Procedures and strategies for anti-counterfeiting: Germany
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Germany is part of the EU trademark and design systems. Thus, the EU Trademark Regulation (207/2009), as amended by EU Regulation 2015/2424, and the EU Community Designs Regulation (6/2002) apply directly to protect EU trademarks and registered and unregistered Community designs in Germany.
Legal framework
Germany is part of the EU trademark and design systems. Thus, the EU Trademark Regulation (207/2009), as amended by EU Regulation 2015/2424, and the EU Community Designs Regulation (6/2002) apply directly to protect EU trademarks and registered and unregistered Community designs in Germany. Further protection is obtained through the following national laws, which implement European directives and international IP protection treaties:
- the Trademarks Act;
- the Design Act;
- the Patent Act;
- the Act on Utility Models;
- the Act on Copyright and Related Rights; and
- the Act Against Unfair Competition.
While the protection of unregistered trademarks and other designations used in commerce and trade (eg, trade names, other business designations and work titles) has not been harmonised throughout the European Union, these rights are also governed by national law (in particular, the Trademarks Act).
With respect to the traditionally high thresholds for copyright protection in Germany, in the Birthday Train decision (Geburtstagszug, I ZR 143/12, November 13 2013), the Federal Court of Justice relaxed the originality requirement for supporting a copyright in works of applied art. However, rights holders that rely on copyright protection in other countries should be aware that German courts still apply strict originality and creativity standards when checking the availability of copyright protection for a common, everyday design.
In the absence of a registered or unregistered IP right and under specific circumstances, the Act Against Unfair Competition may grant protection against a product imitation.
The above German laws provide for a large spectrum of remedies which has been fortified by the implementation of the EU IP Rights Enforcement Directive (2004/48/EC). These remedies include measures under civil, criminal and administrative law.
Regarding jurisdiction and the recognition and enforcement of judgments in cross-border IP cases, EU Regulation 1215/2012 applies (replacing EU Regulation 44/2001).
Border measures
Rights holders may file an application for action with Customs. Customs examines millions of goods every day. Goods suspected of infringing an IP right that has been notified to Customs through this process will be temporarily seized and the rights holder will be notified. The rights holder can then take legal action, either before the civil courts or by filing a request for criminal proceedings against the importer. Illegally imported and seized products will be destroyed by Customs if legal action is successful against the importer or no objection is raised against the seizure. A similar application for action can be filed regarding illegal parallel imports. This customs surveillance is an effective means for rights holders to discover and prosecute infringements and keep infringing products, particularly counterfeits, off the market.
Most seizures by Customs follow the procedural rules of EU Regulation 608/2013, which takes precedence over national legislation. However, infringement scenarios exist which still fall under the scope of national provisions. Examples include infringements taking place in commerce between EU member states, parallel or grey-market imports and production overruns.
Since 2009, both EU and national applications for customs action can be filed with customs offices in Germany and – where pan-European IP rights with additional effect for other EU member states are infringed – using ZGR-Online, the centralised online database system for the protection of IP rights.
Criminal prosecution
Infringement of trademarks, registered designs, patents, utility models or copyright is not only actionable under civil law, but may also constitute a criminal offence if committed intentionally.
An ‘ordinary’ offender will be sentenced to a fine or imprisonment of up to three years. Such offences will be prosecuted by the Public Prosecution Office on request only, unless ex officio intervention is considered necessary. In many cases, proceedings can be resolved without lengthy trials; however, this is often on the condition that the accused accepts a public charge.
Offenders committing the infringement as a business (as is usually the case with organised piracy and counterfeiting activities) can be sentenced to a fine or up to five years’ imprisonment.
If there is an initial suspicion of a criminal offence, the Public Prosecution Office and the police may take measures under criminal procedural law to investigate the case and prevent concealment of facts. Such measures may include seizure of products (eg, products exhibited at trade shows). Seizures may be ordered by a judge or, in case of imminent danger, the Public Prosecution Office and the police. According to a decision of the Cologne District Court (Kinderreisebett 116 Qs 12/13, 116 Js 788/12, May 6 2013), the prerequisite of initial suspicion may be questionable where the relevant IP infringement (in this case, patent infringement) is not obvious and the seizure is ordered (or intended) on the basis of information furnished by the rights holder only. In any event, in Kinderreisebett there was no imminent jeopardy to the rights holder’s position if prompt legal assistance could be arranged through the courts, even on the same or the following day. In light of this decision, rights holders should secure infringement evidence and seek legal advice and court assistance before relying on seizure actions by the Public Prosecution Office or the police.
