News and Press - Lawyers Attorneys MTR Rechtsanwälte Germany - Cologne Berlin Bonn Düsseldorf Frankfurt Hamburg Munich Stuttgart News and Press releases of Lawyers Attorneys MTR Rechtsanwaltsgesellschaft mbH Germany Cologne Berlin Bonn Düsseldorf Frankfurt Hamburg Munich Stuttgart en MTR Rechtsanwaltsgesellschaft mbH Mon, 16 Dec 2019 08:43:06 +0100 Mon, 16 Dec 2019 08:43:06 +0100 TYPO3 news-97 Fri, 13 Dec 2019 14:52:14 +0100 OLG Naumburg deems GDPR violation an antitrust infringement The OLG Naumburg ruled in judgments from November 7, 2019 that a violation of the General Data Protection Regulation may also constitute an antitrust infringement (Az.: 9 U 6/19 and 9 U 39/18).

Whether a GDPR violation can also constitute an antitrust infringement is significant, as competitors are entitled to issue formal warnings in response to antitrust infringements and may, e.g., sue for an injunction or damages. We at MTR Rechtsanwälte note that the courts have to date arrived at different conclusions on this issue.

The OLG Naumburg recently ruled that GDPR provisions can be categorized as rules governing market behavior and that violating them may constitute an antitrust infringement.

In the case in question, a pharmacist had sued a competitor offering nonprescription medicinal products via an online platform which were only to be sold by pharmacies. The plaintiff viewed this as an antitrust infringement, claiming that personal health information was being saved in the process, which it noted is only permissible with the customer’s explicit consent.

The OLG Naumburg held that due to the absence of explicit consent here, this constituted a GDPR violation as well as an antitrust infringement of the rules governing market behavior.

Lawyers with experience in the field of antitrust and competition law can offer advice.

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news-89 Tue, 03 Dec 2019 21:34:56 +0100 BFH reinforces tax relief when selling owner-occupied accommodation The BFH delivered a ruling on Sept. 3, 2019 facilitating the sale of owner-occupied accommodation that has been rented out for a short time (Az.: IX R 10/19).

If a property is sold before the end of the ten-year speculation period, tax must be paid on any increase in value. However, the situation is different for owner-occupied accommodation: no tax is due even after a short period of occupancy if the property was personally occupied by the owner from the time it was acquired to its eventual sale, or if it was used as a private residence in the year it was sold and the two years preceding that year.

The BFH recently ruled that this tax relief also applies if the property was briefly rented out during this time. The plaintiff had purchased a condominium in 2006, which he personally occupied until moving out in April 2014. He rented out the property until he sold it in December 2014. The BFH later found that the tax office had been wrong in seeking to tax the capital gains.

It held that it is sufficient for the property to have been occupied by the owner continuously in the calendar year prior to its sale. In the year it was sold and in the second calendar year prior to this, the property need only have been even briefly occupied by the owner to benefit from the tax relief.

Lawyers experienced in tax law can offer advice.

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news-83 Fri, 29 Nov 2019 11:25:02 +0100 OLG Stuttgart affirms protection of collective trademarks featuring designations of origin While it is not possible to completely shut out other market participants from indications of origin, a trademark’s reputation must not be unduly exploited according to the Oberlandesgericht (OLG) Stuttgart, the Higher Regional Court of Stuttgart.

Trademark protection is an important issue for a lot of businesses that can potentially prove to be challenging when it comes to indications of origin, as these cannot be completely off limits to others. That said, we at the commercial law firm MTR Rechtsanwälte note that other market participants cannot simply take unfair advantage of the reputation of a trademark that has a designation of origin as one of its characteristics.

This stems from a ruling of the OLG Stuttgart from July 25, 2019 (Az.: 2 U 73/18). A farmers’ cooperative with around 1450 farms as members had its pork and beef produce protected by including the name of the location in the trademark’s name. The members were allowed to use the collective trademarks provided they respect specific criteria as to how the animals were reared, fed, kept, etc.

A meat-processing business from the region in question was supplying its meat products under the same name, yet it was not a member of the cooperative. The latter’s action claiming its trademark had been infringed was subsequently successful.

The OLG Stuttgart held that while indications of origin or descriptive designations that form part of a collective trademark can be used by persons other than the proprietor of the trademark, this must not be contrary to accepted ethical principles or honest practices in industrial or commercial matters. This was found to be the case here.

The Court ruled that in using designations that perfectly matched the collective trademarks, the defendant had failed to make it clear that it was not a member of the cooperative. This was said to give rise to the risk of consumers associating the defendant’s products with those of the cooperative. The OLG Stuttgart went on to state that the use of the two designations in this case constituted unfair exploitation of the reputation the collective trademarks enjoyed in the region.

Experienced lawyers can advise on issues pertaining to trademark law; from registration and trademark protection, to asserting legal claims in response to violations.

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news-80 Fri, 22 Nov 2019 09:40:23 +0100 LG Essen: Unlawful advertising statements promoting e-cigarettes Liquids for e-cigarettes must not be promoted using the slogan “Genuss ohne Reue” (enjoyment without regrets). That was the verdict of the Landgericht (LG) Essen, the Regional Court of Essen, in a ruling from October 25, 2019 (Az.: 41 O 13/19).

Consumers must not be misled by health claims in advertising. We at the commercial law firm MTR Rechtsanwälte note that this kind of advertising is unlawful and in breach of competition law.

The Landgericht Essen recently ruled that in the context of promoting liquids for e-cigarettes, the statement “Genuss ohne Reue” constitutes a health claim. The statement was said to give consumers the impression that consuming these liquids does not pose any health risk whatsoever and was found to be misleading to consumers as well as unlawful.

In addition, the Court held that the manufacturer must also refrain from advertising its products as “apothekenreine Liquids” (liquids of pharmacy-grade purity), as the law already requires that liquids exhibit a certain degree of purity. As such, the statement was deemed to be self-evident, and, as noted by the LG Essen, advertising featuring self-evident statements is unlawful.

Unlawful statements in advertising and violations of competition law may be met with rigorous sanctions. Experienced lawyers can offer advice.

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news-78 Wed, 20 Nov 2019 09:23:54 +0100 GDPR violation – Record 14.5 million euro fine imposed GDPR violations can prove expensive, something which one real estate firm recently had to learn the hard way when it received a fine to the tune of 14.5 million euros.

The EU General Data Protection Regulation – GDPR for short – is supposed to afford better protection to sensitive personal data. For businesses, this means stricter data protection standards. GDPR violations may be met with tough sanctions. We at the commercial law firm MTR Rechtsanwälte note that fines of up to 20 million euros or up to 4 percent of global annual turnover can be imposed.

