Written by Dr. Jochen M. Schaefer, Attorney-at-Law (Germany), Legal Counsel of the World Federation of the Sporting Goods Industry, and of the European Federation of the Sporting Goods Industry (FESI)
This article is primarily based on the grounds of German substantive laws and the jurisprudence of German courts, the legal situation in other European countries might differ.
Introduction:
I very recently represented a well-known sporting goods brand before a German court in temporary injunction proceedings, which had the following factual background:
My client is a long-established manufacturer and seller of high-quality sporting goods products under its well-known brand, which is also part of its company name. Those branded products are equally offered for sale DTC on my client’s own websites targeting consumers in various countries in various language versions including German for the D.A.CH countries.
To facilitate the customer journey for potential and actual buyers in terms of swift orientation and easy differentiation between hundreds of different products within the broad product range of the respective brand, the articles displayed on the websites did not only show numbers but also model names. Such names were, to a major extent, only used for a considerable short time, such as for the respective actual spring/summer and fall/winter collections, and were thereafter replaced by new model names in the following seasons.
The model names were picked and selected by the marketing and sales department of the company without any involvement of the in-house legal department. No prior trademark searches were conducted before selecting a certain model name with the argument raised by the commercial sales and marketing guys that it would be too cumbersome and also too costly to undergo such exercise in each individual case and that such kind of procedure would also create unnecessary delays. Further, one was convinced that it should be clear to anybody that such model names, which only appeared on the respective websites of the brand and on the packaging of an article, yet not on the products themselves, did not constitute a use as a trademark, but were pure identification factors comparable to number sequences distinguishing a certain product from another. Consequently, the overall feeling of the commercial team was that one would be fairly on the safe side and that any legal conflicts were very unlikely to occur.
Yet my clients had to find out pretty soon that their own subjective risk assessment proved to be wrong and that this turned out to be a quite costly experience for them.
In early 2023 they received a cease-and-desist letter from a major German law firm specialized in dealing with such kinds of scenarios, who was obviously systematically screening websites on behalf of its clients looking for the usage of TM-protected names by third parties not only in identical, but also in similar categories of goods.
In line with standard practices widely acknowledged by German courts, these lawyers requested not only the immediate removal of the disputed model name in dispute from the website of my client but also asked for the reimbursement of their legal fees just for the sending of this C&D letter, which already amounted at a very early stage to more than 3.500 EUR. In addition, they asked for damage compensation and requested, in this context, detailed information on the sales of the respective articles, including names and addresses of the manufacturers, suppliers, purchasers, buyers, and quantities of ordered and delivered goods same as on their pricing.
My clients decided to defend themselves and not give in also in view of the fact that the adverse German law firm was notorious for pursuing such kinds of legal actions as numerous comments of other German lawyers in Internet blogs and publications proved. They felt kind of harassed, and this is where I came into play.
First Attempt to Settle Failed
After I had been mandated by my clients to represent them, I had hoped that one could settle this matter very swiftly by convincing the other side that the usage of the respective challenged name, which was also part of the common German language, but at the very same time protected by a German national trademark in a related product class and a registered EU Mark, did not constitute a use in a trademark like fashion, but was just a temporary model name identification, which was not essential for my clients anyway and which they were prepared to give up on a relatively short notice by replacing it with another undisputed generic model name.
Yet, I also made clear in my very first detailed letter announcing my representation to the adverse lawyers that my clients were neither willing to sign the much too broad cease and desist declaration nor to pay any damage compensation in this specific case since they felt they were unfairly attacked by the other side and that the far-reaching claims of their client were basically without merits by explaining why this in our opinion was the case.
What I would have expected as a normal reaction to my letter was, that the colleague on the other side handling that case would have contacted me and would have discussed with me a kind of compromise settlement, yet this did not happen.
