Court of Appeal of Berlin, Decision of 12 October 2010, 5 U 152/08

The Court of Appeal of Berlin held that the transit of counterfeit products through Germany under customs surveillance, threatening to infringe trademark rights in the country of destination, constitutes a tortious act in Germany. Therefore, the trademark owner may enjoin the transport company in Germany from transporting the products to the country of destination. Moreover, the transport company is obliged to surrender the products for the purpose of destruction.

Estée Lauder Cosmetics Ltd, the world-famous producer of cosmetics, owns various worldwide trademarks for its products, in particular in Germany and Russia. In 2007, the customs office at Berlin Airport informed Estée Lauder Companies GmbH (Estée Lauder) about the retention of a shipment consisting of counterfeit perfumes. The defendant, a German transport company, intended to transport these perfumes to Moscow. The transport through Germany should have taken place under so-called external transit proceedings, i.e. from a customs law perspective without a formal import of the products.

Estée Lauder claimed that the products would infringe its trademark rights both in Germany and in Russia and requested the defendant to refrain from transporting the products to Russia and to surrender them for the purpose of destruction. As the defendant did not comply with the request, Estée Lauder started legal action against the defendant, based on claims of infringement of its German trademarks and on German tort law on the ground that transport of the products through Germany to Russia contributed to the trademark infringement and was therefore an illegal act in Russia.

In its decision, the Court of Appeal of Berlin ordered the defendant to cease and desist from transporting the counterfeits to Russia and to surrender the products for the purpose of destruction.

The Court of Appeal, however, rejected the claims of trademark infringement in Germany. It held that according to the Court of Justice of the European Union (CJEU) and the German Federal Court of Justice, the mere transit did not amount to the use of the trademark in the transit country. This case-law was also applicable in this case although - unlike the facts in the cases earlier decided by the CJEU and the German Federal Court of Justice - the goods at issue would also infringe trademarks in the country of destination.

A trademark infringement in the transit country could only be found if the trademark owner provided evidence that the counterfeit products were to be put into the course of trade in the transit country "with certainty." The fact that the products were also illegal in the country of destination was not sufficient to serve as such evidence. While the court acknowledged that the illegality of the products in the country of destination clearly showed the willingness of the counterfeit traders to infringe Estée Lauder's trademarks, this would only allow for finding an increased risk of the products to be put into the course of trade already in the transit country, yet, it would not constitute evidence that this was to happen "with certainty."

However, the court said that the right to enjoin the transport company from transporting the products to Russia and the right to request the destruction of the products could be based on German tort law. The court held that this was long established German case-law which had not become obsolete by the recent decisions of the CJEU and the German Federal Court of Justice which stated that the mere transit of products with a sign protected in the transit country did not constitute a trademark infringement while in transit. In none of these decisions the products at issue threatened to infringe trademark rights in the country of destination, which were the circumstances of the present case.

The court also held that although the defendant as a transport company was generally not obliged to check the originality of the products it transported in the first place, it would have been obliged to do so once Estée Lauder notified it about the counterfeit character of the goods. Hence, its liability arose when, after the notification by Estée Lauder, it neither made any inquiries to verify or falsify this allegation, nor surrendered the goods to Estée Lauder.

In practical terms, this decision is of high importance. It clearly strengthens the position of trademark owners in transit cases in Germany which was formerly very uncertain after the CJEU decision in Montex Holdings/Diesel.[1] It confirms that in cases where the products are also to infringe trademarks in the country of destination trademark owners might already stop and destroy counterfeit products in transit in Germany. This is very important since, otherwise, trademark owners might be forced to seek protection in the country of destination which in many cases will either be unattainable or - at least from a practical perspective - often not available in time.

The decision is, however, not yet final as the defendant filed a further appeal to the Federal Court of Justice.