Nestlé retires from court with dilution victory

The Swiss Federal Supreme Court has extended the protection afforded to the NESTLÉ trademark against use in relation to medical and social services. The court ruled that the use of the name Nestlé in relation to a nursing home by a party unrelated to Société des Produits Nestlé SA created a risk of dilution of the famous mark.

Nestlé is an internationally known supplier of foodstuffs that is also active in the fields of dietetic food, pharmaceuticals, cosmetics and related services. It is not, however, involved in medical and social care for elderly people.

One of Nestlé's first factories was established in the Swiss village of Bercher in 1880 and operated until 1940. The real estate on which the factory operated was later divided into lots. One of these lots was locally known as 'Clos Nestlé' (meaning 'the Nestlé enclosure'). The owner of another of these lots subsequently built a retirement home under the name Clos Nestlé. In 1997 a company was founded under the name Boas-EMS Clos Nestlé SA with the purpose of running a nursing home called Etablissement médico-social Clos Nestlé. Nestlé initiated a lawsuit seeking to enjoin Boas-EMS from using Nestlé in its company name and its nursing home's name. The first instance court found in Nestlé's favour.

On appeal, the Supreme Court affirmed. It ruled that NESTLÉ is a famous trademark afforded protection under Article 15 of the Swiss Trademarks Law against use on unrelated goods or services where there is a risk of dilution. The court held that - in contrast with well-known trademarks - famous marks are not only broadly known but also enjoy a high reputation with a majority of the Swiss public. It reached this conclusion even though Nestlé seems to have submitted insufficient evidence of (i) its name's fame, and (ii) the fact that its trademark is synonymous with high quality and prestige. The court accepted these facts as being 'generally known', notwithstanding some public criticism against Nestlé in connection with the distribution of baby food in developing countries.

It seems obvious that the court considered the fact that the area close to which the nursing home had been built was locally known as 'Clos Nestlé' to be insufficient justification for using the famous name and mark in the nursing home's name.

This judgment confirms that the concept of famous trademarks not only applies to luxury goods but also to ordinary consumer products, at least if they are of superior quality and enjoy a great prestige. The judgment also demonstrates that Swiss courts are free to base judgments on generally known facts even if the parties fail to submit appropriate evidence.

David J Meisser and Esther M Jost, Meisser & Partners, Klosters