In the case of a cease and desist letter due to a trademark infringement or a voilation of competition law, design law, Internet law, patent law, utility model law and also in copyright law, a certain structure has prevailed.
A cease and desist letter serves to settle a legal dispute about a trademark infringement, an infringement of another property right or an infringement of competition law without judicial assistance. At the same time, it is an offer to conclude a cease-and-desist agreement.
A cease and desist letter is not a mandatory prerequisite for a lawsuit or an application for an interim injunction. However, anyone who sues without a prior cease and desist letter is at risk of an "immediate acknowledgement". In this case, the infringed party must usually pay the costs of the proceedings, even if he has won the case. A milder form of action than a warning is the request for authorisation. Whoever initiates such an inquiry, unlike a warning, does not risk a negative declaratory action.
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„Rechtsicher werben", 180 Seiten, XchangeIP Verlag, in bookstores or at Amazon
Everything about warning letters and declarations to cease and desist letters
"Property Rights and Legal Protection in the Fashion and Textile Industry", 368 pages, published 2014 by dfv-Mediengruppe
In the presentation of the facts of the cease and desist letter, the alleged infringement must be precisely described. For example, anyone accused of violating the Unfair Competition Act (UWG) must be given a detailed description of the action by which he or she violated the UWG. In the event of a trademark infringement, the party issuing the warning must state exactly which sign on which product infringes which trademark (e.g. registered German trademark or Union trademark) or which company logo.
In design law, on the other hand, a so-called "feature analysis" is popular for strategic reasons. This describes in words the peculiarity of the design and the difference to the known treasure of forms. This often counteracts possible doubts about the uniqueness of the allegedly infringed design.
A legal assessment of the facts of the warning is necessary because without it it it is often not possible to determine the subject matter of the dispute. For example, anyone who objects to the infringing use of a trademark must not only state whether the trademark infringes a trademark or a company trademark (see BGH decision of 24.03.2011 - I ZR 108/09 - TÜV I and judgment of 17.08.2011 - TÜV II). He must also state the legal reason (e.g. likelihood of confusion under Sec. 14 (2) No. 2 MarkenG or exploitation of publicity under Sec. 14 (2) No. 3 MarkenG) (BGH op. cit. TÜV I). The determination of the subject matter of the dispute is also decisive for the amount of the warning costs to be reimbursed if the warning is only partially justified.
Usually the corresponding paragraphs are also quoted from which the respective claims against the dunned party (omission, information, damages, possibly unjustified enrichment or destruction, refund of fees) arise (e.g. Sections 14, 15 MarkenG, 3 ff., 12 para. 1 sentence 2 UWG, 242 BGB, 97 para. 1 sentence 1 UrhG).
The time limits until receipt of the cease-and-desist declaration with penalty clause are usually tight. On the one hand, this is intended to exert pressure on the infringer. On the other hand, especially in competition law, the "urgency" of issuing a temporary injunction must be kept in mind: Anyone who waits more than four weeks after becoming aware of a violation of the law before applying for an interim injunction is threatened with rejection of the application for a injunction for this reason alone. This period of urgency varies between the districts of the Higher Regional Court. Roughly speaking, there is a north-south divide: Higher regional courts in the south may consider a longer wait than four weeks to be detrimental to urgency. At the Hanseatic Higher Regional Court in Hamburg, on the other hand, three months may not be harmful.
In unfair competition law, seven days are usually granted. In the case of trademark infringements, seven days to two weeks are usual. A deadline that is too short is harmless for the person issuing the warning notice. Because a deadline that is too short sets an appropriate deadline in motion. However, anyone who applies for legal action after a deadline that is too short threatens to lose the case if the person concerned submits after the expiry of the deadline that is too short but within a reasonable period of time. The "circumstances of the individual case" determine what is appropriate. In design law, two weeks may often be appropriate. In patent law, periods of up to four weeks are also granted. In this case, the complainant often takes longer to examine the allegation of a violation of the law.
In almost all cases, the complainant is asked to provide information about the extent of the infringement (e.g. origin of the infringing goods and commercial customers (independent right to information). In addition, they are typically asked to provide information on the calculation of damages ("accessory" right to information). Only after the information has been provided will the person issuing the warning notice calculate his loss and then request payment from the dunned party.
Often the dunned party is asked to acknowledge the claim for damages on its merits (determination of damages).
Last but not least, the letter of formal notice usually already asks the complainant to reimburse the lawyer's fees and, if applicable, the patent attorney's fees. Not infrequently, either excessive item values are used here.
Usually a cease and desist letter contains a pre-formulated cease-and-desist declaration with penalty clause. But this does not have to be the case. The admonisher can just as well ask the addressee to formulate a cease-and-desist declaration with penalty clause on his own initiative. But that's hardly ever practical. Because a cautioner will typically use the strategic advantage of a self-formulated declaration.
