Article 16 requires an inventory of stock before authorization of a general closing-out sale:

ART. 16. The merchant who wishes to conduct a general closing-out sale of his business must accompany his request for authorization with an inventory of the stock of his goods and indicate the place where they are stored and where they are sold.

Article 17 limits the duration of a general closing-out sale:

ART. 17. The duration of a general closing-out sale must not exceed one year, without an authorization from the police department.

Article 18 prohibits the replenishment of stock during a closingout sale:

ART. 18. From the date of the request for the authorization to liquidate, every replenishment of goods is forbidden. The contravention of this prohibition, in addition to the penalties fixed by the present law, may lead to the immediate termination of the closing-out sale by revocation of the authorization.

Articles 19, 20, and 21 relate to the frequency and duration of such sales:

ART. 19. An interval of two years at least must elapse between two general closing-out sales conducted by the same merchant.

ART. 20. The duration of a partial liquidation must not exceed one month. ART. 21. An interval of five months at least must intervene between two partial closing-out sales conducted by the same merchant and for the same kind of goods.

Article 22 provides for the segregation and marking of goods to be sold:

ART. 22. The goods to be closed out must be separated from other goods and marked in a clear manner.

Articles 23 and 24 provide imprisonment up to 8 days or a fine up to 100 francs for violations of articles 3 to 6, 11, 14, 15, 17, 19, 20 to 22, and imprisonment up to 30 days or a fine up to 1,000 francs for violations of articles 1, 7, 8, and 18 of this law.

Unfair-competition law of Aargau.-The law of the Canton Aargau of March 24, 1911,1 for the suppression of unfair competition and business practices and the regulation of clearance sales comprises 12 sections. Four of these are administrative merely, but the first eight set up specific standards or requirements.

Sections 1 and 4 are aimed at damaging misrepresentations. The former forbids them when wilfully made in regard to a competitor or his products, and the latter prohibits "puffing" or exaggerated claims in regard to one's own establishment, and even forbids a merchant to advertise articles at a specified price unless he has them in stock. Sections 2 and 3 are for the protection of trade secrets and

1 Gesetz über die Bekämpfung des unlauteren Wettbewerbes und unlauteren Geschäftsgebahrens und das Verfahren bei Ausverkäufen, vom 24. März 1911; Schweizerische Zeitschrift für Strafrecht (1912), p. 94.

prevention of corruption of employees and are somewhat similar to the English Prevention of Corruption Act of 1906 (see p. 534). These four sections dealing with unfair practices are worded as follows:

SEC. 1. Whoever as business proprietor or in the service of such an one circulates untrue statements concerning a competitor or his goods or industrial services against better knowledge or in a grossly negligent manner, which are adapted to injure the competitor's business or credit, is punishable.

SEC. 2. He is punishable

1. Who induces employees or workmen of a third party, or those who were such, to divulge factory or other business secrets of said third party.

2. Who makes use of or gives out the business secrets of a competitor, which he has learned through his own punishable conduct or through the disloyalty of third parties.

3. Who acquires the knowledge of such secrets by virtue of his office or as a court expert and then makes use of them in competition or gives them out.

4. Who as an employee or workman reveals the secrets of his business to competitors, whether for the purpose of competition or with the intent of doing an injury to the proprietor of the business.

SEC. 3. He is punishable who offers, promises, or grants to the employee or agent of a third party presents or other advantages in order thereby to gain a preference in competition for himself or a third party.

Punishable also is the employee or agent of a business undertaking who, for such a purpose, demands presents or other advantages or allows them to be promised him or who accepts them when offered.

SEC. 4. He is also guilty of punishable unfair competition—

1. Who in published announcements or through other communications that are intended for an extensive group of persons knowingly or in a grossly negligent manner makes untrue statements concerning business relations, for example, concerning the quality or the price of his goods, or concerning the size of the stock, or concerning the source of supply or the method of supply or the occasion for the offer, which statements are adapted to create the impression of an unusually favorable offer.

2. Who announces or lists at a certain price goods which he does not keep, whether he demands a higher price from the purchasers or does not deliver them these goods at all.

