Passing-off in Germany – To trade or not to trade?

So far, according to Germany’s Supreme Court’s decision Viennetta from 2000, infringers were allowed to use deviating designations on similar or even identical packaging to avoid consumer confusion under German unfair competition law (“passing-off”). Obviously brand owners weren’t happy with that case law.

Nine years later, the very same Court got the long-awaited opportunity to provide further clarification (Garlic Sausage). At first, the Court confirmed that indirect confusion as to origin may occur if consumers perceived the imitation as the original being sold under a sub-brand, or if consumers assumed a business or organisational link between both companies. Such indirect confusion as to origin, however, may be avoided if the imitation shows a deviating manufacturer’s brand. But is it the same with private labels?

The Court clarified that private labels, rather common nowadays in the food trade sector, per se would not help avoiding indirect confusion as to origin. However, as a pre-condition, private labels were perceived as such only if they refer to a specific retailer (in the underlying case, however, the defendant was able to demonstrate that his sub-brand “Namli” was not perceived as a private label but as a manufacturer’s brand).

This is good news but only for brand owners who do not deal with discount retailers. Others following a two-track policy (i.e., selling the original under the manufacturer’s brand and a second line under a private label) will barely dare challenging their own discount retailer for selling a similar packaging. Isn’t it part of their game that consumers will associate the private label with the original?