Key Aspects of German Business Law www.ebook3000.com Michael Wendler ´ Bernd Tremml Bernard Buecker (Eds.) Key Aspects of German Business Law A Practical Manual Third Edition 12 www.ebook3000.com Michael Wendler Wendler Tremml Rechtsanwồlte Mổrsenbroicher Weg 200 40470 Dỗsseldorf Germany dus@law-wt.de Bernard Buecker 1220 Tower Life Building 310 S St Mary's San Antonio, Texas 78205 USA Dr jur Bernd Tremml, M C J Wendler Tremml Rechtsanwồlte Martiusstraỷe 5/II 80802 Mỗnchen Germany munich@law-wt.de The information contained herein is general information and is not intended to provide legal advide Should you require legal advice, you should seek the assistance of counsel Copyright ° 2006 Michael Wendler, Bernd Tremml, Bernard Buecker ISBN-10 3-540-28422-2 Springer Berlin Heidelberg New York ISBN-13 978-3-540-28422-2 Springer Berlin Heidelberg New York ISBN 3-540-43411-9 Auflage Springer Berlin Heidelberg New York Cataloging-in-Publication Data Library of Congress Control Number: 2005938059 This work is subject to copyright All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag Violations are liable for prosecution under the German Copyright Law Springer is a part of Springer Science+Business Media springeronline.com ° Springer Berlin ´ Heidelberg 1999, 2002, 2006 Printed in Germany The use of general descriptive names, registered names, trademarks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use Hardcover-Design: Erich Kirchner, Heidelberg SPIN 11543978 64/3153-5 ± Printed on acid-free paper www.ebook3000.com Preface This book presents a clear and precise overview of the key aspects of German business law It was written by attorneys involved in the daily practice of business law in Germany and is aimed at people who wish to orient themselves quickly with the German legal system and the manner in which it impacts business purchases, establishment, operations and liquidations The first section of the book is devoted to an explanation of the major issues to be considered in acquiring or establishing a business in Germany The second section focuses on areas of commercial law that are important for an operating business The following sections deal with labor law as an independent part of German business law and with computer law Furthermore, procedural law and European law are addressed Finally, the last two sections of the book are devoted to an overview over the German tax law, which has an enormous impact on business decisions, and IP law In all sections special attention has been paid to highlighting and explaining the differences between the German legal system and that of the United States Nevertheless, the intention is to provide information that will prove valuable to all foreigners, particularly business men and women and lawyers advising clients with an interest in doing business in Germany Although it is the object of this book to provide readers with a general orientation and the foundation for making informed decisions concerning business transactions in Germany, it cannot possibly function as a substitute for casespecific professional advice and by no means purports to so Those readers who wish to follow up on any decisions they may have formed on the basis of the material presented here are well advised to seek the guidance of qualified attorneys and tax advisors before entering into any binding obligations This holds particularly true in light of the fact that all information here is based on the laws that were in effect in the Federal Republic of Germany on the first of November 2005 Michael Wendler Attorney at Law Dusseldorf, Germany Bernd Tremml Attorney at Law Munich, Germany www.law-wt.de www.ebook3000.com Bernard Ben Buecker Attorney at Law San Antonio, Texas Table of contents Introduction Overview of the German legal system and its role in light of Germany’s membership in the European Communities Bernd Tremml Part I How to establish or acquire a business in Germany Recognized forms of business organizations Bernd Tremml and Bernard Buecker Establishment of a company or branch office .35 Thomas Fischl The Acquisition of closely held Companies 41 Bernd Tremml Valuation of business enterprises 57 Bernd Tremml “Pseudo-foreign companies” in Germany - The Centros, Überseering and Inspire Art decisions of the European Court of Justice 63 Kai F Sturmfels Part II Commercial law 69 The law of contracts 71 Michael Luber General terms of business (AGBs) 85 Andreas Stadler and Michael Luber Torts 97 Tobias Tremml Product liability under German and European law 111 Ralf Grote Real-estate property law Germany 121 Christian R Wolf www.ebook3000.com VIII