3. Who in retail trade for goods which are sold by weight or measure does not announce the price for full weight or measure nor maintain them in a sale. 4. Whoever in retail trade does not give the price of goods in Swiss currency. Sections 5 to 8 forbid the holding of closing-out sales except under permits issued by the proper authority on payment of fees prescribed. Each application for holding such a sale must show what goods are to be offered and the reason for the sale. For general closing-out sales permits are not to be issued oftener than once in two years, and then only in case damage has been caused by the elements or the party contemplates retirement, removal, or transfer to another town. Stock-reducing sales may be held twice a year, but none can be held during the latter half of December. These four sections are given below:

SEC. 5. The permission of the proper Government department is required for conducting a closing-out sale. Permission is to be granted provided the following legal provisions are met:

The quality and quantity of the goods intended for the closing-out sale, as well as the reason for the closing-out sale, must be indicated in the written application.

The announcement of a closing-out sale may only occur with the statement of the name of the firm.

The closing-out sale shall be conducted only in the existing business premises. Cut-price sales which have the character of a closing-out sale come under the provisions of this law.

SEC. 6. Permission for a total closing-out sale shall be granted only in case of going out of business, change of ownership, removal of the business to another locality, or accidents due to the elements.

As a rule only those owners of a business are entitled to make application for a permit for a total closing-out sale who have sold similar goods in the same community for at least two years.

The total closing-out sale shall not last longer than a half year.

The repetition of such a sale before the expiration of two years after the close of the preceding one is not permitted.

During a total closing-out sale the replenishment of goods is forbidden.

SEC. 7. Only those owners of a business are entitled to make application for a permit for a partial closing-out sale who during at least one year have sold similar goods in the same community.

For the second half of the month of December no permits shall be granted. A partial closing-out sale shall be permitted only twice during a year and only with at least a three months' interval. The duration of a partial closingout sale shall not exceed two weeks.

SEC. 8. For every permit to conduct a partial closing-out sale a fee of from 15 to 40 francs, and to conduct a total closing-out sale a fee of from 50 to 200 francs is to be paid.

Section 10. Germany.

INTRODUCTORY.-In combating the rapid spread of unfair business practices during the last half century German courts did not utilize general provisions of law, as the French courts did, but resorted in the main to special legislation. Although the principle contained in article 1382 of the French Civil Code prevailed in the law of a considerable part of the German Empire prior to the adoption of the present Civil Code, and especially in Prussia, the courts made practically no application of it to the field of unfair competition.1

The first attempts of the Imperial Government to curb unfair competition were contained in various laws for the protection of patents, trade-marks, and other forms of industrial property. Of these the most important was the trade-mark law of 1894, which adopted the first provision especially directed against unfair competition. It was shortly followed by the enactment of the special law of May 27, 1896, against unfair competition, which after 13 years was superseded by the new law of June 7, 1909.

Various provisions of the Civil Code, especially sections 823 to 826, have also been applied to cases of unfair competition, as well as several provisions of the Penal and Commercial Codes.

1 Fuld, Das Reichsgesetz gegen den unlauteren Wettbewerb vom 7. Juni 1909 (Hannover, 1910), S. 2-6; Rosenthal, Handwörterbuch der Staatswissenschaften, 1909, Bd. 8 (Wettbewerb, unlauterer), S. 799.

SPECIAL LAWS.

PATENT LAW.-Section 40 of the patent law of May 25, 1877,1 in addition to the penalties for infringement of patents, contains two paragraphs relating in a general way to the subject of unfair competition. They are as follows:

With a fine of not more than 150 marks or arrest is punished:

1. Whoever provides objects or their wrappers with a designation which is adapted to cause the mistaken idea that the objects are protected by a patent in accordance with this law.

2. Whoever in advertisements uses a designation upon his signboards, business cards, or in similar announcements which is adapted to cause the mistaken idea that the objects referred to therein are protected by a patent in accordance with this law.

This provision, as will be noted, makes the false claim or misuse of a patent right a penal offense. Civil actions to enjoin the practice and to recover damages can also be brought under other laws.

