Counterclaim
despite “free”
Cease and desist letter.
Counterclaim
despite “free”
Cease and desist letter.
from
Anyone who issues an unjustified cease and desist letter must reimburse the legal costs of the person receiving the letter – even if no costs of their own were claimed in the letter. At least that’s how the OLG Jena sees it. A ruling with a signal effect for warning practices.
What is it all about?
Cease and desist letters in competition law are a double-edged sword. On the one hand, they are used to settle disputes out of court. On the other hand, they are occasionally used tactically – not always with justified claims behind them. In such cases, the legislator has granted the cease and desist letter recipient a claim for reimbursement of costs: anyone who issues an unjustified cease and desist letter must pay the other party’s legal fees.
But what applies if the party issuing the cease and desist letter does not claim any costs of its own? The prevailing opinion to date has been that the counterclaim is then also capped at zero. The Jena Higher Regional Court takes a different view – and has thus raised a fundamental question.
The case
An occupational therapist in Erfurt wanted to give up her practice. The person interested in taking over the practice was ultimately awarded the rent for the business premises, but a purchase agreement was not concluded. After the previous owner moved out, her old contact details were still available on various internet portals, including a telephone number that had been redirected to another practice.
The new tenant saw this as an infringement of competition law and issued a cease and desist letter to the former owner. In the cease and desist letter, she demanded a declaration to cease and desist with a penalty clause and reserved the right to later demand “compensation for damages, including for lost business and legal costs already incurred”.
The problem was that the person who had been warned was no longer self-employed at the time. She had returned her health insurance license and was working full-time as an employee. After an unsuccessful personal defense, she contacted a lawyer who rejected the cease and desist letter – and demanded reimbursement of her legal defense costs.
The decision of the OLG Jena
The Erfurt Regional Court had dismissed the claim. Reasoning: As no specific costs had been claimed in the cease and desist letter, the counterclaim was capped at zero. The OLG Jena sees this in the Judgment of 19.11.2025 – AZ. 1 U 244/25 and awarded the plaintiff 973.66 euros.
Several defects in the cease and desist letter
The court first found that the cease and desist letter was defective in several respects:
The cease and desist letter contained neither a quantification of the claim for reimbursement of expenses nor an express waiver thereof. The mere reservation to demand legal costs later is not sufficient. The law expressly requires clarity as to whether and to what extent costs will be claimed.
In addition, there was a lack of sufficient information on the cease and desist letter’s entitlement. The entitlement to claim must be set out in the cease and desist letter – this was not done here.
Finally, the cease and desist letter was also materially unjustified: The cease and desist letter was no longer active as a competitor at the time of the cease and desist letter.
The key question: capping at zero?
The actual point of contention concerns the interpretation of the law. According to this, the counterclaim is limited to the amount of the claim for reimbursement of expenses “asserted” by the cease and desist letter. If he does not assert anything, the prevailing opinion is that the counterclaim is capped at zero.
The OLG Jena contradicts this view for several reasons:
The legislator had simply not considered this case. Although the explanatory memorandum to the law speaks of a “mirror image” claim, it did not mean that it should be strictly capped at zero mathematically.
Such an interpretation would undermine the purpose of the law.
If this lack of specification alone led to a counterclaim being ‘capped at zero’, the party issuing the cease and desist letter could evade liability under Section 13 (5) sentence 1 UWG in this way by first waiting to see whether the cease and desist letter is complied with by the ceased and desisted party or whether the ceased and desisted party raises any compelling objections.
In other words, the non-enforcement of warning costs would invite abusive tactics. Anyone who does not claim costs in the cease and desist letter would be protected from counterclaims. This would be a privilege that the legislator did not intend.
There is also a systematic argument: the law expressly requires clarity regarding the assertion of costs. A breach of this obligation must not result in the party issuing the cease and desist letter being in a better position than if it had proceeded properly.
Received a cease and desist letter?
How to react
You are best advised to
cease and desist letter!
A cease and desist letter, e.g. for infringement of competition law, industrial property rights or copyright, should always be taken seriously, as it can have considerable legal and financial consequences.
Timely and professional advice is crucial in order to minimize risks and develop the right strategy.
- Check cease and desist letter: Have the cease and desist letter legally checked. Not every cease and desist letter is justified, formally correct and abusive cease and desist letters are unlawful.
- Observe the deadline: Be sure to respond within the set deadline to avoid further legal action such as an injunction or a lawsuit.
- Check the cease-and-desist declaration: Do not sign a pre-formulated cease-and-desist declaration without legal advice. It could be too far-reaching and lead to considerable and lasting disadvantages. Once a cease-and-desist declaration has been signed, it is almost impossible to get rid of it and can result in considerable follow-up costs in the form of high contractual penalties.
- Strategy: Regardless of whether the cease and desist letter is justified or not, you should consider the right strategy for responding to the cease and desist letter with professional support. Many aspects play a role here. For example, there may be formal errors or the submission of a cease-and-desist declaration may involve incalculable risks.
What does this mean in practice?
The decision is not yet legally binding and the Federal Court of Justice could reach a different assessment in the event of an appeal. Nevertheless, there are already important indications:
- For cease and desist letters: Anyone issuing a cease and desist letter should comply with the formal requirements. This includes always making it clear whether and to what amount reimbursement of expenses is demanded or, if necessary, expressly waiving this. Simply reserving the right to claim costs later does not meet the legal requirements and renders the cease and desist letter formally incorrect.
- For cease and desist letters: The decision strengthens the position of those who defend themselves against unjustified cease and desist letters. Even if the cease and desist letter does not claim any costs, a claim for reimbursement of legal defense costs is not excluded.
Conclusion
The decision of the OLG Jena is convincing in its result. The contrary view, according to which the counterclaim is capped at zero if no costs are claimed, leads to a contradictory result: it rewards those who disregard the legal requirements for a cease and desist letter. Anyone who, contrary to the express requirement, does not clarify their claim for costs would be in a better position than the careful cease and desist letter. As a result, this cannot be right.
With the counterclaim, the legislator wanted to create an incentive to draft cease and desist letters carefully and only assert justified claims. This objective is undermined if the party issuing the cease and desist letter can evade any liability by simply omitting to state the costs.
It remains to be seen whether the Federal Court of Justice will endorse this view.
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