E-News No.47

E-News No.47

German Federal Court of Justice on scope of injunctive relief and personal liability of lawyers

by Karolina Schöle (Harte-Bavendamm Rechtsanwälte PartG mbB – Germany)

German Federal Court of Justice (FCJ) decides about the scope of injunctive relief, in particular the defendant’s obligation to recall products from the chain of commerce, and about personal liability of lawyers for unjustified cease-and-desist letters.

German Federal Court of Justice, I ZR 109/14, Hot Sox (in German)

In a decision dated November 19, 2015, the German FCJ held that a court injunction imposes an obligation on the defendant to recall products from the chain of commerce. With this decision the FCJ deviated from the hitherto practice of most courts of first and second instance. Those courts had held that the product recall from the chain of commerce was not part of the infringer’s obligation to cease and desist from further infringement. The rationale behind the instance courts’ position was mainly a systematic argument. Under German IP law, product recall is a remedy governed by distinct provisions of the relevant laws, as for instance Sect. 18 Trademark Act or Sect. 140a Patent Act. Moreover, compared to just refraining from further infringing acts, recalling products from the chain of commerce can be a much more incisive and final remedy.

Whilst German courts in the past were rather generous in issuing preliminary injunctions that were traditionally understood to be limited to an obligation to cease and desist from further infringement it remains to be seen whether this IP owner friendly practice will be affected by this most recent decision and courts will be more reluctant to issue preliminary injunctions in view of the infringer’s potential obligation to recall products from the chain of commerce.

German Federal Court of Justice, X ZR 170/12, Unfounded Cease-and-desist letter (in German),

In another decision dated December 1, 2015, the German FCJ extended the civil law liability of lawyers in the context of sending cease-and-desist letters. The FCJ held that an IP right owner’s lawyer was under a duty to honor the alleged infringer‘s interests. According to the FCJ, the lawyer of the right owner breaches this duty if he advises his client to issue a cease-and-desist letter even though actually no unlawful infringement of the client’s IP rights had occurred. If the lawyer acted negligently, he can be held liable for damages to the alleged infringer, both jointly with his client and severally.

The lawyer’s personal liability is, however, excluded if, in case of an uncertain legal situation, the lawyer informed his client about all relevant aspects of the case and the client nevertheless instructed his lawyer to send the cease-and-desist-letter.

The FCJ’s decision increases the professional risk of German lawyers and establishes a concept that bears some similarity to the unjustified threats regime in the UK.