"Unfair competition protection against lookalikes in Germany spreads", Jan Peter Heidenreich, Preu Bohlig

LEADERS LEAGUE: Does German law provide for adequate protection against lookalikes?
Jan Peter Heidenreich: Yes, Germany has a long tradition of unfair competition law protection against lookalikes. The German Act against Unfair Competition (UWG) not only protects consumers against aggressive and misleading commercial practices, as required by EU law, but also explicitly grants protection to competitors.

The UWG considers it unfair to offer goods or services that are imitations of goods or services of a competitor if that offer causes avoidable confusion as to the commercial origin of these goods and services. This provision is mainly intended to protect the individual rights of competitors but by extension also preserves undistorted competition.

The Act stipulates: (1) the imitated product must have some individual characteristic, (2) the incriminated product must be an imitation of that product and (3) there must be special circumstances justifying a finding of unfairness, namely intentional deception of the public as to the commercial origin of the imitating product. These factors are interdependent. Thus, the greater the individual character and the higher the degree of the imitation, the lower the bar for special circumstances required to find unfairness (and vice versa).

A deception of origin can either be direct, when consumers assume that the imitation is in fact the original product, or indirect, when they notice the differences between the products but assume some kind of commercial relationship between the undertakings (e.g. a license agreement) or believe the imitation to be part of a new product line or a product sold under a different (secondary) brand by the producer of the original product.

What are the main obstacles to winning an unfair competition action against a lookalike?
One of the main obstacles has been the dictum of the Federal Supreme Court in its Viennetta judgment (19 October 2000, I ZR 225/98) that differing trademarks on the products generally rule out a deception as to the origin of these products.

The Viennetta case centered on the design of ice-cream packages.

While the Cologne Appeals Court had issued an injunction against a product entitled Café au lait, the Federal Supreme Court, annulling that decision, reasoning that in the case of everyday products that differ only slightly from a plethora of similar products on the market, it must generally be assumed that the public is primarily guided by the product designation and the manufacturer’s indication and not by the design of the product or its packaging. A deception as to the origin of the product despite (clearly) different product or manufacturer designations would therefore only be likely in the case of practically identical design features.

This judgment has been understood to mean that a deception as to the commercial origin is generally excluded when the incriminated product has a clearly differing product or manufacturer designation, as long as there is no identical adoption of all the essential design features of the imitated product. Thus, even in cases where the imitator followed the design of the original product rather closely, actions have often been dismissed due to differing product marks, making it at times rather easy for copycats to get away with very similar overall product designs just by putting a different trademark on the product.

Do differing product designations suffice to rule out deception?
The courts have always held that, to rule out a deception as to the origin, the differing product designation must be distinctive.

A designation that is generic or purely descriptive will therefore not suffice.

The Munich Appeals Court recently confirmed an injunction against a look-a-like sparkling wine, reasoning that the product designation Spritz on the label of the imitated product was a generic term for the product in question and could thus not counteract the very similar product get up (judgement of 12 July 2022, 29 W 739/22).

However, the court repeated the dictum of the Viennetta judgment that the deception of origin could have easily been avoided by labelling the product with a clearly different (and distinctive) indication of origin.

What does the Kerrygold judgment change?
In the Kerrygold judgement (26 January 2023, I ZR 15/22), the Federal Supreme Court ruled on unfair competition claims against imitations of the packaging of well-known Irish butter brand Kerrygold.

The Cologne Appeals Court had granted injunctive relief with the argument that consumers would assume that the Dairygold products were a new product series or a secondary mark of the Kerrygold producer. On further appeal the defendant argued that the differing trademarks would rule out any possible confusion as to the origin of the products, relying on the Federal Supreme Court’s Viennetta judgment.

The Supreme Court has taken the opportunity to clarify that the Viennetta case is not to be assumed to mean that a deception of origin is always ruled out in cases of different product or manufacturer designations. The court explicitly states that:

‘Should the head note of the Senate’s “Viennetta” decision be understood to this effect, the Senate does not adhere to this. When examining whether there is a deception of origin, all circumstances of the individual case must be taken into account, in particular the product and origin designations used on the imitation and how they are used.’

Based on this premise, the Supreme Court has accepted the Appeal Court’s finding that the differing product designations do not preclude a deception of origin, as the defendant had not only chosen a product name containing “Gold” in combination with an indication of geographical origin referring to “Kerry” but had also imitated several elements of the get-up (gold and silver background; black and white cows, golden signet). However, according to the Supreme Court, more detailed factual findings are needed to demonstrate that that the public would actually assume that the defendant’s products are a new series or a secondary brand of the claimant. The Supreme Court has therefore remanded the case to the Appeals Court.

What can a company do preemptively strengthen its legal case against lookalikes?
It is always best if you do not have to rely on unfair competition law but can base claims on registered rights. The most helpful registered right to protect a product get-up is, of course, a registered design. By registering several variations of the design (color, black/white, varying levels of abstractions) you can maximize your protection to be prepared for a multitude of possible imitations of your product. It is also helpful to accompany any design rights with trademarks for the product form and/or the get-up.

Finally, keep in mind that the Federal Supreme Court has lowered the threshold for copyright protection for works of applied art in recent years, in particular with its Geburtstagszug decision (13 November 2013, I ZR 143/12), so an original product get-up might also be protected under copyright law. You should therefore keep track of who has designed what part of the get-up and make sure that you acquire all copyrights and are able to demonstrate a complete chain of title (this is also important for unregistered design rights). Thus, you should document the design process and the persons involved as well as all relevant contracts, particularly with external design or marketing agencies.

Regardless of any registered rights, there will always be cases where claims can only be based on unfair competition law, either because no rights have been registered, such rights have lapsed or because they do not provide protection against a particular look-a-like product. For such cases, the clarification provided by the Kerrygold ruling that differing trademarks on the products do not rule out a deception as to the origin, is welcome news for brand owners.