In several recently issued decisions, the German Federal Court of Justice made clear that enjoined parties in injunctive relief proceedings are frequently also obligated to demand from their distribution partners the return of any infringing products that have reached the market. This has important and liability-relevant implications for petitioners and respondents.
The view was signaled some time ago, and with the “Rescue Tropfen“ decision of the Federal Court of Justice (Order 29 September 2016, Case: I ZB 34/15, MarkenR 2017, 74), it has reached its conclusion for the time being. In this decision, the Federal Court of Justice holds that if the enjoined party is responsible for continuing infringement, it is regularly obligated to refrain from such actions in the future. This party is, however, also obligated to take feasible and appropriate actions to eliminate the infringement. A party that has been prohibited from distributing a product must subsequently make sure, by way of a recall, that products already delivered will not be further distributed.
In the future, whenever judgment is entered against a respondent to refrain from distributing a product, the respondent must read into the judgment the additional obligation to prevent, to the extent possible (whatever this may be), the further distribution of such products that have already been sold to its distribution partners. Fortunately, though, the Federal Court of Justice does not require success in this effort. The obligation of the enjoined party is fulfilled even if the distributor’s sales department refuses to comply with the enjoined party’s request.
While the enjoined party is not categorically responsible for the independent actions of third parties, it is required to influence third parties whose actions benefit the enjoined party economically, if it must seriously consider an infringement and has legal and actual influence on the conduct of third parties (Federal Court of Justice, loc. cit., para. 30).
Even if the enjoined party possesses no legal means to demand the return of products from its buyers, it is still feasible and appropriate for the enjoined party to ask for a return. The Federal Court of Justice does not explain what this attempt at obtaining a return must look like.
This decision creates several problems, not only for respondents but also for petitioners. Firstly, the respondent needs to know that its obligations are so extensive, which has now been clarified with the decision. The wording of the injunctive relief does not make the extent of the obligations obvious, however. For example, it is rather obvious that a copyright-infringing photograph must be removed from one’s own website if obligated to refrain from using the photograph. Sometimes it is not clear, however, how far one is obligated to exert an influence on third parties, such as search engines, discontinuing links to the photographs or even deleting cache storage of the photograph. It is also confusing that the law on competition and the protections for industrial property in addition to injunctive relief provide, as a rule, for abatement and removal. The petitioner could therefore, if it wants removal, make this clear with an appropriate petition. Now, according to the jurisdiction of the Federal Court of Justice, this is finally no longer required. This had already been indicated by the Federal Court of Justice in the “CT Paradise” (MarkenR 2015, 157) and “Hot Socks” (MarkenR 2016, 315) decisions, although with the now available “Rescue Drops” decision, there no longer exists any doubt.
Failure to comply with this extensive injunction can have enormous consequences, especially because failure to issue a recall poses the threat of substantial fines. At least for the time being, the Federal Court of Justice wants to allow parties in contempt proceedings to present reasons why respondents should not be expected to issue a recall. But at a conference, the judges of the 1st Civil Panel indicated that this will not be the case for much longer.
Problems for petitioners, too
This jurisdiction is not entirely harmless for petitioners, either, especially for petitioners requesting a preliminary injunction. If petitioners are granted injunctive relief in connection with the sale of a product and if respondents react with a recall of products from the market, significant claims for damages may arise in cases where the temporary injunction is later lifted. This can definitely happen since the procedure for obtaining an injunction is an expedited proceeding, in which decisions are reached very quickly and mistakes can sometimes occur. The respondent’s damage arising from an executed but later lifted temporary injunction must then be compensated.
Recommended course of action for practitioners
What should be done, then? If the petitioner is not entirely sure of injunctive relief and would like to minimize any possible claim for damages by the opposing party following the lifting of an injunction, the petitioner should state that it does not expect a recall of the opposing party’s products. At the above-mentioned conference, the presiding judge of the 1st Civil Panel of the Federal Court of Justice indicated that he does not consider this prejudicial to a finding of urgency. Therefore, this would be a viable approach.
As opposing party or defendant in the principal proceedings, in complying with the order in the judgment, the recall must be taken into account and carried out where required. Otherwise, a fine could be due. That has troublesome consequences, because the recall of one’s own products while they are in distribution is extremely unpleasant. In some cases, there may be an opportunity when the preliminary injunction is issued to discuss this topic with the petitioner and find an agreement; but usually this will not be possible.
In practice, the decision is meeting considerable resistance for the reasons described above. Nonetheless, the 1st Civil Panel defended its decision at the aforementioned conference and made clear despite arguments to the contrary that it will be standing by this decision at least in the short term.