Court ruling can lead to more competitive automotive industry

This on-going dispute culminated in an application being brought before the North Gauteng High Court in August 2011 by BMW SA, who claimed that Grandmark had infringed on certain of its intellectual property rights by importing and selling spare parts that were fitted to BMW models. BMW claimed that Grandmark had infringed four specific aesthetic designs, another 150 less clearly defined designs and certain of BMW's trade mark registrations.

Grandmark challenged the legitimacy of BMW's design registrations in a counter-application, saying they did not qualify as aesthetic designs as the parts are functional in nature and lack novelty or originality. Grandmark also stated in court papers that BMW's practice of registering designs for many of its vehicle parts, as well as aggressively pursuing replacement parts suppliers who allegedly infringed its design rights, could be deemed to be anti-competitive.

Parts have no aesthetic features

On 18 July 2012, Judge Natvarial Ranchod handed down a landmark judgement in favour of Grandmark International. In addition to various rulings pertaining to the alleged intellectual property rights infringements, the court held that BMW had not proved any aesthetic features of its parts that warranted protection in the aesthetic register under the Designs Act. As such, Judge Ranchod said it was not clear what merited the monopoly right BMW had sought to enforce over its design rights.

"This ruling has the potential to loosen the monopolistic stranglehold that original equipment manufacturers (OEMs) currently have on the parts market, should it be upheld through the appeals process," says Steven Ongchin, chief operating officer of Grandmark International. "This would open up the market as established parts distributors could stock a greater variety of replacement parts for various OEM brands and models."

Cheaper spare parts

Ongchin says that this would enable significant reductions in the cost of spare parts and increase availability and product offerings as both OEM and aftermarket parts would be suitable options for replacement parts.

"Our decision to continue with this protracted legal battle has been driven by our desire to create a more competitive marketplace in the local motor industry. Following the favourable judgement we feel vindicated in our decision to dispute the legality of the design rights and seek to have them revoked and we are excited about what lies ahead for the local motor industry, short-term insurers and South African consumers," concludes Ongchin.