Warning letter German competition law

When is a warning letter under German competition law justified?

Purpose of a warning letter in competition law

Avoid legal proceedings in competition law

A warning letter in German competition law serves to avoid a legal dispute (e.g. in preliminary injunction proceedings) about a violation of competition law, e.g. a violation of the Unfair Competition Act (UWG). A warning is at the same time an offer to conclude a cease-and-desist agreement. Such a cease-and-desist agreement is concluded if the warned party submits a cease-and-desist declaration with a penalty clause and the warning party does not reject this declaration.

Avoid "immediate acknowledgment"

A warning letter is not a mandatory prerequisite for a lawsuit or an application for an injunction. However, anyone who sues without a prior warning is at risk of "immediate acknowledgement". In this case, the infringed party must usually pay the costs of the proceedings, even if he has won the case.

 

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The typical structure of a warning letter in German competition law (UWG) is as follows:

  • Presentation of the active legitimacy (e.g. as a competitor in a concrete competitive relationship).
  • Description of the facts of the alleged infringement, e.g. an unfair competition offer
  • Legal assessment of the infringement, e.g. an unfair commercial act or a misleading commercial act
  • Presentation of the "passive legitimation": Why should the person warned be liable for the infringement (e.g. as offender, accomplice or participant)?
  • Request to submit a pre-formulated cease-and-desist declaration with penal sanction
  • Request to also fulfill the "follow-up claims" (information, warning costs, possibly damages).

The active legitimation in competition law

Who is allowed to issue a warning letter in competition law?

The question of who is entitled to issue a warning letter concerns the legitimacy of action. First of all, competitors may issue a warning notice under competition law. However, associations authorized to do so (e.g. the Wettbewerbszentrale) and chambers may also issue warnings under certain conditions.

 

Warning letters from competitors

Definition of competitor, Section 8 III No. 1 German UNfair Competition Act (UWG)

In competition law, the competitor is in any case entitled, Section 8 III No. 1 German Unfair Competition Act (UWG), to issue a warning against infringements of competition law and to take legal action. A competitor is someone who is in a concrete competitive relationship as a supplier or buyer of products, § 2 I No. 3 German Unfair Competition Act (UWG). In this context, it is sufficient if the competitive conduct complained of can interfere with the sales of the other party (BGH v. 12.1.2017 - I ZR 253/14 - World of Warcraft II). § However, Section 8 III No. 1 UWG restricts the active legitimation, i.e. the entitlement to claim: Not every competitor is allowed to issue a warning anymore, but only those who have

  • products to a not insignificant extent and
  • not only occasionally distribute or request products.

This regulation is aimed at the typical abusive warning party who only offers "goods of all kinds" in order to be able to issue as extensive a warning as possible. A mere "offer" will no longer be sufficient in the future. The competitor must actually sell or buy. The new regulation also targets those who have just started a business in order to be able to issue warning notices. For the question of whether "to a not inconsiderable extent" is bought or sold, it depends on the number of actual sales or similar (Explanatory Memorandum to the Government Draft of July 31, 2019, BT-Drucksache 19/12084, page 26).

Concrete competitive relationship

A concrete competitive relationship exists if both parties try to sell similar products (goods or services) within the same group of end consumers and therefore the competitive behavior of one party can interfere with the sales of the other party. The requirements for the existence of a concrete competitive relationship are not too high: It is sufficient that the infringing party is in some way in competition with the affected party through its infringing action in the concrete case (BGH, judgment of November 29, 1984 - I ZR 158/82, BGHZ 93, 96, 97 f. - DIMPLE).

However, a concrete competitive relationship does not only exist if two parties seek to sell similar goods or services within the same group of end consumers. Rather, it also exists if there is an interaction between the advantages that one party seeks to achieve through a measure for its company (or that of a third party) and the disadvantages that the other party suffers as a result, so that its own competition can be promoted and the competition of another party can be impaired. (BGH v. 19.03.2015 - I ZR 94/13 - hotel rating portal). A concrete competitive relationship does not require that the parties are active on the same distribution level. Nor does it require that the parties offer similar products. It is sufficient if the offer of one of them can impair the marketing of the other (case law; cf. BGH, judgment of 10.4.2014 - I ZR 43/13 - nickelfrei).

