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Lego Nederland et alia v. Mega Brands Inc. et alia

2009 November 23
by Hein Kernkamp

Court: Netherlands Supreme Court

Date: November 20, 2009

LJN Number: BJ6999

Case: Lego is the producer of the well known Lego and Duplo “studs and tubes” interlocking brick system. All relevant Lego patents have expired. Mega Brands markets and sells similar construction bricks in Germany and Belgium and intended to enter the Dutch market. Before the Court Lego upheld that Mega Brick’s Micro and Mini building systems should be qualified as a slavish imitation of the Lego and Duplo bricks. The Court held that the Lego bricks and the Mega bricks are indeed practically identical as to their form, size, construction and application and that the product of Mega Brands should be regarded as an unlawful slavish imitation, that was likely to confuse the public. Mega Bloks could and should have made other choices as to the size of the bricks without affecting the soundness and usability of Micro and Mini as building bricks.

Mega Bricks appealed and the Court of Appeal held that the imitation was lawful as there is a strong wish among the potential buyers of the bricks to buy bricks that fit and have the same looks as the Lego bricks they have at home. The need for compatibility and exchangeability with an existing and widespread system, dictated the design. Under these circumstances, an imitation will be justified by the realistic need among consumers for compatibility. The Court of Appeal quashed the ruling of the Court and held that the marketing and sale Mega Brands bricks cannot be qualified as a slavish imitation of the basic elements of Lego and Duplo. Lego appealed to the Netherlands Supreme Court.

Held: The Netherlands Supreme Court confirmed the decision of the Court of Appeal. A necessity for imitation exists in this case. The imitation of the Lego brick is justified by the consumers’ need for compatibility and exchangeability. Mega Brands may bring the bricks on the Dutch market. It has a duty to care that avoid unnecassary confusion of the public, but under the circumstances the criteria are met.

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Unocal et alia v. Conoco et alia

2009 October 29

Court: Netherlands Supreme Court

Date: October 14, 2005

LJN Number: AT7537

Case: Under Dutch law it is possible for the Dutch Government to grant licenses to explore and exploit natural resources on the Dutch Continental Shelf. For licensing purposes the Continental Shelf is divided into quadrants. Each of these quadrants is given a unique number; a full quadrant is subdivided into blocks.

Unocal held a license to explore and exploit natural resources in block Q1, but never operated a well in the block. The Continental Netherlands Oil Company (Conoco) held such a license for the adjacent block L16a. Both blocks form part of the Logger Field, an oilfield in the North Sea. Since 1985, Conoco has exploited wells in block L16a. One of the wells that has been operational had been drilled within 125 meters from the border between the blocks, which establishes a breach of the Governmental Licensing regulations.

The legislation moreover contains obligations to enter into a pooling agreement in case adjacent blocks form part of one and the same oilfield. In December 1992 Unocal requested the Minister to order Conoco to enter into a pooling agreement, but the Minister did not honour the request. Due to the exhausted status of the oilfield there was no legal ground to force the parties to enter into a pooling agreement. The law does not contain regulations regarding pooling historical revenues. For this, one needs to address the civil courts.

Unocal indeed decided to bring the case before the civil court, claiming that Conoco committed a tort against the licensees of the adjacent block. Conoco defended the claim, among others by alleging that the Rule of Capture forms part of Dutch law. Under the Rule of Capture, the various surface owners atop a common pool can take all the oil they can get, even if they disproportionately drain the pool or reduce the output of nearby wells and neighbouring producers. The problem with the rule of capture is that it encourages bad behaviour, reason why this theory is rejected in a lot of jurisdictions.

Held: The decision of the Supreme Court is long and technical. It is a very interesting decision for the Dutch legal community, but also for clients who are in the energy and natural resources business. Two important decisions have been made:

  1. It was held by the Supreme Court that the Rule of Capture does not form part of Dutch law.
  2. Moreover, the Supreme Court held that if it is established that it has indeed been economical feasible to explore the oil from within block Q1, then Conoco committed tort by withdrawing oil from the adjacent block Q1.
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Anonymous v. European Patent Organisation

2009 October 28

Court: Netherlands Supreme Court

Date: October 23, 2009

LJN Number: BI9632

Case: The European Patent Organisation (EPO) is an intergovernmental organisation that was set up on 7 October 1977 on the basis of the European Patent Convention (EPC) signed in Munich in 1973. The European Patent Office, a body of the European Patent Organisation, entered into an agreement of employment with the plaintiff as a patent examiner.

