Within the European Union, Germany is one of the most attractive jurisdictions because its courts have a reputation for expertise and efficiency, both time and cost-wise. In addition, although the remedies available are largely harmonised throughout the European Union, rights holders enforcing their trademark rights in Germany benefit from ex parte injunctive relief through preliminary injunction on an urgent basis, which judges in other EU member states are less ready to grant.

Legislative framework and causes of action

Legislative framework

Germany is a signatory to all major international treaties in the field of intellectual property. As an EU member state, Germany is a part of the EU trademark system. Regulation 207/2009, amended by Regulation 2015/2424, provides for unitary trademark protection in all EU member states via a single registration of an EU trademark. The supranational EU trademark regime coexists with the Trademark Act 1994 implementing Directive 2008/95/EC. However, the Trademark Act is more comprehensive, in that it also provides for the protection of unregistered trademarks and other designations used in commerce and trade, such as signs that have acquired public recognition, well-known marks within the meaning of Article 6bis of the Paris Convention for the Protection of Industrial Property, trade names, symbols and indications of geographical origin. Where registered or unregistered trademark rights are not available, the Act against Unfair Competition affords some level of subsidiary legal protection in certain circumstances.

Germany is also a signatory to the Madrid Agreement and Protocol. Thus, trademark protection in the territory of Germany and the European Union may be obtained through an international registration with the World Intellectual Property Organisation (WIPO). Lastly, as a member of the World Trade Organisation, Germany must comply with the Agreement on Trade-Related Aspects of IP Rights.

Causes of action

The most common remedy is an action for infringement of:

  • an earlier German national trademark right, either registered or unregistered;
  • an EU trademark; or
  • an international registration designating either Germany or the European Union.

A preliminary injunction is the most efficient option for obtaining injunctive relief. The core advantage is that an enforceable court decision can be based solely on the facts and legal arguments presented by the applicant’s writ. It is therefore possible to obtain such an enforceable court decision on the merits without giving prior notification to the defendant. The abrogation of the basic right of due process of law is justified by the preliminary injunction’s urgency requirement.

Main proceedings become necessary where:

  • the urgency period has expired;
  • the defendant does not accept a preliminary injunction as final resolution;
  • cases are particularly complex; or
  • the plaintiff seeks other remedies such as damages.

Invalidity can be based on EU and German marks, as well as on other colliding prior rights, on all absolute grounds. This can lead to a refusal of registration ex officio and on grounds of bad faith. Grounds for revocation are absence of genuine use and development into a generic or deceptive indication.

In Germany, cancellation requests based on absolute grounds or non-use against German trademarks must be brought before the German Patent and Trademark Office (PTO). The PTO’s decision can be appealed before the Federal Patent Court. Invalidity proceedings based on earlier rights and non-use actions fall under the jurisdiction of the civil courts. Cancellation and revocation claims can also be raised by way of counterclaims.

Revocation and invalidity requests against EU trademarks are brought before the EU Intellectual Property Office (EUIPO). The decisions of the EUIPO’s Cancellation Division can be appealed before the EUIPO Boards of Appeal and thereafter before the General Court of the European Union, and subsequently before the European Court of Justice.

Alternative dispute resolution

Litigation is the preferred dispute resolution mechanism in Germany, as most disputes arising out of trademark infringements can be resolved in a cost-efficient and timely manner. This is because the German courts have specialised chambers for IP-related matters and relatively low court fees. In addition, German judges actively support settlement negotiations during trial.

Alternative dispute resolution methods, however, are used increasingly frequently in cross-border IP disputes. This is primarily because these methods are often incorporated into the terms and conditions of the procedures for settlement of disputes of institutions such as the Internet Corporation for Assigned Names and Numbers or the Arbitration and Mediation Centre. The basic rules for arbitration are set forth in Sections 1025 to 1066 of the German Code of Civil Procedure. The German Institute of Arbitration provides more detailed rules. These are often used as a reference in cross-border trademark licence or research and development agreements, as well as in various commercial contracts.