Examples of a concrete competitive relationship

Example 1: A concrete competitive relationship exists between an insurer and an insurance broker who has concluded an insurance brokerage agreement with a policyholder of the insurer (BGH, judgment of April 21, 2016 - I ZR 151/15 - Wettbewerbsverhätlnis zwischen Versicherung und Versichungsmakler).

Example 2: A concrete competitive relationship also exists if one party, as the owner of a patent (or an exclusive right of use thereto), licenses the manufacture or distribution of a product covered by this property right and the other party offers or distributes products corresponding to the property right (BGH, judgment of April 10, 2014 - I ZR 43/13 - nickelfrei).

Time of the concrete competitive relationship

It is sufficient that the person issuing the warning notice or the plaintiff has a concrete competitive relationship with the defendant at the time of the last oral hearing. It is not necessary that the competitive relationship also already existed at the time of the infringement of competition law (OLG Frankfurt of July 3, 2014 - 6 U 240/13 - Stirnlampen).
Legitimation to sue of qualified business associations, Section 8 III No. 2 UWG in conjunction with. § Section 8b UWG

Business and competition associations are now only authorized to issue warnings, i.e. entitled to claim, if they are entered in the list of qualified business associations to be maintained by the Federal Office of Justice (Section 8 III No. 2 UWG in conjunction with Section 8b UWG n.F.). One such association is the Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main e.V. in Bad Homburg (Wettbewerbszentrale). The courts examine the active legitimacy (right to sue) of the competition associations "ex officio". This means that here the courts - unlike otherwise in civil proceedings - determine the facts of the case themselves (see BGH of 7.5.2015, I ZR 158/14 - Der Zauber des Nordens, para. 13). In this examination by the courts, the quality of the members also matters, according to the Frankfurt am Main Higher Regional Court (judgment of May 2, 2019 - 6 U 58/18 - Klagebefugnis von Wettbewerbsverbänden):

Members with stationary business weigh heavier than ebay traders. If the majority of members are ebay traders, the right to sue may be doubtful.

In addition, it is a prerequisite that, as was already the case under the previous law, "a considerable number of entrepreneurs who sell goods or services of the same or a related kind on the same market" belong to the association. Another requirement is that the infringement must affect the interests of the members, as was already the case under previous law.

Even under previous law, associations had to be able to perform their statutory duties "according to their personnel, material or financial resources." The latter requirement in particular is virtually impossible to determine by a court, which examines the standing to bring an action "ex officio". For this reason, the amended UWG 2020 shifted the clarification of the question of whether an association can effectively perform its statutory tasks on a permanent basis due to its personnel, material or financial resources from the courts to the Federal Office of Justice. This office maintains a "list of qualified trade associations" not only for associations entitled under the UKlaG, but also for trade and competition associations, and is to check the conditions of eligibility already upon entry in this list (cf. Section 8b UWG n.F.).

Pursuant to Section 8b of the German Unfair Competition Act (UWG), registration is subject to the association

  •     having at least 75 entrepreneurs as members
  •     at the time of application, it has been performing its statutory duties for at least one year,
  •     on the basis of its previous activities and its personnel, material and financial resources, it appears assured that it will
        a) will continue to perform its statutory duties effectively and appropriately in the future, and
        b) will not assert its claims primarily in order to generate income for itself from warnings or contractual penalties,
  •     its members will not be granted any benefits from the association's assets and persons working for the association will not benefit from inappropriately high remuneration or other benefits.

The requirements are intended to prevent an association from being established merely as a "warning letter association". When determining the number of members, indirect memberships via an association which is itself a member of the trade association may also be taken into account. The staffing requires that the association employs employees who are qualified to provide advice on competition law (fair trading law) and who can reprimand infringements. The financial resources must be secured. Warning letters and the assertion of contractual penalties must not serve primarily to generate income. The membership fee must therefore be high enough to enable the association to operate in accordance with its statutes and to be able to resolve competition law issues even through several judicial instances. If an association never files an application for an administrative fine in favor of the treasury after a violation of a cease-and-desist order (e.g., an injunction), this may be an indication of abuse (explanatory memorandum to the government draft of July 31, 2019, BT-Drucksache 19/12084, page 28).

