CJEU sheds light on interpretation on community designs regulation 'repair clause'
interpretation of Article 110.1 of EU Regulation 6/2002 of 12 December 2001, on Community Designs ("Regulation 6/2002")
14 December 2018
In its Judgment of 20 December 2017 (cases C-397/16 and C-435/16), the Court of Justice of the European Union analysed the scope and requirements for applying the so-called "repair clause" (set out in Article 110.1 of EU Regulation 6/2002, on Community design rights), which excludes protection as a Community design for component parts of complex products if certain conditions are met.
On 20 December 2017, the Court of Justice of the European Union ("CJEU") issued a Judgment in cases C-397/16 and C-435/16 regarding the interpretation of Article 110.1 of EU Regulation 6/2002 of 12 December 2001, on Community Designs ("Regulation 6/2002"), which establishes the so-called "repair clause": "Until such time as amendments to this Regulation enter into force on a proposal from the Commission on this subject, 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."
Article 19.1 of Regulation 6/2002 identifies the exclusive rights conferred by the Community design, namely to use the design and to prevent third parties from using it without the design holder's consent. Such "use" includes "in particular, the making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes." The repair clause establishes, as an exception, that the protection conferred by a design does not extend to the use of a component part protected by the design merely for repairing a complex product to restore its original appearance. The exception's purpose, as the CJEU highlights in paragraph 50 of its Judgment of 20 December 2017 ("Judgment"), is to avoid creating captive markets for spare parts. If acts covered by the repair clause were to fall within the design holder's ius prohibendi, consumers would be "indefinitely tied, for the purchase of external parts, to the manufacturer of the complex product" and competition would be adversely affected.
The issues referred to the CJEU were raised in the context of infringement complaints filed by Pneusgarda Srl and Audi AG ("Audi") in Italy and by Dr. Ing. h.c. F. Porsche AG ("Porsche") in Germany against Acacia Srl ("Acacia"). In the second case complaints were also filed against Acacia's Managing Director. Audi and Porsche alleged that Acacia had infringed their Community design rights by manufacturing and marketing alloy car wheel rims identical to those protected by such designs. Acacia relied on the repair clause to defend itself against the complaints. The complaints were initially upheld in both cases, but the Italian Appellate Court and the German Federal Court of Justice referred the issues regarding the interpretation of the repair clause to the CJEU for a preliminary ruling.
The CJEU first analysed whether the repair clause excludes Community design protection for designs constituting a component part of a complex product which is used for the repair of that complex product, so as to restore its original appearance, subject to the condition that the protected design is dependent upon the appearance of the complex product. In other words, whether the repair clause only applies to parts whose shape is fixed (parts whose shape is "immutably determined by the appearance of the complex product and cannot therefore be freely selected by the customer", paragraph 30 of the Judgment), as alleged by Audi and Porsche to defend that alloy car wheel rims are not covered by the repair clause.
The CJEU concluded that dependence of the protected design on the appearance of the complex product is not required to apply the repair clause, as supported by (i) a literal interpretation of Article 110.1 of Regulation 6/2002, (ii) the legislative work preceding the adoption of the repair clause (since this condition was omitted from the final version of Article 110.1), and (iii) the repair clause's purpose.
Secondly, the CJEU identified the repair clause's requirements:
(1) The existence of design rights over a component part (fulfilled in this case);
(2) The component must be part of a "complex product" (fulfilled in this case, insofar as a wheel rim is part of a car, a complex product, and without it such complex product could not be subject to normal use);
(3) The component must be "used" within the meaning of Article 19.1 to "repair" the complex product. According to the CJEU, "use" covers "any use of a component part for the purposes of repair", and it must be "necessary for the repair of a complex product that has become defective". Thus, the use of a component part for reasons of "preference or purely of convenience" (such as the customisation of a complex product) is not covered by the repair clause (paragraphs 68 to 70 of the Judgment);
(4) Repairs must be carried out to restore the complex product's original appearance. Only components benefitting from protection as a design (and which, according to Article 4.2(a) of Regulation 6/2002, remain visible during normal use of the complex product) are covered by the repair clause.
Furthermore, the component must be used to restore the complex product to its appearance when it was placed on the market. In this regard, the CJEU concluded that the repair clause only applies if the replacement part is "visually identical" to the part originally incorporated into the complex product when it was placed on the market, rejecting Acacia's argument that the repair clause covers all standard variants of original wheel rims (paragraphs 74 to 77 of the Judgment).
Lastly, the CJEU analysed whether, to benefit from the repair clause, manufacturers or sellers of component parts must ensure (and if so, how) that the part "can be purchased exclusively for repair purposes" (paragraph 79 of the Judgment).
The Court concluded that manufacturers or sellers of components are not required to guarantee, "objectively and in all circumstances", that the parts they make or sell are, ultimately, used by end users in compliance with the repair clause's conditions. However, in order to rely on the clause, manufacturers and sellers must comply with a "duty of diligence" as regards compliance by downstream users with the clause's conditions (paragraphs 85 to 88 of the Judgment), particularly by:
(1) Informing the downstream user that the component part incorporates a design of which they are not the holder, and that the part is intended exclusively for repairing the complex product to restore its original appearance;
(2) Ensuring through "appropriate means, in particular contractual means" that downstream users do not intend to use the components beyond the conditions required to apply the repair clause; and
(3) Refraining from selling a component part when "they know or, in the light of all the relevant circumstances, ought reasonably to know" that the part will not be used in compliance with the repair clause conditions.
In conclusion, in its Judgment of 20 December 2017, the CJEU has provided some necessary clarity on the scope of the repair clause (which has been subject to differing interpretations in the past). The CJEU attempted to strike a balance between broad and strict interpretations. While the Judgment will undoubtedly have a significant impact on manufacturers and sellers of spare parts and complex products, the practical implementation of the criteria it establishes is yet to be seen; for example, as regards the duty of diligence imposed on manufacturers and sellers of component parts.
Key Take-Away Points
- According to the CJEU, the repair clause is not restricted to components whose shape is fixed by the shape of the complex product.
- Among the conditions for applying the repair clause set out by the CJEU is the requirement that the replacement part have a visual appearance identical to that of the part originally incorporated into the complex product when it was placed on the market.
- The CJEU concluded that uses of the component part for reasons of "preference or purely of convenience" (for example, replacing a part for aesthetic purposes, or customisation of a complex product) are not covered by the repair clause.
- According to the CJEU, manufacturers or sellers of component parts are under a duty of diligence as regards compliance by downstream users with the conditions set out in Article 110.1 of Regulation 6/2002.