Distribution online – Platform bans in selective distribution (The Coty case continues)

15 Agosto 2017

  • Germania
  • Distribuzione
  • eCommerce

I produttori di articoli di marca tipicamente puntano ad assicurare lo stesso livello di qualità lungo tutti i canali di distribuzione. Al fine di conseguire tale scopo, essi stabiliscono criteri su come rivendere i propri prodotti. Con l’aumento delle vendite via internet, l’utilizzo di tali criteri è aumentato altrettanto.

Il miglior esempio: Asics. Fino al 2010, la controllata tedesca Asics Deutschland GmbH riforniva i propri distributori in Germania senza applicare criteri particolari. Nel 2011, Asics ha lanciato un sistema di distribuzione selettivo chiamato “Distribution System 1.0“. Esso prevede, tra le altre cose, un divieto generale, per i distributori, di usare strumenti di comparazione dei prezzi nelle vendite online:

“In aggiunta, il distributore autorizzato … non è da ritenersi autorizzato … a supportare la funzionalità di comparazione dei prezzi apportando l’interfaccia specifica d’applicazione (“API”) per tali strumenti di comparazione dei prezzi.” [tradotto]

L’Ufficio federale dei cartelli tedesco (“Bundeskartellamt”) ha stabilito, con decisione del 26 agosto 2015, che il divieto di utilizzare strumenti di comparazione dei prezzi nei confronti di distributori presenti in Germania era nullo in quanto viola l’articolo 101 (1) TFUE e l’art. 1 della Legge contro le limitazioni della concorrenza (cfr. il testo della decisione, di 196 pagine, qui). Il motivo addotto è che tale divieto punterebbe principalmente a controllare e limitare la competizione dei prezzi a spese del consumatore. Asics, per contro, ha presentato ricorso dinnanzi all’Alta Corte Regionale di Düsseldorf, al fine di vedere annullata la decisione dell’Ufficio federale dei cartelli, sostenendo che tale divieto era uno standard di qualità proporzionato nell’ambito del suo “Distribution System 1.0“, mirante a una presentazione uniforme dei prodotti.

Il 5 aprile 2017, l’Alta Corte Regionale di Düsseldorf ha confermato, così come la decisione dell’Ufficio federale dei cartelli, che nell’ambito di sistemi di distribuzione selettiva il divieto generale di usare strumenti comparazione dei prezzi era anticoncorrenziale e con ciò nullo (fasc. n. VI-Kart 13/15 (V); vedi altresì la rassegna stampa dell’Ufficio federale dei cartelli in inglese):

  • In particolare, il divieto di strumentazione di comparazione dei prezzi non era dispensato, nell’ambito di una interpretazione teleologica (“Tatbestandsreduktion”), dall’art. 101 co. 1 TFEU. Secondo la Corte, ciò non era necessario al fine di proteggere la qualità e l’immagine di prodotto del brand Asics (ossia la stessa argomentazione dell’Alta Corte regionale di Francoforte nella sua sentenza del 22.12.2015, fasc. n. 11 U 84/14 riguardante gli zaini di Deuter; la Corte suprema federale non dovrà più decidere su tale caso perché la revisione è stata ritirata in marzo 2017, fasc. n. KZR 3/16). La Corte ha dichiarato che il divieto era volto a limitare i compratori, argomentando che i distributori sarebbero stati limitati nell’entrare in una competizione sui prezzi con altri. La presentazione di prodotti all’interno degli strumenti di comparazione dei prezzi non avrebbe danneggiato la qualità o il brand di prodotti Asics. Non avrebbe nemmeno dato “l’impressione di un mercato delle pulci”, nemmeno attraverso la presentazione, in parallelo, di prodotti usati. Inoltre, il divieto di strumenti di comparazione dei prezzi non risolverebbe comunque il problema del “free-riding”. In ogni caso, il divieto generale posto all’utilizzo di strumenti di comparazione dei prezzi non era necessario e perciò illegittimo.
  • Il divieto, inoltre, non doveva ritenersi esentato dal regolamento sulle categorie di accordi verticali e pratiche concordate. Al contrario, la Corte ha rilevato che il divieto avrebbe limitato vendite passive (svolte cioè attraverso internet) verso consumatori finali, contrariamente all’art. 4 (c) del regolamento sulle categorie di accordi verticali e pratiche concordate (facendo riferimento alla decisione della Corte di Giustizia dell’UE nel caso di Pierre Fabre, 13 ottobre 2011, fasc. n. C-439/09). Il “principio di equivalenza” (secondo cui le restrizioni valide per le vendite offline così come online non dovrebbero essere identiche, ma funzionalmente equivalenti) non si applicherebbe, in quanto nel commercio tradizionale non ci sarebbero funzioni comparabili agli strumenti di comparazione dei prezzi.
  • Infine, il divieto non beneficerebbe nemmeno dell’esenzione individuale di cui all’art. 101 co. 3 TFUE (“difesa dell’efficienza”).

Conclusioni

Secondo l’Alta Corte regionale di Düsseldorf, i produttori non potrebbero proibire generalmente ai loro distributori di usare strumenti di comparazione dei prezzi. Allo stesso tempo, la corte ha rifiutato di concedere l’autorizzazione a un appello contro la propria decisione – che, comunque, può essere richiesto separatamente, tramite la via dell’impugnazione (cfr. artt. 74, 75 della Legge contro le restrizioni in materia di concorrenza). Il futuro sviluppo di criteri limitanti i distributori nella rivendita online resta aperto, in particolare in quanto (i) il caso Coty è attualmente pendente presso la Corte di Giustizia dell’UE (vedi sotto) e (ii) la Commissione UE nella sua inchiesta di settore sull’e-commerce apparentemente sembra favorire i produttori di articoli di marca (vedi sotto).

  1. La Corte ha lasciato esplicitamente aperte – adducendo che non fossero rilevanti per la sua decisione – la questioni se:
    • il divieto di motori di ricerca sia anti competitivo (paragrafo 44 e ss. della decisione);
    • il divieto generale di usare piattaforme di terze parti sia anti competitivo (paragrafo 7) – sebbene il “Distribution System 1.0” di Asics vietasse anche piattaforme come Amazon e eBay.
  1. Se e come produttori di prodotti di lusso o di marca possono continuare a vietare la loro distribuzione via Amazon, eBay e altri mercati in generale verrà probabilmente deciso dalla Corte di Giustizia UE nei prossimi mesi – nel caso Coty (vedi il nostro post “eCommerce: restrizioni su distributori in Germania”) per il quale un’udienza ha già avuto luogo alla fine di marzo 2017.
  2. Senza pregiudizio per il caso Coty, la Commissione UE, nella propria inchiesta di settore sull’e-commerce del maggio 2017, dichiarato che
  • “divieti di marketplaces in generale non producono una proibizione di fatto della vendita online, non restringono l’uso effettivo di internet come canale di vendita indipendentemente dai mercati colpiti dal divieto…”;
  • “la potenziale giustificazione ed efficienze riportate dai produttori differiscono da un prodotto all’altro …”;
  • “(assoluti) divieti di marketplaces non dovrebbero essere considerati quali restrizioni fondamentali nel significato dell’articolo 4(b) e articolo 4(c) del regolamento su categorie di accordi verticali e pratiche concordate …”;
  • “la Commissione o una autorità nazionale della concorrenza potrebbe decidere di ritirare la protezione del regolamento su categorie di accordi verticali e pratiche concordate in casi particolari, se giustificato dalla situazione di mercato”
    (41–43 del     Report finale sull’inchiesta di settore sull’e-commerce).
  1. Per dettagli sulla distribuzione online e il diritto antitrust, si prega di consultare il mio ultimo articolo “Internetvertrieb in der EU 2018 ff. – Online-Vertriebsvorgaben von Asics über BMW bis Coty”, in: Zeitschrift für Vertriebsrecht 2017, pp. 274-281.

Perciò, sulla base della più recente posizione della Commissione Europea, vi è spazio per argomenti e per la redazione creativa di contratti, posto che anche divieti generali di mercato possono essere compatibili con le norme UE sulla concorrenza. Comunque, le corti potrebbero considerare la questione in modo differente nel singolo caso. Conseguentemente, soprattutto la Corte di Giustizia UE con il suo caso Coty (vedi sopra) porterà maggiore chiarezza per la futura distribuzione online. Sul caso Coty, la Corte di Giustizia UE deciderà il 6 dicembre 2017 (vedi il calendario giudiziario della Corte) : rimanete aggiornati sugli sviluppi seguendo il nostro blog.

The Court of Justice of the European Union (“CJEU”) has issued a new ruling on the international scope of the Commercial Agency Directive (86/653/EEC of 18 December 1986). The new decision is in line with the rulings of

  1. the CJEU in the Ingmar case (decision of 9 November 2000, C-381/98, goodwill indemnity mandatory where the agent acts within the EU) and Unamar (decision of 17 October 2013, C-184/12, as to whether national agency law is mandatory where exceeding the Commercial Agency Directive’s minimum protection) and
  2. the German Federal Supreme Court of 5 September 2012 (German agency law as mandatory law vis-à-vis suppliers in third countries with choice-of-court clause).

