BMW case highlights corporate personality rights and when it is safe to use them

Companies can promote their products and/or services in several ways but ultimately any promotion or marketing activity is about explaining why your own performance or product is of particularly special – or even superior – quality. However, in times of customer reviews, the opinions of other’ are increasingly important for making a purchase decision.

For service providers, it is also possible to attract attention from consumers by listing well-known companies or personalities who belong to their customer base – known as a customer reference list. This attention, however, can be contrary to the interests of these listed enterprises if they do not wish to be associated with the service provider. Recently, the Regional Court I in Munich addressed the pertinent question of when a company can be named in such a list.

Background

The owner of the German word mark ‘BMW Group’ brought a case against two defendants, one of whom (defendant A) advertises online seminars, lectures and books about profiling on the Internet, and the second of whom is its managing director (defendant B).

The term ‘profiling’ refers to the creation of the overall image of a personality to be used for specific purposes. In this sense, profiling concerns data collection on the character in question in order to make corporate decisions.

Under the heading “Customers and References” on its homepage, one of the defendants listed BMW Group without the plaintiff’s permission, even though it expressly objected to the use of the word mark as a reference. The defendants claimed that the plaintiff’s employees had used its services but could not provide any evidence of this.

Decision

The plaintiff asserted claims for injunctive relief, damages, information and rendering of accounts based on infringement of its corporate personality rights. It also sought reimbursement of the costs incurred as a result of sending a warning letter for trademark infringement as well as infringement of unfair competition law by the defendants.

Claims arising from corporate personality rights

Munich’s regional court considered the question of whether the plaintiff could assert its claims against the defendants based on an alleged violation of its corporate personality rights.

The fact that it is not a natural person is not detrimental to the plaintiff's position. The general right of personality is based on other fundamental rights that legal entities are afforded and which apply to them naturally (Article 19(III) of the German Constitution). As the Federal Court of Justice has repeatedly ruled, legal entities are therefore also entitled to protection of personality rights.

The right of personality grants the entitled person or entity general protection against third-party interventions that affect them. It is therefore up to the person or entity alone to decide whether – and under what conditions – their name appears in public. It would be inconsistent with these rights if the rights holder had to tolerate their name being used for third-party advertising without their knowledge or authorisation.

Infringement of the right of personality must always be distinguished from infringement of the right to a name. The latter rights are infringed if a name is used to create the impression that:

• the person acting in the advertisement bears the name;
• the true name bearer is responsible for the advertisement; or
• the advertised services or products are somehow attributable to the person.

The right of personality is infringed if an incorrect factual assertion is made, but only if the individual bearing the name is affected (eg, by exploiting the name bearer's fame or esteem in a trade/commercial environment). The listing of BMW Group under the defendants’ "Customers and References" web page created no confusion as to the attribution. Rather, the intention here was to exploit BMW's reputation.

The defendants interfered with the plaintiff's right of personality, despite its express objection. The plaintiff's corporate personality right, derived from Article 2 of the German Constitution, outweighs the defendant's interest in communicating its services and competences to its customer base. It also outweighs the freedom of opinion to which it is fundamentally entitled and an information interest under Article 5 – the listing of BMW Group under the "Customers and References" heading is an incorrect factual assertion.  

The truthfulness of factual assertions is crucial when weighing up conflicting interests, because freedom of opinion bears no weight on upholding and further disseminating disparaging, untrue factual assertions. What is instead essential when determining factual assertions is whether its accuracy can be verified using evidence.

The plaintiff, who has the burden of proof in this respect, substantiated that there had never been any cooperation between BMW and defendant A. Due to the company’s size, the defendant had a so-called secondary burden of proof for such alleged collaboration, which was not met. The defendant was unable to even explain when they were booked, by whom, for which event and who was supposed to pay them.

Consequently, Munich’s regional court affirmed the violation of BMW Group's corporate personality rights and considered the claims for injunctive relief, damages, information and accounting to be well founded.

Claims for trademark infringement or infringement of unfair competition law

As already mentioned, the plaintiff had issued a warning letter to the defendants for trademark infringement and infringement of unfair competition law before filing the lawsuit, and therefore claimed reimbursement of the related costs. According to the plaintiff, trademark infringement occurred according to Section 14(II)(3) of the Act on the Protection of Trademarks and other Signs or Article 9(II)(lit c) of the EU Trademark Regulation, while an infringement of unfair competition law took place according to Sections 3, 5(I)(2)(1) and 3 of the Act against Unfair Competition.

However, the well-known sign ‘BMW Group’ is not used for one of the defendant's own services. Defendant A did not advertise its own or third-party goods or services with the designation, it only indicated that the name was among its customers and references. Claims based on unfair competition law were ruled out entirely as there was no concrete competitive relationship between the parties.

While the plaintiff had a cease-and-desist claim due to infringement of another property right, this is irrelevant when considering whether reimbursement of the warning letter costs was justified. The content of the letter must put the person being warned in a position to assess the infringing act, and therefore must be precise about which property right the asserted claim is based on so that the warned party can assess the accusation’s accuracy. Since the warning letter failed to refer to infringement of the corporate personality right, the costs were not reimbursable.

Key takeaways

The naming of a company in a customer reference list is only a mere mention of a trademark and therefore does not constitute trademark infringement per se. Since the companies in question are supposed to be customers, the competitive relationship required for infringement of unfair competition law is often lacking which – in most cases – rules out claims in this respect.

However, this does not mean that a company is unprotected against such exploitation of its reputation on the market. It can defend themselves against the naming of their company in a customer reference list on corporate personality rights infringement grounds if the listing is an incorrect factual assertion. Since with large companies it is often rather difficult to prove that the claim is untrue, the secondary burden of proof is imposed on the plaintiff.

While this case is only a first-instance decision, important insights can be gained with regard to the structure of corporate personality rights. In addition to name, trademark and competition protection, this forms the fourth pillar of protection against external abuse and therefore, is likely to receive greater attention in the future. Further, all professionals are advised to give due consideration to the wording of any warning letters issued. It is highly recommended to include all possible violations in the letter to be reimbursed later for any costs incurred.