EUR 30 million
Contractual penalty
enforceable.
EUR 30 million
Contractual penalty
enforceable.
from
Foreign judgments in trademark law can be expensive. The Higher Regional Court of Schleswig-Holstein confirms enforcement of EUR 30 million contractual penalty in a trademark dispute.
Background to the case
At the heart of the proceedings were long-standing trademark disputes between two companies relating to the design of jeans. The trademark owner had been involved in several disputes against a jeans manufacturer before various courts since 2006. In 2006, the parties reached an out-of-court settlement. In this settlement, the jeans manufacturer undertook, among other things, to pay a contractual penalty of EUR 50 per pair of jeans if it continued to sell jeans with the trademark owner’s protected trademark .
When the trademark owner claimed in 2014 that the jeans manufacturer had breached this settlement, it filed an action in Belgium. In September 2016, the Court of Appeal in Brussels ruled in the second instance in a legally binding interim judgment that the jeans manufacturer had indeed breached the agreement and ordered it to pay provisional compensation on the basis of the contractual penalty provision. The jeans manufacturer’s subsequent appeal against this interim judgment was unsuccessful. An expert established that the jeans manufacturer had distributed an estimated 600,000 pairs of pants in breach of the agreement.
In the further course of the Belgian proceedings, the jeans manufacturer complained for the first time that the settlement and the contractual penalty provision contained therein were contrary to antitrust law and applied for a referral to the European Court of Justice. The Belgian Court of Appeal in Brussels rejected these arguments, as the validity of the settlement had already been recognized in the first interim judgment. The jeans manufacturer also lodged an appeal against the final judgment of the Belgian Court of Appeal in February 2023, which ordered the jeans manufacturer to pay 30 million euros.
The trademark owner finally applied to the Regional Court of Kiel to declare this Belgian judgment enforceable in Germany. The Regional Court of Kiel granted this application. The jeans manufacturer filed an appeal against this, arguing, among other things, that domestic enforcement should not be permitted because the judgment was clearly contrary to antitrust law and violated German procedural principles.
Assessment of the court and reasons for the decision
The Schleswig-Holstein Higher Regional Court dismissed the jeans manufacturer’s appeal with Decision of 30.06.2025 – Ref. 16 W 68/24 back. The court found that the formal requirements for recognition had been met. The court did not see an obstacle to recognition due to a breach of “ordre public” (public policy).
A violation of public policy under procedural law, such as an infringement of the law on the right to be heard, was denied. The jeans manufacturer had the opportunity to raise its objections to the settlement before the Belgian courts. The court emphasized that the Belgian Court of Appeal had already determined the validity of the settlement in a legally binding interim judgment and was bound by this decision. The jeans manufacturer raised antitrust law arguments later in the proceedings. Under German procedural law, this can lead to preclusion.
The judges also found that the agreement did not violate antitrust law. The court concluded that a comprehensive review of the judgment for antitrust violations was not appropriate in the context of enforceability proceedings of state judgments, especially when the court of origin had to apply the same legal standard. In this case, a trademark delimitation agreement does not constitute a restriction of competition by object, as the parties had not coordinated their conduct for the purpose of interfering with the market. In addition, the restriction of competition that was brought about was not appreciable. The jeans manufacturer is not appreciably impaired if it uses other embroideries that are not similar to the protected trademark.
The court also rejected the jeans manufacturer’s argument that the agreed contractual penalty was excessive. The contractual penalty of EUR 30 million is not disproportionate to the significance of the infringement, meaning that there is no infringement of good faith or public policy. In its decision, the court took into account the Europe-wide scope of the agreement as well as the size of the jeans manufacturer with 1,200 stores in 47 countries and a turnover of several billion euros.
A stay of proceedings or making enforcement dependent on the provision of security was also rejected, as the chances of success of the jeans manufacturer’s appeal were considered to be low and the disadvantages asserted were not considered to be irreparable.
General effects of the judgment
The judgment strengthens the principle of mutual recognition and enforcement of court decisions within the European Union, which is based on the idea of mutual trust. It makes it clear that objections under antitrust law to the validity of a settlement based on a foreign judgment are not automatically re-examined in the enforcing state if they could already be raised in the state of origin and were finally decided there.
For companies that operate across borders, this means increased legal certainty when enforcing claims arising from settlements or judgments. It is crucial to raise antitrust or competition law issues early and comprehensively in court proceedings in the country of origin. It can generally be assumed that legally binding decisions, even if they involve a high contractual penalty, will be enforced in other EU states without a renewed examination of the content. This is particularly important in the area of competition law and in the case of allegations of misleading practices, such as those that can occur in the context of discounts or strike prices at online retailers such as Amazon. In such cases, the rapid and enforceable implementation of decisions is of crucial importance.
Conclusion
The ruling of the Schleswig-Holstein Higher Regional Court underlines the importance of the efficiency and coherence of judicial cooperation in the EU.
It sends a clear signal: issues that have been finally decided in a Member State, even if they involve complex aspects of antitrust law and high contractual penalties, will generally not be reopened in the enforcing state.
For companies, this means greater legal certainty and the need to comprehensively assert all relevant arguments – particularly in the area of trademark law and competition law – in the original court proceedings.
We are happy to
advise you about
Trademark law!
