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Patenting Coffee—IP Protection and Its Impact on Innovation in the Coffee-Capsule Market

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Book cover Varieties of European Economic Law and Regulation

Part of the book series: Studies in European Economic Law and Regulation ((SEELR,volume 3))

Abstract

Despite a hard to kill belief patents are not a booster for innovation per se but an instrument of competition and innovation policy that needs to be used in a careful manner and with a clear understanding of its functioning and consequences. In the last decades discussions about the strengths and weaknesses of the patenting system have circulated mostly around pharmaceuticals or the information technology. Some of the most important questions addressed in these discussions are the ever rising and unmanageably large number of patents, a phenomenon known as patent thickets, the overlapping of different intellectual property rights, and in consequence the limitation of necessary competition.

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Notes

  1. 1.

    In the various court proceedings sometimes Nestlé S. A. is the plaintiff and sometimes its subsidiaries are involved. For the purpose of this article we slightly simplify the situation by referring to the plaintiffs collectively as either Nestlé or Nespresso.

  2. 2.

    See the decision of the St. Gallen Commercial Court, 10/1/2011, HG.2011.10-HGP, http://www.gerichte.sg.ch/home/dienstleistungen/rechtsprechung/kantonsgericht/entscheid_2011/hg_2011_10/_jcr_content/Par/downloadlist/DownloadListPar/download.ocFile/Entscheid%20Handelsgericht%20vom%2010.%20Januar%202011.pdf.

  3. 3.

    St. Gallen Commercial Court, 4/3/2011, HG.2011.10-HGP, http://www.gerichte.sg.ch/home/dienstleistungen/rechtsprechung/kantonsgericht/entscheid_2011/0/_jcr_content/Par/downloadlist/DownloadListPar/download.ocFile/Entscheid_HG_2011_10-HGP_2_.pdf.

  4. 4.

    Swiss Federal Court, 28/6/2011, 4A_178/2011.

  5. 5.

    St. Gallen Commercial Court, 21/5/2013, HG.2011.199 http://www.gerichte.sg.ch/home/dienstleistungen/rechtsprechung/kantonsgericht/entscheide-2013/hg-2011-199/_jcr_content/Par/downloadlist/DownloadListPar/download.ocFile/HG_2011_199.pdf

  6. 6.

    Ibid, 25 f.

  7. 7.

    It seems that so far there has been only one – unpublished – court decision regarding the infringement of Nespresso-patents in Switzerland. In a preliminary ex parte decision the Commercial Court Zurich dismissed the allegations of infringement based on two European Patents. See Commercial Court Zurich, 21/1/2011, HE110003-O.

  8. 8.

    European Patent No 0 512 148– Enclosed cartridge for making a beverage.

  9. 9.

    In the proceedings before the High Court in England the suit was based on the European Patent (UK) No 2 103 236– Capsule extraction devise.

  10. 10.

    See the arguments presented by Nespresso as summarized in the court decisions.

  11. 11.

    LG Dusseldorf, 16/8/2012, 4b O 82/12; OLG Dusseldorf, 21/2/2013, (2013) Gewerblicher Rechtsschutz und Urheberrecht – Rechtsprechungsreport 185.

  12. 12.

    Ibid.

  13. 13.

    In most cases Nestlé does not place the coffee machines on the market but instead licenses the technology to established manufacturers of coffee machines and allows them to sell those machines through various channels of commerce. Only with respect to the capsules Nestlé has the exclusive right to sell those.

  14. 14.

    LG Dusseldorf, 16/8/2012, 4b O 82/12; OLG Dusseldorf, 21/2/2013, (2013) Gewerblicher Rechtsschutz und Urheberrecht – Rechtsprechungsreport 185.

  15. 15.

    LG Dusseldorf, 16/8/2012, 4b O 82/12; OLG Dusseldorf, 21/2/2013, (2013) Gewerblicher Rechtsschutz und Urheberrecht – Rechtsprechungsreport 185.

  16. 16.

    Ibid.

  17. 17.

    Ibid.

  18. 18.

    Ibid.

  19. 19.