The practices forbidden by the two paragraphs of this section are regarded as acts of unfair competition, since they awaken the impression that the goods which are falsely claimed to be patented are more useful and more valuable than competing goods. The public may be deceived thereby and competitors injured.2

TRADE-MARK LAW.-Three sections of the trade-mark law of May 10, 1894,3 prohibit the usurpation or misappropriation of certain designations used to distinguish competing products. Section 14 relates to the misappropriation of names, firm names, and trademarks; section 15 relates to the misappropriation of decorations used as distinctive marks; and section 16 relates to the misuse of designations of provenance of a geographical nature. The language of these three sections is as follows:

SEC. 14. Whoever, knowingly or as a result of gross negligence, unlawfully provides goods, containers, or wrappers, or announcements, price lists, business letters, recommendations, bills, or the like, with the name or the firm name of another, or with a trade-mark protected by the regulations of this law, or puts on sale or sells such goods illegally marked, is bound to compensate the injured party for the damage.

If he has knowingly committed the act, he is also punished with a fine of from 150 to 5,000 marks or with imprisonment up to six months. The criminal prosecution takes place only upon complaint. The recall of the complaint is permissible.

SEC. 15. Whoever, for the purpose of deception in trade and commerce, provides goods or their containers or wrappers, or announcements, price lists, business letters, recommendations, bills, or the like, with a dress which within the particular branch of business is a distinctive mark of another for like goods,

1 Patentgesetz vom 25. Mai 1877, Reichsgesetzblatt, 1877, S. 501, S. 509.

2 Allfeld, Grundriss des Gewerblichen Rechtsschutzes, 1910, S. 55.

3 Gesetz zum Schutz der Waarenbezeichnungen vom 12. Mai 1894, Reichsgesetzblatt, 1894, S. 441.

without his acquiescence, or whoever for the same purpose puts on sale or sells goods marked in this way, is obligated to the injured party for the injury, and is punished with a fine of from 100 to 3,000 marks or with imprisonment up to three months. The criminal prosecution takes place only upon complaint. recall of the complaint is permissible.

The

SEC. 16. Whoever falsely provides goods, containers, or wrappers, or announcements, price lists, business letters, recommendations, bills, or the like, with a national coat of arms, or with the name or coat of arms of a place, municipality, or larger communal organization, for the purpose of causing a mistaken idea regarding the quality and value of the goods, or who for a like purpose sells or puts on sale goods so designated, is punished with a fine of from 150 to 5,000 marks or with imprisonment not exceeding six months.

The use of names which serve to designate certain goods according to commercial usage, without intending to designate their provenance, does not fall under this provision.

In addition to registered trade-marks, these three sections protect family names, firm names, the exterior appearance of goods, wrappers or containers, and designations of provenance when used as distinctive marks of products. Section 16 of the law of 1909 against unfair competition affords similar protection to designations of establishments. (See p. 639.) The designations of products which have become generic are not protected by these provisions. Likewise according to section 16 of the Trade-Mark Law, designations which no longer refer to the provenance, but have become the common name of goods, are specially excepted.

The distinctive marks specified in these sections may be affixed to the products which they distinguish or they may be used on announcements and advertisements of various kinds regarding the goods. The use of such distinctive marks by others is considered an act of unfair competition, since it leads to confusion between products and thereby injures the rightful possessors.

During the passage of this measure in 1894 another provision of much broader scope was proposed, but was finally dropped, with the understanding that a special law regarding unfair competition should be introduced. Two years later, in accordance with this arrangement, the law of May 27, 1896, was enacted.

UNFAIR COMPETITION LAW OF 1896.-The Law of May 27, 1896,1 for the Suppression of Unfair Competition contained 16 sections, which dealt with the following practices: 2

1. Deceptive advertising of one's own goods or services sections 1 to 4, inclusive.

2. Deception in respect to quantity or quality of goods in retail trade section 5.

1 Gesetz zur Bekämpfung des unlauteren Wettbewerbes vom 27. Mai 1896; Reichsgesetzblatt, 1896, S. 145-149.

2 Wassermann, Der Unlautere Wettbewerb nach Deutschem Recht (Leipzig, 1907), S. 9.