German trademark law is regulated in the Trademark Act of 25 October 1994 (MarkenG). This implements the Directive no. 2008/95/EC into national law, which has recently been revised by Directive (EU) 2015/2436 of 16 December 2015. In addition to the national regulation, various European provisions have an effect in Germany. EU-wide trademark protection is granted by the European Union trademark based on Regulation (EU) 2017/1001 of 14 June 2017. Furthermore, Germany participates in international treaties concerning trademark law such as:

• The Paris Convention for the Protection of Industrial Property of 20 March 1883.
• The Madrid Agreement concerning the International Registration of Marks of 14 April 1891 and the Madrid Protocol of 27 June 1989 relating to the Madrid Agreement concerning the International Registration of Marks.
• The Marrakech Agreement on Trade-related Aspects of Intellectual Property Rights of 15 April 1994 (TRIPS).

Not all law has the same priority. The legal system has a hierarchical structure. At its top is the German constitution, followed by the European treaties and, in its scope of application, EU law. The following level is German law, which is followed by individual regulatory acts. Being a civil law country, judges are bound by statutory law and not by precedent case law. However, cases by the Federal Supreme Court (BGH) are regarded to be persuasive and typically accepted as precedent. Only judgements of the Federal Constitutional Court have binding effect.

Under § 4 MarkenG, the following shall give rise to trademark protection:

• the entry of a sign as a trademark in the Register for specific goods and services;
• the use of an unregistered sign in trade in so far as the sign has acquired public recognition as a trademark within the affected trade circles; or
• a trademark constituting a well-known mark within the meaning of Article 6bis of the Paris Convention.

Trademark protection is either granted after registration and the scope of protection is defined by the goods and services registered, or protection is based on recognised use for certain goods and services.

However, according to § 14 III a MarkenG, a third party is also prohibited from using a sign identical with or similar to a trademark for goods or services which are not similar to those for which the trademark enjoys protection, if the trade mark has a reputation in Germany and the use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark.

Typically this provision extends the scope of protection of well known marks. According to German case law, a mark has a reputation according to § 14 II 3 MarkenG if it is known to a "significant part of the public" (BGH, 2 June 2017 - I ZR 75/15 No. 37 – Wunderbaum II).

Consequently, trademarks with a reputation can be protected against reproduction or imitation that constitutes an unjustified exploitation of the sign or is likely to cause prejudice to the owner of the mark. This protection particularly extends to luxury marks that typically have a high market recognition which will facilitate proof of their reputation in the sense of § 14 II 3 MarkenG.

To establish that a registered trademark is enforceable under § 14 MarkenG against acts of infringement, a trademark owner must prove that he is the owner of the mark or an exclusive licensee entitled to enforce the mark. A registered trademark is deemed to be valid as long as it has not been cancelled from the register.

An injunction against infringing trademark use can be obtained if the use refers to identical signs for identical goods and services or if there is a likelihood of confusion between the coinciding marks and their respective goods and services (§ 14 II 1 and 2 MarkenG). German law accepts that there is a interaction between the similarity of the mark, the similarity of the goods and services and the distinctiveness of the mark, which may be enhanced by reputation and market recognition. Therefore, the better known a mark is, the less similar it needs to be to establish infringement.

For proving that a mark is renowned and has enhanced distinctiveness, the trademark owner can provide written evidence about, for example, the intensity, geographical extent and duration of use of the trademark, sales figures and market share of the trademark as well as advertising spent. Owners of well known luxury brands can provide documents showing the mark‘s presence in the media. Evidence can be provided, for example, in the form of surveys showing the level of recognition of the mark in the market (see Court of Justice of the European Union (CJEU), 14 September 1999  - C-375/97 para 23 – Chevy). Even though the CJEU has has stated that the degree of knowledge required in order to benefit from the protection of § 14 II 3 cannot be defined as a predetermined percentage of the public, German courts have a long tradition as accepting survey results as decisive. Degrees of recognition between 31% and 79% have been accepted. Besides that, oral testimony, affidavits and expert evidence can be admitted.

Once the reputation of the trademark has been established, the owner can enforce it against all uses "in the course of trade", which includes use as a domain name, a trade name and other distinctive signs, if used as a trademark. The German Federal Supreme Court (BGH), also decided that the use of a trademark in metatags can be an act of infringing trademark use, as long as the sign is not used descriptively. For the same reason a trademark can also be enforced against an unauthorized use in social media, provided the use takes place "in the course of trade" as a trademark.

