Ortlieb Sportartikel has suffered a setback in its legal battle with online platforms about their search engine merchandise practices, as the German Federal Court of Justice sent a case about the interchangeability of brands back to the lower courts. According to the company, they had previously ruled clearly in favor of Ortlieb, which specializes in panniers and bags for cycling and outdoor activities.
The issue is that, when online consumers enter the term Ortlieb in their search engine, they may be directed to products made by competing brands. Ortlieb claims that this practice infringes its trademark rights and violates competition law, irrespective of the application of an algorithm-based search.
The German brand adds that, in a separate case, the Higher Regional Court of Munich ruled in its favor without the possibility of appealing. In this case, Ortlieb claims in a statement, Amazon had placed online ads with the trademark Ortlieb in combination with the product category “panniers,” but when online consumers clicked on the link, they were forwarded to a variety of products by other brands.
As Ortlieb reads it, the ruling by the Federal Court actually strengthened the brands' rights, to the extent that competitive products have to be highlighted in a more obvious fashion when they are shown as part of the search results for a specific brand. Ortlieb remains confident that the court of appeals will again rule in its favor and it states that it will continue to advance the cause of trademark protection in the context of its membership of the German Brands Association.
The Ortlieb case is one of the legal disputes that could help to clarify rules around online retailing of sports and outdoor products in Europe. The European Commission is apparently eager to stimulate competition at European level, which has led to the proposal to put an end to geo-blocking for specific categories of products and services. This was approved by the European Parliament earlier this year and is expected to come into effect before the end of the year – potentially making search engines all the more relevant on a European scale.
In December the European Court of Justice (ECJ) in Luxembourg published its own decision on unauthorized sales of branded products on third-party online retailing platforms like Amazon or Ebay. In this case relating to Coty Germany, a supplier of fragrances and cosmetics, against a German retailer, Parfümerie Akzente, the ECJ found that a selective distribution system for luxury goods intended primarily to preserve the image of these goods complies with the European Union's competition rules – provided that resellers are chosen on the basis of objective criteria of a qualitative nature that apply in the same way for all potential resellers, and that these criteria do not go beyond what is necessary.
It remains unclear to what extent this ruling could impact cases involving sporting goods. The Federal Court of Justice already ruled in December that Asics could not issue blanket bans preventing its dealers from using price comparison engines. The decision indicates that per se prohibitions that are not tied to quality requirements are illegal. The German federal court made a reference to the ECJ's ruling on Coty but it apparently holds the view that, in contrast with the cosmetics involved in the Coty case, sports and running shoes are not luxury goods.
Jochen Schäfer, a German lawyer who has established selective distribution systems for many customers in the sporting goods industry and beyond, said that this ruling in the Asics case was somewhat in line with a judgment issued by an appeal court in Frankfurt in December 2015 in a case involving Deuter Sport. As Schäfer describes it, this ruling held that a general contractual prohibition to prevent retailers from accessing price search engines per se is violating competition laws.
Then again, Schäfer argues that the Federal Court's verdict in the Asics case has no relevance for a ban of third-party open platform presence of retailers in selective distribution schemes – because the latter case relates to a brand's freedom to operate and to choose its customers upon its own decision and business policy, which is not the case in relation to access to price comparison engines. The Deuter case failed to provide a clear-cut precedent because the retailer involved decided to withdraw the case after it reached the German Federal Court.