The Defense against Unjustified Attacks Based on IPR on the Opportunity of Trade Fairs and Exhibitions

2011/04/19,By Heinz Goddar and Carl-Richard Haarmann,[Unfair Competition]

Germany is one of the world’s leading locations for international specialists and consumer trade fairs. Numerous important trade fairs and exhibitions take place in Germany’s exhibition venues, including, for instance, the computer fair, CeBit in Hannover and the Frankfurt Car Show. These fairs and numerous other shows have a leading role in the world and as such draw large numbers of visitors and exhibitors each year from all over the world. Increasingly, Chinese companies are also taking part in such trade fairs as exhibitors, using the outstanding opportunities offered to present products and technologies as well as establish and develop international trade relationships. The increased significance and market presence of Chinese companies, though, also leads to a greater potential for conflict with competitors. In this respect, Western companies have traditionally used and still use especially intellectual property rights, namely patents, trademarks and copyrights in order to defend their market share against competitors. In this context, the holders of industrial property rights often take advantage of the fact that the German justice system provides excellent opportunities to take swift and effective legal action against actual or alleged rights infringements due its more specialized courts, quicker and more efficient proceedings and traditionally more protection rights friendly court decisions. As such, the assumption is at times not wholly wrong, that the possibilities for efficiently asserting intellectual property rights are not only used in cases of actual rights infringements but are used by some rights holders, sometimes apparently also with the help of the courts and authorities, in cases where a protection right infringement is not evident or even probable. Such actions are necessarily often taken against Chinese companies with trade fairs and exhibitions playing a central role. In light of the considerable damage which can be suffered by those subject to such attacks, it can be of the utmost importance for any company planning to participate in a trade fair or exhibition in Germany, to develop suitable strategies in good time, on how to defend themselves against attacks based on patents, trademarks and copyrights. This requires a precise knowledge of the legal sanctions which can potentially be applied in Germany as well as the preparation of suitable defence measures in good time.
Ⅰ. Potential Risks: Instruments Rights Holders can Use to Pursue infringements of Patents, Trademarks or Copyrights
1. Main Action before the Civil Courts
The German legal system sees the primary and preferred way of asserting intellectual property rights to be the filing of a claim in the civil courts. Such claim proceedings are heard by highly specialized divisions of the responsible regional courts (Landgericht) and a judgment is usually reached within 12 to 14 months.
However, such main proceedings are not particularly significant as far as trade fair participation is concerned and does not represent an acute risk to exhibitors as the infringement courts do not issue judgments which are directly enforceable whilst the trade fair is taking place.
2. Preliminary Injunctive Relief at Civil Courts
An additional or alternative possibility for an assertion of intellectual property rights at short notice is to affect a preliminary injunction at the responsible civil court. The object of such a preliminary injunction is usually a cease and desist order and obligation to disclose information. Where appropriate, in particular in connection with trade fairs and exhibitions, the court orders the allegedly rights infringing objects to be seized and impounded, for instance devices or machines displayed.
The holder of a protection right can file an application for injunctive relief at the court which has the respective jurisdiction ratione loci and ratione materiae. It is possible but not necessary to give the opposing party a prior verbal or written warning demanding they cease and desist the rights infringing activity. In the application for injunctive relief, the rights holder must argue and show credibly that he is the holder of an enforceable protection right, for instance a granted German patent, that there is a high probability that the right is legally valid and that the case constitutes a clear case of infringement of a right. The responsibility of the opposing party must also be evident. Finally, the applicant must show that the matter has a high degree of urgency, which is usually assumed by German courts provided the application for injunctive relief is filed with the court within one month of the applicant becoming aware of the infringing activity. A further requirement is that the case is not too complex which is particularly relevant in respect of injunctive relief proceedings in connection with alleged patent infringements.
After receiving a request for preliminary injunction, the civil court will usually rule within 48 hours, often without oral proceedings and without hearing the opposing party. The court can either grant the requested injunction, reject it or alternatively order or al proceedings at short notice. If the case is clear-cut, a preliminary injunction will often be granted with no further action. Once a preliminary injunction has been granted, the court notifies the applicant but not the opposing party. The applicant itself must then within one month serve the decision, with the help of a bailiff, on the opposing party; otherwise the decision is lifted by the court.
A preliminary injunction of a civil court must be unconditionally observed by the opposing party immediately upon being served. In the case of violations, the court then orders, upon application of the applicant, either a monetary fine, usually of considerable height, or imprisonment.