Examples of qualified business associations with the power to issue warnings

The following, for example, have the right to act, i.e., to issue warnings and bring actions under competition law

    the Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main e. V. (Wettbewerbszentrale) (Central Office for Combating Unfair Competition in Frankfurt am Main)

    the Bundesverband Deutscher Bestatter e.V. (BGH v. April 27, 2017 - I ZR 55/16 - price portal)
    the Verband Sozialer Wettbewerb e.V. (e.g. BGH v. Sept. 14, 2017 - I ZR 231/14 - MeinPaket.de II)

Active legitimation of qualified entities, Section 8 III No. 3 UWG

"Qualified entities", such as certain tenants' associations and consumer protection associations or Deutsche Umwelthilfe (German Environmental Aid), are only entitled to take legal action if they are entered in the list of qualified entities pursuant to Section 4 UKlaG kept at the Federal Office of Justice (Section 8 III No. 3 UWG) or are qualified entities from other Member States of the European Union that are on the list of the European Commission pursuant to Article 4 (3) of Directive 2009/22/EC.

The entry in the list of qualified entities has a constitutive effect with regard to the legal standing to be examined in the context of admissibility (see BGH, judgment of February 4, 2010 - I ZR 66/09, para. 11 - Gallardo Spyder). The standing to bring an action can be doubted by a defendant (cf. Sec. 4 IV UklaG). High standards must be applied to the existence of justified doubts within the meaning of Section 4 IV UKlaG, which lead to a stay of proceedings (OLG Frankfurt/M. v. March 14, 2019 - 6 U 134/15 - Wettbewerbsrechtlich Klagebefugnis einer "qualifizierten Einrichtung"). The Federal Office of Justice reviews registrability on an annual basis. The review by the Federal Office serves precisely to determine whether the requirements for registration are (still) met and therefore includes a review of whether the institution offers the guarantee of proper performance of its duties (see OLG Celle, decision dated May 8, 2018 - 13 U 12/18, marginal no. 13).

The Chambers' Active Legitimacy, Section 8 III No. 4 UWG

The chambers of industry and commerce and the chambers of the liberal professions (chambers of lawyers, chambers of physicians) may also assert claims by means of warnings and may also sue.

The "Passive Legitimation"

Who is liable for the competition law infringement?

In competition law, the perpetrator (infringer) is initially liable for the breach of competition law. This can also be the person acting on behalf of another company. This company does not necessarily have to be a competitor of the person issuing the warning.

EXAMPLE: A magazine that promotes an ointment in an "In and Out" section of its editorial promotes the sales of the ointment manufacturer. It is itself acting in an anti-competitive manner due to disguised advertising, even if it is not a competitor of the ointment manufacturer.

In addition, under competition law the violator of "competition law traffic obligations" is also liable (BGH v. 12.7.2007 - I ZR 18/04 - Jugendgefährdende Medien bei eBay). Such duties of competition may be duties of care or duties of inspection.

EXAMPLES: The owner of an eBay account is liable as a perpetrator for trademark infringements committed by his wife via his account if he fails to adequately protect the access data (BGH v. March 11, 2009 - I ZR 114/06 - Halzband). A managing director of a limited liability company may also be personally liable alongside the limited liability company for breaches of competition law obligations if he is deliberately unable to detect competition law infringements in his company because, for example, he is abroad. However, the fact that he only learns of competition violations in his area of responsibility without preventing them is not sufficient for liability (BGH, decision of 18.06.2014 - I ZR 242/12 - Geschäftsführerhaftung)

Liability as a perpetrator due to violations of traffic obligations has led to an abandonment of so-called "Stoererhaftung" (Breach of Duty of Care) in competition law ( BGH of July 22, 2010, I ZR 139/08 - Kinderhochstühle im Internet, para. 48).

Is the warning letter justified under competition law?

Is there an "unfair commercial practice"?

Whether a warning under competition law is justified depends on whether an "unfair business practice" within the meaning of Section 3 of the German Unfair Competition Act (UWG) has occurred. The unfair commercial practice is the general term of the UWG. The most significant subcases of unfair commercial practices in practice are the "misleading advertisements" according to §§ 5 ff. UWG.