The internal "Service Regulations for Permanent Employees" of the EPO are applicable to the employment contract of the plaintiff. These regulations include an incapacity benefit for employees unfit for work due to disability. Article 13 of the Convention refers disputes between the European Patent Organisation and the employees of the European Patent Officeincludes to the Administrative Tribunal of the International Labour Organization.

Due to repetitive strain injury, the plaintiff became totally occupationally disabled in 2002. He received a compensation of € 254.082,18 and was entitled a pension due to disability. The plaintiff held the EPO responsible for further damages resulting from his occupational disabilities. The EPO refused to accept responsibility, a decision which was upheld by the Internal Appeals Committee.

The plaintiff then applied to the District Court in The Hague suing for damages from the EPO. The EPO argued that the court in The Hague was not competent to hear the case, as article 13 of the European Patent Convention contains an internal legal procedure which has exclusive jurisdiction. The court of first instance, and the court of appeal, dismissed the case, ruling that the Convention provides a sufficiently fair and equitable judicial process. The courts did not agree with the plaintiff that the Convention does not offer a fair trial as meant in article 6 of the European Convention on Human Rights.

Held: The Netherlands Supreme Court ruled that the case is indeed related to the employment contract of the plaintiff with the EPO. Therefore, the EPO has rightfully argued that the internal legal procedure should have been followed and has rightfully invoked its immunity from jurisdiction.

The plaintiff also argued before the Supreme Court that the Administrative Tribunal of the EPO tends to dismiss requests for oral hearings of cases brought before the Tribunal. Since 1992, about 2.200 cases have been brought before the Tribunal, and only once did the Tribunal grant the request to organise an oral hearing. According to the plaintiff, this leads to an unfair trial, as article 6 of the European Convention on Human Rights includes the right to a public hearing before an independent and impartial tribunal. The Netherlands Supreme Court upheld the decision of the Court of Appeal that the procedure before the Tribunal will only then be deemed an "unfair trial" when the Tribunal dismisses requests for oral hearings even when parties have given valid reasons for wanting an oral hearing. Whether this was the case had neither been argued by the plaintiff nor had it become evident that such was the case during the proceedings before the Dutch courts. Therefore, the decision of the Court of Appeal to dismiss the case on the basis of immunity of jurisdiction is upheld.

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Bangladesh v. Tulip Computers

2009 October 12

The People's Republic of Bangladesh v. Tulip Computers International

Court: Netherlands Supreme Court

Date: October 2, 2009

LJN Number: BJ1249

Case: In 2001 the State of Bangladesh entered into an agreement with Tulip Computers in the Netherlands for the sale and purchase of computers and computer courses. In November 2002, Tulip commenced legal proceedings before the District Court in 's-Hertogenbosch (The Netherlands) to have the agreement rescinded. Tulip also claimed damages from Bangladesh for an alleged breach of contract by Bangladesh (which, allegedly was connected to a regime change in Bangladesh). On May 14th, 2003, this led to a default judgment against Bangladesh, in which the agreement was rescinded and damages to an amount of € 4,216,648.– were awarded to Tulip.

On November 15th, 2004 Bangladesh issued a writ and thus initiated proceedings to have set aside the default judgment. The court decided that the claim by Bangladesh was non-admissible, as it had not been filed in due time. The Dutch Code of Civil Procedure regulates, that a foreign party may start proceedings to set aside a default judgment rendered against it within eight weeks after the foreign party has committed a so-called act proving that it had knowledge of the default judgment.

It appeared that Tulip had tried to enforce the Dutch judgment in Scotland. During these Scottish proceedings, Bangladesh's lawyer had filed a "note" to the court, from which it was apparent that Bangladesh had knowledge of the Dutch default judgment. As this note was filed on the 16th of September, 2004, this meant that the proceedings by Bangladesh in The Netherlands had commenced outside the eight week deadline (in fact, just few days too late, as eight weeks after the 16th of September 2004 would have been the 11th of November 2004).