The time limits until receipt of the declaration to cease and desist with a penalty clause are usually tight. On the one hand, this is intended to put pressure on the infringer. On the other hand, the "urgency" for issuing an interim injunction must be kept in mind: Anyone who waits more than four weeks after becoming aware of an infringement before applying for an interim injunction risks having the application for an injunction dismissed for that reason alone. This urgency period varies between the Higher Regional Court districts. Roughly speaking, there is a north-south divide: Higher Regional Courts in the south may consider waiting longer than four weeks to be detrimental to urgency. At the Hanseatic Higher Regional Court in Hamburg, on the other hand, even three months may not be harmful.
In competition law or unfair competition law, seven days are usually granted. For trade mark infringements, seven days to two weeks are usual. A deadline that is too short is not dangerous for the person issuing the warning notice. This is because a deadline that is too short sets a reasonable deadline in motion. However, anyone who applies for legal action after a too short period of time risks losing the case if the warned party submits after the too short period of time has expired but within a reasonable period of time. What is reasonable is determined by the "circumstances of the individual case". In design law, two weeks may often be reasonable. In patent law, time limits of up to four weeks are also granted. Here, the warning party often needs longer to examine the allegation of infringement.
According to the purpose of a cease-and-desist letter, the central concern is to request the person being warned to submit a cease-and-desist declaration with a penalty clause. This is intended to eliminate the presumed risk of repetition due to the infringement. Such a declaration may be attached to the warning letter. However, this does not have to be the case. The person issuing the warning can just as well ask the person being warned to make his or her own declaration. The latter is often recommended.
Almost always, the warning party is requested to provide information about the scope of the infringement (e.g. origin of the infringing goods and commercial customers (so-called independent claim for information). In addition, he is typically requested to provide information on the calculation of damages (so-called dependent or "accessory" claim for information). Only after the information has been provided will the person issuing the warning notice calculate the damages and then request payment from the person being warned.
Usually, the infringer of an intellectual property right (trademark right, labeling right, patent right, utility model right, design right, copyright) calculates his damage according to the license analogy or according to the infringer's profit. For this he needs the information of the infringer. The person issuing the warning notice must specify here the actions for which he is requesting information. If he also demands invoicing, he must specify which invoices are to be submitted. If the infringed party only demands compensation for his own concrete damage, no information must be provided. This is because the infringed party can quantify this damage himself.
Only when the person being warned has provided information about the extent of the infringement can he calculate his damages. Like the claim for damages, the claim for information only exists in the event of a culpable infringement of the law by the person being warned.
In competition law, the aggrieved party can only demand compensation for the concrete damage he has suffered (exception: supplementary protection of performance under competition law). For this purpose, information about the profits of the damaging party is not necessary (OLG Frankfurt, judgment of 22.09.2016 - 6 U 103/15 - Comparative advertising claiming functional equivalence and more favorable pricing).
In principle, the infringer must provide information about all infringements complained of. Since the decision of the Federal Court of Justice (BGH) of July 19, 2007, Case No. I ZR 93/04 - Windsor Estate, there is no longer a time limit from the first proven infringement (see also BGH, Judgment of April 30, 2009, Case No. I ZR 191/05 - Electronic Customs Tariff). The warning party must also generally disclose its upstream suppliers and its commercial customers. This information is often particularly interesting for the person issuing the warning. In this way, he can work his way step by step to the manufacturer of a plagiarism, for example. The subsequent warning of other links in the supplier chain often increases the willingness to reach an out-of-court settlement.
As a matter of principle, the warned party must also submit invoices and other customary documents about its income and expenses relating to the infringing products. How detailed the warned party must submit invoices depends on the individual case, in particular also on the type of company of the infringer. For example, a pure distribution company - unlike the manufacturer of a plagiarism - usually does not have to provide information on manufacturing costs.
TIP: In order to avoid the warning party having to disclose its customers to the warning party, which is at the same time its competitor, the warning party can claim a so-called "auditor's reservation".
Finally, the scope of the information also depends on the way in which the infringed party wishes to calculate its damages. In addition, confidentiality interests and the principle of proportionality limit the scope of the right to information (BGH, judgment of October 6, 2005, I ZR 322/02 - Noblesse, para. 14).
In the case of so-called "third-party information", in the event of an obvious infringement of the law or after a lawsuit has been filed, forwarding agents, warehousing companies or the operators of online platforms, for example, may also be obliged to provide information.
What happens in the event of false information?
If the infringed party can prove that the infringer provided false information, he can have the infringer compelled to provide information again and to affirm the accuracy of his information in lieu of an oath. Providing false information again would then be punishable by law.
Often, the warned party is requested to acknowledge the claim for damages on the merits.If the rightfully warned party does not make such a declaration, the person issuing the cease and desist letter can file a lawsuit with the aim of having the claim for damages acknowledged on the merits.
In the event of an infringement of intellectual property rights, the destruction of the infringing goods is often demanded. This claim is only enforceable if it is proportionate in the specific case.
Last but not least, in most cases the warning letter already requests the defendant to reimburse the costs of the warning letter and, if applicable, the patent attorney's fees. Not infrequently, excessive object values are set here.