Read here: Misleading advertising


 

Receipt of a warning letter

Who has to prove receipt?

A warning letter must have been received by the person being warned. Anyone who acknowledges a court decision (temporary injunction or judgment) immediately after service and wishes to have the costs of the proceedings imposed on the plaintiff can initially plead that he did not receive the warning (so-called "simple denial" of a negative fact). The applicant or plaintiff must then provide a "qualified" explanation of why the warning must have been received. Only now must the warned party explain and prove that he did not receive the warning (BGH of 21.12.2006 - I ZB 17/06 - Receipt of the warning letter).

Warning letter by e-mail

A warning sent as an attachment to an e-mail message is only deemed to have been received if the person being warned has also opened the attachment. This is because, due to the known risk of viruses, a person being warned does not have to open a file attachment (OLG Hamm, judgment of 09.03.2022 - 4 W 119/20 - e-mail warning). Sending by e-mail is therefore risky due to potential cost disadvantages.

Formal requirements for the warning letter in German competition law

Section 13 II German Unfair Competition Act (UWG)

The formal requirements for a warning letter are particularly high in German competition law. Pursuant to Section 13 II German Unfair Competition Act (UWG), the warning notice must expressly state in a clear and comprehensible manner:

 

  • Name or company name of the person issuing the warning notice and, in the case of representation, additionally the name or company name of the representative,
  • the conditions of eligibility according to Section 8 (3), i.e. to what extent the person issuing the warning notice distributes or requests products to a not insignificant extent and not only occasionally (see above)
  • the infringement of rights, stating the actual circumstances
  • whether and to what extent a claim for reimbursement of expenses is asserted and how this is calculated, or
  • that the claim for reimbursement of expenses is excluded if the warning concerns infringements committed in electronic business transactions or in telemedia ("Internet") and concerns statutory information and labeling obligations or data protection obligations and labeling obligations or data protection violations by small companies or micro-enterprises or comparable commercially active associations.

Consequences of a violation of Sec. 13 II German Unfair Competition Act (UWG):

Anyone who issues a warning 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 meet the requirements of Section 13 II UWG.

Deadlines in the warning letter under German competition law

Background to the short deadlines: urgency in preliminary injunction proceedings

The deadlines until receipt of the cease-and-desist declaration are usually set tightly. On the one hand, this is intended to exert pressure on the infringer. On the other hand, the "urgency" for issuing an injunction must be kept in mind: Anyone who waits more than four weeks after becoming aware of an infringement before applying for a preliminary injunction is at risk of having the injunction application rejected for this reason alone. This urgency period varies between the higher regional courts. Higher Regional Courts in the south 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.

Reasonable deadlines in competition law

In German competition law, seven days are usually granted. A deadline that is too short is not dangerous for the person issuing the warning. This is because a deadline that is too short sets a reasonable deadline in motion. However, anyone who applies for legal action after a period of time that is too short risks losing the case if the warned party submits after the period of time that is too short but within a reasonable period of time. What is reasonable is determined by the "circumstances of the individual case".

Request to submit a cease and desist declaration with penalty clause

According to the purpose of a warning letter, the central concern is to request the person being warned to submit a cease-and-desist declaration with a penalty clause. This is because the risk of repetition is presumed as a result of the infringement. This can only be eliminated by issuing a cease-and-desist declaration with a penalty clause. Furthermore, the cease-and-desist declaration with a penalty clause may not be rejected. Such a declaration may be attached to the warning notice. However, this does not have to be the case. The person issuing the warning can just as well request the person being warned to issue his own declaration. The latter is often recommended.


Learn more: The cease and desist declaration with penalty clause - structure, submission, modified submission, legal consequences, violations and termination.


Graduated rules for contractual penalties in German competition law

Exclusion, fixed limit, limitation to what is reasonable, Section 13a German Unfair Competition Act (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 a contractual penalty is generally determined according to § 13 I UWG according to

  1.          Type, extent and consequences of the infringement,
  2.          culpability of the infringement and, in the case of culpable infringement, the gravity of the culpability,
  3.          size, market strength and competitiveness of the warned party as well as
  4.          the economic interest of the warned party in past and future infringements.

