When is it legal to be named as a reference?

Since you find references more and more frequently on German websites, the following is a consideration according to German law, what you need to observe when you want to use references in order to attract new clients.

1. Regulate the mention of references directly in the contract!

It is recommended to clearly regulate the type and scope of the reference designation in the contract. If you have not thought about the request for a reference at this point of time, a safe way is to obtain the prior explicit consent of the contractual partner - ideally in written form - for the specific use. Of course, this is always associated with some effort and in doubt with (waiting) time. And what if the customer refuses for the sake of simplicity?

2. What if there is no contractual arrangement? 

If there is no contractual arrangement for reference naming and one would like to avoid obtaining prior consent, the question arises whether and under what circumstances the advertiser may name his customers. If the reference naming was not regulated in detail and one wishes to avoid obtaining prior consent, the question is whether and under what circumstances the advertiser may name his customers. In this case, you have to check whether such use is in conflicts with customer's rights, which justify inadmissibility. To exclude an inadmissibility the following has be considered:

a) Observe confidentiality and secrecy interests!

In many cases, company contracts contain a confidentiality clause, which you have to observe. If, by agreement of the parties, a press release on the cooperation was published at the beginning of the cooperation, this is an indication that the confidentiality provision does not prevent the mere reference to the cooperation (without providing information on the content of the cooperation). If the contractual partners have not specifically agreed confidentiality or if the agent is not subject to a duty of confidentiality, they do not have to maintain silence about the assignment. As long as there nothing is offensive or confidential about the contractual relationship, the client relationship is generally not subject to a confidentiality requirement.

b) What about data protection?

The indication of who is a contractual partner represents a "personal" date that is not subject to the protection of the GDPR for legal entities. For a natural person, it depends on whether there are any interests that are worth protecting. In this case, it is important to observe the requirements of the GDPR.

c) Should you present achievement results?

Copyright usage rights become relevant when presenting achievement results. Here it is necessary to check which rights of use remain with the author and whether these rights grant him the authority to present his achievement results for self-promotion, e.g. on his own website or elsewhere.

d) Think about the limits of competition law!

A mention of a reference is not permitted under German competition law if it is used to advertise in a misleading manner and the underlying contractual relationship is unrealistically reproduced. Misleading may exist if the publication of the reference gives the audience a wrong impression of the scope of the advertiser's activity.

e) Do not violate any trademark, name or labelling rights!

As a rule, the use of third-party brands, names and corporate logos in references is subject to trademark protection under the German trademark law, provided that the reservation of fair business practice is observed. The name of a person is protected according to § 12 of the German Civil Code in its function as an identity designation and is intended to prevent a risk of confusion. Therefore, you have to make ensure that it is clear to visitors of the website that the reference designation is not the name of the advertiser, but of a third party, namely his customer.

3. What is your strategy?

If you want to advertise with references, you are on the safe side if you make a clear contractual agreement with the client about this. If there is no agreement, you must check in each specific case that none of the above rights are violated.

Therefore, you should explicitly identify brands, names and company logos as reference advertising so that the target public can recognize that they are only used to refer to the respective customer.

In order to avoid a misleading representation of the business relationship, you should avoid ambiguities and exaggerations and represent the underlying contractual relationship realistically.

Also, check the underlying contract to see whether you are bound to secrecy. Of course, this applies especially to business transactions that are worthy of secrecy or those that require a certain degree of discretion.

In the case of services protected by copyright, it must be ensured that the author reserves the right to use the achievements for the purpose of self-promotion if the rights of use have been exclusively transferred to the client.

Article provided by: Dr. Jens Eckhardt (Derra, Meyer & Partner, Germany)

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