In this edition of Bird & Bird's Food Law Digest we guide you through the most recent legal developments in the European food industry: You will read about antitrust topics reporting on the German potato industry becoming subject to price-fixing allegations and find out, why the Spanish Competition Authority hinders Government measures in favour of food processors.
You can read up on trademark related articles highlighting counterfeited pâtés and the outcome of the most escalated trade mark disputes for processed cheese in the Czech Republic.
We are also featuring the regulatory issues of the food industry discussing if a “fat tax” helps fight against obesity within the EU. Furthermore, should crocodiles really enrich the Czech diet?
Last but not least, we do not want to withhold the report on the progress of the Greek yoghurt trial in the UK.
We hope you enjoy reading this selection of interesting and informative articles! Click on the titles for more information.
- Czech Republic: Czech pâté Hamé won the battle in the Russian Federation
- Czech Republic: Cheese battle Apetito/Smetanito has ended
- Czech Republic: Crocodile enriches Czech diet
- France: More tools to fight against fraud and infringements in the food sector in France
- Germany: German potato industry subject to price-fixing allegations
- Hungary: Energy drinks war
- The Netherlands: No "fat tax" in the Netherlands
- Poland: Fast food free education
- The Netherlands: Dutch Patent Court takes an advance on Tomato II Case by deciding on purple radish sprouts
- Poland: Polish Vodka/Polska Wodka - What does it mean?
- Spain: The Spanish Competition Authority hinders Government measures in favour of food processors
- UK: Plain packaging for cigarettes - Australia leads the way, but will others follow?
- UK: Nespresso compatible coffee capsules do not infringe one of Nespresso's system patents
- UK: Extended Passing Off in the UK: “Greek Yoghurt” v “Greek style Yoghurt”
- Contact us
Czech Republic: Czech pâté Hamé won the battle in the Russian Federation
Andrea Jarolímková and Eva Bajáková
The Czech food company Hamé, producing one of the most famous pâtés in the Czech Republic, holds around 30% of the pâté market in the Russian Federation. Pâtés are sold under the brand Hamé, registered as a trade mark. In November 2009, a local company Ruzkom launched pâtés under the brand "Naše", which written in the Cyrillic alphabet and in the same graphic layout looked almost identical to Hamé’s product presentation. The overall similarity of Hamé's and Ruzkom's products was striking. The company Hamé sought defence via an arbitration court, but surprisingly arbiters did not acknowledge Hamé's claims. Hamé's legal representative even commented that the decision was shocking and its marketing director said that the decision was motivated by the fact that Hamé is not owned by Russians. Nonetheless, Hamé sought protection at the Russian court of law. In April 2013 a final judgement was announced, which ordered Ruzkom to pay Hamé approximately EUR 212,000 as compensation and forbids Ruzkom to produce counterfeits.
Czech Republic: Cheese battle Apetito/Smetanito has ended
Andrea Jarolimkova and Eva Bajakova
Czech consumers may be notoriously known as the biggest beer drinkers (132 litres per capita a year); but not everyone has heard that the Czechs are also known as the largest consumers of processed cheese in the world (2.25 kg per capita a year). No wonder that one of the most escalated trade mark disputes in the Czech Republic concerned APETITO and subsequently SMETANINTO, both for processed cheeses.
As background to the whole story, the history of APETITO dates back to 1973, when a national company Lacrum Brno started to produce its melted cheese in two manufacturing plants, Želetava and Hodonín. After privatization, each of the manufacturing plants had a different owner. This was the beginning of a terrible long dispute. The company TPK, daughter of Bongrain Europe, obtained the plant in Hodonín and registered APETITO as the trade mark in 1993. The company BEL Sýry Česko obtained the plant in Želetava and registered a trade mark APETITTO, with double "t"s. This was, simply said, the beginning of the battle - in 2000 TPK attacked the competitor's trade mark and APETITTO with the double "t" was, unsurprisingly, declared invalid. BEL Sýry Česko was therefore forced to come up with a new trade mark for its processed cheese and registered a new trademark "SMETANITO". TPK enforced the invalidation of the Smetanito trade mark since the word "smetana"("cream" in English) represents the original ingredient from which the processed cheese is made, and is therefore descriptive. Moreover, TPK argued with alleged identity or similarity of SMETANITO with an earlier trade mark APETITO due to the similar ending of both words "-ITO". The Municipal Court in Prague decided in March 2013 to reject all TPK’s arguments and dismissed its legal action. The ending "-ITO" was not found significant and original enough to be connected exclusively with APETITO products. Additionally, the Municipal Court in Prague ruled that "It cannot be expected from the average consumer that he will read backwards, which means from left to right." Therefore, the trademark SMETANITO stays valid and the disputes between both competitors seem to be, for the time being, over.