The question

Now, the CJEU had to decide whether a commercial agent acting in Turkey for a supplier based in Belgium could claim goodwill indemnity on the basis of the Commercial Agency Directive. More specifically, the question was whether the territorial scope of the Commercial Agency Directive was given where the commercial agent acts in a third country and the supplier within the EU – hence opposite to the Ingmar case.

The facts

According to the agency contract, Belgian law applied and the courts in Gent (Belgium) should be competent. Belgian law, transposing the Commercial Agency Directive, provides for a goodwill indemnity claim at termination of the contract (and, additionally, compensation for damages). However, the referring court considered that the Belgian Law on Commercial Agents of 1995 was self-restraining and would apply, in accordance with its Art. 27, only if the commercial agent acted in Belgium. Otherwise, general Belgian law would apply.

The decision

The CJEU decided that the parties may derogate from the Commercial Agency Directive if the agent acts in a third country (i.e. outside the EU). This has here been the case since the agent acted in Turkey.

The decision is particularly noteworthy because it – rather by the way – continues the CJEU’s Ingmar ruling under the Rome I Regulation (I.). In addition, it indirectly confirms sec. 92c of the German Commercial Code (II.) – which allows the parties to a commercial agent agreement governed by German law to deviate from the generally mandatory agency law if the commercial agent is acting outside the European Economic Area (“EEA”). Finally, it provides legal certainty for distribution outside the EEA and illustrates what may change after a Brexit as regards commercial agents acting in the United Kingdom (III.) – if the EU and the United Kingdom do not set up intertemporal arrangements for transition.

For details, please see the article by Benedikt Rohrßen, Zeitschrift für Vertriebsrecht 2017, 186 et seq. (“Ingmar reloaded – Handelsvertreter-Ausgleich bei umgekehrter Ingmar-Konstellation nicht international zwingend”).

This post is the last of three small articles on the protection of IP rights in Germany. In the first we have already seen how the German Copyright Act protects creative and artistic works and how Design Patents protects achievements in the aesthetic field. In the second we focused the attention on Trademarks, Patents and Utility Patents, in order to verify how to best protect names, signs and technical inventions.

In this post we will concentrate on how the Act against Unfair Competition grants protection against unfair practices in the course of the business and the main procedural aspects of the IP claims in Germany.

Unfair Competition Law

The Act against Unfair Competition outlaws unfair practices in the course of business by a respective general clause. A number of specific practices are explicitly listed in the Act, in particular misleading advertising and other deceptive practices, psychological pressure, destructive competition and the unfair exploitation of work results (but only under special circumstances). The breach of law can also constitute an unfair practice, provided that the practice is aimed at gaining an unlawful advantage over competitors.

Unfair practices are not controlled by a state authority, but can be prosecuted by any competitor. In addition, private associations which exist for the promotion of commercial or of independent professional interests and qualified entities that are entered on a list of the Injunctions Act or on a list of the EU Commission for the protection of consumer interests may prosecute unfair practices.

Unfair Competition Law is partly harmonized within the EU by a Directive dealing with unfair practices against customers.

Procedural aspects

In German practice, most of the unfair competition and intellectual property claims follow the same pattern:

In case of a suspected infringement, the claimant usually sends a warning letter to the violating party, asking for a cease and desist statement that must be enforceable by a contractual penalty. If the allegation is true, the violating party has to bear the lawyer’s costs for the warning letter.

If the violating party refuses such a statement, the claimant can apply for a temporary injunction. Such an injunction will be granted by the court if the claimant can establish the claim and the urgency of the matter. In practice, the urgency is assumed, if the application has been filed within a short time frame after the applicant became aware of all relevant facts. However, there is no statutory time limit. Some courts deny urgency after more than one month, while other courts consider two months or even more as acceptable.

The addressee of a warning letter should always check the legal allegations and react within the time limit given, otherwise the risk of a temporary injunction without oral hearing is comparatively high. Such a court decision can be very detrimental, as most of unfair competition and intellectual property claims are finally decided or settled in injunctive proceedings.

If a temporary injunction is granted and the violating party does not appeal against the judgement, the claimant usually asks for a termination letter. During this stage, the matter can be settled, otherwise a regular lawsuit will follow.

While a temporary injunction is usually raised to prevent further infringements or the repetition of an unfair practice, the main proceedings can also cover remedy, damage, disclosure and account claims.

An important advantage for the plaintiff is his right to choose the venue. Usually he has the choice between the domicile or seat of the defendant and all places where the infringement or unfair practice has been committed. In particular in internet cases, this can be all over Germany.

Most of the German member states have established special courts and chambers for Intellectual Property and unfair Competition Law. Therefore the quality of decisions in this field of law is usually comparatively high.

Manufacturers of brand-name products typically aim to ensure the same level of quality of distribution throughout all distribution channels, offline and online. To achieve this aim, they provide criteria how to resell their products. With the increase of internet sales, the use of such criteria has been increasing as well.

A total ban of online sales to end consumers within the EU is, however, hardly valid because online sales are considered as passive sales (cf. Guidelines on Vertical Restraints 2010, para. 52). Restrictions below a total ban are, however, commonplace (for examples, see the post “eCommerce: restrictions on distributors in Germany”). Yet, it is still not clear how far such restrictions are permissible.

For example, the luxury perfume manufacturer Coty’s German subsidiary Coty Germany GmbH has set up a selective distribution network and its distributors may sell via the Internet, under the following conditions. They shall

  • use their internet store as “electronic store window” of their brick and mortar store(s), thereby maintaining the products’ character as luxury goods, and
  • abstain insofar from engaging third parties as such cooperation is externally visible.

The court of first instance decided that tsuch ban of sales via third party platforms was an unlawful restriction of competition under art. 101 Treaty on the Functioning of the European Union (“TFEU”), namely a hardcore restriction under article 4 lit. c Regulation (EU) No. 330/2010 (Vertical Block Exemptions Regulation or “VBER”). The court of second instance, however, does obviously not see the answer that clear. Instead, the court requested the Court of Justice of the European Union (CJEU) to give a preliminary ruling on how European antitrust rules have to be interpreted, namely article 101 TFEU and article 4 lit. b and c VBER (decision of 19.04.2016, ref. no. 11 U 96/14 [Kart]) – see the previous post “eCommerce: restrictions on distributors in Germany”.

On 30 March 2017, the hearing took place before the CJEU:

  • Coty defended its platform ban, arguing it aimed at protecting the luxury image of brands such as Marc Jacobs, Calvin Klein or Chloe.
  • France – seat of several luxury brands such as Louis Vuitton, Chanel and Christian Dior –supported Coty.
  • The distributor instead argued that established platforms such as Amazon and eBay already sold various brand-name products, e.g. of L’Oréal. Accordingly, there was no reason for Coty to ban the resale via these marketplaces. Germany also supported this view by emphasizing the importance of online platforms for small and medium-sized enterprises (where, however, the share of distributors using online marketplaces is 62% much higher than in all other Member States, see the Staff Working Document, „Final report on the E-commerce Sector Inquiry“, para. 452).
  • Luxembourg – the seat of Amazon – considers a general platform ban to be disproportionate and therefore as anti-competitive (cf. Reuters’ article here).

Interest in the outcome of the Coty case is widespread, as the active participation of the various EU Member States illustrates (in addition to the abovementioned countries, also Italy, Sweden, the Netherlands and Austria). Simply put, the question is whether owners of luxury brands may generally or at least partially ban the resale via internet on third-party platforms.

Indications on how the court may decide have just appeared on 26 July 2017, with the Advocate General giving his opinion. The Advocate General proposes that the CJEU answers the questions referred to the court as follows:

“(1) Selective distribution systems relating to the distribution of luxury and prestige products and mainly intended to preserve the ‘luxury image’ of those products are an aspect of competition which is compatible with Article 101(1) TFEU provided that resellers are chosen on the basis of objective criteria of a qualitative nature which are determined uniformly for all and applied in a non-discriminatory manner for all potential resellers, that the nature of the product in question, including the prestige image, requires selective distribution in order to preserve the quality of the product and to ensure that it is correctly used, and that the criteria established do not go beyond what is necessary.

(2) In order to determine whether a contractual clause incorporating a prohibition on authorised distributors of a distribution network making use in a discernible manner of third-party platforms for online sales is compatible with Article 101(1) TFEU, it is for the referring court to examine whether that contractual clause is dependent on the nature of the product, whether it is determined in a uniform fashion and applied without distinction and whether it goes beyond what is necessary.

(3 The prohibition imposed on the members of a selective distribution system who operate as retailers on the market from making use in a discernible manner of third undertakings for internet sales does not constitute a restriction of the retailer’s customers within the meaning of Article 4(b) of Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) on the Treaty of the Functioning of the European Union to categories of vertical agreements and concerted practices.

(4) The prohibition imposed on the members of a selective distribution system, who operate as retailers on the market, from making use in a discernible manner of third undertakings for internet sales does not constitute a restriction of passive sales to end users within the meaning of Article 4(c) of Regulation No 330/2010.”

