2. In Germany, legislation providing for the protection of visible spare parts under design law is still in force. However, within the context of the review of German laws in this area following the transposition of Directive 98/71/EC, the vehicle manufacturers made a commitment in 2003, through the intermediary of the VDA433, not to use this protection to prevent the marketing of non-OEM visible parts, provided the current legislation remains in force.
3. This Annex will demonstrate that the vehicle manufacturers' commitment consists of an undertaking not to exercise their rights with regard to visible spare parts (1), and that they have complied with this commitment, as evidenced by the existence of a free market for visible spare parts in Germany (2).
1- SUBSTANCE OF THE UNILATERAL COMMITMENT
4. In their contribution to the public consultation document, the vehicle manufacturers have contested the existence of an agreement between the German motor vehicle industry and the German government under which the vehicle manufacturers have agreed not to exercise their rights with regard to visible spare parts. They are of the opinion that the commitment made by the VDA is simply an assurance that in the future, as in the past, they will not improperly or abusively file designs or models. They claim this is "a simple statement of intent that in no way modifies the law or current practice".
5. However, although the commitment does not expressly state that the vehicle manufacturers will not exercise their rights with regard to visible spare parts, nor does it state that the
433 Verband der Automobilindustrie (German Federation of Vehicle Manufacturers).
vehicle manufacturers' commitment merely concerns abusive filing and excludes remedies in litigation (A). Despite the ambiguous wording of the commitment, its substance was defined and clarified by the German Minister of Justice very shortly after it was signed.
The Minister refused to allow a vehicle manufacturer to enforce its design rights (B).
a) The wording of the 2003 commitment
6. The following excerpts are taken from the explanatory memorandum on the law set out in the bill on designs and models dated 28 May 2003, describing the substance of the vehicle manufacturers' commitment434. Although these excerpts refer to a status quo, this is in relation to the previous situation where independent channel operators (spare parts manufacturers, distributors and repairers) were able to operate freely in the market435. Furthermore, the document does not specify that the commitment applies only when there is no abusive design and model filing . On the contrary, the third excerpt below suggests that the manufacturers have undertaken not to "increase the extent to which they exert their rights", which suggests that the commitment also covers litigation.
"The vehicle manufacturers have expressly stated that they do wish to harm competition in the spare parts market, nor do they intend to dispute the market shares held by independent repairers and distributors through legal action on the ground of design protection. Accordingly, this commitment is made on the basis of the maintenance of currently applicable legislation and should not adversely affect the currently satisfactory coexistence of market operators."436 (emphasis added).
"Manufacturers of spare parts and independent repairers have been able to establish themselves in the market in the past. This should not change. The motor vehicle industry has clearly and unambiguously stated that it does not wish to harm competition or the spare parts market and thereby harm parts manufacturers and distributors. The maintenance of the status quo constitutes the basis for the proposed solution."437 (emphasisadded).
"The status quo must therefore be preserved. Spare parts manufacturers and the corresponding distributors have held a significant economic position in the past. The proposed solution should not result in any adverse consequences in this matter. If it is found that vehicle manufacturers are protecting bodywork spare parts to a greater extent than in the past and seeking to influence the
434 Translation into English by the Autorité de la concurrence.
435 It may be the case that prior to 2003 the vehicle manufacturers only rarely made use of design rights to protect visible spare parts. When questioned on the number of cases it had started on the ground of its design rights between 1990 and 2003, one German vehicle manufacturer said that it had not started any such proceedings.
436 Explanatory memorandum of the bill, BT-Drucksache 15/1075, page 1: “Die Automobilhersteller haben insoweit ausdrücklich versichert, dass sie den Wettbewerb im Ersatzteilhandel nicht beeinträchtigen und den freien Werkstätten und dem freien Teilehandel durch Inanspruchnahme von Schutzrechten Marktanteile nicht streitig machen wollen. Auch diese Zusage ist Grundlage für eine Beibehaltung der Rechtslage, die das bisherige auskömmliche Nebeneinander der Marktteilnehmer nicht beeinträchtigen soll”.