One real estate firm recently learned the hard way that these are not empty threats. The company received a fine at the end of October in the amount of 14.5 million euros from Berlin’s Commissioner for Data Protection and Freedom of Information, the Berliner Beauftragte für Datenschutz- und Informationsfreiheit. The reason: The company used an archive system for storing tenants’ personal information which did not allow data that was no longer necessary to be deleted. The data was being stored without checking whether its storage was legitimate and necessary. It was established, for instance, that data was being stored relating to personal and financial circumstances, payslips, voluntary declarations, account statements, etc.

The firm had already been strongly advised during an initial audit in 2017 to change the archive system. However, by the time of the second audit in March of 2019, little had changed apart from preparations by the company to address the shortcomings; too little to reach a state of legal compliance.

There were therefore compelling reasons to impose a fine according to Berlin’s Commissioner for Data Protection. The GDPR requires supervisory authorities to ensure that fines are effective and proportional in individual cases. The starting point for assessment is the turnover achieved in the previous year. For the purposes of reaching a specific determination, all incriminating and extenuating factors are taken into account. Incriminating factors in this case were that the real estate firm had deliberately created the archive structure and that the relevant data was being unlawfully processed over an extended period of time. On the other hand, the fact that the company had taken initial measures to address the shortcomings was considered an extenuating factor mitigating what could otherwise have been a significantly higher fine.

The decision demonstrates that supervisory authorities do not consider GDPR violations a trivial offense and are instead liable to clamp down. Experienced lawyers can advise on data protection issues.

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news-77 Tue, 19 Nov 2019 21:19:11 +0100 ECJ on country of origin: the decisive factor is the location of the harvest Germany is the county of origin for fruits and vegetables harvested in Germany, even if prior to this the fruits or vegetables were grown in another country. That was the verdict of the ECJ.

The courts frequently hear cases concerning designations of origin for foodstuffs. We at the commercial law firm MTR Rechtsanwälte note that consumers must not be misled as to the origin of foodstuffs by the designation of origin.

In a ruling from September 4, 2019, the ECJ held that “Ursprungsland Deutschland” (country of origin Germany) is a permissible designation for fruits and vegetables (in this case mushrooms) even if they were grown in another country and merely harvested in Germany (Az. C-686/17).

In the case in question, mushrooms grown in culture boxes in the Netherlands were being brought to Germany shortly before harvest, harvested, and labelled with “Ursprungsland Deutschland”. A competition association brought an action against this, claiming that this designation misled consumers because all the key stages of production took place outside of Germany.

The ECJ took a different view, ruling that European customs law was decisive here. The Court held that according to the EU Customs Code, the country of origin is where the harvest took place and that further details regarding the food’s cultivation were not necessary.

Lawyers with experience in the field of competition law can offer advice.

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news-72 Fri, 15 Nov 2019 09:09:27 +0100 OLG Hamm: Advertising must include all information that is material to consumers Consumers must not be deprived of information material to their decision whether or not to make a purchase. This constitutes a breach of competition law, as demonstrated by a ruling of the Oberlandesgericht (OLG) Hamm, the Higher Regional Court of Hamm.

In order for consumers to be able to make an informed transactional decision, they must be provided with all information regarding the product’s essential characteristics that is essential to their decision whether or not to make a purchase. We at the commercial law firm MTR Rechtsanwälte note that if this information is withheld from them, this constitutes a breach of Germany’s Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb (UWG)).

According to a ruling of the OLG Hamm from March 7, 2019, these essential characteristics may also include specifying the relevant model (Az.: 4 U 120/18).

In the instant case, a furniture dealer had promoted a bedroom featuring a bed, closet, chests of drawers, etc., from a specific manufacturer at a permanently low price. The manufacturer offers a wider variety of different bedrooms. However, there was no reference to the exact model in the advertisement. Details about the model were only to be found on the website. It then became clear from this information that competitors were offering the bedroom in question at a cheaper price.

For this reason, a competition association decided to sue for an injunction against the furniture dealer, arguing that the lack of details about the model meant that material information was being withheld from consumers. It further noted that it is only clear from the model name which product is actually being advertised.

The OLG Hamm granted the legal action, stating that those who withhold material information from consumers that they require in order to decide whether or not to make a purchase are acting unfairly. If goods are offered with reference to their characteristics and price in such a way that consumers are able to conclude the transaction, information concerning all the characteristics of the good are considered to be material if they are not already apparent from the context.

The OLG Hamm held that material information includes details about the bedroom’s model. These details were said to be necessary for consumers to be able to compare prices and products. The OLG Hamm went on to state that not specifying the model at the very least makes this comparison more difficult.

Breaches of competition law may give rise to formal warnings, injunction suits, and damages claims. Lawyers with experience in the field of competition law can offer advice.

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news-71 Thu, 14 Nov 2019 09:06:15 +0100 Automatic exchange of (financial) information (AEOI) – Timely voluntary disclosure for tax evasion Financial information was automatically exchanged once again on September 30, 2019. Those with unreported income in foreign accounts can still submit a voluntary declaration leading to immunity from tax evasion charges.

The automatic exchange of (financial) information (AEOI) occurs regularly at the end of September, with Germany’s Federal Ministry of Finance (Bundesfinanzministerium) exchanging financial information with around 100 countries this year as well. For the authorities, the AEOI is a powerful weapon in the fight against tax evasion. Its reach is not limited to countries such as Liechtenstein, Luxembourg, Austria or Switzerland; many other countries that were once considered tax havens take part in the exchange.

In doing so, the German tax authorities receive vast amounts of data and information concerning foreign accounts, income, interest, and dividends. Tax evaders who have deposited untaxed income in foreign accounts, on the other hand, are now scarcely able to conceal their tax evasion from the German tax authorities. We at the commercial law firm MTR Rechtsanwälte note that submitting a voluntary declaration leading to immunity from tax evasion charges still represents a way out of this situation.

Given the ever-increasing risk that the tax evasion will be uncovered, tax evaders should not kick voluntary disclosure into the long grass. Voluntary disclosure can only succeed if there are no grounds impeding its success. This means that the tax evasion must not yet have been discovered by the authorities.

However, it is equally important for a voluntary declaration to be well prepared and not hastily put together on one’s own or with the help of standard templates, as a voluntary declaration can only lead to immunity if it is complete and error-free. It must include all relevant information from the past ten years. Complying with these requirements is a tall order for a layperson. Those who nonetheless decide to take their chances and forgo expert legal advice risk voluntary disclosure failing. Even minor errors can lead to an invalid voluntary declaration.

