Court of Appeal revokes mark for non-use in landmark decision

On September 4 2013 the Court of Appeal of Milan (Specialised Company and IP Division) issued a landmark decision in which it ordered the revocation for non-use of the famous LAMBRETTA trademark for motorcycles (the motivation for the decision was published at a later date).

LAMBRETTA had been one of main trademarks in the Italian mechanical sector since the Second World War, when it was launched to designate a scooter which was, for many years, the main competitor of the Vespa scooter (still produced by Piaggio). Use of the LAMBRETTA mark by the original owner (Innocenti, which had registered it in Class 12 in 1947) had ceased in 1971, when the transferee of the company's rights (Scooters India Ltd) had moved the production facilities to India, exporting the motorcycles to Italy only until 1985.

In 2010, in the first instance proceedings, the Milan court had decided that, although use of the trademark had ceased, the fact that the new owner had resumed use since 2002 was a sign of the company's intentions to take advantage of the symbolic value of the old LAMBRETTA mark (however, the use was not for motor vehicles, but only for items of clothing and accessories).

The Court of Appeal reversed the decision, finding that:

• the termination of the use had occurred before December 31 1992 - when the Italian legislation implementing the First Trademarks Directive (89/104/EEC) entered into force;
• under the Italian law in force at that time, the renewed use was insufficient to counteract the revocation of the trademark, which had occurred in the meantime; and
• the transitional provision relating to this issue (now contained in Article 235 of the Intellectual Property Code) did not provide for the application of the new scheme - in line with the directive - to trademarks that had lapsed before the directive entered into force (see Galli, "Il diritto transitorio dei marchi", Milano, Giufffré, 1994, page 29 et seq).

Consequently, the court did not take position on the relevance and the effects of the renewed use of a trademark for products dissimilar to those originally manufactured by the mark owner. However, the decision stated that "a trademark can be adequately and sufficiently used only if its use is at least potentially able to alter the state of the market, and, consequently, at least potentially able to affect the competitors' position". The ruling is consistent with the teachings of EU case law on this point (see the decision of the Court of Justice of the European Union in Ansul BV v Ajax Brandbeveiliging BV (Case C-40/01)).

The decision thus seems to take the view that 'reputation' is not merely an abstract element that can be used and marketed independently; reputation is a quality attached to a trademark, which needs to be valid and "used" on the market (ie, not expired).

This point had been expressly addressed in another decision of the Court of Milan (Isotta Fraschini Milano Srl v CO.RI.MEC SpA, Court of Milan, Specialised IP section, March 15 2006, President: Tarantula), in which the court had declared that trademarks registered for luxury goods by the transferee of the original owner (who had continued to use the old trademark only for boat engines) and then transferred to third parties could not "take advantage" of the reputation related to the trademark ISOTTA FRASCHINI (still known today for being used until 1948 for the production and marketing of cars). In that decision, the Court of Milan had ruled that, as it was a long time since the use of the trademark for cars had ceased, the new trademarks "could not take advantage of the connection with the old mark". Instead, they were deemed to be the result of "an independent initiative, legitimate because the previous trademark had been revoked" due to non-use, notwithstanding the enduring memory of that use. Consequently, the court declared that, "since the trademarks are new, any arguments relating to the reputation of the [old] trademark are already included in the original court ruling", as those trademarks were considered to be "completely unrelated to the name and history of the automobile factory".

In the Isotta Fraschini case, the parties owned registered trademarks that were different from the original mark (which related to the automotive sector and had been revoked for non-use), and the court specifically stated that "none of the parties can claim to be the repository of the history of the old ISOTTA FRASCHINI mark". On this basis, the court had considered that the new trademarks could be validly registered and used in their respective fields (cars on the one hand, and clothing items and luxury goods on the other) by their owners, which were unrelated to the previous owner.

As neither of the new owners could claim to have continuity with the old and revoked trademark, but could only introduce their activity as a new economic initiative in their respective sectors, inspired by the values of the original trademark, they could not take advantage of the old trademark's reputation to enlarge the scope of protection of their mark.

Cesare Galli, IP Law Galli, Milan