15 April 2015Jurisdiction reportsJens Künzel

Enforcing a cease-and-desist order in Germany

If the IP right owner or claimant then accepts that declaration, a binding contract to cease and desist is concluded.

One would think that the duty to cease and desist under such a contract is fulfilled if the accused party simply stops committing the infringing activity. However, as Germany’s Federal Supreme Court has recently affirmed in CT Paradise, the task of abiding by such a declaration may be a lot more difficult for the person or company that made the declaration.

The Supreme Court held that a debtor of a contractual cease and desist obligation is, in principle, not only under a duty to cease and desist but to actively eliminate the disturbance caused by its unlawful act if such elimination is possible, just and reasonable under the circumstances of the particular case.

The court held that a contractual obligation to cease and desist may, in the absolute majority of cases, be interpreted to also include a further duty to become ‘active’. Generally, German law differentiates between claims to cease and desist on the one hand and to eliminate continuing disturbance on the other.

However, as the Supreme Court recognised, if before the contract was signed the parties had not differentiated between these two categories of claims, and the debtor simply makes the requested declaration to cease and desist, it shall normally be held accountable if he fails to eliminate a disturbance whose elimination is possible, just and reasonable under the circumstances—because any continuing disturbance is to be regarded as a future breach.

"There are cases in which the manufacturer of infringing goods has delivered them under terms that mean it has retained legal ownership."

What is possible, just and reasonable under the circumstances is to be clarified in each case at hand. In CT Paradise, the subject matter of the cease and desist declaration was the publication of photographs on eBay. After the contract had been concluded, the claimant asserted that the photographs could still be searched and found on the eBay website under “closed auctions”. So the court had to decide whether the photographs that could still be found on eBay constituted a breach.

The court held that they did. In doing so, it found that a duty to eliminate continuing infringements may include the duty to exert pressure on a third party (eBay) to remove the infringing material or eliminate continuing disturbances, if the debtor is in a position to either exert legal or factual pressure on that third party to comply with the declaration.

Under certain circumstances, the debtor may be under a contractual duty to take legal measures against third parties to remove the source of the infringement if the debtor has a cause of action against the third party to do so.

It is recognised that, under normal circumstances, the manufacturer of infringing goods that has delivered these goods to customers is not under a duty to recall them from the chain of customers if it is no longer the legal owner of these goods. Of course, the EU Enforcement Directive has introduced special claims for the recall of goods and elimination from the commerce chain in cases of IP rights infringement (eg, patents, designs, trademarks), thereby recognising that the ‘normal’ claim to cease and desist does not include such a duty if the ownership of the goods had been transferred to the customers and the manufacturer has no claim in law to recall them.

But there are cases in which the manufacturer of infringing goods has delivered them under terms that mean it has retained legal ownership. In such circumstances, the manufacturer would be under a contractual duty to do everything in its power to get the products back so that they would no longer be offered in breach of the contractual obligation to cease and desist.

Jens Künzel is a partner at  Krieger Mes & Graf v. der Groeben. He can be contacted at: jens.kuenzel@krieger-mes.de

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