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Österreich, Pichler 1

International League for Competition Law / Question 3

How can one ensure the effective respect of the rules of fair competition in respect of electronic commerce?

PRELIMINARY AUSTRIAN NATIONAL REPORT

by Marie Helen Pichler

I. Introduction

The internet has led to a new dimension of competition law. Until recently, the competition law has been governed by national legislation and jurisdiction. The cross-border dissemination of commercial information via satellite led already to conflicts between the globalisation of marketing techniques and the territoriality of competition law. Due to the internet, the borders between national economies are going to erode and diffuse. Companies which didn’t compete in the past now find new competitors in the net. Territorial limitations of distribution agreements are losing their strength. New marketing techniques arise, including the use of hyperlinks, frames and e-mail. In addition, it becomes more and more complicated to enforce law. It remains unclear which courts are competent in the area of competition law and how they can execute their decisions in an international context.

The reporters are not responsible for commenting upon developments in the area of EU law. The international reporter Prof. Dr. Thomas Hoeren will summarize existing directives and decisions which might affect online marketing.

II. Questions of material competition law

1. The use of use e-mail for advertisement: (“spamming”)

a) Is there any obligation to mark e-mail advertisements as such?b) Is it allowed to send advertisements via e-mail with the consent of the

addressee?c) Which effect has the clear opposition of the user on the legality of spam mails? d) Can access providers restrict the use of spams, i.e. by refusing to transfer these

mails to the addressee?c) How is the legal situation affected by the fact that that the e-mail has been sent

from abroad?f) Are users allowed to send flame mails to the spamming company?

Marie Helen PichlerOrtner Pöch Foramitti Rechtsanwälte OEG


2. The use of hyperlinks

a) Is it lawful to set hyperlinks to websites of competitors?b) Which effect has an express statement of the competitor prohibiting or restricting

hyperlinks to his homepage?c) Are hyperlinks supposed to refer to the main homepage?d) Are there legal restrictions as to inline linking (i.e. the use of frame technology in

a way that the user has the impression to read a specific homepage without noticing that he has already been linked to another homepage)?

3. Limitations for online marketing of specific products

a) Are there any restrictions for the online marketing of tobacco products?b) Are there any restrictions for the online marketing of alcohol?c) Are there any restrictions for the online marketing of medical products?d) Are there any specific restrictions for the online marketing of other products?

4. Limitations for online marketing to specific persons

a) Are there any restrictions for the online marketing as to minors?b) Are there specific restrictions for lawyers, doctors or dentists which are interested

in using the internet for the dissemination of commercial information on their services?

c) Are there other regulations which are aimed at or have the effect of restricting the online marketing for specific persons?

5. To which extent are there any information duties with regard to commercial websites?

a) as to pricesb) as to taxationc) as to the identity of the content providerd) as to other relevant commercial data

6. Netiquette and self-regulation

a) Do you know of specific codes of conduct for online marketing in your country?b) How do these codes of conduct influence competition law?



c) Is there a chance to enforce these codes?d) How do you estimate the value and importance of these codes?

III. Procedural rules (Private International Law/International Civil Procedure Law)

1. Which principles are applied to solve problems of private international law?

a) Which are the general rules of your country’s international private law (law of conflict of laws) applicable to unfair competition (e.g. int. private law of torts) and what do these rules state?

b) Are there any specific limitations or modifications to these rules with respect to unfair competition, e.g. the sole application of the substantial law of the marketplace?

c) If so, are there any proposals how to determine or restrict the marketplace with respect to cross border electronic commerce over the internet?

d) May domestic competitors be subject to the national rules of competition law, even though they only advertise and compete in foreign markets?

e) In the case of an act of unfair competition in more than one state, could a competitor meaning a competitor in all of these states) recover damages applying one single substantial law, or would his claim be governed by a bundle (mosaic) of different substantial laws, e.g. the law of each marketplace for the damage occurring in that state? Would domestic courts have jurisdiction with respect to the total claim?

f) Is there any case law in your country on the influence of Art. 30 EC Treaty on national competition law?

g) Is there any discussion about a “country of origin principle” to determine the applicable competition law in cross border electronic commerce?

h) Is a choice of law between competitors possible in unfair competition matters?

2. How can national regulations be enforced in other states?

a) Which are - apart of the Brussels convention - the principles of international jurisdiction in unfair competition cases in your country; is there a distinction between general and specific jurisdiction? Are there specific limitations or modifications with respect to unfair competition law (e.g. jurisdiction is limited to the country/countries of the marketplace)? Is there a forum non conveniens doctrine or a similar doctrine and, if so, is it relevant in unfair competition cases?

b) Are there different rules on jurisdiction in interim or injunctive proceedings?c) Which measures of interim or injunctive relief are available in your country in

unfair competition cases? Are these measures available for foreigners to the same extent as they are for domestic plaintiffs?



d) Will your courts grant cross border injunctions? That means will they render prohibitory injunctions with respect to a conduct occurring in a foreign state?

e) How are your court’s prohibitory injunctions or prohibitory judgments/restraint orders (i.e. judgments stating the duty to refrain from doing something, e.g. an act of unfair competition) enforced? Can they be enforced in your country, even though the conduct that is subject to the prohibitory order is taking place in a foreign state?

f) Will your courts decide at all on a conduct of unfair competition taking place in a foreign country? Will your courts apply foreign law in these cases?

g) If your courts have jurisdiction in an action for damages with respect to unfair competition taking place in your country and other countries, will they also award damages that occurred in the other countries (may be applying a bundle of substantial laws) or will they limit their judgment and restrict their jurisdiction to the damages that occurred within their territory (parallel to the EC´s Shevill decision)?

h) Is there discussion about alternative dispute resolution in unfair competition matters related to the internet?

i) Is a choice of forum between competitors possible in unfair competition matters?

1. The use of use e-mail for advertisement: (“spamming”)

Several companies use e-mail for sending advertisement to users. The internet allows to send e-mails to thousands of people within seconds and without any special costs. Special address agencies already sell the e-mail addresses to companies interested in online marketing. However, users often feel annoyed by these so-called spams. Some court decisions seem to suggest that e-mail advertisements can only be sent on demand. Other people think that it is enough to mark spams with a special sign for the protection of consumers. In addition, there are access providers which try to stop the transmission of spams in advance.

Internet and the Austrian Media Law

The Austrian Media Law has been drafted in 1981 relatively independent from the means of communications (e.g. paper) with a view to encompass future means of communication. The legal definition of "Medium" in Section 1 (1) N° 1 Austrian Media Law (MedienG) stresses the communication to a bigger circle of people by way of mass production or mass distribution. A bigger circle of persons means that the number of persons is not a priori limited and has a significant size.

According to a decision of the State Court of Vienna dated 26 November 1997, (OLG Wien, 24 Bs 291/97, MR 2/98, 44), the world wide web (www) is to be seen as a "Medium" (a publication) within the meaning of Section 1 (1) N° 1 of the Austrian Media Law (MedienG 1981). The same applies when a journal is published in parallel on the web with a printed edition. The decision stated that the World Wide Web is without any doubt a medium by which data are communicated in text and images to a bigger circle of persons. The decision thus likened a publication on the internet (printed text) with a journal and applied the Media Law provisions accordingly.



An internet home page is directed to a bigger circle of persons which qualifies it as a medium or at least an “auxiliary medium” within the meaning of Section 50 N° 4 Media Law (Hanusch Kommentar zum Mediengesetz 1998, 12). Other authors make the qualification of an internet homepage as a medium conditional upon an actual communication to a bigger number of persons, i.e. whether and how many internet users are actually visiting the site (Mayer-Schönberger Das Recht am Info-Highway 1997, 117).

