Loss of Standing to Sue in Mass Warnings

A court's determination of abusive legal action due to serial warnings (serial cautioners) pursuant to § 13 Abs. 5 UWG results in the loss of standing to sue as a competitor. This does not apply indefinitely if the cautioner demonstrates substantial changes in the material circumstances of the legal action, which now make it appear bona fide.

The applicant – a property developer – has demonstrably and regularly warned competitors in large numbers regarding unlawful competitive advertising. This already led in 2001 to a decision by the Federal Court of Justice (BGH) (GRUR 2001, 260 ff. – Vielfachabmahner) according to which this legal action by the applicant was deemed abusive within the meaning of § 13 Abs. 5 UWG, since the attorney and authorized representative of the applicant simultaneously represented the applicant as owner and the warning activity served solely the purpose of obtaining attorney's fees. The Federal Court of Justice (BGH) was correct in its decision in holding that, from the perspective of an economically rational business operator, the legal action served no interest other than the fee interest of the attorney.

The court's decision

The Higher Regional Court (KG) holds this circumstance in its order of 21.05.2004 (Az. 5 U 285/03) to be refutable, albeit upon demonstration of substantial changes in the material circumstances by the applicant. However, it is of the opinion in the present case that substantial considerations continue to speak for the existence of abusive legal action.

First, it is irrelevant that the attorney has in the meantime ceased to attach a cost note to the warnings, as this does not change the primary profit-making intent. The applicant, namely, could not ordinarily expect an out-of-court settlement and has thus, in the view of the court, speculated on the fees incurred through court proceedings.

Furthermore, the applicant's only marginal business activity bears no reasonable relation to the mass pursuit of competition violations. Since there is no significant number of business transactions and the offered products are not actively promoted on the market, the applicant could not have been substantially affected by the competitors' infringements.

Finally, the court also considers it indicative of the applicant's profit orientation that the applicant itself stated an inflated amount in dispute upon initiation of the proceedings, from which its fees are calculated.

See also the judgment of the Federal Court of Justice (BGH) of 05.10.2000 (File number I ZR 237/98) – Vielfachabmahner, GRUR 2001, 260 ff. Here the abusive nature of the applicant's legal action is determined for the first time.