Daimler on verge of settling Smart ForTwo clone car suit in Europe

For more than a year now, Mercedes' parent company Daimler has pursued a copyright infringement case against Chinese carmaker Shuanghuan for its Bubble, a blatant knock-off of the Smart ForTwo minicar. A recent holding in a Milanese court has put the German company on the back foot, however, and reports now indicate it is considering settlement to avoid paying huge sums in damages.

The doubt that has crept into Daimler's outlook on the matter comes courtesy of an Italian court's holding on a similar case between BMW and Shuanghuan on the distribution of the CEO, an SUV that bears a striking resemblance to the first-gen BMW X5, essentially allowing Shuanghuan to sell the cars with impunity, and potentially opening BMW to liability for lost sales due to the lawsuit.

The CEO/X5 lawsuit garnered global attention when it broke in 2007, in part because of Shuanghuan's open stance on the matter, essentially saying that copy cars are legal. "Noble and CEO cars, approved by the Chinese government, are legal products," said a company spokesperson. A Munich court even banned the CEO entirely.

In December, 2007, Shuanghuan flouted the ongoing injunction against the Bubble in Italy by displaying the car at the Bologna Motor Show. At the time, things looked bleak for Shuanghuan and the move was viewed as a stunt. In retrospect, it may have been a shrewd business move. Daimler's ForTwo/Bubble suit is before a court in Milan, the same city where the CEO/X5 lawsuit was decided, and so it has been forced to reconsider the strength of its position. What had initially appeared to be a clear-cut case of copyright infringement has now turned about and become a clear loser.

The Milan court's ruling in the case of the Shuanghuan CEO held that it would be impossible for consumers to mistake the Chinese clones for BMW products, reports Automotive News Europe, and that the significant price difference prohibited any real damage to BMW's copyright or trademark, despite the obvious similarity in design.