The Düsseldorf court rejected an application by Swiss food giant Nestlé to ban the sale of unlicensed coffee capsules for its Nespresso coffee machines, giving the green light to copycat manufacturers to sell cheaper versions at up to two thirds of the price of originals.
The capsules, advertised by Hollywood star George Clooney, generated revenues of €2.5 billion for Nestlé last year. The overall market for capsules is booming and is expected to reach €6.6 billion by 2014.
That is now likely to be spread a little more widely. The regional court rejected Nestlé's application for an injunction against two rival Swiss companies - Betron and Ethical Coffee Company (ECC) - from selling cheaper coffee capsules labelled "suitable for Nespresso machines", despite not having a license to do so from Nestlé.
But the court found that although Nestlé subsidiary Nestec held the patent on the Nespresso machines and both it and its license holders produced original Nespresso capsules, consumers were not infringing Nestlé's patent if they used coffee capsules made by other manufacturers in the machines.
The consumer's right to unlimited use of their own property had higher priority than the protective interests of Nestlé, said a court spokesman.
The patent covered the machines themselves, but not the capsules, which although are essential for making coffee with the machines, they are not the devices' "functional core," said the court.
Nestec will continue to fight to prevent the two Swiss competitors from using the "suitable for Nespresso machines" label on their products, wrote Die Welt newspaper on Thursday.
Nestlé's capsules are threatened in many countries by similar copycat competition and the multinational is suing in several places at once, with little success.
"We are disappointed that the Düsseldorf regional court did not grant our application for an injunction to protect our intellectual property," Holger Feldmann, head of Nespresso Germany said in a statement, adding that Nestle would appeal, possibly at the Higher Regional Court in Düsseldorf.