Repair clause referred to Court of Justice

Motor Law's great friend David Musker reports on the Class 99 blog that a court in Milan has referred to the Court of Justice (how nice to see the institution being identified by the correct name!) for an interpretation of the repair clause (Article 110 of the EU designs regulation, No 6/2002). The questions asked - of which there are two - are (as is so often the case, partly I suspect as a result of their having been translated into English) pretty incomprehensible. Why do these questions so often have to ask if something is "precluded"? In BMW v Round and Metal, to which the article refers, Arnold J, in a judgment that epitomises the adjective "Arnoldian", rejected the proposition that the defendant's alloy wheels fell within the scope of the repair clause: they were sold not as straight replacements but as alternatives, with different dimensions - and tellingly they were usually supplied in sets of four. What a misfortune to damage all the wheels of your car at once! Although it reminds me of a client who found her Boxster (this was probably 20 years ago) completely devoid of wheels one morning ...

An interesting point in the reference is that it appears to try to establish a connection between the "complex product" (the car) and the replacement part by reference to the fact that the wheels are approved under UNECE Regulation No 124 for use on that particular model of car. I'm looking forward to seeing what the court makes of that. I'm also trying to find some more enticing prospects to look forward to.

Court of Justice to consider online sales ban in selective distribution

The whole idea of selective distribution is that the manufacturer is allowed to decide how its goods will reach the market - through a certain type of reseller, which in the motor sector means a dealer who meets a raft of standards imposed by the manufacturer. Luxury goods might be limited to shops with a certain ambience, and in only the best locations. In Case C-439/09, Pierre Fabre, the Court of Justice ruled that absolute bans on online sales were prohibited, in selective distribution agreements and elsewhere. But can selected retailers be prevented just from selling the goods using online platforms like eBay and Amazon?

That's the topic of a reference from the Oberlandesgericht Frankfurt am Main to the Court of Justice (Case C-230/16, Coty Germany). The courts in Germany have taken a different view from that of the competition authorities there, which is a bit of a problem: the competition authorities have struck down online sales bans, while the courts (or at least the OLG Frankfurt am Main, here) have been upholding them. That court applied something very like the traditional justification for selective distribution, that a manufacturer has a legitimate interest in ensuring that its branded products are perceived as high-quality products, and that customers receive the right sales advice, so the manufacturer is free in principle to dictate the conditions under which its products are sold provided that they are necessary to meet its quality standards. Note that the court was there concerned with branded goods: it looks as if the fact that the new reference to Luxembourg concerns luxury products is significant, as the headings of the court documents suggest. The earlier case concerned "The question of the admissibility of the prohibition of Internet sales of brand-name items and their setting in the price search engines" and the new one is headed "Decision on the admissibility of selective distribution systems, which are directed on distribution of luxury and prestige goods" (thanks, Yandex Translate).

The motor industry is still quite a long way from having a big problem with online sales, with new car transactions still being showroom-based - but that isn't going to remain the case for ever. Depending on what the Court of Justice says, it might be a long, long time before online sales become significant. But we'll have to wait a while just to know that - about 15 months, according to one commentator.

[Hat tip to Isabelle Rahman, a partner in Sheppard Mullin's Brussels office, on the firm's Fashion Apparel Law blog - the commentator cited above.]

Trade marks: reference to the Court of Justice relating to continuing use of VM's trade mark in advertising for former authorised repairer

A trade marks case of interest to the motor industry is being referred to what the Intellectual Property Office website calls, not entirely inaccurately but could do better, the Court of Justice of the European Union. (The link is to the relevant page on the IPO website, which is now inconveniently part of the .gov.uk colossus.) The reference comes from a court in Hungary, the Fővárosi Törvényszék (which apparently means "municipal court"), and the case, C-179/15, involves Daimler. What is the reference about? The IPO says:

 "A request for a preliminary ruling in a case which concerns the unauthorised use of online advertisements as confirmation of an official commercial relationship beyond the termination of the parties contracted period, where the advert was not placed on the internet by the person featuring in it and the person featured took steps to remove it."

According to a Dutch government website, http://www.minbuza.nl/ecer/hof-van-justitie/nieuwe-hofzaken-inclusief-verwijzingsuitspraak/2015/c-zakennummers/c-179-15-daimler.html, which is inviting people to suggest an intervention, but in greater detail than the IPO is, Együd Garage was a Mercedes repairer until 31 March 2012. Advertisements (both in print and on the Internet, it seems, but Google Translate has struggled a bit with the Dutch and I am hardly qualified to second-guess it - I will try to find a suitably qualified friend to help) indicated that the garage was still a member of the Daimler franchise, but the information was published (including being placed on the Internet) by third parties. The garage had asked them to remove or change the adverts, but evidently without success. It seems that the operator of a website where the information was found said that they had taken over someone else's business and the offending ad was included, which is hardly a convincing excuse. It seems pretty clear that had the garage run the ads it would have infringed Daimler's marks, but is it an infringement by the garage if the ads are under the control of a third party? One would hope that the garage would not be held liable, especially if it has tried hard to put matters right. (Hat tip to the Class 46 blog and the IPKat for telling me about the reference: if you want to comment to the IPO, urging the UK to intervene in the case, you must contact them by 15 June. Instructions are at the far end, as it were, of the link above.)

