Specialised IP Division of Turin Court implicitly applies HAG II doctrine

The Specialised IP Division of the Court of Turin has issued a ruling (June 30 2012, published only recently) protecting the trademark ERACLIT - owned since 1925 by the homonymous Italian company - against use of the trademark HERAKLITH - owned by an Austrian company since the early 20th century, but never used as such in Italy - for similar products (wood fibre panels).

The Austrian company had been supplying the Eraclit product for many years, but always under a private label deal (ie, selling products without a trademark). Eraclit would then affix its own trademark to the products. The two companies never entered into a trademark licensing agreement. The Austrian company even offered to buy the ERACLIT mark several years ago when it decided to enter the Italian market, thereby expressly acknowledging that Eraclit was its owner.

The court placed great emphasis on the fact that the ERACLIT mark had, as a result of its continuous use on the Italian market, acquired its own independent distinctive character in Italy. The HERAKLITH mark, on the other hand, was completely unknown on the Italian market. Hence, consumers automatically connected the products sold in Italy under the HERAKLITH mark with Eraclit.

According to the court, of particular importance was the fact that the relations between the parties never involved the grant of a licence or authorisation by the Austrian company to the Italian company to use the ERACLIT mark; therefore, the ERACLIT mark was held to be independently protectable in Italy. To support this finding, the court drew confirmation both from the above circumstances and from the fact that the ERACLIT mark was the “general trademark” of the homonymous company Eraclit. The company used it to distinguish all its goods and services, including those which were not supplied to it by the Austrian company.

Consequently, in practice, the HERAKLITH mark, owned by the Austrian company, can be used only in Austria and in the other states in which it has already been used; on the other hand, the ERACLIT mark, owned by the homonymous Italian company, can be used only in Italy. The court thus implicitly applied settled Community case law which recognises that similar - or even identical - trademarks belonging to different parties might co-exist in different member states. In such a case, each party must respect the exclusive territory rights of the other party within the European Union, which constitutes a derogation to the principle of exhaustion. In HAG II (Case C-10/89) and Ideal Standard (Case C-9/93), the Court of Justice of the European Union (ECJ) stated that, when two identical signs (and, a fortiori, two similar signs) belong to different parties in different member states, the case no longer involves a single trademark, but a plurality of trademarks, each of which informs the public that a certain party owns the exclusive rights to that mark in that state. Each party is thus entitled to oppose the importation into its state of goods made in another state by the local owner of the trademark, and vice versa. The ECJ further stated that this principle applies both when the trademark is divided “by state” (as in the HAG case), and when the original owner has decided freely to assign its mark (as in the Ideal Standard case).

The court also dismissed the Austrian company's argument that the name Eraclit was the generic name for the product (wood fibre panels) in Italy. The court stated that a number of publications in which the trademark was used as the name of the product did not constitute sufficient proof of its genericness, due to the sporadic nature of these publications. The submission of these documents by the Austrian company was offset by the much greater number of documents submitted to the court showing that consumers perceived the name as identifying a specific company (Eraclit).

Further, the court held that whether the HERAKLITH mark had been registered in Italy was irrelevant, as it had lapsed through non-use. In relation to non-use, the court also held that the fact that the website of the Austrian company could be seen in Italy was irrelevant. It stated that this did not allow to determine the renown of the trademark among the Italian public, in part because only languages other than Italian were used on the website. This appears to be in line with the approach of the ECJ, which has stated that the “genuine use of the mark entails use of the mark on the market for the goods or services protected by that mark and not just internal use by the undertaking concerned” (see Ansul (Case C-40/01), Paragraph 37, and La Mer Technology (Case C-259/02). In La Mer Technology, the ECJ also stated that, “where the use of the mark does not have as its essential aim the preservation or creation of market share for the goods or services which it protects, such use must be considered in fact to be intended to defeat any request for revocation. Such use cannot be characterised as ‘genuine’ within the meaning of the [First Trademarks Directive (89/104/EEC)].”).

As a result, the court enjoined use of the trademark HERAKLITH on the grounds that it infringed the ERACLIT mark. It also ordered:

• the withdrawal from the market of goods and advertising material bearing the trademark HERAKLITH; and
• the publication of its decision in the Italian newspaper with the widest circulation (Corriere della Sera) and the best-known Italian architectural review (Domus) at the expense of the Austrian company.

Under Italian law, this ruling is effective even though it was issued in interim proceedings and was not followed by an action on the merits. In Italy, interim proceedings in IP matters are 'special proceedings', similar to an action on the merits, but much quicker. An ordinary action on the merits is necessary only if, in the interim proceedings, a seizure order has also been issued (the order becomes ineffective if it is not followed by an action on the merits within the term provided by the Agreement on Trade-Related Aspects of Intellectual Property), or if compensation or reimbursement of profits are sought (these measures can be granted only at the end of an ordinary action on the merits).

Cesare Galli, IP Law Galli, Milan