On 10 June 1908 a design was entered in the designs register of the Patent Office under no. 342454 on behalf of defendant 2a for socks, the upper portions of which were in whole or in part made of wool, but the lower portions of non-woollen material. The defendant transferred his right to that design to defendant 1, the partnership H. B., which he operated in common with defendant 2b. On 21 March 1911, defendant 1 sent to the firm L. & S. in D, which had obtained from the plaintiff the right to retail his socks, a letter in which, referring to the registered design, it warned them against retailing the socks received from the plaintiff, ordered them to withdraw the offers made by them, and threatened them with a claim for compensation. According to the plaintiff’s allegation defendant 1 had sent letters to the same effect to two other firms whom the plaintiff had appointed retailers of his socks. The plaintiff also asserted that defendant 1 had completely succeeded in the aim pursued in his letter, since his customers had, in consequence of defendant 1’s letters, cancelled their substantial orders.

The plaintiff also alleges that in consequence he has suffered substantial damage. He demands RM 16,000 in part payment for the damage averring that the proprietors of defendant 1, namely the defendants 2, had known when sending the letters that their design was not entitled to protection, since, inter alia, it lacked novelty.

The defendants, who allege that they were convinced of the validity of the design when they sent the letters and are even now convinced of it, demand the dismissal of the action and offer to show that the plaintiff has no claim whatever against the defendants.

The Landgericht declared the claim justified in principle, but the Court of Appeal invited both defendants 2 to swear upon oath that they were unaware, when they warned the firm L. & S. and two other firms against infringement of the design no. 342454, that already before giving notice of the design socks were being manufactured and put into circulation of which the upper portion was of whole or part made of wool and the lower portion of non-woollen material. If the two defendants swear the oath, the action should be dismissed; if they do not, the claim should be declared justified in principle.

On the plaintiff’s application for review, the appeal of the defendants against the judgment at first instance was rejected for these

Reasons

1. The Court of Appeal, in agreement with the judge at first instance, starts correctly from the position that the defendants’ conduct constituted an attack on an established business and that this must be regarded as a legal interest protected by § 823 1 BGB. That view conforms to the standing case-law of the Reichsgericht (cf. RGZ 58, 24; 64, 52).

The Oberlandesgericht then sets out the content of the defendants’ design and finds that in preliminary proceedings brought by the defendants 1 and 2a against the present plaintiff before the Landgericht of Chemnitz, defendant 2a was ordered to approve the cancellation of the registered design no. 342454.

The Court of Appeal attaches no importance to that condemnation for the purposes of the present dispute. In particular it holds that the judgment in that preliminary proceeding, both at first instance and on appeal, ordered the cancellation of defendant 2a’s design only because the inventive idea constituted by the socks had not been disclosed in the notice. It followed that the defendants could not have known this legal reason for the invalidity of the design; and, accordingly even apart from the presence of especial circumstances the existence of which was not alleged, they were not bound to make enquiries in that direction.

These considerations should obviously serve to deny negligence in what the Court of Appeal regarded as the objectively unlawful conduct of the defendants. Even so far the explanations of the Court of Appeal do not seem free from objection. It looks as though the Oberlandesgericht attaches to the registration of a design an importance that it does not possess.

In contrast to principles of patent law, whereby the grant of a patent (and the consequent entry in the patent register according to § 19 of the Patents Act) confers on the patent-holder without more ado the exclusive right to manufacture industrially the object of the invention, to put it into circulation, and sell it (§ 4 Patents Act), the person on whose behalf a design is entered in the register of designs acquires an exclusive right to copy the design industrially and put it in circulation only if it serves the purpose of work or use by a new structure, arrangement, or preparation. In other words, the entry in the register of designs confers on the person entering it no right of exclusive use that could empower him to invade another’s established business unless the presuppositions exist that are set out in § 1 GebrMustG.

