German Court rules Facebook original Friendfinder and various terms and conditions to be illegal (Landgericht Berlin, Urteil vom 6. März 2012, Az. 16 O 551/10)

In a decision published on 6 March 2012 the German court has issued an injunction against the European subsidiary of Facebook, Facebook Ireland Limited, to the effect that, at least not in regard to users and contacts from Germany,

• Facebook may no longer automatically import the user’s contact lists and collected email addresses upon registration, and then automatically generate emails directed at the user’s friends and contacts, inviting them to join Facebook as well.

Furthermore, the court has held that a number of general terms and conditions found in Facebook’s terms and privacy policy are illegal and unenforceable under German law, inter alia:

• that the user grants to Facebook a basically all-encompassing, royalty-free, worldwide license to use any IP content the user may post on Facebook;
• that the user gives permission to Facebook to use the user’s name and profile picture in connection with advertising and commercial content
• the mechanism for Facebook’s unilateral right to change the terms and conditions more or less arbitrarily on short notice;
• the vague rule about terminating the user’s Facebook account if the user “violates the letter or spirit of this Statement, or otherwise creates risk or possible legal exposure for Facebook”
• the unlimited data mining and tracking of user behaviour for advertising purposes

According to the court’s decision, Facebook is prohibited from continuing to employ said practices and terms when dealing with users domiciled in Germany.

The court’s decision is not yet final. It is subject to appeal to the Berlin Court of Appeals (Kammergericht).
Lawyer’s note:

The case has been brought by a German consumer rights organisation, the Verbraucherzentrale Bundesverband, a non-profit, non-governmental organisation fulfilling a watchdog role not unlike the Office of Fair Trading (OFT) in the UK or the Federal Trade Commission (FTC) in the USA.
The case illustrates the willingness of German courts to tackle what may be considered overly aggressive and assertive business practices commonly employed particularly by U.S. companies. There is a tendency to transfer extant terms and conditions to other international markets literally and one to one. In Facebook’s case, the company has indeed for the most part simply literally translated its original terms and conditions, which may be compliant to U.S. law and practices, into German. This does not work from a legal point of view.

German law in particular has a strict regime regarding the content of everything which may be considered general terms and conditions, especially in regard to consumer rights. The German Civil Code has an entire section dealing with what kind of clauses may or may not be used in general terms and conditions and standard business terms (see sec. 305 ff. BGB).

In case of violations, not only the respective clauses may be legally invalid and unenforceable under German law, but also competitors and consumer protection organisations may bring injunctive action under the German laws against unfair competition (UWG)

Of course, the case offers an interesting example of the legal problems encountered when a foreign company, hailing from one country (U.S.A. in this case), having established a subsidiary based in another country (Ireland) conducts online business with customers from yet another country (Germany).

The German court at least in this case has assumed itself to be competent, and to apply national German law, for all cases which involve consumers of German nationality or domicile.

This corresponds with legal standards in the European Union where consumer protection is held high.

Any international company seeking to expand its business to Germany and other European markets would do well to consider the legal implications, and to take extra efforts to try to comply with the relevant national laws, in particular consumer protection laws. This may entail changing and adapting the terms and conditions.

German law offers a wide range of effective legal remedies to enforce and defend consumer rights as well as intellectual property rights. These range from out-of-court warning letters and cease and desist letters to immediate court injunctions and claims for damages. Also, the reimbursemend of legal costs my e claimed from an infringing party. Any strategy aimed at conducting interantional online business should consider the German market and the legal enforcement opportunities to be found in Germany.

If you have any questions please feel free to contact:
Dr. Marcus Dittmann