Section 13 (2) IPRG - Preliminary austrian national report

Section 13 (2) IPRG
For the protection of names the law of the country is applicable in which the infringement has taken place. Some authors include also the commercial name of a merchant. The Supreme Court treats the commercial name as an industrial property right and applied in the past Section 34 (1) IPRG (principle of the applicable law of the country for whose territory protection is sought). For the protection of names there is no choice of law foreseen by the IPRG. (Herzig, Rechtliche Probleme grenzüberschreitender Werbung, RdW 1988, 252).
Section 34 (1) IPRG
Formation, scope and termination of industrial property right shall be governed by the law of the country whose protection is sought (parliamentary materials to Section 34) or in other words “for whose territory protection is sought” (Schwimann, Internationales Privatrecht, 75), which is not identical to the country of the forum.
According to the law of the protection country determines in particular the legitimation and exercise as well as the protection against infringements and abuse of industrial property rights
(OGH 5/5/1987, ÖBl. 1987, 152 - Stefanel). Section 9 Unfair Competition Act and the other legal Austrian provisions providing for the protection of these rights become only applicable if Austria is the protection country (OGH 5/5/1987, ÖBl. 1987, 152 , 155- Stefanel). In this field a choice of law is not possible. A choice of law is only possible in those cases where there is a contractual relation regulating industrial property rights according to the general rules for contractual obligations ( Art. 3 Rome Convention, Section 35 IPRG) (Herzig, op.cit. 252).
In those cases where infringements of industrial property rights constitute at the same time acts of unfair competition the application of Section 34 (1) IPRG and Section 48 (2) IPRG compete. Here the formation of the industrial property right is to be judged according to Section 34 IPRG. Whether the infringement constitutes at the same time an act of unfair competition will be judged according to Section 48 (2) IPRG. The difference is not so important in practice since the infringement of the industrial property right takes place most times at the same location than the market which is effect by the competition (Schwind, Internationales Privatrecht, 191).
Section 48 (2) IPRG
See below
a) Which are the general rules of your country’s international private law (law of conflict of laws) applicable to unfair competition (e.g. int. private law of torts) and what do these rules state?
The general rules of Austria’s international private law relating to extra-contractual claims are those regulating the law of torts. The applying principle would normally be the “lex loci delicti”: Section 48 (1) of the Private International Law Act 1976 IPRG. In order to differentiate between the place of action and the place where one should cease and desist from a particular action, or the place where a specific result should be achieved, a clarification was needed as to the place where the damaging action is triggered. Since this place may in many cases be coincidental, another principle is emphasised: wherever there is a stronger relation to another law of than that of the law of the state of behaviour than this law is applicable. This clause is exceptional in that it requires no other special circumstances to apply. That takes into account that the locus delicti usually has minimal importance for the claim for damages. When there is any stronger relation between the one who inflicted the damage and the one who suffered it (e.g. the same nationality or the same residence or a combination thereof) than these rather weak elements are considered an expression of a stronger relation and will take precedence over the connection to the “locus delicti” (Koppensteiner³, § 21 N° 13, 477)
b) Are there any specific limitations or modifications to these rules with respect to unfair competition, e.g. the sole application of the substantial law of the marketplace?
There is a specific modification of these rules with respect to unfair competition: Section 48 (2) of the Private International Law Act 1976 IPRG states that claims for damages or any other claims based on unfair competition are to be judged according to the (substantial) law of the country whose market is affected by the competition (cf. e.g. Supreme Court OGH ÖBl. 1987, 44 - Media-Markt Rosenheim). In case of a breach of competition law (e.g. through the unlawful use of an internet domain name) with effect on the Austrian market Austrian law would apply (Mayer-Schönberger Das Recht am Info-Highway 1997, 175). The application of Section 48 (2) IPRG covers not only claims for damages but also injunctive claims, claims for revocation, for publication or orders for interim or injunctive relief, in other words any claims that can be the result from unfair competition (Schwimann in Rummel ABGB² Vol. II § 48 IPRG N° 10).
The other reason for this modification of the general rule is an economic one. It’s aim is to prevent that Austrians suffer a disadvantage when trading abroad through the application of the more severe rules of Austrian competition law - when these rules are not applicable to their foreign competitors. This means that any further “renvoi” is excluded nor is any choice of law permitted (Schwind Internationales Privatrecht, 1990, S. 235; Koppensteiner³, § 21, N° 15).
The provision of Section 48 (2) IPRG stating that the law of the state whose market is affected by the competition connects to the effect of the competitive behaviour on the market and not to the action (such as Section 28 (1) IPRG). Market is the advertising market as well as the distribution market where the product is marketed since the purpose of the conflict of laws rule includes both markets and since the breach of competition can be relevant according to the laws of both markets (Schwimann in Rummel ABGB² Vol.II, § 48 N°11). Herzig states that if those markets are not the same than the advertising market is the decisive one since it is the one where the interests of the competitors collide (Herzig WBl.1988, 253). Koppensteiner acknowledges the validity of certain elements of this argumentation (Koppensteiner³, § 21, N° 17 FN 31).