Table of contents The law of bankruptcy and security interests 131 Reinhard Nacke Unfair competition 141 Henrik Schroeder The law of public procurement 149 Norman Müller Distribution agreements 165 Michael Bihler Private public partnerships 179 Richard Pietrzyk and Kai F Sturmfels Copyright 187 Carsten Gerlach Part III Labor law 203 Aspects of German labor law 205 Wolf D Schenk Residence and work permit 219 Michael Wendler and Sebastian Maiß Essentials of social security law in the Federal Republic of Germany 231 Richard Pietrzyk and Sebastian Maiß Part IV Computer law 235 Computer law 237 Michael Karger Electronic commerce 245 Raimund Walch Protection of internet domain names 251 Wolfgang C Leonti and Henrik Schroeder Part V Procedural law 257 Enforcement of rights and claims through the courts and arbitration tribunals/The German attorney fees 259 Reinhard Nacke www.ebook3000.com Table of contents IX Principles of the legal regulation of attorney fees .267 Stefan Sandrock Notaries in Germany 277 Christian R Wolf Part VI European law .287 Institutions of the European Community 289 Bernd Tremml Antitrust law in the European community 301 Bernd Tremml and Michael Luber Part VII Tax law 311 German tax law 313 Inge Badura Part VIII IP 327 The PCT and the enforcement of patents in Europe 329 Kay Rupprecht Trademark protection in Germany and Europe 377 Eugen Popp List of authors 437 www.ebook3000.com Glossary of German terms and abbreviations A Abgabenordnung (AO) Tax Code Abstraktionsprinzip abstraction principle Abtretung assignment Allgemeine Geschäftsbedingungen (AGB) General Terms of Business Amtsblatt der Europäischen Union Official Journal of the European Union Amtsgericht Court of Small Claims; municipal court Änderungskündigung a termination of a contract with the reserved right to renew it under altered conditions Änderungsvertrag contract of amendment Angestellte employees; salary earners; “white collar” workers Aktiengesellschaft (AG) stock corporation Aktiengesetz (AktG) Corporation Act Aktionär stockholder (of a stock corporation) Aktie a share of stock; stock certificate Arbeiter laborers; “blue collar” workers Arbeitserlaubnis work permit Arbeitserlaubnisverordnung (AEVO) Work Permit Regulations Arbeitsförderungsgesetz (AFG) Work Promotion Act Arbeitsgerichtsgesetz (ArbGG) Code of Labor Procedure Arbeitslosenversicherung occupational incapacity insurance Arrest Freeze Order Arzneimittelgesetz (ArzneimittelG) Pharmaceutical Products Act Aufenthaltserlaubnis temporary residence permit www.ebook3000.com XII Glossary of German terms and abbreviations Aufenthaltsgesetz Federal Residence Act Aufsichtsrat supervisory board of a company or corporation Ausländer foreigner; alien Ausländergesetz (AuslG) Aliens Act Ausländeramt Aliens Office Außenministerium Department of Foreign Affairs Außenwirtschaftsgesetz Federal External Trade Act B Begehungsgefahr danger of commission of an offense Bergamt mining authorities Berufsgenossenschaft administrative authorities in charge of providing social insurance due to occupational accidents Berufungsverfahren appellate proceedings (to the next higher court) Beschäftigungsverordnung (BeschV) Employment Regulation Order Betriebsaufgabe abandonment of a business enterprise Betriebsrat works council Betriebsstätte operational location (dependant branch offiche) Betriebsverfassungsgesetz (BetrVG) Employee Representation Law Bezirk district BGB-Gesellschaft see Gesellschaft des bürgerlichen Rechts BGB-InfoV Federal Ordinance on the Duty to Provide Information to the Consumer Bilanzrichtliniengesetz commercial balance sheet Bilanzrichtliniengesetz Accounting Directives Act Bundesagentur für Arbeit Federal Employment Office www.ebook3000.com Glossary of German terms and abbreviations Bundesarbeitsgericht Federal Labor Court Bundesministerium für Arbeit und Soziale Sicherung Federal Department of Labor and Social Order Bundesfinanzhof Federal Finance Court Bundesgerichtshof (BGH) Federal Supreme Court Bundeshaushaltsordnung Federal Budget Code Bundesimmissionsschutzgesetz (BImSchG) Federal Emission Act Bundeskartellamt Federal Cartel Authority Bundesrechtsanwaltsordnung (BRAO) German Bar Act Bundesrechtsanwaltsgebührenordnung (BRAGO) Attorneys’ Fee Ordinance Bundespatentgericht Federal Patent Court Bürgerliches Gesetzbuch (BGB) Civil Code Bürge guarantor Bürgschaft surety or personal guarantee Bundesverfassungsgericht Federal Constitutional Court XIII D Darlehen loan intented for consumption (normally a monetary loan) Delikt tort, (compensatory) unlawful act Deutsche Angestelltengewerkschaft White Collar Union Deutscher Beamtenbund