Must advertising agencies check trademark rights?

The Regional Court of Appeal (Kammergericht) Berlin had to decide whether advertising agencies must provide their services free from third-party trademark rights or must at least inform the client that they do not conduct an independent trademark search.

An advertising agency was commissioned by a client to develop a logo for his company for a fee of EUR 770.00. A trademark examination of the design through a trademark search was not expressly agreed. After the client used the logo designed by the advertising agency, the client was sent a cease-and-desist letter by a trademark owner because the logo was confusingly similar to the trademark owner's mark. The client now demands damages from the advertising agency under the law of works contracts.

Court decision

By means ofJudgment of 04.02.2011 – Az. 19 U 109/10 the Regional Court of Appeal (Kammergericht) Berlin decided that the question of whether an advertising agency commissioned with the creation of an advertising logo must provide its creation free from third-party trademark rights or must at least inform that it does not conduct an independent trademark search depends on the circumstances of the individual case.

The advertising agency does not owe the claimant the creation of a logo free from third-party trademark rights, but merely the creation of a logo meeting the client's graphic requirements. Whether a trademark search is owed must be determined from the contractual agreement. Accordingly, an advertising agency in the case of a large-scale advertising campaign and agreement of more than merely negligible remuneration may also be obliged, without separate agreement, to perform comprehensive legal review. In such a case, the principal can and will, on the one hand on account of the increased liability risk associated with a larger advertising volume, and on the other hand on account of the agreement of remuneration that is not manifestly inadequate, assume that the advertising agency will act comprehensively for him, that is, not merely creatively but also by examining the legal permissibility of the advertising measure. If these prerequisites are not met, the client can conversely only expect to be notified of trademark violations known to the advertising agency as well as gross and easily recognizable violations of law.

In the present case, this was not to be assumed given the very low remuneration, so that the advertising agency was not ordered to pay damages.

Conclusion

As often the case, the question of the liability of advertising agencies for trademark defects depends on the particular circumstances of each case. In principle, however, it can be stated that advertising agencies in the context of larger contracts may also be obliged, without separate agreement, to perform comprehensive legal review. It is therefore advisable to offer the client a corresponding examination as an additional service provided by a specialised lawyer. If the client refuses this service, the agency can rely on this in the event of a dispute.