Obligation to recall in case of cease and desist order

The German Federal Court of Justice (Bundesgerichtshof) recently decided that a cease and desist order not only includes the infringer’s obligation to refrain from the prohibited action but also to recall the products concerned (Case No. I ZB 34/15).

The scope of a cease and desist order

After a court order ruling that a company was not allowed to distribute a product under a certain anticompetitive labeling, the respective product was still available on the market under that labeling. Therefore, the claimant applied for imposing a fine against the seller of the product and the Higher Regional Court of Munich imposed such fine in the amount of 45,000 EUR. According to the court the defendant had infringed the cease and desist order by not actively reaching out to third parties in order to ensure the return of the already delivered products.

The Federal Court of Justice shared this view in its decision of 29 September 2016 (case no. I ZB 34/15). It stated that regularly, a cease and desist order does not only include the obligation for the infringer to refrain from the prohibited action, but also the obligation to recall its products. Based on the cease and desist order the claimant is also entitled to request the removal of the infringement. It does not matter whether the claimant applies for cease and desist or for removal or for both. Under the cease and desist order the defendant is also obliged to ensure by means of a product recall that its customers will not distribute the infringing products further. According to the decision it is not relevant whether the defendant has a right to request the return of the remaining products because it is possible and reasonable for the defendant to ask its customers for returning the remaining products.

The practical need for a product recall

By the above-mentioned decision the Federal Court of Justice ended the dispute in German case law about the scope of a cease and desist order, resulting in a substantial increase of the defendant’s obligations. They do not only comprise the obligation to ensure within its own organization, if necessary by appropriate instructions and information of its staff, that the distribution of the product concerned is stopped, but also to request every customer to whom the product was delivered for resale to return the remaining products. For purposes of proof it is advisable to initiate such a recall in writing. Possibility and reasonableness limit this obligation. But sending a letter to all customers with the corresponding request will as such rarely be impossible or unreasonable, even if the recall action can disturb the business relationship with the customers. Considering these consequences, it becomes even more important that manufacturers examine or let examine their products and product labels for their legal compliance, especially with regard to mandatory labeling provisions as in food law, before putting the same on the market.