To prevent this from happening, lawyers with experience in the field of tax law ought to be consulted when dealing with voluntary disclosure. They can assess each case individually and know what information needs to be included in the voluntary declaration for it to be capable of leading to immunity.

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news-69 Wed, 13 Nov 2019 09:25:41 +0100 Detailed project contracts for software development and computer programming Ready-made software solutions no longer cut it in many businesses whose needs require dedicated software. In this context, attention needs to be paid to how the project contract is drafted.

A lot of business sectors require the use of specially developed software that is tailored in detail to individual requirements. We at the commercial law firm MTR Rechtsanwälte note that in order to avoid legal disputes between the developer and the contractor at a later date, it is crucial to precisely define in a project contract the performance requirements as well as the rights and obligations of the client and the contractor.

Essential points that ought to be regulated in a project contract are a precise performance specification, the timeframe, the costs, and, of course, the rights of use.

In many instances, only a brief outline is provided of the requirements that need to be met by the software. A vague description is in practice not enough, especially if problems with technical implementation or delays arise. That is why the performance expected of the developer should be precisely defined from the outset. One possibility to this end is to create a functional specification and product requirement document, which then forms an integral part of the contractual agreement.

One obvious requirement is the provision of a timetable setting out when each stage of development is reached and when the software is ready to be accepted by the client.

Delays typically go hand in hand with additional costs, and these must be agreed upon in the project agreement as well. It needs to be clarified what budget is available, whether there is any financial leeway, whether calculations are made according to effort or a fixed price is agreed upon, and whether provision is made for installments. The issue of whether subsequent remedial work is included in the price should also be clarified in advance.

Another important aspect is rights of use. Software developments and computer programming are protected by copyright. Generally speaking, the client does not obtain the copyright but instead merely a right of use. The scope of this right of use should equally be clearly defined in the contract.

Standard-form contracts are normally not sufficient when dealing with such complex issues. It is therefore advisable to draft detailed project contracts. Lawyers with experience in the field of IT law can offer advice.

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news-68 Tue, 12 Nov 2019 10:54:40 +0100 BGH: Rescission of a managing director’s invalidly constituted employment contract While a managing director’s invalidly constituted employment contract may be treated as if it were valid, it can be rescinded at any time without good cause.

Companies and managing directors should, of course, always make sure that the employment contract is validly constituted and that all contractual arrangements are valid. However, it is possible for mistakes to be made when concluding an employment contract that renders it invalidly constituted. This is not necessarily a problem as long as there is no dispute between the parties, and the shareholders or, more specifically, the supervisory board are aware of the managing director’s service. We at the commercial law firm MTR Rechtsanwälte note that under these circumstances an invalid employment contract may be treated as if it were a valid employment contract.

Yet managing directors should not rely on this arrangement. In the event of a dispute with the company, the managing director’s invalidly constituted employment contract can be rescinded at any time without good cause, as demonstrated by a ruling of the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, from August 20, 2019 (Az.: II ZR 121/16).

In the instant case, the chairman of the supervisory board of a GmbH had unilaterally concluded an employment contract with the managing director despite the fact that this was strictly speaking the responsibility of the supervisory board and later, following an amendment to the articles of association, the shareholders’ meeting. When the shareholders became unsatisfied with the managing director’s work, the shareholders’ meeting formally removed the managing director from his position and issued both extraordinary as well as ordinary notice terminating the employment contract.

Despite reaching all the way to the BGH, the managing director’s action against his dismissal was ultimately unsuccessful. The employment contract was deemed to have been invalidly constituted because it had not been concluded as prescribed in the articles of association by the supervisory board, which was found at the time of the contract’s conclusion neither to have had effective representation nor to have authorized its chairman to conclude the contract. The BGH held that because the employment contract had not been validly constituted, it could be rescinded at any time without good cause. The Court went on to state that the employment contract was only to be deemed valid for the duration of the managing director’s service.

Companies and managing directors therefore have a mutual interest in ensuring that contracts are legally watertight. Lawyers with experience in the field of company law can offer advice.

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news-66 Mon, 11 Nov 2019 09:07:33 +0100 EGC: Chinese scooter not in breach of competitor’s intellectual property rights A Chinese manufacturer of motor scooters is not in breach of an Italian competitor’s intellectual property rights. That was the verdict of the General Court of the European Union (EGC) in a ruling from September 24, 2019 (Az. T-219/18).

We at the commercial law firm MTR Rechtsanwälte note that in order for a registered design to be capable of being affording protection under the Community Design Regulation, it needs to be new and possess individual character.

In the dispute between the motor scooter manufacturers, the General Court found the Chinese model to have sufficient individual character, there being no risk of confusion with a well-known model from an Italian manufacturer. Consequently, the Chinese producer’s Community design remains registered.

The Chinese manufacturer had its scooter registered in 2010 as a Community design at the European Union Intellectual Property Office (EUIPO). Its Italian rival brought an action against this and applied to have the design declared invalid, reasoning that the Chinese scooter lacked novelty and individual character because its profile and structural characteristics bore a strong resemblance to one of the Italian manufacturer’s models. It went on to note that the Italian motor scooter was protected as a creative work in Italy and France.

The EUIPO rejected the application for annulment, and this decision has since been upheld by the EGC. The Court held that the two motor scooters created a different overall impression. While the Chinese model was said to have a predominantly angular profile, the Italian scooter, on the other hand, was said to be characterized by curved lines. Consequently, the EGC found that the Chinese scooter possessed individual character. It ruled that the differences distinguishing the two scooters were numerous and of such significance that they would not escape the attention of informed consumers, and that there was thus no risk of confusion.

The EGC also confirmed the EUIPO’s view that the Chinese motor scooter did not infringe the Italian manufacturer’s copyrights in Italy and France. The Court noted that the copyright protection was for the “curved, feminine vintage character,” and that the more angular Chinese roller did not draw on this character.

Trademarks and the protection of intellectual property are of great value to businesses. Lawyers with experience in the field IP law can offer advice.

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IP RechtPressemitteilungen
news-64 Thu, 07 Nov 2019 08:55:39 +0100 MTR Rechtsanwälte – Experience with post-contractual non-compete clauses for managing directors Post-contractual non-compete clauses between companies and managing directors need to be balanced in order to be effective.

Post-contractual non-compete clauses are designed to protect the interests of the company after the managing director leaves. For this reason, the parties typically agree that the managing director shall not perform work for a competing company for a certain period following his departure. In return, the managing director receives compensation for observing the period of non-competition. Our experience at MTR Rechtsanwälte shows that this kind of prohibition on competition needs to be balanced and that the managing director’s freedom to choose an occupation must not be unduly restricted. Otherwise, the entire agreement may be void.

