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20.06.2018

Federal Court of Justice on liability caused by warning letters

Under German law, issuing a warning letter for infringement of an IP right may cause liablitiy, if the letter turns out to be unjustified, e.g. if said right proves to be invalid. In contrast, an unfounded infringment action does normally not cause such liablity, because prosecuting a case within official, statutory regulated court proceedings generally cannot be regarded as illegal.

The damages to be redressed may include losses which the opponent incurred due to discontinuation of the sale of the product under dispute. If the claiment first issues a warning letter and then files suit, the damages nevertheless extend to the losses incurred after initiation of the court proceedings, if the warning latter was still causal for the discontinuation of sales as a whole, as the Federal Court of Justice now clarified (judgment of 11/01/2018 - I ZR 187/16 - Ballerinaschuh). As a consequence, the risks arising from a warning letter cannot be limited by filing suit shortly thereafter.

In any case, such a liability requires at least negligence on the side of the party issuing the warning letter. The test for this largely depends, as the Federal Court of Justice found in the same decision, on whether the warning letter was directed against the producer of the disputed product or just a vendor. In the letter case, it is a so-called "Abnehmerverwarnung" (warning of a consignee), which requires an elevated level of diligence. In particular, such a warning letter shall only be the means of choice if a warning letter to the producer either had been unsuccessful or appears to be inadequate under the special circumstances of the particular case. Otherwise, negligence and thus increased damages risks have to be reckoned with.

The decision thus gives rise to even more accurate evaluations as to whether IP infringements should be prosecuted with or without warning latters.

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