Czech Republic: Crocodile enriches Czech diet
Andrea Jarolimkova and Eva Bajakova
After a long time, the Czech Republic has reached a culinary primacy across EU; however, it is doubtful if such a primacy is worthwhile. On 1 March 2013, the Regulation No. 34/2013 Coll., on Veterinary Requirement for Slaughtering Crocodiles and further Processing of Meat and Animal Products Originating from Crocodiles, issued by the Czech Ministry of Agriculture and approved by the European Union, became effective.
This May, after watching instructional videos from crocodile farms, Czech butchers slaughtered the first Nile crocodile in a farm of the joint-stock company AGRO Jevišovice, a.s. under curious surveillance of the veterinary inspection. Crocodiles have been bred in this farm approximately for nine years. However, crocodile breeding in Czech conditions turned out to be very expensive due to demands on heating.
Even a newly established crocodile zoo could not cover the costs. The farm with approximately 200 Nile crocodiles lobbied for legislation, which would enable them to get rid of the animals. They finally succeeded and as a result, the crocodile became a farm animal. Dozens of purchasers from hotels and restaurants already showed interest in crocodile meat. A crocodile steak costs around CZK 600 (approximately EUR 23) on the Czech market.
The Czech Republic is the only member of the European Union, in which crocodiles can be slaughtered and processed.
France: More tools to fight against fraud and infringements in the food sector in France
Axel Munier, Nathalie Ruffin
The food & beverage sector has seen growing concerns in France in the past few months concerning fraud and infringement to hygiene rules, fuelled mainly by a major food scandal following reports that horse meat was passed off as beef in various frozen products.
Customs supervision is amongst one of the various effective means which French and EU law provide for the fight against such infringements. The scheme provided for under the EU Customs Regulation, and strengthened in France by national rules in the Intellectual Property Code and the Customs Code, allows intellectual property right holders (in particular trademark owners) to file an EU-wide or national application for Customs action. Customs will then inform rights holders whenever they find potentially infringing products during controls or investigations. The efficiency of this scheme was recently illustrated by the seizure of 10,000 packages of counterfeit "BN" cookies by Customs of Marseille (South of France) on 15 May 2013.
Yet Customs supervision, whilst extremely effective to protect brand owners, only allows fighting against fraudulent and infringing products through the lens of anti-counterfeiting.
However, fraud and infringement to hygiene rules in the food sector sometimes go beyond the realm of intellectual property rules. In these situations (such as misleading advertising, or violations of regulations on food hygiene), Customs may not always have all the tools to act alone against infringements, mainly because not all Customs Agents are trained to detect infringing products and networks.
Another specialized Public Office is in charge of assisting manufacturers, brand owners and distributors in the food & beverage sector: OCLAESP ("Office central de lutte contre les atteintes à l’environnement et à la santé publique" - Central Office Against Environmental and Public Health Violations). OCLAESP is specialized in investigating various types of food fraud (such as i.a. misleading advertising). It notably provides support to all stakeholders in the food and beverage sector desiring to protect even further their own rights, and to battle against infringements to food hygiene regulations. It has been very active in the recent horse meat scandal.
All stakeholders in the food sector should thus not hesitate to bring OCLAESP into the fold, should they require any support in investigating a possible food fraud.
Germany: German potato industry subject to price-fixing allegations
Dr. Jörg Witting, Dr. Martin Jäger
On May 7th the Bundeskartellamt (Federal Cartel Office, FCO) carried out unannounced inspections on the premises of various potato producers and distributors searching for evidence of price-fixing.
In its press release the FCO pointed out that the inspections should not be regarded as prejudging, however, the FCO had sufficient grounds to suspect illegal behavior since the agency had successfully convinced a judge to order these searches. As the so-called dawn-raids took place at a very early stage of the proceedings the press release of the FCO is deliberately limited in substance and allows only for a preliminary assessment.
The FCO refers to anticompetitive price-fixing in general terms and mentions companies in the German food retail market as the main customers affected. Further statements suggest that the alleged activities were implemented mainly by intermediate dealers and their organizations causing harm to farmers as well as retailers. Especially vigorous competition in the retail sector of the German food industry might have incentivized suppliers of potato products to form an illegal counterbalance for stabilizing prices.
However, there is no information publicly available on whether the dawn-raids trace back to an application for leniency filed with the Bundeskartellamt and very little is known about the companies subject to the proceedings. According to media reports the alleged cartel operated over a period of 10 years and affected approx. 80 % of the German potato market. It is speculated that the amount of damage caused by the cartel might range between 100 million and 1 billion Euros.
Although details about the parties and the alleged anti-competitive behavior are missing, it is clear that the Bundeskartellamt suspects violations of Art. 101 of the TFEU and Section 1 GWB (Gesetz gegen Wettbewerbsbeschränkungen - German Act against Restraints of Competition, ARC). These provisions apply to horizontal as well as vertical agreements, whereas price-fixing between competitors constitutes the most severe form of cartelization within the meaning of these statutes. Jörg Witting, partner in the Düsseldorf office of Bird and Bird, commented in a television report on the investigations by the German public broadcasting company “Westdeutscher Rundfunk” (interview broadcasted in the leading German news program “Tagesschau” and “Tagesthemen” of May 11, 2013) that fines, in particular imposed on members of price-fixing cartels, have risen to very substantive levels in recent years.