Civil Servants’ Union Deutsche Bundesbank Federal Reseve Bank of Germany Deutscher Gewerkschaftsbund (DGB) German Association of Industrial Labor Unions Dienstvertrag contract for services (without any promise of specific result, as opposed to a Werkvertrag dinglicher Vertrag real contract www.ebook3000.com Trademark protection in Germany and Europe 425 C Opposition An opposition period of three months runs from the publication date, within which the owner of any prior conflicting mark may oppose the CTM registration If refused in opposition proceedings, the application may be converted into separate national applications, for example in the countries where the prior conflicting rights not exist If at least one opposition has been filed, an extendable “cooling off period” of initially two months commences in order to provide for time to negotiate a settlement of the opposition between the parties Repetitive: Opposition Opposition a) Opposition period of three months from publication date b) CTM-Application may be converted into separate national applications c) Extendable „Cooling off period“ of initially two months D Seniority To allow for a transition from national registrations to the CTM, a seniority claim is available A CTM application may claim seniority from a previous national registration in any Member State This will permit Applicant to make a CTM application covering all of the European Union Member States, while at the same time retaining his protection rights back to the filing date of his national registration Having obtained the seniority right in the CTM application, the national registrations can be abandoned without loss of rights 426 Eugen Popp Repetitive: Seniority Seniority a) Application may claim seniority from a previous national registration b) Having obtained seniority right, national registration can be abandoned E Registration and use The CTM has a duration of ten years, after which renewal is possible without the necessity of filing proof of use Validity of the mark requires use in any part of the European Union The registration is subject to cancellation if it has not been used within the Union over a continuous period of five years Repetitive: Registration and Use Registration and Use a) Duration of 10 years, after which renewal is possible without filing proof of use b) Subject to cancellation if not used over a continuous period of five years F Litigation Infringement and invalidity with respect to the CTM are dealt with by the respective national courts under national law A CTM may be revoked in view of conflict with prior rights, including a prior right anywhere in the European Union Trademark protection in Germany and Europe 427 This may be the one disadvantage of the CTM system However, the CTM can be converted into national applications The CTM registration provides a single unitary right throughout the EU Assignments or licenses with respect to the mark are registered at the OHIM Being unitary, the trademark cannot be separately assigned to different parties for separate countries However, it can be licensed to different parties for separate countries From these short remarks on the Community Trademark it can be recognized that such marks for Germany are just as important as national German trademarks Actions can be taken against the Community Trademark out of prior national German marks or, on the other hand, rights can be derived from Community Trademarks against newer national trademark applications In summary, the German trademark competes in Germany not only with German designation rights, but stands on the same footing with: x International Registrations under the Madrid Agreement and/or Madrid Protocol which designate Germany, as well as x Community Trademarks Repetitive: CTM-Litigation CTM-Litigation a) Infringement and invalidity are dealt with by national courts and law b) CTM may be revoked in view of conflict with prior rights in the EU c) German Trademarks are equivalent to IR-Marks and CTMs 428 Eugen Popp G The “link”: interaction between the Madrid protocol and the CTM system The “link” between these two systems provides for the possibility of designing the European Union as one single region as CTM in a Protocol application (“incoming PRI Mark”) or to base a Protocol application as “home applications (“outgoing PIR Mark”) Regarding the question whether an applicant should seek protection in the European Union directly by filing a CTM application or through the protocol, the following is important to note There is a five year vulnerability of a CTM as part of a protocol registration which provides for risk of