Electronic mail is not a system relevant from a media law point of view if it consists of one-to- one communications in small groups. The regular communication of data similar to newsletters from one author to a bigger group of receivers might be a media service that should be treated similar to a newspaper or journal (Jaburek/Wölfl Cyberrecht, 1997, 47 f.).

However, since the State Court decision defining the www as a “Medium” within the meaning of the Media Law concerned only the provisions concerning privacy and non-disclosure of identity of persons in the reporting of crimes, it is still doubtful whether all other provisions of the Media Law should be applied to the edition of home pages and all other services in the internet.

a) Is there any obligation to mark e-mail advertisements as such?

An obligation to mark messages applies only to periodical media. A "periodical medium" is a medium which is distributed in the same or comparable form at least four times a year (Section 1 (1) N° 2 Media Law). Section 26 Media Law requires notices, recommendations and other reports that are published against remuneration to be marked as "Advertising", "Insert against remuneration" or "Announcement" except in cases that there is no doubt whatsoever by the choice of its form or layout that the message was published against remuneration.

For foreign media there is no such obligation according to Austrian law (Section 50 Media Law).

There is no specific rule yet that the sender of an e-mail has an obligation to mark them as advertising messages. Insofar as electronic mail can be considered as a periodical medium it e-mail advertising must be marked as such.

The application of Section 26 Media Law to periodical publications on the internet has not yet been firmly established since the definition of medium is based on a medium in a physical form which is distributed in a physical form ("Medienwerk"). Certain authors therefore believe that there is no equivalent notion yet for a periodical medium published in electronic form (Hanusch op. cit., 14). They expect however that this uncertainty will be removed by the next amendment to the media law. A specific proposal to incorporate electronic media into the Media Law exists already. For other authors it is already clear that opinion-forming contents, distributed at least four times a year on the internet constitute a periodical medium within the meaning of § 1 (1) N° 2 Media Law (Jaburek/Wölfl op.cit., 49).

A recent state court decision concerning the obligation to mark TV advertising as such (OLG Wien 28/1/1999, 15 R 50/98b MR 2/99, 108) states that Section 26 Media Law covers publications in periodical media, including electronic media (OLG Wien 28/1/1999, 15 R 50/98b MR 2/99, 109). The Supreme Court (29/9/92, 4 Ob 79/92 – Product Placement, MR 1992, 207) had already clarified that printed media and electronic media are competitors with respect to paid advertising. The infringement of obligations to mark advertising is considered a breach of



law that contravenes public policy within the meaning of Section 1 Unfair Competition Act (MR 1991, 75; MR 1992, 39, 255).

The decision referred to broadcasting as electronic media. Certain authors think that this term might also encompass internet publications such as online services or e-mails distributed by way of mass distribution if they are publications directed to the general public. Thus one could assume an obligation to mark advertising messages via e-mails as such for information offerings that are created and fed into the web in Austria and that are renewed more than three times a year (Jaburek/Wölfl op.cit., 55). This view is however not firmly established in Austria for the reasons set out above under a).

b) Is it allowed to send advertisements via e-mail with the consent of the addressee?

Certain authors draw an analogy to the judgement of the Austrian Supreme Court (OGH 28/120/1997, 4 Ob 320/97 f, WBl. 1998,98 = JBl. 1998, 324) as well as an analogy to the provision in the Telecommunications Law (Section 101 Telekommunikationsgesetz "TKG" BGBl. 1997/100) concerning the illegality of telefax advertising and argue that unsolicited advertising via e-mail is therefore not admissible as well (Pfersmann, commentary to the Supreme Court decision OGH 28/10/1997, 4 Ob 320/97 f, JBl. 1998, 324, 325).

Others think that e-mail advertising should be allowed in principle as a communication means for advertising messages (Thiele Das Internet in der anwaltlichen Berufspraxis, AnwBl. 1998, 670, 674). It is argued that the owner of an e-mail address has the possibility to control whether to admit the intrusion into his privacy whereas the owner of a telefax is limited to tolerate passively the transmission. There are filter programmes available which are able to prevent the molestation of the potential receiver. Since there is interim saving on the central server of the provider - i.e. the "electronic mailbox" - the analogy to advertising via written mail or mailbox is seen as more adequate to judge the conformity with competition law. That is why this kind of advertising is seen as admissible due to its inherent information value (Thiele op.cit. 675; Bydlinski, Zivilrechtliche Zulässigkeitsgrenzen bei der Verteilung von Werbematerial „an der Wohnungstür“, ÖJZ 1998, 641 ff.).

For others this actions are seen as a form of robbery (transmission service, saving space, time to download, read and destroy the message - since these are costs that are borne by the obligatory receiver). In a test case the Viennese telecommunication expert Dieter Zoubek received on 26 September 1997 an unsolicited spam with a bigger graphic attachment. Zoubek made a notice to the district attorney of Vienna describing the case. The district attorney immediately informed him that it was not competent (WCM N° 107/ Mail 1999,12). A notice to the Austrian telecommunication authority in autumn 1997 on the grounds of Section 101 TKG was not successful either. Section 101 TKG forbids unsolicited calls and telefaxes. But - since Section 101 TKG only mentions "calls - including the transmission of telecopies - for advertising purposes" - e-mails are not covered by this provision in the TKG. In spring 1999, i.e. 18 months later, Zoubek received the information from the telecom authority that the proceedings had been discontinued. Since e-mails are not explicitly mentioned in the law they cannot be seen as "calls" within the meaning of the TKG (Alfred Ruzicka, Director of the Fernmeldebüro Wien, NÖ und Burgenland, as cited by Zoubek in WCM N° 107/Mai 1999, 12).



Another legal basis to stop unsolicited e-mails lies however in Section 75 (1) TKG that apparently had not been considered in the above proceedings. Section 75 TKG forbids the misuse of telecom equipment and telecom terminals. Misuse includes - each communication endangering public order and public policy or which is conflict with

any law;- any gross vexation (”grobe Belästigung”) or intimidation of other users.

The provision does not use the term “calls” but the wider term of use of misuse of telecom equipment and telecom terminals which could certainly emcompass e-mails. Spams might thus be stopped if the conditions of Section 75 TKG are fulfilled (breach of a specific law; or evidence of serious vexation).

Some authors see the technical avoidance of spams as the best solution and advocate the use of anti-spam filter programmes (Pankart, Die dunklen Seiten der E-mail, Datagraph 4/1998, 21).

c) Which effect has the clear opposition of the user on the legality of spam mails?

If the advertising e-mail sender has received an explicit refusal to give the requested permission for the reception of e-mail advertising than the clear opposition of the e-mail receiver has the effect of spams being in breach of competition rules. This means also that the e-mail sender has an obligation to request such a permission from the e-mail receiver. Should the sender omit this request the first time he sends the e-mail to a particular user than the spams are equally inadmissible (Thiele op. cit. 675, following the opinion of Funk, Wettbewerbsrechtliche Grenzen von Werbung per E-mail, CR 1998, 411 ff.)

d) Can access providers restrict the use of spams, i.e. by refusing to transfer these mails to the addressee?

Section 75 (2) TKG specifies that “owners of telecom equipment and telecom terminals must – as far as reasonable - take all necessary measures to exclude any misuse. Misuse of telecom equipment could lie in the serious vexation of other users of telecom equipment through the sending of unsolicited e-mails. Service providers which provide only access to telecom services are not deemed to be “owners” within the meaning of this sub-clause. “ The parliamentary materials confirm that mere “access-providers”, offering access to the internet, are not liable in accordance with this provisions (RV 759 /XX. GP zu BGBl. 1997/I/100). This provision thus cannot serve as a legal basis to refuse the transfer of these mails to the addressee.

e) How is the legal situation affected by the fact that that the e-mail has been sent from abroad?