Bangladesh argued before the Netherlands Supreme Court that the note filed during the Scottish proceedings only proves that its Scottish lawyer had knowledge of the default judgment; The State of Bangladesh itself had not committed any act proving knowledge of the default judgment. The Dutch decision had, however, already been referred to at an earlier date in the Scottish proceedings. The court had decided on May 7, 2004: "The Lord Ordinary (…) grants warrant to the Keeper of Registers of Scotland to register the certified copy of the Judgment of the Court of Hertogenbosch, Holland at the instance of Tulip Computers International BV against the People’s Republic of Bangladesh (Ministry of Education) dated 14 May 2003 for payment of € 4,216,648.00 together with interest (…)". This court decision was attached to the aforementioned note of September 16th, 2004 filed on behalf of Bangladesh, and it was also referred to in said note.

Held: The contents of the note unambiguously prove that the Scottish lawyer representing Bangladesh had knowledge of the default judgment on the 16th of September 2004. The exact instructions given by Bangladesh to its Scottish lawyer are not relevant, as under Dutch law, documents submitted to a court by a lawyer as well as statements made during proceedings by a lawyer are directly attributable to his / her client. Therefore, the fact that Bangladesh had argued that its instructions to the Scottish lawyer did not mention the default judgment is not relevant when deciding whether proceedings had been lodged within the time period stipulated in the Dutch Code of Civil Procedure. Filing the note with the Scottish court referring to the Dutch default judgment, is an act directed at the outside world, proving knowledge of the main components of the Dutch default judgment. The decision not to admit the claim by Bangladesh was therefore upheld by the Netherlands Supreme Court.

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Anonymous v. The Kingdom of Morocco

2009 September 15

Anonymous v. The Kingdom of Morocco

Court: Netherlands Supreme Court

Date: September 11, 2009

LJN Number: BI6317

Case: A national of the Kingdom of Morocco, started working as a chauffeur for the Moroccan Ministry of Foreign Affairs and Cooperation in 1976. From 1976 until 1986, and in 1993 and 1994, he performed his duties in Morocco. From 1986 until 1993, and from 1994, he performed his duties for the Consulate-General of the Kingdom of Morocco in Rotterdam, The Netherlands. In 2000, parties entered into a new agreement, containing a choice for Moroccan law. In 2004, the Consul-General confirmed in writing that Dutch social security contributions were being paid for the chauffeur by the Consulate-General. He has been granted a residency permit for The Netherlands, which states that he is a "member of staff" of the Consulate-General.

On March 18, 2005, the chauffeur became ill. On April 20, 2005, the Moroccan Minister of Foreign Affairs and Cooperation terminated the contract of employment, coming into effect with retroactive force as from the 18th of March 2005. The chauffeur asked the court in the Netherlands to declare the contract termination null and void. The Kingdom of Morocco invoked state immunity. An answer to this issue should be sought along the lines of the European Convention on State Immunity of 1972 and although not signed and therefore not (yet)  in force in The Netherlands, the United Nations Convention on Jurisdictional Immunities of States and Their Property of 2004. Article 11 reads:
"1. Unless otherwise agreed between the States concerned, a State cannot invoke immunity from jurisdiction before a court of another State which is otherwise competent in a proceeding which relates to a contract of employment between the State and an individual for work performed or to be performed, in whole or in part, in the territory of that other State.
2. Paragraph 1 does not apply if:
(…)
(e) the employee is a national of the employer State at the time when the proceeding is instituted, unless this person has the permanent residence in the State of the forum".

Both the court of first instance and the Court of Appeal have granted this invocation of state immunity by the Kingdom of Morocco.

Held: The chauffeur had relied upon the Dutch Ministry of Foreign Affairs' interpretation of "permanently resident" as meant in article 37 of the Vienna Convention on Diplomatic Relations of 1961. For matters concerning the Kingdom of The Netherlands, a diplomatic or consular employee is deemed to have permanent residence in The Netherlands after working and living here for a continuous period of at least ten years. From 1994 until March 2005, he has worked and lived in The Netherlands without interruption. When the procedure started, he had lived and worked in The Netherlands for at least ten successive years. Hence one would anticipate that no state immunity would be granted. Given these circumstances, the Court of Appeal failed to motivate why the Kingdom of Morocco was nonetheless granted immunity in this matter. The decision of the Court of Appeal was therefore quashed and the case was sent back to another Court of Appeal.

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BARIN v. The State of The Netherlands

2009 July 20

Board of Airline Representatives in The Netherlands v. The State of The Netherlands (Ministry of Finance)

Court: Netherlands Supreme Court

Date: July 10th, 2009

LJN Number: BI3450

Case: In July of 2008, the Dutch government introduced a new air passenger duty, the so-called ticket tax. This tax was levied for all flights departing from airports in The Netherlands. A tax of € 11.25 was introduced for passengers whose destination was within the European Union or whose flights would be 2.500 kilometers or less. For all other flights, the tax was € 45.00.

