October 2014; as Mahindra acquires majority stakes in France based Peugeot Motorcycles, it also inherits their ongoing legal battle with Piaggio. This patent infringement case pertains to Peugeot’s three-wheeled scooter Metropolis, which was launched in 2013. Piaggio, the creator of the famous Vespa scooters, has filed an infringement case in Milan, Italy as well as Paris, France.
They targeted Peugeot’s use of the control system technology that enables the three-wheeler to tilt on corners like a normal two-wheeler. It is impertinent to note, that Peugeot is not the only one using this piece of technology. The stark time difference between the launch of Piaggio’s MP3 scooter, which came out in 2006, has many experts questioning the timing of this move. As of now, the two scooters have been competing in European markets for over five years now.
IP litigation is an effective tool to protect market dominance. We have seen this in the smartphone market companies have protected their SEPs (Standard Essential Patents) as a means to oust competition. SEPs are technologies that are necessary to develop a standard-compliant product. For example, if there is only one technology that enables 5G communication among phones, it is a SEP. Smartphone brands indulged in practices like unfair licensing, exorbitant pricing and most important litigation to keep competitors from using their technology. The Essential Facilities doctrine was what came to the rescue and ended the so-called Smartphone Wars (2009 – 19), a period of innumerable patent battles amongst smartphone manufacturers.
As of now, the French court Tribunal Judiciaire have prohibited Peugeot from the sale, marketing, export or import of the scooter to and from France of the Metropolis. It has also imposed a fine of 1.5 million Euros (Roughly Rs.13 Crores) on the French manufacturer.
The Tribunale of Milan, Italy has also followed suit prohibiting the sale, advertisement, manufacture, import and export of the scooter in Italy. It has gone a step ahead and imposed a fine of 6000 Euros (Roughly Rs. 5lakh) on each unit sold a month after the sentence. Further, if the vehicles are not taken back within 3 months, the Court will impose a fine of 1000 Euros (Roughly Rs. 8.6 lakh) per day.
Mahindra and Mahindra, the holders of the controlling stakes in Peugeot’s motorcycle wing haven’t commented on the issue in the media anywhere so far. However, indications are that they will soon seek an appeal against the sentences in both jurisdictions.