This is clear from an indicative court order of the OLG München (Az.: 7 U 2107/18). In the case in question, the prohibition on competition included a clause preventing the managing director from performing any activity for a competitor for a period of one year. The Court took the view that this went too far, since it prohibited the managing director from working for a competitor even, e.g., as a caretaker. It found that the entire prohibition was null and void due the clause.

Lawyers with experience in the field of company law can offer advice.

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news-62 Mon, 04 Nov 2019 09:57:02 +0100 ECJ: Cookies require users’ active consent The use of cookies on websites requires users’ active consent. That was the verdict of the ECJ in a ruling from October 1, 2019 (Az.: C-673/17).

Users regularly encounter what are referred to as “cookies” on websites online. These are used for storing information on a user’s hard drive. We at the commercial law firm MTR Rechtsanwälte note that this makes recognizing users and their preferences quicker when they revisit a website.

It is also common for users to come across pre-checked boxes on websites that indicate consent to the use of cookies. According to the ECJ’s ruling, this is not allowed. The Court made it clear that the user must provide active consent in each instance and that consent is not validly constituted by the user failing to deselect a pre-checked box to refuse his or her consent. The ECJ went on to state that the user participating in a promotional lottery does not constitute valid consent to the storage of cookies either. Moreover, the service provider must provide information concerning the duration of the operation of cookies and whether or not third parties may have access to those cookies.

A lot of website operators will have to adjust their online presence following the ECJ’s ruling. Lawyers with experience in the field of IT law can offer advice.

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news-60 Wed, 30 Oct 2019 11:41:56 +0100 FG Münster: Managing director’s salary plus pension payments does not necessarily equal hidden profit distributions Pension payments to a shareholder with a controlling stake who also draws a managing director’s salary do not necessarily constitute hidden profit distributions according to the Finanzgericht (FG) Münster, the Fiscal Court of Münster.

If a shareholder draws an appropriate salary and additionally receives other forms of remuneration, this normally constitutes hidden profit distributions. We at the commercial law firm MTR Rechtsanwälte note that this has implications, inter alia, for the calculation of corporation tax.

Having said that, not every additional income stream gives rise to the assumption of a hidden profit distribution, as a ruling by the FG Münster from July 25, 2019 demonstrates (Az.: 10 K 1583/19 K). According to the ruling, pension payments to a shareholder with a controlling stake who also serves as managing director and draws a salary for this do not necessarily amount to hidden profit distributions.

In the instant case, the sole shareholder of the plaintiff GmbH was also its managing director until 2010. Following his removal for reasons relating to age, he received monthly pension payments from the company. In 2011, the sole shareholder was once again appointed to the position of managing director and received monthly payments for this, though these amounted to less than ten percent of the remuneration he previously received as managing director. Moreover, he continued to receive the pension payments.

The competent tax office deemed the pension payments to be hidden profit distributions and amended the relevant corporation tax notice accordingly. The GmbH brought an action against this, claiming that the sole shareholder had been reinstated as managing director for operational reasons due to the threat of order losses under his successor.

The claim was successful before the FG Münster. The concurrent payment of a managing director’s salary together with pension payments did not, in this case, constitute hidden profit distributions. The Court noted that the reinstatement of the shareholder as managing director was not originally intended and only took place in the interests of the GmbH to prevent order losses. It went on to state that the newly agreed managing director salary was not a full salary; it was only intended as a recognition of his position. The combined total of the salary and the pension payments amounted to a mere 26 percent of the previous remuneration. The FG Münster held that the pension payments were not to be viewed as an undue contribution instigated by the company and that they passed the arm’s length test. Even unrelated third parties would have approved an appointment at a low salary plus pension payments according to the Court, which granted leave to appeal to the Bundesfinanzhof, Germany’s Federal Fiscal Court.

Lawyers with experience in the field of tax law can offer advice.

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news-59 Fri, 25 Oct 2019 09:40:20 +0200 Tougher sanctions – Draft legislation to combat corporate criminality The Bundesjustizministerium, Germany’s Federal Ministry of Justice, has submitted draft legislation designed to combat corporate criminality. The bill provides for, among other things, significantly harsher penalties.

Going forward, businesses could be faced with significantly harsher penalties in the event of serious legal violations. The Bundesjustizministerium has submitted draft legislation to this effect, as was first reported by the Süddeutsche Zeitung.

While the bill is not yet publicly available, media reports indicate that businesses should anticipate, among other things, the possibility of having to pay hefty sums in the event of legal violations. The reports suggest, for instance, that fines will be substantially increased. With the upper limit currently set at ten million euros, this will in future be ten percent of annual turnover in the case of companies with an annual turnover of more than 100 million euros. In other words, there is the prospect of sanctions running into billions of euros. Sanctions may be reduced considerably in return for cooperating with the investigating authorities or internal investigations.

The current upper limit of ten million euros for fines is said to have particularly hit small and medium-sized businesses but done little to deter financially robust corporations. This is now set to change.

The draft legislation also indicates that the prosecution of corporate criminality will no longer be at the discretion of the authorities. Instead, the public prosecutor’s office will have to open an investigation if a company comes under suspicion. This should lead to consistent enforcement of sanctions.

The new law is meant to ensure that companies are subject to greater accountability if executive bodies or officers commit criminal offenses or tolerate them at a lower level.

We at the commercial law firm MTR Rechtsanwälte note that it is not only significantly higher fines in response to criminal offenses that businesses need to be prepared for. The bill also creates new requirements for an effective compliance management system. Companies will be accountable not only for actions taken at an executive level but also for offenses committed by other employees if these ought to have been prevented by an effective compliance management system. The introduction of stricter compliance rules may also lead to penalties being reduced.

Compliance is becoming an increasingly important topic not only for corporations but also small and medium-sized businesses. Lawyers with experience can offer advice.

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news-58 Thu, 24 Oct 2019 08:58:51 +0200 Steinhoff International Holding – OLG Frankfurt opens model case proceedings The Steinhoff accounting scandal has shaken investors. Those who have incurred losses can join the ongoing model case proceedings pursuant to the German Capital Markets Model Case Act, the Kapitalanleger-Musterverfahrensgesetz (KapMuG).

At the end of 2017, investors in Steinhoff International Holding N.V. were rocked by news of accounting irregularities. The company’s share price subsequently collapsed. We at the commercial law firm MTR Rechtsanwälte can report that investors who have incurred losses can now register and assert their claims for damages as part of model case proceedings.