that CTM being turned down together with the Protocol registrations following a successful “central attack” This may be an argument against this type of application However, even in such case, a conversion of a CTM into a national application remains available An “outgoing PIR Mark” is in any case solely available to EU nationals since the basic CTM application must act as home application For EU member states signatory to both the Madrid Agreement and the Madrid Protocol, an outgoing PIR Mark on the basis of a CTM application may also be disadvantageous because of significantly higher official fees payable for each Protocol designation IV Summary A What is a trademark? A mark distinguishes goods and services from those of another enterprise Marks are the names, which “personalize” the product or service A mark ensures the quality of the goods (guarantee and trust), the recognition of a product (advertising and origin) and the better quality (quality function) The mark should also ensure the quality of the goods (guarantee and trust) as well as recognition of a certain product (advertising and origin) of the same or better quality (quality function) together with the technical advancement The recognition function of a mark by the consumer and the control function of the owner of the mark was again confirmed by the European Court of Justice in the Ideal Standard decision dated June 22, 1994 (published in GRUR Int 1994, 614 et seq.) The mark is therefore an instrument of consumer protection Trademark protection in Germany and Europe 429 B According to Par trademark act, marks can be registered in the following forms: Word Marks Groups of Letters Picture Marks Word & Picture Marks Sounds Colour Combinations Numbers Three dimensional shapes and packaging 430 Eugen Popp C How does a mark originate? Trademark protection in Germany and Europe 431 D How does trademark protection originate? Registered trademark protection rights are obtained by application and registration at the competent authorities Normally these are patent offices or trademark offices in the various countries In Europe, the Community Trademark Office (OHIM) is also available for filing a Community Trademark (CTM) In Germany, the German Patent Office in Munich with its branch office in Berlin is the competent office Upon entry in the Trademark Register, a sign becomes a registered trademark The sign may (but need not be) marked with the sign ® which equals registered mark For well known marks, the proprietor often does not use an ®, such as for Boss or Mercedes However, for less well known marks, also with additional elements it is recommended as follows: For weaker marks, the ® should be used such that the presence of trademark protection is visible For example, the trademark Balance (registered by Goldwell AG, Darmstadt) appears almost descriptive, especially when seen on the packaging or in advertising with the words “skin balance” or “maintains the natural balance”, etc 432 Eugen Popp E Why seeking trademark protection? A registered mark provides industry with protection from mark pirates, infringers and inadvertant imitators Mark pirates are extremely detrimental to the economy Well known marks such as the Lacoste crocodile, Rolex, Pattex, Creme 21, Persil, etc are often popular mark pirates’ imitations Concerning such imitations, see below: Trademark protection in Germany and Europe 433 434 Eugen Popp Mark piracy appears in many forms While in some countries almost slavish imitation is rife, in western countries where the law is effective, imitations are more subtle Leading market products are copied in such a way as to make the consumer think that imitations are another mark of the known manufacturer as can be seen from the following comparison between originals and corresponding imitations The trademark protection law makes it possible for the owner to take legal action against imitators and pirates The laws and their implementation are different in every country, however, the registered trademark is the best means for defense Thus, trademark protection is very important As already mentioned, the trademark also protects the consumer because he can expect the same or even better quality of the known product, especially for pharmaceuticals, etc Marks should not be ridiculed or satirized in such a way as to damage or exploit the goodwill associated with them Trademark protection in Germany and Europe 435 F What other dangers face registered marks? Registered marks can lose their protection when they are used in a generic sense, e.g., the mark “Vasolene” for mineral fat was previously protected (still