Tag: Preliminary Injunction

  • Poaching and Diverting Clients by Exploiting Trade Secrets

    Poaching and Diverting Clients by Exploiting Trade Secrets

    Owner of a beauty salon successfully obtains an injunction against her former freelance employee (a physician)

    In preliminary injunction proceedings conducted by attorney Florian Daniel on behalf of the petitioner before the Berlin Regional Court, the former independent contractor (the respondent) was prohibited from poaching the petitioner’s clients by exploiting her knowledge of scheduled treatment appointments and/or, on the occasion of the respondent’s move to a competing business, actively calling the petitioner’s clients or having them called in order to redirect them to the respondent’s new place of business (for a future treatment appointment).

    Facts of the Case

    The petitioner operates a beauty salon with multiple locations in Berlin. The respondent worked there as a freelance physician.

    At short notice, the respondent terminated her employment and, as it subsequently transpired, assumed a managerial position at a direct competitor.
    In connection with the change in place of work, the petitioner – both personally and through another employee whom the petitioner had also terminated “out of the blue” and who subsequently – as it turned out – also obtained a prominent position at the competing beauty salon – rescheduled the petitioner’s clients.

    In doing so, the respondent made use of the petitioner’s APPOINTMENT DATABASE. Specifically, the respondent contacted – either directly or through the other employee – clients who had already scheduled a treatment appointment, with the aim of redirecting them to the new location.

    Furthermore, the respondent made use of the applicant’s CUSTOMER DATABASE, as she also contacted customers who were expected to have another treatment appointment in the (near) future. This customer data could only have been obtained from the relevant database, as the respondent contacted customers with whom she had never had any personal contact prior to this, even during her time as a (freelance) contractor.

    Decision

    The Berlin Regional Court issued the preliminary injunction as requested, without a hearing, despite the protective brief filed by the respondent’s authorized attorneys.

    In its reasoning, the Berlin Regional Court stated, among other things, that

    “the respondent’s actions—which have been credibly established – of rescheduling clients whose treatment appointments had already been arranged with the petitioner to the new clinic where she was working constitute an unlawful exploitation of the petitioner’s trade secrets. This is self-evident and requires no further justification. The applicant’s CLIENT APPOINTMENTS are its TRADE SECRETS (…)”

    It could be left open in this case whether the respondent would have been entitled, in the course of her work for the petitioner, to inform her clients there that she would soon be employed elsewhere. For that is precisely not what is at issue here with the rescheduling of clients by exploiting knowledge of the agreed-upon appointments.

    Likewise, the request to other clients of the plaintiff – who had not previously been treated by the defendant – to now seek treatment at the defendant’s new practice (also) clearly constitutes the unlawful and unauthorized use of the plaintiff’s trade secrets.

    The respondent’s affidavit, submitted in part as part of the protective brief, was unable to undermine the applicant’s prima facie case simply due to its lack of factual substance. The respondent’s further arguments regarding the issue of poaching employees were irrelevant because such conduct was not the subject of the motion for a preliminary injunction.

    Comment

    This decision has once again demonstrated how important trade secrets are to a company and how worthy they are of protection. Know-how and, in particular, a customer base that has in some cases been built up over many years are assets of a company that must be protected against unauthorized access and unlawful exploitation!

    In assessing the value of the claim for injunctive relief, the primary determining factor is the economic interest of the party seeking the injunction (= the petitioner) in the enforcement of the claim. This interest must be determined based on the severity (the “risk factor”) of the act to be prohibited, as indicated by the impending harm. It depends, among other things, on the effects of future infringing acts (scope, intensity, and frequency, as indicated by the infringing act already committed), the intensity of the risk of repetition (degree of fault, subsequent conduct, obligations to refrain from infringing acts toward third parties), and the risk of imitation.

    The Berlin Regional Court determined the value in dispute at its discretion pursuant to Section 3 of the German Code of Civil Procedure (ZPO) by way of estimation at EUR 40,000.00 in the preliminary injunction proceedings, which is 2/3 of the value of the main action amounting to EUR 60,000.00.

    Do you suspect that your (freelance) employee is betraying you?

