Higher Regional Court Frankfurt am Main “Exzenterzähne II” (“Eccentric Teeth II”)

The Higher Regional Court Frankfurt am Main ruled that the unique selling point (USP) or “individual character” of a product that serves as an indication of origin may lose that function if the manufacturer of the original product has previously allowed a competitor to adopt that feature into one of its own products. However, the function as indication of origin will only be lost or diminished if the competing product that adopts that special feature is present on the market on a large scale.

Background

The applicant, a company based in Austria, manufactures and sells plug-in technology products. These products are used to attach plastic pipes and cables for electrical installations. The unique feature of the applicant’s plug-in technology is that the products can be attached in a drilled hole without further aid. This is possible due to uniquely shaped expansion elements – called “eccentric teeth”. The product was protected by a patent until 2004.

Through an agreement with a competitor the applicant had allowed that competitor to use parts of the applicant’s plug-in technology in its own product. This competitor then implemented that technology in its new product which it started selling in Germany.

The defendant, formerly the applicant’s sales partner in Germany, began manufacturing its own products using the same plug-in technology in September 2009 and started to sell the product in 2010.

The applicant requested the immediate termination of production and distribution of the defendant’s products that allegedly contain its own proprietary technology as previously described.

Decision

The court found that the plug-in technology of the applicant’s product has USP function and constitutes its “individual character” due to unique design features and thus functions as an indication of origin. A comparison with plug-in technologies used in products of other manufacturers shows that the unique design of the applicant’s technology does not stem exclusively from its technical purpose and is thus capable of indicating the commercial origin of the product.

According to the Higher Regional Court Frankfurt am Main, the fact that the applicant had previously allowed a competitor to use its unique design in a new product with a highly similar function and purpose could subsequently lead to a limitation of such USP’s function as indication of origin. As a result the public would then no longer be able to clearly distinguish between the original manufacturer’s product and a new product using that same technology. In this scenario, the original manufacturer’s ability to secure injunctive relief against competitors using that technology would in consequence be weakened.

In the present case, however, the court found that the market presence of the product of the competitor that had previously been allowed to use the specific plug-in technology by the applicant was not sufficient to diminish the function as an indication of origin of that technology towards the applicant.

The court therefore came to the conclusion that the function as indication of origin of the applicant’s plug-in technology was not diminished and that the adoption of this technology by the defendant was misleading as to the origin of the product. Therefore the court granted the applicant the requested injunction.

Comment

The ruling of the court clarifies that if a manufacturer allows a competitor to adopt features of its product that constitute the individual character or USP of the product, this may weaken the function of those features as an indication of origin, and thus limit the manufacturer’s ability to secure injunctive relief against other competitors. However, the market presence of the competitor’s product can be a deciding factor in this finding. Companies should thus carefully consider this question before allowing others to use features that are unique to their products.

However, there is still a need for judicial clarification on the extent to which the relevant public must have been made aware of the manufacturer’s grant of use to third parties in order for the product feature to lose its function as indication of origin.

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