“Der Novembermann” part 2 - problems in the assertion of claims for reimbursement of warning costs, especially in supply chains

In detail on this topic Part 1 of our blog post on the Novembermann decision.

In practice, however, this not only leads to significantly lower warning fees, but also to a large number of subsequent problems when asserting the claim for reimbursement of the warning fees. In supply chains in particular, the individual members of the supply chain can often only be determined step by step through the asserted claims for information. As the warning letters in such cases are usually issued at different times, the question arises as to how and to what extent the claim for reimbursement should be asserted against the individual infringers. If warning costs are initially claimed in full, the claim could subsequently have to be reduced by further warning letters in the same matter. If, on the other hand, the warning costs are initially only claimed on a pro rata basis, the claim could subsequently increase if different reactions turn one matter into several matters.

Below we provide a brief overview of possible solutions for how to deal with this problem in practice:

1. How can the claim for reimbursement of warning costs be asserted if there is uncertainty about further similar warning letters?

If a retailer is warned and a claim for information is asserted in addition to the cease-and-desist claim, it is not unlikely that the client will decide to take action against further infringers in the supply chain and that further similar warning letters will be issued. On the other hand, however, it is uncertain whether the right to information will be fulfilled, how many infringers the supply chain comprises and whether the client will decide to take further action at all.

At the time the warning letter is issued, it is therefore uncertain whether and, if so, how many warning letters will follow.

The question therefore arises as to whether the claim for reimbursement of costs should be asserted in full in the warning letter - which entails the subsequent problem of how to proceed after further warning letters against (intermediate) traders - or whether it should already be taken into account that the amount of the claim may have to be reduced later.

In response to the decision “Der Novembermann”, it is often recommended, in order to avoid a possible repayment claim, not to attach a cost calculation to the warning letters and not to demand reimbursement of a specific amount, but to reserve the claim for reimbursement until it is foreseeable how many warning letters will be issued in this matter (see Goldmann in: BeckOK Markenrecht, 38th edition, status: 1.7.2024, Section 14 MarkenG para. 913.1; Brau, GRUR-Prax 2022, 501, 502 f.; Büscher, GRUR 2021, 162, 167). This is the only way to ensure that too much is not demanded.

A further advantage of this approach can be seen in cases where several infringers have been warned at the same time and they react differently to the warning letters. This is because a different reaction regularly leads to a uniform matter subsequently becoming several matters, so that the claim for reimbursement is subsequently increased. However, if the amount of the claim for reimbursement is calculated in the warning letter on the basis of the overall value of the claim and has already been paid by the warned party, the warning party would have to return to the matter at a later date and demand payment of the difference. This is likely to meet with much greater resistance than if the specific amount is reserved and the higher reimbursement is then demanded on the basis of the individual value of the claim. As it is unlikely to be economical to claim the difference in court, the client will often be at risk of having to pay the difference in these cases.

This also applies to cases in which the parties have already agreed on a lump sum payment to settle the matter. Once a lump sum payment has been agreed, it is regularly not possible to demand a higher amount afterwards. In order to avoid a lump sum payment being agreed on the basis of a reimbursement claim that is set too low, it may therefore be advantageous to wait until the final amount has been determined.  

On the other hand, depending on the rights asserted, this approach could conflict with special legal requirements. For example, Sec. 13 para 2 no. 3, para. 3, para. 4 Act against Unfair Competition (UWG) states that the warning letter must clearly and comprehensibly state whether and to what amount reimbursement of fees is claimed and how this is calculated. However, Sec. 97a para. 2 sentence 1 no. 3 Act on Copyright and Related Rights (UrhG) leaves a little more leeway, according to which an asserted claim for payment only has to be broken down as a claim for damages and reimbursement of fees. Whether the special statutory provisions are to be interpreted restrictively in certain cases against the background of uncertainty about the final amount of the claim for reimbursement of warning costs has not yet been decided in case law as far as can be seen. In any case, in competition law matters, the safest way to avoid a counter warning letter due to a breach of Sec. 13 para. 2 no. 3, para. 3, para. 4 UWG is therefore likely to be to assert the claim for reimbursement in the full amount calculated on the basis of the information known at the time of issuing the warning letter.

From a purely practical point of view, the fact that the identification of the complete supply chain can often take several months or even years also speaks in favour of asserting the full amount. This is because the final amount of the reimbursement claim against the individual infringers would only be known once this full disclosure had been made, meaning that the matter could not be concluded until then. This would have several disadvantages: Firstly, the client would be stuck with the costs during this period, which is generally not in their interest. Secondly, after uncovering the supply chain, the warning party would have to approach warned parties whose infringement occurred months or even years ago and whose willingness to pay is likely to be correspondingly low. Negotiating an agreement on the payment of a lump sum would also be considerably more difficult if the amount of the reimbursement claim is still completely uncertain.