protected in the USA), the mark “Kleenex” for facial tissues or “TEMPO” for tissuehandkerchieves The mark “Nylon” for synthetic fibre has also become a so-called “free sign” open to the public domain (generic designation), because the proprietor failed to prohibit third parties from use of the mark in describing similar goods Do you know for example that the word “WALKMAN” is a registered mark? Only the proprietor or licensee may use this sign on their products The goods of other manufacturers use words such as walk player, cassette recorder, etc Thus, it is actually detrimental to use a registered mark in the form of a verb, e g the mark “PRITT” in advertising as “PRITT ALONG TOO” PRITT is a trademark for a glue stick If used in the form of a verb, PRITT could one day replace the word “glue” Then trademark protection would be lost! For another example, the company Henkel owns the mark “MEGAPERLS” for detergents The detergents are presented in the form of small balls and look like little pearls The trademark owner would be ill advised to speak of the newly developed detergent as the “Megaperls” in the descriptive sense of “Mega Pearls” In this manner, good trademarks can become generic expressions and, therefore, free to the public for use by the competitors List of authors INGE BADURA Tax consultant and certified public accountant in Munich, Germany She has many years of experience in all areas of tax law and accountancy, working with both German and international clients, including French and English speaking companies and subsidiaries DR MICHAEL BIHLER Attorney at Law in Munich, Germany – partner in the law firm of Wendler Tremml He provides legal representation to large international corporations and distribution companies, as well as to developers and mid-sized businesses DR BERNARD BUECKER Attorney at Law in San Antonio, Texas He received the Doctor of Jurisprudence degree from the University of Texas at Austin, was a Fulbright Scholar at the University of Heidelberg School of Law, Germany, and specializes in German American legal disputes He was awarded the Service Cross of the Federal Republic of Germany in 1987 and was appointed Honorary Consul of the Federal Republic of Germany by President Rau in 2001 DR THOMAS FISCHL Attorney at Law in Munich, Germany – senior associate in the law firm of Wendler Tremml He is chiefly involved with representing the interests of midsized and major IT providers and business customers in both the domestic and international markets Corporate law and industrial property protection are his areas of further focus CARSTEN GERLACH Attorney at Law in Berlin, Germany – senior associate in the law firm of Wendler Tremml His areas of expertise include intellectual property and computer law He provides legal representation to companies and public authorities, especially in the area of computer law DR RALF GROTE Attorney at law in Berlin, Germany – partner in the law firm of Wendler Tremml He is a litigation lawyer with longstanding experience One of his areas of expertise is the law of product liability He is active for and recommended by well-known German insurers Moreover, he provides legal advice to the food industry 438 List of authors DR MICHAEL KARGER Attorney at Law in Munich, Germany – partner in the law firm of Wendler Tremml His areas of expertise include computer law and telecommunications law He is a frequent lecturer on the law pertaining to the use of on-line computer services WOLFGANG C LEONTI Legal counsel at a global software company His areas of expertise include IT law, industrial property rights, and software law He handles trademark infringement cases DR MICHAEL LUBER, LL.M.Eur Senior associate at the law offices of Wendler Tremml and lecturer at LudwigMaximilians-University in Munich, Germany He teaches constitutional law and has special experience in European law, as well as in the laws of procedure SEBASTIAN MAIß Attorney at law in Düsseldorf, Germany His special areas of expertise include European labor law and international social legislation NORMAN MÜLLER Attorney at Law in Berlin, Germany – partner in the law firm Wendler Tremml His areas of expertise include computer law and public procurement law He provides legal representation to large international corporations as well as to midsized companies, especially in their activities for and with public authorities in Germany DR REINHARD NACKE Attorney at Law in Düsseldorf, Germany – partner in the firm of FPS Fritze Paul Seelig His special area of expertise lies in the representation of foreign and German companies in legal matters with international