Case law had already used these criteria in the past to determine an appropriate contractual penalty amount (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 German Dismissals Protection Act (Kündigungsschutzgesetz) (see above).

Section 13a II UWG: Exclusion of contractual penalty for infringements according to Section 13 IV UWG.

For a first warning notice due to violations of information and labeling obligations on the Internet and data protection information obligations under the DSGVO and BDSG according to Section 13 IV UWG (see above) of companies with less than 100 employees (Section 13 a II UWG), competitors can no longer agree on contractual penalties. This is intended to prevent warning parties - if they cannot already satisfy themselves through the warning costs - from financing themselves in any case through income from future contractual penalties, so that pursuing such infringements ultimately remains attractive nonetheless. Such violations include, for example, violations of Section 5 of the German Telemedia Act (TMG) ("imprint obligation"), the obligation to provide information on revocation, or violations of the Price Indication Ordinance ("Preisangabenverordnung", PAngV).

Section 13a III UWG: Maximum contractual penalty of € 1,000.00 permissible for only minor infringements

In the case of only minor infringements against competitors with less than 100 employees, Section 13a III UWG only allows 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 Section 348 HGB.

Example of a cease-and-desist declaration with penalty clause in competition law

Example: Untrue statement of fact according to Section 4 No. 2 UWG

Company ... Ltd.
- Debtor-

undertakes towards the

Company ...
- Creditor -

1. to refrain from claiming as a business act [now follows the so-called "infringement form":] to third parties that the creditor would [Untrue statement of fact] if it happened as it did on [date] to Mr ...;

2. to pay a contractual penalty to the creditor for each case of future infringement of the act described in item 1, the amount of which is to be determined by the creditor and which may be reviewed by the debtor by the competent court as to its appropriateness; and

3. to provide the creditor with information on the scope of the infringement described under item 1;

4. to compensate the creditor for any damage which the latter has suffered or will suffer as a result of the infringing act described under item 1;

5. to bear the costs incurred by the use of the attorneys ... in accordance with a 1.3 fee pursuant to VV 2300 plus expenses from a value in dispute of € 25,000.00.


[Place], the


(Debtor)

No "flying jurisdiction" for infringements in electronic legal transactions and for claims by associations, Sec. 14 German Unfair Competition Act (UWG)

Previously, infringements of competition law (UWG) 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, ruling 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 brought 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, in principle, a plaintiff must bring disputes under competition law in electronic commerce ("Internet") before the court having jurisdiction for the defendant's registered office. The new provision 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 copyright warnings 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.

Request to provide information

Sometimes, even in competition law, the person who has been warned is requested to provide information about the scope of the infringement. In competition law, however, the aggrieved party can only demand compensation for the specific damage incurred (exception: additional protection of benefits under competition law). For this purpose, information about the profits of the damaging party is not necessary (OLG Frankfurt v. 22.09.2016 - 6 U 103/15 - Comparative advertising claiming functional equivalence and more favorable pricing).

Request for reimbursement of costs

Which warning costs must be reimbursed?

Last but not least, in most cases the warning letter already requests the warned party to reimburse the costs of the warning letter and, if applicable, the patent attorney's fees. Not infrequently, excessive object values are set here.


Read here: Which warning costs must be reimbursed?


Abusive cease-and-desist letters

The fact that warnings are sent in order to earn money from the costs of the warning letter is a recurring occurrence. Such a warning is an abuse of rights. Other "extraneous motives" can also be abusive, e.g. a warning with the predominant intention of damaging the person being warned.

Particularly relevant in competition law

The objection that a warning letter is abusive is particularly relevant for warning letters in competition law. The UWG, which was amended with effect from December 2, 2020 by the Gesetz zur Stärkung des fairen Wettbewerbs (Act to Strengthen Fair Competition), has considerably expanded the possibilities of the person being warned to raise abuse objections.