Whether the claim for reimbursement of fees should already be quantified in the warning letter or merely reserved cannot therefore be answered in general terms, but should primarily depend on the area of law concerned and also on the client's interests. For example, some clients may have an interest in avoiding any reimbursement claims against themselves, while other clients may prefer to settle their own reimbursement claim as quickly as possible.

2. Are there special information obligations?

If it is already clear at the time of issuing the warning letter that further warning letters have been or will be issued in the same matter, the claim for reimbursement must be calculated proportionately on the basis of the overall value of the claim. Since the amount claimed must be specified - at least according to some special legal regulations - there is likely to be an obligation to provide information at least to the extent that the information necessary for the calculation must be provided. This should at least include the overall value of the claim as well as the fraction attributable to the respective warned party. An obligation to disclose who the warning party has warned and how many infringements it has accused the other warned parties of, on the other hand, is likely to go too far (see Büscher, GRUR 2021, 162, 167, who, however, considers a disclosure obligation to be possible if the warned party presents concrete evidence that the calculation of the warning costs was incorrect).

If the warning costs are initially claimed and reimbursed in full, but the amount of the claim is subsequently reduced, the warned party may be entitled to repayment of the overpaid amount due to unjust enrichment. However, it is questionable whether the party issuing the warning letter therefore has an obligation to inform the warned party if further warning letters are subsequently issued in the same matter. As far as we know, this problem has not yet been addressed in case law.

At least in cases in which a settlement agreement has already been reached with the warned party and a lump sum has been paid to settle all claims, it is rather unlikely that there would be a claim for repayment and therefore there would be no obligation to provide information. This is because the agreement of a lump sum payment is likely to be a legal basis for the payment, so that a claim for unjust enrichment would have to be rejected.

This is also in the interests of the parties because it is not possible to quantify what proportion of the lump sum is attributable to the reimbursement claim or what amount of the lump sum would have been agreed if the parties had already known the actual amount of the reimbursement claim at the outset. On the other hand, such an agreement serves precisely to bring the matter to a close and to find legal peace, whereby it is accepted in the interest of an out-of-court settlement that the lump sum does not usually reflect the actual amount owed. This is because the amount of a claim for damages in IP matters is also not certain beyond doubt, but is regularly merely estimated by the parties.

Often, however, there is no obligation to provide information in these cases because the negotiation of a lump sum means that it is no longer a uniform matter under fee law. This is because different reactions lead to a uniform matter becoming several matters if separate, differentiated processing by the lawyer is therefore required (see BGH GRUR-RR 2011, 389 para. 10 - www.bild.de; BGH GRUR-RR 2012, 90 para. 25 - Rosenkrieg II). This should regularly be assumed in the case of negotiations on an agreement and the payment of a lump sum, as this usually requires (multiple) correspondence or telephone calls both with the other party and for coordination with the client and therefore requires differentiated processing.

3. Key points for practice

If warning letters are issued to different infringers for similar infringements, it is always necessary to check whether the matter is a uniform matter under fee law in accordance with the decision “Der Novembermann” when asserting a claim for reimbursement of warning fees. The criteria listed in part 1 of this blog post series provide guidelines in this regard.

The following points in particular should then be taken into account when asserting the claim for reimbursement:

• If it is a uniform matter, an overall value of the claim must be formed and the respective fee must be calculated in relation to the individual values of the claim (which may vary depending on the value and attack factor and depending on whether additional damages are claimed).
• The basis for calculating the amount claimed should be broken down in the warning letter, whereby at least the overall value of the claim and the fraction attributable to the respective warned party should be stated.
• If it can already be foreseen at the time of the issuing of the warning letter that further similar warning letters could follow, but not how many and with what value, it must be considered and, if necessary, discussed with the client how to proceed with regard to the assertion of the claim for reimbursement. This problem will arise in particular if action is taken against a trader behind whom there is a supply chain consisting of several trade levels. The following options exist here in particular:
  1) Assertion of the claim for reimbursement in the amount of the fees calculated on the basis of the individual value of the claim - with the risk that a claim for repayment could arise in the event of further warning letters
  2) Reservation of the right to reimbursement without specific quantification - with the risk that the client may have to wait a long time for reimbursement and the warned party may no longer be willing to reimburse the costs out of court as time progresses