The situation is more complex in relation to keyword advertising. Defendants have typically used identical marks as keywords to advertise goods identical to the protected ones. The BGH has, based on the CJEU‘s judgments on keyword advertising, established that the the function of origin of a mark or trade name is regularly unaffected if it is used as a keyword if:

• The ad appears in an advertising area which is expressly designated (e.g. “Advertisement”) and is clearly separated from the search results.
• The ad itself does not contain the mark and does not refer to the owner or to its goods or services in any other way.

If these conditions are met, the user who has used the mark in a search query, does not assume that the ad comes from the trademark owner or companies linked to the owner. According to the CJEU the situation may be different if the ad triggered by a keyword is so vague regarding the origin of goods or services that the internet user is unable to determine from the ad whether an economic link between the advertiser and the trademark owner exists or not (CJEU, 22 September 2011 - C-323/09, para. 45 - Interflora). In that case the CJEU held that the function of origin is already adversely affected and the trademark is infringed.

With respect to comparative advertising, the use of a trademark is deemed to be infringing if it is disparaging and taking unfair advantage of the reputation of the trademark or if it creates a risk of confusion. Any comparative advertising that does not meet the legal standards of objective and fair comparison and would be deemed to be an act of unfair competition also qualifies as trademark infringement (CJEU, 18 June, 2009, C-487/07 - L’Oréal/Bellure).

Trademark parodies do not necessarily constitute trademark infringement. The constitutionally protected freedom of art and opinion can legitimize the parody. Nevertheless, a trademark parody is inadmissible, particularly in the case of disparagement without any discernible reason and solely commercial interests of the parodist (BGH, 02 April 2015, I ZR 59/13 – Jumping Poodle).

Under German law claims can be made both on the grounds of trademark infringement and unfair competition. The BGH gave up its opinion that trademark law prevails over unfair competition law in its Hard Rock Cafe decision in 2013 (BGH, 15 August 2013, I ZR 188/11). Typically, claims for unfair competition are made before the same court in addition to trademark infringement claims, when the facts of the case, in addition to the use of the trademark, amount to separate unfair practices (for example by parasitism, misleading the consumer about the origin of a product or by passing off the product‘s reputation).

Copyright law in Germany is primarily based on the Act on Copyright and Related Rights of 9 September 1965 (as revised and amended) (UrhG), which has been significantly influenced by the unification of European law. In addition to European Community legislation, other supranational regulations contained in treaties of which Germany is a contracting party also have an impact in Germany:

• The Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886.
• The Geneva Universal Copyright Convention of 6 September 1952.
• The Geneva WIPO Copyright Treaty of 20 December 1996.

German law does not provide for registration of copyrights. All works resulting from a personal intellectual creation that is not conventional or customary, is copyright protected as of its creation. A non-exhaustive list can be found in § 2 UrhG, which covers, amongst others, artistic works, including works of architecture and of applied art and drafts of such works.

In order to be protectable the work’s features must be original and not be exclusively determined by functional needs or follow general fashion trends. In the light of these requirements products of fashion, jewellery, furniture or accessory design may be eligible for copyright protection. The BGH held, for example, the Bauhaus Tubular Frame Chair and the Wagenfeld lamp to be eligible for copyright protection (BGH, 27 February 1961, I ZR 127/59 – Stahlrohrstuhl; BGH, 15 February 2007, I ZR 114/04 – Wagenfeld Leuchte). If the threshold of an original work is not met, other means of protection may be available such as Unfair Competition or Design Law.

When a work is eligible for copyright, the author is entitled to claim economic and moral rights in their own personal creation.

As for economic rights, the author is granted the exclusive right of reproduction and the right of distribution of original copies of the work to the public as well as the right of exhibition (§§ 15 I, 16, 17 and 18 UrhG).

The author has further rights to communicate their work to the public in non-material form, which covers the right to making the work available to the public on the internet or to broadcast or perform works amongst others (§§ 19 to 22 UrhG).

The author’s moral rights cover:

• the exclusive right to determine whether and how their work shall be disclosed to the public;
• the right to reconsider or withdraw the work after it was first disclosed;
• the right to be recognised as the author of the work; and
• the right of integrity and to prohibit the distortion or derogatory treatment of the work.