437 Explanatory memorandum of the bill, BT-Drucksache 15/1075, page 27: “Freie Ersatzteilehersteller und Werkstätten konnten sich in der Vergangenheit auf dem Markt etablieren. Daran soll sich nichts ändern. Die Automobilindustrie hat insoweit klar und eindeutig erklärt, dass es ihr nicht darum geht, den Wettbewerb und den Ersatzteilmarkt zum Nachteil der Ersatzteilehersteller und des Handels zu beeinträchtigen. Die Beibehaltung des Status quo ist Grundlage der vorgeschlagenen Regelung”.
spare parts market by exerting their rights more strongly, the law will need to be changed."438 (emphasisadded).
b)
The substance of the commitment as clarified by the German Minister of Justice7. The substance of the commitment made to the Bundestag by the vehicle manufacturers is defined and clarified in a letter sent by the German Minister of Justice to the Chariman of the German Federal Trade Association439, along with a statement from the VDA. These two letters clearly show that the manufacturers' commitment is not merely undertaking commitment not to abusively file designs or models, it is also undertaking commitment not to seek to protect spare parts under design law through litigation. In addition, these letters show that the Minister of Justice intends to monitor the situation and ensure that the manufacturers comply with their commitment.
8. The letters were written following court orders handed down in summary proceedings in which the court found in favour of the vehicle manufacturer and against the manufacturers and distributors of spare parts on the basis of an infringement of design rights. The letters postdate the commitment made to the Bundestag by the manufacturers, and refer to it440, stating that the vehicle manufacturer in question immediately waived its right to enforce the court orders. It also seems that the vehicle manufacturer apologised to the Minister of Justice, saying that the group's senior management had not been aware of the court proceedings. The letter sent to the Chairman of the German Federal Trade Association by the Minister of Justice is reproduced below441:
"Dear Mr [ ], during a conversation with the Minister of Justice on 17 July 2003, Mr [ ] and yourself produced copies of three court orders finding in favour of [vehicle manufacturer] and against manufacturers and distributors of spare parts, in support of another request that a repair clause be introduced into the new law on designs and models. The Minister, Mrs Zypries, telephoned the board of directors of [vehicle manufacturer] on the same day. According to a statement by VDA (motor vehicle industry association) enclosed, these court proceedings were started without the knowledge of the [vehicle manufacturer]'s senior management. As a result of our actions, [vehicle manufacturer] immediately waived its right to enforce the court orders. This process shows that the motor vehicle industry is seriously committed and intends to keep its word.
438 Explanatory memorandum of the bill, BT-Drucksache 15/1075, page 66: “Dadurch soll der „Status quo“
erhalten bleiben. Die Ersatzteilehersteller und der entsprechende Handel haben in der Vergangenheit eine bedeutsame wirtschaftliche Stellung eingenommen. Die vorgeschlagene Regelung soll insoweit zu keinen Nachteilen führen. Sollte sich herausstellen, dass die Automobilhersteller in höherem Maße als bisher Einzelteile der Gesamtkarosserie eines Fahrzeuges schützen lassen und versuchen, vermehrt Rechte durchzusetzen, um auf diese Weise den Ersatzteilmarkt zu beeinflussen, wäre ein Einschreiten des Gesetzgebers erforderlich”.
439 Bundesverbandes des Deutschen Gross-und Aussenhandels.
440 Contrary to the claim made by the vehicle manufacturers in their contribution to the public consultation document that the manufacturers’ commitment was made after these letters were written. The letters are dated 21 July 2003 and 30 July 2003, whereas the commitment by the manufacturers is contained in the bill dated 28 May 2003.
441 Translation into English by the Autorité de la concurrence.
In view thereof, the government will respect and apply this draft law’s "commercial basis"442 (emphasisadded).
9. Moreover, the vehicle manufacturers have also referred to interpretations of the commitment set out in an affidavit of law drawn up by a German law firm, an extract from a thesis and a decision handed down by the Munich Court of Appeal in 2005. However, none of these documents are relevant when interpreting a commitment binding the vehicle manufacturers and the German government, whose position has been expressly stated in the above-mentioned letter443.
2- IMPLEMENTATION OF THE COMMITMENT IN GERMANY
10. The action of the Minister of Justice with regard to the vehicle manufacturer who took court action on the ground of the design protection of its spare parts shows that the German government intends to ensure that the vehicle manufacturers comply with their commitment in Germany.
11. Moreover, none of the vehicle manufacturers questioned have started any proceedings in Germany since 2003444. This is in contrast to France, where the two main French vehicle
442 Letter from the German federal Minister of Justice to the German federal trade association dated 30 July 2003: “Sehr geehrter Herr [ ], bei dem Gespräch mit der Bundesministerin der Justiz am 17.Juli 2003
haben Sie und Herr [ ] Abschriften von drei einstweiligen Verfügungen der [Automobilhersteller] gegen Ersatzteilehersteller und händler vorgelegt und dies zum Anlass genommen, erneut die Aufnahme einer Reparaturklausel in das Geschmacksmustergesetz zu fordern.