There can therefore be a negligent attack on another’s business if anyone on whose behalf a design is registered forbids a tradesman only on the basis of that fact to retail such objects to which the design refers. Whoever makes himself guilty of an attack on another’s business on the basis of a design registered for him can therefore in certain circumstances even act negligently within the meaning of § 823 I BGB if he does not convince himself of the efficacy of his design before he seeks registration. For, in contrast to the provisions of §§ 20 ff. of the Patents Act governing the grant of a patent, this is not ordered on the basis of an official examination into whether the material presuppositions exist on which § 1 GebrMustG affords to a design a claim to legal protection. The Patent Office must under § 3 GebrMustG order the entry of the design in the register of designs as soon as only the formal presuppositions of § 2 of the Act are fulfilled (cf. also the Reichsgericht decision of 27 February 1900, Via. 347/99).

2. It now appears from the foregoing reasons that the Court of Appeal’s opinion that the defendant cannot be charged with negligence on the ground that he had not known of the legal inefficacy of this design is not free from objection. Moreover, its further considerations give occasion for appreciable legal doubt.

In particular, the Court of Appeal went on to say that in both the sets of preliminary proceedings concerning the design no. 342454 brought by the defendants against B1 (Landgericht Köln) and the present plaintiff (Landgericht Chemnitz) it was alleged that the object of the design was not new at the time of the notice. But in both cases that question did not give rise to a judicial decision. The proceedings against B1 ended with a settlement and in that against the present plaintiff, the newness of the design was assumed. In the proceedings against B1, the witnesses K and Sch. had indeed said at their examination of April 1911 that as long ago as twenty-five years their range had included socks of which the lower portion was made of cotton and the upper of woollen yarn. From that the Court of Appeal drew the further conclusion that the evidence of the two witnesses proved the lack of newness of the object of the design here in question. Since, however, their examination took place only after defendant 1’s warning letter was sent out, since the latter was under no obligation to enquire what those witnesses would say, and since the defendants could not be held to blame for not waiting for the examination of the witnesses before sending out their warning letter, they could not be charged with negligent behaviour. Nor were they bound, once they knew what the witnesses had said, to withdraw their warning by a corresponding recall, since it appears to be excluded that the statements of the witnesses K and Sch. would have shaken their conviction of the newness of their design. Thus, the defendants were not shown to be negligent in failing to withdraw their warning once they knew of the witnesses’ statements.

In these statements it appears even more clearly than in the considerations of the Court of Appeal discussed under (1) that it misunderstood the meaning of the registration of a design. Since that registration conferred on the person registering only a purely formal, but not a material right, he exercised it, as the Senate has already declared in its judgment of 3 July 1916, at his peril and responsibility, in so far as concerns the newness and previous use of the design. Hence ‘anyone who in reliance on a design encroaches on another’s business by a trenchant prohibition against producing and selling the wares and thereby causes damage must constantly examine with the utmost care whether and for how long he is entitled to do it.’

If one starts from this fundamental standpoint the conduct of the defendant 1 is already shown to have been negligent by the fact that, although in the preliminary proceedings against B1 the witnesses K and Sch. had alleged that the object of the design had been openly used in Germany, they had nevertheless sent out the warning letters here in question. For the defendants were bound to take into account that witnesses K and Sch. would confirm the correctness of the then defendant B1’s statements.

However, the defendants were guilty of a quite exceptionally gross negligence when, after the examination in April 1911 of the witnesses K and Sch. . . . the absence of newness in the object of the design was established, all the same they did not withdraw their warning.

The Court of Appeal, which considers the defendants not obliged to make such a recall, thereby contradicts its own explanations. In particular it lays especial and decisive emphasis on the fact that the warning had already been sent out before the examination of the witnesses K and Sch. From that it follows that even from the Court of Appeal’s standpoint the warning letters should not have been sent after the examination of the witnesses. But if that is correct, a recall of the warning letters was under all circumstances essential once the examination of the witnesses had taken place.

The appellate decision, which thereby wrongly denied the negligence of the defendants, is therefore set aside for infringement of § 823 BGB.

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