These moral rights are perpetual and cannot be transferred or waived.

The author’s economic rights expire at the end of a time-period of 70 years starting on the first day of the year following the death of the author.

According to § 10 UrhG the author is the creator of the work and there is a presumption in favour of the person under whose name the work has been disclosed to the public, unless otherwise proven. § 8 UrhG stipulates that where several persons have jointly created a work without it being possible to separately exploit their work, they are joint authors and the right of publication and exploitation of the work accrues jointly to them.

As in German law the copyright as such cannot be transferred, any legal entity that wishes to acquire the rights in the works created by its employees, consultants, shareholders, directors or suppliers can only contractually acquire the rights to use the works in question. Case law recognizes that the employer is granted far-reaching and exclusive rights of use by virtue of the employment contract. According to § UrhG, the employer acquires rights of use to the work created by the employee in accordance with the “transfer of purpose theory“ to the extent that they are required for business purposes.

Any copyright assignment agreement with an author must comply with the following requirements:

• The contract must distinctly mention each assigned right and the scope, destination, geographical extent and time period for which the right is assigned.
• The general assignment of future works is not valid and assignment contracts need to have a clearly defined object.
• The author cannot waive his moral rights.

As in German law there is no copyright registration, in each case of dispute the claimant needs to demonstrate that their work meets the standards of an intellectual creation rising above the average and functional. This also applies to industrial design and may be demonstrated by oral testimony, affidavits, expert reports etc.

For establishing infringement the reproduction of the original features protected by the copyright need to be shown, substantial similarity is enough. The court will analyse the similarities – and not primarily the differences – between the infringing object and the copyrighted work.

Copyright grants a monopoly right to its owner, which can be enforced against trademarks, registered and unregistered designs, patents, domain names, trade names, pseudonyms or other distinctive signs, any use in social media or in comparative advertising, as long as they reproduce the original characteristics of the work.

The only limits to these prerogatives are the legal exceptions of §§ 44 a to 53 a UrhG. These exceptions are restrictively listed and precisely specified, there is no general doctrine of ‘fair use’ or ‘fair dealing’. The most relevant exceptions in relation to luxury goods are:

• copies or reproductions reserved strictly for the private use of the copier;
• analyses and quotations provided that they are justified by the critical, polemic, educational, scientific or informatory nature of the work they are taken from;
• press reviews;
• publishing or broadcasting of speeches as long as they are considered as current news; and
• reproduction or performance of a work extract used as an illustration for educational purposes.

The typical defence against infringement claims is to challenge either the copyrightable character of the work (due to lack of quality of an own intellectual creation or expiry of the protection); the ownership on the copyright; or the similarities between the infringing object and the copyrighted work. The right to enforce a valid copyright might be forfeited if the copyright owner has tolerated the use for a substantial amount of time. The copyright owner cannot file any action if the claim has become time barred, which is three years for civil actions after he has learned about the infringing act.

The right holder can bring an action claiming both copyright and design infringement based on the same facts, as the purpose and preconditions of these rights are not the same: a luxurious object of industrial design may be eligible for both, copyright and design protection. Furthermore, unfair competition claims for slavish copying can be made before the court in charge of the copyright dispute in addition to the infringement claims. Following established case law regarding the protection of fashion novelties, unfair competition law, for example, grants protection against identical adoption or almost identical imitation as that the creator of a fashion novelty is deprived of the competitive advantage on the market based on his performance (BGH, 6. November 1997, I ZR 102/95).

German design law originates from two sources. The national source of law is the Act on the Legal Protection of Designs (DesignG) as amended on 24 February 2014, which transposes the EU Directive on the legal protection of designs (EC Directive 98/71/EC of 14 October 1998) into national law (EUDD).

In addition, the European Regulation on Community Designs ((EC) No 6/2002) of 12 December 2001 applies, as amended by Council Regulation No 1891/2006 of 18 December 2006 (EUDR).

In Germany designs can be registered at the German Patent and Trademark Office (GTPO) while Community designs may either be registered at the European Union Intellectual Property Office (EUIPO) or claim protection as an unregistered design under European Design Law. All designs are defined as “protecting the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture and/or materials of the product itself and/or ist ornamentation”.