The potato case constitutes yet another peek in enforcement activities against illegal behavior in the food retail sector: sweets, coffee and some years ago also sugar have been products subject to prominent investigations.
Cartel members not only face administrative penalties but also civil litigation. In the aftermath of governmental proceedings, it is an increasing tendency that customers more and more seek damages for buying overpriced products. In this respect, German competition law provides that affected companies can be admitted to participate in the administrative proceedings at the FCO. Pursuant to Section 54 ARC the FCO can confer, upon application, the status of a party on “persons whose interests will be substantially affected by the decision”.
Irrespective of the possibility to participate in administrative proceedings before the FCO, potentially affected companies can pursue private damage claims based on Section 33 Subsection 3 ARC. For the purpose of effective litigation, plaintiffs can rely on subsection 4 which declares binding on German courts the finding of illegal price-fixing identified by the Bundeskartellamt in a final decision. Thus, it is necessary for both alleged cartel participants as well as potential cartel victims to assess from the beginning the impact of the investigations in terms of subsequent damage proceedings.
Although the proceedings against German potato producers are at a very early stage and it is not possible to predict any outcome, it is recommendable to closely observe further developments.
Hungary: Energy drinks war
Bálint Halász and Bettina Kövecses
As a result of the so-called “chips tax”, a tax imposed on food and beverage products considered unhealthy, manufacturers and distributors of energy drinks encounter extreme competition on the Hungarian market. The “chips tax” introduced in 2011 made the market situation for the manufacturers of energy drinks harder and less profitable. Two players dominate the Hungarian market with approximately 45% of sales: Hell Energy (Hell), a Hungarian company, and Bomba Drink (Bomba, which means bomb in English) which has Austrian ties. Hell and Bomba have been aggressively fighting for customers. The introduction of chips tax opened a new front in this war: Bomba reduced the amount of caffeine in its drinks to 15 mg/100 ml to evade chips tax, as a result of this Hell launched series of comparative advertisements focusing on the amount of caffeine and emphasizing that while products of Hell is still to be considered as energy drinks other products containing less caffeine are rather soft drinks.
The era of health
In 2011 the so called “chips tax” act was introduced by Act 103 of 2011 (Chips Tax Act) imposing taxes on certain salty and sugared goods, energy drinks and soft drinks. The theory behind this new tax was on the one hand to raise state revenues and on the other hand to force Hungarian consumers to follow a healthier eating habit.
The tax affects the following consumer goods:
- soft drinks containing more than 8 g /100 ml of added sugar (customs tariff heading N°2009.2202);
- energy drinks containing methylxanthine (caffeine, theobromine or theophylline) in which the amount of taurine is more than 1 mg /100 ml, or the amount of caffeine is more than 15 mg/100 ml (customs tariff heading N°2009.2202);
- pre-packed sugared snacks, sweets, confectionary and ice cream containing more than 25 g of added sugar/100 g or chocolates containing more than 40 g of added sugar/100 g;
- ready to consume salted snacks containing more than 1 g/100g of salt;
- food seasonings containing more than 5 g /100 g of salt;
- flavored beer and/ or alcoholic beverages containing added sugar of more than 5 g /100 ml;
- jams containing added sugar with sugar content higher than 35 g/100g (there are some exceptions).
The imposed taxes are however quite high, in respect of beverages ranging from EUR 0,02/l to EUR 0,86/l, meanwhile regards other goods it is between EUR 0,34/kg to EUR 0,86/kg. Certain provisions of the Chips Tax Act had been already amended as manufacturers are in a constant try to find the loopholes in the system. Currently EUR 0,86/l tax must be paid for energy drinks containing 1 mg /100 ml taurine, which means that the tax is almost 20% of the average final price. (Note that the applicable rates are set in Hungarian forints therefore the above Euro rates are subject to change of the EUR-HUF exchange rate.)
In the name of consumer protection
One of the main purposes of the Chips Tax Act was to guide and educate consumers to choose healthier goods. The Hungarian Authority for Consumer Protection (NFH) however has received several anonymous complaints about certain products that do not live up to the expectation of an energy drink, namely they do not enhance concentration or fight fatigue. The authority has not published names of products concerned but it is likely that complaints addressed the product of Bomba (2.5 dl) which contains a reduced amount of caffeine (15 mg/100 ml).
To avoid the possible confusion of consumers the NFH advised the shops and markets to accompany these drinks with a notice clearly stating that these are not energy drinks, and also to remove them from shelves for energy drinks. These measures are likely to result in a decline of less efficient drinks for example Bomba.