According to Section 26 Media Law notices, recommendations and other reports that are published against remuneration must be marked as "Advertising", "Insert against remuneration" or "Announcement" except in cases that there is no doubt whatsoever by the choice of its form or layout that the message was published against remuneration. For foreign media there is no such obligation according to Austrian law (Section 50 Media Law).



f) Are users allowed to send flame mails to the spamming company?

Section 75 (1) TKG (see above under 1.b) might constitute a legal basis to prevent the sending of flame mails.

2. The use of hyperlinks

Hyperlinks are a very effective instrument for online marketing. Commercial homepages can integrate links to competitors and their internet location. Links can enrich the informational value of a homepage. By referring to the content of other homepages information on competing products can be compared to the own products which leads to a kind of virtual comparative advertisement. In addition, the value of a homepage is increasing due to the various links to other web-spaces. However, linking is not always welcome among competitors and therefore causes legal problems.

a) Is it lawful to set hyperlinks to web-sites of competitors?

When creating web-sites "links" are used as a form of table of contents. If a user clicks upon a word or an icon another page opens whereby the user normally leaves the referring page . The homepage where the user has been linked to may be on a completely different server of a completely different person or institution. Via links it is possible to visit the offers of other providers on the internet even without their knowledge.

The legality of the setting of hyperlinks must be examined under aspects of copyright law and (unfair) competition law.

Copyright protection

A web site may be protected as a collective work under § 6 Austrian Copyright Act ("UrhG"). Collection of links on a web site can be protected as individual intellectual creations by the copyright law insofar they correspond to the indicated criteria, i.e. that they are well chosen, commentated, are updated and included in a systematic organisation. Databases are thus protected on the one hand as collective works (Section 6 Copyright Law) if they constitute an individual intellectual creation by way of their selection and organisation "Datenbankwerke" (Section 40f (2) Copyright Act).

The copyright of the database work belongs to the producer (employer) of the database (Kilches, Urheberrechtsnovelle 1997 - neuer Schutz für Datenbanken, RdW 1997,710). He is granted the economic rights enumerated in the copyright law, i.e. reproduction, distribution, rental and borrowing, public exhibition, broadcasting and public performance (Laga, Rechtsprobleme im Internet, 318 ff.).

According to Section 76c Copyright Act a database is granted on the other hand copyright protection if for the obtaining, verification or demonstration of the contents a substantial form and amount of investment was necessary. The protection of Chapter IIa Copyright Act is independent from the fact that the database per se or whether its contents are granted



copyright protection or protection under other specific legal provisions (Section 76 c (3) Copyright Act). The owner of the sui-generis copyright protection for databases has the exclusive right to reproduce, to amend, to broadcast or to perform in public the whole or parts of the data bank (Section 76 d Copyright Act). The copyright in a database work and the protection right granted to a database per se are completely independent from each other (Laga, op. cit., 320).

The author of a work thus has the exclusive right to make reproductions of its work (Section 15 or Section 76d Copyright Act). If this right is infringed he has claims of damages and injunctive claims on the basis of Section 81 and 86 to 89 of the Austrian Copyright Act against the infringer. The person that – through the setting of a hyperlink to foreign web site enables the access to a copyright protected work (Sections 1 to 6 Copyright Act) does not make a reproduction of the work himself. The link is nothing else than the indication that a specific content can be found on another location in the net - without necessarily specifying where the location is exactly – together with the technical help to access this location immediately. This does not infringe the reproduction right. only the downloading through the user on its own hard disk constitutes a reproduction within the meaning of Section 15 Copyright Act. If this is done for private purposes it will normally be lawful within the limits of Section 42 Copyright Act.

Care has to be taken in this respect of the exhaustive list of authorized exceptions to the reproduction right that will be imposed by Article 5 of the Directive to harmonise certain copyright and neighbouring law aspects in the information society (COM) 97 628 fin. of 10 December 1997 (Dittrich Internet und On-Demand- Dienste im IPR, ecolex 1997, 166; MR 2/98, 61).

Even the unauthorized reproduction possibility is facilitated through the setting of the link. This makes the link not unlawful. Since putting the information on a web site means that it is in principle intended for publication one could assume in principle that its access is desired and that the "linking" from other page to the referred page is permitted. The author wishes a dissemination of his work. The linking of different pages in the net is a central element of the net known to every provider. That a lot of links increase the possibility of unauthorized reproduction is the normal risk of every content provider in the net.

Moral rights of the author

The author has the right to be recognised as the author of a work and to be identified by name as the author (Section 19 f. Copyright Act). This right is important when the link leads to the showing of a work protected by copyright in a frame in such a way that the user must assume erroneously that it stems from the frame provider. In this case Article 20 Copyright Act is infringed and the author has the right to injunctive remedies (cease and desist claims) and damages. In certain cases the right of the author to prevent distortions and other changes to his work (Section 21 Copyright Act) might be used to prevent the presentation of the work in a frame that supplies a context totally contrary to the main character of the work. (Ernst Rechtliche Fragen bei der Verwendung von Hyperlinks in Internet NJW-CoR 4/97, 224, 225).

Competition law

In general, with the activation of a hyperlink (not an inline link or a frame!) the internet address in the address line of the browser is changed as well. Therefore there is no deception of the



user regarding the identity of the provider nor does the "linking" provider pretend the linked contents of another home page are his own by way of a mere hyperlink (Laga, Rechtsprobleme im Internet, 317). Hyperlinks are not more than a reference to content from another source similar to a foot note except in the case of frames or inline links (Laga, op. cit., 313 ff).

Without express statements of the "linking" provider pretending the linked contents of another web page are his own it is only with the use of frames and inline-links that a deception of the user regarding the identity of the provider might be possible. Other hyperlink references remain lawful. Certain home-pages are visited very often precisely because they have a collection of very interesting links. It appears to be permitted in principle to create a site with links to different court decisions or other texts of other providers' web sites. Whoever places a site into the web must expect that links will be set to it. He permits in principle the access to his site. This remains true even when the links are established for commercial purposes (Ernst, op. cit., 226).

Generally it is legal to use the work of a competitor if the work is not protected by the Patent Act, Copyright Act, Trademark Act, model Protection Act, etc. If hyperlinks are used for commercial purposes their use may be unlawful under certain conditions and may lead to claims of damages and injunctive claims on the basis of Section 14 and 16 to 18 of the Austrian Unfair Competition Act. If the link to the competitor is combined with the misleading indication that e.g. the services of the competitor are announced as one's own, it can lead to injunctive claims. As shown below, the most likely legal ground for the provider of the “linked” page to base it’s claim on is Section 1 Unfair Competition Act (exploitation of the competitor’s work).

c) Which effect has an express statement of the competitor prohibiting or restricting hyperlinks to his homepage?

A possible legal ground for the limitation to set links to a home page may be found in the copyright (see above under 2.a) or in the unfair competition law (see below under 2.e).

d) Are hyperlinks supposed to refer to the main homepage?

Through the possibility to set links to offerings from another provider for which the author has not planned a direct access it may happen that the conditions of use, copyright indications, advertisements, etc. presented before the information are circumvented. This contravenes the legitimate interests of the author of the web sites. On the other hand there is also a real interest by users to access directly the desired information without having to go through every single step from the home page to the desired page.

In principle yes, hyperlinks are supposed to refer to the main homepage but the legitimate interests of the users to access the desired page directly - without having to go through every page leading from the home page to the desired page - should be taken into account. This could be done by allowing the link to a specific page at the same time of making the home page accessible from this specific page through the setting of a direct link thereto.



d) Are there legal restrictions as to inline linking (i.e. the use of frame technology in a way that the user has the impression to read a specific homepage without noticing that he has already been linked to another homepage)?