The German Mediation Act 2012 is the first codification of mediation and related areas. It implements EU Directive 2008/52/EC on Certain Aspects of Mediation in Civil and Commercial Matters. Mediation may therefore gain additional relevance in the future.

Litigation venue and formats

Court system

Trademark infringement cases can be heard in up to three courts: district courts, courts of appeal and the Federal Supreme Court.

Cases before the district courts and the courts of appeal are typically heard by three judges. In less complicated cases, the parties have the option to agree that the dispute be decided by a single judge. Appeals filed before the Federal Supreme Court are heard by five judges. The parties must be represented by attorneys admitted to appear before the Federal Supreme Court.

Jury trials do not exist in the German court system.

Litigation venues

Each of the 16 German federal states has one or more specialised district courts with jurisdiction in cases involving trademark rights. Each court of appeal has at least one chamber specialised in trademark law.

The general principle is that the court of the defendant’s domicile has jurisdiction in all disputes based on trademark law. Alternatively, the court’s jurisdiction can be determined under the rule of forum loci delicti – that is, the location where the act of infringement occurred or the location where the threat of infringement occurred. Such location can be the place where the infringer committed the infringement or the place where the damages resulting from the trademark infringement occurred. Consequently, virtually every district court will have jurisdiction in cases concerning trademark infringements online because the infringing websites targeting German customers are accessible throughout Germany. In this latter category of trials, forum shopping is possible in the sense that the claimant has the option to choose with which district court to file its action.

Only the German civil courts designated as EU trademark courts can have jurisdiction over infringement actions based on EU trademarks. In principle, the jurisdiction of these courts is determined under rules similar to those that apply in cases of infringement of national trademarks. When the rule of forum loci delicti applies, the jurisdiction of the respective German EU trademark court and the enforceability of its award are limited to the territory of Germany, being the state where the infringing act has been committed or was threatened. If neither claimant nor defendant is domiciled or has an establishment in the European Union, the EU Trademark Court in Alicante, Spain, has EU-wide jurisdiction.

Costs

It is significantly less expensive to litigate in Germany in comparison to, for example, the United States or the United Kingdom. This is because of, among other things, the absence of discovery or disclosure costs, but also the length of trials: court hearings are generally a matter of a couple of hours, and the bulk of the proceedings rests on written submissions by the parties.

The losing party must reimburse the victorious party’s statutory lawyers’ fees, the court fees and any necessary expenditures, such as travel expenses and translation costs. The amount of statutory court and attorneys’ fees is calculated according to a scale laid down by statute, which is based on the economic value in dispute.

Damages and remedies

Civil law remedies include:

  • cease and desist claims (injunctive relief);
  • claims for destruction of the infringing products;
  • claims for recall or removal of the infringing goods from sales channels;
  • claims for obtaining detailed information and accounts regarding the infringement; and
  • claims for damages, including claims for lost profits, although excluding any form of punitive damages.

Damages

The infringer is obliged to compensate the damages that the trademark owner suffered if the infringer acted culpably – that is, with wilful misconduct, gross negligence or at least simple negligence. German law provides only for compensatory damages. Typically, the trademark owner – and in certain circumstances the exclusive licensee – is entitled to damages. In general, damages amount to the lost profits of the rights holder. As the standards to prove lost profits are high and thus often difficult to meet, established German case law accepts two methods for calculating damages:

  • The infringer must pay a fictitious licence fee to the trademark owner calculated on the basis of the volume of the illegal sales; or
  • The infringer must pay the rights holder a sum that is equal to the profits resulting from the trademark infringement.

Typically, courts grant only a portion of the infringer’s profits as damages if the infringer can successfully argue that it would have been able, to a certain extent, to sell the product without illegally using the plaintiff’s trademark. The German legal community views this type of argument critically, however, because if the infringer can keep a share of the profits, trademark infringement becomes a profitable and thus attractive proposition.