The legal remedy available to the opposing party is filing objection with the court which granted the preliminary injunction. Upon receipt of such an objection, the court must order an oral hearing. In these oral proceedings, only the actual evidence available is admitted, arguments which have not been shown credibly and absent witnesses are not considered. If the court confirms the preliminary injunction in its ruling, the opposing party must continue to observe such injunction. However, the opposing party can force the applicant to file a main action in order to have the dispute dealt with in non-cursory proceedings.
At this point, one may summarize that the possibility of obtaining and enforcing a preliminary injunction is a dangerous and effective weapon in the hands of a rights holder. It is relatively easy to effect and simple to enforce whilst the defence possibilities of the alleged rights infringer are restricted.
3. Border Seizure by Customs
In addition to civil measures, the holder of intellectual property rights also has the possibility to pursue infringers with the help of the customs authorities and to submit a general application for border seizure with the German customs authorities. In such cases, the customs officials merely receive general information about the protection rights on which the application is based as well as characteristics which can be used to identify infringing goods.
The customs authorities check goods sent when they are imported into Germany and during trade fairs and exhibitions. Upon mere suspicion of rights infringements, the officials initially secure the goods and inform both importer and rights holder. Insofar as the importer does not object to the seizure within ten working days, providing grounds for such an objection, the goods are finally seized and destroyed.
If the importer does object timely to the impounding, the rights holder has further 10 working days to file either a claim for injunctive relief or a main action with the aim of affecting a court ordered restraint on disposal obligating the importer to tolerate the impounding of the goods until the alleged rights infringement can be clarified in court. If the rights holder does not institute such civil law proceedings within the time limit, the impounding order will be rescinded and the goods released.
4. Police Seizure
In addition to the measures available under civil law and customs seizure, a holder of intellectual property rights also has the possibility of reporting persons suspected of importing, offering for sale or distributing rights infringing products to the law enforcement authorities and thus effecting police seizure and the institution of a criminal investigation by the public prosecutor.
Since any wilful, unlawful and culpable infringement of an intellectual property right constitutes a criminal act under German law, a police seizure of the allegedly rights infringing objects can be ordered. The requirement for the granting of a search and seizure order is the existence of a well founded initial suspicion in respect of the existence or imminent occurrence of a criminal act. In such cases, the investigating judge must assume that the infringement of one or more intellectual property rights is being committed or is imminent.
5. Interim Conclusion
It is evident, in light of the possibilities described above for asserting intellectual property rights claims against actual or alleged infringers on the occasion of trade fairs and exhibitions, that companies who present their goods at such events are faced with many and various risks.
Besides the risk of being drawn into costly main proceedings, the highest risk is that an exhibitor may be confronted with a civil law preliminary injunction on the occasion of a trade fair or exhibition. Unlike in cases where main proceedings are brought, injunction proceedings can directly lead to a lasting impairment of the immediate trade fair activities.
Furthermore, particular risks are harbored in the system of border seizure. The danger is, on the one hand, due to the extremely short time limits which apply as well as that an immediate and energetic reaction of the importer is required as soon as the customs authority has ordered a border seizure. A particularly problematic element is on the other hand the fact that the customs officials are indeed often able to form an opinion on the possible existence of trademark or copyright infringements but not on infringement of patents due to lacking of the necessary knowledge. In such cases, the customs officials rely heavily on the information provided by the patent owner when assessing whether an infringement has occurred.
Similar risks are posed by a preliminary criminal investigation. Whilst the civil courts which handle patent, trademark and copyright infringements are highly specialized, a comparative specialization is not seen in the law enforcement agencies, i.e. public prosecutor and criminal court judge.
II. Strategies and Measures to Reduce the Risk
In light of the considerable risks and unknowns which in particular foreign exhibitors face in the course of trade fairs and exhibitions in connection with attacks based on infringements of intellectual property rights, it is highly advisable, in respect of participation in such trade fairs, to prepare suitable measures in advance in order to fend off any attacks from competitors. This requires more than simply taking individual protection measures. Rather, it is necessary to develop a consistent defence strategy in good time prior to the participation in a trade fair. Such a strategy must be aimed at first ruling out, where possible, an infringement of intellectual property rights through a thorough analysis of the situation whilst also identifying potential dangers. If such an analysis reveals indications that even just a small conflict potential exists, precautions should subsequently be taken which are suitable at least to significantly reduce the danger posed by attacks which could directly jeopardise the success of the trade fair participation.
1. Infringement (Freedom-to-operate) Research in Advance of Trade Fair Participation
A central element of any defence strategy must be to check, far in advance of the specific trade fair preparations, whether the products intended for presentation may possibly infringe intellectual property rights. For this, it is necessary that a decision is made at least six weeks in advance, as to exactly which products are to be presented at the trade fair or exhibition.