Neither Hungarian statutory law, nor official food safety manuals contain a proper definition of “energy drinks”. The Chips Tax Act in fact contains the description of energy drinks from a taxation perspective when it states that chips tax must be paid after the sale of certain drinks that contain more than 1 mg /100 ml taurine or more than 15 mg/100 ml caffeine. The NFH’s interpretation suggests that if a product is not subject to chips tax then, according to the aforementioned limits, it cannot be considered an energy drink, and thus should not be labeled as such and shall be separated from other energy drinks in shops. Usually the NFH imposes such obligation if a product has or is likely to have dangerous effects, and not as a result that it is less unhealthy. The NFH explained that the interest of consumers shall also be protected against this type of confusion.
Even though the complaints filed with the NFH are anonymous, according to press coverage, it is likely that these can be associated with competitors of Bomba which are trying to ride the wave of possible confusion of consumers. Recent advertisements of Hell Energy have specifically drawn the attention of the public to the fact that an energy drink, such as Hell, shall contain at least 32 m/100 ml caffeine. The advertisement also compares Bomba to a regular bottle of Coke stressing that the level of caffeine in these products are almost on the same level. As far as confusion of consumers are concerned, it is worth mentioning that Bomba’s label contains that it is a “caffeinated beverage” so Bomba does not qualify itself as an energy drink.
It is likely that finally a judicial review will make it clear whether the approach of the consumer protection agency is justified, so soft drinks giving less “push”, such as a medium strength coffee, cannot be displayed among, and marketed as energy drinks.
Tough decisions ahead
As a result of the chips tax energy drink manufacturers and distributors are forced to decide whether or not to decrease the level of caffeine or other “unhealthy” ingredients in their products to evade the chips tax. However if they decide to do so then they may face that their products cannot be marketed as energy drinks. This may result in a decrease of sales and also trigger need for reevaluation of their brands.
The Netherlands: No "fat tax" in the Netherlands
In recent years, the so-called "fat tax" has become increasingly popular among the member states of the European Union ("EU"). A fat tax is a tax or surcharge that is placed upon fattening food and/or beverages. The general aim of a fat tax is to discourage unhealthy diets and offset the economic costs of obesity.
European food industry workers and manufacturers, represented by the European Federation of Food, Agriculture and Tourism Trade Unions ("EFFAT"), and FoodDrinkEurope respectively, have recently opposed, by means of a joint position , the introduction of any forms of fat taxes on foods by the governments of different EU member states, urging the EU member states to focus on broader measures to encourage responsible eating habits and positive behavioural change among consumers in the EU.
In that regard, the Netherlands has carefully considered any commitment to the introduction of such a tax, taking into account the recent experience undertaken by Denmark with regard to imposing a "fat tax".
In October 2011, Denmark introduced a "fat tax" by targeting foods containing more than 2,3% saturated fat, including dairy produce, meat and processed foods. However, in November 2012, the Danish Tax Ministry announced it would abolish the "fat tax", stating that it failed to change the eating habits of Danish inhabitants, having opposite effects such as inflation of food prices, increase of cross border trading and high risk of loss of Danish jobs.
In the Netherlands, the possibility of a "fat tax" was first raised at the session of the Senate with regard to the Tax Plan 2012 on December 13, 2011. During the session, the State Secretary of the Ministry of Finance (hereafter "the Secretary") made a pledge, in view of further developing a possible tax burden shift from income tax to VAT, to take into account a possible increase of VAT with regard to certain harmful goodies such as fat.
In his letter of March 20, 2013 to the Senate of the Netherlands, the Secretary informed the Senate with regard to this pending fiscal pledge and submitted its final conclusion related to the possibility of introducing an increase of VAT for fats.
In that regard, the Secretary started by referring to the enacted Act on the elaboration of fiscal measures regarding the Budget Agreement of 2013 (hereafter "the Act"). According to the Act, the Secretary emphasized that it has been decided to solely proceed with an increase of the general VAT rate that is (partially) to serve as a basis for a reduction of the income tax in the Netherlands.
The Secretary further elaborated that these fats (being part of finished products) are already covered by the VAT rate applicable to the finished products. The Secretary explained that a possible increase of the VAT rate to the fats would involve the case where the finished products (encompassing the fats) were to attract a reduced VAT rate (for example in case of foodstuffs). In such cases, the applicable reduced VAT rate of the finished products would have to be raised to the general (i.e. higher) VAT rate in the Netherlands. In that regard, the Secretary pointed out that such a process would result in a troublesome distinction policy towards different food products and would pose a high burden on the authorities with regard to the implementation and controlling process thereof.
Furthermore, the Secretary made a reference to the unsuccessful attempt of the "fat tax" introduced in Denmark as described above. Taking all the mentioned aspects into account, the Secretary concluded that it is not desirable (or even possible) to introduce a so-called "fat tax" in the Netherlands. Therefore, any possibility of introducing a "fat tax" in the Netherlands should be disregarded in the near future.
Although the Netherlands has refrained from introducing a "fat tax", support for such a tax is gaining momentum in several EU member states, thus raising the question whether the EU should consider stepping in so as to adopt an EU-wide "fat tax" scheme that is to be applied in all EU member states.