It is irrelevant whether the involved competitors are established in the same country (ÖBl. 1986, 73 = IPRE 2/119; Schwimann Grundriß des IPR 176; Koppensteiner³, § 21, N° 16). The rules against unfair competition protect not only the competitors but the also the partners on the market (in particular the consumers) as well as competition on the market as such. If the damages inflicted upon a competitor relate however not to the market place but to the business of the competitor (e.g. inducement to breach of contract, enticing away of eomployees, bribery, industrial espionage) then the behaviour cannot be qualified as unfair competition but is to be judged according to the lex loci delicti of Section 48 (1) IPRG. The cases with no effect on the market place are however quite rare (Schwimann 176; Koppensteiner³, § 21, N° 19).
c) If so, are there any proposals how to determine or restrict the marketplace with respect to cross border electronic commerce over the internet?
Certain authors have examined the questions whether the marketing actions (advertising and offers to sell goods) of a commercial undertaking restrict in any way the market place in the context of the determination of the applicable law for consumer contracts (old Section 41 IPRG replaced since 1 /12/1998 by Section 13 a (2) Consumer Protection Act). For the application of Section 13 a (2) Consumer Protection Act it is necessary that the undertaking had initiated the business contact (“Anbahnung”) since it states that the law of the country of the consumer becomes applicable only if the undertaking had carried out marketing activities with the aim of concluding a contract in that country. Such activities include offers, sale excursions, door to door sales, personally addressed advertisements (EvBL 1992/48) whereas other advertising for products by way of announcements, wall advertising, broadcasting only insofar as they are specifically directed to the country of the consumer (Kilches Fernabsatzrichtlinie - Europäisches Electronic Commerce Grundgesetz? MR 5/97, 277).
Czernich argues that it depends whether the marketing actions reach the country of a consumer by coincidence or with the knowledge and intention of the undertaking. Whoever advertises (or makes an offer) over the internet knows that it is at least potentially directed to customers in states in the whole world. This represents the advantage for the undertaking. This is why it is argued that contracts between undertakings and consumers should be subsumed under the law of those states where the marketing actions of the undertaking have their effect even when the undertaking does not know exactly where his customers are potentially located. Such actions would be considered a marketing action within the meaning of Section 41 IPRG now Section 13 a (2) Consumer Protection Act (Czernich Kauf und Dienstleistungsvertäge im Internet, ecolex 1996, 82, 84, differing: Schwimann in Rummel ABGB² § 41 IPRG N° 2). In order to exclude customers from a specific state (i.e. to prevent the application of a specific law) the undertaking must actively communicate this in its advertising or in its offer (“This offer is restricted to persons in the following states ...”). A further restriction of the applicable laws are possible by not taking into account those actions of an undertaking in those states where it did not intend to work the market. This intention might be deducted e.g. from the use of language or the qualities of the product in question (e.g. winter coats for Central Africa, train trip in Switzerland etc.) (Czernich op. cit. 84).
Schwimann as cited by Laga argues that there is no marketing action within the meaning of Section 41 IPRG if such actions are not specifically directed to the country of the consumer but reach the country rather by way of mass distribution (e.g. world wide distribution of journals or trans-frontier TV programmes. This would be the case of the marketing over the internet since only very few home pages offer localised versions of their home pages by use of the local language and currency (Laga, Rechtsprobleme im Internet 94 f.).
To determine the applicable market places of internet providers of products it has been proposed to request a certain minimum amount of influence on the market resulting from an anti-competitive behaviour (Rüßmann Internationale Zuständigkeit für die Durchsetzung von Ansprüchen aus Geschäfts- und Wettbewerbshandlungen im Internet JurPC Web-Dok. 108/1998, par 47). Further indications might be derived by studying the log protocols to determine the amount of influence on the market of the web site (Cf. Hoeren, Werberecht im Internet am Beispiel der ICC Guidelines on Interactive Marketing Communications, in: Lehmann (Ed.) Internet- und Multimediarecht, 1997, 111, 113).
d) May domestic competitors be subject to the national rules of competition law, even though they only advertise and compete in foreign markets?
