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ART. 7. If an agreement is not reached the board of arbitration may issue an award, provided the parties have signed the following written declaration: "We agree that the arbitration of the legal contests existing between us relating to unfair competition shall be effected through the board of arbitration of the Corporation of the Merchants of Berlin in matters of unfair competition, which shall also decide as regards the costs of the trial; furthermore, that we shall be liable as joint debtors for the expenses of the board of arbitration-reserving any claims on our part for restitution; also, that the Royal Lower Court of central Berlin, or the Provincial Court I of Berlin, shall be considered the proper court for filing the decision."

ART. 8. No fees are collected for the trial by the board of arbitration. The chairman may demand a suitable advance for covering expenses.

Section 11. Austria.

INTRODUCTORY.-Unfair competitive practices in Austria are prosecuted under various provisions of the Penal Code and special laws. There appears to be no general provision of law applicable to such practices. The Civil Code contains in section 1295 a general provision similar to article 1382 of the French Civil Code, which reads as follows:

SEC. 1295. Every person is entitled to demand from the injurer compensation of the injury which the latter has done him as a result of a wrong; the injury may have been caused by a breach of a contract obligation or without any relation to a contract.

This section has not been utilized as a means of protection against unfair competition on account of the narrow interpretation given it by the courts. Austrian jurisprudence has always, in theory and practice, interpreted the term "wrong" (Verschulden) in this section in such a manner that to constitute liability for compensation · it requires the breach of a contract obligation or the violation of an explicit provision of a law or of a legal decree.1 The Administrative Court (Verwaltungsgerichtshof) declared it to be a generally established principle that "every kind of competition is permissible which does not conflict with the legally protected rights of others."2

Austria as yet has no comprehensive special law against unfair competition. In order to prepare such a law, the Austrian minister of commerce, in a decree of September 7, 1899 (Z. 47800), called upon the chambers of commerce and trade for their opinions and suggestions concerning certain kinds of unfair competition, and a bill was drafted in 1906.3

1"Gutachten über die mit dem Erlasse des K. K. Handelsministeriums, 6. Okt. 1906, versendeten Gesetzentwürfe betreffend den Schutz gegen unlauteren Wettbewerb," Wien, 1906, S. 22.

2 Erkenntnis v. 4. Okt. 1882, Z. 1513, Budwinski: Die Erkenntnisse d. K. K. Verwaltungsgerichtshofes, 1882, Nr. 1513, S. 443.

3 Entwurf eines Gesetzes betreffend den Schutz gegen unlauteren Wettbewerb; No. 2596 der Beilage zu den stenograph. Protokollen des Abgeordnetenhauses, XVII. session, 1906. See also Leonhard, Der Unlautere Wettbewerb und seine Bekämpfung, 1903, S. 96 fol.

This bill contains civil-law provisions against fraudulent advertising, appropriating and misusing distinctive marks of others, and betrayal of business and trade secrets. Penalties of fine and imprisonment are provided where these acts are intentionally done.

The bill also makes obligatory the designation of certain goods with reference to their quantity, quality, or provenance.

A general provision in section 16 reads as follows:1

Every act committed in the course of conducting a business enterprise which is grossly repugnant to good morals and adapted to injure the sales or other business activity of one or more competitors is to be regarded as unfair competition.

PENAL CODE.-Section 197 of the Penal Code 2 is applicable to cases of injury to the property of another person, as, for instance, a run on a bank caused by subtle, false pretenses. Section 308 is applicable to cases involving the circulation of disparaging statements regarding the credit or products of another. The language of this section is as follows:

SEC. 308. Whoever, in a public announcement (by means of wall posters, public speeches or lectures, etc.), disseminates or spreads a false rumor disturbing public safety, without sufficient reasons for considering it to be true, or an alleged prediction of like kind, is guilty of a misdemeanor, and is to be punished with close arrest of from eight days to three months.

This section was held to be applicable in a case where an Austrian Regie cigarette was artificially caused to explode in order to give rise to the rumor that cigarettes of a dangerous nature were to be found among the products of the Regie factories.*

TRADE LAW OF MARCH 15, 1883.-The so-called trade law of March 15, 1883,5 amending the Industrial Code, contains several provisions relating to the misappropriation or misuse of various business designations. Of these, sections 46 and 49 are the most important. The language of these sections is as follows:

SEC. 46. No tradesman is entitled, for the exterior designation of his place of business or dwelling, whether in circulars, public announcements, or price lists, to unlawfully appropriate the name, firm name, coat of arms, or special designation of the establishment of some other domestic tradesman or producer, or to falsely designate in the above-named manner the products of his trade establishment as having come from another establishment.