    Are you concerned that trade secrets are being “stolen” from you and unlawfully exploited?

    Would you like to know what constitutes “trade secrets” and how they can be protected?

    I’d be happy to advise you—please contact me; I’d be glad to take on your case.

  • The use of the ‘R’ symbol requires corresponding trademark rights

    The use of the ‘R’ symbol requires corresponding trademark rights

    The Berlin Regional Court has prohibited the use of the ® symbol (“R” in a circle”) even though a corresponding registered trademark is not in force.

    When using the ® symbol, corresponding TRADEMARK rights must exist!

    In preliminary injunction proceedings conducted by Attorney Daniel on behalf of the petitioner before the Berlin Regional Court, the (alleged) trademark owner was prohibited, under threat of statutory penalties, from using the ® symbol (“R” in a circle), even though no corresponding registered trademark is in force.

    When the symbol “®” is attached to a mark, the public expects that this mark is registered as a trademark for the user or, at the very least, that the trademark owner has granted the user a corresponding license.

    Consequently, the relevant public infers from the inclusion of the ® symbol that the mark in question is a registered trademark with precisely that content (see, e.g., Federal Court of Justice [BGH] in GRUR 1990, 364, 366 – “Baelz”; in GRUR 2009, 888 – “Thermoroll”).

    In fact, however, the company logo was not registered as a trademark.

    Nor is it sufficient that the respondent has filed an application for such a trademark, since the mere filing of an application does not yet create a trademark!

    The use of the ® symbol is therefore only permissible once a trademark has been registered, meaning that prior use constitutes an act of unfair competition. This is because the user misleads the public regarding the scope of (allegedly) existing industrial property rights and thereby engages in a deceptive business practice that is objectionable under unfair competition law (see also OLG Cologne, judgment of Nov. 27, 2009, Case No.: 6 U 114/09 – “® [R in a circle]”; Hanover Regional Court, judgment of October 22, 2013, Case No.: 32 O 29/13).

    Even though the ® symbol was visible only in small print on the defendant’s website, it was recognizable as such by the relevant public.

    Common symbols “in a circle” include the “C” for copyright and the “R” for a registered trademark; however, in this specific case, any connection to copyright was clearly ruled out, and the assumption that it was some kind of fanciful symbol was also far-fetched, since the symbol was placed exactly where one would expect a ® symbol—namely, attached to the upper right corner of the company logo.

    The respondent, represented by counsel, filed a written defense with the Berlin Regional Court after failing to respond to the prior cease-and-desist letter. Since the claim for an injunction remained valid even in light of the arguments presented in the written defense, the 15th Chamber of the Berlin Regional Court issued the requested injunction without an oral hearing.

    The grounds for the injunction were established, even though the defendant had already been issued two prior cease-and-desist warnings regarding this matter in close succession. This is because, despite the defendant having already submitted two cease-and-desist declarations, the infringement was still ongoing. There was no response to the third warning, so the plaintiff required immediate and effective protection.

    Do not “ignore” a cease-and-desist letter—and be sure to meet the deadline set for you!

    Attorney Daniel advises and protects your legal interests effectively and with a clear focus on your goals. My goal is to provide legal advice that is strategically and tactically sound and tailored to your specific case.

    Feel free to contact me with no obligation, and I’ll provide you with a legally sound initial assessment.

    Benefit from my outstanding expertise in trademark law matters and receive personalized advice. You’ll always receive personal and direct guidance from start to finish. Of course, every step will be closely coordinated with you. I look forward to hearing from you!

  • Time and again, this *darn* point of contention

    Time and again, this *darn* point of contention

    Those who look closely have the advantage!

    The plaintiff withdraws her motion for a preliminary injunction during the oral hearing before the Erfurt Regional Court (gritting her teeth).

    In a preliminary injunction proceeding conducted by Attorney Daniel before the Erfurt Regional Court, in which the defendant’s legal interests were represented, the plaintiff withdrew her motion seeking a prohibition order. The costs of the proceedings were imposed on the opposing party (the plaintiff).

    Facts of the Case

    The case concerned automotive accessories that the defendant sells through his eBay shop. Since a specific trailer hitch he offered was allegedly not roadworthy – as it was not approved under road traffic regulations – a cease-and-desist letter was issued, and, among other things, a declaration of discontinuance was demanded.