    Nestec S. A. et al v Dualit Ltd. et al [2013] EWHC 923 (Pat).

  20. 20.

    The principle of bifurcation in German patent law gives jurisdiction regarding the validity of patents exclusively to the Federal Patents Court ( Bundespatentgericht) while leaving the infringement proceedings with the Regional (Civil) Courts. The Regional Courts cannot rule on the validity of a patent but can only in clear-cut cases stay their own decision until the Federal Patents Court has decided on the validity. For an in-depth explanation of the bifurcation see A Schwarz, ‘Nullity Proceedings’ in C Milbradt (ed) Patent Litigation in Germany (Stuttgart, German Law Publishers, 2012) 227; AR Klett, M Sonntag and S Wilske, Intellectual Property Law in Germany (Munich, CH Beck, 2008) 24 f.

  21. 21.

    The priority document was the European Patent No 1 495 702 A1 filed on 7/10/2003 regarding a device for extraction of a capsule as well as the machine incorporating said device.

  22. 22.

    See for a comparison of the differences the judgment by Justice Arnold in Nestlé v Dualit [2013] EWHC 923 (Pat) para 51–68.

  23. 23.

    Nestlé v Dualit [2013] EWHC 923 (Pat) para 203.

  24. 24.

    Ibid, para 166.

  25. 25.

    Ibid, para 167.

  26. 26.

    Ibid, para 183.

  27. 27.

    Ibid, para 200.

  28. 28.

    OLG Dusseldorf, 21/2/2013, (2013) Gewerblicher Rechtsschutz und Urheberrecht – Rechtsprechungsreport 185.

  29. 29.

    Although the machines can cost several 100 € it is important to realize that this prize is paid once for a machine that will last for a longer period of time. The price for the capsules, however, is approximately 50 ct. but will be paid for each cup of coffee for as long as the machine lasts. This will in many cases lead to substantial spending throughout a year.

  30. 30.

    OLG Dusseldorf, 21/2/2013, (2013) Gewerblicher Rechtsschutz und Urheberrecht – Rechtsprechungsreport 185, para 141.

  31. 31.

    ibid.

  32. 32.

    WM Landes and RA Posner, The Economic Structure of Intellectual Property Law (Harvard University Press, Cambridge, 2003) 294; RM Hilty, ‘Märkte und Schutzrechte’ in J Beckert et al (eds), Märkte als soziale Strukturen (Campus Verlag, Frankfurt, 2007) 235, 236.

  33. 33.

    RM Hilty, ‘Economic, legal and social impacts of counterfeiting’ in C Geiger (ed), Criminal Enforcement of Intellectual Property (Cheltenham, Elgar, 2012) 9, 14.

  34. 34.

    DZ Johnsson, ‘Using Intellectual Property Rights to Create Value in the Coffee Industry’ (2012) 16 Marqette Intellectual Property Law Review 283 points out that in the past two decades consumers began to increasingly value coffee that can be differentiated by origin, quality or cultivation process and describes the importance of trademarks, geographic origins and certified sustainability as the most important assets in the coffee market.

  35. 35.

    Ibid.

  36. 36.

    See Arts 52, 54, 63 of the European Patent Convention.

  37. 37.

    While the coffee machines can be obtained from different sources and are distributed through different companies, the capsules can only be obtained from Nestlé.

  38. 38.

    In his judgment Judge Arnold mentions some of those alternative systems. See Nestec v Dualit, [2013] EWHC 923 (Pat) para 75–79.

  39. 39.

    European Patent No 0 512 148– Enclosed cartridge for making a beverage.

  40. 40.

    This is the litigation in England and Wales as well as in Germany based at least on EP 2 103 236.

  41. 41.

    In Switzerland the cases were based on the Swiss trademark Reg No P-486 889 registered for ‘coffee, coffee extracts and preparation on the basis of coffee’.

  42. 42.

    An additional layer of protection is also possible based on design rights. However, as this has not played a role in the Nespresso litigation, we omit it for the purpose of this paper.

  43. 43.

    M-R McGuire, ‘Kumulation und Doppelschutz‘ (2011) Gewerblicher Rechtsschutz und Urheberrecht 767, 768.

