June 16, 2010

Nespresso Sues Sara Lee over Patent Infringement

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Nespresso is starting the long defense of their patented system of Nespresso capsules and extraction methods against competition through patent infringement suits. Nespresso has a lot to lose if they don't, as the Nespresso business has been a bright spot in the company's balance sheets lately.

Nespresso volume was up 20% in the last quarterly announcement, and Sara Lee recently started selling capsules in France to fit the Nespresso maker at a 10% discount to the Nespresso ones. Definitely a concern at Nestle if the Nespresso brand is to continue doing well. Clearly Nespresso sees a lot of growth ahead for its Nespresso brand and with what they believe to be a strong patent portfolio they believe that they will need to defend it and the growth potential. Sara Lee on the other hand clearly sees an opportunity or at least a need to get into this growing high end market with something that doesn't infringe on Nestle's patents.

Ethical Coffee has also released a capsule that fits the Nespresso machine in France. No news about suits versus this company, but to add a twist to this facet, the founder of this company, Jean-Paul Gaillard, used to work at Nespresso and apparently is trying to navigate around Nestle's patent coverage.

I am sure we will continue to hear about these stories well into the future.

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Posted by Scott Martin at June 16, 2010 7:50 AM
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