Section 48 (2) of the Private International Law Act 1976 (IPRG) does not allow anymore an exception to the principle that solely the substantial law of the marketplace is applicable. The courts had allowed exceptions before 1979 when the new international private law act came into force (OGH ÖBl. 1973, 17 cf. also OGH ÖBl. 1975,38 – Prawda; Prunbauer Anwendbares Wettbewerbsrecht bei Werbefahrten ins Ausland, RdW 1985/9, 268 f.).
e) In the case of an act of unfair competition in more than one state, could a competitor (meaning a competitor in all of these states) recover damages applying one single substantial law, or would his claim be governed by a bundle (mosaic) of different substantial laws, e.g. the law of each marketplace for the damage occurring in that state? Would domestic courts have jurisdiction with respect to the total claim?
In the case of an act of unfair competition in more than one state, a competitor could not rely on one single substantial law, but his claim to recover damages would be governed by a bundle of different substantial laws, i.e. the law of each marketplace for the damage occurring in that state (Schwind, Internationales Privatrecht, 1990, S. 235). If several markets are affected by the same behaviour then the consequences have to be judged according to the laws of each of them separately (ÖBl. 1986,73 = IPRE 2/119; 4 Ob 86/88; MR 1988, 208; Schwimann, op.cit. 176, Koppensteiner³, § 21, N° 17).
f) Is there any case law in your country on the influence of Art. 30 EC Treaty on national competition law?
If the effects of unfair competition relate to the marketplace Austria than Austrian jurisdiction is not hindered where foreign writings or printings are subject of a court action (Section 83 c (3) Code on Jurisdiction). In other cases it is necessary that there is domestic jurisdiction and a sufficiently close connection of the facts to Austria. This principle has not changed through the application of the EC Treaty.
It is possible that Art. 30 EC Treaty leads to the application of the law of origin rather than the law of the receiving country to cases of trans-frontier advertising. This is not seen as a modification of the relevant conflicts of laws rule but rather as a modification of the substantial national law applying to the case.(Koppensteiner, Österreichisches und europäisches Wettbewerbsrecht³, 1997, § 21 N° 13).
The influence of Art. 30 EC Treaty on national competition law is significant. National rules of competition law which are not compatible with the case law of the European Court become inapplicable. Art. 30 EC Treaty leads to different treatment of trans-frontier cases in particular in cases of Section 2 Unfair Competition Act (deceptive statements - misrepresentation), and in cases of Section 9a (1) N° 1 2 Unfair Competition Act (free goods or premiums or other bonuses offered as a promotional device) or certain group of cases of Section 1 Unfair Competition Act (advantage through breach of law) (cf. Koppensteiner³ § 22 N° 4 citing the relevant Austrian cases taking into account principles of European law).
g) Is there any discussion about a “country of origin principle” to determine the applicable competition law in cross border electronic commerce?
This discussion is taking place within the context of the implementation of the distance selling directive, the EU proposal for the E-commerce Directive as well as the proposal for a Directive to harmonise certain copyright and neighbouring law aspects in the information society (COM) 97 628 fin. of 10 December 1997 (Dittrich Internet und On-Demand- Dienste im IPR, ecolex 1997, 166, 169 f.).
h) Is a choice of law between competitors possible in unfair competition matters?
Section 35 (1) IPRG allows a choice of law by the parties in case of Section 48 (1) IPRG. This is seen by Austrian doctrine as making sense only in case of the general law of torts, i.e. in the cases of Section 48 (1) IPRG. According to the strongly prevailing opinion in Austria the opposite is true in the cases of Section 48 (2) IPRG due to the specific economic aims of the competition rules, i.e. it is judged wrong to allow any choice of law in cases of acts of unfair competition (ÖBl. 1986,73 = IPRE 2/119; 4 Ob 86/88; MR 1988, 208; Schwimann Internationales Privatrecht 1993, 64; Koppensteiner, Rn 18, p. 480, Schwind, 235; Koppensteiner³, § 21, N° 18; Herzig WBl., 253). Competition law regulates not only the relations between the competitors. Its aim is also to protect competition per se and in particular the consumers. This public law aspect explains why a choice of law – which would be admissible in principle in all cases of contractual obligations – is excluded in this field (OGH 14.1.1986 - Hotel Sacher, ÖBl. 1986, 73).
2. How can national regulations be enforced in other states?
The question which courts, that is the courts of which state, have jurisdiction in internet-unfair competition cases is just as important as the issue of international private law. The fact that it is the international private law of the forum that determines the applicable substantial law gives the jurisdictional issue an even greater significance. International procedural law is governed by the autonomous rules of each country, unless there are international treaties. The most important of which is the 1968 Brussels Convention on jurisdiction and enforcement of judgements in civil and commercial matters. The general rules in autonomous as in conventional law (e.g. Art. 5 N° 3 of the Convention) are however often modified with respect to unfair competition law.