Both the DesignG and the EUDD define said products as “any industrial or handicraft item, including inter alia parts intended to be assembled into a complex product, packaging, get-up, graphic symbols and typographic typefaces, but excluding computer programs”.

A design may therefore be considered for a wide range of luxury products. Not protectable, however, are features of appearance of a product which are solely dictated by its technical function and interconnecting parts (except those that serve the purpose of allowing multiple assembly or connection of mutually interchangeable products within a modular system). Also excluded from design protection are appearances of products that are contrary to public policy or morality.

The appearance of a product can be protected by a valid design under the following requirements:

• The design must be new, meaning that no identical design has been made available to the public before either the date of filing of the application for registration (or the date of priority) for national or registered Community designs, or, for unregistered Community designs, the date on which the design claiming protection has first been made available to the public. The design is not considered as being made available to the public when the disclosure was made by the designer within a 12-month time period preceding the filing for registration (or date of priority) or when the disclosure is the result of an abuse.
• The design must have individual character, meaning that the overall impression the design produces on the informed user differs from the overall impression that may be produced on such user by any design which has been made available to the public before.

For registered designs, the duration of the protection is 5 years renewable 4 times for 5 years (up to 25 years) whereas the protection for unregistered design is granted for 3 years after the first disclosure of the design within the European Union.

According to § 7 DesignG the right in the registered design shall belong to the designer. Where several persons have jointly created a design, the right in the registered design shall belong to them jointly. Where a design was created by an employee in the execution of his duties or following the instructions given by his employer, the right in the registered design shall belong to the employer, unless otherwise provided by contract. Designs created by consultants, agencies, shareholders, directors or suppliers need to be contractually assigned. Usual rules of contract law apply to design assignment, but for a Community design to be enforceable against third parties, the agreement must be in writing and published on the European Design register (Art. 28 EUDR).

German and European Law does not recognise a moral right in the appearance of the product; however, § 10 DesignG and Article 18 EUDR provide that the designer has the right to have their name cited before the Office and in the register.

A design may be enforced against all designs that do not give a different overall impression on the informed user. Registered designs are protected against unauthorized uses by third parties, in particular against the making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or storing such a product for these purposes. For registered designs, this also applies against slavish imitation and similarities. Unregistered Community designs enjoy the protection against uses described above when they result from purposely copying the protected design.

The right holder can enforce the design against any kind of infringement, including infringement arising from use of the design in trademarks, registered designs, patents, domain names, trade names, pseudonyms or other distinctive signs or IP rights.

Exceptions to protection are granted in cases of acts done privately and for non commercial purposes or acts done for experimental purposes or citations. Furthermore a valid design can be forfeited and therefore unenforceable in the case where the design owner has tolerated the use for five years.

As defence, the alleged infringer may challenge the validity or ownership of the design right invoked (for example, citing the expiry of the protection, the existence of prior art that removes novelty or the purely functional features of the design). It can furthermore be argued that the infringing design does not produce a similar overall impression on the informed user or that the claim is time barred (three years after the claimant became aware of the infringement).

Furthermore, Article 8.2 EUDR provides the repair clause that excludes protection of the Community Design from a component part used for the purpose of the repair of a complex product. This exemption particularly effects the car industry. § 40 DesignG accepts a more limited approach by stating that such limitation only applies to the repair of a complex product with the aim to restore it to its original appearance.

The owner of the design is entitled to claim both copyright and design infringements based on the same facts. Furthermore, unfair competition claims can be made before the court hearing the design dispute in addition to the infringement claims when the surrounding facts aside from the mere use of the design amount to separate unfair practices such as slavish copying.

Under German law private individuals are entitled to control the use of their name, image and other aspects of their identity. These rights are based in the general personality right, granted by Art. 2 I of the German Basic Law (GG) and § 12 (right to one‘s name) and § 823 I of the German Civil Code (BGB), as well as § 22 of the German Art Copyright Act (KUG), which grants the right to one’s own picture which may only be published with this person's consent.

There are no other conditions to owning the right of publicity apart from being a human being.

The right to informational self-determination, as well as the other manifestations of the general personality right from Article 2 I in conjunction with Article 1 I GG, end with the death of a person. Simple-law provisions such as the right to one‘s name or data protection also end in principle with the death of a person.

In terms of fundamental law, post-mortem protection of personality derives exclusively from human dignity protected under Article 1 GG. However the claim to value and respect initially continues to exist, but fades with time.

