In September 2011, Nespresso and parent company Nestlé took action against Swiss coffee pod company Ethical Coffee, a competitor that sells similarly shaped capsules in France and Switzerland. Nestlé SA entity Nespresso USA Inc. illegally requires coffee maker buyers to use expensive Nespresso capsules to keep their warranties in place, says a consumer in a new class action lawsuit filed in federal court in New York. Trademark law refers to a branch of intellectual property law that distinguishes between different goods and services through the independent use of brand names, slogans, logos or other non-traditional marks by sellers. The term trademark can be described as a sign capable of distinguishing the goods or services of one company from those of other companies. A trademark is an identifying mark that provides legal protection to trademarks. The court questioned whether Nespresso could maintain its argument that ECC had not only infringed its patent right on the soon-to-expire coffee capsules, but that ECC had infringed Nespresso`s registered shape mark because of the similarity in shape and size of the coffee pods. The dispute was based on the legal bases of trademark law and patent law. The court pointed out that trademark law deals with the identification of trademarks and triggers protection through logos, slogans, brand names and signs, not through shapes and designs of articles.
On this basis, the Court of First Instance ruled against Nespresso and ruled that the ECC coffee pods did not infringe the Nespresso trademark. Nespresso USA Inc. sued northern California chain Peet`s Coffee in federal court in Manhattan on Thursday, claiming its coffee pods infringed Nespresso`s trademark rights for its own capsule design. In parallel with the lawsuit, Nespresso applied for the registration of a federal trademark for its coffee pod design. Nespresso asked the court to award it the profits made by Peet`s on its allegedly counterfeit capsules, as well as triple damages. Peet`s has not yet commented on the lawsuit. In Germany, however, trademark registration has been accepted, and since April 2003, Nespresso capsules have been protected in Germany. However, in the summer of 2014, the German Patent and Trademark Office (DPMA) decided to revoke trademark protection for Germany. Since then, Nestlé has filed a lawsuit in Germany against the Swiss Ethical Coffee Company, but so far to no avail. The Federal Patent Court ruled in 2017 that Nespresso capsules were losing trademark protection in Germany. Nespresso capsules were a packaging container with a design that was only created for technical reasons.
The packaging must be assimilated to the shape of the goods. On appeal, the Swiss Federal Supreme Court ruled against Nespresso on the same legal grounds. The shape of the Nespresso coffee capsule could not be registered as a trademark because it does not trigger trademark identification protection. In 2011, Nestlé and its Nespresso division filed a lawsuit in the canton of Vaud, Switzerland, to ban the sale of coffee capsules made by a competing coffee machine called Ethical Coffee Company. ECC had developed a coffee capsule very similar in shape to Nespresso and compatible with Nepresso`s coffee machines. The main difference between the coffee capsules was that, unlike Nespresso`s capsules, which are made of aluminum, the ECC capsules were made from plant fibers and biodegradable starch. Coffee pods have become ubiquitous and their manufacturers have been trying for years to defend the intellectual property rights they claim to have over the design and function of tampons. Nespresso also said Peet`s capsules are likely to cause confusion and that some customers have already been confused, noting several product reviews of Peet`s pods, which they call Nespresso capsules. Although both areas of law fall under intellectual property law, each area operates differently and independently of each other and therefore cannot be considered interchangeable. A misunderstanding of the distinction can make or break a lawsuit. This position is illustrated by Nespresso`s long legal battle over the invention of the brand`s coffee capsules. Keurig failed to maintain similar claims regarding its iconic coffee pods, losing a patent lawsuit in 2011 against Rogers Family Company, LLC, where it attempted to prevent other manufacturers from making pods for its popular machines.
In fact, the lawsuit alleges that Peet`s advertising has already confused customers and lists a number of online product reviews where customers refer to Peet`s pods as Nespresso capsules. In September 2021, the Swiss Federal Supreme Court ruled against Nespresso`s attempt to obtain trademark protection for its coffee pod design, finding that its napkins had an “ordinary” and “unforgettable” shape. Coffee pods have triggered a number of disputes in recent years, including patent and trademark litigation with Nespresso, Keurig Dr. Pepper and others. The decision in the above-mentioned case was followed in the case of Nespresso v. Dualit, in which Dualit`s coffee pods, which were also compatible with Nespresso coffee machines, allegedly infringed the Nespresso trademark. Today, Nespresso USA, Inc. once again went on the offensive against Peet`s Coffee, Inc., arguing in federal district court in Manhattan that Peet`s coffee pod design infringes its trademark rights. Nespresso`s latest claim claims that Peet`s coffee pods are “almost identical” to his, mimicking the “cone-shaped” shape of Nespresso pods and essentially containing “frustoconical” tops, opaque colors, and other essentially similar elements. And Nespresso claims that Peet`s is confusing customers by advertising that its capsules are compatible with Nespresso machines, which would have led customers to believe that Peet`s capsules are associated with the Nespresso brand.
The lawsuit alleges that Peet`s similar capsules confuse customers and believe the capsules are connected to Nestlé`s Nespresso, which Peet`s would exacerbate by promoting that its capsules are compatible with Nespresso machines. The decision could have a significant impact on the Swiss food and beverage giant and the entire coffee pod industry. Nespresso had previously complained that failing to protect its tampon design could lead to an “open door” for manufacturers of Nespresso-compatible coffee pods. (NOTE: This story has been updated with the parties` responses.) In this case, Nestlé claimed that the Ethical Coffee Company (ECC) had violated its trademark rights. In fact, ECC had marketed biodegradable coffee capsules compatible with Nespresso coffee machines. For its part, Ethical Coffee sought the cancellation of Nespresso`s Swiss shape mark on the ground that the registered trade mark was a technically necessary form. The Federal Supreme Court therefore upheld the judgment of the lower court and the annulment of the Swiss shape mark Nespresso capsules. We also stress to all our customers, and especially start-ups, the great importance of their intellectual property. Because intellectual property is a capital for a company and an investment in the future. Companies are therefore well advised to ensure maximum protection of their intellectual property. The Swiss Federal Court expressly referred to a provision similar to art. 2 bed.
b of the Swiss Trademark Act in European law (Art. 4 para. 1 lit. E/II of European Directive 2015/2436). Nestlé appealed this decision, which has now (7 September 2021) been decided by the Federal Court.