Model case proceedings against Steinhoff International Holding N.V. are currently being heard by the OLG Frankfurt pursuant to the KapMuG. The purpose of the model case proceedings is to establish whether Steinhoff failed to comply with its ad-hoc obligations and in doing so rendered itself liable to pay damages to its investors. The OLG Frankfurt has since designated a lead petitioner and thus officially opened model case proceedings.

For the investors, this means that they can register their claims for damages as part of the model case proceedings within a period of 6 months until the end of January 2020. Registration halts the prescription of claims and also allows the investors to join the model case proceedings and benefit from the outcome at an acceptable level of risk as regards costs. The first oral hearing begins on December 18, 2019.

Steinhoff informed the investors about the accounting irregularities on December 5, 2017. Several annual financial statements were retracted and need to be drawn up again. Moreover, the report by the auditing company is now available. It can be assumed from this that turnover and profits were inflated at Steinhoff over a period of years. The investors have incurred substantial financial losses as a result and can assert claims for damages, as Steinhoff was too late in informing about the accounting irregularities and misled others regarding the company’s valuation.

There have since been indications that Steinhoff might be interested in reaching a settlement with the shareholders. If a settlement is concluded in the context of the model case proceedings, only those investors who registered their claims as part of said proceedings will benefit directly from this.

Shareholders who acquired their shares between the IPO on December 7, 2015 and the ad-hoc announcement on December 5, 2017 may be entitled to claim damages. Lawyers with experience in the field of capital markets law can advise on damages claims and registration within the framework of the model case proceedings.

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news-56 Tue, 22 Oct 2019 09:25:36 +0200 M&A deals subject to stricter controls While M&A deals were still booming in Germany in 2018, the trend has since been downward. Apart from the state of the economy, stricter controls may also be responsible for this.

German companies are a popular investment vehicle among foreign businesses. However, stricter controls have recently been introduced in relation to mergers and acquisitions. We at the commercial law firm MTR Rechtsanwälte can report that Germany’s federal government adopted an amendment to the Außenwirtschaftsordnung at the end of 2018, with the EU’s competition watchdog also looking closely at whether M&A deals might be in violation of antitrust law.

In the case of investors from outside the EU, Germany’s federal government can apply stricter controls, with the government able to exercise a veto if an investor is seeking to acquire as little as ten percent of a company. It should, however, be noted that this supervisory power is limited to companies from sensitive sectors of the economy.

The European Commission, for its part, has of late been more frequently imposing fines in cases where mistakes were made in connection with M&A deals or where there was deliberate deception. These strict controls call for prudent action, from registering the transaction to complying with transactional requirements.

Experienced lawyers can provide comprehensive advice on mergers and acquisitions.

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news-54 Mon, 21 Oct 2019 09:03:30 +0200 ECJ: User consent to social plugins on websites If websites make use of social plugins, the ECJ has ruled that the provider and the operator of the site are jointly responsible for the collection and transfer of personal user information.

Many website operators use what are referred to as social plugins by embedding them on their website. While the site operators are then jointly responsible for the collection and transfer of personal information, they are generally not responsible for the subsequent processing of this data by the provider of the social plugins. That was the verdict of the European Court of Justice in a ruling from July 29 (Az.: C-40/17). We at the commercial law firm MTR Rechtsanwälte note that this might mean in practice that website operators have to obtain the consent of their users, for instance by requiring an extra click for consent.

An online fashion retailer had embedded a “Gefällt mir” button, i.e., a “like” button, on its website. The consumer advice center for the German state of North Rhine-Westphalia, the Verbraucherzentrale NRW, took issue with this. It claimed that because of the button, personal information was being transferred to the provider of the social plugin from just loading the webpage, and that this was happening without the user’s knowledge and irrespective of whether the user was even registered with the relevant social network.

The Verbraucherzentrale considered the integration of the button a breach of data protection laws and filed an injunction suit. The case came before the ECJ.

The European Court of Justice held that the operator of the website may be deemed to be jointly responsible, together with the provider of the social plugin, for the collection and transfer of personal information, as it could be assumed that the website operator and the plugin provider jointly decided on the purposes and means, and that they both have an economic interest in the data. The Court went on to state that the operator of this kind of website must, therefore, make certain information available to users at the point in time when the data is being collected, for example regarding identity and the purpose of processing. However, the site operator is generally not responsible for the subsequent processing of the data after it has been transferred.

While the final details have yet to be clarified by the OLG Düsseldorf, website operators need to prepare themselves for having to obtain the consent of their users if the former wish to embed social plugins on their website. Lawyers with experience in IT law can offer advice.

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news-52 Thu, 17 Oct 2019 09:30:33 +0200 OLG Stuttgart: Damages due to truck cartel The OLG Stuttgart, Stuttgart’s Higher Regional Court, has ruled in connection with what has become known as the “truck cartel” that an aggrieved buyer is in principle entitled to claim damages from Daimler AG (Az.: 2 U 101/18).

From 1997 to 2011, the truck manufacturers Daimler, MAN, Volvo/Renault, DAF, and Iveco entered into illegal price-fixing arrangements. In 2011, this so-called “truck cartel” was uncovered. We at the commercial law firm MTR Rechtsanwälte can report that a fine running into billions of euros was subsequently imposed by the European Commission against the manufacturers in 2016.

The European Commission’s decision serves as proof that antitrust law has been violated and thus paves the way for damages claims brought by aggrieved truck buyers. In a judgment from April 4, 2019, the OLG Stuttgart ruled in appeal proceedings that a buyer was entitled to damages from Daimler AG. The plaintiff had purchased a dozen Daimler trucks between 1998 and 2011, and later asserted a claim for damages due to inflated prices resulting from the cartel arrangements.

The OLG Stuttgart confirmed that the antitrust violation was beyond dispute, having been definitively established by the European Commission’s decision from July 19, 2016. Moreover, since the plaintiff’s truck purchases, with one exception, coincided with the period of the illegal price-fixing arrangements, the OLG concluded that it was likely the plaintiff had in fact suffered harm as a result.

According to the established case-law of the Bundesgerichtshof, Germany’s Federal Supreme Court, the purpose of establishing a cartel is to increase the profits of the companies involved. As such, the OLG Stuttgart noted that it was highly likely the cartel was formed and maintained as a means of achieving higher market prices. It went on to state, therefore, that it was equally likely that those who purchased trucks affected by the price-fixing arrangements suffered harm. While the objections submitted by Daimler were deemed by the OLG Stuttgart to be insufficient, the Court did grant leave to appeal.