In the case of so-called frames or windows, the link covers only a smaller less important optical part of the viewed page but communicates nevertheless important information. This technique permits authors of web pages to separate these pages in different parts and to provide each part with different specific qualities. This enables the producer to show in each frame various forms of content (e.g. text, graphic, links) and to incorporate complete web pages of other providers into the own web page. Since the frame still shows the name of the referring page the impression is created that the provider has offered this information even though it is someone else. This could only be detected only if the user calls up the function "View Frame Info" (Netscape). With the use of frames it is therefore possible that the contents of the referred page may not be identified as foreign from the point of view of the user.

Possible legal grounds to restrict inline linking are Section 2 Unfair Competition Act (“Deceptive Statements”) and Section 1 Unfair Competition Act (“Breach of law”; “Exploitation of a competitor’ work”) which will be examined here.

Deceptive (misleading) statements

Whoever makes misleading statements about his (own) business circumstances in the course of business for competition purposes is in breach of competition law (Section 2 Unfair Competition Act). This includes also statements of the origin of goods or services or misleading statements regarding the (own) enterprise. Since the pages referred to do not belong to the services offered by one or the other undertaking it could be a relevant misleading statement only if the referring enterprise creates the impression that it has collected and organised the relevant information itself and thus made a added service to the potential customer. That the reference creates the impression that the referred pages are his own services is however not the case. That is why it cannot be subsumed under Section 2 Unfair Competition Act. It is more likely that it will fall under Section1 Unfair Competition Act (exploitation of a competitor’s work).

Breach of law

It constitutes also a breach of Section 1 Unfair Competition Act if someone breaches another legal provision - if this breach is objectively in the position to hinder the fair competition - to get an advantage over a competitor. The breached provision must not necessarily be a provision regulating fair competition (OGH 13.7.1993 - Tageszeitungsimpressum - ÖBl. 1993, 226). It could also be a breach of a provision of the Copyright Law protecting the moral rights of an author. It has to be noted however that the resulting breach of competition law and the protection granted by the Unfair Competition Act is only a subsidiary remedy to the copyright protection. Third persons may not base their claim on this breach (Baumbach Hefermehl Wettbewerbsrecht § 3 N°121). This legal ground may thus not serve as a basis against the link (Ernst op.cit.,225).



Exploitation of a competitor’s work

Generally it is legal to use the work of a competitor if the work is not protected by the Patent Act, Copyright Act, Trademark Act, model Protection Act, etc. However, in specific circumstances, it constitutes unlawful exploitation of the (unprotected) work of a competitor within the meaning of Section 1 Unfair Competition Act if someone exploits the results of the efforts of another person and uses it to compete with this other person (cf. OGH 27.7.1993 - Loctite - ÖBl 1993, 156). The same is true if the competitor’s work is protected. The Unfair Competition Act applies in parallel to the law protecting the specific work except when the application of the protection right has been explicitly excluded (OLG Wien, 19.12.1995 - Happy Birthday I MR 1996, 109 ff.). The exploitation must take place in a substantial way and without any significant efforts of one's own. This applies also to marketing measures. For the setting of a link to be unlawful, the exploitation of the competitor’s work must lead to the obstruction of the competitor.

The more recent court decisions stress however that the exploitation of a competitor’s work is always against public policy. The defendant would have to prove that there was no other technical and reasonable economic possibility other than to copy the services of the plaintiff (OGH ÖBl. 1994, 223).

The mere copying / imitation of an otherwise (e.g. by copyright law) unprotected product remains lawful in those cases where there is no danger of a deception regarding its origin (OGH 13.7.1993 - Makramee Spitzen - ÖBl. 1994, 58). It might however constitute an unlawful exploitation of a competitor’s work if the exploited work possesses a specific competitive quality worthy of protection in addition to other elements which make the exploitation an unfair practice. A competitive quality exists where a product has specific qualities or a specific form which enables the customers and other competitors to differentiate this product from similar ones (OGH ÖBl. 1993,212 - Ringe).

It is decisive whether the imitator uses the product not only as an inspiration for a product of his own but without sufficient reasons gives the product the form of another product and thus creates the possibility for confusion (OGH ÖBl. 1975, 110 - Bilder-Bonbonnieren ). Real copying "Glatte Übernahme" exists where the imitated product is copied with any technical means wahrsoever (OGH ÖBl. 1995, 116 - Schuldrucksorten).

The use of frames constitutes an identical copying of the efforts of another. This is why no further elements of unfairness are needed to make the action unlawful. Whoever uses the efforts of another person regularly wants to hinder the other person since he strengthens his own position without any remuneration worthy of mentioning. The copying saves money and the original provider of the service does not collect the rewards of his efforts. A simple indication would suffice that the page shown has not been made available by the frame provider. If such an indication is lacking then the site (that had been put into the web for marketing purposes under possibly quite considerable expense) would be unlawfully shown as the frame provider's own site and his own marketing effort. This would be a breach of Section1 Unfair Competition Act. If this web site possesses an individual competitive quality then the behaviour of the frame provider would be considered as unlawful unfair practice (Kucsko Schmarotzen im Netz, ÖBl. 1999 1; Ernst, op. cit., 226).



After having requested the linking competitor unsuccessfully to erase such links one could also think of technical solutions (described by Laga, Neue Techniken im World Wide Web - Eine Spielwiese für Juristen? JurPC Web-Dok. 25/98, Abs 20 -22).

3. Limitations for online marketing of specific products

Several states have problems with online marketing insofar as specific products are concerned. Special regulations might prohibit the marketing for instance of tobacco in mass media. Therefore, it is of great interest to know how product-related marketing restrictions influence the online dissemination of commercial information.

In Austria there are no specific provisions yet applying to online marketing. Such obligations will be established with the implementation of the distance selling directive of the EU (Directive dated 4 June 1997, 97/7/EC, OJ L 144, 19) in Austria, i.e. at the latest by 4 June 2000. In the meantime, the application of existing provisions to online publications must be examined.

In a controversial State Court decision the world wide web (www) was seen as a "Medium" (a publication) within the meaning of Section 1 (1) N° 1 of the Austrian Media Law 1981.(OLG Wien, 26/11/1997, 24 Bs 291/97, MR 2/98, 44). The State Court thus likened a publication on the internet with a journal published in a printed edition and applied the Media Law (privacy and protection of identity) provisions accordingly. Another court decision concerning the obligation to mark TV advertising confirmed the application of the Media Law to electronic media (OLG Wien 28/1/1999, 15 R 50/98b MR 2/99, 108). The Supreme Court (29/9/92, 4 Ob 79/92 – Product Placement, MR 5/92, 207) had already clarified that printed media and electronic media are competitors with respect to paid advertising.

Online services consisting of regular communication of data similar to newsletters from one author to a bigger group of receivers could be regarded as media services that should be treated similar to a newspaper or journal (Jaburek/Wölfl Cyberrecht, 1997, 47 f.). However, since the State Court decision defining the www as a “Medium” within the meaning of the Media Law concerned only the provisions concerning privacy and non-disclosure of identity of persons in the reporting of crimes, it is quite doubtful whether all other provisions of the Media Law should be applied to the edition of home pages in the Internet.

It is to be noted that the obligations contained in the Austrian Media Law do not apply to foreign media (Section 50 Media Law).

The following indications refer therefore only to the most important marketing restrictions applicable to printed journals (newspapers and magazines). Insofar an internet service is considered broadcasting, the relevant restrictions apply (for the Austrian Broadcasting Organisation – ORF, the restrictions contained in the “Rundfunkgesetz”, BGBl. 379/1984 as last amended by BGBl. 1/1999, in particular Section 5h “Anwendung auf Teletext und Online-Dienste”; for other broadcasters the restrictions are contained in the “Kabel-und Satelliten-Rundfunkgesetz”, BGBl. 42/1997 as last amended by BGBl. 100/1997).