BARIN, the Board of Airline Representatives in The Netherlands, did not agree with this new tax, and stated that the tax was in breach of article 15 of the Chicago Convention (Convention on International Civil Aviation of December 7, 1944). This article reads: "No fees, dues or other charges shall be imposed by any contracting State in respect solely of the right of transit over or entry into or exit from its territory of any aircraft of a contracting State or persons or property thereon."

Before the introduction of the tax, BARIN started interlocutory proceedings. BARIN asked the court for an injunction against the State of The Netherlands to withhold the introduction of the new tax until the proceedings on the merits of the lawfulness of the tax had ended with a final judgment.

Held: The Netherlands Supreme Court confirmed the decisions of the lower courts not to grant an injunction. To withhold the new law from being introduced, an injunction may only be granted in case of a manifest breach of the Chicago Convention. The Supreme Court does not agree with BARIN's assertion that "other fees" in Article 15 should be interpreted as broadly as possible, in that the right for passengers to depart from a country may not be subdued to any levies whatsoever. The parliamentary debate regarding the introduction of the tax states that the objective of the tax is to provide clarity regarding the "public costs" of flying. The tax is levied "as is", without any counter-obligation from the Dutch Government. From the legislative history of the Chicago Convention, it appears that one may only speak of "charges" within the meaning of Article 15 when these charges are levied in relation to a certain performance of the other party. A tax such as the ticket tax is not covered by Article 15. Therefore, the lower courts have rightfully refused the injunction.

An interesting detail is that the ticket tax was abolished exactly one year after its introduction, on the 1st of July, 2009. According to the State Secretary for Finance, this is done to reduce the effects of the economic crisis on the travel industry.

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"Cape May"

2009 July 7

United States of America v. Havenschap Delfzijl/Eemhaven

Court: Netherlands Supreme Court

Date: November 12th, 1999

LJN number: AA3368

Case: The "Cape May", a Ready Reserve Force Vessel owned and operated by the United States of America, took berth in the Eemshaven in The Netherlands in November 1990. The port call was not very fortunate. A number of boiler tubes fell overboard and were salvaged by the port authority. Later the vessel broke loose from her berths in a gale and the vessel damaged the quay owned by the port authority. The port authority filed a claim for costs and damages at the Court of Groningen. The United States of America claimed jurisdictional immunity, alleging that the "Cape May" was involved in the Operations of Desert Storm and Desert Storm and thus employed in a governmental and non-commercial service. In order to establish whether immunity should be granted, the Court of Groningen and the Court of Appeal distinguished between a State's acting by virtue of its sovereignty (iure imperii), and a State's acting according to private law (iure gestionis). In this interpretation of the rules of Public and Private International Law by the lower Courts the principle of immunity from jurisdiction is applicable only in the first case. Based on this principle it was held that taking berth and damaging a quay did constitute an act according to private law and thus the United States of America were not in a position to claim immunity. The United States of America appealed to the Netherlands Supreme Court.

Held: The Netherlands Supreme Court did not follow the lower Courts. Under Article III of the Brussels Convention for the Unification of Certain Rules Concerning the Immunities of Government Vessels of April 10, 1926, it should be established whether the "Cape May" was employed in a governmental and non-commercial service at the time of the incidents. In that case jurisdictional immunity should be granted. This is in line with decisions of Courts abroad and with international legal literature. The Netherlands Supreme Court also referred to Article 30 of the European Convention on State Immunity (Basle, 1972) that specifically excludes the application of the Convention in respect of claims relating to the operation of seagoing vessels owned or operated by a Contracting State. Moreover the Netherlands Supreme Court followed the Advocate General, who referred to a similar Article 16 regarding "Ships owned or operated by a State" of the Draft Articles on Jurisdictional Immunities of States and Their Property (Report of the International Law Commission on the work of its forty-third session, 29 april – 19 july 1991, United Nations, General Assembly, Official Records: Forty-sixth Session Supplement No. 10 [A/46/10]), accepted by the International Law Commission in 1991. The decisions were quashed and the case was referred back to another Court of Appeal, which subsequently ruled in favour of the United States of America.

