Cease-and-desist counterclaim for set-off of cease-and-desist costs unlawful?

The Higher Regional Court (OLG) Hamm was called upon to review a judgment of the Regional Court (LG) Bochum concerning competitive infringements through the use of invalid general terms and conditions and the unlawfulness of a cease-and-desist counterclaim, which threatened a set-off of cease-and-desist costs.

In the present case, the parties were competitors in the field of online retail of coffee, chocolate and baked goods. One shop operator sent a cease-and-desist letter to the competitor for violation of the Price Indication Ordinance. The competitor refused to sign a declaration of discontinuance for the competitive infringement and threatened the shop operator with a cease-and-desist counterclaim on account of the use of competitive general terms and conditions, should the latter not withdraw the cease-and-desist letter that had been issued.

The online shop operator did not withdraw his cease-and-desist letter, so the competitor in turn sent a cease-and-desist letter and demanded discontinuance. After the online retailer did not provide a declaration of discontinuance, the latter obtained a preliminary injunction before the Regional Court (LG) Bochum, which was examined in the subsequent proceedings.

Decision of the court
The Higher Regional Court rescinded judgment of 20.01.2011 – Az. I-4 U 175/10 the decision of the LG Bochum in large part, as the court considered the conduct of the competitor to be unlawful.

An abuse of law would be present whenever an admonishing party, in requesting its competitor to cease a competitive infringement, acted exclusively for extraneous motives and not for the purpose of establishing fair competition itself. In the present case, the competitor merely wished to create a set-offable claim in order to set off the (justified) cease-and-desist costs of the opposing party against its own claims. It was therefore not the competitor's intention to obtain the cessation of the competitive infringement itself. However, the fee-generating interest of the competitor present here was a prime example of an abusive cease-and-desist letter.

Conclusion

The threat of a cease-and-desist counterclaim may be unlawful if it serves only to generate fees and to avert the cease-and-desist letter received, in particular if no binding declaration of discontinuance is provided. Had the competitor sent a cease-and-desist letter to the shop operator immediately without previously threatening him, the court would not have found unlawfulness here due to the generally existing competitive discontinuance claims.