Further useful information is contained in the Voluntary Restrictions of the Austrian Advertising Sector (“Selbstbeschränkungen der österreichischen Werbewirtschaft – Informationsbriefe für



Werbetreibende (Werbebriefe) drafted by the Federal Ministry of Ecomoic Affairs in co-operation with the Representatives of the Section Advertising of the Austrian Chamber of Commerce) contained in the Pressehandbuch edited by the VÖZ, Schreyvogelgasse 3, 1010 Wien). These apply to advertising in any media, including electronic media. The Austrian advertising industry also follows the ICC Code of Advertising (Handbook of the European Association of Advertising Agencies, Brussels 1993).

a) Are there any restrictions for the online marketing of tobacco products?

See restrictions contained in Sec 11 (2) to (5) Tabakgesetz (BGBl. 1995/431). Advertising is restricted to one page per tobacco manufacturer per issue.See also the Directive 98/43/EC for tobacco advertising and sponsoring to be implemented until 30/7/2001 (Leidenmüller, Tabak, Werbung und das Europarecht, ecolex 1999, 138).

b) Are there any restrictions for the online marketing of alcohol?

The restrictions are voluntary.

c) Are there any restrictions for the online marketing of medical products?

Sections 50 ff. Arzneimittelgesetz and the Voluntary Restrictions of the Austrian Advertising Sector. Restrictions on references to the medical professions and to people portrayed as doctors. Testimonials are banned for medicinal products.

d) Are there any specific restrictions for the online marketing of other products?

These include among others- Law on Foodstuffs 1975, BGBl. 86/1975 last amended by BGBl. 63/I/1998 and

372/II/1998, applying to also to advertising for cosmetics, consumer goods and additives which may affect health: Advertising for food must not make health claims; must not refer to members of the medical profession, to body organs, or to the effect of the product on them. In advertising for dietary food, nutritional information must be given

- Sec. 28 Chemicals Act 1996, BGBl. 53/1997: advertising must make reference to dangerous ingredients in all (e.g. cleaning and household) products and give a clear security advice.

- Sec. 27 and Sec. 30 Suchtmittelgesetz BGBl. 112/1997 (drugs and addictive substances)

- Restrictions for publicity of financial services (Sec. 4 Capital Market Act BGBl. 625/1991, Sec. 43 Investment Fund Act, BGBl. 532/1993 last amended by BGBl. 41/1998)

- Sec. 24 Wine Act BGBl. 444/1985 last amended by BGBl. 10/1992 (denomination of origin)

4. Limitations for online marketing to specific persons



Other competition law restrictions relate to specific groups of users. For instance, the marketing of products to minors is sometimes restricted. Similarly, specific restrictions exist in the area of lawyers, doctors or dentists. It is therefore important to get some information as to the extent of person-related restrictions and their effect on online marketing.

a) Are there any restrictions for the online marketing as to minors?

See in particular the Voluntary Restrictions of the Austrian Advertising Sector (“Kind und Werbung”).

b) Are there specific restrictions for lawyers, doctors or dentists which are interested in using the internet for the dissemination of commercial information on their services?

The members of liberal profession (lawyers, doctors, public notaries, architects, etc.) are bound by their general internal rules. For lawyers see Sections 45 to 49 of the Richtlinien für die Ausübung des Rechtsanwaltsberufes /Directives for the Exercise of the Lawyer’s Profession) (RL-BA 1977) applicable to advertising in any means of communication.

c) Are there other regulations which are aimed at or have the effect of restricting the online marketing for specific persons? No.

5. To which extent are there any information duties with regard to commercial websites?

Several national laws contain obligations for internet providers with regard to the disclosure of information on their homepage. Therefore, it is necessary to get some ideas as to the extent of information duties for providers a) as to prices, b) as to taxation, c) as to the identity of the content provider and d) as to other relevant commercial data.

In Austria there are no specific provisions yet for internet providers with regard to the disclosure of information on their homepage. Such obligations will be established with the implementation of the distance selling directive of the EU in Austria (Directive dated 4 June 1997, 97/7/EC, OJ L 144, 19) in Austria, i.e. at the latest by 4 June 2000. In Austria the implementation of these information duties will be made through an amendment of the Consumer Protection Law. The Federal Ministry of Justice has drafted a proposal for an amendment which follows now the examination procedure. It will oblige undertakings selling products over the internet to inform their potential customers in a clear and detailed manner on all the significant details mentioned under a) to d). The proposal also includes a right to resign from the contract within two weeks in case the goods do not correspond to the expectation of the consumer. The amendment is supposed to come into force in summer 2000. (Der Standard 2 April 1999 Besserer Schutz für Konsumenten im Internet-Versandhandel; Mohr Aktuelles zur Umsetzung der Fernabsatzrichtlinie, ecolex 1999, 82).



6. Netiquette and self-regulation

The discussion on internet regulation is highly influenced by the idea that netiquette and self-regulation has to be stressed and supported in the light of the trans-national nature of the internet. Netiquette is a short-term for a variety of codes of conduct which are used with the internet community. The question still remains to be solved if and how the netiquette can be integrated within the legal framework.

a) Do you know of specific codes of conduct for online marketing in your country?b) How do these codes of conduct influence competition law?c) s there a chance to enforce these codes?e) How do you estimate the value and importance of these codes?

These codes are under discussion but have not yet been adopted (Information provided by G. Wagner, General Secretary VIW – Verband für Informationswirtschaft in Österreich, http: //www.viw.or.at/; see also the web site of the Internet Service Providers Austria – ISPA, http://www.ispa.at/).

III. Procedural rules (Private International Law/International Civil Procedure Law)

1. Which principles are applied to solve problems of private international law?

Due to the international, even global nature of the internet, the issue of international private law creates a multitude of problems. International private law (or law of conflict of laws) determines the substantial law, applicable to a case that has connections to more than one state. Since content on the internet is typically available world-wide, the number of potentially applicable laws to actions of (allegedly) unfair competition increases significantly. Does someone who advertises on the internet therefore have to obey every unfair competition law in the world, meaning his behaviour would be governed by the strictest possible standards?

International private law is regulated in Austria by the Act on Private International Law – IPRG (Federal Law Gazette 1978/304 last amended by Federal Law Gazette 1998/119 . The latest amendment in force since 1 December 1998 is due to Austria’s adherence to the Convention on the Applicable Law to Contractual Obligations „Rome Convention“ (Rome 19 June 1980). It has led to the derogation of Section 36 to 45 IPRG and a special conflict of laws rule in implementation of Art 6 (2) of the Council Directive for abusive clauses in consumer contracts 93/13/ EEC, OJ N° L 95/29 (Derogation of Section 41 IPRG by Art. 5 Rome Convention). This special rule has not been incorporated into the IPRG but in the relevant specific Act (Section 13a Consumer Protection Act, Section 11 TNG). The Rome Convention is directly applicable in Austria and – since a special transformation was not necessary - has not been incorporated into the IPRG.

For breaches of competition law there are several connecting points in the Act: Section 13 (2) IPRG for infringements of the right to one’s name; Section 34 (1) IPRG determining the



applicable law for industrial property rights and Section 48 (2) IPRG determining the law for other breaches of competition law

Section 13 (2) IPRGFor the protection of names the law of the country is applicable in which the infringement has taken place. Some authors include also the commercial name of a merchant. The Supreme Court treats the commercial name as an industrial property right and applied in the past Section 34 (1) IPRG (principle of the applicable law of the country for whose territory protection is sought). For the protection of names there is no choice of law foreseen by the IPRG. (Herzig, Rechtliche Probleme grenzüberschreitender Werbung, RdW 1988, 252).

