While German design rights, as well as international design registration covering Germany, provide protection only in Germany, Community designs have “unitary character” and “equal effect throughout the Community” (Article 1  CDR) and therefore cover all Member States of the EU. Accordingly, it is established case law that a claim for cease-and-desist (injunctive relief) on the grounds of a Community design infringement applies, as a rule, to the entire territory of the EU, because an infringement committed anywhere in the European Union establishes, in principle, a risk of repeat infringement for the entire territory of the EU.
7.1 Competent courts and jurisdiction
Remedies in cases of design infringement are in practice primarily civil remedies (injunction, damages, etc.), although penal remedies exist as well, as do administrative remedies such as border seizure.
In Germany, organization of the courts is a matter for the 16 German federal states (“Länder”). Thus, the degree of specialization of the courts differs greatly from “Land” to “Land”. In many infringement cases the claimant has the choice of the court where proceedings are brought. He may choose the defendant’s domicile or, alternatively, any court where acts of infringement have been committed or threatened (forum delicti commissi). Design cases are heard in up to three instances: In first instance by the District Courts (“Landgericht”), in second instance by the Courts of Appeal (“Oberlandesgericht”) and in third instance by the Federal Supreme Court (“Bundesgerichtshof”). On the basis of the functional competence within the court, in first instance the case may be brought to a commercial chamber sitting with one professional judge and two lay judges. However, practitioners often choose to file a complaint with the civil chambers that sit with three professional judges.
Most German states have concentrated the jurisdiction for design matters on only one court in each state. Claimants have a tendency to go to the courts which are known for handling a large number of design cases, such as the
District Courts of Dusseldorf, Hamburg, Frankfurt, Mannheim and Munich.
Judgments of the District Courts can be appealed to the Courts of Appeal. These courts of second instance basically evaluate whether the first instance judgment correctly considered the facts and evidence, and correctly applied the law. However, the appeal instance does not perform a full de novo trial. New facts may only be submitted under certain conditions, e.g., if the claimant or defendant did not act negligently when failing to introduce these facts in the first instance. Therefore, it is very important to assert all the relevant facts and defenses already in the first instance. New legal arguments may be submitted at any time, including in the second instance.
A further appeal to the Federal Supreme Court can be allowed by the Court of Appeal if the matter is of fundamental importance or can further develop the law. In practice, these requirements are high and are often not considered to be fulfilled. In consequence, only a few cases are heard in third instance.
If the appeal has not been allowed by the Court of Appeal, a special motion for admitting the appeal can be brought to the Federal Supreme Court. Only a very small percentage of these motions are successful. If the motion is granted or the appeal has been allowed by the Court of Appeal, the case will be taken to judgment by the Federal Supreme Court. This further appeal is for a review on issues of law only. The parties have to be represented by a special attorney admitted to act before the Federal Supreme Court.
Very rarely, a case may be brought to the Federal Constitutional Court (“Bundesverfassungsgericht”) in Karlsruhe. The Constitutional Court does not serve as a regular court of appeals from lower courts or the Federal Supreme Court as a sort of “super appellate court” on any violation of federal laws. Its jurisdiction is limited to issues of constitutional law, including fundamental individual rights such as freedom of speech.
Infringement of Community designs (whether registered or not) belongs to the competence of Community design courts. These are national courts designated by the Member States to deal with Community design cases. In Germany, in principle, the same courts that are competent for hearing German design cases have also been designated as Community design courts. Community design courts have Community-wide competence when the case is brought in the Member State where the defendant is domiciled or established, or, failing this, where the claimant is domiciled or established. If neither claimant nor defendant are domiciled or have an establishment in the European Union, the Community design court in Alicante (the seat of EUIPO) has Community-wide competence. In addition, actions may also be brought before the courts of a Member State where acts of infringement have been committed or are threatened. In that situation the competence of the court is limited to the territory of the Member State where it is established (forum delicti commissi).
7.2 Main procedural principles
An infringement case is usually started by sending a warning letter with a cease-and-desist declaration containing a contractual penalty in case of violation. Should the matter not be resolved as a result of such a warning letter, the proprietor of a trademark, design or copyright will usually file proceedings for a preliminary injunction (see below).
A complaint must be filed at a competent District Court. The parties must be represented in infringement proceedings by an attorney-at-law (“Rechtsanwalt”) admitted to a German bar, optionally cooperating with a patent attorney (“Patentanwalt”). Non-EU nationals who act as claimants in proceedings brought before German courts must, upon application by the defendant, give security for costs and lawyers’ fees.
The claimant has to present evidence of all facts which are relevant for finding infringement. Discovery is generally not available in German court proceedings. Any facts which cannot be proven by documentary evidence may be dealt with in a taking of evidence by hearing witnesses in oral testimony. Rarely, the courts may require a design expert for considering novelty or individual character of the asserted design; this may especially happen in case of designs in densely occupied fields of design where even the average observer with an open mind to questions of design will find it difficult to assess differences as against the existing design corpus, that it can be appropriate making use of an expert opinion. Many cases, however, are decided on the basis of written presentations by the parties and in subsequent oral hearings in which the presiding judge explains the views of the court and gives the parties an opportunity to present their arguments and observations. Formal taking of evidence is rather an exception in design infringement proceedings.