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Court of Justice clarifies the rules on consumer guarantees

A press release yesterday from the Court of Justice informs me of the Judgment in Case C-497/13, Froukje Faber v Autobedrijf Hazet Ochten BV. Because I have too many other demands on my time right now, I am resorting to cutting and pasting the text of the press release - lazy, but effective, and I assume that this is what the press department had in mind. I'll come back to it to add some value later.

The headline is: 'Any lack of conformity which becomes apparent within six months of the delivery of goods is to be presumed to have existed at the time of delivery.' That might tell you all you need to know!

On 27 May 2008, Ms Froukje Faber purchased a secondhand vehicle at a garage. On 26 September 2008, the vehicle caught fire during a journey and was completely destroyed. It was towed to the seller’s garage by a breakdown lorry and then, at the request of that garage, to a scrapyard to be kept there. Ms Faber maintains, in contrast to the garage, that, on that occasion, the parties spoke about the accident and about the possible liability of the garage. By letter of 11 May 2009, Ms Faber gave the seller’s garage notice that she was holding it liable. A technical investigation into the cause of the vehicle fire could not take place as the vehicle had been scrapped in the meantime.
As the seller disputed that it was liable, Ms Faber brought legal proceedings. The Gerechtshof (Regional Court of Appeal) Arnhem-Leeuwarden, Netherlands, before which the dispute was brought on appeal, decided to refer questions to the Court of Justice for a preliminary ruling.
As regards whether the national court is required to examine of its own motion whether, in the present case, Ms Faber is to be regarded as a consumer within the meaning of Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees  (OJ 1999 L 171, p. 12), even though she has not relied on that status, the Court replies, in its judgment delivered today, in the affirmative. Whether the consumer is assisted by a lawyer or not cannot alter that conclusion.
In the same vein, the Court confirms that the national court may of its own motion raise Article 5(3) of the directive in the context of an appeal. That provision provides that, unless proved otherwise, any lack of conformity which becomes apparent within six months of delivery of the goods is, in principle, to be presumed to have existed at the time of delivery. In view of the nature and importance of the public interest underlying the protection which that provision confers on consumers, it must be regarded as a provision of equal standing to a rule of public policy within the domestic legal system.
The referring court also asks whether the principle of effectiveness precludes a national rule which requires the consumer to prove that he informed the seller of the lack of conformity in good time. According to Netherlands law, it is in principle for the consumer, if there is a challenge by the seller, to furnish evidence that he informed the seller of the lack of conformity of the goods delivered within a period of two months after the discovery of the lack of conformity.
The Court points out in that regard that Art. 5(2) of Directive 1999/442 on certain aspects of the sale of consumer goods and associated guarantees permits Member States to provide that the consumer must, in order to benefit from his rights, inform the seller of the lack of conformity within a period of two months from the date on which he detected such lack of conformity.
According to the travaux préparatoires in respect of that directive, that option reflects the aim of reinforcing legal certainty, by encouraging ‘diligence’ on the part of the purchaser, ‘taking the seller’s interests into account’, ‘but does not establish a strict obligation to carry out a detailed inspection of the good’.
The Court explains that the obligation imposed on the consumer is limited to that of informing the seller that a lack of conformity exists. The consumer is not required, at that stage, to furnish evidence that a lack of conformity actually adversely affects the goods that he has purchased or to state the precise cause of that lack of conformity. By contrast, in order for the notification to be of use to the seller, it must include a certain number of particulars, the degree of precision of which will necessarily vary depending on the specific circumstances of each case.
Lastly, the referring court asks how the apportionment of the burden of proof functions and, in particular, which matters it is for the consumer to establish.
The Court states that if the lack of conformity has become apparent within six months of delivery of the goods, the directive relaxes the burden of proof which is borne by the consumer by providing that the lack of conformity is presumed to have existed at the time of delivery. In order to benefit from that relaxation the consumer must nevertheless furnish evidence of certain facts.
Firstly, the consumer must allege and furnish evidence that the goods sold are not in conformity with the contract in so far as, for example, they do not have the qualities agreed on or even are not fit for the purpose which that type of goods is normally expected to have. The consumer is required to prove only that the lack of conformity exists. He is not required to prove the cause of that lack of conformity or to establish that its origin is attributable to the seller.
Secondly, the consumer must prove that the lack of conformity in question became apparent, that is to say, became physically apparent, within six months of delivery of the goods.
Once he has established those facts, the consumer is relieved of the obligation of establishing that the lack of conformity existed at the time of delivery of the goods. The occurrence of that lack of conformity within the short period of six months makes it possible to assume that, although it became apparent only after the delivery of the goods, it already existed ‘in embryonic form’ in those goods at the time of delivery.
It is therefore for the professional seller to provide, as the case may be, evidence that the lack of conformity did not exist at the time of delivery of the goods, by establishing that the cause or origin of that lack of conformity is to be found in an act or omission which took place after that delivery. 

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