Such an offense gives the injured party the right to call upon the proper trade authorities to stop the further use of the unlawful designation or to prohibit the false announcement.

1 Cf. Lobe, Die Bekämpfung des unlauteren Wettbewerbs, 1907, Bd. I, p. 108.

2 Das Strafgesetz vom 27. Mai 1852, Reichsgesetzblatt, 1852, Nr. 117. Leonhard, op. cit., p. 49.

4 Entscheid. des Obersten Gerichtshofes vom 12. Mai 1899, Z. 5298, Sg. 2353; cited in Löffler u. Lorenz, Das Strafgesetz vom 27. Mai 1852. Wien 1912, S. 523.

"Gesetz vom 15. März, 1883, betreffend die Abänderung und Ergänzung der Gewerbeordnung," Reichsgesetzblatt, 1883, No. 39, S. 113.

The protection accorded the injured party is not precluded by the fact that, in addition to the unlawful designation or false declaration, the name, firm name, coat of arms, special designation of the establishment, or the mention of another trade establishment, are made with such additions, omissions, or other changes as are not discernible with ordinary attention.

SEC. 49. Furthermore, an offense is committed by

1. Every tradesman, who in cases which have not already been covered by section 46 or by the law for the protection of trade-marks, for the exterior designation of his place of business or dwelling, for the designation of products, or generally in conducting his business and in affixing his signature, makes use of a name to which he is not entitled, unless authorized thereto by the prior recording of his firm name in the trade register.

2. Every tradesman who, in the cases mentioned under 1, appropriates to himself marks of distinction which have not been conferred upon him.

3. Every tradesman who, in the cases mentioned under 1, uses a designation which permits the inference of a partnership relation, whereas in reality none such exists.

4. Every tradesman who fails to use his full first name and surname, unless justified by the prior recording of his firm name in the trade register.

5. Every tradesman who, in the cases mentioned under 1, while a partnership relation exists, uses a designation which contains not only names of partners but, besides, an addition which suggests the existence of a partnership, without being authorized to use such a firm name in the sense of the Commercial Code.

In a decision of March 6, 1908, the Ministry of Commerce held that the use of the name "Grand Hotel Slavia," in the city of Turnau, constituted an infringement on the rights of an older establishment in the same town, known as "Grand Hotel," according to section 46 of the trade law, because the words "Grand Hotel" constitute an essential element of the older firm's name and because the addition, "Slavia," is not discernible with ordinary attention.1

A certain manufacturer, Eisner, used as a sign on his shop the words "Siegfried Eisner, to the busy Fischer," the word Fischer which was the name of a competitor who previously occupied the same shop, being in letters seven times as large as the other words on the sign. The Ministry of the Interior held that this act constituted a violation of section 46 of the trade law because the word "Fischer" would be taken to denominate the competitor.2

Judgment was given against a dealer who advertised his beer in the newspapers as being "according to the type of Pilsener beer," the words "according to the type of" being printed in small type, whereas the words "Pilsener beer" were in heavy type.3

A certain R. in Pilsen, who named his drug store "Drogerie zum goldenen Krebs," was found guilty, according to section 46 of the

1 Entsch. d. Handelsministeriums v. 6. März 1908, Z. 2810; Öster. Patentblatt, 1908, p. 676.

2 Entsch. d. Ministeriums d. Innern v. 5. Nov. 1902; Öster. Patentblatt, 1903, p. 225. 3 Entsch. d. Statthalterei in Lemberg, v. 5. März 1912; Öster. Patentblatt, 1912, p. 701.

trade law, of infringing the trade rights of Richter & Co., owners of the "Drogerie zum roten Krebs." The Administrative Court held that the names "Zum roten Krebs" and "Zum goldenen Krebs" were likely to give rise to confusion, all the more in this case because the defendant was then conducting his business in the former shop of the plaintiff. The court said further that in considering the possibility of confusion between the names of two establishments it is not so important to consider their specific details as to weigh the impression caused by these details collectively, and also to consider local conditions.1

The trade law of 1883 was amended in 19022 by the addition of several new sections in place of sections 59 and 60. The second paragraph of the new section 592 contains the following provision which has been applied by the courts to the so-called block system:

The soliciting of orders for goods of persons who do not have use for such goods in their business is unconditionally forbidden to proprietors or their representatives with respect to the sale of groceries and dry goods inside as well as outside of the place of business; with respect to other goods the soliciting of orders of the above-mentioned persons outside of the place of business is permitted only in special cases where an express written request naming specific goods has been directed to the proprietors.