Civil prosecution
Civil law remedies are the most commonly used means to address counterfeiting issues. Under German law, civil law enforcement of IP rights often involves a three-step approach:
- a cease and desist demand in a letter to the alleged infringer;
- an application for a preliminary injunction, if the requested cease and desist undertaking is not properly carried out; and
- a regular complaint to obtain a final judgment in substantive proceedings, if the preliminary injunction order is not accepted by the defendant as a final resolution of the dispute.
Cease and desist letter
Although it is not legally required for the initiation of legal proceedings, rights holders normally approach alleged infringers with a cease and desist letter, asking for a cease and desist commitment.
The cease and desist letter usually encloses a draft of the requested cease and desist declaration. In that declaration, the alleged infringer commits to discontinue the infringing act and pay a penalty to the rights holder in case of future breach of the commitment. As per German case law, a cease and desist commitment issued without such penalty provision will not legally eliminate the threat of repeated infringement, meaning that the rights holder would have to apply for a court injunction promptly in order to enforce its cease and desist claim. For the rights holder, the practical advantage of a contractual penalty clause is that the penalty becomes due and payable on occurrence of a breach (subject to court review if requested by the debtor). A similar penalty, if ordered in a court injunction, is payable to the State Treasury rather than the rights holder.
In addition to the cease and desist request, the demand letter normally contains a request for disclosure of past sales, names of suppliers and commercial customers of the infringing products and all other facts describing the extent of the alleged infringement. On the basis of these, the rights holder can calculate its claims for damages. Apart from damages, the rights holder can seek reimbursement of legal fees and costs.
The main purpose of a cease and desist letter is to encourage the infringer to commit to an out-of-court settlement, thereby avoiding lengthy and costly court proceedings.
Any kind of IP infringement can be the subject of a cease and desist demand, as well as alleged violations of fair trade rules (eg, missing or improper disclosures on online sales platforms or social media). Under German law, operators of online marketplaces may be held liable not only for third-party infringements in which they play an active role, but also – by way of secondary liability – for unlawful third-party content, provided that the operator is in breach of a duty of care. This can occur if the platform provider has knowledge of the unlawful content – either through internal investigation or notification by the rights holder (eg, a cease and desist letter) – and still fails to remove the unlawful content. Counterfeiters that continue infringements despite a warning may be deemed to act intentionally, in which case criminal prosecution is possible.
In some circumstances it may be preferable not to issue a cease and desist letter, but to proceed directly to a preliminary injunction – usually through ex parte proceedings, which are normally granted in situations where the alleged facts appear to support the cease and desist request clearly and beyond reasonable doubt. A court order issued without the prior warning of a cease and desist demand or court hearing will help to secure evidence and facilitate the seizure of counterfeit products. Further, a direct approach to the court will often shorten proceedings because the defendant has fewer opportunities to request a hearing or otherwise delay the decision.
Preliminary injunction
If prompt court assistance is required, relief may be available by means of a preliminary injunction. In this case the applicant asks the court to issue a cease and desist order. Where infringement is obvious, the court can order the defendant to disclose:
- the names and addresses of suppliers and commercial customers;
- details of the infringement, such as quantities, prices and whereabouts of infringing products; and
- trade documents.
The court can also grant a seizure order which the applicant can enforce through a bailiff, either on the infringer’s premises or at other locations (eg, a warehouse, distributor’s premises, trade show or exhibition).
Germany’s specialised IP infringement courts enjoy an excellent reputation. Further, the costs of IP proceedings before a German court tend to be lower than those in other jurisdictions. If infringement is committed on a national scale (eg, by presenting the infringing product on a website), applicants may file suit in the court of their choice (ie, forum shopping). Almost all major cities in Germany have specialised courts for trademark and design cases. In patent disputes, plaintiffs often prefer to file in Dusseldorf, Mannheim or Munich.
Preliminary injunctions can be granted without prior hearing (ie, in ex parte proceedings), sometimes within a few days or even hours. Once the injunction is officially served on the defendant, it must promptly comply with the court order, but may challenge the preliminary decision by filing an opposition brief. If the court feels that it should hear the defendant before deciding on the merits of the application, it will set a hearing date (normally within one or two weeks); it will then render a judgment promptly after the hearing. This can be appealed by the losing party to the competent appellate court.
