Pitfalls of international IP litigation: Federal Court of Justice clarifies requirements for “domestic connection” in copyright infringement cases

While these questions have long been clarified for trademark law, the German Federal Court of Justice (BGH) has now also clarified the requirements for copyright law (judgment of 5 December 2024, case no. I ZR 50/24 – Produktfotografien).

We summarise the decision for you and also provide an overview of what you need to be aware of when prosecuting infringements of intellectual property rights on the internet.

1. Facts of the case

The plaintiff is a manufacturer of clothing and owns the copyrights to the corresponding product photographs. It originally had a contractual relationship with the defendant, a company based in Germany, for the supply of garments and product photographs and the granting of rights of use in those images.

Following the termination of the contractual relationship, the plaintiff discovered that those product photos were available as thumbnails via the image search function of a search engine. Clicking on the images led to websites with Ukrainian (.ua) or Kazakh (.kz) top-level domains. However, the images were not displayed on the websites themselves; the text was in Cyrillic, except for the German-language product descriptions and the German-language notice that the product photos could not be displayed. The defendant was also named on the “contact” pages of the websites.

The plaintiff considered the display of the thumbnails in the image search to be an infringement of copyright and brought an action against the defendant before the Regional Court of Hamburg for injunctive relief and damages.

The defendant contested the (international) jurisdiction of the German courts, the application of German copyright law and took the view that the infringement lacked a sufficient domestic connection as its focus was abroad.

The Hamburg Regional Court and the Hanseatic Higher Regional Court dismissed the action on the grounds that the allegedly infringing act of use had no domestic connection with Germany.

2. The legal issues of the case

While international jurisdiction and applicable law did not pose any problems in this case (but see below for the issues often arising here), the crux of the case was whether a sufficient domestic connection is required for an infringement of German copyright law and, if so, whether this was present in this case.

In trademark law, it has long been established that in cross-border cases it is necessary to examine whether the relevant act of infringement has taken place in Germany. This consideration follows from the principle of territoriality – which applies to all IP rights – according to which the scope of application of a national IP right is geographically limited to the respective national territory of the state of protection. As a result, the IP right can in principle only be infringed by an infringing use in that country.

According to the case law of the Federal Court of Justice, the mere availability of a website with (allegedly) infringing content is not sufficient for the application of German trademark law, as this would lead to an inappropriate de facto extension of national trademark law (BGH, Urt. v. October 13, 2004, I ZR 163/02 - HOTEL MARITIME; BGH, Urt. v. November 7, 2019, I ZR 222/17 - CLUB HOTEL ROBINSON). Rather, a “commercially relevant domestic connection” (“commercial effect”) in Germany is required. Whether there is a relevant act of infringement in Germany requires special considerations, which have to be made by an overall assessment of the interests and circumstances involved.

Whether these principles also apply to copyright law has so far been the prevailing view of the lower courts and the academic literature, but has not yet been decided by the highest court. The Federal Court of Justice has now had the opportunity to clarify this issue.

3. The decision of the Federal Court of Justice

As was to be expected, the Federal Court of Justice dismissed the appeal and confirmed the decisions of the lower courts in Hamburg that the requirements for domestic use developed in trademark law also apply to copyright.

In this respect, the Federal Court of Justice first of all correctly states that the principle of territoriality also applies in copyright law - despite the harmonization under EU law. As in trademark law, there is also a risk in copyright law of an unlimited extension of national property rights and thus an unreasonable restriction of the opportunities for foreign participants in business transactions. Particularly in the case of website content which is inevitably accessible worldwide, it must therefore be examined on a case-by-case basis whether the conduct alleged against the defendant can be regarded as a domestic act of infringement in the context of an overall assessment if it has its focus abroad.

As the Federal Court of Justice correctly points out, this does not contradict the case-law according to which, in the case of copyright infringements on the internet, the determination of international jurisdiction pursuant to Sec. 32 of the German Code of Civil Procedure or Art. 7 no. 2 of the Brussels 1^bis Regulation/Art. 5 no. 3 of the Lugano Convention does not require a specific connection towards the country of jurisdiction, but rather the mere accessibility of the content is sufficient (BGH, judgment of. April 21, 2016, I ZR 43/14 - An Evening with Marlene Dietrich; ECJ, judgment of. October 3, 2013, C-170/12, para. 42 - Pinckney).

