News on the Legal Situation of Direct Marketing
in the Federal Republic of Germany
by Dr. Peter Schotthoefer

A whole series of important changes in the German advertising law in the recent past was triggered by the European Union.

Thus in 1997 the directives for the introduction of the admissibility of comparative advertising became effective. And yet in 1998, i.e. before the expiration of the deadline for the conversion of this Directive into a German national law the Federal Supreme Court had already decided that the applicable jurisdiction had to be amended which had for approx. 70 years primarily considered comparative advertisement a violation of § 1 of the "Law against Unfair Competition" and thus against good moral. They also found that shortly before the turn of the millenium and being a member state of the European Union in the opinion of the judges of the Federal Republic of Germany no longer could be considered a violation of "good moral" what in most of the remaining member states of the European Union did not violate good moral at all, and that therefore also comparative advertisement should be considered by German Courts admissible already before expiration of the deadline for the conversion of the Directive into national law.

The Directive which has been converted into German law since September 1, 2000, however, does not only have effect on the sector of comparative advertisement. Much more important is the acknowledgement of the Federal Supreme Court that German courts cannot consider any longer something as "contrary to (German) good moral" what in other member states is just not found a violation of their "good moral". This approach has effect on a whole series of relevant prescriptions of the advertisement law. Thus e.g. "cold" telephone calls for advertising purposes in the Federal Republic of Germany are also considered a violation of "good moral", but not by the majority of the remaining member states of the European Union.

Another directive, namely the Remote Sales Directive finally demands that in the beginning of a telephone call for advertising purposes the reason of the call and the company must be indicated. If a directive prescribes how a "cold" telephone call must be made, this does not show without a reason that the Directive considers admissible a call for advertising purposes in se without the prior consent of the person called because otherwise it would not have regularized the modalities of such a call. According to the good old principle that "what cannot be" also "must not be", this acknowledgement, however, has not yet got through to the competent German courts. As the Remote Sales Directive has also been converted into German Law since July 1, 2000, this is certainly a matter of time until this argument, too, will have been spread.

The E-Commerce Directive and its far reaching influence on the German (advertising) law

It is quite an essential influence the so-called e-commerce Directive, which was passed as recently as on May 3, 2000, is exerting on the German National Advertising Law and on the German legal situation. For § 3 of this Directive contains the so-called "Country of Origin Principle". This principle means nothing else but the fact that in electronic legal transactions the decisive factor for the legal judgement is the country where the offerer has its domicile. The country of the receiver of the offer, however, is not relevant. This means that in the case of the offer by an English company by e-mail to possible German customers it is not German Law that applies but the English Law. And another by an Italian e-mail sender to German customers is governed by the Italian law, in case of the offer by a French enterprise French law must be applied. With this "trick" the European Union forces countries with strict legal prescriptions - as the Federal Republic of Germany - to adapt their national law to the less rigorous law of their EU neighbors. This means for the Federal Republic of Germany that it must weaken or even abolish its strict prescriptions if it does not want to considerably prejudice its companies in their own country ("discrimination of nationals"). Above all it is thanks to this "principle of the country of origin" that the premium regulation and the discount law will be abolished without replacement in the course of 2001.

These two prescriptions which have never been understood completely by the other European countries, and which have considerably hindered the entry of foreign enterprises in the German market since the countries of origin did not have any prescription of similar strictness, are the first and most prominent victims of this principle of the country of origin.

New conditions for the mail order business

The Remote Sales Law which became effective on July 1, 2000 regularizes all contracts concluded between enterprises and consumers without the personal presence of the two contracting parties only via telecommunication means such as telephone, telefax, e-mail, etc. This law contains extensive information and warning duties which in part had been included already in a comparable form in various German prescriptions and a revocation right also already known in the German law to the consumer. At the same time as the Remote Sales Law provision was introduced to the Civil Code ruling that the winner of a contest for advertising purposes now has a legal right to receive his prize contrarily to the legal situation effective so far. According to the wording of the law this, however, only applies to the announcement of a prize in a mailing ("forwarding"), i.e. not for the general offer of the prize in a print medium, on television, radio or by other communication means.

"Cold" e-mail advertising not allowed

As for e-mail advertising the opinion has established itself that also advertising through "cold" e-mail for advertising purposes was against good moral and thus against § 1 of the "Law against Unfair Competition". This opinion which certainly complicated commerce by means of electronic communication considerably is shared by most German courts but they try in a few cases to substantiate the admissibility of this kind of advertising with comprehensible arguments which, however, are very difficult to be understood from the legal point of view.

Modification of jurisdiction on "Notion of Misleading Advertising"

The prohibition of misleading advertising contained in § 3 of the "Law against Unfair Competition" has been and is being influenced by the European Law, especially by the European Court of Justice. Whereas in the Federal Republic of Germany an advertising statement is considered misleading when approx. 15% of the consumers polled understand it as a misrepresentation, the European Court of Justice applies a more generous standard. German courts judge the question of misrepresentation from the viewpoint of a "superficial, uninterested and uninformed consumer", the European Court of Justice, however, from the viewpoint of the "interested, informed and not superficial consumer". It seems though that German courts have not yet adopted this change of jurisdiction. Even if they acknowledge the changed jurisdiction at all they do invoke the formulations of the European Court of Justice but nevertheless they do not change their standards.

As far as it is known only the Hamburg Appelate Court has applied the legal opinion of the European Court consequently by a bold decision. The case being the subject of its decision was the cover of a CD which contained music titles by the famous German singer "Roy Black". On the face of the cover there was a reference to Roy Black, on the rear the statement that they were not the original songs from 1964 but remakes recorded in 1974. The Hamburg Appellate Court sentenced that the "interested, informed and not superficial consumer" does first conclude from the statement on the cover face that it is the original music but looking at the rear he can clearly recognise that it really is a remake recorded in 1974.

Data Privacy

The amendment of the Federal Data Privacy Law became effective on 23.05.2001. Thus the Directive of the European Union was converted into German national law. At the time of converting this Directive the Federal Republic of Germany had already been in default for almost 3 years.

Besides the Federal Data Privacy Law, the Telecommunication Law as well as the Telecommunication Data Privacy Ordinance contain further data privacy provisions relevant for telephone marketing.