Preliminary injunction proceedings are available only if court assistance is required urgently. Urgency is a procedural condition, meaning that the claimant must react in a timely fashion to a discovered infringement by requesting a cease and desist declaration and filing its unresolved claims in court. The date of discovery of an infringement is usually determined as the date on which the claimant receives actual knowledge of the facts in such a way that it can reasonably understand that they constitute an infringement of its rights. There is no statutory or other fixed deadline for taking legal action in order to meet the urgency requirement. However, with some regional differences, the courts expect applicants to file for a preliminary injunction within one month of discovering the infringement.
Generally, German courts grant preliminary injunctions on the basis of both registered and unregistered rights (eg, in the case of unregistered Community design rights or copyright, or where the Act Against Unfair Competition has been violated). In order to assert such rights successfully in preliminary injunction proceedings, intensive preparation and comprehensive presentation of the case in court are required. Evidence in support of the relevant facts is usually provided by means of material such as affidavits, catalogues and website screenshots.
Substantive proceedings
Preliminary injunctions aim at a quick response to IP infringement; if the violation is clear and beyond reasonable doubt, they can even provide quick access to the source of the infringing products and distribution channels. If the defendant is unwilling to accept the preliminary injunction as final and binding, a court decision is required, including the enforcement of full disclosure, damages, destruction of infringing goods and reimbursement of legal expenses.
A regular court action is initiated through a long-form complaint stating the full facts and legal reasons for the claims raised. The court will serve the complaint on the defendant, which will file a substantial statement of defence. Usually, the court will allow further exchange of written arguments before an oral hearing is set. Unlike in preliminary injunction proceedings, evidence may not be provided as affidavits, but only as formal evidence (eg, documents, witness statements in a court hearing or oral or written expert opinions).
Depending on the workload of the court, substantive proceedings in IP matters can take considerable time until a first-instance judgment is rendered – usually between eight and 12 months. Appellate proceedings may take longer. If the appellate court admits further recourse against its judgment or the losing party successfully contests the denial of leave to appeal, the Federal Court of Justice may rule on the case.
Anti-counterfeiting online
Customs authorities provide extensive online information that educates rights holders on available practical measures to prosecute counterfeiting and piracy. The information is available on the Ministry of Finance website (www.zoll.de).
As an EU member state, Germany participates in the Anti-counterfeit and Anti-piracy Information System (COPIS) information platform, an EU-wide industrial property rights information database for customs authorities. COPIS was established by the European Commission and member states under the EU Customs Enforcement Regulation (608/2013). The ZGR-Online system, established in Germany in 2009, is directly linked to COPIS and thus forms part of the commission’s administrative system.
Preventive measures/strategies
German IP law provides for effective and cost-efficient measures against counterfeiters and pirates, if rights holders make use of its specific features.
Trade shows
Unlike many other jurisdictions, Germany does not recognise a per se ‘landlord liability’ of a trade show organiser for IP infringements taking place on its premises. Against this background, exhibitors depend on the assistance of Customs, police and IP lawyers in order to enforce their rights.
Nevertheless, well-known trade fairs such as Messe Frankfurt offer specific services to exhibitors, which often include contact with Customs, police, IP lawyers, bailiffs, translators and security staff. In order to benefit from these services, it is important to contact the organiser in due time before the show starts, to ensure that the competent authorities are informed and prepared to take appropriate action. For this purpose, a rights holder should prepare a dossier containing all information required for a quick assessment of the legal situation.
Regarding legal service of documents, German civil procedure rules require specific forms of service which can mean that service must take place at the business premises of the party to be served. An exhibitor’s trade show stand or booth is normally accepted as ‘business premises’ in this sense. Thus, a warning letter, preliminary injunction, court decision on cost reimbursement claims or other judicial document may be served with legal effect on a foreign exhibitor at its trade fair booth. Even where a foreign exhibitor has insufficient command of the German language, no translation is required. Obtaining a court order and arranging for service on the infringer at its trade show stand is one of the most efficient ways of combating infringement during trade fairs. This particularly applies to complex IP infringements because administrative emergency measures such as police or customs seizures usually require prima facie and clear violation of applicable laws.
Further strategies
Generally, rights holders will benefit from a multi-step approach which combines market monitoring measures, cooperation with Customs and other authorities, use of information available on online platforms and from internet service providers and – where necessary – warning letters and initiation of court action. It pays to invest in the registration of patents, trademarks, designs and other IP rights where possible.
Heuking Kühn Lüer Wojtek PartGmbB
Goetheplatz 5-7
Frankfurt am Main 60313
Germany
Tel +49 69 975 61 422
Fax +49 69 975 61 400
Web www.heuking.de
