“Repair Clause for Motor Vehicle Parts” Not Adopted by Appellate Court: Court Affirmed DEPO's Infringement on Mercedes-Benz’s Car Light

Date: 19 July 2022

In July 2022, the Intellectual Property and Commercial court rendered a second-instance judgment for the case inducing amendment of “Repair Clause for Motor Vehicle Parts”, in which the court upheld the judgement of the first instance of DEPO's Infringement on Mercedes-Benz’s car light but reduced the compensation which DEPO has to pay from NTD 30 million (≈USD 1,002,623) to NTD 18 million (≈USD 601,654).

In 2017, DEPO, a car light piece manufacturer in Taiwan, was accused by Daimler AG, the owner of the famous Mercedes-Benz, claiming that the head light design produced by DEPO infringed the design patent owned by Daimler. In the first instance, the court held that DEPO infringed the design patent for appearance and ordered DEPO to pay NTD 30 million (≈USD 1,002,623) in compensation. DEPO was also demanded to recall the products and destroy all infringing products and manufacturing molds. During the first instance of this case, it even led to the amendment of “Repair Clause for Motor Vehicle Parts” which is still under examination now in Legislative Yuan1.

The court of second instance held that because Mercedes-Benz which held only 6% to 8% of market share in the main market of automobile sales was not monopolistic or dominant, one could not conclude that it violated the regulations related to prohibition on monopolistic enterprise stipulated in Paragraph 1 and 4, Article 9 of the Taiwan Fair Trade Act. Also, Mercedes-Benz did not hold high market share in the main market as mentioned, and the patentee did not have obligation to authorize others to exploit its patent. Therefore, one could not conclude that Mercedes-Benz’s refusing to authorize DEPO violated Paragraph 2, Article 20 of the Taiwan Fair Trade Act “treating another enterprise discriminatively without justification” and Article 25 of the Taiwan Fair Trade Act “any deceptive or obviously unfair conduct that is able to affect trading order.”

In defense, DEPO claimed that VDA (Verband der Automobilindustrie, the German Association of the Automotive Industry) made an official statement in 2003 promising that the German automotive industry would not compete market share with independent car parts suppliers by utilizing design protection laws. However, the appellate court found such statement not legally binding. It was hard to conclude that the above statement was permanently and globally legally binding.

The court of second instance held that the common features shared by the product in dispute and the patent in dispute were all located in the parts which could draw attention of consumers easily when observed and compared as a whole. The different features were located in the parts which could not draw attention of consumers easily or the difference was too minor to affect the whole visual effect. Thus, the appearance of the product in dispute and the patent in dispute is similar. In conclusion, the product infringed the patent in dispute.

Patent in dispute Product in dispute

 

 

Wisdom Suggested Strategies

After the ruling of first instance was announced, the manufacturers of auto parts in Taiwan suggested the amendment of Patent Act to the Legislators, and the Legislators proposed the introduction of a repair clause on 24 April 2020 to the Legislative Yuan. The amendment is still under examination now.

In fact, the IPO expressed that it would not actively initiate the amendments to the Taiwan Patent Act regarding repair clause. However, since legislators have passed the draft amendment on the Taiwan Patent Act to the Legislative Yuan, the amendment will be reviewed by the Economic Committee of the Legislative Yuan. The IPO would only decide its stance and respond if the Legislative Yuan invites the IPO to voice its opinions.

If the repair clause for motor vehicle parts is introduced in Taiwan, it will certainly have a significant impact on the rights of the design patentee. It will be interesting to see how the repair clause develops in Taiwan. Wisdom will be following up on this issue.

For more information on this topic or if you have any questions, please contact Wisdom by email (info@wisdomlaw.com.tw) or phone (+886-2-2508-2466 ext. 220). Click here to subscribe to our Wisdom News and stay updated on the latest intellectual property developments.

[1] For the introduction to the amendment, please refer to Volume 27 of Wisdom News & Insights:” Taiwan Patent Updates – Legislators Propose to Introduce Repair Clause for Motor Vehicle Parts in the Taiwan Patent Act” (https://www.wisdomlaw.com.tw/m/405-1596-96703,c12318.php?Lang=en)

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