Poland: Fast food free education
Krzysztof Kossakowski & Marta Koremba
In February 2013 the Polish Parliament began works on an amendment to the Act on Food and Nutrition Security which aims at reducing the percentage of obesity among Polish students aged 7-19.
Recent surveys conducted by the World Health Organization (“WHO”) show that almost 30 percent of Polish 11 year-old students are affected by obesity, and the number is constantly growing. The surveys identified two major causes of obesity among students, i.e. (i) consumption of unhealthy food (such as fast foods), which is sold inter alia in school canteens, cafeterias and shops, and (ii) lack of physical activity.
The upcoming amendment intends to reduce the impact of the first factor by prohibiting the sales, presentation and advertising of unhealthy food in schools. The prohibition concerns food and beverages containing ingredients recognized as “unhealthy”, including fats, unsaturated fatty acids and isomers of fatty acids, sugar and sodium. As a result, it would be banned to sell in school canteens, cafeterias and shops food such as: confection, margarine based products, various fast food, crisps, sweet beverages (both carbonated and non-carbonated) and energizers.
New provisions should also strengthen the supervision of school’s principals over school canteens, cafeterias and shops (in Poland such canteens, cafeterias and shops are always run by independent entrepreneurs). In case of breach of the prohibition, the school’s principal will be entitled to terminate the contract with the person or entity running the shop. Such termination will be immediately effective, despite any termination period stipulated in the contract, and will not require any compensation from the school. Furthermore, the sales and advertising of banned food in school will be subject to an administrative penalty in the amount not exceeding ca. EUR 120.000, imposed by the Sanitary Inspection.
As the vast majority of the assortment sold in school canteens, cafeterias and shops falls within the scope of banned food, the upcoming amendment is expected to have a major impact on the performance of school shops. Moreover, entities running school shops in over 30 000 Polish schools capture an important share in the whole food and beverage market. Consequently, the amendment may also be seen as a potential risk for the producers and wholesalers of confection, fast food and sweet beverages.
Nevertheless, the amendment is consistent with the views presented by WHO and EU which have already urged the producers of snacks and food in general to limit the usage of unhealthy ingredients as used in the past. Some local self-governments have already taken the same approach. The municipality of the capital city of Warsaw has recently launched a campaign advertising healthy nutrition in schools. Considering strong social support, the amendment is likely to pass through the parliament.
The Netherlands: Dutch Patent Court takes an advance on Tomato II Case by deciding on purple radish sprouts
In the February 2011 edition of our Food Law Digest, the so-called 'Broccoli' and 'Tomato' cases were discussed before the Enlarged Board of Appeal of the European Patent Office (EBA). It was explained here on 9 December 2010 that the EBA had announced that no patents can be obtained for plant breeding methods consisting of sexual crossing of plants and subsequent selection, even if technical steps were involved in the breeding method. According to the EBA, if the technical steps merely served to perform the breeding process, such process would still be considered an 'essential biological process' as excluded from patentability under Article 53 (b) of the European Patent Convention (EPC).
The decision of the EBA was eagerly anticipated within the seed and breeding industries, but after the decision was rendered, the exclusion of Article 53 (b) EPC still kept stirring up these industries. In particular, a lot of questions remained both for individual cases (does a given technical step merely serve to enable or assist crossing or selection, or does this step itself introduce a trait into the genome or modify a trait in the genome of the plant produced, which would make the process patentable after all?) as well as questions of a more general and legal nature.
An important debate still remained on whether or not the product of an 'essential biological process', such as a plant or plant material, could also not be patented because of the exclusion of Article 53 (b) EPC. As the 'Broccoli' and 'Tomato' cases were referred back to the Technical Board of Appeal (TBA), this very question came up in the 'Tomato' case. The TBA decided to yet again refer questions to the EBA in order to decide whether the exclusion of Article 53(b) EPC can be held against certain plants or plant materials, in particular where these plants are the result of an essential biological process.
The 'Tomato II' case is still pending before the EBA under number G 2/12, but it is uncertain if a decision will ever be rendered by the EBA. The opponent in this particular case has withdrawn himself from the proceedings and it is unsure if the EBA shall decide if the proceedings will continue regardless. In any case, there certainly is no lack of interest within industry as shown by the impressive number of 22 amicus curiae briefs that were filed by or on behalf of interested parties.
Meanwhile, in the Netherlands, a country with a very rich tradition in plant breeding, similar questions as asked in G 2/12 have come up in patent proceedings before the Patent Court in The Hague. This particular case concerned a nullity action against a patent claiming radishes with an increased level of anthocyanins, as well as a counterclaim for infringement. Anthocyanins are pigments that provide the radish sprouts with purple colouring and are suggested to have beneficial health effects. The claimed radish was obtainable by screening and selecting the radishes for their ability to produce sprouts with at least some purple colouring. Such a claim directed at a product, which is defined by the process by which it can be obtained, is called a product-by-process claim.
