Supreme Court Dismisses Nespresso Suit against Espresso Club

The Supreme Court recently dismissed an appeal by Nestlé, the Swiss multinational food and drink processing conglomerate, and its subsidiary corporation Nespresso, filed against our client, the Israeli company Expresso Club. The appeal claimed copyright and trademark infringement, unfair competition, and damage to Nespresso’s reputation.

The lawsuit was filed with the Tel Aviv District Court after Espresso Club launched a campaign starring a look-alike of actor George Clooney. In addition to casting the look-alike, the campaign included satirical elements referencing Nespresso’s recent advertisements starring the famous actor. After the district court rejected the plaintiffs’ arguments, Nestlé and Nespresso appealed the ruling to the Supreme Court.

The Supreme Court’s ruling rejected the appellant’s claims and stressed that Espresso Club did not infringe on any of Nespresso’s copyrights, thus setting a precedent on the boundaries of trademarks in the world of advertising. The Supreme Court determined that Nespresso had no copyrights over George Clooney or his public image as tied to the Nespresso brand. The justices held that only Clooney holds such rights, if any exist. The Supreme Court further held that the displayed design elements in Expresso Club’s commercials, such as of the coffee store, are not subject to protected copyrights by Nespresso either.

Based on the dismissal of Nespresso’s argument as to wrongful use of its trademarks, the Supreme Court analyzed sources from comparative case law and rejected Nespresso’s argument that Espresso Club’s advertising campaign “diluted” its reputation.

The Supreme Court held that proving the existence of parody or satire in advertising does not meet the bar necessary to prove harm to reputation. Furthermore, the justices stated that even in circumstances of a “stinging advertisement,” which presents a competitor in a negative light, the burden is on the plaintiff to lay down a sufficient factual infrastructure. This includes, for example, “consideration for the actual influence of the advertising on the reputation of the trademark and the way in which it is perceived in the eyes of consumers following the negative advertising.”

The Supreme Court further dismissed the appellants’ argument that Espresso Club’s advertisements constituted unlawful copying. Rather, the Supreme Court held that the advertisements constituted a new and independent parodic creation and that, in general, satirical advertising against a competitor does not constitute illegal copying.

This precedent-setting judgment received international coverage and was publicized in both Swiss and British media.

Source: barlaw.co.il