Buyers harmed by the truck cartel can assert damages claims against the members of the cartel. Following the European Commission’s decision, there is nothing standing in the way of bringing a claim for damages. It is nonetheless crucial to consider the prescription of claims and its implications for individual cases. Lawyers with experience in the field of antitrust law can offer advice.

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news-51 Wed, 16 Oct 2019 11:01:32 +0200 ECJ: Copyright protection for designs only possible to a limited extent Although a pair of jeans may fit perfectly and look good to boot, this does not in and of itself confer copyright protection. That was the verdict of the ECJ in a ruling from September 12, 2019 (Az.: C-683/17).

According to the established case-law of the ECJ, an original subject matter constituting the expression of its author’s own intellectual creation can be classified as a “work” and enjoy copyright protection. We at the commercial law firm MTR Rechtsanwälte note, therefore, that designs can, under certain circumstances, benefit from copyright protection.

However, the ECJ has since set the bar high for designs to benefit from copyright protection in a recent ruling. The Court held that copyright protection may not be granted to designs on the sole ground that, over and above their practical purpose, they produce a specific esthetic effect.

The case before the ECJ concerned a dispute between two manufacturers in the fashion industry. One of the two producers accused the other of copying and bringing to market several of its jeans and shirts. The ECJ ruled that while it is possible for designs to be granted copyright protection as works, the protection of designs and copyright protection pursue different objectives and are subject to distinct rules.

It held that the purpose of the former is to protect subject matter which, while being new and distinctive, is functional and liable to be mass-produced. The protection only applies for a limited time and is not meant to excessively restrict competition. The ECJ went on to state that the duration of copyright protection is significantly greater and applies to subject matter that is capable of being classified as a work. Granting copyright protection to subject matter that is already protected as a design must not undermine the respective objectives.

The cumulative grant of copyright protection for designs is thus only possible within narrow parameters. The Court also noted that a design’s esthetic effect does not constitute a factor that is relevant to the determination of whether said design can be classified as a work. What does need to be demonstrated to this end is that the subject matter is identifiable with sufficient precision and objectivity and that it represents an intellectual creation of the author.

Lawyers with experience in the field of IP law can offer advice.

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news-49 Mon, 14 Oct 2019 09:52:47 +0200 Conducting litigation in national and cross-border legal disputes Strategic litigation is essential to enforcing one’s rights in national and cross-border legal disputes.

Due to globalization, both national and international laws need to be considered in the context of legal disputes. While trade is international, legal jurisdiction begins and ends at national borders. We at the commercial law firm MTR Rechtsanwälte note that strategic planning, as well as collaboration with international law firms, is becoming increasingly important to enforcing one’s rights at home and abroad.

Proceedings are often highly complex and involve various legal fields. MTR Rechtsanwälte boasts an experienced team of attorneys with a high level of expertise in all legal fields relevant to commercial law. This enables us to provide reliable advice from a single source in enforcing our clients’ rights.

This includes assessing whether it is necessary to take a case to court and weighing up the opportunities and risks of formal proceedings. There may be other, more appropriate means of settling a dispute. If this is not the case, taking the matter to court becomes unavoidable. We at MTR Rechtsanwälte are then able to represent our clients in any form of judicial or arbitration proceedings.

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news-48 Fri, 11 Oct 2019 09:16:36 +0200 International law – From drafting contracts to conducting litigation International law is no longer confined to regulating relations between states. Today, it also plays an increasingly important role in business and private law.

Globalization has made the world a smaller place. Trade is conducted across national borders and cross-border business relations are the rule rather than the exception. That being said, increasing globalization and internationalization also have legal consequences that must be borne in mind for both trade and relations governed by private law, e.g., trusts and estates law.

It is in light of internationalization that companies as well as individuals find themselves facing new challenges that necessitate obtaining expert legal advice. As an international commercial law firm, we at MTR Rechtsanwälte have faced these challenges and advise our clients on a diverse range of international matters. Our comprehensive consulting services include collaborating with world-renowned law firms.

Cross-border business entails exposure to various national and international laws. Different rules and regulations need to be taken into account for a wide range of issues, from drafting contracts and establishing a subsidiary abroad to conducting international litigation or international arbitration proceedings.

Moreover, it is often initially unclear which country’s national laws are applicable in a lot of disputes, it being necessary to consider international private law (IPL) and intergovernmental agreements alike. It is equally possible for parties to contractually agree that a particular country’s national laws will apply to the entire business relationship or parts of the business.

When it comes to contract optimization, familiarity with the potential legal consequences from as early as the drafting stage is therefore crucial.

Yet international law is playing an increasingly determinative role not only in business but also private life. While this is true of marriage and divorce as well as, of course, legal access to children, it also applies to purchasing real estate abroad and inheritance cases with a foreign dimension.

International law is a complex field that affects many aspects of both business and private life. Lawyers with experience in the field of international law can offer advice.

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Internationales RechtPressemitteilungen
news-47 Wed, 09 Oct 2019 13:47:26 +0200 Revision clauses in joint wills A joint will in which both parties mutually appoint each other as sole heir is popular among spouses. However, they need to be mindful of its strong binding effect.

Joint wills are very popular among spouses in Germany. These generally entail the partners mutually appointing each other as sole heir and designating a final heir for when both parties are deceased. Nevertheless, it is important to consider the strong binding effect associated with this kind of will. We at the law firm MTR Rechtsanwälte note that it cannot subsequently be unliterally amended if the parties did not have the foresight to include revision clauses.

If a joint will does not include revision clauses enabling the surviving spouse to unilaterally amend its provisions, he or she will remain bound by the joint provisions even if their situation in life has since changed, for example, if the relationship with the final heir has severely deteriorated. It is clear from a ruling of the OLG Düsseldorf, for instance, that in the absence of appropriate arrangements it is then no longer possible to unilaterally amend the provisions appointing the final heir (I-3 Wx 202/17).

In the case in question, a married couple had prepared a handwritten joint will and mutually appointed each other as sole heir. They also designated their son as the final heir. However, following the death of the husband, his widow drafted a second will, according to which another person was to be become the sole heir and her son would only receive the compulsory portion. The latter successfully brought an action against this.

The widowed mother had no longer been entitled to unilaterally amend the joint will. Even though the married couple had included the wording “the surviving spouse is not encumbered or restricted by this will and is free in every sense to make arrangements” in their will, the OLG Düsseldorf held that this did not refer to the appointment of the final heir. The Court ruled that it was not clear the married couple had agreed to a right to make changes.

This example demonstrates that revision clauses are an avenue which ought to be explored as a means of loosening the strong binding effect of a joint will. Moreover, the wording should be unambiguous and leave no room for interpretation. Lawyers with experience in the field of trusts and estates law can offer advice.

