I received this email today.



Swatch v Cousins
An Explanation and an Update
I am pleased to be able to give you a positive update on the progress of the Court case in Switzerland regarding the open supply of spare parts for repairers. However, the update will make a great deal more sense if I provide you with a bit of explanation first.

When we released the news two months ago that Swatch had brought an action against us, many people contacted me directly, or asked questions on various on-line forums as to how Cousins could be the defendant and Swatch be claiming against us, when clearly the supply chain was the other way around, and Cousins was claiming to be the injured party because Swatch was refusing to supply us. The answer and the update both come from an explanation of the type of action that Swatch have used. This is known as a “Negative Declaratory Action” or NDA. Like all things legal, an NDA has various clauses and options within it, and because it seems at first to be the reverse of common sense, it takes a bit of thinking about before the logic becomes apparent.

At heart an NDA has one principle purpose, and that is to allow an organisation that finds itself accused of wrongdoing by another, to have a mechanism available where it can force the issue into a court, and have the matter resolved. Imagine a circumstance where your company is being accused by another of breaking the law. You think you have done nothing wrong, but however many letters you write to your accuser telling them to take you to Court to settle things they just won’t do it, and their continued accusations are potentially damaging your business. This is a good example of where an NDA is appropriate. It gives you the right to bring your accuser into court, and make them prove the claims they have made against you, or give you the chance to publicly prove that their accusations are false.

For an NDA claim to be valid, there are various conditions that have to be met, and these can vary from country to country. As the case against us has been brought in a Swiss court, then the conditions applicable are as set out in Swiss law, and one of the most important of these is the principle of ‘Legal Uncertainty’. What this means is that an NDA claim can only be brought by a company if there is reasonable uncertainty that the other party who is accusing them of wrongdoing shows no real intention of bringing its own action in a court. So with this explanation in mind, I am now pleased to give you the following update on our case.

As you will have seen from our last announcement, the thing that triggered Swatch to bring this NDA against Cousins was our “Letter Before Action”. This clearly stated that if Swatch did not re supply us, we would be bringing an action against them in the English High Court. At the end of August, our Swiss lawyers submitted the first stage of our defence to the court in Berne. In it, they argued that there are a number of reasons why this NDA is not a valid action, and have requested that the Judge dismiss the whole case. I cannot go into detail about all of these reasons, but the most obvious one is that there was no legal uncertainty in this matter. Cousins made it quite plain that it would be taking Swatch to court in London if it did not resupply us, and this being the case, a Negative Declaratory Action is not a legitimate claim that the Swiss court needs to consider.

The Swiss judge, having looked at the arguments raised by our lawyers, has agreed that this and other issues need to be examined first, so we are now entering the next stage in which these points of law will be examined before he makes a decision. Depending upon what the Judge decides, the full case will then be heard either in Switzerland, or it will be returned to the English courts where we will ask for an expedited trial.

It may be a few months before we will have the verdict, so we may not be able to update further until then. However please do not take silence on our part as a negative, but be assured that we have assembled an excellent case, and are fighting harder than ever for the future of the Independent Repair Trade.

Kind regards

Anthony Cousins
Managing Director, Cousins Material House Ltd.
[email protected]

 

Thanks for posting.

 

Best of luck ... Have you thought about some kind of crowd funding mechanism? I got a feeling a lot of us WISers would chip in with a low amount, until you have a non-low-amount.

After all this seems like a historic precedent and not just for you guys...

 

I posted an email I got, I'm not with Cousins.

 

An update:
http://us7.campaign-archive1.com/?u=ceefad6307d366a92a1b87c7b&id=0bf18182c0&e=6c18609152

Sounds promising!

 

That is good news. I am looking for a part that seems to be out of stock everywhere, so this should hopefully help and rectify that. Part in question is dial for 165.024 SM300

 

I would not hold your breath that this is going to help you any time soon...this is a decision to make another decision before they decide if the case goes to court in one country, or if they will wait for the other party to take the case to court (at some point) in the other country...parts flowing from this are a very long way off if it ever happens...

 

First: I've also known NDA to stand for Non-Disclosure Agreement, ie: document signed to ensure confidentiality is maintained

Second: I don't understand why a manufacturer/retailer (Swatch in this case) could be legally 'forced' to supply parts to third party if they don't want to, unless there was a pre-agreed contract signed to do so. If Cousins UK (or others) have such a contract, then I would think they'd be suing for breach of contract.

(I'm not a lawyer, although I deal with various aspects and elements of contracts and IP globally)

 

I've not read any part of the documentation or the complaint, other than what I've seen about Swatch's plans to stop supplying parts outside of the Swatch group. Best guess is that the action is being brought under competition and monopolies legislation (anti-trust in the US, if my terminology is correct).

Don't expect a conclusion within the next three years.

 

You could be right that the complaint stems from the idea of competition/monopoly. Although again, I would find it surprising if a supplier of a device (watch) that is sold in a comepeitive market with many alternatives were forced to supply service parts to independent sources under such reasoning. I think it is more likely related to some perception of past agreement/contract that Cousins UK believes has been broken.

I don't think Swatch has a monopoly on mechanical watches in UK. I wonder if Swatch had to make some assurances related to maintenance parts to get approval when they were aquiring the many brands that now fall under their group?

 

It could well be a contract action, as I've said, I've not read into it. With regards to a monopoly, though, refusing to supply replacement parts for ETA movements will create a monopoly on the repairing of older movements. I've no doubt that this is in breach of EU and UK law, not to mention US. It'll be fun to read when it all gets reported.

 

If you look at the automotive industry (and this took years to sort out) as analogous to the watch industry, the EU says:

http://www.figiefa.eu/wp-content/uploads/r2rc-newberframeworkbrochure.pdf

I have no doubt there's a cause for action there. Suing for breach of contract would be simpler but they're unlikely to get a court to order specific performance as damages could be calculated and, even if they were granted specific performance, Swatch could easily cancel any contract as there's sure to be a mechanism to do that.

 

Yes, it's an anti-trust case.
The repair of a watch is considered a different market to the sale of a watch. Therefore, an outright refusal to supply to any third party creates a monopoly in the repair market.

 

But that's not what Swatch have done...they have chosen to sell directly to the watchmaker, and cut out the middle man (resellers like Cousins). There is no monopoly in the market with the current arrangement, since many different watchmakers (such as myself) can access parts directly from Swatch and service your watch. As I've said before, if your current watchmaker does not have a parts account with Swatch, they can certainly apply.

Everyone should keep in mind that this is not a class action, and Cousins are not suing for access on behalf of anyone but themselves. They are also a supplier to the trade, and I believe they make you click a small box to that effect when you purchase there the first time. Technically, they are not really in the business of supplying end users, but watchmakers like me. I have bought from them certainly, but if the part is available from Omega, it's much cheaper to buy from directly from Omega and in the end it saves my customer money.

Cheers, Al