Nespresso dispute still brewing

Switzerland

In the dispute between Nestlé and Swiss retailer Denner over the sale of capsules compatible with Nestlé's Nespresso machines, the Federal Supreme Court has annulled the decision of the Commercial Court of St Gallen on procedural grounds and sent the case back to it (4A_178/2011).

The Commercial Court of St Gallen, in preliminary injunction proceedings, had denied Nestlé's request for an injunction preventing Denner from selling compatible capsules. The court held that Nestlé had failed to show that it was technically possible to produce alternative solutions without incurring substantial disadvantages.


                         Denner's capsules                                              Nestlé's Nespresso capsule mark

The Federal Supreme Court rebuked the lower court for having come to this conclusion without the aid of a court-appointed technical expert. According to the Federal Supreme Court, this was a violation of Nestlé's due process rights (in particular, the right to be heard or 'rechtliches Gehör'). The case was sent back to the Commercial Court of St Gallen, which will now have to find an independent expert. The expert will file an opinion as to whether there are alternative capsule shapes that are compatible with the Nespresso system and are not clearly inferior to Nestlé's trademarked shape.

This process is expected to take at least six months - which is why the St Gallen court probably tried to do without an expert opinion. In preliminary injunction proceedings, this approach has some advantages, as the expert opinion could be obtained during the proceedings on the merits. There is a trade-off between speed and accuracy, but the Federal Supreme Court  - not for the first time - favoured accuracy over speed.

The written grounds of the decision have not been published yet. Until then, Denner can continue to sell its capsules.

For a background discussion of the case please see "Nestlé enforces 3D Nespresso capsule mark" and "Nespresso suit runs out of steam".

Mark Schweizer, meyerlustenberger, Zurich  

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