The alleged infringer (Cresco) and the patentee (Taste of Nature) agreed that the method by which the claimed radishes can be obtained was an essentially biological process within the meaning of Article 53 (b) EPC and that there were no technical steps that interfered with this process. Therefore, one of the questions that needed to be answered was if a product-by-process claim is excluded from patentability, where the process is essentially biological (which one at a good game of Scrabble could call a product-by-an-essentially-biological-process claim).
Notwithstanding G 2/12 being still pending, the outcome of which would most likely be highly relevant to the underlying case, the parties requested the court to render judgment and not stay with the proceedings. Not afraid to decide on difficult legal issues and taking into account the uncertainties of when or even whether at all a decision will be rendered in G 2/12, the court did answer the request and ruled on the question at hand.
In its judgment of 8 May 2013 (which can be found in English translation here), the court took the position that the exclusion from Article 53 (b) EPC does not apply to product-by-process claims, even where the process is essentially biological. This means that if the product itself fulfils the criteria for patentability, the fact that the known process to obtain the product is essentially biological does not stand in the way of a valid patent claim.
The court considered that Article 53 (b) EPC does not refer to products, but only to processes, and held that the fact that in this case the claimed products are partly defined on the basis of the production process does not make a difference. Cresco's plea that the granting of patents for plants that are obtainable by essentially biological processes would lead to an ‘erosion’ of the exclusion of Article 53 (b) does not hold according to the court. The court summed up various aspects of product-by-process claims, which make these claims substantially different from mere process claims. An important difference is for instance that product-by-process claims can only be granted if the product itself is novel and has an inventive step. Therefore, certainly not every method claim can be reformulated into a product-by-process claim in order to circumvent the exclusion of Article 53 (b) EPC.
The court has rendered a judgment in which it expressed a firm and clear view, which for the moment acknowledges the patentability of product-by-an-essentially-biological-process claims in the Netherlands (European patents only, the Dutch Patent Act is clearly different in this respect). Patentees should therefore not fear that such claims are likely to be prone to annulment.
However, the fact that the Patent Court in these proceedings on the merits seemed to hold such a strong opinion did come somewhat as a surprise. Earlier this year, in preliminary relief proceedings between the same parties concerning the same patent, a single judge of the Patent Court in The Hague had denied an injunction (PI) against Cresco on the very basis that the product-by-process claims were not patentable because of the exclusion of Article 53 (b) EPC. Taste of Nature lodged an appeal against this decision.
In the proceedings on the merits, the question of infringement is yet to be answered, but on appeal in the PI action a judgment was rendered on 28 May 2013. The Court of Appeal held that in this PI action it is bound by the court's assessment of Article 53 (b) EPC in the proceedings on the merits. Therefore, the Court of Appeal did assume that the patent is valid and also came to a finding of infringement, granting an injunction against Cresco.
Still, it can by no means be excluded that an appeal will also be filed in the proceedings on the merits. Even if G 12/2 would be quietly abandoned in the end, it may very well be that higher Dutch courts will get a chance to shed light on this highly debated topic.
Poland: Polish Vodka/Polska Wodka - What does it mean?
There are not many Polish products that have made a worldwide carrier more spectacular than Polish Vodka (which is spelled Wódka in Polish and is the diminutive of the word “woda” – water). Vodka (its manufacturing process and geographical indication “POLISH VODKA/POLSKA WÓDKA”), a Polish national alcoholic beverage is subject to legal protection by the Act of 18 November 2006 on Manufacturing of Spirit Liquors and Registration and Protection of Geographical Indications of Spirit Liquors.
Based on an amendment of 13 January 2013 to this act, the legal definition of Polish Vodka has been changed. According to the new provision the name Polish Vodka may be used only for vodka:
- with no other supplements than water, or flavor vodka with a dominant flavor different than the flavor of products used to produce the vodka and level of sugar not higher than 100 gram per one liter of pure alcohol;
- based on ethyl alcohol of agricultural origin and produced from rye, wheat, barley, oats, triticale or potatoes grown on the territory of Poland;
- produced entirely on the territory of Poland; and
- which may be mellowed in the storage to acquire special organoleptic proprieties.
The most significant change consists in the limitation of grains used to produce Polish Vodka which have to be traditionally grown on the territory of Poland. Furthermore, the new definition specifically indicates that all stages of the production of Polish Vodka must take place on the territory of Poland (the previous definition included only producing and bottling on the territory of Poland which theoretically allowed conducting parts of the production in other countries).
No self-respecting producer of Polish Vodka would produce vodka contrary to the definition above. Nonetheless it is always wise to look at the label and check whether you are drinking a genuine Polish Vodka. So always remember, no original Polish Vodka is made of rice or corn!
Spain: The Spanish Competition Authority hinders Government measures in favour of food processors
One of the historical main problems in the Spanish food sector has been the food processing industry’s remarkable weak position before the distribution sectors.
In order to attenuate the imbalance between food processors and distributors the Government has initiated steps in order to pass a law on the food supply chain.
According to the Draft Law, its objective is to improve the functioning and the cohesion of the food chain sector in order to increase the efficiency and the competiveness of the Spanish food sector while reducing the imbalance in the commercial relations amongst the different operators in the food value chain, within a framework of fair competition to the advantage not only of processors but also of consumers.
