Daimler Chrysler successful as Turin Court upholds community trade mark and design for Smart car

Last year, DaimlerChrysler obtained a preliminary injunction from the Court of Frankfurt preventing the Beijing manufacturer, Shuanghuan cars, from marketing and selling a car which was almost an identical copy of the original DaimlerChrysler Smart car, in the Germany territory. The decision was based on the grounds that the model was a counterfeiting of the well known Smart car model. As a consequence, access was denied to the Chinese manufacturer to the Frankfurt Motor show in September 2007. In proceedings No. 29292/2007 in a preliminary decision of 16 November 2007, later confirmed with a decision of 14 March 2008 following the issuance of a report by a court appointed expert, the Italian courts were asked to examine almost the same set of facts. In the Italian scenario the Chinese manufacturer had, through its two Italian importers, introduced and was attempting to sell two almost identical versions of the same ‘Smart clone’ car marketed under the names ‘Noble’ and ‘Bubble’.

The Italian importers of the Chinese Noble/Bubble cars challenged the validity of DaimlerChrysler’s international design registrations covering the shape of the Smart car before the Milan Court.

DaimlerChrysler responded by applying for a preliminary injunction before the Turin Court with a view to obtaining seizure of the imported products and to halting the marketing and sales. The plaintiff also requested sanctions for each further sale in breach of the order as well as the publication of the decision in the daily newspapers. The defendants argued that DaimlerChrysler’s Community trade mark and registered Community design covering the shape of the Smart car were invalid.

In an ex-parte hearing the IP Division of the District Court of Turin granted DaimlerChrysler’s requests and at the inter-partes hearing confirmed the order.

In its capacity as Community Trade Mark and Design Court, the Court reiterated the differences in the test assessment of infringement when considering design rights and trade mark rights. The Court indicated that under Community Design Law, a design must produce a different impression on the “informed user” to avoid infringement, while in the case of a Community trade mark the law requires that the assessment of likelihood of confusion between trade marks is made taking into consideration the “average consumer”.

On the validity of the Community design, the Turin Court held that the Chinese Noble car, reproducing amongst others the bi-colour effect infringed the registered Smart design as the car in question did not produce a different overall impression on the informed user.

In the case of the Bubble model, on the other hand, in the absence of the two-colour combination effect, the court held the car did have individual character and do not constitute infringement of the Smart design particularly as the overall impression conveyed by the Chinese design differed from that of the original Smart car.

With regard to DaimlerChrysler’s Community trade mark however covering the shape of the Smart car, the Court considered the trade mark to be valid, stating that the value of the Smart car was not exclusively due to its shape, but also due to other elements which gave substantial value to the Smart, such as its additional technical and design characteristics.

As a consequence, the Court came to the overall conclusion that both Chinese car models infringed DaimlerChrysler’s Community trade mark for the Smart, due to the existence of a likelihood of confusion, including a risk of association, as to the origin of the cars, for the relevant average consumer.

The legal battles in this field are not yet at an end however. According to Automotive News Europe, the Shuanghuan minicar might go on sale in Europe this summer as lawyers from the Daimler Group and the Chinese cars’ European importer Martin Motors come close to settling. The fact that Martin Motors launched counter-suits seeking immense compensation for damages for lost sales, while the Milan Court has rejected in December 2008 BMW’s claim for infringing its BMX X5 car model against Martin Motors (also distributing a Shuanghuan BMX clone) ruling that consumers would not mistake the Chinese clone for a BMW product (decision not yet published), would have put additional pressure on Daimler who may see further challenges in the courts in the future.