Only one week after receipt of my letter, the other law firm filed a motion to issue a preliminary injunction against my clients without any prior oral hearing. And – the competent court located in the city where such law firm had its headquarters granted such injunction right away, which was one hundred percent identical with the various claims the other party and its lawyers had raised in their previous C&D letter…
Next Evolvement
- Under German procedural laws, one is entitled to object to such kind of preliminary injunction and request an oral hearing with the motion to lift the injunction. This required of course a very detailed written brief outlining on the one hand the underlying facts and on the other hand dealing with all the technical legal issues surrounding such kind of case. The plaintiff had smashed us in its motion with tons of case law, which were mostly court verdicts issued already decades ago and which in my opinion were either totally outdated, since the customer journey ordering goods online today is certainly very much different than the one before the World Wide Web existed at all, or, had even nothing to do with the case matter as such, but looked of course at a very first glance impressive, until one undertook the effort to scrutinize and analyze the respective court decision in detail.
After we had forwarded a thirty-page written brief plus comprehensive attachments to the competent court, an oral hearing took place, which however proved to be very frustrating:
- The three professional judges took a highly abstract and formalistic view by just referring to judgments of the German Federal Court of Justice and verdicts of the European Court of Justice, which had been issued decades ago;
- they did not honor the fact that the respective disputed name never appeared visibly on the sports product itself, but just as a model name in my clients’ B2C web store;
- they also did not acknowledge that educated consumers purchasing online do not, or very little care about such model names, but just want to order a certain product bearing a well-known trademark they have confidence in;
- the fact that my clients had repeatedly expressed their willingness in writing to withdraw from using such a model name and to remove it from any marketing and sales materials offline and online during a certain reasonable transition period did also not help;
- further, for the Court, it all in all did not play a role that the products for which the adverse party’s trademarks were registered were by far not identical with those manufactured and distributed by my clients.
All in all, the court chamber indicated that it would uphold the interim injunction in all points and not grant any relief to my clients. After I had asked for an interruption of the hearing to be able to get in touch with the General Counsel of my client on the phone, who had been on standby, I returned to the courtroom, and I still managed finally to reach a fairly reasonable settlement with the plaintiff, which however involved a substantial additional financial commitment on part of my clients to be able to make an end to such dispute and to close swiftly the case out of primarily economic practical considerations.
Lesson Learned:
After the quite negative (and for my clients also very costly) experiences we had made in the course of these litigation proceedings, lessons learned are the following:
- A model names without conducting any trademark searches in advance and thus without caring about the risk of possible legal conflicts with third-party trademark owners. Such a gambling strategy might, to a certain extent, be successful over a certain period of time, in particular, if only generic model names are chosen, which, as such, cannot enjoy any trademark protection. Any usage of other distinctive denominations could, however, trigger costly lawsuits, which also bind substantial resources at a brand’s management level, as the above example demonstrates.
- The risk of clashing with third-party trademark rights in such kind of scenarios can nowadays be substantially reduced by conducting prior trademark searches at the national and EU levels (respectively also at the international level if required). This can be easily done online, does not consume much time and even if the results of such searches are frequently not providing the full picture, this kind of quick and dirty analysis does at least mitigate risks.
- In particular, SMEs should be aware of the fact that numerous service providers and law firms are systematically screening the World Wide Web to detect possible IP infringements, which per se is nothing negative, it only takes on a certain negative connotation, if the money- earning aspect is in the foreground and not the legitimate objective to efficiently fight illicit offerings on the internet.
- Company may still decide to pursue the strategy to use such kind of unregistered
Dr. Jochen M. Schaefer is a German practicing attorney based in the Munich area. For several years, he has been representing the World Federation of the Sporting Goods Industry (WFSGI) and the European Federation of the Sporting Goods Industry (FESI) as their legal counsel. He also chairs the WFSGI’s legal committee and is co-chair of the FESI’s digital working group. At the individual client level, he represents a significant number of well-known brands within and beyond the bicycle/sporting goods sector. He is a specialist in national and international distribution topics, intellectual property (IP) and risk management issues, and the drafting and negotiation of comprehensive contracts at the operational level; in particular in the area of European selective distribution schemes. In case of any questions about this article (or in general), he can be reached at [email protected] and at +49 151 1640 7932.