In the event of a violation of the non-material components of the post-mortem personality right under civil law, the heirs shall be entitled to claims for defense, but not additionally to claims for damages. (BGH, 5 October 2006 - I ZR 277/03 – kinskiklaus.de.)

However, the general post-mortem right of personality under civil law also protects the person's pecuniary interests. In the event of a violation, claims for damages may exist which can be asserted by the heirs of the deceased (BGH, 5 October 2006 - I ZR 277/03 – kinskiklaus.de). Like the right to one's own image (§ 22 KUG), the duration of protection of the pecuniary components of the post-mortem right of personality is limited to ten years after the death of the person.

The rights and obligations provided by assignments or licensing agreements entered into by the deceased persons before their death are transmissible to their heirs.

Individuals are free to enter into exclusive or non-exclusive assignment or licensing agreements and monetize the use of their right of publicity, as a whole or in parts. There are no specific provisions under German law that govern contracts for the use of one’s personality rights, so general contract law applies. It is advisable to clearly define the scope of the contract, in particular as regards its duration, geographical scope, the subject matter and uses covered or not covered. The rights to terminate the agreement also needs to be defined. Therefore, the contract remains binding until the agreed term has expired. This also applies to the heirs of the person whose personality rights are the subject of the license agreement. In addition, German law provides that continuing obligations such as license agreements can always be terminated for cause, if it cannot reasonably be expected for the licensor to adhere to the agreement, especially in cases of misconduct of the licensee.

The right of publicity can not only be enforced against a commercial use of an individual's name, image, likeness or other aspects of their identity. Equally, a non commercial use (for example, for artistic reasons), can be prevented if it is not justified e.g. by freedom of art of freedom of speech. Therefore an injunction can also be obtained against a defamatory or disparaging use, even if no commercial interests are involved.

The commercial value of one’s personality is relevant in order to determine the amount of damages to be incurred for an unauthorized use of an individual‘s name, image, likeness or other aspects of their identity. If an individual is well known and can show that they typically monetize their rights, the easier it will be to be awarded a high compensation for infringement. The BGH has awarded high damages to a well know television presenter whose image was used in so called "clickbaiting," that is, luring readers to third party advertisements on the internet (BGH, 21 January 2021 - I ZR 120/19 – Clickbaiting).

In defence, the alleged infringer may dispute the infringement of one’s right of publicity on several grounds. In particular, freedom of speech, including satire and freedom of art, can legitimize the use of personal attributes, when this use is made as part of a debate of public interest, or is necessary to illustrate current events. The right to one’s own picture is, for example, limited if it amounts to a portrait from the field of contemporary history (§ 23 KUG).

Product placements are permitted under German law but are subject to restrictions, mainly resulting from the State Media Treaty (MStV) and Advertising Statutes. German law defines product placement as "any form of advertising that consists of incorporating or referring to a product, service, or brand in return for remuneration or a similar consideration, so that it appears in a programme or user-generated video". Product placement requires monetary consideration. However, the free provision of goods or services can also be classified as product placement if the goods or services are of significant value. This is most relevant for expensive luxury goods. If the value of the product is higher than €100 and at the same time reaches 1 percent of the production costs of the programme or if it exceeds the amount of €10,000, the regulations for product placements are applicable. If several products are provided by the same advertising partner, they will be counted up together.

According to the MStV product placement is permitted, except in (for example), news programmes and programmes intended for political information, consumer programmes, programmes with religious content, and children's programmes. Furthermore, there are special restrictions on product placements in public service broadcasting. Here, product placements are only allowed in cinematographic works, films, series, sports programmes and light entertainment programmes.

Programmes containing product placements must meet strict requirements:

• editorial responsibility and independence concerning content and placement in the programme schedule must not be prejudiced;
• no direct encouragement of purchase, rental or lease of the placed goods or services;
• the product shall not be unduly prominently placed; and
• clear identification of product placement at the beginning and at the end of a programme, as well as at its continuation following an advertising break.

For cinematographic works only the provisions of the Unfair Competition Act (UWG) apply. The viewer must not be deceived by product placements insofar that the props used are in fact advertising.

Details of the agreed product placement in a production should be set out on a contract stating precise criteria for the form of the presentation. The parties may also agree on an obligation to return the goods. If the film producer does not comply with the agreement, damages can be claimed under civil law.

