Clifford Chance

There are several ways companies can promote their products and/or services. Ultimately, any promotion or marketing activity is about explaining why your own performance or product is of special (or even superior) quality (compared to other products). In the past, it was mainly the offering itself that was described in the context of the ad. However, in times of customer reviews, the opinion of others is increasingly important for making a purchase decision.

For service providers in particular, there is also the possibility of attracting the attention of consumers by listing well-known companies or personalities (often celebrities) who belong to the customer base (so-called customer reference lists). This attention, however, may contradict the interests of the enterprises specified in the lists, e.g. if they do not want to be associated with the service provider. The question of when a company may be named in such a list was recently addressed by the Regional Court I in Munich ("Munich Regional Court").

1. BACKGROUND

In the present case, the plaintiff is the owner of the German word mark "BMW Group". Defendant 1 advertises online seminars, lectures and books on the subject of "profiling" on the internet. Defendant 2 is the managing director of Defendant 1. The term "profiling" refers to the creation of the overall image of a personality that can be used for specific purposes. In this sense, "profiling" concerns the collection of data on the character of persons in order to make corporate decisions on this basis. Defendant 2 listed "BMW Group" under the heading "Customers and References" on its home page without permission. Plaintiff expressly objected to the use of "BMW Group" as a reference. The defendants claim that employees of the company have used their services but cannot provide any evidence for such assertion.

2. DECISION

The plaintiff asserts claims for injunctive relief, damages, information and rendering of accounts on the basis of an infringement of its corporate personality rights. In addition, it is seeking reimbursement of the costs incurred as a result of sending a warning letter for trademark infringement and infringement of unfair competition law by the defendant.

2.1 Claims arising from corporate personality rights

One of the questions the Munich Regional Court had to deal with was whether the plaintiff could assert its claims against the defendants based on an alleged violation of its corporate personality rights.

It is not detrimental to the plaintiff's position that it is not a natural person, since legal entities are afforded the protection of the fundamental rights on which the general right of personality is based, insofar as such rights are applicable to them by nature (Art. 19 III GG (German Constitution)). As the Federal Court of Justice has repeatedly ruled, they are therefore also entitled to protection of personality rights.

The general right of personality grants the entitled person/entity general protection against interventions by third parties that affect the person/entity as such. It is therefore up to such person/entity alone to decide whether and under what conditions their name appears in public. It would not be consistent if the right holder had to tolerate their name, which they themself use for advertising in business transactions, being used for third-party advertising without being asked or even against their will.

An infringement of the right of personality must always be distinguished from an infringement of the right to a name. The right to a name is deemed to have been infringed if a name is used to create the impression that the person acting in the advertisement is the bearer of the name, that the bearer of the name is responsible for the advertisement, or that the services or products advertised are somehow attributable to the person in question. The right of personality is infringed if an incorrect factual assertion is made, but only if the personal substrate of the name bearer behind the name is affected, for example by exploiting the name bearer's fame or esteem in a trade/commercial environment. The listing of "BMW Group" under the heading "Customers and References" on the homepage of the first defendant does not create any confusion as to the attribution. Rather, the intention here is to exploit BMW's reputation on the market.

Consequently, the defendants have interfered with the plaintiff's right of personality despite its express objection. The plaintiff's corporate personality right derived from Art. 2 I GG outweighs the defendant's interest in communicating its services and competences (professional freedom, Art. 12 GG), its customer base (property guarantee, Art. 14 GG) as well as the freedom of opinion to which it is fundamentally entitled and an information interest under Art. 5 GG, insofar as the listing of "BMW Group" under the heading "Customers and References" is an incorrect factual assertion.

The truthfulness of factual assertions is important when weighing up conflicting interests. This is because there is no interest worthy of protection from the point of view of freedom of opinion in upholding and further disseminating disparaging factual assertions that are untrue. Accordingly, what is essential for the classification as a factual assertion is whether the assertion is amenable to verification as to its accuracy by means of evidence. The plaintiff, who has the burden of proof in this respect, substantiated that there had never been any cooperation between BMW and Defendant 1. In view of the size of the company, the defendant has a so-called secondary burden of proof for such alleged collaboration. The defendant did not meet this obligation and was even unable to explain when they were booked, by whom, for which event and who was supposed to pay them.

Consequently, Munich Regional Court affirmed the violation of BMW Group's corporate personality rights and considered the claims for injunctive relief, damages, information and accounting to be well-founded.

2.2 Claims for trademark infringement or infringement of unfair competition law (claims for reimbursement of warning costs)

Further, the plaintiff had issued a warning letter to the defendants for trademark infringement and infringement of unfair competition law before filing the lawsuit and therefore claimed reimbursement of the related costs. According to the plaintiff, a trademark infringement according to section 14 II No. 3 MarkenG (Act on the Protection of Trademarks and other Signs) or Art. 9 II lit. c EUTMR or an infringement of unfair competition law according to sections 3, 5 I 2 No. 1 and 3 UWG (Act against Unfair Competition) were given in the scenario at hand.

However, in the given case, the well-known sign "BMW Group" is not used for one of the defendant's own services. Defendant 1 did not advertise its own or third-party goods or services with the designation "BMW Group". Rather, it only indicates that these would be among its "customers and references".

Claims based on unfair competition law were ruled out in the case at issue as there was no concrete competitive relationship between the parties.

The fact that the plaintiff objectively had a cease and desist claim from the same conduct due to infringement of another property right – here: the corporate personality right (see above) – is irrelevant for the question of whether a reimbursement of the warning letter costs was justified. This is because content of the letter must put the person being warned in a position to assess the infringing act. The warning letter must therefore be precise about which property right the asserted claim is based on so that the person being warned can assess the correctness of the accusation. Since the warning letter did not refer to an infringement of the corporate personality right, the costs were not reimbursable.

3. PRACTICAL ADVICE

Important findings for legal practice can be drawn from the Munich Regional Court's decision.

The naming of a company in a customer reference list is a mere mentioning of a trademark and therefore does not per se constitute a trademark infringement. Since the companies in question are supposed to be customers, the competitive relationship required for an infringement of unfair competition law is often lacking which – in most cases – rules out claims in this respect.

However, this does not mean that the company is unprotected against such exploitation of their reputation on the market. They can defend themselves against the naming of their company in a customer reference list on the grounds of infringement of their corporate personality rights if the listing is an incorrect factual assertion. Since in the case of large companies, it is often rather difficult to prove that the claim is untrue, the secondary burden of proof is imposed on the plaintiff.

Even though the case at hand is only a first-instance decision, important insights can be gained as regards the structure of corporate personality rights. In addition to name, trademark and competition protection, this forms the fourth pillar of protection of a company against abuse by others and, therefore, is very likely to receive greater attention in the future.

Furthermore, all professionals are advised to give due consideration to the wording of any warning letters issued. It is highly recommended to include all possible violations in the letter in order to be reimbursed later for any costs incurred.