However, the Federal Court of Justice still had to examine whether there was a sufficient domestic connection in the present case. For this assessment, a colourful bouquet of different indications is always to be used, which are not to be applied uniformly, but rather on a case-by-case basis in the sense of an overall assessment. Like the previous instances, the Federal Court of Justice also denied a domestic infringement and based its decision in particular on the following considerations:

• The top-level domains of the websites in question already indicated that they were targeted at consumers in Kazakhstan and Ukraine. The defendant also operated a German website with the top-level domain “.de”, which was easier and more convenient to use for German consumers.
• The contact details (telephone numbers and e-mail addresses) also did not point to Germany.
• There was no evidence that the goods were sent to German consumers. The fact that the defendant shipped the goods from Germany abroad said nothing about the target group of the websites. The online offers were directed, if at all, only to a very small part of the German population, namely those consumers who might be interested in ordering items of clothing from the websites in question in order to send them to friends or relatives in Kazakhstan or Ukraine or to have them sent to Germany.
• The prices were indicated on the website in Ukrainian or Kazakh currency.
• The fact that the defendant did not exclude German users from accessing the websites by geo-blocking did not justify the assumption that the website was (also) directed at Germany.
• The German article descriptions and the error message were merely seen as a consequence of the (earlier) use of identical images on all of the defendant’s websites.
• The fact that, according to the general terms and conditions – which were also written in Ukrainian and Kazakh – German law should apply was not relevant to the direction of the websites, but only served the seller’s own interests.

4. Summary and looking beyond the horizon

The decision is of great practical importance. Not only has it now been clarified that an infringement of German copyright law requires a “commercial effect” in Germany. It also provides legal practitioners, particularly in conjunction with the decisions of the lower courts in Hamburg, with some valuable guidance for the practical examination of the relevant criteria for the overall assessment across all IP rights. The decision is also an impressive reminder that, particularly in the case of infringements of IP rights on the internet, a careful examination is required and that supposed trivialities can quickly lead to the loss of a case.

Beyond the specific case, it should be noted that, particularly in the case of IP right infringements on the internet, a distinction must be made between different levels, each of which raises complex issues and can quickly become a pitfall for legal action:

4.1 Jurisdiction:

In principle, the mere accessibility of a website with infringing content is sufficient to establish the jurisdiction of the courts of that Member State (see above). However, at least within the scope of the Brussels I^bis Regulation and the Lugano Convention – i.e. when the defendant is domiciled in the EEA – they can only rule on the damage that occurred in “their” state on the basis of the so-called “mosaic principle” (ECJ, judgment of 7 March 1995, C-68/93, para. 33 – Shevill; for internet cases: ECJ, judgment of. 25 October 2011, C-509/09 and C-161/10, para. 42 et seq. – eDate Advertising; for copyright cases: ECJ, judgment of 3 October 2013, C-170/12, para. 45 – Pinckney; ECJ, judgment of 22 January 2015, C-441/13, para. 34 – Hejduk). On the other hand, only the courts of the defendant’s place of residence or domicile have jurisdiction for total damages and injunctive relief, which is why it is generally advisable to bring an action there.

4.2 Applicable law:

Pursuant to Art. 8(1) of the Rome II Regulation, the law of the country for which copyright protection is claimed is to be applied (so-called “country of protection principle”, lex loci protectionis). According to this law, the existence of the right, the ownership of the infringed party, the content and scope of the protection as well as the facts and legal consequences of an infringement are to be assessed. Thus, German law applies when copyright protection is claimed in Germany.

4.3 Domestic connection:

Ultimately, as the Federal Court of Justice has now clarified also for copyright law, the actual infringement of German copyright law requires a commercially relevant domestic connection (commercial effect) of the infringing act – unlike in the case of jurisdiction, the mere availability of a website with infringing content is therefore not sufficient. Whether such a domestic connection exists depends on the one hand on the respective copyright law (e.g. the right of making works available to public, Sec. 19a of the German Copyright Act) and on the other hand is always subject to a case-by-case assessment based on a colourful bouquet of different factors and indications.

With our extensive and long-standing experience in complex cross-border copyright, trademark and unfair competition litigation, we can help you to avoid these pitfalls on the claimant’s side as well as to uncover them on the defendant’s side.