Pursuant to Section 13 II UWG, high requirements are placed on the form of a cease and desist letter. The cease and desist letter must expressly state in a clear and comprehensible manner:
Consequences of a violation of Section 13 II UWG: Anyone who issues a cease and desist letter that does not comply with the requirements of Section 13 II UWG is not entitled to reimbursement of the warning costs. He must also expect that the person warned will in turn claim the costs of his legal defense against him (cf. Sec. 13 V UWG). This counterclaim of the person warned is capped at the amount of this lump-sum expense allowance in a new sentence 2 in order to protect qualified trade associations and qualified institutions, which only have a comparatively small claim to a lump-sum expense allowance. Thus, in contrast to Section 8b III UWG and in contrast to the previous provision of Section 8 IV UWG, the recipient of a warning notice does not only have a counterclaim for reimbursement of his own legal defense costs in the case of an abusive warning notice. Rather, he already has this counterclaim if the warning is unjustified or does not comply with the requirements of Section 13 II UWG.
The UWG also provides for restrictions in the determination of contractual penalties: In a graduated model, the agreement of a contractual penalty is either excluded (Sec. 13a II UWG), limited to € 1,000, (Sec. 13a III UWG) or limited to a reasonable amount (Sec. 13a V UWG), and this also applies if the warned party has promised a fixed contractual penalty amount (Sec. 13a IV UWG).
What is a reasonable amount of contractual penalty is basically determined according to § 13 I UWG according to
These criteria had already been used by case law in the past to determine an appropriate level of contractual penalties (see e.g. BGH GRUR 2009, 982 - Dr. Clauder's Hufpflege; OLG Karlsruhe GRUR-RR 2016, 92). The number of employees can also be determined here in accordance with Section 23 (1) sentence 4 of the Dismissal Protection Act (see above).
Competitors are no longer be able to agree on contractual penalties for a first warning for violations of information and labeling obligations on the Internet and data protection information obligations under the DSGVO and BDSG pursuant to Section 13 IV UWG (see above) by companies with fewer than 100 employees (Section 13 a II UWG). This is intended to prevent those issuing warning letters - if they cannot already satisfy themselves through the warning letter costs - from financing themselves in any case through income from future contractual penalties, so that the pursuit of such infringements ultimately remains attractive nevertheless. Such violations are, for example, violations of § 5 TMG ("Impressumspflicht"), the obligation to provide information on revocation or violations of the Price Indication Ordinance (PAngV).
In the case of only minor infringements against competitors with less than 100 employees, Section 13a III UWG only permits a contractual penalty agreement of a maximum of € 1,000.00. This provision is aimed at infringers with only small business activities.
Sec. 13a IV and V: Reduction of contractual penalty amounts to the reasonable, also in case of a fixed contractual penalty
If the warned party had promised an unreasonably high contractual penalty, its amount can nevertheless be reduced to a reasonable amount according to Sec. 13a IV and V UWG. This applies not only if the amount of the contractual penalty was promised according to Hamburg custom (Sec. 13a V UWG), but also if a fixed contractual penalty amount was promised. This was previously not possible due to § 348 HGB.
Previously, infringements of competition law on the Internet could be asserted in court at the place of tort under Section 32 of the German Code of Civil Procedure (ZPO). The place of jurisdiction under Section 32 of the German Code of Civil Procedure (ZPO) is any place where the infringing website can be accessed and the asserted right is protected in Germany (BGH, judgment dated April 21, 2016 - I ZR 43/14 - An Evening with Marlene Dietrich). This place of jurisdiction on the fly is undermined by Section 14 II 3 UWG. This shall not apply to
1.legal disputes arising from infringements in electronic commerce or telemedia or
2.legal disputes asserted by persons entitled to assert a claim for injunctive relief pursuant to Section 8 (3) Nos. 2 to 4, unless the defendant has no general place of jurisdiction in Germany."
Now, a plaintiff must generally bring disputes under competition law in electronic commerce ("Internet") at the court having jurisdiction for the defendant's registered office. The new regulation is based on an evaluation of a similar provision in the UrhG. Back in 2013, the flying jurisdiction in copyright law for copyright infringements against private individuals was abolished (cf. Section 104a UrhG). This is said to have significantly reduced the number of urhebrrechliche Abmahnungen against private individuals. In the future, associations and organizations authorized to file suit under Section 8 III Nos. 2 to 4 UWG must generally file suit at the defendant's place of business.
The authorization request or the property right notice is a milder form of letter to a potential infringer of an industrial property right than a warning letter. It merely inquires as to what a user of a right feels entitled to. The submission of a cease-and-desist declaration with a penalty clause is not required.
In contrast to an unjustified warning, an authorization inquiry cannot give rise to claims for damages or the risk of a negative declaratory action. It is recommended in the case of unregistered property rights (unregistered Community design) or property rights which are registered but not examined (registered design, registered Community design, utility model).
Author: Lawyer (Rechtsanwalt) for Trademark Law, Competition Law and Specialist Lawyer for Intellectual Property Law (Fachanwalt fuer gewerblichen Rechtsschutz) Thomas Seifried