The regional court in the western German city of Cologne upheld the complaint of venerable gummy bear manufacturer Haribo against the distribution of Switzerland's Lindt and Spruengli foil-wrapped "Teddy" bears.
The judges ruled that the "Lindt Teddy" amounted to a "visual representation of the 'Gold Bear'," the brand under which Haribo sells its trademark gummy bears.
Lindt had said that its gold foil and red ribbon to wrap the chocolate bears were in line with the chocolate bunnies the company sells at Easter and that it consciously avoided using the brand name "Gold Bear" or "Gold Teddy".
It also argued that gold was a traditional Christmas season colour and thus appropriate for a holiday treat. Furthermore, the Swiss company told the court, the two products looked nothing alike and would thus not confuse consumers.
But the judges said that shoppers were likely to refer to the Lindt product as a "Gold Bear" because of its appearance and thus dilute the Haribo brand.
"Most consumers would not use descriptions such as 'golden bear figure', 'gold foil-wrapped bear' or 'gold-coloured chocolate teddy bear'... but rather the closest description, particularly considering how well-known the other brand is: Gold Bear," it said in a statement.
Lindt said it would appeal the ruling.
The Cologne court noted that the case was unique under German competition law.
"What is special about the case is that there has been no high court ruling on the issue of a collision between a brand name and a three-dimensional product design," it said.