The system of IP protection in Italy is rigorous and effective – but rights holders need to adopt the correct measures to protect their marks
This article first appeared in World Trademark Review magazine issue 40, published by The IP Media Group. To view the issue in full, please go to www.worldtrademarkreview.com
Globally, the question has long been debated of whether and to what extent the monopoly related to the registration of a trademark, or even to the reputation of an unregistered
trademark, constitutes a barrier to market entry for goods and services.
Today, the scenario is even more complicated and topical as the unconventional use of registered or unregistered trademarks has increased: for example, the importance of commercial signs in the online community, and the establishment of the reputation of commercial signs through the use of brands as an expression of free speech in online social networks.
Is use of the ‘like’ button in a Facebook¬addicted world now considered a free¬speech activity, even when evaluating the notoriety of registered or unregistered trademarks? If so, how much and in what ways could a massive like/dislike activity affect the recognition of the existence or notoriety of an unregistered trademark?
In Italy, an unregistered trademark is protected against any third-party use that could cause a risk of confusion and/or association with the activity of the unregistered trademark owner.
The major weakness of this system is the need to prove that the use of an unregistered trademark – and of a commercial sign where it has an appropriate level of distinctive value – is not only local.
In order to assess whether an unregistered trademark is eligible to be protected against the use of identical or confusingly similar trademarks by a third party, it should be perceived as a clear indication of the product originating from a specific user, and such perception should be achieved by the (sometimes mythological) ‘average consumer of average attention and perception’.
When considering why the international community has organised a system to protect distinctive signs, it can be argued that the market barriers deriving from this system are clearly justified, as the real aim is to protect the end consumer.
The end consumer has the power of free choice, but a relatively limited perception of the risks of confusion or association that could ensue from an environment saturated by brands. It follows that there is no advantage for the trade community or the end consumer in creating or maintaining different systems of protection for registered or unregistered trademarks.
The reason is clearly related to the undisputable fact that both registered and unregistered trademarks are created through trading and commercial conduct.
However, it must be remembered that the market is dominated by established consumer perceptions; in order for new players to establish a competitive position, it is vital that they understand the importance of adopting a policy of protecting goodwill and reputation from their first use of any unregistered trademarks.
Such a policy is clearly focused on the target consumer; it is reasonable that if the target of an unregistered trademark is the consumer in a local market, the best way to protect this target is by allowing the prior user to continue using the unregistered trademark locally, where the unregistered trademark has become well known.
All of the above-mentioned reasoning indicates why the owner of an unregistered trademark which is used only locally cannot prevent the registration of a confusingly similar trademark, as preventing that registration would be considered to be an unjustified broadening of the scope of protection – it would be wider than the justified need to protect the local consumer in the local market.
Another point could play a fundamental role in the need to register a trademark, if the prior user has no intention of focusing only on the local market: the risks related to the almost impossible battle against dilution of an unregistered trademark.
Dilution is damage caused to the reputation of a mark by association, without deception as to the true commercial origin of the goods. This damage may occur when the party responsible for this blurring and/or tarnishing activity refers to another similar trademark to promote its own different goods. In such a scenario, if the owner of an unregistered trademark cannot prove effective diversion of customers, it cannot oppose the possible reduction of the future value of its unregistered trademark due to the third party’s activity, even where the third party’s activity has a negative impact due to the different levels of quality of the goods.
In other words, when investigating the differences between the scope of protection of registered and unregistered trademarks, it is necessary to think about the legislature’s real target (ie, the customer).
Italian judges, in line with the reasoning of the European Court of Justice, are dedicated to protecting the average consumer by giving relevance to the scope of protection of an unregistered trademark which is currently in use in a relevant part of the Italian territory.
As a consequence of the adoption of a consumer-eye perception and approach, unregistered trademarks are considered to be eligible for protection even if they are unconventional trademarks, such as colour marks, sound marks or even shape marks.
