National Report Germany. Question B: Ambush-marketing. Ass. Stefan Wirths, LL.M. Dr. Jan Kaestner

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1 National Report Germany Question B: Ambush-marketing Ass. Stefan Wirths, LL.M. Dr. Jan Kaestner 1. Has your country enacted legislation specifically aimed at prohibiting ambush-marketing? Or are there (concrete) plans to enact such legislation? No. In Germany there exists neither specific legislation dealing with ambush-marketing, nor are there concrete plans to enact such legislation. 2. What are the interests protected by the anti ambush-marketing provisions adopted in your country? See answer to question In the absence of specific ambush-marketing provisions in your country or in addition to such specific anti ambush-marketing provisions, are there other legal grounds on which such practices can be prohibited? Are there, for instance, special property rights for sport events or are the current unfair competition law or trade mark principles or other principles based on civil law or else, applicable to ambush-marketing? 3.1 Can you describe all the provisions that could be applicable to ambush-marketing situations? Is there a criterion or test common to all these different provisions? In the absence of specific anti ambush-marketing provisions, organizers or sponsors of sporting events have to rely on the general provisions of the German copyright- and trademark law, as well as the law of unfair competition. In addition to that, special provisions in advertisement contracts and also certain rights such as the domestic authority of the rightful occupant of premises and personal rights support claims against ambush marketing. The provisions in the copyright and trademark acts are remedies against ambush-marketing in the case of an obvious breach of these provisions, whereas trying to battle the more subtle forms of ambush-marketing with other means such as the provisions of the Unfair Competition Act (UWG) poses some difficulties. 1

2 Copyright law Graphically designed logos or emblems are protected by the provisions of the German Copyright Act (UrhG), if they fulfil the requirements stipulated by Section 2 of that act. According to Section 2 protection is granted to those works that are characterized by an act of personal intellectual creativity. The abovementioned obvious breaches of copyright law that could be connected to ambush-marketing activities are those comprising acts of plagiarism, where someone uses the sporting event to sell imitations of the products of one of the official sponsors. Trademark law Sections 14, 15 of the Trademark Act (MarkenG) stipulate that if anyone makes unauthorized use of words, symbols, logos or slogans that are identical with or similar to protected trademarks, the owner of that trademark may invoke the right to ban such use. Overall, only those marketing activities that constitute an obvious violation of trademarks can be prohibited on grounds of German trademark law, whereas those activities comprising the use of abstract terms of a certain sport or of stylized images or illustrations related to that sport and referring to the actual event no more than indirectly can not. Law of unfair competition Section 3 UWG is the blanket clause and core regulation of the German Unfair Competition Act (UWG). This section prohibits activities which might considerably impair competition to the disadvantage of competitors, consumers or other market participants. Common to all provisions of the UWG is the criterion of an act of competition. For the rights stipulated by the Act to be invoked, this criterion must be fulfilled. Section 2 subsection 1 defines this act of competition as any act of a person to further the sales or acquisition of goods or services to the benefit of one s own or a third party s business. In this regard, ambush-marketing will generally constitute a competitive action. The main question is, therefore, whether the ambush-marketing practice must be regarded as unfair commercial practice. As there are a number of specific provisions (Sections 4 to 7 UWG) which might be applicable to ambush-marketing practices, there remains little room for the exclusive application of the general clause. Here, especially Section 4 No. 9, No. 10 and the prohibition of misleading advertising must be considered. According to Section 4 No. 9 UWG, the imitation of goods and services is an unfair commercial practice if it is connected to a deception of the consumer with regard to the products origin (lit. a), or if it exploits a competitor s reputation (lit. b). The former alternative is less likely to be applied to an ambush-marketing situation, because usually the trademark-owner would be able to invoke his rights provided by the Trademark Act. However the latter alternative can possibly be applied to a situation, where to the eyes of the consumer, the ambush-marketing strategy aims at transferring the good reputation of an official sponsor s product to the imitation. In this situation the burden of proof would be on the claimant s part. He would have to provide evidence concerning the good reputation of the official sponsor s product, as well as the transfer of that reputation onto the ambusher s product. 2