Product placement involving luxury brands is particularly relevant in the context of influencer marketing on social networks, to which the above mentioned rules also apply. Advertising by influencers must also be clearly recognisable as such and unambiguously separated from the other content of the offerings if the influencer has received consideration for his posts (BGH, 09 September 2021 – I ZR 125/20). Under Unfair Competition Law, it is also regularly necessary that the commercial purpose of the advertising (e.g. of the Instagram posts) is made clear.

In German law there are various possibilities to protect the image or reputation of any company (goodwill). Sources of law are primarily the Unfair Competition Act (UWG) and the German Civil Code (BGB) in combination with criminal law granting rights against the tort of defamation and slander.

Under Unfair Competition law, companies are protected against impairment of their economic interests through disparaging statements by competitors (e.g. in advertising). In addition, competitors are not allowed to harm the economic interests of other companies by claiming or spreading false facts. Furthermore, Unfair Competition law protects the good reputation of brand owners marks against unfair exploitation or impairment. The good reputation of a company and its brands is exploited, for example, if it is transferred to the products of another company through advertising (e.g. in the advertisement for a sparkling wine, persons are clearly visible wearing watches of well-known luxury manufacturers; the use of a picture of a well-known car in an advertisement for a whiskey (BGH, 09 December 1982 – I ZR 133/80)). 

In addition, claims for injunctive relief can be established through general civil law provisions (§ 823 BGB), for example in the case of the exploitation of a famous trademark for political campaigns, the ridiculing of a famous trademark and other damage to reputation. The same applies to statements that affect a company's social standing as an employer or business enterprise, i.e. that challenge its reputation. In addition, § 824 BGB protects companies from untrue facts that are likely to jeopardise credit or cause other disadvantages for acquisition or advancement. This has practical significance, for example, in cases where goods of the company are disparaged on television or untrue allegations (e.g. about health hazards) are spread about them in the press.

In general, clauses that are aimed at protecting the corporate image through resale restrictions are only permissible as long as they do not constitute a restriction of competition in accordance with § 1 German Act against Restraints on Competition (GWB) or Art. 101 of the Treaty on the Functioning of the European Union (TFEU).

Prohibition to sell the products to re-sellers whose image is below a certain defined standard is only permissible if the manufacturer, re-seller and retailer are part of a selective distribution system. In such a system, the parties agree to sell the product only to authorised partners within the network who fulfil certain qualitative (and – under certain conditions – quantitative) selective criteria specified by the manufacturer. The admissibility of selective distribution systems has been confirmed in Germany for several products or groups of products, especially in the luxury product sector, such as technically sophisticated products or amongst others watches, jewellery, luxury perfumes, luxury cosmetics. Having a selective distribution for luxury goods may even justify the prohibition to sell the products on internet marketplaces, if necessary to safeguard the exclusive image of the products (CJEU, 6 December 2017 – C-230/16 - Coty Germany GmbH/Parfümerie Akzente GmbH).

Restrictions on the freedom to set resale prices are generally not permissible, as they constitute a restriction on competition. All clauses that aim at directly or indirectly influencing resale prices are prohibited, even if they are only applicable for specific time periods. Only in very narrow circumstances the practice of setting resale prices can be permissible, e.g. the mere recommendation of a retail price (in German: “unverbindliche Preisempfehlung UVP”) or the setting of a maximum resale price, which does not have the effect of a price fixing.

The prohibition to buy non-original – but otherwise legitimate – spare parts and components would constitute an exclusive purchase obligation or a non-competition clause, which are only permissible if they are justified. However, if the Vertical Block Exemption Regulation (VBER) applies – i.e. the market share of the parties does not exceed 30% and the restrictive agreement does not contain any hard-core restrictions – such obligations are exempted from the prohibition of competition restricting agreements for a period of 5 years.

Stipulated fines clauses for breach of protecting the reputation or corporate image of a party are generally permissible in Germany. If stipulated fines clauses are part of general terms and conditions of a contract, they are subject to content inspections under German law. In order to avoid a declaration of unenforceability, the stipulated fines must not unreasonably disadvantage the other party. A clause is considered to be disadvantageous if the sanction (e.g. the amount of the fine) is disproportionate to the seriousness of the breach of contract.