In a decision issued at the beginning of this year (judgement of 26 January 2023, I ZR 15/22 – KERRYGOLD), the Federal Court of Justice (BGH) not only dealt with an interesting procedural question regarding the plaintiff’s capacity to sue, but also with the requirements of the prohibition of imitation under unfair competition law pursuant to Section 4 No. 3 UWG.
The facts on which the decision is based
The plaintiff has been selling various dairy products, in particular butter and spreads, under the trademark “KERRYGOLD” in Germany since 1973. The product packaging of the butter sold in Germany has a golden (unsalted butter) or silver (salted butter) background colour. In addition to the trademark “KERRYGOLD”, the product packaging of the different variants each depicts a black and white cow grazing on a green meadow. The words “made from Irish pasture milk” are also displayed in an arch above the cow and a golden, round seal is shown on the right.
The defendant is a company based in Ireland that also sells butter in Germany under the name “DAIRYGOLD”. The defendant also used a gold base colour for the unsalted version and a silver base colour for the salted version for the packaging of its butter products. The trademark “DAIRYGOLD” was applied in a central position on the product packaging. The packaging also featured black and white cows grazing on a green meadow. The words “From Country Kerry” and “original Irish butter” were printed on the lower part of the packaging. A golden, round seal was also positioned on the right-hand side of the packaging.
The plaintiff was of the opinion that the defendant’s products were unfair imitations and therefore issued a warning letter. After the plaintiff subsequently obtained an injunction from the Regional Court of Cologne (judgement of 20 January 2021, 84 O 252/19), the dispute went through several instances and ultimately ended up at the Federal Court of Justice.
The central substantive legal question
The question that was once again clarified by the BGH in this case was whether product packaging is subject to protection against imitations and, if so, under what conditions. In principle, Section 4 No. 3 UWG protects competitors against imitations under unfair competition law if the imitated products have a competitive character. However, the wording of this legal norm refers to the imitation of “goods or services” and the resulting “avoidable deception of customers with regard to the commercial origin”.
So how is the case to be assessed if it is not a question of the competitive character of the goods or services but of their packaging and the product packaging already states that the product comes from another manufacturer?
The decision of the BGH
The BGH ruled that the product packaging of the plaintiff’s products had the necessary competitive character, but that in the specific case there were insufficient findings of fact on the question of deception of origin.
a) Competitive character
Competitive character exists if the specific design of the product or certain features are capable of drawing the attention of the interested public to its commercial origin or its special features (established case law; see BGH, judgement of 4 May 2016 – I ZR 58/14). It is not necessary for the targeted customers to know the manufacturer by name. However, they must assume on the basis of the design or characteristics of the product that it comes from a specific manufacturer, whatever that manufacturer may be called.
In the current judgement, the BGH once again clarified that packaged products can generally have a competitive character:
“A packaged product may have a competitive character if the specific design or certain features of the product’s packaging are capable of drawing the attention of the interested public to the commercial origin or special characteristics of the packaged product.” (para. 34)
In the specific case, the BGH assumed that the product packaging of the plaintiff’s products was competitively unique due to the design features described above (golden or silver base colour, cows grazing on a green meadow, etc.). This is also not contradicted by the partially product-descriptive character of individual design elements.
In the specific case, the BGH found that the defendant’s product packaging constituted an imitative replication. The defendant adopted for its own product packaging precisely those design features that established the competitive character of Kerrygold’s packaging, such as the similar-sounding brand name “Dairygold”, the golden seal, etc.
c) Deception of origin
Firstly, the BGH clarified that a deception of origin due to counterfeit product packaging with different product or manufacturer designations is not automatically excluded if not all essential design features of the original are adopted identically. Rather, all circumstances of the individual case must be taken into account when examining the question of whether there is a deception of origin, in particular which product and origin designations are used on the imitation and how this is done.
A deception of origin can be direct or indirect. The public can either assume that it is the original product or a secondary brand of the original manufacturer. In the specific case, neither direct nor indirect deception of origin was ruled out in the opinion of the BGH. Although the packaging bears different product and manufacturer designations, the BGH did not rule out an indirect deception of origin. If there was a risk that the public would assume that the “Dairygold” products were a second brand or a new product range from the plaintiff, indirect deception of origin could not be ruled out.
However, the BGH was of the opinion that insufficient findings had been made regarding the deception of origin and therefore referred the case back to the Higher Regional Court of Cologne.
The decision has far-reaching implications for the protection of product packaging under German competition law and emphasises the need for a comprehensive assessment of the competitive character and the deception of origin, taking into account all circumstances of the individual case.
You can find the full text of the decision here: https://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=en&Datum=Aktuell&Sort=12288&nr=133235&pos=25&anz=887