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Nespresso Rivals Dealt A Blow As Patent Upheld

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04/19/2012 | 08:24pm CEST

--European Patent Office upholds patent protecting Nespresso from capsules produced by other companies

--Rival companies, including Sara Lee, can challenge decision at EPO's court of appeal

(Updates throughout with European Patent Office comment and details.)

   By John Revill 

Rivals to Nestle SA's (NESN.VX) Nespresso system have been dealt a blow, as the European Patent Office upheld a patent that protects the coffee system from capsules produced by other companies.

"The patent has been maintained in an amended form," EPO spokesman Oswald Schroeder told Dow Jones Newswires.

The ruling, made by a panel of experts, was opposed by Sara Lee Corp. (>> Sara Lee Corp.), privately held Ethical Coffee Co. and Italian coffee company Vergagno.

The three companies, which all make capsules that are compatible with the Nespresso system, had demanded the patent, which protects the interface between the coffee capsule and the machine, be removed. But the patent was upheld by the EPO's panel of experts late Wednesday.

The three companies can now challenge the decision at the EPO's court of appeal, whose decision is final.

Nestle Chief Executive Paul Bulcke said Thursday that the patent "will continue to provide adequate protection to our intellectual property." This put the company in a good position against its generic rivals, Bulcke told the Nestle annual general meeting here.

Nestle's Nespresso business has been fighting legal battles against a string of rivals, including Swiss discounter Denner, that have launched their own versions of capsule coffee that are compatible with Nestle's machines.

The Swiss food company has sought to defend Nespresso, which has grown into a business with sales of more than 3 billion Swiss francs in 2011 and profit margins among the highest in the company.

It is too early to say whether the decision means the rivals must remove their capsules from shop shelves.

Richard Girardot, chief executive of Nespresso, said: "This is a positive decision for Nestle--we are satisfied."

He said Nespresso wasn't against competition, with the brand facing competition from 50 other companies in the coffee capsule business. But Nespresso would continue to defend its intellectual property where necessary, Girardot told Dow Jones Newswires.

-By John Revill, Dow Jones Newswires; +41 43 443 8042; john.revill@dowjones.com

Stocks mentioned in the article : Sara Lee Corp.
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