3 Section 4 No. 10 UWG stipulates that purposeful obstructive competitive practices constitute an act of unfair competition prohibited under Section 3 UWG. But to successfully invoke this right, the official sponsor and competitor of the ambusher could face problems when it comes to providing evidence, for it could be very difficult to prove that the obstruction was purposeful. So far, only one court decision was based on the grounds of Section 4 No. 10 UWG (see below). Section 5 UWG prohibits deceptive advertising. Accordingly, marketing campaigns which aim at creating the false impression that the advertising company is one of the official sponsors of a given sporting event contradict the German law of unfair competition. All ambush-marketing activities designed in that fashion can be stopped and prohibited and the advertising companies can be held liable, provided the claimant can prove the deceptive character of the statement made in the advertisement and that the statement is capable of influencing the consumer s behaviour. According to Section 5 subsection 2 No. 3 UWG especially those advertisement statements are to be considered deceptive which are aimed at creating the false image of a business-related connection between the advertising company and the organizer or official sponsor of an event. This is a scenario in which a subtle form of ambush-marketing is likely to be used. But given the organizers and sponsors can overcome the evidence-related difficulties, even these subtle forms of ambush marketing could be effectively battled on the grounds of the German unfair competition law. Domestic authority / rights of the owner of premises or the lessee to undisturbed possession Under German law, the owner or other rightful occupant of premises has and may exercise domestic authority. This right is provided by Article 13 of the German Constitution (Grundgesetz), as well as Section 905 of the German Civil Code (BGB). Section 1004 BGB grants a claim against any violator to desist from infringing the owner s domestic authority, if the owner has a legitimate interest. The remedy against the infringement of the rightful occupant s rights is provided by Section 862 BGB. Before the commencement of the FIFA WM 2006 in Germany, the organizers negotiated with the owners and officials of the venues, that all the stadiums were to be cleared from any non-sponsor advertisement (the 3 huge letters on top of the roof of the AOL-Arena stadium in Hamburg had to be removed, because AOL was not an official sponsor of the FIFA WM an endeavour that created costs of ,- ). Yet, difficulties arise in the event that the ambushing company distributes merchandise to the audience on the way to the venue but still outside the premises. If this is done at the airport or at the train station, an agreement of the organizers or the sponsors with those exercising the rights of owners of these premises could help to qualify and prohibit that behaviour as ambush marketing. Contractual Law Sponsors or organizers have the possibility to negotiate contracts with local officials to ban non-sponsor advertisement. During the FIFA WM 2006 even the air space above the venues was subject to provisions in advertisement contracts, since the air space above a certain premises is also subject to the domestic authority under German law (Section 905 BGB). Yet, under German law, the domestic authority 3

4 concerning the air space above the premises is limited by the regulations of the Air Traffic Act (LuftVG) and the Air Traffic Ordinance (LuftVO). Section 6 LuftVO requires the permission of the Federal State Aviation Authorities for all flights of airplanes pulling advertisement banners, while Section 9 allows flights for advertisement purposes without permission, if the advertisement is not placed on a banner but on the airplane itself. Thus, an airplane pulling a banner of the Australian airline Quantas was banned from the airspace above the Berlin Olympic Stadium. Based upon the provisions of Section 1004 in conjunction with Section 823 of the German Civil Code (BGB) under German civil law a legal construction prohibits the infringement of the organizers rights with regard to their protected business interests (Eingriff in den eingerichteten und ausgeübten Gewerbebetrieb). In the event of certain ambush-marketing actions constituting an illegal and direct impairment of the business (here the organization of sporting events), the said right is a possible remedy against ambush-marketing. Related to the FIFA WM 2006, agreements were made between FIFA and the cities hosting the events to not allow non-sponsors to advertise their products within a radius of 1 km around the venue. Enforcement was secured by the so called Ambush-Police, but this is always an enormous cost-factor for the sponsors and organizers to cope with. Personal Rights Athletes interests to prohibit unauthorized use of their own picture by advertising companies are protected by Section 22 of the German Artistic Copyright Act (KUG). Pursuant to this section, images of persons may only be used with the persons consent. An exception to this principle is provided by Section 23 KUG, under which images related to contemporary history do not require the consent of the depicted person. However, pursuant to subsection 2 this exception is not applicable if the use of the picture or image contradicts the depicted person s legitimate interest. Even the use of an athlete s image or name for advertisement purposes with his or her permission can still be considered an illegal ambush-marketing strategy if this athlete is already bound by a contract with another sponsor. 3.2 What are the available remedies and to whom? Copyright law: Section 97 of the Copyright Act (UrhG) gives the originator (Section 7 et seqq.) of a protected symbol or logo the right to demand the violator to cease and desist and, in case of negligence or intent on the violator s part, the right to either claim damages or entitlement to the profits gained in the course of violation. Trademark law: Sections 14 and 15 of the Trademark Act (MarkenG) give the owner of a trademark or business name the right to demand the violator to desist the use of that trademark. These sections also 4