The Advocate General’s complete opinion can be found at CJEU’s website here.

The updated overview of the procedure can be found at CJEU’s website here.

Practical Conclusions

  1. The Coty case is extremely relevant to distribution in Europe because more than 70% of the world’s luxury items are sold here, many of them online now.
  2. The general ban to use price comparison tools shall be anti-competitive – according to the Bundeskartellamt, as confirmed by the Higher Regional Court of Düsseldorf on 5 April 2017. The last word is, however, still far from being said – see the post “Asics’ Distribution of Sporting Goods: Ban of Price Comparison Tools anti-competitive & void?!?”. Besides, also the Coty case’s outcome may influence how to see such bans.
  3. The Coty case is setting the course for future Internet sales. Depending on the decision of the CJEU, manufacturers of luxury or brand-name products can continue to ban the use of marketplaces like Amazon or eBay for the distribution of their products – or not any more or only under certain conditions. If the court follows the Advocate General’s conclusions, such platform bans appear possible, provided that the platform ban depends “on the nature of the product, whether it is determined in a uniform fashion and applied without distinction and whether it goes beyond what is necessary” (see above).
  4. For further trends in distribution online, see the EU Commission’s Final report on the E-commerce Sector Inquiry and details in the Staff Working Document, „Final report on the E-commerce Sector Inquiry“.
  5. For details on distribution networks and antitrust, please see my article „Plattformverbote im Selektivvertrieb – der EuGH-Vorlagebeschluss des OLG Frankfurt vom 19.4.2016“, in: Zeitschrift für Vertriebsrecht 2016, p. 278–283.

In a previous post we outlined how the German Copyright Act protects creative and artistic works and how Design Patents protects achievements in the aesthetic field.

In this second of three posts on IP rights in Germany, we are going to focus the attention on Trademarks, Patents and Utility Patents, in order to verify how to best protect names, signs and technical inventions.

Trade marks

Trade marks identify products and services of an enterprise. By protecting such names and signs (such as words, letters, numbers, pictures, and even colours and sounds), the owner gets a monopoly on their use.

Protection is usually granted by the registration of the trade mark at the DPMA, but can also exist if a trade mark gets well known in the relevant market. There are some absolute grounds for refusal of the registration, the most important one being the lack of distinctiveness of the requested trade mark for the considered products and services. Trade marks which consist exclusively of signs or indications which may serve to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service, and trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade shall not be registered. But the office will not check on their own, if the new trade mark infringes trade marks of others. It is up to the owner of an older trade mark to challenge the new registration. However, the older trade mark can only attack the new application, if the older mark has been used in business within the last five years.

Registrations must be filed on a special form issued by the DPMA. It is important to include the list of goods and services for which the protection is sought. The exact fee for the application depends on the number of classes of such goods and services, starting at € 290,00.

The registration at the DPMA covers only the use in Germany. The protection can be extended by a Community trademark for the use in the whole EU (application fee starting at € 850,00) or by an international registration at the WIPO (application fee depending also on the number of countries for which the protection shall be granted).

A registered trade mark can be renewed indefinitely and last forever. However, the registration will be cancelled, if the renewal fee (DPMA: starting at € 750,00) is not paid every ten years.

Before the launch of a new name or sign for a product or a service, we recommend to always check if the name violates existing trade marks of third parties. If this is not case, it is recommendable to think about the protection of the new name or sign by registering an own trade mark, choosing the register (Germany, EU, WIPO extension to other countries) by considering the intended geographic markets.

Trade mark owners can sell and assign their trade marks to third persons. The owner of a trade mark can also grant others a right of use of the trade mark.

The Trademark Act also recognizes the protection of commercial designations, such as company symbols (names, firm names or special designations of business establishments or enterprises) and titles of works. These designations are not registered, but are protected by the use in the course of business.

Patents

Patents are granted for new technical inventions, giving the owner a monopoly for 20 years (starting from the date of the filing, under the condition of the payment of annual fees). The technical invention must be new, based on an inventive activity (requiring a high level of inventiveness) and susceptible of industrial use. It is not new if it has been described in any manner accessible to the public anywhere in the world before.

The most important part of the application is the publication of the invention. So other persons can challenge the validity of the patent on the one hand, and the patent can be a basis for further developments on the other hand.

Before filing an application for a patent, we recommend to always check if the publication of the invention can conflict with a business interests that may require secrecy, in order to avoid the raising of a dispute.

Patents granted by the DPMA are only valid in Germany. It is also possible to apply for a patent at the European Patent Office in Munich. It is also possible to file an international patent application under the Patent Cooperation Treaty. The advantage of such an international application is that there is only one application for more than one country. However, the application will be examined and the patent will be granted by the national patent offices of the countries which the inventor has selected for protection.

The patent holder can sell and transfer the patent. He can also keep the patent and grant licences to third parties.

Utility Patents and further technical protective rights 

As the design patent is the small brother of the copyright, the utility patent is the small brother of the patent. The utility patent is also registered at the DPMA, but the substantive requirements for protection (novelty, inventive achievement and industrial application) are not examined during the registration procedure. The protection is granted up to ten years, but has to be renewed by paying maintenance fees after three, six and eight years. For the rest, utility patents and patents are very similar.

Utility patents granted by the DPMA are only valid in Germany. There is no EU utility patent and no international application for other countries. In some countries, utility patents are not recognized at all.

Finally, Germany acknowledges the statutory protection of semiconductor chip topographies and plant varieties.

German Law recognizes protection for certain creations of the mind and grants a set of exclusive rights for these creations. While the Copyright Act grants protection for works of literature, science and art without any further conditions, other intellectual property rights basically require a registration at the German Patent and Trademark Office (DPMA) or in an international register. Furthermore, the imitation of products not protected by intellectual property rights can violate the Act against Unfair Competition, which grants protection against any kind of unfair practice in the course of the business. Unfair competition lawsuits are very similar to lawsuits in the field of intellectual property law and usually follow the same pattern.

In this first post we will analyse the German Copyright Act, Neighbouring Rights and Design Patents. The next post will look into Trademarks, Patents and Utility Patents; while a third post will focus on the Act against Unfair Competition and the procedural aspects.

Copyrights and Neighbouring Rights

The German Copyright Act protects creative and artistic works, in particular linguistic works (for example books, speeches and software), musical works, works of pantomime including choreographic works, works of fine art including those of architecture, applied art and plans for such works, photographic works, films and illustrations of a scientific or technical nature. Ideas are not protected, as only the form of an individual and personal creation is the subject of copyright. The person who creates a work shall be deemed the author; several persons who have created a work jointly shall be deemed joint authors. As mentioned above, there is no registration of works, but in the case of anonymous or pseudonymous works the true name of the author can be submitted for entry in the Register of Authors at the DPMA.

Copyright shall protect the author with respect to his intellectual and personal relationship with his work on the one hand, and with respect to the utilization of his work on the other hand. The right of exploitation of the work can be licensed to third persons, but the copyright itself cannot be transferred to others (except by way of inheritance). Copyright expires 70 years after the author’s death.

The Copyright Acts grants also protection for economic efforts in relation to works. The so-called Neighbouring Rights cover for example the protection of the performer of a work, of the producer of an audio recording of a work, of broadcasting organizations and of the maker of a database

Germany has signed the most important international copyright conventions and therefore grants copyright protection to authors of the most states in the world, while these states also grant copyrights to German authors, based on the respective national law. Several European Union directives on special parts of copyright legislation have been implemented in Germany, but the harmonization within the EU does not yet cover the whole copyright system.

Design Patents

The design patent is the small brother of the copyright, because it also protects achievements in the aesthetic field. However, the German Design Patent Act grants only protection after the registration of the Design Patent at the DPMA. The design has to be new and needs an individual character. A design shall be considered new if no identical design has been made available to the public before the date of filing of the application for registration. It has an individual character if the overall impression it produces on the informed user differs from the overall impression produced on such a user by any design which has been made available to the public before the date of filing of the application. The protection is granted up to 25 years, but has to be renewed every five years by paying renewal fees.

The German design patent grants only protection for Germany. If the creator of an aesthetic form wants to exploit the design internationally, he can also apply for a European Design Patent at the European Office for Harmonization in the Internal Market for the EU or at the International Bureau of the World Intellectual Property Organization (WIPO). Newly, the European system even recognizes the protection of new designs that have not been registered, but only for three years since the design has been made available to the public.

Companies can sell their products worldwide directly – through branches, subsidiaries or e-commerce – or indirectly – through agents, distributors, franchisees or commission agents.

The German Federal Court of Justice now ruled for the first time that commission agents may also claim indemnity at terminination of their contract (decision of 21 July 2016, ref. no. I ZR 229/15).

What are Commission Agents?

Commission agents are self-employed business persons who are constantly entrusted with the task of concluding transactions in their own name for the account of another company, i.e. the supplier. They differ from distributors insofar as distributors buy and sell products on their own behalf and consequently bear distribution risks themselves (for details, see the Legalmondo post on Distribution Agreements in Germany and the Legalmondo post on “German” Distributor Indemnity – How to avoid it).

What is new for Commission Agents?