Section 8c UWG: Presumptions of abuse of rights

Prohibition of abusive warning letters and excessive contractual penalty claims

The fact that warnings are issued in order to earn primarily from the attorney's fees - under certain circumstances with a fee-sharing agreement between the person issuing the warning and the warning attorney - occurs time and again. Such a warning is abusive in competition law (unfair competition law) (§ 8c I UWG). According to case law, a warning letter with the predominant intention of harming the person being warned or other "extraneous motives" is also abusive in competition law.

The main objective of the UWG Reform 2020 was to curb abusive cease-and-desist letters. The consequences of abusive warnings were previously regulated in Section 8 IV UWG. Section 8c UWG now expands the regulation and also specifies concrete conditions in standard examples under which an abusive assertion of cease-and-desist claims is presumed. The person issuing the warning notice can rebut these presumptions. The wording of the law includes circumstances that case law has considered in the past to be indicative of an abusive cease-and-desist letter.

Abusive assertion of a claim is thus presumed if

  1.     the assertion of the claims primarily serves the purpose of creating a claim against the infringing party for reimbursement of expenses or costs of legal prosecution or payment of a contractual penalty,
  2.     a competitor asserts a considerable number of infringements of the same legal provision by means of warning letters, if the number of infringements asserted is disproportionate to the scope of the competitor's own business activities or if it can be assumed that the competitor will not bear the economic risk of his extrajudicial or judicial action himself,
  3.     a competitor sets the amount in dispute for a warning notice at an unreasonably high level,
  4.     obviously excessive contractual penalties are agreed or demanded,
  5.     a proposed cease-and-desist obligation obviously goes beyond the infringement for which a warning has been issued,
  6.     several infringements, which could have been warned together, are warned individually, or
  7.     in the case of an infringement for which several infringers are responsible, the claims against the infringers are not asserted together without objective reason.

According to the express wording of Section 8c UWG, an abuse of rights is also presumed if an "excessive" contractual penalty is demanded. According to the explanatory memorandum, this does not only apply to cases in which a clearly excessive contractual penalty for future infringements is already demanded in the warning notice. Abuse of the law is also presumed if a significantly excessive contractual penalty is demanded after a declaration to cease and desist has been issued in accordance with the new Hamburg custom.

Abuse is also presumed if a proposed cease-and-desist obligation obviously goes beyond the warned infringement. A comparable provision is already known from the Copyright Act (Section 97a II No. 4 UrhG). In the future, the requirements for the person issuing the warning notice will therefore increase: He must formulate a clear statement of the facts ("warned infringement") and a precisely formulated cease-and-desist declaration in this regard, if possible limited to the specific form of infringement, with a penalty clause. If a proposed cease-and-desist declaration does not go beyond the actual legal claim, however, no notice is required (cf. on Section 97a IV UrhG: OLG Frankfurt a. M. v. 2.12.2014 - 11 U 73/14).

Consequences of abuse of rights: Not only no claim for warning costs, but no claim at all

If claims are asserted in an abusive manner pursuant to Section 8c UWG, this not only means that no warning costs are to be reimbursed, but also that the asserted injunctive relief itself does not exist (BGH GRUR 2002, 357 - Missbräuchliche Mehrfachabmahnung). A subsequent action would be inadmissible. Even if the warning ĺetter would actually have been justified, the person issuing the warning loses the subsequent lawsuit if it is proven that he issued the warning mainly (not exclusively!) for the purpose of charging fees or with the intention of causing damage.

Counterclaim of the abusively warned party: Reimbursement of own attorney's fees

In addition, the recipient of an abusive warning letter in competition law can demand reimbursement of his own legal fees from the person issuing the warning letter, Section 8c III UWG.

Example from the case law on § 8c UWG n.F.: Landgericht Dortmund, decision dated 16.2.2021, 10 O 10/21:
The applicant files an application for a preliminary injunction against the defendant for failure to provide mandatory information pursuant to Section 5 of the German Telemedia Act (TMG), failure to provide information on revocation and failure to provide information/link to the ODR platform. The accusation: He had offered new household articles as a private person on an Internet platform and had not listed mandatory information according to § 5 TMG, revocation instruction and missing information/link to the OS platform. The plaintiff warned the defendant with a lawyer's letter. The warning costs were quantified in this letter on the basis of a value in dispute of € 30,000.00 with € 1,501.19. At the same time, the defendant was requested to submit a cease-and-desist declaration with penalty clause. The application for an interim injunction was rejected, as the assertion of the injunctive relief was precluded by Section 8c of the German Unfair Competition Act (UWG), as amended. This was because fees were asserted with the warning letter, although this was excluded under Section 14 IV UWG. According to this standard, the applicant could not demand reimbursement of the necessary expenses, because it was a matter of violations of statutory information and labeling obligations.