The so-called "block system," which was much complained of by Austrian merchants as being an unfair method of trade development, was held by the Administrative Court to be repugnant to section 59 of the law of February 25, 1902. This system operates as follows: By presenting a stem coupon costing 1 krone 25 heller and 5 kronen additional the buyer receives a block consisting of four coupons, at 1 krone 25 heller each. The buyer is advised to pass on to other prospective buyers each of these coupons for 1 krone 25 heller, so that he receives back his 5 kronen. If a new block is bought under like conditions by the holders of each of the four coupons, the original buyer receives 20 kronen worth of goods, the value of which has been paid by the other four blocks. If all of the four blocks are not sold, the original buyer receives 5 kronen worth of goods for each block sold.3

A dry goods merchant of Chrudim appealed from an order of the Ministry of Commerce restraining him from making further use of the "block" system in his business. The appeal was dismissed partly on the following ground: The block system is unlawful and directly at variance with section 59 of the trade law of February 25, 1902, because the method employed in selling the "blocks" involves the use

1 Erkenntnis d. Verwaltungsgerichtshofes v. 7. Mai 1913, Z. 4809; Öster. Patentblatt, 1914, p. 164.

2 Gesetz vom 25. Febr. 1902; Reichsgesetzblatt, 1902, Nr. 49. Erkenntnis d. Verwaltungsgerichtshofes v. 7, Jänner 1909; Öster. Patentblatt, 1909,

p. 1117.

of numerous auxiliary solicitors whose function is to drum up trade for the tradesman in various localities differing from, and without regard to, the location of his business. Section 59 permits orders for goods to be solicited only by persons who are officially licensed employees of the tradesman. Furthermore, orders shall be solicited from private persons only upon special written request to the tradesman with explicit mention of the goods desired.1

TRADE-MARK LAW.-The law of January 6, 1890,2 relating to the protection of trade-marks, as amended July 30, 1895, contains a number of sections prohibiting the wrongful use of trade-marks.

Section 3 excludes from registration trade-marks which are currently used in commercial intercourse for designating certain kinds of goods, as well as those which contain immoral and offensive or other representations contrary to public order, or inscriptions or statements such as are contrary to actual business conditions or to truth, and which are calculated to deceive consumers.

Section 10 prohibits the misappropriation of various designations as follows:

SEC. 10. No person may, without permission from the interested party, make use of the name, firm name, coat of arms, or business name of the establishment of another producer or merchant for designating goods or products.

Sections 23 and 24 relate to the sale or offer for sale of goods bearing fraudulent trade-marks. The language of these sections is as follows:

SEC. 23. Whoever knowingly circulates or offers for sale goods which have been designated without authority with a trade-mark with respect to which the exclusive right of use belongs to another, or whoever knowingly counterfeits a trade-mark for this purpose, is guilty of an offense and is punished with a fine of from 500 to 2,000 florins, or with imprisonment of from three months to one year, to which may be added a fine not to exceed 2,000 florins.

The simultaneous application of the more severe provisions of the Penal Code, especially those relating to the crime of fraud (sec. 197 fol.) are not hereby excluded.

SEC. 24. The provisions of section 23 have application also to the one who knowingly circulates or offers for sale goods which have been designated without authority with the name, firm name, coat of arms, or business name of the establishment of a producer or merchant, also to whoever for this purpose knowingly makes such designations.

LAW REGULATING CLOSING-OUT SALES.-The law of January 16, 1895,3 regulates the advertising and conduct of closing-out sales. Section 1 provides that such sales can only be held with the approval of the

1 Josef Křenek ca. Handelsministerium, Erkenntnis v. 2. Okt. 1907, Z. 8911; Budwinski, op. cit., Bd. XXXI, S. 887, No. 5388.

2 Gesetz vom 6. Jänner 1890, mit Ergänzung und Abänderung vom 30. Juli 1895; Reichsgesetzblatt, 1895, Nr. 19.

3 Gesetz vom 16. Jänner 1895, betreffend die Regelung der Ausverkäufe; Reichsgesetzblatt, 1895, No. 26, S. 83.

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