5 provide the claim of damages for cases of intent or negligence (Section 14 subsection 6 and Section 15 subsection 5). Law of unfair competition: Sections 8, 9, 10 of the UWG provide the right to demand the violator to cease and desist, as well as a claim for damages arising from violations of Section 3 of the UWG. According to Section 8 subsection 3 of the UWG, these rights are given to the sponsors against their competitors, as well as to organizations promoting fair competition (such as the Wettbewerbszentrale), consumer protection organizations (today: qualified organizations) and the Chambers of Commerce and Industry. Contractual remedies: Advertisement contracts can confer the rights of either the organizers (such as the FIFA) to the sponsors or of the sponsors to the organizers to take action against ambushers. Rights of domestic authority: The owner or other rightful occupant of premises may exercise his domestic authority. This right is provided by Article 13 of the German Constitution (Grundgesetz), as well as Section 905 of the German Civil Code (BGB). Section 1004 BGB grants a claim against any violator to desist from infringing the owner s domestic authority if the owner has a legitimate interest. The remedy against the infringement of the rightful occupant s rights is provided by Section 862 BGB. These remedies may be exercised only be the owner or other rightful occupant. Rights with regard to protected business interests (Recht am eingerichteten und ausgeübten Gewerbebetrieb): In the event of a certain ambush-marketing action constituting an illegal and direct impairment of the business (here the organization of sporting events), the organizers may invoke the provisions of Section 1004 in conjunction with Section 823 of the German Civil Code (BGB), to protect their undertaking with an established business enterprise. The organizers invoking said rights may claim for damages or demand the violator to cease and desist. Personal rights: In the event of a violation of the athlete s rights pursuant to Section 22 of the Artistic Copyright Act (KUG), Sections 12, 862 and 1004 of the German Civil Code (BGB) in conjunction with Section 823 BGB and Section 22 KUG are applicable by analogy, giving the athlete the right to cease and desist, as well as a claim for damages. 3.3 Are there sanctions applicable (administrative or civil) and what are the authorities entrusted with enforcement authority? As has been stated before, there is a wide range of remedies against ambush marketing practices. In practice, the most important remedy is the right to demand the infringer to cease and desist his unfair marketing practice. Possible sanctions in case of a breach of the obligation to cease and desist are in case of a contractual declaration of discontinuance with a penalty clause contractual damages and In 5