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PressemitteilungenPrivate Clients
news-45 Tue, 08 Oct 2019 12:32:37 +0200 ECJ: Stringent requirements for registering a color mark as an EU trademark A beverage manufacturer had a combination of colors registered as an EU trademark. In a ruling from July 29, 2019, the ECJ confirmed that the mark is null and void (Az.: C-124/18 P).

Registering a combination of colors requires overcoming significant hurdles. We at the commercial law firm MTR Rechtsanwälte note, for instance, that the arrangement of the colors and their relationship to one another need to be clearly defined, and the mark must be sufficiently distinct from products of other providers.

A beverage manufacturer failed to meet these requirements, having registered two combinations of colors as EU trademarks. A rival firm successfully filed challenges to these with the European Union Intellectual Property Office (EUIPO), claiming that the information provided about the combination of colors was much too vague. The ratio of the colors of the first mark was described as roughly 50:50, while the colors of the second mark were described as being depicted next to each other in equal proportions.

This description was first rejected by the General Court of the European Union for being too imprecise. In November 2017, it held that the color mark lacked sufficient distinctive character. This decision has since been upheld by the ECJ in spite of the beverage manufacturer’s argument that the combination of colors had achieved significant brand awareness and possessed distinctive character.

The ECJ clarified that the graphic representation of two or more colors must be systematically arranged in such a way that the colors concerned are associated in a predetermined and uniform way. The mere juxtaposition of two or more colors, without shape or contours, or a reference to two or more colors ‘in every conceivable form’, will not exhibit the required qualities of precision and uniformity.

According to the case-law of the ECJ, combinations of colors cannot be granted an EU trademark if they allow for a plurality of reproductions. If this is the case, the requirement for a trademark to be clear is not met.

Trademarks are an important asset for businesses. Yet registering a trademark may require overcoming significant hurdles. Lawyers with experience in the field of IP law can advise on trademark law.

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IP RechtPressemitteilungen
news-42 Fri, 04 Oct 2019 13:38:01 +0200 Failed capital investment – Compensation for flawed investment advice A lot of investors have experienced a crash landing when it comes to their financial investments. If the bank gave flawed investment advice, it is possible to assert claims for damages.

During periods of persistently low interest rates, many people search for suitable capital investment opportunities. However, a lot of investors also have past experiences where their investment flopped and they lost money as a result. But in many cases the money is not lost for good. We at the commercial law firm MTR Rechtsanwälte note that if the investment advice was flawed, it is possible to assert claims for damages.

When deciding to make a capital investment, a lot of consumers rely on the expert advice of a bank. Just as in the case of independent investment consultants, the advice given by bank advisors must be investor and investment specific.

This means that when making investment recommendations, the advisor needs to account for the financial situation, his or her client’s investment experience as well as investment goals, and, above all, their appetite for risk. In short: the investment must fit the investor; a highly speculative capital investment is generally not suitable for investors looking to, for instance, make a safe investment as part of their retirement planning.

Moreover, the advisor needs to provide detailed information about how the financial investment works and the associated risks. The consumer must receive all the information that is of material importance to his or her investment decision.

The bank advisor also needs to provide information about any additional costs and high brokerage commissions or kickbacks. This obligation to inform is designed to expose potential conflicts between the bank’s interest in receiving commission and its client’s investment goals before the latter decides to commit to a capital investment.

Experience shows again and again that investment advice does not meet these high standards and fails, for example, to sufficiently inform investors about the risks involved, or the advisor withholds information from them about the high brokerage commissions the advisor or consultancy will receive. If the bank advisor fails to fulfill his or her obligation to inform, it is possible to assert claims for damages. That being said, it needs to be demonstrated on a case-by-case basis that the investment advice was flawed. Lawyers with experience in the field of banking law can offer advice.

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news-41 Tue, 01 Oct 2019 16:40:05 +0200 KG Berlin: Misleading advertising featuring “best price” claims Caution is advised in relation to “best price” advertising claims. These may give a misleading impression of occupying a leading position in the market and violate competition law.

It is no secret that self-promotion is part and parcel of business as well as, of course, advertising. Promotional hyperbole is permissible as long as it does not go too far and amount to false claims asserting a leading position in the market. We at the commercial law firm MTR Rechtsanwälte note that claims of this kind mislead consumers and violate competition law.

A case in point is a ruling from June 21, 2019 by the Kammergericht (KG) Berlin, Berlin’s Higher Regional Court, in which the Court held that advertising claims promising the best price constitute misleading advertising if the promises cannot be fulfilled. These were said to constitute misleading claims asserting a leading position in the market (Az.: 5 U 121/18).

The defendant operates an intermediary platform for real estate agents. It promoted its services with, among other things, statements such as “sell at the best price”, “sell your real estate quickly and at the best price”, “the best price for your real estate”, and “best price achieved in 92% of cases”. The KG Berlin ruled that the defendant was not allowed to advertise with these statements, as they constituted misleading claims asserting a leading position in the market.

The Court held that a claim asserting a leading or unique position in the market can be said to exist if the content of the relevant statements is verifiable and does not consist merely of exaggerations. This was found to be the case here, because pricing information is a measurable variable. Accordingly, the Court ruled that best price promises of this kind might well be perceived by consumers as factual claims. It went on to state, however, that the defendant’s best price claims were untrue, since there was no apparent reason why the interested party with the best purchase bid would choose to come specifically to the internet platform in question; while a large platform may be helpful in this context, it cannot guarantee the highest purchase price. In addition, the KG Berlin noted that no benchmark exists for assessing whether real estate has, in fact, been sold at the highest possible price.

The Court also criticized the wording, “independent selection of certified real estate agents”, ruling that this gives the impression a selection is drawn up according to specific criteria and that the estate agents are in a position to negotiate the best price, when, in fact, no substantive checks according to quality standards take place when an agent is admitted to the portal.

While advertising is important for businesses, it can also easily overstep the mark. The consequences of this can include formal warnings, injunction suits and damages claims. Lawyers experienced in competition law can offer advice.

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news-39 Mon, 30 Sep 2019 10:07:35 +0200 OLG Celle: Plant-based product can be designated as alternative to cheese A purely plant-based product can be promoted as an alternative to cheese. The Oberlandesgericht (OLG) Celle, the Higher Regional Court of Celle, ruled that this kind of advertising is neither unfair nor misleading to consumers.

