1. The problem
In Germany, in case of non-compliance with labeling or registration requirements possible authority action is neither the only nor the largest threat for a company placing products on the market. The sharp sword to protect against is rather injuctive relief sought by a competitor. We have seen in recent practice that companies increasingly use this possibility to try to stop their competitors from selling products on the German market. This tendency is favored by the ever-growing complexity and inconsistency of labeling requirements.
2. Labeling and registration requirements
As regards proper labeling, most requirements that apply in Germany are the same as in other EU Member States. Many products must be labeled with the CE marking and sometimes, in addition, a Declaration of Conformity with applicable laws has to be provided; electrical and electronic consumer equipment will need the crossed-out wheelie bin; consumer products must bear the company address and contact information. For some products, such as IT/C equipment, chemicals and batteries, to name a few, additional labeling requirements apply.
Typical questions arise with regard to whether the required information is at the right place (product, packaging, manuals) and whether all required information has indeed been considered, e.g. the name of the legal entity placing product on the relevant market and a contact address in the EU.
Sometimes, importers of products overlook registration requirements such as the requirement to register as producer of electrical and electronic equipment or importer of batteries. Such omissions may also happen because of a false understanding of the scope of such registration obligations.
3. A dangerous German peculiarity: Third-party claims to stop product sales
Non-compliance with labeling or registration requirements may not only result in administrative fines but also in claims by competitors and consumer protection organizations or other interest groups under Section 4 no. 11 German Unfair Competition Act ("GUCA").
According to Section 4 no. 11 GUCA, infringement of a market conduct rule is deemed to be an unfair business practice. A statutory provision only qualifies as a market conduct rule if it also – not necessarily primarily – aims at “protecting the integrity of competition” or if it serves consumer protection purposes. Whether labeling and registration requirements also aim to govern market conduct needs to
Non-Compliance with product labeling and registration requirements Public Law & Intellectual Property, Germany
Non-Compliance with product labeling and registration requirements
be assessed on a case-by-case basis. As a general rule, it is a fair statement to say that German courts tend to consider labeling and registration requirements as either aiming at protecting the integrity of competition or as serving consumer protection purposes. For instance, the manufacturer's obligation under the German law implementing the take-back obligation for electrical and electronic equipment (WEEE) to register with the EAR foundation (German national clearing house) before placing on the market such equipment and the obligation to label medical devices with the CE-mark have been found to constitute market conduct rules according to Sec. 4 no. 11 GUCA.
In such case, either a competitor or a consumer protection organization or other interest group may file suit against a manufacturer, importer or reseller of products, claiming non-compliance with market conduct rules. Such competitor or organization is likely to start its activities by sending out a cease and desist letter. If the alleged infringer does not react or rejects to sign a cease and desist declaration, the attacking party may file a motion for preliminary injunction if the matter is deemed to be urgent. In such case, German courts are likely to grant such preliminary injunction “ex parte”, i.e. without hearing the defendant, usually within as little as one to three days. In a worst case scenario, a manufacturer, importer or reseller of products not complying with market conduct rules may therefore face the situation that it is prohibited by a court order to continue distributing its products with immediate effect.
4. How to protect the company?
Of course, trying to be compliant with labeling requirements would be the preferred protection against a threatened injunction to sell a product. It is therefore good practice to conduct a compliance check for the labeling of the existing product line.
Rectifying an incorrect label is, however, typically not possible within days or even weeks. It is therefore important to develop a defense strategy, which may involve legal arguments in favor of the correctness of the current labeling.
In case a manufacturer, importer or reseller receives a cease and desist letter claiming non-compliance with labeling or registration requirements, swift action is of the essence.
As a proactive measure, the alleged infringer may file a protective brief with the courts as soon as it receives such letter. Filing a protective brief gives the alleged infringer the chance to already bring forward arguments against the invoked claims. Courts often tend to order an oral hearing rather than to decide in an ex parte proceeding if they have been provided with a protective brief. The proper defense strategy will obviously depend on the nature of the alleged non-compliance. In case a preliminary injunction is served, a possible fallback-scenario should include any options to remedy the alleged infringement at short hand.
This client newsletter is prepared for information purposes only. The information contained therein should not be relied on as legal advice and should, therefore, not be regarded as a substitute for detailed legal advice in the individual case. The advice of a qualified lawyer should always be sought in such cases. In the publishing of this Newsletter, we do not accept any liability in individual cases.
Baker & McKenzie - Partnerschaft von Rechtsanwälten, Wirtschaftsprüfern, Steuerberatern und Solicitors is a professional partnership under German law with its registered offices in Frankfurt/Main, registered with the Local Court of Frankfurt/Main at PR No. 1602. It is associated with Baker & McKenzie International, a Verein organized under the laws of Switzerland. Members of Baker & McKenzie International are Baker & McKenzie law firms around the world. In common with terminology used in professional service organizations, reference to a "partner" means a professional who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm.
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