The Federal Court of Justice has clarified that – as is settled case law for distributors – also Commission Agents can claim indemnity at termination if two analogy requirements are met, namely if the commission agent

  • (i) is integrated into the supplier’s sales organization like a commercial agent; and
  • (ii) has to provide the customer data to the supplier so that the supplier continues to derive substantial benefits from the business with such customers after termination of the contract.

With regard to the second requirement (provision of customer data), the Federal Court points out that the prerequisite is – as a general rule – fulfilled because statutory law obliges the commission agent to provide the customer data (sec. 384 para. 2 German Commercial Code). As a result, the customers “belong” to the supplier by law, without any specific contractual obligation.

If distribution concerns “anonymous mass business” (i.e. where customers pay cash and the sales intermediary does not know customer names because of any CRM measures), it may be impossible for the commission agent to provide respective customer data. In such case, it shall according to the Federal Court suffice if the commission agent provides data “on the sale process per se” – so that the supplier can estimate which type of goods is in demand where (quite different from the requirements regarding distribution of high-quality products such as cars, fashion or electronics).

Can the parties contract out?

Yes, the obligation to provide customer data can be contracted out. Nevertheless, indemnity claims can currently not 100% safely excluded by doing so because the Federal Court leaves explicitly open whether commission agents may also claim indemnity if the supplier has the mere factual chance to use the customer data. Hence, to be on the safe side, one has to exclude also the chance to use the data (see “Practical information” below).

What about franchisees?

As regards franchisees as sales intermediaries, the Federal Court confirms that mere factual continuity of the customer base does not suffice to result into an indemnity claim (thus confirming the decision against the franchisee of the traditional bakery chain “Kamps” of 5 February 2015, ref. no. VII ZR 315/13).

Practical tips 

The provisions protecting self-employed commercial agents may apply analogously to commission agents.

As regards existing agreements under German law: if the two analogy requirements are met, indemnity claims at termination are quite likely.

As regards future agreements under German law:

  • In general, the claim for indemnity can likely be avoided by excluding the commission agent’s obligation to provide the customer data. Such exclusion should, however, be clearly formulated. Alternatively – or, to be on the safe side, additionally –, the supplier may oblige himself to block and or delete the customer data at terminaton of the contract with the commission agent.
  • Alternatively, the right to indemnity can be avoided by choosing another law and jurisdiction (taking into account the risk that the “German” indemnity claim might nevertheless be applied by as overriding mandatory provision in the sense of Article 9 of the Rome I Regulation).
  • Finally, if the commission agent acts outside the European Economic Area, the indemnity claim can be excluded by a simple waiver (according to analogue application of sec. 92c German Commercial Code).

In distribution contracts, manufacturers and suppliers tend to restrict distributors in selling the goods online (I.). Though this practice is quite common, there is no clearly established rule if and which restrictions are allowed by antitrust law (II.), especially in case of luxury goods within selective distribution networks (III.).

Now, it is up to the Court of Justice of the European Union (CJEU) to give a preliminary ruling on the internet sales restrictions (IV.). In the meantime, the question is: how to deal with resale restrictions now (V.).

Resale Restrictions in E-Commerce

E-Commerce keeps growing – worldwide and also in Germany, where it accounts for about 10% of total retail turnover (according to the 2016 figures from “Handelsverband Deutschland” [Trade Association of Germany]). Also manufacturers of renowned brands try to take advantage of the market opportunities of e-commerce, and at the same time try to preserve their brand’s image. Consequently, manufacturers have imposed several kinds of restrictions on their distributors, in particular:

  • total ban of internet sales,
  • prohibition of sales via third parties’ online platforms (especially “marketplaces”),
  • operation of a brick and mortar shops as a prerequisite for internet sales,
  • dual pricing, or
  • quality criteria for internet sales.

Antitrust limits to online resale restrictions 

Antitrust authorities, however, however, have lately put such restrictions under scrutiny and enforce antitrust rules in e-commerce as well. Accordingly, there have been quite a few court judgments and antitrust authorities’ decisions, both in favour of and against such restrictions, e.g. on:

  • bags (“Scout” re third party platforms),
  • sportswear (“Asics”re price comparisons, logo clause, “Adidas” re third party platforms),
  • electronics (“Sennheiser” and “Casio”both re third party platforms),
  • luxury cosmetics / perfumes (“Coty” re price comparisons, third platforms), or
  • software (“Google” requiring manufacturers of to pre-install apps, cf. European Commission’s press release of 20 April 2016).

Now, the luxury cosmetics case of Coty Germany has reached the European level.

The current Coty Case 

Facts of the case are as follows: The supplier (Coty Germany GmbH) has set up a selective distribution network. Distributors may sell via internet, under the following restrictions. They shall

  • use their internet store as “electronic store window” of their brick and mortar store(s), thereby maintaining the products’ character as luxury goods, and
  • abstain insofar from engaging third parties as such cooperation is externally visible.

The parties’ intentions: The supplier wants to enforce especially the last restriction, stopping a distributor (Parfümerie Akzente GmbH) from selling supplier’s products via Amazon’s marketplace. The distributor, obviously, intends to be free from such restrictions.

The court of first instance, the district court of Frankfurt, decided that the ban of sales via third party platforms is an unlawful restriction of competition under article 101 Treaty on the Functioning of the European Union (“TFEU”), namely a hardcore restriction under article 4 lit. c Regulation (EU) No. 330/2010 (Vertical Block Exemptions Regulation or “VBER”). The court of second instance, the Higher Regional Court of Frankfurt, however, does obviously not see the answer that clear. Therefore, the court has requested the Court of Justice of the European Union (CJEU) to give a preliminary ruling on how European antitrust rules have to be interpreted, namely article 101 TFEU and article 4 lit. b and c VBER (decision of 19.04.2016, ref. no. 11 U 96/14 [Kart]).

Questions referred to the CJEU

The CJEU has filed the case as “Coty Germany” (reference no. C-230/16). These are the four questions on which the CJEU is requested to answer:

  1. Do selective distribution systems that have as their aim the distribution of luxury goods and primarily serve to ensure a ‘luxury image’ for the goods constitute an aspect of competition that is compatible with Article 101(1) TFEU?

If the first question is answered in the affirmative:

  1. Does it constitute an aspect of competition that is compatible with Article 101(1) TFEU if the members of a selective distribution system operating at the retail level of trade are prohibited generally from engaging third-party undertakings discernible to the public to handle internet sales, irrespective of whether the manufacturer’s legitimate quality standards are contravened in the specific case?
  1. Is Article 4(b) of Regulation (EU) No 330/2010 to be interpreted as meaning that a prohibition of engaging thirdparty undertakings discernible to the public to handle internet sales that is imposed on the members of a selective distribution system operating at the retail level of trade constitutes a restriction of the retailer’s customer group ‘by object’?
  1. Is Article 4(c) of Regulation (EU) No 330/2010 to be interpreted as meaning that a prohibition of engaging third-party undertakings discernible to the public to handle internet sales that is imposed on the members of a selective distribution system operating at the retail level of trade constitutes a restriction of passive sales to end users ‘by object’?

How to deal with Restrictions now

There is quite some case law in Germany about the ban on online sales, some decisions in favour, some against. Online sales restrictions have lately also been under scrutiny of the German Bundeskartellamt (federal antitrust authority), which in general rather takes a critical position against such restrictions, including restrictions on selling via third-party platforms.

A decision of the highest German court is, however, still missing. Still missing is therefore also a clear answer to the question which restrictions suppliers and distributors can validly agree upon, especially in case of luxury goods. The CJEU’s preliminary ruling should provide such clarity.

Until the CJEU’s preliminary ruling, the current legal situation should be as follows – based especially on the Guidelines on Vertical Restraints 2010 (which do not have the quality of a law and do not bind the courts, but set out the principles which guide the European Commission’s assessment of vertical agreements and thus in principle bind the European Commission itself):

  1. A total ban of online sales is hardly valid because online sales are considered as passive sales (cf. Guidelines on Vertical Restraints 2010, para. 52). Hardly an option either is restricting the webstore’s language options because it does not change the passive character of such selling (cf. Guidelines on Vertical Restraints 2010, para. 52). The same goes for restrictions on the turnover made by sales via the internet.
  1. Allowed should, however, especially be
  • qualitative requirements for the design of e-commerce platform (without resulting in a total ban and without restricting the use of languages),
  • the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer (article 4 lit. b (i) VBER), e.g. territory-based banners on third party websites, cf. Guidelines on Vertical Restraints 2010, para. 53),
  • general qualitative restrictions for becoming a member of the supplier’s selective distribution system, e.g. requiring that distributors have one or more brick and mortar shops or showrooms (Guidelines on Vertical Restraints 2010, para. 54, 176).

The CJEU’s decision will bring more clarity – Legalmondo will keep you updated on the Coty Case and possible implications on online distribution.