    Indications for abusive warning letter

    An abuse of rights is often hard to prove for the person being warned. This is because the person being warned will not be aware of a fee agreement between the opponent and his lawyer. He will know just as little about any agreed fee sharing as he will about an inadmissible success-based fee. However, case law has developed indications that speak for an abuse of rights. Circumstances that occur after the warning notice are also to be included here, even if abusive conduct cannot yet be established at the time of the warning notice (BGH, judgment of 3.3.2016 - I ZR 110/15 - Manufacturer price recommendation on Amazon). According to case law, indications of abusive conduct on the part of the person issuing the warning are:

    Disproportion between scope of business operations and number of warnings

    •     Many cease-and-desist letters with relatively low annual profit, here: 50 internet retailers warned and 203 DIY stores warned with an annual profit of less than € 6,000 (BGH v. 26.4.2018 - I ZR 248/16 - Abmahnaktion II;
    •     likewise LG Hamburg v. 07.02.2017 - 312 O 144/16, here: 50 warning letters and 14 injunction proceedings with an equity of € 34.77 and a creditworthiness index of 600

    Numerous warning letters

    Some courts assume an abuse of rights simply because the warning party has sent many warnings (LG Braunschweig GRUR-RR 2008, 214; LG München I 33rd Civil Chamber = GRUR-RR 2006, 416 - Media-Märkte).
    The chambers for commercial matters of the LG Munich I (GRUR-RR 2006, 418 - Preissuchmaschine) take a different view. The Higher Regional Court (OLG) of Frankfurt am Main is also more cautious: it did not assume an abuse of rights even in the case of 200 warning notices sent and attorney's fees that significantly exceed the annual turnover of the person issuing the warning notice (OLG Frankfurt, GRUR-RR 2007, 56 - Sprechender Link).

    Abusive multiple prosecution

    In this case, either several infringers, represented by the same lawyer, take joint action against an infringer (as in BGH, judgment of January 17, 2002 - I ZR 241/99 - Abusive Multiple Warning) or an infringer takes action against several infringers independently of each other and demands the full fees from each of them, although he could have claimed these as a joint litigation, saving fees (BGH, judgment of November 17, 2005 - I ZR 300/02 - MEGA SALE).

    Unnecessary cost burden on the opponent

    A further indication of abusive action is if the person issuing the warning notice cannot have any appreciable economic interest in pursuing the competition infringement complained of, but rather his legal action serves solely the extraneous interest of burdening his competitors with the highest possible costs (BGH v. 26.04.2018 - I ZR 248/16 - Abmahnaktion II).

    Concealment of a reaction of the warned party

    Anyone who attempts to obtain a preliminary injunction by concealing a reaction of the warned party to the warning can act in abuse of rights (OLG München v. 8.7.2017 - 29 U 1210/17).

    Abuse of rights due to the content of the warning letter

    The content of the warning and the pre-formulated cease-and-desist declaration with penalty clause may also be indicative of an abuse of rights. Examples:

    • Systematic demand for lump-sum damages (OLG Hamm, judgment of 19.05.2009 - 4 U 23/09 - Abusive warning activity).
    • Highly excessive object values in the case of violations of below-average weight (according to the OLG Hamm: information obligations within the scope of the revocation instruction are violated, warranty conditions are not explained or general terms and conditions contain inadmissible clauses that do not particularly affect the warning party in practice). In such cases, "adventurously inflated object value[s]" that are "not even remotely justified" are a particularly strong indication of an abuse of rights (OLG Hamm, judgment of 29.06.2010 - 4 U 24/10 - Abusive action).
    • The fees are demanded particularly insistently. For example, the clause on the reimbursement of fees is highlighted in bold print or the fees are demanded with a particularly short deadline (OLG Hamm, judgment of 29.06.2010 - 4 U 24/10 - Abusive action).
    • Contractual penalty in the penalty-based cease-and-desist declaration is demanded irrespective of fault or excluding the plea of continuation (BGH: Judgment of December 15, 2011 - I ZR 174/10 - Bauheizgeräte).