In this context, one of the measures planned by the Government in the Draft Law is the establishment of primary production costs. Accordingly, the price of products in commercial agreements between processors and distributors cannot be lower than the primary production cost. Furthermore, in those cases where there are signs of abuse of dominant position, the competent authority (to be established) will have the power to establish the primary production cost.
This measure has been strongly criticised by the Spanish Competition Authority (CNC), which considers that the above-mentioned measure would cause “a great damage to competition”.
The CNC views are that there will be a situation of price fixing derived from that law given the existence of primary production costs that no doubt will be used as a reference for the sales price, and the fact that there will be no option to negotiate below it.
Moreover, the CNC states that such a measure is neither justified nor proportionate and would go beyond the objective of preventing abuses by distributors.
With its report, the CNC’s stance clearly disregards the producers’ negotiation weakness. It must be said however that such position is consistent with its past actions, where it has repeatedly fined food processors which have established price fixing agreements between them as a reaction against distributors’ extremely high margins. It remains to be seen whether the Government will take into account the CNC’s negative assessment or will focus on the protection of food producers.
Such a legislative action will no doubt affect the European food chain given the importance of Spanish agricultural producers. A good question will be to assess the compatibility of such an action with European law and whether other producing countries may follow the lead.
UK: Plain packaging for cigarettes - Australia leads the way, but will others follow?
Katherine Stephens & Toby Bond
While Australia’s Tobacco Plain Packaging Act is the first of its kind, similar rules may be implemented in other jurisdictions before long – and there are even indications that plain packaging rules may be extended to other sectors. This Article first appeared in the April/May 2013 edition of World Trade Mark Review. Click here to view the full article in pdf format.
UK: Nespresso compatible coffee capsules do not infringe one of Nespresso's system patents
Audrey Horton Rachel Fetches & John Page
On 22 April 2013, Mr Justice Arnold held that Nespresso's patent EP 2 103 236 B1 (the "Patent") for an extraction system comprising a coffee machine and capsule for brewing hot beverages was invalid and if valid would not be infringed by the supply by Dualit of its compatible capsules (Nestec S.A., and others v. Dualit and others  EWHC 923 (Pat)). Arnold J held the patent invalid on the grounds that the patent could not claim priority to its priority application and was anticipated by the publication of that priority application as well as two intervening prior uses. Had the Patent been valid, Arnold J held that although Dualit's capsules were a "means essential" within the meaning of s.60(2) of the Patents Act 1977 (the "Act"), their use in the Nespresso coffee machines was not an infringement of the Patent.
The defendant, Dualit was a supplier and distributor of coffee capsules that were marketed as being compatible with Nespresso's coffee machines. Following Dualit's launch of a concession in the Harrods department store, Nespresso sued Dualit for contributory infringement of the Patent under section 60(2) of the Act on the basis that Dualit's supply of NX capsules to anyone other than a licensee or other person entitled to work the invention equated to supplying a means essential for putting the invention into effect.
There were a large number of issues raised by Dualit but the decision is interesting in that it was the first decision where the multifactorial test set out by Lord Neuberger in Schütz (UK) Limited v Werit (UK) Limited  UKSC 16 on the meaning of "making" within s.60(1) of the Act, was applied by the English Court. It was also of interest for the Judge's consideration of the meaning of means essential and staple commercial product.
Arnold J held that in the absence of any express restrictions placed on the purchaser, an owner of a Nespresso machine was impliedly licensed to acquire and use compatible capsules with their machine. Arnold J also stated that in his opinion, by consenting to the manufacture and sale of the Nespresso machine, Nespresso had exhausted their right under the Patent to use the machine in accordance with its function – to make coffee from capsules. Accordingly, Nespresso had exhausted their right to rely upon the Patent to control the source from which the owners of Nespresso coffee machines acquire capsules.
Arnold J held that Dualit's capsules constituted supply of a means relating to an essential element of the Patent and that the capsule contributed to the implementation of the teaching of the invention. This was in line with the approach adopted by the German court: that third parties should not be allowed to benefit from the invention by supplying means where the market for those means had been created by the invention. Arnold J noted that he preferred this approach to that taken by the Dutch Court.
One of Dualit's defences to infringement was that Nespresso-style coffee capsules were a staple commercial product within the meaning of section 60(3) of the Act. Arnold J held that such coffee capsules were not staple commercial products. To qualify as a staple commercial product, a product must ordinarily be one which is supplied commercially for a variety of uses; a coffee capsule had a limited use and was not a staple commercial product.