Benedikt Rohrssen

Aree di attività

  • Agenzia
  • Distribuzione
  • e-commerce
  • Franchising
  • Investimenti
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    Germany –  Trademarks, Patents and Utility Patents

    20 Luglio 2017

    • Germania
    • Proprietà industriale e intellettuale
    • Marchi e brevetti

    I produttori di articoli di marca tipicamente puntano ad assicurare lo stesso livello di qualità lungo tutti i canali di distribuzione. Al fine di conseguire tale scopo, essi stabiliscono criteri su come rivendere i propri prodotti. Con l’aumento delle vendite via internet, l’utilizzo di tali criteri è aumentato altrettanto.

    Il miglior esempio: Asics. Fino al 2010, la controllata tedesca Asics Deutschland GmbH riforniva i propri distributori in Germania senza applicare criteri particolari. Nel 2011, Asics ha lanciato un sistema di distribuzione selettivo chiamato “Distribution System 1.0“. Esso prevede, tra le altre cose, un divieto generale, per i distributori, di usare strumenti di comparazione dei prezzi nelle vendite online:

    “In aggiunta, il distributore autorizzato … non è da ritenersi autorizzato … a supportare la funzionalità di comparazione dei prezzi apportando l’interfaccia specifica d’applicazione (“API”) per tali strumenti di comparazione dei prezzi.” [tradotto]

    L’Ufficio federale dei cartelli tedesco (“Bundeskartellamt”) ha stabilito, con decisione del 26 agosto 2015, che il divieto di utilizzare strumenti di comparazione dei prezzi nei confronti di distributori presenti in Germania era nullo in quanto viola l’articolo 101 (1) TFUE e l’art. 1 della Legge contro le limitazioni della concorrenza (cfr. il testo della decisione, di 196 pagine, qui). Il motivo addotto è che tale divieto punterebbe principalmente a controllare e limitare la competizione dei prezzi a spese del consumatore. Asics, per contro, ha presentato ricorso dinnanzi all’Alta Corte Regionale di Düsseldorf, al fine di vedere annullata la decisione dell’Ufficio federale dei cartelli, sostenendo che tale divieto era uno standard di qualità proporzionato nell’ambito del suo “Distribution System 1.0“, mirante a una presentazione uniforme dei prodotti.

    Il 5 aprile 2017, l’Alta Corte Regionale di Düsseldorf ha confermato, così come la decisione dell’Ufficio federale dei cartelli, che nell’ambito di sistemi di distribuzione selettiva il divieto generale di usare strumenti comparazione dei prezzi era anticoncorrenziale e con ciò nullo (fasc. n. VI-Kart 13/15 (V); vedi altresì la rassegna stampa dell’Ufficio federale dei cartelli in inglese):

    • In particolare, il divieto di strumentazione di comparazione dei prezzi non era dispensato, nell’ambito di una interpretazione teleologica (“Tatbestandsreduktion”), dall’art. 101 co. 1 TFEU. Secondo la Corte, ciò non era necessario al fine di proteggere la qualità e l’immagine di prodotto del brand Asics (ossia la stessa argomentazione dell’Alta Corte regionale di Francoforte nella sua sentenza del 22.12.2015, fasc. n. 11 U 84/14 riguardante gli zaini di Deuter; la Corte suprema federale non dovrà più decidere su tale caso perché la revisione è stata ritirata in marzo 2017, fasc. n. KZR 3/16). La Corte ha dichiarato che il divieto era volto a limitare i compratori, argomentando che i distributori sarebbero stati limitati nell’entrare in una competizione sui prezzi con altri. La presentazione di prodotti all’interno degli strumenti di comparazione dei prezzi non avrebbe danneggiato la qualità o il brand di prodotti Asics. Non avrebbe nemmeno dato “l’impressione di un mercato delle pulci”, nemmeno attraverso la presentazione, in parallelo, di prodotti usati. Inoltre, il divieto di strumenti di comparazione dei prezzi non risolverebbe comunque il problema del “free-riding”. In ogni caso, il divieto generale posto all’utilizzo di strumenti di comparazione dei prezzi non era necessario e perciò illegittimo.
    • Il divieto, inoltre, non doveva ritenersi esentato dal regolamento sulle categorie di accordi verticali e pratiche concordate. Al contrario, la Corte ha rilevato che il divieto avrebbe limitato vendite passive (svolte cioè attraverso internet) verso consumatori finali, contrariamente all’art. 4 (c) del regolamento sulle categorie di accordi verticali e pratiche concordate (facendo riferimento alla decisione della Corte di Giustizia dell’UE nel caso di Pierre Fabre, 13 ottobre 2011, fasc. n. C-439/09). Il “principio di equivalenza” (secondo cui le restrizioni valide per le vendite offline così come online non dovrebbero essere identiche, ma funzionalmente equivalenti) non si applicherebbe, in quanto nel commercio tradizionale non ci sarebbero funzioni comparabili agli strumenti di comparazione dei prezzi.
    • Infine, il divieto non beneficerebbe nemmeno dell’esenzione individuale di cui all’art. 101 co. 3 TFUE (“difesa dell’efficienza”).

    Conclusioni

    Secondo l’Alta Corte regionale di Düsseldorf, i produttori non potrebbero proibire generalmente ai loro distributori di usare strumenti di comparazione dei prezzi. Allo stesso tempo, la corte ha rifiutato di concedere l’autorizzazione a un appello contro la propria decisione – che, comunque, può essere richiesto separatamente, tramite la via dell’impugnazione (cfr. artt. 74, 75 della Legge contro le restrizioni in materia di concorrenza). Il futuro sviluppo di criteri limitanti i distributori nella rivendita online resta aperto, in particolare in quanto (i) il caso Coty è attualmente pendente presso la Corte di Giustizia dell’UE (vedi sotto) e (ii) la Commissione UE nella sua inchiesta di settore sull’e-commerce apparentemente sembra favorire i produttori di articoli di marca (vedi sotto).

    1. La Corte ha lasciato esplicitamente aperte – adducendo che non fossero rilevanti per la sua decisione – la questioni se:
      • il divieto di motori di ricerca sia anti competitivo (paragrafo 44 e ss. della decisione);
      • il divieto generale di usare piattaforme di terze parti sia anti competitivo (paragrafo 7) – sebbene il “Distribution System 1.0” di Asics vietasse anche piattaforme come Amazon e eBay.
    1. Se e come produttori di prodotti di lusso o di marca possono continuare a vietare la loro distribuzione via Amazon, eBay e altri mercati in generale verrà probabilmente deciso dalla Corte di Giustizia UE nei prossimi mesi – nel caso Coty (vedi il nostro post “eCommerce: restrizioni su distributori in Germania”) per il quale un’udienza ha già avuto luogo alla fine di marzo 2017.
    2. Senza pregiudizio per il caso Coty, la Commissione UE, nella propria inchiesta di settore sull’e-commerce del maggio 2017, dichiarato che
    • “divieti di marketplaces in generale non producono una proibizione di fatto della vendita online, non restringono l’uso effettivo di internet come canale di vendita indipendentemente dai mercati colpiti dal divieto…”;
    • “la potenziale giustificazione ed efficienze riportate dai produttori differiscono da un prodotto all’altro …”;
    • “(assoluti) divieti di marketplaces non dovrebbero essere considerati quali restrizioni fondamentali nel significato dell’articolo 4(b) e articolo 4(c) del regolamento su categorie di accordi verticali e pratiche concordate …”;
    • “la Commissione o una autorità nazionale della concorrenza potrebbe decidere di ritirare la protezione del regolamento su categorie di accordi verticali e pratiche concordate in casi particolari, se giustificato dalla situazione di mercato”
      (41–43 del       Report finale sull’inchiesta di settore sull’e-commerce).
    1. Per dettagli sulla distribuzione online e il diritto antitrust, si prega di consultare il mio ultimo articolo “Internetvertrieb in der EU 2018 ff. – Online-Vertriebsvorgaben von Asics über BMW bis Coty”, in: Zeitschrift für Vertriebsrecht 2017, pp. 274-281.

    Perciò, sulla base della più recente posizione della Commissione Europea, vi è spazio per argomenti e per la redazione creativa di contratti, posto che anche divieti generali di mercato possono essere compatibili con le norme UE sulla concorrenza. Comunque, le corti potrebbero considerare la questione in modo differente nel singolo caso. Conseguentemente, soprattutto la Corte di Giustizia UE con il suo caso Coty (vedi sopra) porterà maggiore chiarezza per la futura distribuzione online. Sul caso Coty, la Corte di Giustizia UE deciderà il 6 dicembre 2017 (vedi il calendario giudiziario della Corte) : rimanete aggiornati sugli sviluppi seguendo il nostro blog.

    The Court of Justice of the European Union (“CJEU”) has issued a new ruling on the international scope of the Commercial Agency Directive (86/653/EEC of 18 December 1986). The new decision is in line with the rulings of

    1. the CJEU in the Ingmar case (decision of 9 November 2000, C-381/98, goodwill indemnity mandatory where the agent acts within the EU) and Unamar (decision of 17 October 2013, C-184/12, as to whether national agency law is mandatory where exceeding the Commercial Agency Directive’s minimum protection) and
    2. the German Federal Supreme Court of 5 September 2012 (German agency law as mandatory law vis-à-vis suppliers in third countries with choice-of-court clause).

