The plaintiff, owner of a chemical factory and oil refinery, who also produced and sold machinery and articles for the maintenance of machinery such as lubricants, was the proprietor of six trademarks in pictorial form, registered between 1915 and 1924 with the competent German authorities. All of these show a laughing face in opposition to a crying face. The faces are located in the surrounds of axle bearings and at shaft ends.

The defendant, who also dealt in lubricants for machinery, make use of a prospectus in order to advertise its own products. This showed a complete human figure, the laughing head of which forms the end of a bearing and supports it; above it appeared the words "Keystone-Hanks", below it the words "Permanent Lubricant". The figure kicks away in disgust an oil can which displays a crying face.

The plaintiff claimed that the defendant has consciously imitated the motif of the laughing and the crying face in advertising its own competing goods so as to cause confusion, because it had become known in the trade as indicating the plaintiff's products. He alleged a violation of paragraph 1 of the Law against Unfair Competition (Un1WG) in conjunction with paragraph 826 of the Civil Code and asked that the defendant be condemned

(a) to desist from using the motif of a crying and a laughing face in opposition to each other in any advertisements or communications; (b) to lay accounts of all sales of lubricants before and after the use of the motif employed in the plaintiff's trademark and (c) damages caused by the use of the plaintiff's motif in his trademark.

The Landgericht Dortmund and the Oberlandesgericht Hamm dismissed the claim. On the plaintiff's further appeal, the decision of the Oberlandesgericht reversed for the following

Reasons

In order to determine the three claims it is essential to ascertain whether the general impression of the respective pictorial designs is likely to confuse the average purchaser of the goods in question which are undoubtedly the same or similar so as to attract the operation of paragraph 20 of the Trade Mark Act. In order to solve this question which, contrary to the courts below must be answered in the affirmative, it is decisive that the trademarks registered in the plaintiff's name are marks bearing particular strong characteristics, seeing that they embody a highly individual motif. The satisfaction with the quality of the lubricant produced and distributed by the plaintiff is expressed by the laughing face figuring at the point of the machinery where the lubricant operation, while dissatisfaction with the lubricants of lower quality, produced and distributed by others, is contrasted by the crying face. The better or worse quality of machinery is thereby indicated simply and effectively ..."

This special motif bearing particularly strong characteristics ... has been treated in commerce as an essential characteristic of the trademark, as the Court of Appeal has found on grounds which cannot be faulted. It has therefore imprinted itself generally upon the memory of the average purchaser.

A trademark consisting of an image, is characterised both by its external form and the execution of the picture as well as by the substantive content, the meaning and significance of the pictorial display. If, therefore, the motif, the meaning of the picture, fulfils the function of pointing to a particular industrial or commercial undertaking, it follows that any mark which embodies the same motif pictorially may result in confusion, even if the pictorial display differs in form, provided that the motif appears in its pure form [references]. This is the case here ... The pictorial display in the prospectus of the defendant is based on the same motif. The centre piece of the display is made up of the laughing face at the place of the machinery where the lubricant of the defendant is applied. Moreover, the defendant has taken over the contrast between satisfaction with the good and dissatisfaction with the bad merchandise. He uses the same idea as that expressed by the plaintiff in his trademark in order to draw attention to the difference between his own lubricants, alleged to be better and others which are less effective ... The Court of Appeal failed to appreciate that in protecting the motif it does not matter ... whether the imitation includes every detail of the display, and that it must suffice, instead if the principal features of the motif are taken over and reproduced by the imitation. Therefore, even if the respective pictorial displays may differ in form, nevertheless the defendant's display retains the characteristic motif, no new motif has been created by the addition of other conceptual elements of equal value.

The danger of confusion exists therefore notwithstanding the fact that the pictorial displays differ in their execution, that the words "Keystone-Hanks" have been added, which refer to the firm of the defendant ... The plaintiff's claim for an injunction is thus justified within the limits set by paragraph 12 of the Trade Marks Act ...

To this extent this court can determine that issue on the merits by quashing the judgment under appeal.

