Nestle's Nespresso patent battles with ECC heating up
- The saga of Nestle's legal battles over coffee pod patents continues, with The Ethical Coffee Co. (ECC) hanging on to its claims to technology patents that could impact Nestle's Nespresso brand. ECC's founder is former Nespresso president Jean-Paul Gaillard.
- For years, ECC has alleged that Nestle made modifications to its Nespresso machines so that ECC's coffee capsules would be incompatible. The company also alleges that Nestle made those modifications with a technology for which ECC claims to own a patent.
- Europe's main patent office dismissed Nestle's challenge over that patent last month, leaving ECC to pursue patent infringement damages in several European countries. ECC is also attempting to block sales of Nestle's machines that use its patented technology. Nestle disagrees that its machines use ECC's technology and plans to appeal the patent office's decision.
Whether Nestle's appeal or ECC's attempted blockage of Nespresso machine sales goes through is critical for Nestle, as all of the Nespresso machines sold in Europe and many sold in the U.S. use the technology ECC claims it owns. The loss of machine sales in addition to any damages the company would be forced to pay could cause significant financial harm for Nestle.
ECC has been pressuring Nestle from a legal standpoint for years and shows no signs of letting up, with more lawsuits on the horizon and total claims estimated to be about $2 billion to $2.5 billion, Gaillard told The Wall Street Journal.
Besides legal battles, Nespresso's chief concern is growing competition eating away at its market share, which has fallen from 13% in 2011 to 11.1% of the global coffee capsule market in 2015, according to Euromonitor. Senseo from Jacobs Douwe Egberts is gaining with 10% of the market share last year.
- The Wall Street Journal Trouble Brewing for Nestlé in Coffee-Pod Market