Were the condoms "made in Germany" and why does it matter?

One of the more vexing questions in product marking is the circumstances in which a product may describe itself as having been “made in” a given place. This Kat previously tackled the issue in the context of national legislation in Switzerland regarding the use of “Swiss made” with respect to the manufacture of watches (“Do you know now much Swatch is in your watch?”). There, it was pointed out that such a designation does not mean that 100% (indeed, maybe only as little as 50%) of the watch components need actually be made in Switzerland. A similar question was raised in the German courts, reaching the Bundesgerichtshof, in its Decision of 27 November 2014 (I ZR 16/14), "CONDOMS - Made in Germany". The IPKat is grateful to Silke Freund, of the Munich office of Katfriends Boehmert & Boehmert, for recently summarizing this decision in English ("Use of the indication 'made in Germany', in the era of global division of labour"). What follows is this Kat's understanding of the decision and its implications.

At issue was a claim for unfair competition regarding the use of the designation “CONDOMS --  made in Germany." The Bundesgerichtshof rejected the defendant’s complaint against the denial of leave to appeal and upheld that the designation “Made in Germany” was improper. It noted that the mere fact that the making of a product is the result of a “division of labour” among several countries is not of itself determinative, since the modern consumer does not expect that 100% of the manufacture of a product will necessarily take place in a single country (in this case, Germany). What then was required to state that the condom product was “Made in Germany”? The answer is that, for the designation to be accurate, the quality and characteristics of a condom deemed by consumers to be essential must have taken place in Germany. The Court identified the essential characteristics with respect to a condom as impermeability and tear-resistance. As such, the question is where the process of manufacture that confers on the condom product these essential characteristics has occurred.

The Bundesgerichtshof noted that the defendant was supplied with the natural rubber latex condom product, appropriately shaped, from outside of Germany. The defendant then individually sealed the condom product in foil packaging, to which it added certain required markings. The sealed items are then appropriately packaged together with printed instructions for use. In this connection, the defendant carries out in its own laboratories batch quality control tests on randomly selected products, in accordance with German DIN-standard regulations. These tests determine, inter alia, whether the products meet the standard for both impermeability and tear-resistance. The defendant advertises the product on-line that meet these quality criteria by using the designation—“CONDOMS—Made in Germany.” Against this background, the Court affirmed that the condom products at issue could not claim to be “made in Germany.” This is because while the sealing, packing and quality control of the product had been carried out in Germany, all the actual manufacturing process had taken place outside of Germany. Under such circumstances, the product was not “made in Germany.”

The Bundesgerichtshof ruled that Article 24 of Regulation 2913/92 (the Customs Code) was not to the contrary. By Article 24:

“Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.”

With respect to the condom product at issue, Germany did not satisfy the requirement of being the country of origin. Adherence to the quality standards set under German law had no impact on whether the product in question had made in Germany. The term “hergestellt in Deutschland”/ “made in Germany” means exactly what is says, namely that the process of manufacture had taken place in Germany.

The result of this case seems reasonable, based on the legal standard as described. That said, this Kat does wonder whether the issue of quality in accordance with the German national standards should be so easily dismissed. After all, it is presumed that the defendant sought to claim that its condom product is “made in Germany” not solely because of its geographic provenance but because such provenance itself connotes an assurance of high product quality. This Kat wonders how that consideration is brought to bear under Germany law.

Decision of the OLG Köln here
Decision of the Bundesgerichtshof here