Once the products have been selected, it is urgently necessary to analyse these objects in respect of whether the import, exhibit or sale thereof, could infringe intellectual property rights in Germany. Those protection rights for which a certain probability of an infringement exists should be checked in respect of their legal validity.
Ultimately, a properly performed “freedom-to-operate” search can localize all possible risks and evaluate them according to their risk potential. In this way, the exhibiting company is in a position to decide on any further strategy even before the trade fair or exhibition begins.
2. Filing Protective Letters at the Civil Courts
If the “freedom-to-operate” search reveals information suggesting that a particular product intended to be shown potentially infringes a legally valid intellectual property right, it makes little sense to import that product into Germany nevertheless, for the purpose of making it the object of a trade fair presentation. A possible solution in such case would be arranging licensing negotiations at short notice whereby the aim could be both the granting of a long term license or a so-called trade fair license.
If, as a result of the “freedom-to-operate” search, attacks due to patent, trademark or copyright infringements cannot be ruled out, but reasonable doubts exist as to the existence of an infringing act or as to the legal validity of the respective right, appropriate protection measures should be put into place.
The most efficient means which can be employed to defend against preliminary injunctions in civil courts is the protective letter. This legal instrument can be described as a pre-emptive pleading. Usually, the filing is made with all courts in Germany which are competent in terms of the subject matter. Furthermore, there is the possibility of depositing the protective letter in the central protective letter registry, where the protective letter can be uploaded to a centrally run database.
In the protective letter, firstly the parties to the expected proceedings are named whereby where possible all potential applicants are to be listed in order to guarantee the court takes the protective letter into account. Potential applicants include the actual right holder as well as related companies and licensees or licensors.
Next, a short description of the protection rights on the basis of which an attack is expected follows. Thereafter, the facts of the matter and the history of the case so far should be briefly laid out. The core of the protective letter is then in the arguments, which from a legal perspective justify the refusal of injunctive relief, thus in particular which argue against the fulfillment of the constituent elements of an infringement or which show a lack of legal validity of the protection rights upon which the application is based. In many cases, one can argue that the conflict in question has existed between the parties for some time or that the assumed applicant has been aware of the alleged infringing activity for some time so that the degree of urgency necessary for a preliminary injunction to be granted is no longer given. Moreover, it is advisable to show in detail that the matter is too extensive and complex for a decision in cursory proceedings of preliminary injunctive relief and why this is the case.
The main aim of the protective letter, however, is not necessarily to convince the competent court to reject the feared injunction application but not to grant a preliminary injunction without an oral hearing. In this way, the depositor of the protective letter obtains the possibility to make the court aware of his opinion and to argue his legal position in oral proceedings on an equal footing.
The court is fundamentally free in its decision: it can reject the injunction application on the basis of the protective letter, it can issue a preliminary injunction despite the existence of the protective letter but it can also first hear the parties in writing or even arrange an oral hearing at short notice.
With the help of such a protective letter, unjust preliminary injunctions can be avoided. In particular, the protective letter provides an opportunity for the party being attacked to win some time and improves the possibilities for responding in the case of an intellectual property right based attack.
3. Filing Protective Letters with the Customs and Law Enforcement Authorities
In addition to filing a protective letter at the civil courts, it is advisable to deposit copies of this protective letter with the respective local public prosecutor as well as with the central office responsible for the Germany-wide border seizure process for intellectual property. This measure serves primarily to make the customs and law enforcement authorities aware of the fact that one should not assume the legal validity of the allegedly infringed intellectual property rights or the fulfillment of the constituent elements of infringement purely on the basis of a possibly subjectively formulated criminal complaint lodged by the rights holder.
III. Summary

In light of the substantial risks which a company in Germany can be exposed to when introducing new products as well as when participating in trade fairs, if an infringement of intellectual property rights is claimed, a thorough “freedom-to-operate” search should certainly be undertaken in advance. If this or the actions of competitors or other rights holders indicate that a rights conflict is imminent, it is highly advisable to refrain from offering, exhibiting or launching products onto the market. If, on the other hand, the search reveals that attacks by rights holders are to be anticipated however reasonable doubts exist as to the presence of an infringement of a legally valid protection right, protection letters should be formulated in good time prior to the beginning of the respective use and filed with the competent civil court as well as the central protection letter registry. Furthermore, copies of this protective letter should be filed with the locally competent state prosecutor as well as the central office for intellectual property. In this way, there is a considerable chance of avoiding a preliminary injunction being ordered without oral proceedings and to avoid confiscation of the respective goods by customs or the police.

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