ITALIAN CASE LAW

A sign that includes a surname may be registered even though the surname is part of an earlier registered trademark, upon condition that it is exploited in accordance with honest practices and does not take unfair advantage of the earlier mark’s distinctive character and renown.

The late, renowned fashion designer Elio Fiorucci left the company Fiorucci S.p.A. in 1990 and transferred to Edwin Co. Ltd. (Edwin) registrations for several word and device trademarks which included the Fiorucci surname.

After the transfer, the fashion designer registered several trademarks that included the surname Fiorucci (among them the mark “Love Therapy by Elio Fiorucci”), which he used to market and advertise clothing, accessories and various gadgets.

Over the years Edwin brought several court actions aiming to prove that the registration and use by the designer of trademarks including the surname Fiorucci infringed the rights in the trademarks that Mr. Fiorucci had transferred. The 1st Civil Section of the Italian Supreme Court has recently issued a ruling in one of such actions: judgement No 12995, published on 24 May 2017.

Facts in the case
Edwin had sued before the District Court of Milan maintaining that use of the trademarks including the Fiorucci surname amounted to counterfeiting of Edwin’s earlier Fiorucci trademarks as well as unfair competition.

The District Court and the Court of Appeal of Milan both rejected Edwin’s arguments on the grounds of Article 21 of the Italian Industrial Property Code (Decreto Legislativo No 30/2005), which sets forth that registered trademark rights cannot be invoked to forbid third parties to use their name in business, if such use is according to honest professional practice.

According to the Court of Appeal of Milan the inclusion of the “by Elio Fiorucci” element in the trademarks registered and used by the fashion designer was not in conflict with Article 21 because the surname merely signalled the designer’s creative contribution and was therefore used in a descriptive function, not a distinctive one.

Edwin appealed to the Italian Supreme Court.

The Supreme Court’s decision
Decision No. 12995/2017 annulled the ruling of the Court of Appeal of Milan, which will now have to re-examine the case and issue a new judgement.

The Supreme Court clarified first of all that since the legal action had been commenced on 27 January 2005 the Italian Industrial Property Code did not apply, since it only entered into force on 19 March 2005. The applicable law was therefore the Italian Trademark Law still in force at the time.

Under Article 1 bis of the Italian Trademark Law the owner of a registered trademark could not forbid third parties to use their surname in business, providing that such use was according to honest professional practice, and therefore not in a trademark function, but merely in a descriptive function.

The above provision of the Italian Trademark Law derived from Article 6(1) of Directive 89/104/EEC, which set forth that a trademark did not entitle its proprietor to forbid third parties to use their surnames in business, provided that such use was in accordance with “honest practices in industrial or commercial matters”. According to the case law of European Union courts, use of a surname coinciding with a trademark is not in accordance with honest practices in industrial or commercial matters in the following cases:

• it is used in such a way as to suggest that there is a commercial link between the third party and the trademark owner;
• it jeopardises the value of the trademark by taking unfair advantage of its distinctive character and renown;
• it discredits or disparages the trademark;
• the third party presents his product as an imitation or counterfeit of the product bearing the trademark of which he is not the owner.

It is therefore in this sense that the Court of Appeal of Milan should have interpreted Article 1 of Italian Trademark Law.

The appealed decision is erroneous, according to the Supreme Court, not only for its application of Article 21 of the Industrial Property Code to facts that are prior to its entry into force, but also because the appeal court should have assessed, given the notoriety of the Fiorucci trademark, whether the use of the surname had jeopardised the value of the trademark, taking an unfair advantage of its distinctive character and renown.

The Supreme Court’s decision points out to this regard that undue advantage may exist also in the absence of a likelihood of confusion, merely because of the linking of the signs.

Though conceding that in absolute terms the registration of a trademark including a surname that is already part of an earlier registered trademark cannot be ruled out, the decision points out that the appeal court should have assessed whether the exploitation of the sign was to be considered contrary to “honest practices”.

The Supreme Court judgement quotes its own recent case law in a different law suit between Edwin and Mr. Fiorucci: decision No 10826 published on 25 May 2016 (see news item), in which the court ruled that the inclusion of the words “by Elio Fiorucci” in the trademarks registered by the designer after transferring the Fiorucci trademark to Edwin was not in accordance with honest professional practices because it was not justified by a real need to describe activities, products or services.

This latest ruling adds that the very absence of a descriptive use of the surname causes a link between the signs, with the double effect of allowing the owner of the later trademark to take advantage of the market position gained by the earlier mark, and of weakening the later mark’s distinctive character.

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