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In Germany, claims for passing off may be successfully asserted where the original product concerned consists of technical and design features and the technical features contribute to the product’s “originality”.
“Originality” of a product is a requirement for unfair competition claims for passing off. It basically requires that the product has certain special features which the potential buyers may associate with one particular source. If the copying of such an “original” product leads buyers to be deceived about its true origin, a claim for passing off may be founded.
The courts have long recognised that largely “technical” products may be “original” if the potential buyers associate a particular technical feature of the product with one manufacturer, even if the technical feature belongs in the public domain. The argument is that if alternative technical solutions exist, and competitors use them, the buyers may have cause to think that the particular technical feature stands for a particular manufacturer, thus making the product “original”.
However, if there are no technical alternatives, the courts will deny the originality requirement. The rationale behind this is that a product cannot be original if all other competitors are compelled to use the same technical feature, so granting a claim for passing off would in fact monopolise a technical feature that is basically in the public domain.
There is another exception to the general rule that the copying of technical features that contribute or even constitute the originality of a product may lead to claims for passing off. That was the situation in a case, Light Balloons, which was decided in September 2017 by Germany’s Supreme Court of Justice.
German courts have long recognised that even if technical features contribute to the originality of a product, and those features have been identically or nearly identically copied so that consumers may be deceived about the true origin of the product, a claim for passing off may nonetheless fail if the deception was “unavoidable”.
This is the case if the technical solution that was copied is, first, in the public domain and, second, is under the circumstances the “appropriate” solution such that a sensible manufacturer would choose the product at hand if it wants to ensure that buyers really buy it.
Under these circumstances, the copying of such “appropriate” and “free to use” solutions can be prohibited only if the defendant fails to take appropriate countermeasures to avoid any remaining danger of deception of the public. Examples of such countermeasures may be a different trademark, or any possible and sensible change, however small, of such design features that the product shows besides the technical features.
In Light Balloons, the product concerned was a light balloon consisting, as always, of a combination of design and technical features. The technical features at least contributed to the lower court’s findings that the product was indeed “original” so that one requirement of the claim for passing off was fulfilled.
The lower court also found that the essential features (also the technical ones) were nearly identically copied so that buyers were indeed under a danger of deception about the origin of the product.
But the Supreme Court also upheld the lower court’s reasoning that the copied product made use of a technical solution that was “appropriate” under the circumstances, making it unreasonable for a court to say it constituted unfair competition.
The decisive question was whether the defendant had taken the appropriate countermeasures to avoid any remaining danger of deception. The Supreme Court held that the defendants had taken such measures by changing the proportions between the upper and the lower half of the balloon (without changing the technical features).
Any remaining danger of deception caused by the fact that the defendants had made use of the technical function (which contributed to the “originality” of the plaintiff’s product) therefore had to be accepted as inherent in a functioning market in which appropriate and public domain solutions may be used if all remaining measures to avoid deception have been taken by the defendant.
The Supreme Court therefore upheld the lower court’s reasoning and finding that the special facts of Light Balloons did not justify a prohibition based on passing off.
Jens Künzel is a partner at Krieger Mes & Graf v. der Groeben, Düsseldorf, Germany. He can be contacted at: firstname.lastname@example.org
Jens Künzel, Krieger Mes & Graf v. der Groeben, jurisdiction report, passing off, unfair competition, Light Balloons