In the relationship between trademark protection and claims under unfair competition law, it is an established principle of the German Federal Court of Justice that valuation contradictions should be avoided in the case of deceptions of origin under the Unfair Competition Act.

The Higher Regional Court of Frankfurt last substantiated this principle in a decision from 2018 (OLG Frankfurt a.M., decision of March 14, 2018 - Ref.: 6 W 18/18) in the context of a franchise relationship with regard to the use of a domain by a franchisee. Accordingly, the Frankfurt Higher Regional Court ruled that a misleading use of a domain name is ruled out if the trademark owner has permitted the use of the corresponding trademark. A use permissible under trademark law cannot in principle be misleading under competition law at the same time.

Factual circumstances

The applicant (franchisee) had entered into a franchise agreement with a franchisor under which it had been permitted and was obliged to train and educate using a particular method/system and to use the IP of the franchisor, especially a particular trademark. The franchisor had contractually reserved the right to exercise the rights himself or to grant them to third parties within the territory that was subject to the franchise agreement. Under an addendum agreement signed between the parties in 2002, the franchisee was (subject to certain prerequisites) further granted the exclusive distribution rights for Germany with respect to a list of specified products. The franchisor terminated this franchise agreement with effect from December 31, 2018.

In January 2018, a new contractual partner concluded a partnership agreement with the franchisor entitling him to use the franchisor's training system, to train trainers, to trade under the name and to use the respective word mark in the context of the contractual activities. The new contractual partner also uses the trademark as a domain.

Arguments of former franchisee

The applicant was of the opinion that the use of the domain by the new contractual partner of the franchisor was deceiving of origin and thus impermissible under principles of unfair competition and applied to the court to prohibit him from using the domain in commercial transactions. 

The court rejected the application. It is of the opinion that the defendant is entitled to use the trademark as a domain under the partnership agreement. If one were to award the applicant claims under the "Law against Unfair Competition" on the grounds of deception of origin, there would be valuation contradictions to trademark law, which should be avoided. Trademark protection may not be extended or limited by unfair competition law. Insofar as the granting of a license is permitted under trademark law, a possibly connected misconception of the trade - in this case: the relationship between the domain and the former licensee - must be accepted.

Consequences

In practice, it follows that, with regard to the question of the existence of any claims under unfair competition law between franchisees, the granting of rights under the respective franchise agreements is decisive and legal valuations under trademark law must be taken into account.

It is not clear from the decision whether the case would have been decided differently if no full grant of rights had taken place. Relevant for such questions are the respective circumstances of each individual case. In the case of a "collision", the principle of the Supreme Court must be taken into account that valuation contradictions between trademark law and the provisions on protection against deception of origin must be avoided: no protective position may be granted under unfair competition law that does not exist under trademark law.

Depending on the individual circumstances and as far as legally permissible the implementation of provisions with respect not only to the use of the trademark(s), but also the aspect of the use of a domain may reduce risks of future disputes.