The Supreme Court recently issued the latest decision in the ongoing saga between renowned Italian stylist Elio Fiorucci, who passed away last year, and the eponymous company which he founded.
The matter was previously considered by the European Court of First Instance on May 14 2009 in Case T-165/06 and the European Court of Justice (ECJ) on July 5 2011 in Case C-263/09. Both decisions were criticised by Italian commentators as they:
- were based exclusively on Italian law when the matter concerned a Community trademark; and
- mistook the meaning of the Italian IP Code. The EU courts held that Article 8 of the IP Code – which allows the owner of a well-known name to prevent others from using or seeking to register that name as a trademark without its authorisation – applies even if that name's reputation has resulted from commercial activities (as with Fiorucci), which under the Italian law may give rise to exclusive rights on a de facto trademark, which follows the general rules on distinctive signs.
The two rulings overturned the Office for Harmonisation in the Internal Market Board of Appeal's (OHIM) April 6 2006 decision in Case R 238/2005-I, which held that Article 8 aims to protect the potential commercial opportunities that can be realised through a well-known name. According to the decision, if the opportunities have already been realised – and consequently the name is perceived by the public to be a commercial sign – then protection under Article 8 is unavailable. This is the case when the name of a person, albeit famous, is perceived by the public to be a trademark.
The Supreme Court did not consider this issue, but rather the rights of the stylist to register his name as a trademark after he left the company which had previously registered the same name as a trademark with his agreement. The trademark registered by the stylist thus conflicted with the mark owned by the company. In considering the matter, the Supreme Court's decision was closer to OHIM than the EU courts, although the Supreme Court's reasoning is open to criticism. The Supreme Court decided in favour of the company Fiorucci – which owned the trademark FIORUCCI – and against the trademark LOVE THERAPY BY ELIO FIORUCCI, the rights to which the stylist had granted to a different company after leaving Fiorucci and invoking the rights granted by Article 21 of the IP Code to use a person's name and address to pursue business, even when that name matches the trademark of a third party.
Departing from the Milan Court of Appeal's ruling, the Supreme Court held that LOVE THERAPY BY ELIO FIORUCCI did not comply with the conditions required to apply the exception provided under Article 21 – namely, that use of the name must constitute fair use. Hence the Supreme Court referred the decision on the merits of the case to the Milan Court of Appeal.
According to the Supreme Court, the fair use requirement is fulfilled only when the name is used to meet a "real need to describe the business, products or services" of the natural person seeking to avail of the exception under Article 21 – at least when the earlier trademark is strong and when its reputation is linked to that of the person claiming the rights to use his or her name. For the Supreme Court, Article 21 requires that the use concerns a specific business carried out directly by the natural person seeking the right to use the name; in the case at hand, the trademark had been used in relation to an activity of "coordination of someone else's work, marketing of goods of other companies and in a wide variety of sectors, merchandising activities, cobranding and comarketing", which would therefore not have complied with the said condition.
These conclusions also resulted from a misunderstanding concerning the distinction between descriptive use (which is lawful) and distinctive use (which is always unlawful), which was included in the first version of the Italian legislation implementing Article 6 of the EU Trademark Directive (89/104/EC). However this distinction is no longer included in Article 21 of the IP Code, which removed the specification contained in Article 1bis of the old trademark law that in order to constitute fair use, a sign must be used "not as a trademark but according to descriptive purpose". The Supreme Court decision assumes that the old and new definitions are identical on the basis that only descriptive use can be considered lawful. Instead, it is clear from the EU court decisions that fair use must be understood in accordance with the prerogatives conferred by law on the trademark. Therefore, to ascertain whether there is fair use, it is necessary to "provide a full assessment of all the relevant circumstances", including the context in which the sign is used, see for example the ECJ's January 7 2004 decision in Case C-100/02, in which it held that consideration should be given to "the form and the labelling" of the product on which the sign was used.
Further, the Supreme Court made a distinction between the:
- use of the stylist's name to indicate the origin of products on which it was used (in particular, preceded by the term "licensed by"); and
- use of that name as a trademark.
This distinction has no basis; it does not consider that in the world of fashion and design the most important function conveyed by such a trademark is that of informing consumers that a stylist has designed the trademarked products or has at least coordinated such styling work. In other words, the EU courts' recognition of a trademark as a means of communication that reflects the role it plays in the market implies that this function should be considered alongside the other functions of a trademark, for which it is protected by law.
On the one hand, this means that such use can result in protection rights for an unregistered trademark in favour of a party whose use of the mark has made it famous as a distinctive trademark. On the other hand, this also means that such use can interfere with an earlier trademark owned by a third party, since the exception set out in Article 21 will not apply if use of the mark containing the famous person's name does not constitute fair use, in particular if it gives rise to a risk of confusion among the public or an undue exploitation of the message conveyed by the earlier trademark.
The Supreme Court seems to have understood that the exception to Article 21 is available only for fair use, but then seems to have overlooked this issue and focused instead on the (assumed) need for descriptive purposes linked to the natural person's activity. In this regard, Supreme Court decision 4405 issued on February 28 2006 is preferable to the decision at hand, because it states that:
"in a company name the use of a patronymic matching with a previous trademark owned by someone else is allowed only when it complies with the requirement of fairness and so only if it is used together with other elements that avoid that the use gives rise to a risk of confusion or association."
Instead, the decision did not address the main issue concerning trademarks relating to famous persons (as it had not been raised by the parties), namely their potential deceptiveness when there is no further relationship between the person and the trademark owner. In its first decision on this issue the ECJ seemed to hold that the deception is relevant only when it concerns the material features of the product (see ECJ 30 March 2006, C-259/04, Elizabeth Emanuel). However, this conclusion was criticised, especially by Italian scholars, because the material features must be considered "intangible" features, namely the style of the designer and the consistency with his or her style, which are the most relevant for the consumers of fashion goods. In this case, according to Italian case law a rights holder that wants to prevent any risk of deception (and hence possible forfeiture of its trademark) should "explain through a suitable commercial communication the break with the past", that is, inform the market that there is no further relationship between the designer and the trademark owner).(1) That of course would give the designer a wider opportunity of using his or her name – even in the context of a new trademark – with the aim of stressing the existence of such a relationship between him or her and the owner of the new trademark.
The Supreme Court missed the chance to shed light on an important issue, especially in the world of luxury goods. It has thus been left to the Court of Appeal to which the case was referred to strike a balance between the different needs that Article 21 seeks to reconcile.
For further information on this topic please contact Cesare Galli at IP Law Galli by telephone (+39 02 5412 3094) or email ([email protected]). The IP Law Galli website can be accessed at www.iplawgalli.it.
Endnotes
(1) See for example Court of Milan, April 16 2012, in the case of the trademark corresponding to the name of the fashion designer Massimo Piombo.
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