The designation of foodstuffs as vegan is an issue with which the courts have had to grapple. In 2017, the European Court of Justice (ECJ) ruled that designations such as “milk” and “yoghurt” must be not used in relation to purely plant-based products. We at MTR Rechtsanwälte note that the ruling also precludes combinations such as “tofu butter” and “veggie cheese”.

A business had advertised its purely plant-based products as “vegan alternatives to cheese” as well as “matured cheese alternatives”. Referring to the case-law of the ECJ, the plaintiff argued that this was unfair and misleading, even going so far as to claim that the designation “alternative to cheese” is an impermissible combination.

The injunction suit was unsuccessful at first instance. The OLG Celle subsequently indicated its intention to dismiss the legal action in a ruling from August 6, 2019. It held that for consumers the term “alternative” serves to clarify that the product in question is not cheese but rather something else (Az.: 13 U 35/19).

Lawyers with experience in the field of competition law can offer advice.

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news-37 Wed, 25 Sep 2019 07:58:00 +0200 Costs incurred obtaining tax advice reduce estate tax burden The costs incurred by an heir in correcting the testator’s tax return reduce the estate tax burden. That was the verdict of the Finanzgericht (FG) Baden-Württemberg, the Fiscal Court of Baden-Württemberg (Az. 7 K 2712/18).

We at the commercial law firm MTR Rechtsanwälte note that if the testator submitted incorrect tax returns, the heir is obliged to correct them. According to a ruling of the FG Baden-Württemberg from May 15, 2019, the costs incurred from correcting the tax returns can be offset against estate tax.

Heirs ought to examine whether the estate includes untaxed income. If this is the case, the heir must correct the testator’s tax returns. Such were the circumstances in the instant case. The testator had not paid the correct tax on income from capital generated in Switzerland. The daughter, as the sole heir, had the incomplete tax returns corrected. She then deducted the associated costs from the amount of estate tax due.

While the tax authorities did not take these costs into account when determining the amount of estate tax due, the Finanzgericht took a different view. It ruled that the plaintiff had been obliged as the heir to correct the incomplete tax returns. Since this entailed her fulfilling a pre-existing obligation of the testator, the Court held that the costs must therefore be accounted for as liabilities of the estate.

Lawyers with experience in the field of tax law can offer advice.

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news-33 Fri, 13 Sep 2019 08:34:29 +0200 CJEU: Sampling permissible within narrow parameters The courts have been grappling for years with the extent to which sampling pieces of music breaches copyright. The Court of Justice of the European Union (CJEU) has now ruled that sampling is permissible within narrow parameters.

This longstanding legal dispute concerns an electro-pop group and a music producer. The producer had taken a short sequence from a song by the pop group and added it to a song by another singer. The latter featured the relevant audio sequence at a reduced speed and in a continuous loop. The band considered this a breach of their copyright.

The dispute has occupied the courts for years. The Bundesverfassungsgericht, Germany’s Federal Constitutional Court, had already ruled that artistic freedom is to be valued more highly than intellectual property if the copyright breach is minor and the creator suffers no economic loss as a result. The Bundesgerichtshof, Germany’s Federal Supreme Court, has since referred the matter to the CJEU. We at the commercial law firm MTR Rechtsanwälte can report that, according to the CJEU’s ruling, sampling may be permissible within narrow parameters even if the creator’s consent has not been obtained in advance.

In a ruling from July 29, 2019, the CJEU held that sampling may constitute an interference in the phonogram producer’s rights if it happens without their permission. Notwithstanding this, it is possible to use a short audio sequence without permission if the audio fragment is inserted into a new work in a modified form that is unrecognizable to listeners (Az.: C-476/17). The Court went on to state that the assumption that a reproduction of this kind requires the phonogram producer’s consent runs counter to, among other things, the need to strike an appropriate balance between, on the one hand, the interests of the copyright holders and related rights in the protection of their intellectual property, and, on the other hand, the protection of the interests and fundamental rights of those using the protected subject matter, including artistic freedom and the public interest.

The CJEU concluded that taking (modified) fragments from a phonogram and using them to create a new independent work does not amount to an illegal copy from the phonogram, and that national provisions needed to take a back seat to EU law here.

Lawyers with experience in the field of industrial and intellectual property law can advise on matters relating to copyright and the protection of intellectual property.

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Gewerblicher RechtsschutzPressemitteilungen
news-32 Thu, 12 Sep 2019 11:00:10 +0200 BAG: Notice of collective dismissal and effective termination In the case of mass dismissals, an employer is allowed to go ahead and sign termination notices before the notice of collective dismissal has been received by Germany’s Federal Employment Agency, the Agentur für Arbeit. That was the verdict of the Bundesarbeitsgericht, Germany’s Federal Labor Court.

Employers need to make sure that termination notices are issued effectively. This is all the more important in the case of mass dismissals. We at the commercial law firm MTR Rechtsanwälte note that termination notices may be ineffective if the employer makes a mistake.

One aspect that has proven to be particularly problematic for employers is the short window between the required submission of the notice of collective dismissal to the Agentur für Arbeit and the timely delivery of the termination notices. A ruling by the Bundesarbeitsgericht from June 13, 2019 relieves pressure on employers in this regard (Az.: 6 AZR 459/18). The BAG ruled that the employer is allowed to go ahead and sign the termination notices before the notice of collective dismissal has been received by the Agentur für Arbeit. It went on to state that for termination to be effective within the framework of a collective dismissal process, it is sufficient for the Employment Agency to have received the notice before the termination letter reaches the employee.

In the instant case, the employer’s company became the subject of insolvency proceedings in June 2017. The Agentur für Arbeit received the notice of collective dismissal on June 26, 2017. In a letter written the same day, the employer issued its employees with ordinary notices of termination with effect from September 30, 2017. The termination notices were received by the employees on June 27, 2017.

One employee lodged an action for unfair dismissal. Citing the case law of the Court of Justice of the European Union, he argued that the employer had been obliged to first discharge its duty to notify the Employment Agency before reaching a decision on whether to terminate the employment relationship. Consequently, the termination letter should not have been signed until after the notice of collective dismissal reached the Employment Agency. The claim was successful before the Landesarbeitsgericht, i.e. the Regional Labor Court.

Yet the ruling was later overturned by the Bundesarbeitsgericht. It held that the notification procedure is designed to inform the Agentur für Arbeit of a pending notice of collective dismissal so that it can prepare itself accordingly; though it is not the Employment Agency’s place to influence the employer’s decision. The BAG noted, however, that the termination notice must not reach the employee until after the notice of collective dismissal has been received by the Employment Agency.

There are a number of legal pitfalls that one needs to be aware of when it comes to dismissals. Lawyers with experience in the field of employment and labor law can offer advice.

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