The German Federal Court of Justice (“FCJ”) has given three landmark decisions addressing product recalls in the context of injunctive relief in IP matters. These three decisions are the cases Hot Sox (case no. I ZR 109/14), Rescue-Tropfen (I ZB 34/15) and Luftentfeuchter (I ZR 208/15).
The FCJ held in all three cases that a cease and desist obligation typically involves recalling the infringing products or advertising material from the channels of trade. While recalls tended to be the exception in the past, with these decisions, they have now become the rule, whether a prohibitory injunction has been issued by a court (either in proceedings on the merits or in interim injunction proceedings) or the defendant has delivered a cease and desist undertaking including a penalty clause in an out-of-court situation.
Within possible and reasonable limits, the defendant must exert its influence on third parties (especially the defendant’s retailers) as may be necessary to remedy the unlawful situation. Therefore, the defendant usually also has to ensure that its buyers refrain from reselling the products previously delivered to them. This means that the defendant is required to submit buyback offers (refund of purchase price and reimbursement of the retailer’s costs relating to the recall), at least to the defendant’s direct customers, whether or not the product recall has been expressly ordered by the court.
These FCJ precedents are likely intended to apply to all fields of IP. They have been heavily criticised and raise questions, such as the compatibility of these decisions with the Enforcement Directive, as well as many practical legal questions that currently remain unanswered. The FCJ judgments have caused considerable legal uncertainty. Therefore, for the time being, both sides, the defendant as well as the claimant, should proceed with extreme caution in Germany.