If an unregistered trademark in use on the Italian market is infringed, this could lead to a criminal prosecution, since in Italy trademark infringement is either a criminal or an administrative offence.
As for criminal offences, Articles 473, 474 and 517(3) of the Criminal Code provide penalties of up to two years’ imprisonment plus a fine of up to €20,000 for the importation, possession for commercial sale or circulation of goods that bear counterfeit or altered marks or distinctive signs, or otherwise violate other IP rights.
Following several police operations in the fight against financial crime, new Law 99/2009 was introduced as a specific and additional measure in order to increase penalties (in terms of both fines and imprisonment) should infringement be committed on an ongoing basis, on a large scale or through an organised system.
This is a reasonable method by which to fight against organised crime (commonly referred to as ‘mafia’); organised crimes consisting of (un)registered trademark infringement could be punishable by a maximum of six years’ imprisonment.
In Italy, criminal liability is personal; however, any party which participates in organised crime involving the infringement of unregistered trademarks will be considered as responsible for a severe tort, with a high degree of ethical misbehaviour, as responsible for acts of organised crime (commonly known as ‘mafiosi’).
In an attempt to shut down organised¬crime corporations like the mafia, the Supreme Court ruled that the more severe penalty of Article 648 of the Criminal Code must be applied even if a party is merely in possession of infringing goods for business purposes.
Furthermore, if criminal organisations are running counterfeiting operations, more invasive forms of investigation may be adopted, including telephone monitoring.
In terms of protection afforded to the holders of unregistered trademarks, a specialised system was introduced in 2003 which consists of specialised IP divisions within 12 existing courts in major cities.
In cases of alleged unregistered trademark infringement the specialised IP courts may grant urgent measures, such as injunctions, seizures and orders for the withdrawal of goods from the market.
These orders may help the holder of an unregistered trademark to obtain all evidence not only of the infringement itself, but also of the damages incurred or deriving from the infringer’s activity.
The specialised IP courts have exclusive competence to decide civil actions relating to trademarks, patents, copyright and unfair competition linked to these rights. When unregistered trademarks with a high level of notoriety are involved, the courts can examine and grant urgent measures within a few days – in particular, inaudita altera parte (without prior hearing of the other side).
An injunction is usually accompanied by a fine for each violation, which is paid to the rights holder. Violating an injunction order renders the offender liable to a prison term of up to three years or a fine under Article 388 of the Criminal Code.
Urgent measures, including protective measures, are granted by individual judges who are appointed by the president of the competent specialised division. They may be subject to appeal before a panel of three judges of the same division. The panel, which does not include the first judge, normally issues a decision within one to two months.
The decision rendered in relation to the injunctive relief, in particular the decision relating to the imposition of a fine and withdrawal of the infringing goods from the market, may become final unless a party starts proceedings on the merits.
As a consequence, proceedings on the merits in cases of infringement of unregistered trademarks or other commercial signs are necessary only if the rights holder is asking the court to order the infringer to suffer any further consequences, such as paying compensation, paying for publication of the order in the media, handing over the infringing goods to the rights holder or having them destroyed at the infringer’s expense.
Last but not least, in line with the implementation of the EU IP Rights Enforcement Directive (2004/48/EC), the holder of an infringed right such as an unregistered trademark may receive a sum which corresponds either to the infringer’s profits or to its own lost profits.
Compensation for any further damage may also be added to the amount, such as expenses incurred as a result of responding to the infringement or damage to the corporate or brand image.
The amount of compensation for damage caused to the rights holder’s image is often calculated as a fraction of the advertising expenses incurred by the rights holder or the cost of an advertising campaign to mitigate the negative impact of the infringement on the public.
Thus, even in relation to the amount of damages, the focus of the judge rests on protecting the public from being misled.
The system of IP protection in Italy is rigorous and effective in the fight against the counterfeiting of unregistered trademarks or any other commercial signs.
However, it is crucial that rights holders adopt measures to protect their customers, including ensuring that the goods and services bearing the unregistered trademark have a reasonable and stable level of quality.