background, including the representation in legal disputes in and out of court or arbitration tribunals RICHARD PIETRZYK Attorney at Law in Düsseldorf, Germany – partner in the law firm of Wendler Tremml He concentrates on providing legal counsel to foreign companies in Germany and Poland, on international business law and private building law He also serves as an arbitor for the German-Poland Chamber of Commerce in Warsaw, Poland DR EUGEN POPP Educated at Munich’s Technical University and Ludwig-Maximilians-University, he is a partner in the firm of Meissner, Bolte & Partner in Munich, Germany Dr Popp is Vice-President of the German Patent Attorneys’ Bar Association, Secretary General of the European wide Committee of National Institutes of List of authors 439 Patent Attorneys and former President of the Bavarian Association of Patent Attorneys KAY RUPPRECHT European and German patent and trademark Attorney in Munich, Germany – partner in the intellectual property firm of Meissner Bolte & Partner He specializes in the prosecution and litigation of German, European, and International (PCT-) patent and trademark applications and their registrations STEFAN SANDROCK Attorney at Law in Munich, Germany – senior associate in the law firm of Wendler Tremml His areas of expertise include administrative law as well as landlord and tenant law WOLF D SCHENK Attorney at Law in Munich, Germany His areas of expertise include collective bargaining and individual labor law, industrial property and copyright law, as well as drafting of corporate contracts, especially in regard to tax issues DR HENRIK SCHROEDER Attorney at Law in Munich, Germany – senior associate in the law firm of Wendler Tremml His areas of expertise include industrial property law, the law on competition, internet law, and public law DR ANDREAS STADLER Attorney at Law in Munich, Germany - partner in the law firm Wendler Tremml His areas of expertise include IT law, contract law, commercial and distribution law, as well as industrial property protection and copyright law KAI F STURMFELS, LL.M Attorney at Law in Düsseldorf, Germany – senior associate in the law firm of Wendler Tremml His professional focus is on private building construction law, business and corporate law, as well as IT law He participates in seminars as an expert speaker on various legal issues, chiefly as they concern private building construction law DR BERND TREMML, M.C.J Attorney at Law in Munich, Germany – partner in the law firm Wendler Tremml He has many years of experience in the representation of foreign clients who wish to establish a subsidiary or purchase a business in Germany or in other European countries Bernd Tremml is admitted to the Bar of the State of Texas as Foreign Legal Consultant 440 List of authors TOBIAS TREMML, MPA Holding both a German law degree, as well as a business degree from Columbia University, New York, he is working in a management position at an international software company in Dresden, Germany Before joining his current company, he taught constitutional law at Ludwig-Maximilians-University of Munich, Germany RAIMUND E WALCH Attorney at Law in Berlin, Germany – partner in the law firm Wendler Tremml His special areas of expertise include IT law, commercial and corporate law, as well as private construction law MICHAEL WENDLER Attorney at Law in Düsseldorf, Germany – partner in the law firm Wendler, Tremml His focus is on the provision of legal representation to German corporations that operate globally and to foreign companies and associations concerning their business activities in Germany and in all EC-member states DR CHRISTIAN R WOLF Notary in Kleve, Germany Educated at the Ludwigs-Maximilians-University of Munich and the University of Freiburg, he specializes in corporate law and international business transactions, in real-estate transactions, and particularly in the formation and merger of business enterprises Fluent in Dutch, he is especially involved in international transactions between The Netherlands and Germany ... presents a clear and precise overview of the key aspects of German business law It was written by attorneys involved in the daily practice of business law in Germany and is aimed at people who wish... areas of law impacting the establishment and operation of businesses in Germany are often reflective of EC law Nevertheless, for the most part EC laws have been incorporated into national law and... a business in Germany The second section focuses on areas of commercial law that are important for an operating business The following sections deal with labor law as an independent part of German