Nestle suffers setback in Germany in coffee capsule war

FRANKFURT: A German court rejected Thursday an application by Swiss food giant Nestle to ban the sale of unlicensed coffee capsules for its Nespresso coffee machines in Germany.
The regional court in Duesseldorf rejected Nestle’s application for an injunction against two rival Swiss companies from selling cheaper coffee capsules that carried a label saying they were “suitable for Nespresso machines.”
While Nestle subsidiary Nestec held the patent on the Nespresso machines and both it and its license holders produced the original Nespresso capsules, a consumer was not infringing Nestle’s patent if they used coffee capsules made by other manufacturers in the machines, the court argued.
While the capsules were essential for making coffee with the machines, they were not the machines’ “functional core,” it ruled.
Already in early July, Nestle failed to win an injunction against the sale of biodegradable coffee capsules by compatriot Ethical Coffee Company (ECC) which are compatible with Nespresso machines.
The capsules generated revenues of 3.0 billion Swiss francs (2.5 billion euros, $3.0 billion) for Nestle last year and the overall market for such capsules is expected to reach $8.1 billion by 2014.