    Already during the pre-trial proceedings, attempts were made to explain to the plaintiff – a limited liability company (GmbH) that sells such products on a large scale – that the asserted claim had no merit. Unimpressed by this, the plaintiff sought a preliminary injunction after the defendant refused to issue a cease-and-desist declaration.

    Since this was to be expected, Attorney Daniel drafted a protective brief on behalf of the defendant, whereupon the Erfurt Regional Court scheduled an oral hearing. At this hearing, the plaintiff appeared, among other things, with an expert witness who was supposed to confirm the (allegedly non-existent) marketability of the trailer hitch offered by the defendant. *Unfortunately*, the expert had, on behalf of the plaintiff, examined a different model of trailer hitch, so that the counterargument – which would otherwise have been relevant anyway – no longer mattered. The ball head of the trailer hitch (a distinction is made, in particular, between so-called rigid and flexible models; in the case of flexible models, the ball head of the trailer hitch can be removed in just a few simple steps) allegedly obscured the license plate of a specific vehicle model, which is why the rigid model of the trailer hitch could not be sold.

    The plaintiff attempted to salvage the proceedings by arguing that the trailer hitch examined by the expert was of identical construction to the trailer hitch offered by the defendant. This was – admissibly – disputed on the grounds of lack of knowledge. Consequently, the cease-and-desist letter and the sought-after injunction related to a different subject matter of the dispute, leaving the plaintiff with no choice but to withdraw its motion for a preliminary injunction.

    Comment

    The “subject matter of the dispute” refers to the matter to be decided in civil proceedings. This is a central concept in civil procedure, yet the law uses it ambiguously. An unambiguous designation or definition (legal definition) does not exist – even though it is a term of the utmost importance.

    For example, the Code of Civil Procedure (ZPO) refers to the “subject matter of the legal dispute,” the “claim sought,” or simply the “asserted” or “disputed” claim.

    The subject matter of the dispute is decisive, among other things, for:

    • the scope of lis pendens
    • the scope of res judicata
    • the question of an amendment to the complaint
    • the existence of an objective joinder of claims
    • determining territorial and subject-matter jurisdiction
    • the amount in dispute.

    In legal literature, the concept of the subject matter of the dispute is highly controversial.  However, prevailing doctrine and case law are based on a two-part concept of the subject matter of the dispute.

    The content and scope of the subject matter of the dispute are determined, on the one hand, by the relief sought in the complaint and, on the other hand, by the cause of action – that is, by the factual circumstances presented to substantiate it. A set of factual circumstances exists when it involves an actual event that, viewed from a natural perspective, constitutes a single, coherent sequence of events.

    Pursuant to § 253(2), second sentence, of the German Code of Civil Procedure (ZPO), the complaint must contain a specific statement of the subject matter and the basis of the claim asserted, as well as a specific request. This at least outlines the concept of the subject matter of the dispute.

    The question of the subject matter of the dispute coincides with the question of whether, based on the action brought, under the procedural circumstances determined by it, and based on the factual circumstances introduced into the legal dispute by the complaint, the relief sought can be granted.

    In the present case

    In the present case, the plaintiff had not looked closely enough, which proved to be her “undoing.” This is because the motion for a preliminary injunction challenged a specific trailer hitch as (allegedly) unfit for use on public roads, which the defendant, however, had not offered in its product line. In doing so, the plaintiff made a serious error that not only prevented her from obtaining relief on the merits but also resulted in her being ordered to pay the costs of the litigation.

    It is therefore always advisable to examine a cease-and-desist letter very carefully in order to identify any errors on the other party’s part and/or to have the validity of the claim itself reviewed.

    Have you received a cease-and-desist letter and can’t imagine that the conduct you’re accused of is accurate?

    Have you received a cease-and-desist letter and have no idea why?

    Have you received a cease-and-desist letter and are unaware of any “wrongdoing”?

    I represent your interests both out of court and before all local, regional, and higher regional courts, as well as the Berlin Court of Appeal, throughout Germany.

    Please contact me; I would be happy to take on your case.