In addition the plaintiff asks that the defendant be condemned to lay accounts as to which sales of lubricants were concluded before and after the use of the above mentioned motif and to pay compensation for the loss still to be ascertained, caused to the plaintiff through the use of the motif. The plaintiff bases his claim on the intentional imitation of his trademark by referring to the correspondence between the parties before the action was brought, whereby the plaintiff asked the defendant to desist from imitating the plaintiff's trademark by supplying the defendant with the numbers of their registration. The right to compensation is derived from paragraph 12, 14 and 20 of the Trade Mark Act in conjunction with paragraph 826 of the Civil Code and paragraph 1 of the Law against Unfair Competition. This claim ... must clearly be treated as one for a declaration, in case the plaintiff should not succeed in obtaining an order to lay accounts ... Since the Court of Appeal did not examine at all the question as to whether the defendant is liable to having intentionally imitated the plaintiff's mark, i.e. for the intentional violation of a trademark, the judgment had to be quashed also to this extent and the case remanded to the Court of appeal.

The same applies to the claim for an account ... the appellant alleges a violation of paragraph 687 of the Civil Code. The Court of Appeal held that this provision does not apply [references] on the ground that a person who intentionally and without a legal right employs a trademark belonging to another in order to identify his own goods admittedly interferes with a legal right of another unlawfully, but that he acts on his own account and not on behalf of another. However, according to the constant practice of this court [references], where a patent, design or copyright has been violated, a claim for an account, in addition to a claim for the payment over of all gains made by the imitator has been allowed according to the principles governing the conduct of business for another (negotiorum gestio). The reason is that any object which has been created in contravention of a patent, design or intellectual property right represents the protected idea of an innovation or of a protected creative form and that therefore the commercial trade in such objects without a legal right is to be treated at the same time as the exploitation of one's own account of a business concerning another in the meaning of paragraph 682 (2) of the Civil Code. It is true that in the decisions of this Division [references] the analogous application of these provisions to the law of designs and get-up was rejected on the ground that the use of a design or of a get-up without a legal right in the course of selling goods of one's own was not a transaction which involved a right of the owner of the mark, and because the right of the injured party for compensation according to paragraphs 14 and 15 of the Trademarks Act, while constituting compensation for the complete, the actual damage and the loss of gains, did not create a direct obligation to hand over the illegal profits. Upon reconsideration of this question this Division cannot maintain the opinion expressed in the decisions [references] but now holds that a claimant under paragraphs 14 and 15 of the Trademarks Act is entitled not only to damages but also to an account according to paragraph 260 of the Civil Code - thus following in the result the opinion of the First Division formulated for violations of Patents, Designs and Artistic Property rights ... Of course the application of the rules of the Civil Code concerning unjustifiable enrichment are excluded as a matter of principle, seeing that the Trademarks Act (paragraphs 14 and 15), as distinct from the Copyrights Acts, regulates the duty to pay compensation to the exclusion of all other claims and limits it to intentional or reckless violations of marks [references]. Equally it is correct that the duty to pay compensation under paragraphs 14 and 15 of the Trademarks Act - contrary to that arising from violations of patents under paragraph 35 of the Patents Act [references] and of the duty to pay compensation for violations of rights in designs under paragraphs 9 of the Act of 1 June 1891 [references] - is not directed towards the return of the profits obtained by the defendant as a result of the use of the protected invention or of the protected design, if the injured party himself was not able to make profits to the same extent [references]. Thus the application of paragraph 687 (2) of the Civil Code, according to which anybody who knowing that he is not entitled to treat as his own another person's business is liable to hand over any profits he may have made (paragraphs 687 (2), 681 (2), 667 of the Civil Code) is also excluded where a design or get-up has been violated. However, as early as 24 June 1904 [reference] this Division has held that in cases such as the present it is difficult for the plaintiff to specify and for the court to determine the amount of damages, unless the defendant is obliged to lay an account. Paragraph 287 of the Code of Civil Procedure ... does not offer a sufficient means for obtaining full compensation. Paragraphs 687 (2) of the Civil Code ... is not, however, the only device for applying paragraphs 260 of the Civil Code. In those cases in which a right to information by the debtor greatly facilitates the prosecution of rights and often is the only means of making the latter possible, the principle of good faith - leaving aside any conduct of business on behalf of another without authority - requires that a claimant who is excusably unaware of the existence and extent of his rights be given that information from the debtor who has easy access to it.

Such is the case here [references]. The obligation to provide information is sometimes more extensive and sometimes more restricted. The most extensive duty is that of having to lay accounts. According to paragraphs 259 (1) of the Civil code it is discharged by providing accounts, if an administration is involved which has an income and expenses. This is not the case here. However, according to paragraph 260 of the Civil Code the duty to give information may be limited to the presentation of an inventory of a plurality of assets (objects, rights of claims) which the plaintiff, who claims rights on the comprehensive ground that the defendant has intentionally or recklessly violated a mark, cannot specify in detail ...

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