Section 34 (1) IPRGFormation, scope and termination of industrial property right shall be governed by the law of the country whose protection is sought (parliamentary materials to Section 34) or in other words “for whose territory protection is sought” (Schwimann, Internationales Privatrecht, 75), which is not identical to the country of the forum.

According to the law of the protection country determines in particular the legitimation and exercise as well as the protection against infringements and abuse of industrial property rights(OGH 5/5/1987, ÖBl. 1987, 152 - Stefanel). Section 9 Unfair Competition Act and the other legal Austrian provisions providing for the protection of these rights become only applicable if Austria is the protection country (OGH 5/5/1987, ÖBl. 1987, 152 , 155- Stefanel). In this field a choice of law is not possible. A choice of law is only possible in those cases where there is a contractual relation regulating industrial property rights according to the general rules for contractual obligations ( Art. 3 Rome Convention, Section 35 IPRG) (Herzig, op.cit. 252).

In those cases where infringements of industrial property rights constitute at the same time acts of unfair competition the application of Section 34 (1) IPRG and Section 48 (2) IPRG compete. Here the formation of the industrial property right is to be judged according to Section 34 IPRG. Whether the infringement constitutes at the same time an act of unfair competition will be judged according to Section 48 (2) IPRG. The difference is not so important in practice since the infringement of the industrial property right takes place most times at the same location than the market which is effect by the competition (Schwind, Internationales Privatrecht, 191).

Section 48 (2) IPRGSee below

a) Which are the general rules of your country’s international private law (law of conflict of laws) applicable to unfair competition (e.g. int. private law of torts) and what do these rules state?

The general rules of Austria’s international private law relating to extra-contractual claims are those regulating the law of torts. The applying principle would normally be the “lex loci delicti”: Section 48 (1) of the Private International Law Act 1976 IPRG. In order to differentiate between the place of action and the place where one should cease and desist from a particular action, or the place where a specific result should be achieved, a clarification was needed as to the place where the damaging action is triggered. Since this place may in many cases be coincidental, another principle is emphasised: wherever there is a stronger relation to another law of than that of the law of the state of behaviour than this law is applicable. This clause is



exceptional in that it requires no other special circumstances to apply. That takes into account that the locus delicti usually has minimal importance for the claim for damages. When there is any stronger relation between the one who inflicted the damage and the one who suffered it (e.g. the same nationality or the same residence or a combination thereof) than these rather weak elements are considered an expression of a stronger relation and will take precedence over the connection to the “locus delicti” (Koppensteiner³, § 21 N° 13, 477)

b) Are there any specific limitations or modifications to these rules with respect to unfair competition, e.g. the sole application of the substantial law of the marketplace?

There is a specific modification of these rules with respect to unfair competition: Section 48 (2) of the Private International Law Act 1976 IPRG states that claims for damages or any other claims based on unfair competition are to be judged according to the (substantial) law of the country whose market is affected by the competition (cf. e.g. Supreme Court OGH ÖBl. 1987, 44 - Media-Markt Rosenheim). In case of a breach of competition law (e.g. through the unlawful use of an internet domain name) with effect on the Austrian market Austrian law would apply (Mayer-Schönberger Das Recht am Info-Highway 1997, 175). The application of Section 48 (2) IPRG covers not only claims for damages but also injunctive claims, claims for revocation, for publication or orders for interim or injunctive relief, in other words any claims that can be the result from unfair competition (Schwimann in Rummel ABGB² Vol. II § 48 IPRG N° 10).

The other reason for this modification of the general rule is an economic one. It’s aim is to prevent that Austrians suffer a disadvantage when trading abroad through the application of the more severe rules of Austrian competition law - when these rules are not applicable to their foreign competitors. This means that any further “renvoi” is excluded nor is any choice of law permitted (Schwind Internationales Privatrecht, 1990, S. 235; Koppensteiner³, § 21, N° 15).

The provision of Section 48 (2) IPRG stating that the law of the state whose market is affected by the competition connects to the effect of the competitive behaviour on the market and not to the action (such as Section 28 (1) IPRG). Market is the advertising market as well as the distribution market where the product is marketed since the purpose of the conflict of laws rule includes both markets and since the breach of competition can be relevant according to the laws of both markets (Schwimann in Rummel ABGB² Vol.II, § 48 N°11). Herzig states that if those markets are not the same than the advertising market is the decisive one since it is the one where the interests of the competitors collide (Herzig WBl.1988, 253). Koppensteiner acknowledges the validity of certain elements of this argumentation (Koppensteiner³, § 21, N° 17 FN 31).

It is irrelevant whether the involved competitors are established in the same country (ÖBl. 1986, 73 = IPRE 2/119; Schwimann Grundriß des IPR 176; Koppensteiner³, § 21, N° 16). The rules against unfair competition protect not only the competitors but the also the partners on the market (in particular the consumers) as well as competition on the market as such. If the damages inflicted upon a competitor relate however not to the market place but to the business of the competitor (e.g. inducement to breach of contract, enticing away of eomployees, bribery, industrial espionage) then the behaviour cannot be qualified as unfair competition but is to be judged according to the lex loci delicti of Section 48 (1) IPRG. The cases with no effect on the market place are however quite rare (Schwimann 176; Koppensteiner³, § 21, N° 19).



c) If so, are there any proposals how to determine or restrict the marketplace with respect to cross border electronic commerce over the internet?

Certain authors have examined the questions whether the marketing actions (advertising and offers to sell goods) of a commercial undertaking restrict in any way the market place in the context of the determination of the applicable law for consumer contracts (old Section 41 IPRG replaced since 1 /12/1998 by Section 13 a (2) Consumer Protection Act). For the application of Section 13 a (2) Consumer Protection Act it is necessary that the undertaking had initiated the business contact (“Anbahnung”) since it states that the law of the country of the consumer becomes applicable only if the undertaking had carried out marketing activities with the aim of concluding a contract in that country. Such activities include offers, sale excursions, door to door sales, personally addressed advertisements (EvBL 1992/48) whereas other advertising for products by way of announcements, wall advertising, broadcasting only insofar as they are specifically directed to the country of the consumer (Kilches Fernabsatzrichtlinie - Europäisches Electronic Commerce Grundgesetz? MR 5/97, 277).

Czernich argues that it depends whether the marketing actions reach the country of a consumer by coincidence or with the knowledge and intention of the undertaking. Whoever advertises (or makes an offer) over the internet knows that it is at least potentially directed to customers in states in the whole world. This represents the advantage for the undertaking. This is why it is argued that contracts between undertakings and consumers should be subsumed under the law of those states where the marketing actions of the undertaking have their effect even when the undertaking does not know exactly where his customers are potentially located. Such actions would be considered a marketing action within the meaning of Section 41 IPRG now Section 13 a (2) Consumer Protection Act (Czernich Kauf und Dienstleistungsvertäge im Internet, ecolex 1996, 82, 84, differing: Schwimann in Rummel ABGB² § 41 IPRG N° 2). In order to exclude customers from a specific state (i.e. to prevent the application of a specific law) the undertaking must actively communicate this in its advertising or in its offer (“This offer is restricted to persons in the following states ...”). A further restriction of the applicable laws are possible by not taking into account those actions of an undertaking in those states where it did not intend to work the market. This intention might be deducted e.g. from the use of language or the qualities of the product in question (e.g. winter coats for Central Africa, train trip in Switzerland etc.) (Czernich op. cit. 84).

Schwimann as cited by Laga argues that there is no marketing action within the meaning of Section 41 IPRG if such actions are not specifically directed to the country of the consumer but reach the country rather by way of mass distribution (e.g. world wide distribution of journals or trans-frontier TV programmes. This would be the case of the marketing over the internet since only very few home pages offer localised versions of their home pages by use of the local language and currency (Laga, Rechtsprobleme im Internet 94 f.).

