Company Referencing Websites and Search Engine Cache - Significant Reduction of the Risk of Cease and Desist Declarations and Reclaim of Contractual Penalties

The Internet holds considerable risks regarding cease and desist declarations due to the way information is published, duplicated and stored there.  Especially search engines are risky. If no request for deletion of their so-called “cache” was made, one is liable for outdated versions of Internet pages stored there, according to settled German case-law. The same applies to outdated entries on company referencing websites or rating portals. However, the ECJ has now rejected this case-law. As a result, considerable amounts of contractual penalties which were paid in recent years could be reclaimed.

Background

According to settled German case-law, after a declaration to cease and desist has been issued, not only must the prohibited act, for example a trademark infringement, not be repeated, but the issuer must also take all reasonable steps to undo the past infringement. Among other things, it was recognized that the cache of search engines must be deleted. Hence, if a trademark infringing sign was used on a website, it was not sufficient to simply remove it from the website as the designation could still be the result of an internet search because the search engines retrieve their information from often outdated prior versions of a website.

Similar problems are caused by yellow pages or similar services, where business information is made publicly available without consent or order by the referenced companies. The change in a company's name had to be communicated to company referencing websites and rating portals even if the company's listing had not been initiated there. If the providers were not informed, the cease and desist declaration was infringed which required the payment of a contractual penalty. This led to very considerable cost risks of cease and desist declaration and especially "clever" trademark owners took advantage of these easily overlooked failure sources for the assertion of contractual penalties.

Decision of the ECJ of July 2, 2020 - MK Advokaten

A German law firm had been prohibited by a final judgment from using the sign "MBK" in connection with legal services because another law firm had earlier registered “MBK” as a trademark. After the judgment became final, when entering the name "MBK Rechtsanwälte" in Google, hits for a company referencing website and a rating platform were still displayed. Both providers had not been commissioned, but published the information on their own initiative.

Following settled case-law, the Regional Court of Düsseldorf held the non-information of the providers of these internet services to be a violation of the judgement and imposed an administrative fine on the law firm. The Düsseldorf Higher Regional Court (OLG), which was called upon, submitted to the ECJ the question of whether the failure to initiate a change in the entries was an infringement of the judgement.

The ECJ answered the question referred to the effect that there was no infringement. Only the "use" of the designation "MBK" had been prohibited by the court. However, “use” within the meaning of trademark law requires active conduct and direct or indirect control over the act constituting the use. If independent operators list a designation without order or consent, such use cannot be attributed to the party liable to cease and desist. The fact that there may be economic benefits associated with publications on company referencing websites is not sufficient for that purpose.

Note

The verdict is diametrically opposed to the previous settled case-law of the German courts. In any case, regarding trademark law, the duties following a cease and desist declaration or judgement have significantly been reduced by this decision. Infringers will no longer have to search the Internet for outdated entries in business directories, rating portals, etc. that they have not initiated. Further, it is worth mentioning that the ECJ expressly refers to the liability of the operators of such Internet services. If, as is often the case, these operators publish information about companies on their own initiative, they can be liable for trademark infringements. Hence, if trademark owners wish to delete infringing designations from business directories, rating portals, etc. they now have to take direct action against the respective providers.

The considerations of the ECJ should apply beyond trademark law. Also in unfair competition or copyright law, the extensive Internet-related duties of the party liable to cease and desist should not endure. Generally speaking, information that can be retrieved from the Internet without its consent or order should not have to be deleted by the liable party any more, but by the internet service providers. This applies to the search engine caches mentioned at the beginning as well. Following the considerations of the ECJ, the fact that information from outdated versions of a website can be retrieved via search engines cannot result in a liability of the website operator, because there also is no active conduct and direct or indirect control over the publication. As a result, it is very likely that numerous contractual penalties have been wrongly paid in recent years in Germany and can now be reclaimed.