In a passionate dispute over shopping trolleys locks, Valencia Commercial Court No. 2 has found against a supplier who had been displaced at one of Spain’s largest retail chains (Judgment 134/19 of May 6th, 2019 in PO764/2017).
When this happens, emotions tend to run high and the row often ends up in court. The shunned supplier frequently alleges infringement of a utility model together with slavish imitation giving rise to unfair competition. A driving force for such litigiousness is the fact that utility models are not subject to any substantive examination in most European countries, for instance, in Spain and Germany. There is no bar to obtaining an exclusive right based on something which may be lacking in merit. This effectively shifts the State’s functions onto the shoulders of competitors, who are saddled with the burden of proving that the title is invalid. It might be fairer if that burden were shifted to the title-holder who, after all, has obtained an exclusive right based on nothing more than his or her own say-so.
The justification for this system is that it provides SME’s with a route to obtaining fast-track protection for inventions at a reasonable cost, thereby giving them access to the patent system and encouraging innovation. However, SME’s competitors are usually other SME’s who may be unjustifiably precluded from carrying out further developments simply because they cannot bear the cost of litigation. It is only fair to point out however that the system does have some checks and balances. The patent office can carry out a prior art search upon request and in fact this has now become mandatory in Spain before enforcement proceedings can be brought. Unlike the case of patents, a German infringement court can consider validity as a defence – an exception to bifurcation. Post-grant opposition is also available in both countries, which can be undertaken for a fraction of the cost of court proceedings.
In the Valencia case the Court found that the new shopping trolley locks did not infringe the utility model which was described by the Court as a simple alternative lacking in any inventive merit. Whether the lock was a slavish imitation or not was irrelevant from the point of view of unfair competition, as imitation per se is expressly permitted by the Spanish Unfair Competition Act. The Court had not been shown any evidence that the imitation had interfered with the normal workings of the marketplace such as causing a risk of association with the original coin-lock in the mind of the average buyer.
This decision applies settled case law which upholds the principle of free imitation. This comes as a surprise to many people who somehow imagine that their “intellectual property” is automatically protected. The whole point of the free market economy is that the public be offered a range of similar products. The granting of patents and other exclusive rights is in fact an exception to this general rule which is only justified because it encourages innovation.Author: Colm Ahern