By judgment of June 14, 2006, the Mannheim Regional Court sentenced three defendants to prison terms for criminal advertising (§ 16 para. 1 UWG) and ordered the forfeiture of equivalent value against them and two ancillary companies. In the case of two other ancillary companies, it refrained from ordering forfeiture.
§ 16 para. 1 UWG (Criminal Advertising) states:
Anyone who, with the intention of creating the impression of a particularly favorable offer, misleadingly advertises through false statements in public announcements or communications intended for a larger group of persons, shall be punished with imprisonment for up to two years or with a fine.
According to the court's findings, the defendants were responsible for companies operating in mail-order business. Through a system of foreign domiciliary companies, they initiated and organized the dispatch of standardized advertising mailings to consumers, which were personalized using address databases and thus designed as personal letters. The mailings, each accompanied by product catalogs, contained false and misleading prize notifications and gift promises. The prizes and gifts specified in the mailings were not distributed. The promised prizes were not paid out; no sweepstakes took place at all. The gifts sent were merely “worthless junk.” The defendants' objective was to promote the sale of the goods offered in the catalogs through these advertising measures; the customer base consisted predominantly of elderly individuals with a low level of education.
The judgment had been challenged by appeals from both the defendants and two ancillary companies, as well as the public prosecutor's office.
The 1st Criminal Senate of the Federal Court of Justice upheld the conviction for criminal advertising and clarified the jurisprudence regarding this offense. It also deemed the Regional Court's assessment correct that the defendants acted with the “intention” of “creating the impression of a particularly favorable offer.” This subjective element of the offense was present, even if the false and misleading statements did not directly relate to the catalog goods but to the prize notifications and gift promises. For these monetary benefits and the catalog goods, based on the overall impression of the advertising mailings – which is decisive for legal assessment – constituted a unified “offer” within the meaning of § 16 para. 1 UWG: The recipient could only receive the gifts if they ordered goods with a minimum value of €15 (legal nexus). In this regard, the Federal Court of Justice considered a contractually agreed or statutory right of return to be irrelevant. Regarding the prize notifications, such a legal nexus was absent. However, the Federal Court of Justice decided for the first time that a unified overall offer also exists if the recipients' decision to order goods is intended to be influenced by the prize notifications from an economic perspective (economic nexus). This was the case here according to the overall circumstances. Specifically, the advertising mailings were designed in such a way that the recipient should gain the impression of already having benefited from a prize; against this background, the goods also appeared cheaper because the customer supposedly received more for their money than just the goods themselves.
The Federal Court of Justice partially overturned and partially affirmed the forfeiture order. With its appeals, the public prosecutor's office rightly objected, in particular, that the Regional Court – incorrectly citing a judgment of the 5th Criminal Senate of the Federal Court of Justice of December 2, 2005 (BGHSt 50, 299 – “Cologne Waste Scandal”) – considered itself precluded from extending forfeiture beyond the (net) profit to the (gross) proceeds in cases of the type presented here. An ancillary company succeeded with its appeal to the extent that the Regional Court had not examined whether customers had tort claims against the company that would take precedence over the forfeiture order.
Judgment of the Federal Court of Justice (BGH) of May 30, 2008 - 1 StR 166/07
Previous instance:
Mannheim Regional Court - Decision of June 14, 2006 - 22 KLs 605 Js 27831/04
Source: Press Release No. 103/2008 from the Press Office of the Federal Court of Justice of May 30, 2008, Herrenstraße 45 a, 76133 Karlsruhe, Telephone 07 21 – 159-5013, Telefax 07 21 – 159-5501, E-Mail: pressestelle@bgh.bund.de
Goldberg Attorneys at Law, Wuppertal-Solingen 2008
Attorney at Law Michael Ullrich, LL.M.(Information Law)
m.ullrich@goldberg.de