  44. 44.

    Ibid.

  45. 45.

    See Art 63 of the European Patent Convention and Arts 46, 47 of Reg (EC) No 207/2009 on the Community Trade Mark.

  46. 46.

    See Art 7(1)(e)(ii) of Reg (EC) No 207/2009 on the Community trade mark as well as Art 3(1) (e)(ii) of Dir 2008/95/EC relating to trade marks.

  47. 47.

    See the decision by the St. Gallen Commercial Court, 31/5/2013, HG.2010.199.

  48. 48.

    See in the respect the decision of the European Court of Justice C-48/09—Lego Juris A/S v OHIM [2010] I-08403.

  49. 49.

    OLG Dusseldorf, 21/2/2013, (2013) Gewerblicher Rechtsschutz und Urheberrecht – Rechtsprechungsreport 185.

  50. 50.

    On patent thickets in general see C Shapiro, ‘Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting’ in AB Jaffe et al (eds), Innovation Policy and the Economy (MIT Press, Cambridge, 2001) 119.

  51. 51.

    See for example the claim by Nestlé itself: Nestlé tops the food industry patent filing, claiming that ‘Nespresso is protected by over 1,700 patents, both on the capsule and how the capsule interacts with the machine’, www.nestle.com/media/newsandfeatures/nestle-tops-food-industrypatent-filings.

  52. 52.

    While the judgment regarding the invalidity by the EPC has not been published yet, the declaration of invalidity is included in the minutes of the oral hearing. See the minutes of the oral proceeding EPO T 1674/12-3.2.04, 8, https://register.epo.org/application?documentId=EVDUCV7M4281 795&number=EP09007962&lng=en&npl=false.

References

  • Hilty, RM, ‘Märkte und Schutzrechte’ in J Beckert et al (ed), Märkte als soziale Strukturen (Campus Verlag, Frankfurt, 2007) 235.

    Google Scholar 

  • Hilty, RM, ‘Economic, legal and social impacts of counterfeiting’ in C Geiger (ed), Criminal Enforcement of Intellectual Property (Cheltenham, Elgar, 2012).

    Google Scholar 

  • Johnsson, DZ, ‘Using Intellectual Property Rights to Create Value in the Coffee Industry’ (2012) 16 Marqette Intellectual Property Law Review 283.

    Google Scholar 

  • Klett, AR, Sonntag, M and Wilske, S, Intellectual Property Law in Germany (Munich, CH Beck, 2008).

    Google Scholar 

  • Landes, WM and Posner, RA, The Economic Structure of Intellectual Property Law (Harvard University Press, Cambridge, 2003).

    Google Scholar 

  • McGuire, M-R, ‘Kumulation und Doppelschutz’ (2011) Gewerblicher Rechtsschutz und Urheberrecht 767.

    Google Scholar 

  • Schwarz, A, ‘Nullity Proceedings’ in C Milbradt (ed), Patent Litigation in Germany (Stuttgart, German Law Publishers, 2012) 227.

    Google Scholar 

  • Shapiro, C, ‘Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting’ in AB Jaffe et al (eds), Innovation Policy and the Economy (MIT Press, Cambridge, 2001) 119.

    Google Scholar 

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Authors and Affiliations

  1. Max Planck Institute for Innovation and Competition, University of Munich, 80539, München, Deutschland

    Reto M. Hilty & Peter R. Slowinski

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  1. Reto M. Hilty
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Correspondence to Reto M. Hilty .

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  1. Law and Governance Group, Faculty of Law, Wageningen University, Erasmus University of Rotterdam, The Netherlands

    Kai Purnhagen

  2. Faculty of Law, University of Copenhagen, Copenhagen, Denmark

    Peter Rott

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Hilty, R., Slowinski, P. (2014). Patenting Coffee—IP Protection and Its Impact on Innovation in the Coffee-Capsule Market. In: Purnhagen, K., Rott, P. (eds) Varieties of European Economic Law and Regulation. Studies in European Economic Law and Regulation, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-04903-8_23

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