The principle problem in determining jurisdiction is similar to the one in international private law: Does the conduct on the internet subject a potential defendant to jurisdiction in every state around the world and does it - vice versa - give the potential plaintiff an unlimited opportunity for forum shopping? In the context of unfair competition it is typically in interim or injunctive proceedings that these questions arise.
a) Which are - apart of the Brussels convention - the principles of international jurisdiction in unfair competition cases in your country; is there a distinction between general and specific jurisdiction? Are there specific limitations or modifications with respect to unfair competition law (e.g. jurisdiction is limited to the country/countries of the marketplace)? Is there a forum non conveniens doctrine or a similar doctrine and, if so, is it relevant in unfair competition cases?
Domestic jurisdiction (= Austrian term for international jurisdiction) is the power of the State to exercise its jurisdiction in general and in individual legal cases (Fasching, Lehrbuch des österreichischen Zivilprozeßrechtes, Rz 55).
The Austrian Supreme Court (Oberste Gerichtshof „OGH“) presumes domestic jurisdiction only in those cases where an explicit legal provision exists or where general principles resulting from other (jurisdictional) clauses or from public international law create this domestic jurisdiction. If none of these conditions are present domestic jurisdiction can exist nevertheless if the enforcement of law abroad is either not possible or not reasonable (Fasching, op. cit., N° 76).
The Commercial Court, or where no Commercial Court exists, the state courts, have sole jurisdiction in all unfair competition cases. This is true regardless of the amounts involved (Section 51 (2) no 10 Code on Jurisdiction) A commercial court has only be established in Vienna. In all other states, unfair competition cases are therefore handled by the regular state courts.
Suits based on the Unfair Competition Act 1984 (UWG) are normally filed at the defendant’s place of business, at his domicile, or at the place where the wrongful conduct has been committed. Specifically the law provides the following (Section 83 c Code on Jurisdiction): If the defendant is an enterprise located in Austria, the court having jurisdiction for the enterprise’s headquarters is competent. If the enterprise has several branches, the complaint may be filed either at the court where the headquarters are located or at the branch to which the wrongful conduct pertains. In the absence of an enterprise in Austria, the defendant may be sued at its general venue. If the defendant has neither an enterprise nor its general venue in Austria, the action may be filed with the court where the defendant has his/her domicile, or, if a domicile is not known, where the illegal conduct has been committed. The law explicitly defines the place of infringement with respect to printed publications sent from abroad. In such cases, the infringement is deemed to be committed at any place where the objects have been received, handed over or distributed (Section 83 c (1) Code on Jurisdiction).
b) Are there different rules on jurisdiction in interim or injunctive proceedings?
If a complaint is combined with an application for a preliminary injunction, the court competent for the complaint is also competent for the preliminary injunction. This is also true if an application for a preliminary injunction is separately filed. Also in this case, the court which would have jurisdiction for the main claim, is competent to decide on the application for a preliminary injunction (Section 387 (3) Act on Enforcement).
The circumstances under which preliminary injunctions can be obtained are laid down in Section 378 ff Act on Enforcement. Section 24 Unfair Competition Act provides that preliminary injunctions may be applied for to protect claims arising from breaches of competition law.
c) Which measures of interim or injunctive relief are available in your country in unfair competition cases? Are these measures available for foreigners to the same extent as they are for domestic plaintiffs?
The most effective way to stop a defendant from continuing unfair practices is a preliminary injunction. The motion is normally filed along with the complaint. In competition cases , the plaintiff must only establish the likelihood of its claim (Anspruchsbescheinigung). Unlike in may other cases, the plaintiff does not, however, have to show that there is an immediate danger jeopardizing its position (Gefahrenbescheinigung) (Section 24 Unfair Competition Act). Preliminary injunctions may therefore be more easily obtained in competition and intellectual property cases than in other cases. It has to be noted that if a preliminary injunction is later lifted by the court because it proved to be unjustified from the beginning, the plaintiff is strictly liable for any damage suffered by the defendant because of the injunction. The plaintiff must summarily establish its claim submitting all documents available, including affidavits, and must name all witnesses. All evidence should be submitted with the initial application.
As regards non-resident parties the following applies: Foreign nationals or enterprises having their seat outside of Austria have the same standing in Austrian courts as Austrians do when instituting legal proceedings. The preliminary measures are available for foreigners to the same extent as they are for domestic plaintiffs. The only difference is that the court upon application of the defendant may order the foreign plaintiff to deposit a security for the costs of the proceedings (Section 57 Code on Civil Procedure). No security deposit needs to be furnished, however, if the verdict may be enforced in the country of the plaintiff’s domicile, or if the plaintiff owns sufficient real property or has claims secured on real property in Austria, or if the requirement of the security deposit has been waived by bilateral or multilateral treaties.
d) Will your courts grant cross border injunctions? That means will they render prohibitory injunctions with respect to a conduct occurring in a foreign state?
f) Will your courts decide at all on a conduct of unfair competition taking place in a foreign country? Will your courts apply foreign law in these cases?
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