    The question

    Now, the CJEU had to decide whether a commercial agent acting in Turkey for a supplier based in Belgium could claim goodwill indemnity on the basis of the Commercial Agency Directive. More specifically, the question was whether the territorial scope of the Commercial Agency Directive was given where the commercial agent acts in a third country and the supplier within the EU – hence opposite to the Ingmar case.

    The facts

    According to the agency contract, Belgian law applied and the courts in Gent (Belgium) should be competent. Belgian law, transposing the Commercial Agency Directive, provides for a goodwill indemnity claim at termination of the contract (and, additionally, compensation for damages). However, the referring court considered that the Belgian Law on Commercial Agents of 1995 was self-restraining and would apply, in accordance with its Art. 27, only if the commercial agent acted in Belgium. Otherwise, general Belgian law would apply.

    The decision

    The CJEU decided that the parties may derogate from the Commercial Agency Directive if the agent acts in a third country (i.e. outside the EU). This has here been the case since the agent acted in Turkey.

    The decision is particularly noteworthy because it – rather by the way – continues the CJEU’s Ingmar ruling under the Rome I Regulation (I.). In addition, it indirectly confirms sec. 92c of the German Commercial Code (II.) – which allows the parties to a commercial agent agreement governed by German law to deviate from the generally mandatory agency law if the commercial agent is acting outside the European Economic Area (“EEA”). Finally, it provides legal certainty for distribution outside the EEA and illustrates what may change after a Brexit as regards commercial agents acting in the United Kingdom (III.) – if the EU and the United Kingdom do not set up intertemporal arrangements for transition.

    For details, please see the article by Benedikt Rohrßen, Zeitschrift für Vertriebsrecht 2017, 186 et seq. (“Ingmar reloaded – Handelsvertreter-Ausgleich bei umgekehrter Ingmar-Konstellation nicht international zwingend”).

    This post is the last of three small articles on the protection of IP rights in Germany. In the first we have already seen how the German Copyright Act protects creative and artistic works and how Design Patents protects achievements in the aesthetic field. In the second we focused the attention on Trademarks, Patents and Utility Patents, in order to verify how to best protect names, signs and technical inventions.

    In this post we will concentrate on how the Act against Unfair Competition grants protection against unfair practices in the course of the business and the main procedural aspects of the IP claims in Germany.

    Unfair Competition Law

    The Act against Unfair Competition outlaws unfair practices in the course of business by a respective general clause. A number of specific practices are explicitly listed in the Act, in particular misleading advertising and other deceptive practices, psychological pressure, destructive competition and the unfair exploitation of work results (but only under special circumstances). The breach of law can also constitute an unfair practice, provided that the practice is aimed at gaining an unlawful advantage over competitors.

    Unfair practices are not controlled by a state authority, but can be prosecuted by any competitor. In addition, private associations which exist for the promotion of commercial or of independent professional interests and qualified entities that are entered on a list of the Injunctions Act or on a list of the EU Commission for the protection of consumer interests may prosecute unfair practices.

    Unfair Competition Law is partly harmonized within the EU by a Directive dealing with unfair practices against customers.

    Procedural aspects

    In German practice, most of the unfair competition and intellectual property claims follow the same pattern:

    In case of a suspected infringement, the claimant usually sends a warning letter to the violating party, asking for a cease and desist statement that must be enforceable by a contractual penalty. If the allegation is true, the violating party has to bear the lawyer’s costs for the warning letter.

    If the violating party refuses such a statement, the claimant can apply for a temporary injunction. Such an injunction will be granted by the court if the claimant can establish the claim and the urgency of the matter. In practice, the urgency is assumed, if the application has been filed within a short time frame after the applicant became aware of all relevant facts. However, there is no statutory time limit. Some courts deny urgency after more than one month, while other courts consider two months or even more as acceptable.

    The addressee of a warning letter should always check the legal allegations and react within the time limit given, otherwise the risk of a temporary injunction without oral hearing is comparatively high. Such a court decision can be very detrimental, as most of unfair competition and intellectual property claims are finally decided or settled in injunctive proceedings.

    If a temporary injunction is granted and the violating party does not appeal against the judgement, the claimant usually asks for a termination letter. During this stage, the matter can be settled, otherwise a regular lawsuit will follow.

    While a temporary injunction is usually raised to prevent further infringements or the repetition of an unfair practice, the main proceedings can also cover remedy, damage, disclosure and account claims.

    An important advantage for the plaintiff is his right to choose the venue. Usually he has the choice between the domicile or seat of the defendant and all places where the infringement or unfair practice has been committed. In particular in internet cases, this can be all over Germany.

    Most of the German member states have established special courts and chambers for Intellectual Property and unfair Competition Law. Therefore the quality of decisions in this field of law is usually comparatively high.

    Manufacturers of brand-name products typically aim to ensure the same level of quality of distribution throughout all distribution channels, offline and online. To achieve this aim, they provide criteria how to resell their products. With the increase of internet sales, the use of such criteria has been increasing as well.

    A total ban of online sales to end consumers within the EU is, however, hardly valid because online sales are considered as passive sales (cf. Guidelines on Vertical Restraints 2010, para. 52). Restrictions below a total ban are, however, commonplace (for examples, see the post “eCommerce: restrictions on distributors in Germany”). Yet, it is still not clear how far such restrictions are permissible.

    For example, the luxury perfume manufacturer Coty’s German subsidiary Coty Germany GmbH has set up a selective distribution network and its distributors may sell via the Internet, under the following conditions. They shall

    • use their internet store as “electronic store window” of their brick and mortar store(s), thereby maintaining the products’ character as luxury goods, and
    • abstain insofar from engaging third parties as such cooperation is externally visible.

    The court of first instance decided that tsuch ban of sales via third party platforms was an unlawful restriction of competition under art. 101 Treaty on the Functioning of the European Union (“TFEU”), namely a hardcore restriction under article 4 lit. c Regulation (EU) No. 330/2010 (Vertical Block Exemptions Regulation or “VBER”). The court of second instance, however, does obviously not see the answer that clear. Instead, the court requested the Court of Justice of the European Union (CJEU) to give a preliminary ruling on how European antitrust rules have to be interpreted, namely article 101 TFEU and article 4 lit. b and c VBER (decision of 19.04.2016, ref. no. 11 U 96/14 [Kart]) – see the previous post “eCommerce: restrictions on distributors in Germany”.

    On 30 March 2017, the hearing took place before the CJEU:

    • Coty defended its platform ban, arguing it aimed at protecting the luxury image of brands such as Marc Jacobs, Calvin Klein or Chloe.
    • France – seat of several luxury brands such as Louis Vuitton, Chanel and Christian Dior –supported Coty.
    • The distributor instead argued that established platforms such as Amazon and eBay already sold various brand-name products, e.g. of L’Oréal. Accordingly, there was no reason for Coty to ban the resale via these marketplaces. Germany also supported this view by emphasizing the importance of online platforms for small and medium-sized enterprises (where, however, the share of distributors using online marketplaces is 62% much higher than in all other Member States, see the Staff Working Document, „Final report on the E-commerce Sector Inquiry“, para. 452).
    • Luxembourg – the seat of Amazon – considers a general platform ban to be disproportionate and therefore as anti-competitive (cf. Reuters’ article here).

    Interest in the outcome of the Coty case is widespread, as the active participation of the various EU Member States illustrates (in addition to the abovementioned countries, also Italy, Sweden, the Netherlands and Austria). Simply put, the question is whether owners of luxury brands may generally or at least partially ban the resale via internet on third-party platforms.

    Indications on how the court may decide have just appeared on 26 July 2017, with the Advocate General giving his opinion. The Advocate General proposes that the CJEU answers the questions referred to the court as follows:

    “(1) Selective distribution systems relating to the distribution of luxury and prestige products and mainly intended to preserve the ‘luxury image’ of those products are an aspect of competition which is compatible with Article 101(1) TFEU provided that resellers are chosen on the basis of objective criteria of a qualitative nature which are determined uniformly for all and applied in a non-discriminatory manner for all potential resellers, that the nature of the product in question, including the prestige image, requires selective distribution in order to preserve the quality of the product and to ensure that it is correctly used, and that the criteria established do not go beyond what is necessary.

    (2) In order to determine whether a contractual clause incorporating a prohibition on authorised distributors of a distribution network making use in a discernible manner of third-party platforms for online sales is compatible with Article 101(1) TFEU, it is for the referring court to examine whether that contractual clause is dependent on the nature of the product, whether it is determined in a uniform fashion and applied without distinction and whether it goes beyond what is necessary.

    (3 The prohibition imposed on the members of a selective distribution system who operate as retailers on the market from making use in a discernible manner of third undertakings for internet sales does not constitute a restriction of the retailer’s customers within the meaning of Article 4(b) of Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) on the Treaty of the Functioning of the European Union to categories of vertical agreements and concerted practices.

    (4) The prohibition imposed on the members of a selective distribution system, who operate as retailers on the market, from making use in a discernible manner of third undertakings for internet sales does not constitute a restriction of passive sales to end users within the meaning of Article 4(c) of Regulation No 330/2010.”