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"Zwartemeer"

2009 July 6

Fernhout v. Essent Netwerken

Court: Netherlands Supreme Court

Date: June 15th, 2007

LJN number: BA1414

Case: During dredge operations at the river IJssel in November 1999 a dredge crane aboard the "Zwartemeer" hit and damaged a gas pipe owned and operated by Essent, resulting in a damage assessed at EUR 81.680,44. The rules of the Netherlands Civil Code on collision of inland vessels are also applicable on one sided incidents, where inland vessels damage objects without collision. Hence the rules on collision are applicalbe on the incident, including the time bar in Article 1793 of book 8 of the Netherlands Civil Code. Actions for the recovery of damages are barred after an interval of two years from the date of the casualty.

The case was brought before the Court after the collision claim had become time barred. The claimant based the claim on tort and upheld that it was entitled to do this, as claims based on tort are barred after an interval of five years. The Court dismissed the claim, but the Court of Appeals accepted the argument of the claimant and allowed the claim. The owner of the "Zwartemeer" brought the case before the Netherlands Supreme Court.

Held: The time bar in Article 1793 of book 8 of the Netherlands Civil Code corresponds with Article 7 of the Geneva Convention relating to the Unification of Certain Rules concerning Collisions in Inland Navigation of 15 March 1960, under which actions for compensation for damage must be brought within two years from the date of the occurance. Article 1793 of book 8 of the Netherlands Civil Code intends to protect the interests of the person that is held liable. The Article would be senseless if claimants could still sue after completion of the prescription period. Hence, all non-contractual claims are barred after the short prescription periode of two years. The Netherlands Supreme Court quashed the decision of the Court of Appeal and confirmed the decision of the Court.

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Anonymous et alia v. Nom

2009 June 30

Court: Netherlands Supreme Court

Date: June 20th, 2008

LJN number: BC4959

Case: A dispute between an investing minority shareholder and a director who controls the majority of the shares. In a situation where the parties intended that the investing minority shareholder would step back, and where negotiations with a new investor did not succeed, the bank decided to terminate the credit facility. The director then decided to act without consulting the minority shareholder. This was a violation of a clause in the corporation's articles of association, that protected the interest of the minority shareholder. Where the director asked the Court for suspension of payment without the formalities being met, NOM, as a minority shareholder, initiated proceedings against the director, alleging that disregarding the formalities made the director liable. The Court dismissed the claim, but the Court of Appeal found the director liable. The director appealed and this gave the Netherlands Supreme Court the opportunity to address the topic.

Held: The Netherlands Supreme Court ruled that the violation of a provision in the corporation's articles of association that aims to protect an individual shareholder in principle justifies liability towards the individual shareholder. It is then to the director to show to the satisfaction of the Court that his deed, in view of all the circumstances of the case at hand, cannot be held against him as a 'serious blame to the director'. The case was referred back to another Court of Appeal.

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Vereniging Buma v. Chellomedia Programming

2009 June 23

Court: Netherlands Supreme Court

Date: June 19th, 2009

LJN number: BH7602

Case: Chellomedia produces and distributes a portfolio of thematic television channels. The television programs contain works of music protected by the Dutch Copyright Act. Chellomedia transmits its programs as encrypted digital files to the Telstar 12 satellite, which beams the files to cable operators and DTH platforms. The cable operators and DTH platforms eventually broadcast the digital television programmes that they receive from Chellomedia. The cable operatiors and DTH platforms pay the required contribution to Buma, a collective rights management organisation of songwriters in the Netherlands. But Buma alleged that Chellomedia's transmissions via satellite to the cable operators and DTH platforms should in itself be considered infringing reproductions, since the programmes contained works of music protected by the Dutch Copyright Act and no approval for the distribution of the signal had been given by Buma. The Court and the Court of Appeal dismissed the claim of Buma and Buma decided to appeal to the Netherlands Supreme Court.

Held: The case asks for an answer to the question whether this is a communication to the public as meant in Article 12 of the Dutch Copyright Act, that should be construed in accordance with EU Council Directive 2001/29. The Netherlands Supreme Court refers to two decisions of the European Court of Justice (SGAE/Rafael Hoteles and Lagardère) from which it follows that the term 'public' refers to an indeterminate number of potential television viewers.

As in the Lagardère case, the Netherlands Supreme Court decides that a limited circle of persons who can receive the signals from the satellite only if they use professional equipment cannot be regarded as part of the public. The case is dismissed.

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