To determine the applicable market places of internet providers of products it has been proposed to request a certain minimum amount of influence on the market resulting from an anti-competitive behaviour (Rüßmann Internationale Zuständigkeit für die Durchsetzung von Ansprüchen aus Geschäfts- und Wettbewerbshandlungen im Internet JurPC Web-Dok. 108/1998, par 47). Further indications might be derived by studying the log protocols to determine the amount of influence on the market of the web site (Cf. Hoeren, Werberecht im



Internet am Beispiel der ICC Guidelines on Interactive Marketing Communications, in: Lehmann (Ed.) Internet- und Multimediarecht, 1997, 111, 113).

d) May domestic competitors be subject to the national rules of competition law, even though they only advertise and compete in foreign markets?

Section 48 (2) of the Private International Law Act 1976 (IPRG) does not allow anymore an exception to the principle that solely the substantial law of the marketplace is applicable. The courts had allowed exceptions before 1979 when the new international private law act came into force (OGH ÖBl. 1973, 17 cf. also OGH ÖBl. 1975,38 – Prawda; Prunbauer Anwendbares Wettbewerbsrecht bei Werbefahrten ins Ausland, RdW 1985/9, 268 f.).

e) In the case of an act of unfair competition in more than one state, could a competitor (meaning a competitor in all of these states) recover damages applying one single substantial law, or would his claim be governed by a bundle (mosaic) of different substantial laws, e.g. the law of each marketplace for the damage occurring in that state? Would domestic courts have jurisdiction with respect to the total claim?

In the case of an act of unfair competition in more than one state, a competitor could not rely on one single substantial law, but his claim to recover damages would be governed by a bundle of different substantial laws, i.e. the law of each marketplace for the damage occurring in that state (Schwind, Internationales Privatrecht, 1990, S. 235). If several markets are affected by the same behaviour then the consequences have to be judged according to the laws of each of them separately (ÖBl. 1986,73 = IPRE 2/119; 4 Ob 86/88; MR 1988, 208; Schwimann, op.cit. 176, Koppensteiner³, § 21, N° 17).

f) Is there any case law in your country on the influence of Art. 30 EC Treaty on national competition law?

If the effects of unfair competition relate to the marketplace Austria than Austrian jurisdiction is not hindered where foreign writings or printings are subject of a court action (Section 83 c (3) Code on Jurisdiction). In other cases it is necessary that there is domestic jurisdiction and a sufficiently close connection of the facts to Austria. This principle has not changed through the application of the EC Treaty.

It is possible that Art. 30 EC Treaty leads to the application of the law of origin rather than the law of the receiving country to cases of trans-frontier advertising. This is not seen as a modification of the relevant conflicts of laws rule but rather as a modification of the substantial national law applying to the case.(Koppensteiner, Österreichisches und europäisches Wettbewerbsrecht³, 1997, § 21 N° 13).

The influence of Art. 30 EC Treaty on national competition law is significant. National rules of competition law which are not compatible with the case law of the European Court become inapplicable. Art. 30 EC Treaty leads to different treatment of trans-frontier cases in particular



in cases of Section 2 Unfair Competition Act (deceptive statements - misrepresentation), and in cases of Section 9a (1) N° 1 2 Unfair Competition Act (free goods or premiums or other bonuses offered as a promotional device) or certain group of cases of Section 1 Unfair Competition Act (advantage through breach of law) (cf. Koppensteiner³ § 22 N° 4 citing the relevant Austrian cases taking into account principles of European law).

g) Is there any discussion about a “country of origin principle” to determine the applicable competition law in cross border electronic commerce?

This discussion is taking place within the context of the implementation of the distance selling directive, the EU proposal for the E-commerce Directive as well as the proposal for a Directive to harmonise certain copyright and neighbouring law aspects in the information society (COM) 97 628 fin. of 10 December 1997 (Dittrich Internet und On-Demand- Dienste im IPR, ecolex 1997, 166, 169 f.).

h) Is a choice of law between competitors possible in unfair competition matters?

Section 35 (1) IPRG allows a choice of law by the parties in case of Section 48 (1) IPRG. This is seen by Austrian doctrine as making sense only in case of the general law of torts, i.e. in the cases of Section 48 (1) IPRG. According to the strongly prevailing opinion in Austria the opposite is true in the cases of Section 48 (2) IPRG due to the specific economic aims of the competition rules, i.e. it is judged wrong to allow any choice of law in cases of acts of unfair competition (ÖBl. 1986,73 = IPRE 2/119; 4 Ob 86/88; MR 1988, 208; Schwimann Internationales Privatrecht 1993, 64; Koppensteiner, Rn 18, p. 480, Schwind, 235; Koppensteiner³, § 21, N° 18; Herzig WBl., 253). Competition law regulates not only the relations between the competitors. Its aim is also to protect competition per se and in particular the consumers. This public law aspect explains why a choice of law – which would be admissible in principle in all cases of contractual obligations – is excluded in this field (OGH 14.1.1986 - Hotel Sacher, ÖBl. 1986, 73).

2. How can national regulations be enforced in other states?

The question which courts, that is the courts of which state, have jurisdiction in internet-unfair competition cases is just as important as the issue of international private law. The fact that it is the international private law of the forum that determines the applicable substantial law gives the jurisdictional issue an even greater significance. International procedural law is governed by the autonomous rules of each country, unless there are international treaties. The most important of which is the 1968 Brussels Convention on jurisdiction and enforcement of judgements in civil and commercial matters. The general rules in autonomous as in conventional law (e.g. Art. 5 N° 3 of the Convention) are however often modified with respect to unfair competition law.The principle problem in determining jurisdiction is similar to the one in international private law: Does the conduct on the internet subject a potential defendant to jurisdiction in every state around the world and does it - vice versa - give the potential plaintiff an unlimited opportunity for forum shopping? In the context of unfair competition it is typically in interim or injunctive proceedings that these questions arise.



a) Which are - apart of the Brussels convention - the principles of international jurisdiction in unfair competition cases in your country; is there a distinction between general and specific jurisdiction? Are there specific limitations or modifications with respect to unfair competition law (e.g. jurisdiction is limited to the country/countries of the marketplace)? Is there a forum non conveniens doctrine or a similar doctrine and, if so, is it relevant in unfair competition cases?

Domestic jurisdiction (= Austrian term for international jurisdiction) is the power of the State to exercise its jurisdiction in general and in individual legal cases (Fasching, Lehrbuch des österreichischen Zivilprozeßrechtes, Rz 55). The Austrian Supreme Court (Oberste Gerichtshof „OGH“) presumes domestic jurisdiction only in those cases where an explicit legal provision exists or where general principles resulting from other (jurisdictional) clauses or from public international law create this domestic jurisdiction. If none of these conditions are present domestic jurisdiction can exist nevertheless if the enforcement of law abroad is either not possible or not reasonable (Fasching, op. cit., N° 76).

The Commercial Court, or where no Commercial Court exists, the state courts, have sole jurisdiction in all unfair competition cases. This is true regardless of the amounts involved (Section 51 (2) no 10 Code on Jurisdiction) A commercial court has only be established in Vienna. In all other states, unfair competition cases are therefore handled by the regular state courts.

Suits based on the Unfair Competition Act 1984 (UWG) are normally filed at the defendant’s place of business, at his domicile, or at the place where the wrongful conduct has been committed. Specifically the law provides the following (Section 83 c Code on Jurisdiction): If the defendant is an enterprise located in Austria, the court having jurisdiction for the enterprise’s headquarters is competent. If the enterprise has several branches, the complaint may be filed either at the court where the headquarters are located or at the branch to which the wrongful conduct pertains. In the absence of an enterprise in Austria, the defendant may be sued at its general venue. If the defendant has neither an enterprise nor its general venue in Austria, the action may be filed with the court where the defendant has his/her domicile, or, if a domicile is not known, where the illegal conduct has been committed. The law explicitly defines the place of infringement with respect to printed publications sent from abroad. In such cases, the infringement is deemed to be committed at any place where the objects have been received, handed over or distributed (Section 83 c (1) Code on Jurisdiction).

b) Are there different rules on jurisdiction in interim or injunctive proceedings?