To determine a reasonable fictitious licence fee or the amount of the infringer’s profits, the infringer is obliged to disclose information about the extent of sales of the infringing products, including the number of manufactured, ordered or sold products, purchase or sales prices, revenue or profit, related advertisements and the duration of infringing sales. This type of information can be required as long as it is necessary to determine the amount of damages and compensation due, and under the condition that it is not disproportionate to the size of the infringement. Furthermore, the infringer may be obliged to submit or allow access to financial documents.

Further remedies

Following the implementation of the EU IP Rights Enforcement Directive (2004/48/EC) into national law, further civil remedies under the German Trademark Act and Code of Civil Procedure include:

  • claims to recall infringing products or to remove them permanently from channels of distribution;
  • claims to obtain information about the origin and channels of distribution of the infringing products;
  • claims to submit or allow access to the banking, financial or commercial documents of the infringer;
  • claim to publish the final judgment; and
  • claims for reimbursement of statutory attorneys’ fees for representation in and out of court.

Evidencing the case

Burden of proof

In trademark infringement cases, the general principle applies that each party must demonstrate and submit evidence about the facts in its favour. The trademark owner need not prove that the use of the trademark was unauthorised. Instead, the infringer must provide evidence that the rights holder consented to use of the mark.

Investigations and first steps

In today’s digital world, investigations into trademark infringement usually start online. Many brand owners have sophisticated market surveillance programmes in place. It is a common practice to demonstrate trademark infringement to the court by submitting print-outs of infringing online offers. In addition, it is often advisable to purchase the infringing item in order to gather evidence as to its packaging and distribution channels. The claimant may also need to verify that the online pictures display the sold product correctly. Sometimes pictures of the original product are shown to disguise the counterfeit nature of the product. Online investigations and test purchases of infringing items should ideally be conducted by a professional investigator, because the investigator may be heard as a witness in court, in cases when the defendant contests the trademark infringement or its responsibility for such infringement.

Pre-trial discovery or discovery comparable with US or UK procedure does not exist. Therefore, the trademark owner should ensure that all necessary evidence to support the case is in place at the time that the lawsuit is filed. It may even be advisable to collect the evidence before notifying the infringer, which may likely try to conceal the illegal activities by removing infringing offers from the website.

Evidence related to the amount of damages is not essential when starting the case, as the infringer will be obliged to provide information on the scope of related activities. However, the claimant should strive to collect as much evidence as possible, as this will enable the claimant to verify or disprove the information that the infringer submits. The claimant will commonly request the court to decide only on the liability for paying damages. Provided that the claimant succeeds, in most cases either the parties will agree on a sum to be paid by way of damages or damages will be assessed in a separate set of proceedings.

Methods of evidence

In general, German procedural law acknowledges five types of evidence:

  • documents;
  • witness testimony;
  • expert testimony;
  • visual inspection; and
  • interrogation of a party.

Trademark ownership can be evidenced by submitting excerpts of the online register of the EUIPO, the German PTO or WIPO. If the claimant is a licensee, the claimant’s status can be proven by submitting a copy of the licence contract or by witness testimony.

Witness testimony is often used to prove trademark infringement. In addition, a visual inspection of the infringing products typically supports the complaint.

If the claimant seeks to prove infringement of a well-known trademark or of a sign that has acquired distinctiveness through use as a trademark or trade name, an opinion survey of the relevant market participants or consumers can be used as evidence of the degree of public awareness. If the defendant contests the findings of the opinion survey, the court has the discretion to appoint an expert witness to conduct a second survey, upon the claimant’s request.

If the contested sign is similar rather than identical to the trademark, the question of sufficient degree of similarity is one of law that the court usually determines based upon its own qualification and expertise. By so doing, the court must take the view of the average consumer or, if appropriate, of the specialised public targeted by the trademark. Rarely, the court may decide to appoint an expert witness to assess the consumer’s understanding of the contested sign.

Available defences

After the defendant has received a cease and desist letter, but before a potential request for preliminary injunction has been filed, the defendant has, as a defensive and precautionary measure, the option to file a so-called ‘protective brief’ (Schutzschrift) through which the defendant can submit facts and arguments to show that the potential claim for preliminary injunction is unfounded. A protective brief may include any relevant arguments, such as lack of urgency or lack of a claim on the merits.