7.3 Claims on the merits in proceedings
The legal tools at the disposal of the claimant in infringement proceedings include claims for cease-and-desist (injunctive relief), for destruction of the infringing products and for detailed information and rendering of account about infringement activities by the defendant, as well as for damages which may be calculated based on the accounting rendered (account of sales, profits etc.).
Furthermore, and following the implementation of the IP Rights Enforcement Directive (2004/48/EC) into German law, the German Design Law provides:
- claims for preservation of evidence;
- claims for recall and definitive removal of infringing products from the channels of commerce;
- claims for securing damages (submission of bank, financial or commercial documents) in certain circumstances;
- claims for the publication of judicial decisions;
- claims for inspection;
- an extension of existing claims for destruction of infringing products and implements principally used in the creation or manufacture of infringing products; and
- an extension of existing claims for information
As regards damages, the claimant may choose between three alternatives for calculating damages: lost profits, infringer’s profits, or reasonable royalty. Punitive damages are not awarded. While a reasonable royalty typically provides the least burdensome of these alternatives for calculating damages, the calculation according to the infringer’s profit is being applied more and more frequently, since the case law now allows the infringer to deduct costs and expenses from the sales figures only if (and to the extent that) they can, in exceptional cases, be directly attributed to the objects infringing the IP right.
As a consequence, only the variable costs of the manufacture and marketing of the product may be deducted from the infringer’s amount of sales made. Additionally, in determining the amount of profit made from the infringement, the infringing party cannot claim that such profit is partly due to its own particular distribution activities. This means that general overhead costs are no longer allowed to be used to reduce the infringer’s profits. However, the question remains whether the infringer‘s profits are caused by the design infringement or by other circumstances, like good client relationships, a dominant market position, effective advertising or good service. The same question arises if the design owner claims his lost profits, which would frequently permit the highest damages awards. Here, an additional obstacle occurs if the market included other competitors than the claimant and the defendant, so that a third party could to some extent have replaced the infringing sales of the defendant in the absence of defendant‘s infringing activities.
When actions for infringement of Community designs are brought, Article 89 CDR provides for the sanctions of injunctive relief, the seizure of infringing products and the seizure of materials and implements predominantly used in order to make the infringing products. In addition, the courts apply all the sanctions provided for in the law of the country where the infringement took place. If a German Community design court deals with infringements committed in Germany, the sanctions applicable in cases of infringement of German designs are applicable.
7.4 Length of proceedings and time limits
The length of proceedings in design infringe-ment cases may differ from court to court and may vary with the court‘s workload. Main proceedings for design infringement are likely to take between six and nine months in first instance, from filing of the complaint until rendering of the judgment. Depending on the practice of the court, there may be one or two hearings in a typical case. If the court orders the taking of evidence, there may be one further session of the court for hearing witnesses or experts, and in that case the proceedings will typically take another three months. Appeal proceedings are likely to take approximately nine to twelve months on average, with usually only one court hearing. If evidence is taken at the appeal stage, approximately three months should be added. If a further appeal to the Federal Supreme Court is admitted, the proceedings before that Court would likely take one and a half to two years.
The first instance proceedings start with the claimant filing a comprehensive complaint, stating all relevant facts of the case. The defendant then has to reply within about six to eight weeks. An oral hearing will be held within another one or two months. The decision is typically rendered about one month after the oral hearing. There is no automatic enforcement of the decision if an appeal is lodged against it. A special order may authorize preliminary enforcement.
An appeal must be lodged within one month from the receipt of the written first instance decision. A comprehensive reasoning has to be filed within a further month. The Court of Appeal may extend this deadline. Typically, the appellee has a few months to respond to the appeal reasoning. A reply of the appellant is then to be expected about two months later. An oral hearing will be held about three months later. The decision is rendered within one more month. There is no automatic enforcement of the decision if a further (legal) appeal is lodged. A preliminary enforcement of the decision may be allowed, but its temporary execution usually requires the deposit of a security.
A further appeal on points of law can be lodged within one month from the notification of the second instance decision. A comprehensive reasoning has to be filed within one further month. The Federal Supreme Court may extend this deadline.
The cost risk in design litigation usually includes fees for both parties’ attorneys and (optional) patent attorneys, plus the court fees and expenses for witnesses, travelling, etc. It is difficult to give a general estimate for litigation costs at first or second instance. To give an idea of the order of magnitude of the litigation costs, one should focus on statutory lawyer’s fees, according to the German statutory fee regulation (“Rechtsanwaltsvergütungsgesetz”) and court fees only. These fees are calculated on the basis of the value in litigation, which reflects the claimant’s interest in the disputed matter. The value in dispute is fixed at the court’s discretion, but is essentially based on the parties’ sales figures. A typical case may be in the range of EUR 250,000. The sum of fees for both parties’ representatives plus the court fees represents the statutory cost risk because the losing party has to pay the costs of the winning party as well. The statutory cost risk is approximately EUR 25,000 in first instance and approximately EUR 30,000 in second instance.
As most other firms in design and other IP matters, BARDEHLE PAGENBERG generally bills on an hourly basis, which can, depending on the actual work load, lead to attorney fees which may be higher than the attorney fees according to the statutory fee regulation. Since the losing party only needs to reimburse the statutory fees, the winning party may still incur an amount of costs which is not reimbursable.