    Abusive warning letters based on litigation behavior

    Systematic suing at distant places of jurisdiction to which none of the parties has a connection (OLG Hamm, judgment of May 19, 2009 - 4 U 23/09 - Rechtsmissbräuchliche Abmahntätigkeit; KG decision of January 25, 2008 - 5 W 371/07 - Missbräuchliche Gerichtsstandswahl im Lauterkeitsrecht; OLG Brandenburg v. June 29, 2009 - 6 W 100/09, para.10). This is intended to drive up the costs of the opponent. This is often also an indication of a mass warning. This is because it spreads the mass of cases over many courts without attracting undue attention at a single court and thus becoming known to the courts (OLG Hamm, judgment of June 29, 2010 - 4 U 24/10 - Missbräuchliches Vorgehen) (see also LG Braunschweig GRUR-RR 2008, 214).

    Abusive warning letters through success-based remuneration or kinship

    Inadmissible fee agreements between the person issuing the warning notice and his lawyer: success-dependent remuneration of the lawyer or participation of the client in fees or contractual penalties received from the person issuing the warning notice (KG Berlin, MMR 2008, 742; KG Berlin BeckRS 2010, 19475). Relationship between lawyer and client can also be an indication of abuse of rights (OLG Hamm, judgment of March 24, 2009 - 4 U 211/08 - Abusive warning of an eBay store).

    These examples are merely circumstantial and they weigh differently. In some cases, several of them must come together to form an overall picture of abuse of rights. This will be the case, for example, with highlighted clauses on fee reimbursement. Others are so serious that they alone indicate an abuse of rights. These include, above all, inadmissible fee agreements between the warning party and its attorney.
    Abusive of rights by eBay merchants

    Classic cases of abusive warning letters eBay traders who have nothing to show except their eBay account. Examples:

    •  An eBay trader does not maintain his own online store or retail store apart from his eBay offers. In his eBay offers he himself points out that he is subject to the small business regulation of § 19 para. 1 UstG. His eBay sales from 01.01. to 14.05.2014 amount to a whole € 1,714.93. He has three legal warnings sent per month, a total of at least 15 warnings. This is an abuse of rights (OLG Düsseldorf v. 24.03.2015, I-20 U 187/14 - Warmwasserland).
    •  An eBay trader has a lawyer, who is also his uncle, send extensive warnings, but only generates monthly sales of a maximum of € 200.00. This is abusive of the law (OLG Hamm, judgment of 24.3.2009 - 4 U 211/08 - Abusive warning of an eBay store).

    Even a single warning letter can constitute an abuse of rights

    In principle, even the issuance of a single warning can be an abuse of rights (BGH, judgment of December 15, 2011 - I ZR 174/10 - Bauheizgeräte; LG Hamburg of February 7, 2017 - 312 O 144/16).

    Criminal consequences of abuse of rights

    Anyone who abusively claims warning costs may also be liable to prosecution for fraud. A person who abusively claims warning costs tacitly asserts that the warning is relevant under competition law and does not merely serve to generate legal fees (BGH of 08.02.2017 - 1 StR 483/16).

    Our help with competition law warning letters

    What we do for our clients:

    For recipients of a warning letter under competition law, we carefully examine whether the opponent has the right to act. We examine each of the claims asserted and also the formal requirements of a warning in competition law. If the warning is justified, we usually draft a modified cease-and-desist declaration ourselves in consultation with our clients and negotiate with the opponent on the reimbursement of the warning costs. In some cases, we advise against issuing a cease-and-desist declaration with a penalty clause, even in the case of justified warnings, if the consequences cannot be calculated. In the case of unjustified or legally abusive warnings, we assert counterclaims, also in court.

    In the case of competitors who act unfairly, we draft a warning letter ourselves in consultation with our clients. We enforce our clients' unfulfilled claims in court, often with the help of an injunction.