After a cease and desist letter has been received, alternatively or in addition to a protective brief, the alleged infringer is generally entitled to file a court claim for declaratory judgment for non-infringement. If the rights holder in such case files a subsequent action for trademark infringement, the pending declaratory lawsuit either will be stayed or will have to be withdrawn.

Other defensive measures are counterclaims or objections on the basis of revocation or cancellation grounds (see above).

Appeals process

The claimant is required to present the case fully before the first-instance court, including all facts and evidence in its possession. The opportunity to submit new facts or evidence during the appeals process is limited and often depends upon the court’s discretion. The court of appeal must base its hearing and decision on the facts established by the court of first instance, unless specific indications give rise to doubts as to whether the first-instance court has correctly or completely established the facts relevant to its decision. Presenting new facts is permissible in exceptional circumstances – for example:

  • if such facts concern an aspect that the court of first instance has recognisably failed to see or has held to be insignificant; or
  • if the new facts were not previously asserted without this being due to the negligence of the party.

To start the appeals process, an appeal notice must be filed with the respective court of appeal within one month of the final judgment being served. This deadline cannot be extended. The appeal may be based only on the argument that the initial decision involved a violation of the law or ignorance of facts and circumstances that should have been considered and would have justified a different decision.

The appellate court may allow further appeal on points of law before the Federal Supreme Court if the case is of fundamental importance or a decision is necessary to develop the law further. If this court refuses to admit further appeal on points of law, the Federal Supreme Court has the option to allow the appeal, once a complaint against the refusal of the court of appeal to grant leave to appeal is filed.

The European Court of Justice has jurisdiction in preliminary rulings regarding questions of interpretation of the EU trademark law.

Squire Patton Boggs (US) LLP

Taunusanlage 17

60325 Frankfurt am Main

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Tel +49 69 17392 400

Fax +49 69 17392 400

Web www.squirepattonboggs.com

Iliana Haleen Partner iliana.haleen@squirepb.com

Iliana Haleen’s practice focuses on IP law and encompasses national and multi-jurisdictional brand portfolio management, trademark prosecution and licensing. She has extensive experience in the design and implementation of multi-jurisdictional enforcement programmes.

Ms Haleen represents and counsels multinational clients on anti-counterfeiting measures in cooperation with customs authorities, with the goal of combating cross-border trafficking of counterfeit goods and preventing parallel imports. In addition, she advises on IP issues regarding due diligence in mergers and acquisitions, restructurings and outsourcings.

Ms Haleen has appeared before the EU General Court and frequently represents clients in opposition and cancellation proceedings before the EU Intellectual Property Office and the German Patent and Trademark Office.

Jens Petry Partner jens.petry@squirepb.com

Jens Petry’s practice focuses on IP litigation in the fields of design, patent, trademark and copyright infringement and competition law. He advises clients in a number of industries, most especially luxury goods and domestic appliances. Mr Petry has enforced IP rights in more than 300 cases in various courts in Germany since 2005, including courts of appeal and the Federal Supreme Court. He also represents brand owners in EU customs procedures and in multinational criminal investigations against professional counterfeiters.

Mr Petry is a member of the German Association for Industrial Property and Copyright Law and the International Trademark Association.

Maren Ebner Associate maren.ebner@squirepb.com

Maren Ebner’s practice focuses on IP law, particularly trademarks and design patents in a variety of industries. Her clients include a US consumer goods company with an international portfolio of nearly 1,600 trademarks registered in over 180 countries. She has responsibility in trademark opposition and cancellation proceedings before the German Patent and Trademark Office and the EU Intellectual Property Office, has represented clients before German Customs and coordinated the work of foreign associates with the customs authorities of other jurisdictions. She is experienced in domain name disputes under the Uniform Domain Name Dispute Resolution Policy and in arbitration proceedings before the International Chamber of Commerce in Paris.

This article first appeared in World Trademark Review. For further information please visit www.worldtrademarkreview.com.