high purchase price, low percentage of profit per vehicle), which, no doubt, will have an impact on the licensing framework and related negotiations. The strategy traditionally seen in the automotive industry to collaborate could shift towards more aggressive strategies as seen in the telecom industry, in particular in issues involving non-practising entities having acquired intellectual property (IP) rights (also known as trolls).

The Netherlands provides several useful possibilities for an IP owner to successfully and quickly take action against infringements of IP rights. Especially, preliminary injunction proceedings and ex parte injunction requests provide exceptionally quick mechanisms for acting against infringements. Another important aspect is that courts in the Netherlands are prepared to grant an injunction even in the situation that no infringement has occurred yet, but there is serious threat thereto. Also, Dutch courts are, depending on the circumstances, prepared to grant cross-border injunctions.

The owners of IP rights can initiate preliminary injunction proceedings when becoming aware of an infringement, or a threatened or potential infringement, of their IP rights. Preliminary relief proceedings are available to get injunctive relief quickly. Provisions judges of district courts are sometimes willing to also grant ancillary orders, such as a recall, rectification, account of profits and an advance payment for the damages. There is an urgency requirement in preliminary injunction proceedings, but this requirement is often easily satisfied. There is no rule that the IP owner must bring preliminary injunction proceedings within a specific time frame, but the IP owner should act in a sufficiently expedited manner. A hearing in which both parties are heard usually takes place within a few weeks of service of the writ of summons and a decision is usually rendered two to four weeks later, thus making it often possible to obtain a preliminary injunction within six to eight weeks. In very urgent cases, a preliminary injunction can even be obtained in a matter of days. The provisions judge will render a decision on the basis of his or her preliminary findings and will normally issue a preliminary injunction if he or she is satisfied that the IP right is valid and infringed. Depending on the facts, the preliminary injunction may have cross-border effect. The party that is successful in the case will normally be awarded payment of reasonable costs that it has made in relation to the proceedings. Preliminary injunction proceedings should be followed in good time by proceedings on the merits. Otherwise, the preliminary injunction will lapse. A decision in preliminary injunction proceedings is normally provisionally enforceable notwithstanding appeal.

Ex parte measures are also available in the Netherlands. In very urgent matters, especially if there is a threat of irreparable harm for the IP owner, the IP owner can request the provisions judge to render an ex parte injunction. This is a preliminary injunction that is rendered by the provisions judge upon request of the IP owner without the alleged infringer being heard. The alleged infringer can protect him or herself against a possible ex parte injunction by submitting a protective letter with the district court of the relevant districts. Some, but not all, district courts in the Netherlands accept such protective letters.

Various types of seizures are also available to the owners of IP rights. One of the options is to file a petition to conduct a seizure for the surrender of infringing goods at the premises of the alleged infringer or elsewhere in the Netherlands. Another type of seizure that is available to the IP owner is the customs seizure with the customs authority in the Netherlands. If granted, the customs authority will undertake to search for infringing goods during its regular customs inspections and inform the applicant if infringing goods are found. If infringing goods are retained by the customs authority, the IP owner can examine the retained goods, confirm that the goods are infringing goods and decide whether he or she wants to have the infringing goods seized and destroyed in a simplified procedure or whether he wants the retention confirmed by initiating court proceedings. If no proceedings are timely initiated and no settlement is reached, the goods will be released. If the seized goods are declared by a court to be infringing goods, the customs authority can proceed to destroy the goods. Another attractive type of seizure is the seizure for the preservation of evidence. The petition for such a seizure is normally assessed and decided ex parte by the court. The evidentiary seizure is to be conducted by a civil bailiff who can, upon request, be accompanied by an independent expert (eg, a patent attorney or an IT expert). The evidence obtained can be in the form of actually seized goods, documents, materials or machinery, or a detailed description or sampling thereof. It should be noted that preserving evidence and getting access to the preserved evidence is a two-stage process. Once the evidentiary seizure has been made, the party levying the seizure must file a claim with the court for the inspection of the preserved evidence. Evidentiary seizures can, inter alia, be made against companies established in the Netherlands that infringe an IP right abroad, for the purpose of submitting the evidence in proceedings abroad. Seizures can also be conducted against foreign companies in case the alleged infringing goods are located in the Netherlands. Alleged infringers of IP rights can protect themselves against a potential evidentiary seizure by filing a protective letter, as outlined above.

The owners of IP rights can also initiate proceedings on the merits, in which definitive relief can be obtained. In proceedings on the merits, is usually takes 12 to 18 months after service of the writ of summons before a decision is rendered. Besides a permanent injunction, the owner of IP rights can also obtain ancillary orders, such as declaratory judgment, recall of infringing products, rectification, information with respect to distribution channels, account of profits, destruction of infringing goods or materials for the production of infringing goods, publication of the decision, payment of damages or surrender of profits and payment of reasonable legal costs. In exceptional situations, courts are sometimes prepared to grant a moratorium (ie, an order for an infringer to refrain from dealing in the infringing product for a certain period of time after expiry of the IP right), to prevent the infringer from benefiting from the infringement.

The District Court of The Hague, the competent court in patent cases in the Netherlands, has a special accelerated regime in patent cases. In such accelerated proceedings on the merits, the District Court sets a time schedule for serving the writ of summons, the filing of the pleadings and the date of the oral hearing. Several weeks after the hearing, a decision will be rendered and a decision is usually obtained within nine to 12 months of the date of service of the writ of summons.

The importance of trade secrets is also recognised, also during legal proceedings. For example, the Netherlands has implemented the European Trade Secrets Directive, which not only ensures the effective protection of trade secrets in the field but also enables the use of confidentiality clubs (ie, a mechanism to rely on confidential information without jeopardising the confidential nature of the information) during legal proceedings. Practice shows that confidentiality clubs are not only used in trade secret cases but also in other cases in relation to IP rights.

Finally, alternative dispute resolution is also available to easily resolve IP disputes, such as arbitration or mediation.