If a complaint is combined with an application for a preliminary injunction, the court competent for the complaint is also competent for the preliminary injunction. This is also true if an application for a preliminary injunction is separately filed. Also in this case, the court which



would have jurisdiction for the main claim, is competent to decide on the application for a preliminary injunction (Section 387 (3) Act on Enforcement).

The circumstances under which preliminary injunctions can be obtained are laid down in Section 378 ff Act on Enforcement. Section 24 Unfair Competition Act provides that preliminary injunctions may be applied for to protect claims arising from breaches of competition law.

c) Which measures of interim or injunctive relief are available in your country in unfair competition cases? Are these measures available for foreigners to the same extent as they are for domestic plaintiffs?

The most effective way to stop a defendant from continuing unfair practices is a preliminary injunction. The motion is normally filed along with the complaint. In competition cases , the plaintiff must only establish the likelihood of its claim (Anspruchsbescheinigung). Unlike in may other cases, the plaintiff does not, however, have to show that there is an immediate danger jeopardizing its position (Gefahrenbescheinigung) (Section 24 Unfair Competition Act). Preliminary injunctions may therefore be more easily obtained in competition and intellectual property cases than in other cases. It has to be noted that if a preliminary injunction is later lifted by the court because it proved to be unjustified from the beginning, the plaintiff is strictly liable for any damage suffered by the defendant because of the injunction. The plaintiff must summarily establish its claim submitting all documents available, including affidavits, and must name all witnesses. All evidence should be submitted with the initial application.

As regards non-resident parties the following applies: Foreign nationals or enterprises having their seat outside of Austria have the same standing in Austrian courts as Austrians do when instituting legal proceedings. The preliminary measures are available for foreigners to the same extent as they are for domestic plaintiffs. The only difference is that the court upon application of the defendant may order the foreign plaintiff to deposit a security for the costs of the proceedings (Section 57 Code on Civil Procedure). No security deposit needs to be furnished, however, if the verdict may be enforced in the country of the plaintiff’s domicile, or if the plaintiff owns sufficient real property or has claims secured on real property in Austria, or if the requirement of the security deposit has been waived by bilateral or multilateral treaties.

d) Will your courts grant cross border injunctions? That means will they render prohibitory injunctions with respect to a conduct occurring in a foreign state?

f) Will your courts decide at all on a conduct of unfair competition taking place in a foreign country? Will your courts apply foreign law in these cases?



Conduct having taken place in or outside Austria

If with regard to disputes concerning acts of unfair competition an action is brought against persons whose enterprise is located in Austria, or who are sued with regard to their activity in Austria, the court shall have exclusive jurisdiction in whose district the enterprise is located. If the enterprise has several branches, the complaint may be filed either at the court where the headquarters are located or at the branch to which the wrongful conduct pertains (Section 83 c (1) Code on Jurisdiction).

Section 48 (2) of the Private International Law Act 1976 IPRG states that claims for damages or any other claims based on unfair competition are to be judged according to the (substantial) law of the country whose market is affected by the competition. Thus the courts will apply foreign law in these cases if the market affected by the competition is located outside Austria.

If the claim is to be judged according to foreign law then the legal provisions on which the claims is based must be established by the Court whereby it can ask the parties to contribute (SZ 61/39 = ÖBA 1988, 609 = RdW 1988,320; Duchek-Schwind, Internationales Privatrecht 17; diff: OGH 12.9.72, SZ 45/94)

Conduct deemed to have taken place in Austria

With respect to printed publications sent from abroad, the infringement is deemed to be committed at any place where the objects have been received, handed over or distributed (Section 83 c (1) Code on Jurisdiction).

This provision is applied rather restrictively. A decision concerning an anti-competitive layout and outer design of a book found it decisive for the anti-competitive act to be deemed of having taken place in Austria that the printed publication had been marketed (distributed) in Austria intentionally and not only in a coincidental manner (Supreme Court 29/10/1986, ÖBl 1986, 97). The infringement of a trademark through goods having been sent from abroad is deemed to be committed where the goods are offered for sale (Supreme Court 16/6/1987 ÖBl. 1988, 106 = SZ 60/106 (Herzig, RdW 1988, 415; Prunbauer RdW 1988, 285).

e) How are your court’s prohibitory injunctions or prohibitory judgements/restraint orders (i.e. judgements stating the duty to refrain from doing something, e.g. an act of unfair competition) enforced? Can they be enforced in your country, even though the conduct that is subject to the prohibitory order is taking place in a foreign state?

The final, definite court decisions may be legally enforced according to the provisions of the Austrian Act on Enforcement (Exekutionsordnung - EO). If despite the final judgement, the defendant continues the infringement, the plaintiff may institute the enforcement procedure against the defendant. The means of enforcing verdicts providing for an injunction in competition law cases are fines and/or imprisonment. If the defendant violates the injunction contained in the verdict, the plaintiff may file an application requesting a fine to be imposed on the defendant. If the defendant continues the infringement, the plaintiff may apply for another fine or for the defendant’s imprisonment of up to one year. The maximum fine amounts to ATS 80,000 for each violation. In addition, the plaintiff may apply for a security to be deposited by



the defendant for damages caused by possible future violations (section 355 Act on Enforcement).

The application for enforcement must be filed with the competent enforcement court (special court responsible for the enforcement of judgements), usually the district court of the defendant’s general venue. Once the enforcement has been granted, it will be executed by the enforcement court.

The enforcement of verdicts is usually limited to the state where the decision has been made. The enforcement of verdicts in other states is only possible on account of special conventions.

The 1968 Brussels Convention on jurisdiction and enforcement of judgements in civil and commercial matters (Brussels Convention) that will be replacing the Lugano Convention on jurisdiction and enforcement of judgements in civil and commercial matters (concluded in Lugano 16.9.1988 (OJ. L 319/88, 9), in force in Austria since 1.9.1996, BGBl. 1996/448) has entered into force on 1 December 1998. Due to its almost identical content it does not materially change the legal situation on jurisdiction and enforcement of judgements but adds the competence of the European Court of Justice to interpret its provisions (Klauser EuGVÜ und EVÜ in Kraft getreten, ecolex 1998, 903).

Further to the signatories of the Lugano Convention there are bilateral conventions with Turkey (BGBl. 1992/571), Israel (BGBl. 1968/349), and Tunesia (BGBl. 1980/305) which provide also for the enforcement of verdicts.

Czernich has shown that 46 of the 51 States of the USA (including the District of Columbia) recognise and enforce Austrian verdicts (Czernich, Die Vollstreckung österreichischer Leistungsurteile in den Vereinigten Staaten von Amerika, WBl. 1995, 10, 15).

Under certain circumstances Sections 79 ff Act on Enforcement foresees the enforcement of verdicts in Austria according to the domestic rules of another State even without the existence of a convention. § 79 EO requires however not only reciprocity but also a constitutive government declaration concerning the existence of reciprocity (Czernich op.cit. 16).

j) Is a choice of forum between competitors possible in unfair competition matters?

No for the reasons set out above under III. 1.h). See however Article 17 Brussels Convention (in force since 1/12/98) that appears to allow a choice of forum in competition matters.

Dr. Marie Helen Pichler LL.M. E-Mail: [email protected] Pöch Foramitti RAe OEG Tel. *43 1 535 37 21,A-1010 Wien, Strauchgasse 1-3 Fax * 43 1 533 1555


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