    The Advocate General’s complete opinion can be found at CJEU’s website here.

    The updated overview of the procedure can be found at CJEU’s website here.

    Practical Conclusions

    1. The Coty case is extremely relevant to distribution in Europe because more than 70% of the world’s luxury items are sold here, many of them online now.
    2. The general ban to use price comparison tools shall be anti-competitive – according to the Bundeskartellamt, as confirmed by the Higher Regional Court of Düsseldorf on 5 April 2017. The last word is, however, still far from being said – see the post “Asics’ Distribution of Sporting Goods: Ban of Price Comparison Tools anti-competitive & void?!?”. Besides, also the Coty case’s outcome may influence how to see such bans.
    3. The Coty case is setting the course for future Internet sales. Depending on the decision of the CJEU, manufacturers of luxury or brand-name products can continue to ban the use of marketplaces like Amazon or eBay for the distribution of their products – or not any more or only under certain conditions. If the court follows the Advocate General’s conclusions, such platform bans appear possible, provided that the platform ban depends “on the nature of the product, whether it is determined in a uniform fashion and applied without distinction and whether it goes beyond what is necessary” (see above).
    4. For further trends in distribution online, see the EU Commission’s Final report on the E-commerce Sector Inquiry and details in the Staff Working Document, „Final report on the E-commerce Sector Inquiry“.
    5. For details on distribution networks and antitrust, please see my article „Plattformverbote im Selektivvertrieb – der EuGH-Vorlagebeschluss des OLG Frankfurt vom 19.4.2016“, in: Zeitschrift für Vertriebsrecht 2016, p. 278–283.

    In a previous post we outlined how the German Copyright Act protects creative and artistic works and how Design Patents protects achievements in the aesthetic field.

    In this second of three posts on IP rights in Germany, we are going to focus the attention on Trademarks, Patents and Utility Patents, in order to verify how to best protect names, signs and technical inventions.

    Trade marks

    Trade marks identify products and services of an enterprise. By protecting such names and signs (such as words, letters, numbers, pictures, and even colours and sounds), the owner gets a monopoly on their use.

    Protection is usually granted by the registration of the trade mark at the DPMA, but can also exist if a trade mark gets well known in the relevant market. There are some absolute grounds for refusal of the registration, the most important one being the lack of distinctiveness of the requested trade mark for the considered products and services. Trade marks which consist exclusively of signs or indications which may serve to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service, and trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade shall not be registered. But the office will not check on their own, if the new trade mark infringes trade marks of others. It is up to the owner of an older trade mark to challenge the new registration. However, the older trade mark can only attack the new application, if the older mark has been used in business within the last five years.

    Registrations must be filed on a special form issued by the DPMA. It is important to include the list of goods and services for which the protection is sought. The exact fee for the application depends on the number of classes of such goods and services, starting at € 290,00.

    The registration at the DPMA covers only the use in Germany. The protection can be extended by a Community trademark for the use in the whole EU (application fee starting at € 850,00) or by an international registration at the WIPO (application fee depending also on the number of countries for which the protection shall be granted).

    A registered trade mark can be renewed indefinitely and last forever. However, the registration will be cancelled, if the renewal fee (DPMA: starting at € 750,00) is not paid every ten years.

    Before the launch of a new name or sign for a product or a service, we recommend to always check if the name violates existing trade marks of third parties. If this is not case, it is recommendable to think about the protection of the new name or sign by registering an own trade mark, choosing the register (Germany, EU, WIPO extension to other countries) by considering the intended geographic markets.

    Trade mark owners can sell and assign their trade marks to third persons. The owner of a trade mark can also grant others a right of use of the trade mark.

    The Trademark Act also recognizes the protection of commercial designations, such as company symbols (names, firm names or special designations of business establishments or enterprises) and titles of works. These designations are not registered, but are protected by the use in the course of business.

    Patents

    Patents are granted for new technical inventions, giving the owner a monopoly for 20 years (starting from the date of the filing, under the condition of the payment of annual fees). The technical invention must be new, based on an inventive activity (requiring a high level of inventiveness) and susceptible of industrial use. It is not new if it has been described in any manner accessible to the public anywhere in the world before.

    The most important part of the application is the publication of the invention. So other persons can challenge the validity of the patent on the one hand, and the patent can be a basis for further developments on the other hand.

    Before filing an application for a patent, we recommend to always check if the publication of the invention can conflict with a business interests that may require secrecy, in order to avoid the raising of a dispute.

    Patents granted by the DPMA are only valid in Germany. It is also possible to apply for a patent at the European Patent Office in Munich. It is also possible to file an international patent application under the Patent Cooperation Treaty. The advantage of such an international application is that there is only one application for more than one country. However, the application will be examined and the patent will be granted by the national patent offices of the countries which the inventor has selected for protection.

    The patent holder can sell and transfer the patent. He can also keep the patent and grant licences to third parties.

    Utility Patents and further technical protective rights 

    As the design patent is the small brother of the copyright, the utility patent is the small brother of the patent. The utility patent is also registered at the DPMA, but the substantive requirements for protection (novelty, inventive achievement and industrial application) are not examined during the registration procedure. The protection is granted up to ten years, but has to be renewed by paying maintenance fees after three, six and eight years. For the rest, utility patents and patents are very similar.

    Utility patents granted by the DPMA are only valid in Germany. There is no EU utility patent and no international application for other countries. In some countries, utility patents are not recognized at all.

    Finally, Germany acknowledges the statutory protection of semiconductor chip topographies and plant varieties.

    German Law recognizes protection for certain creations of the mind and grants a set of exclusive rights for these creations. While the Copyright Act grants protection for works of literature, science and art without any further conditions, other intellectual property rights basically require a registration at the German Patent and Trademark Office (DPMA) or in an international register. Furthermore, the imitation of products not protected by intellectual property rights can violate the Act against Unfair Competition, which grants protection against any kind of unfair practice in the course of the business. Unfair competition lawsuits are very similar to lawsuits in the field of intellectual property law and usually follow the same pattern.

    In this first post we will analyse the German Copyright Act, Neighbouring Rights and Design Patents. The next post will look into Trademarks, Patents and Utility Patents; while a third post will focus on the Act against Unfair Competition and the procedural aspects.

    Copyrights and Neighbouring Rights

    The German Copyright Act protects creative and artistic works, in particular linguistic works (for example books, speeches and software), musical works, works of pantomime including choreographic works, works of fine art including those of architecture, applied art and plans for such works, photographic works, films and illustrations of a scientific or technical nature. Ideas are not protected, as only the form of an individual and personal creation is the subject of copyright. The person who creates a work shall be deemed the author; several persons who have created a work jointly shall be deemed joint authors. As mentioned above, there is no registration of works, but in the case of anonymous or pseudonymous works the true name of the author can be submitted for entry in the Register of Authors at the DPMA.

    Copyright shall protect the author with respect to his intellectual and personal relationship with his work on the one hand, and with respect to the utilization of his work on the other hand. The right of exploitation of the work can be licensed to third persons, but the copyright itself cannot be transferred to others (except by way of inheritance). Copyright expires 70 years after the author’s death.

    The Copyright Acts grants also protection for economic efforts in relation to works. The so-called Neighbouring Rights cover for example the protection of the performer of a work, of the producer of an audio recording of a work, of broadcasting organizations and of the maker of a database

    Germany has signed the most important international copyright conventions and therefore grants copyright protection to authors of the most states in the world, while these states also grant copyrights to German authors, based on the respective national law. Several European Union directives on special parts of copyright legislation have been implemented in Germany, but the harmonization within the EU does not yet cover the whole copyright system.

    Design Patents

    The design patent is the small brother of the copyright, because it also protects achievements in the aesthetic field. However, the German Design Patent Act grants only protection after the registration of the Design Patent at the DPMA. The design has to be new and needs an individual character. A design shall be considered new if no identical design has been made available to the public before the date of filing of the application for registration. It has an individual character if the overall impression it produces on the informed user differs from the overall impression produced on such a user by any design which has been made available to the public before the date of filing of the application. The protection is granted up to 25 years, but has to be renewed every five years by paying renewal fees.

    The German design patent grants only protection for Germany. If the creator of an aesthetic form wants to exploit the design internationally, he can also apply for a European Design Patent at the European Office for Harmonization in the Internal Market for the EU or at the International Bureau of the World Intellectual Property Organization (WIPO). Newly, the European system even recognizes the protection of new designs that have not been registered, but only for three years since the design has been made available to the public.

    Companies can sell their products worldwide directly – through branches, subsidiaries or e-commerce – or indirectly – through agents, distributors, franchisees or commission agents.

    The German Federal Court of Justice now ruled for the first time that commission agents may also claim indemnity at terminination of their contract (decision of 21 July 2016, ref. no. I ZR 229/15).

    What are Commission Agents?

    Commission agents are self-employed business persons who are constantly entrusted with the task of concluding transactions in their own name for the account of another company, i.e. the supplier. They differ from distributors insofar as distributors buy and sell products on their own behalf and consequently bear distribution risks themselves (for details, see the Legalmondo post on Distribution Agreements in Germany and the Legalmondo post on “German” Distributor Indemnity – How to avoid it).