The final issue was whether Dualit's capsules were means suitable for putting the invention into effect, that is, whether a person who uses a Dualit capsule in a relevant Nespresso coffee machine thereby "makes" the system of claim 1 of the Patent. Arnold J went through the multifactorial test set out in Schutz v Werit and held that a consumer was not 'making' the system. Arnold J based his decision on his finding that the capsule was an entirely subsidiary part of the claimed system and that, in his opinion, the presence or absence of the capsule did not affect the functioning or economic value of the machine. He held that both the capsule and the machine had an independent commercial existence. Furthermore, as the capsules were consumables, the purchaser of a coffee machine would assume there was a freedom of choice when sourcing capsules for use in that machine. Although he had held that the capsule was a means essential, Mr Justice Arnold stated that it did not embody the inventive concept of the Patent, which was about how the machine operated. Lastly, Arnold J noted that the owner of the machine was not, by using the machine to make a coffee, doing something that would ordinarily be described as repairing or making a product. On that basis, owners of the Nespresso machines did not make the claimed system when they purchased the Dualit capsules.
UK: Extended Passing Off in the UK: “Greek Yoghurt” v “Greek style Yoghurt”
Fage, the Greek manufacturer of the famous TOTAL Greek yoghurt brand, has succeeded at the full trial of its High Court 'extended passing off' action against US company Chobani. Fage had been selling their TOTAL brand Greek yoghurt in the UK since the mid-1980s and had 95% of the British market for Greek yoghurt. In 2012 Chobani began to market and sell its yoghurt, made in the USA, as ‘Greek yoghurt’ in the UK. Fage initially applied for and was granted a preliminary injunction pending trial.
At trial the Judge summarised the main factual issue to be determined: whether the phrase 'Greek yoghurt' had, when used in the UK marketplace, sufficient reputation and goodwill denoting a distinctive type of yoghurt made in Greece, so that the use of the same phrase to describe yoghurt not made in Greece, however otherwise similar, would involve a damaging misrepresentation sufficient to support a claim in passing off.
The Judge held that substantial goodwill was attached to the use of the phrase ‘Greek yoghurt’, in the sense that it denoted to a significant section of the public a sufficiently defined and distinctive class of goods. Where, as here, a trade name was descriptive of geographical origin, 'something more' was required to establish goodwill. The evidence showed that a substantial proportion of the actual or potential buyers of 'Greek yoghurt' perceived it as 'in some way special', in the same way that the names 'Champagne' or 'Swiss chocolate' have a pulling power that draws in custom, so that reputation and goodwill can be said to be enjoyed by all producers within the class which use that name for their product. As noted in the vodka / vodkat case it is not necessary that the 'something more' consists of a reputation for higher quality or cachet. Similarly, to demonstrate goodwill it is not necessary to show the consumer knows the manufacturing processes typical of the product in question.
The Judge considered that the best of evidence of such goodwill was
- the existence of a uniformly observed unwritten industry-wide labelling convention adhered to by yoghurt producers for over 25 years in the UK that yoghurt labelled ‘Greek yoghurt’ (as opposed to 'Greek style yoghurt') when offered for sale in the UK was yoghurt made in Greece which had been rendered thick and creamy by a particular ‘straining’ method,
- the unanimity of trade witnesses on that point, and
- that Greek yoghurt commanded a premium price by comparison with that of 'Greek style yoghurts', irrespective of any other brand name used.
The Judge criticised ambiguities in Chobani’s survey questions, but considered that the survey results were not inconsistent with a conclusion that the labelling convention had led to a widespread belief among buyers of Greek yoghurt both that it came from Greece and that this provenance mattered to them. Therefore, to describe yoghurt not made in Greece as ‘Greek yoghurt’ was a material misrepresentation.
The very small print used on the rear of Chobani’s pots to indicate that it was manufactured in the USA was not sufficient to ensure that a substantial part of the yoghurt buying public would not be misled into believing that the product came from Greece. In addition, there was evidence that Chobani had been aware that it would be taking a serious risk of misleading the UK public by describing its yoghurt as ‘Greek yoghurt’.
As the introduction into the market of Greek yoghurt made in the USA would erode the distinctiveness in the description ‘Greek yoghurt’ as meaning yoghurt made in Greece, the requirement to show actual or threatened damage was satisfied.
For these reasons the Judge granted a permanent injunction against Chobani to restrain it from passing off its American made yoghurt in the UK under the description ‘Greek yoghurt’.
In any dispute involving ‘extended passing off’ the assessment of evidence and findings of fact are the key to success. It is interesting to note that the industry-wide convention that ‘Greek yoghurt’ means strained yoghurt of Greek origin was found on the evidence to be unique to the UK market. For example both parties sell as ‘Greek yoghurt’ in the USA product which they make in the USA rather than Greece. The perception of UK consumers as to how they regarded the geographical term ‘Greek yoghurt’ was critical. On the particular facts the tort of extended passing off was established, allowing the protection of a class of goods (typically food or beverages) with specific attributes, as developed in the line of cases such as J Bollinger SA v Costa Brava Wine Co Ltd (No. 3)  in relation to ‘champagne’, Chocosuisse Union des Fabricants Suisse de Chocolat v Cadbury Ltd  in relation to ‘Swiss chocolate’ and Diageo North America Inc v Intercontinental Brands  in relation to ‘vodka’.
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