Frau Bundesministerin Zypries hat noch am selben Tag mit dem Vorstand der [Automobilhersteller]
telefoniert. Nach der anliegenden Erklärung des VDA ist die Aktion ohne Wissen der Geschäftsleitung erfolgt. Die [Automobilhersteller] hat unsere Intervention sogleich auf die Rechte aus den gerichtlichen Beschlüssen verzichtet. Der Vorgang zeigt, dass es die Automobilindustrie mit ihrer Zusage ernst meint und ihr Wort halten will. Darauf wird auch die Bundesregierung achten und auf der Einhaltung dieser Geschäftsgrundlage des Gesetzentwurfs bestehen.[…]”
443 The fact that the German government informed the European Commission in September 2004 that it was against the introduction of a repair clause at European Union level does not prevent it from encouraging the de facto non-implementation of design protection in Germany. This equivocal position of the German government might be explained by the fact that vehicle manufacturers benefit from the existence of visible spare parts protection in other European countries, while German consumers and Germany's economy benefit from the lack of protection in Germany. Moreover, several German politicians have recently argued in favour of the introduction of a repair clause into German law, including the current Minister of Affairs and the current Minister of Justice.
444 The vehicle manufacturers' legal representatives only reported five decisions handed down after 2003 in Germany in cases involving design protection for spare parts. However, three of them had been started before the 2003 commitment: in 1998, 1999 and 2001, respectively. Two actions were started after 2003, but in one of them it was the equipment supplier who claimed protection. A German vehicle manufacturer allegedly filed another action after the 2003 commitment. The Autorité de la concurrence was only informed of this in June 2012, i.e., four months after the Investigation Services sent this manufacturer a request for information.
The case concerned wheel rims. Wheel rims are different to most other visible parts in that the spare part does not necessarily need to be identical in appearance to the faulty part. This means that there is some
manufacturers filed approximately 100 legal actions on the ground of design protection over the same period.
12. In their contribution to the public consultation the vehicle manufacturers have stated that the fact that the operators have not exerted their rights before the courts does not mean that the law is not respected. They claim that, unlike France, vehicle manufacturers do not need to take legal action in Germany for the visible spare parts to be protected in practice, and that none of their competitors manufacture or sell the visible spare parts that are design protected.
13. This argument does not stand up to examination. In Germany, independent body shops obtain up to 70% of the body parts they need from the independent channel445. If the independent operators were not entitled to distribute visible parts, and in particular body parts, these operators would be obtaining most of their supplies from the manufacture channel. In their contribution to the public consultation the vehicle manufacturers have stated, without producing any evidence, that the non-OEM parts found in Germany in the independent channel are original parts which "are the product of agreements entered into between the vehicle manufacturers and the equipment suppliers in compliance with design law"446. When questioned on this point, a German vehicle manufacturer acknowledged that it did not grant any licences to third parties in connection with visible spare parts for which designs had been registered. Accordingly, there is no such type of agreement between this German vehicle manufacturer and its original equipment suppliers for visible spare parts.
However, the independent channel offers a wide range of visible non-OEM spare parts for this manufacturer's brand in Germany. Moreover, the parts available in the independent channel in Germany are not always original parts, which proves that secondary equipment suppliers are also free to manufacture and sell visible spare parts in Germany447.
14. Lastly, the existence in Germany of active lobbying in favour of the introduction of a repair clause into German law, which, according to the vehicle manufacturers, is proof of the absence of liberalisation in practice, can be explained by the wish to follow up on the commitment made by the German vehicle manufacturers in 2003. The commitment has no legal value and, although it is respected at the present time, it is nevertheless dependent upon the extent to which successive governments decide to monitor its compliance and the
leeway when selecting the spare part. Accordingly, the protection of spare parts by design rights will not necessarily result in a monopoly, which is not the case for most other visible parts. Furthermore, in their joint contribution the vehicle manufacturers claimed that the Autorité de la concurrence "ignored" a decision by the Munich Court of Appeal dated 12 May 2005 in the public consultation document dated 11 April 2012.
This decision concerns a case started in 1999, which is one of the three cases reported as having been started before 2003.
445 Source: GIPA Professional Survey 2009, page 102.
446 The contributors also state that " vehicle manufacturers frequently enter into agreements with equipment suppliers under which the equipment suppliers are granted a licence/rights authorising them to produce and sell spare parts in exchange for payment of royalties and/or in exchange for their contribution to the development of the parts".
447 For example, ISAM, an Italian manufacturer, supplies Renault Mégane and Citroen C4 front bumpers in Germany, as well as a wide range of visible parts for Toyota, Nissan and Hyundai.
credibility they wish to give to the threat of the introduction of a repair clause in the event of non-compliance. Lastly, the introduction of a repair clause into German law could have repercussions on the introduction of a repair clause at European level.