    What is new for Commission Agents?

    The Federal Court of Justice has clarified that – as is settled case law for distributors – also Commission Agents can claim indemnity at termination if two analogy requirements are met, namely if the commission agent

    • (i) is integrated into the supplier’s sales organization like a commercial agent; and
    • (ii) has to provide the customer data to the supplier so that the supplier continues to derive substantial benefits from the business with such customers after termination of the contract.

    With regard to the second requirement (provision of customer data), the Federal Court points out that the prerequisite is – as a general rule – fulfilled because statutory law obliges the commission agent to provide the customer data (sec. 384 para. 2 German Commercial Code). As a result, the customers “belong” to the supplier by law, without any specific contractual obligation.

    If distribution concerns “anonymous mass business” (i.e. where customers pay cash and the sales intermediary does not know customer names because of any CRM measures), it may be impossible for the commission agent to provide respective customer data. In such case, it shall according to the Federal Court suffice if the commission agent provides data “on the sale process per se” – so that the supplier can estimate which type of goods is in demand where (quite different from the requirements regarding distribution of high-quality products such as cars, fashion or electronics).

    Can the parties contract out?

    Yes, the obligation to provide customer data can be contracted out. Nevertheless, indemnity claims can currently not 100% safely excluded by doing so because the Federal Court leaves explicitly open whether commission agents may also claim indemnity if the supplier has the mere factual chance to use the customer data. Hence, to be on the safe side, one has to exclude also the chance to use the data (see “Practical information” below).

    What about franchisees?

    As regards franchisees as sales intermediaries, the Federal Court confirms that mere factual continuity of the customer base does not suffice to result into an indemnity claim (thus confirming the decision against the franchisee of the traditional bakery chain “Kamps” of 5 February 2015, ref. no. VII ZR 315/13).

    Practical tips 

    The provisions protecting self-employed commercial agents may apply analogously to commission agents.

    As regards existing agreements under German law: if the two analogy requirements are met, indemnity claims at termination are quite likely.

    As regards future agreements under German law:

    • In general, the claim for indemnity can likely be avoided by excluding the commission agent’s obligation to provide the customer data. Such exclusion should, however, be clearly formulated. Alternatively – or, to be on the safe side, additionally –, the supplier may oblige himself to block and or delete the customer data at terminaton of the contract with the commission agent.
    • Alternatively, the right to indemnity can be avoided by choosing another law and jurisdiction (taking into account the risk that the “German” indemnity claim might nevertheless be applied by as overriding mandatory provision in the sense of Article 9 of the Rome I Regulation).
    • Finally, if the commission agent acts outside the European Economic Area, the indemnity claim can be excluded by a simple waiver (according to analogue application of sec. 92c German Commercial Code).

    In distribution contracts, manufacturers and suppliers tend to restrict distributors in selling the goods online (I.). Though this practice is quite common, there is no clearly established rule if and which restrictions are allowed by antitrust law (II.), especially in case of luxury goods within selective distribution networks (III.).

    Now, it is up to the Court of Justice of the European Union (CJEU) to give a preliminary ruling on the internet sales restrictions (IV.). In the meantime, the question is: how to deal with resale restrictions now (V.).

    Resale Restrictions in E-Commerce

    E-Commerce keeps growing – worldwide and also in Germany, where it accounts for about 10% of total retail turnover (according to the 2016 figures from “Handelsverband Deutschland” [Trade Association of Germany]). Also manufacturers of renowned brands try to take advantage of the market opportunities of e-commerce, and at the same time try to preserve their brand’s image. Consequently, manufacturers have imposed several kinds of restrictions on their distributors, in particular:

    • total ban of internet sales,
    • prohibition of sales via third parties’ online platforms (especially “marketplaces”),
    • operation of a brick and mortar shops as a prerequisite for internet sales,
    • dual pricing, or
    • quality criteria for internet sales.

    Antitrust limits to online resale restrictions 

    Antitrust authorities, however, however, have lately put such restrictions under scrutiny and enforce antitrust rules in e-commerce as well. Accordingly, there have been quite a few court judgments and antitrust authorities’ decisions, both in favour of and against such restrictions, e.g. on:

    • bags (“Scout” re third party platforms),
    • sportswear (“Asics”re price comparisons, logo clause, “Adidas” re third party platforms),
    • electronics (“Sennheiser” and “Casio”both re third party platforms),
    • luxury cosmetics / perfumes (“Coty” re price comparisons, third platforms), or
    • software (“Google” requiring manufacturers of to pre-install apps, cf. European Commission’s press release of 20 April 2016).

    Now, the luxury cosmetics case of Coty Germany has reached the European level.

    The current Coty Case 

    Facts of the case are as follows: The supplier (Coty Germany GmbH) has set up a selective distribution network. Distributors may sell via internet, under the following restrictions. They shall

    • use their internet store as “electronic store window” of their brick and mortar store(s), thereby maintaining the products’ character as luxury goods, and
    • abstain insofar from engaging third parties as such cooperation is externally visible.

    The parties’ intentions: The supplier wants to enforce especially the last restriction, stopping a distributor (Parfümerie Akzente GmbH) from selling supplier’s products via Amazon’s marketplace. The distributor, obviously, intends to be free from such restrictions.

    The court of first instance, the district court of Frankfurt, decided that the ban of sales via third party platforms is an unlawful restriction of competition under article 101 Treaty on the Functioning of the European Union (“TFEU”), namely a hardcore restriction under article 4 lit. c Regulation (EU) No. 330/2010 (Vertical Block Exemptions Regulation or “VBER”). The court of second instance, the Higher Regional Court of Frankfurt, however, does obviously not see the answer that clear. Therefore, the court has requested the Court of Justice of the European Union (CJEU) to give a preliminary ruling on how European antitrust rules have to be interpreted, namely article 101 TFEU and article 4 lit. b and c VBER (decision of 19.04.2016, ref. no. 11 U 96/14 [Kart]).

    Questions referred to the CJEU

    The CJEU has filed the case as “Coty Germany” (reference no. C-230/16). These are the four questions on which the CJEU is requested to answer:

    1. Do selective distribution systems that have as their aim the distribution of luxury goods and primarily serve to ensure a ‘luxury image’ for the goods constitute an aspect of competition that is compatible with Article 101(1) TFEU?

    If the first question is answered in the affirmative:

    1. Does it constitute an aspect of competition that is compatible with Article 101(1) TFEU if the members of a selective distribution system operating at the retail level of trade are prohibited generally from engaging third-party undertakings discernible to the public to handle internet sales, irrespective of whether the manufacturer’s legitimate quality standards are contravened in the specific case?
    1. Is Article 4(b) of Regulation (EU) No 330/2010 to be interpreted as meaning that a prohibition of engaging thirdparty undertakings discernible to the public to handle internet sales that is imposed on the members of a selective distribution system operating at the retail level of trade constitutes a restriction of the retailer’s customer group ‘by object’?
    1. Is Article 4(c) of Regulation (EU) No 330/2010 to be interpreted as meaning that a prohibition of engaging third-party undertakings discernible to the public to handle internet sales that is imposed on the members of a selective distribution system operating at the retail level of trade constitutes a restriction of passive sales to end users ‘by object’?

    How to deal with Restrictions now

    There is quite some case law in Germany about the ban on online sales, some decisions in favour, some against. Online sales restrictions have lately also been under scrutiny of the German Bundeskartellamt (federal antitrust authority), which in general rather takes a critical position against such restrictions, including restrictions on selling via third-party platforms.

    A decision of the highest German court is, however, still missing. Still missing is therefore also a clear answer to the question which restrictions suppliers and distributors can validly agree upon, especially in case of luxury goods. The CJEU’s preliminary ruling should provide such clarity.

    Until the CJEU’s preliminary ruling, the current legal situation should be as follows – based especially on the Guidelines on Vertical Restraints 2010 (which do not have the quality of a law and do not bind the courts, but set out the principles which guide the European Commission’s assessment of vertical agreements and thus in principle bind the European Commission itself):

    1. A total ban of online sales is hardly valid because online sales are considered as passive sales (cf. Guidelines on Vertical Restraints 2010, para. 52). Hardly an option either is restricting the webstore’s language options because it does not change the passive character of such selling (cf. Guidelines on Vertical Restraints 2010, para. 52). The same goes for restrictions on the turnover made by sales via the internet.
    1. Allowed should, however, especially be
    • qualitative requirements for the design of e-commerce platform (without resulting in a total ban and without restricting the use of languages),
    • the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer (article 4 lit. b (i) VBER), e.g. territory-based banners on third party websites, cf. Guidelines on Vertical Restraints 2010, para. 53),
    • general qualitative restrictions for becoming a member of the supplier’s selective distribution system, e.g. requiring that distributors have one or more brick and mortar shops or showrooms (Guidelines on Vertical Restraints 2010, para. 54, 176).

    The CJEU’s decision will bring more clarity – Legalmondo will keep you updated on the Coty Case and possible implications on online distribution.

    Stephan Dittl

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