Imitation of products – case no. 1
A German limited liability company A (A ltd.) produces energy drinks, which are fortified with vitamins. The company advertises its products as especially healthy. The products are offered in four tastes and are produced according to newly developed formula. The energy drinks gain in popularity and therefore the production increases, which causes the company profits to increase.
As a consequence sales of the competitive limited liability company B (B ltd.) are falling. In order to avoid being eliminated from the market, B ltd. decides to offer products in more favorable prices than A ltd. B ltd. succeeds in getting the formula of A ltd. by bribing the employee X of A ltd. After a couple of months B ltd. produces the same energy drinks with the same taste and a slightly different formula (more sugar instead of pure natural products). The drinks are poured into the same darkened bottles as the energy drinks of A ltd. With regard to the design, the products are almost identical. B ltd. have just slightly modified the characteristic logo of A ltd. Since the consumers can’t distinguish the products they are buying cheaper energy drinks produced by B ltd.. As a result profits of A ltd. declines.
The answer is given by:
Wojciech Rocławski
Rechtsanwalt & Radca Prawny
w.roclawski@rgw.com.pl
Claims of A ltd. against B ltd.:
- Civil demands against B ltd.: B ltd. commits an act of unfair competition (according to §§ 3, 4 no. 9 UWG). The behavior of B ltd. (production and sales of energy drinks) is undoubtedly connected with business activity. The imitation of the products can be considered as an act of unfair competition (cf. § 4 no. 9 UWG).
- Claim to forbear from infringement à According to § 8 section 1 UWG A has the right to obligate the competitor to refrain from the illegal activity in the future (stopping further production).
- Claim for redressing damage à According to § 8 section 1 UWG the competitor B ltd. can be obligated to redress all the products offered in the market.
- Claim for damages à According to § 9 sentence 1 UWG B ltd. has to compensate the damages caused to A ltd. while acting deliberately or through negligence. The claim of damages is assessed in accordance with the same legal rules as in general civil law (cf. 249ff. German civil code). Prerequisites of liability for damages are: an illegal activity, fault and damage caused by such activity.
- Criminal liability: The employee X can be punished in accordance to § 17 section 1 UWG for disclosing the industrial secret (the energy drink formula), which was entrusted to him in the context of his employment. Employee X is facing imprisonment for up to three years or a fine.