6 case of a court order to cease and desist fines. Furthermore, the threat that the affected competitor may claim damages might be considered a further sanction against ambush-marketing. German copyright, trademark and unfair competition law are mainly governed by civil law. Therefore, apart from the general enforcement authorities (in case a German court has ordered the violator to cease and desist) there exist no public authorities with the specific responsibility to deal with ambush-marketing (or other copyright or trademark infringements or unfair commercial practices). However, based on a selfregulatory approach in the field of unfair competition law, the German legislator has given the right of action to certain business and consumer organizations. In case the ambush-marketing constitutes an unfair commercial practice, these organisations can follow up these breaches of unfair competition law. One exception to this rule is the competence of the Federal Office of Consumer Protection and Food Safety (BVL) for cross-border breaches of the law of unfair competition. With the transformation of the Regulation (EC) No 2006/2004 of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (the Regulation on consumer protection cooperation), the Federal Ministry of Consumer Protection, Food and Agriculture (BMELV) put the BVL in charge of dealing with cross-border breaches of unfair competition law. Yet, disputes with regard to ambush-marketing activities can only be settled at the German civil courts. Since the BVL does not have the legal capacity to invoke rights that provide protection against ambush-marketing activities, it assigns the above mentioned organizations with the capacity to do so. These organizations may then take legal proceedings against the ambushing companies. 4. Could you give us a list of behaviours that have been or would be considered as prohibited ambushmarketing in your country? Trademark Law With regard to the soccer World-Cup hosted by Germany in 2006, it has been discussed whether and to what extent terms like Germany 2006 or Fußball WM 2006 (Soccer World Cup 2006) can be considered protectable under the German trademark law, or whether these terms are purely generic and therefore cannot be registered as protected trademarks. The German Patent and Trademark Office (DPMA) refused to register a variety of trademarks related to the World Cup, because, according to the DPMA, these terms were generic. This was partially overruled by the Federal Patent Court (BPatG, court order March 8, W (pat) 238/04). Yet, in April 2006 the Federal Court of Justice (BGH) decided that the term Fußball WM 2006 was to be cancelled from the list of registered trademarks (BGH, court orders April 27, 2006 I ZB 96/05 and I ZB 97/05). According to the Federal Court of Justice, this term is simply descriptive and lacks the distinctive character, as well as a reference to origin (in this case the FIFA), which are both criterions required by section 8 of the Trademark Act. Under German trademark law no one may create a monopoly by registering a general term of common use. Thus, the Appellate Court of Hamburg decided that it must be permitted to use the descriptive term WM Germany 2006 to 6

7 refer to a product that is issued with regard to the event (OLG Hamburg, decision March 31, U 121/03). Law of unfair competition The District Court of Frankfurt am Main prohibited the sale of stuffed toy animals dressed in shirts decorated with footballs and the words Germany 2006 or 2006 Germany resembling the official mascot of this event (LG Frankfurt a. M., court order September 8, O 98/05) and based its decision on the blanket clause of 3 UWG. However the applicability of the blanket clause in this instance is questionable, because the provision of Section 4 No. 9 UWG is more specific in such a case. The District Court of Hamburg (decision October 25, /05) decided in favor of the FIFA in a case against the Ferrero company. FIFA had claimed the deletion of several logos from the list of protected trademarks. All these logos took reference to the soccer World Cup. The court held that these logos were capable of obstructing the organizer s marketing activities. Yet, the fact that this court decision was based on the provisions of the UWG and not on those of the Trademark Act was subject to some criticism. Due to a court order of the District Court of Berlin (LG Berlin, September 14, O 146/05) a company was prohibited to use terms such as Koordinierungsbüro Public Viewing zur FIFA WM 2006 or WM-Koordinierungsbüro Public Viewing. Domestic authority On the day of the soccer match of Holland against the Ivory Coast, fans of the Dutch national soccer team were refused admission to the venue if they were dressed in orange shorts decorated with the logo of the Dutch brewery Bavaria. So far this incident has not been subject to any examination by a German court. Personal rights The well-known German soccer player Oliver Kahn (keeper) went to court because Electronic Arts (EA) had not asked for his permission to use his name and image in the computer game FIFA Fußballweltmeisterschaft The Appellate Court of Hamburg confirmed the District Court s decision (LG Hamburg, decision April 25, O 381/02), which had been in the claimant s favor. The use of his name was considered a violation of Mr. Kahn s legitimate interest according to Section 23 subsection 2 KUG (OLG Hamburg, decision January 13, U 41/03). EA had to remove name and image of Mr. Kahn from their computer game. 7

8 Contact: Zentrale zur Bekämpfung unlauteren Wettbewerbs e. V. Dr. Jan Kaestner Landgrafenstraße 24 B Bad Homburg v. d. H. Tel. +49 (6172) Fax +49 (6172) kaestner@wettbewerbszentrale.de 8