What started as a marginal court case in Germany could have a major impact on the country’s banking system. An investigation into an online seller of fake perfumes has led to a radical change in bank secrecy rules.
Bank secrecy has been under fire from all angles over the past few years. Much of the focus has been on countries like Switzerland and Luxembourg, which have been forced by authorities of late to end their own bank secrecy rules and even give up the names of clients that evaded taxes by parking money in their banks.
In Germany, which also tends to place a premium on data protection and the privacy of customer information, a court ruling Wednesday could have a similar effect.
It began with a classic case of counterfeiting. The online seller of counterfeit versions of Davidoff Hot Water was operating under a pseudonym on eBay. The maker of the original perfume, Coty, wanted to uncover the suspects’ real names by using the account data provided to eBay.
It proved a lengthy journey, pitting the cosmetics giant against the mid-sized savings bank, Sparkasse Magdeburg, a savings bank in eastern German that hosted the sellers’ accounts.
The savings bank initially resisted Coty’s request for the seller’s identity, citing secrecy requirements. That has now been overruled by the first civil division of Germany’s Federal Supreme Court.
“For the banks, this means more expense and less legal certainty.”
The judges stated that where customers may have committed a trademark violation, banks must disclose their identity and cannot refuse to do so by invoking bank secrecy laws.
The ruling by the country’s highest civil court sets a precedent that could affect similar cases. The decision strengthens the position of trademark owners while weakening that of banks.
Legal experts had eagerly anticipated the court decision. The result is that banks “must get used to dealing with information requests in future – and will not be able to reject these out of hand,” said Thomas Nägele, an attorney with SZA Schilling, Zutt & Anschütz, a firm specializing in business cases.
Mr. Nägele pointed out possible consequences for lenders. “For the banks, this means more expense and less legal certainty.”
In reaching their decision, the court “gave priority” to the basic rights of trademark owners, said presiding judge Wolfgang Büscher when the ruling was pronounced.
According to the court, an account holder’s basic right to the protection of their personal data and the bank’s right to freedom of occupation must be secondary to the rights of the trademark owner. A criminal proceeding was “no real alternative” to obtain the data in question, Mr. Büscher said.
Michael Terhaaf of the Terhaag and Partner law firm said the court had ruled “surprisingly clearly” in favor of trademark owners over banks.
The case is a perfect example of product piracy. The dealers were bold and highly successful, making €11,000, or $12,500, within a few weeks around Christmas 2010.
But sandyundbert2009 were quickly discovered. Coty was not at all pleased about the counterfeit perfumes, especially since the company holds the marketing rights to its signature scent.
The company bought the counterfeit perfume on eBay which, according to Mr. Büscher, “any layperson” would recognize as a fake product.
On buying the perfume in early 2011, the company paid the purchase price into an account at the Stadtsparkasse Marburg. Only the account details and not the name of the account holder were specified.
Coty then began a lengthy campaign to obtain the identity of the seller. But the savings bank fought back, prompting a four-year back-and-fourth court case that went from Germany to Strasbourg and back to Germany.
The Magdeburg Regional Court initially ruled in Coty’s favor. The savings bank appealed, and the Naumburg Higher Regional Court overruled the lower decision and said the Sparkasse could indeed invoke bank secrecy laws. After that, the case landed at the German Supreme Court, the BGH in 2012.
But Germany’s top court turned to the European Court of Justice instead, seeking a preliminary ruling over whether it is a violation of European law when a bank refuses to provide information and invokes bank secrecy. The European court in Strasbourg decided, in a nutshell, that bank secrecy does not give a bank carte blanche to refuse to provide information.
Now, the German court has followed that advice.
Elisabeth Atzler is Handelsblatt’s banking correspondent. To contact the author: firstname.lastname@example.org