The Court of Milan defines the scope of a defensive trademark
Can a registered trademark that has never been used continue to exist simply because it is classified as a “defensive trademark”? And to what extent and under what conditions can a trademark serve a so-called “defensive” function?
To answer these questions, it is worth analyzing a very recent ruling by the Milan Court, Specialized Business Division, obtained by our Firm on behalf of a leading multinational in the confectionery sector; in that case, the Milanese Judges, while clarifying that the defensive trademark constitutes an exception to the principle of actual use of a mark, outlined with greater precision the scope and criteria for the applicability of the defensive trademark.
To better understand this concept, it is necessary to start with the general principle set forth in the Intellectual Property Code, according to which failure to use a trademark within five years of its registration results in its inevitable forfeiture.
Now, the defensive trademark - which is based on Article 24, paragraph IV, of the Industrial Property Code - constitutes an express exception to the aforementioned principle, in that it may remain unused without resulting in its forfeiture.
Specifically, the owner of a “main” trademark (one that is actually used for the same goods and services as the “unused” one) is permitted to register marks similar to the main one, with the aim of extending the protection of the main trademark to closely related variants that preserve its distinctive core and prevent competitors from easily circumventing it.
In other words, “defensive” trademarks are filed and registered precisely to “defend” the main trademark, to prevent third parties from appropriating it and thereby creating a potential risk of confusion between the trademark and the main mark used by the company. This is particularly useful when a company owns a so-called “family of trademarks” all characterized by the same distinctive core.
The difficulty in applying this concept lies precisely in assessing whether or not the defensive trademark can be considered similar to the main one, all without creating unjustified monopolies or situations where signs are hoarded on the market. It is no coincidence that the Italian trial courts have always maintained a strict interpretation of this concept and have therefore rarely - and in very few cases - found that the defensive trademark concept applies.
And even in the case decided by the Court of Milan, the approach was no different, nor were the conclusions reached by the Milanese judges; in fact, by fully accepting our Firm’s defense arguments, the Milan Court ruled that the contested trademark could not benefit from the protection reserved for defensive trademarks, consequently declaring it forfeited for non-use and clarifying certain principles useful for better understanding the so-called “defensive” nature of a mark.
Firstly, the Court of Milan took care to point out that the concept of a defensive trademark is not expressly recognized in European law but rather constitutes a national legal construct that has survived in the Italian legal system as an exception and, as such, is subject to an extremely strict interpretation.
Moreover, while EU case law tends to view the registration of a trademark that has never been used as a possible indication of bad faith on the part of the applicant, the Italian legal system still allows for a very limited form of protection for such unused trademarks, provided they are attributable to and similar to the main mark.
An overly broad interpretation of this concept would, in fact, allow “sleeping” trademarks to be kept alive for the sole purpose of preventing new operators from entering the market, resulting in an unjustified monopoly incompatible with the principles of free competition.
Consistent with this approach, the ruling in question clarifies that the requirement of similarity must be assessed with particular rigor, such that the mere presence of a common lexical root - especially in short trademarks - is not sufficient to establish the existence of a defensive trademark, since this would ultimately grant the owner a monopoly over elements lacking independent distinctive character.
It is therefore necessary that the unused “defensive” sign possess characteristics that make it a genuine “minor variation” of the main trademark - that is, a substantially overlapping variation characterized by minimal differences from a visual, phonetic, and conceptual standpoint.
The conclusions of the Court of Milan must be interpreted as an inevitable alignment of national law with the principles of European law, thereby reaffirming the exceptional nature of the defensive trademark doctrine and the consequent need for a strict interpretation of the conditions justifying its application.
From this perspective, on the one hand, the decision in question confirms, in principle, the possibility that a sign, even if not in use, may nonetheless receive protection against third parties as a defensive trademark; on the other hand, the same ruling confirms that attributing defensive status to a trademark requires a rigorous and careful assessment of its prerequisites, in order to safeguard the principles of free competition.
This decision is significant not only from an interpretive standpoint but also from an operational perspective, as it advises trademark portfolio holders to exercise greater care when registering trademarks that they actually intend to use, thereby avoiding the unnecessary cluttering of the trademark register with marks that, as we have seen, ultimately end up being declared invalid for non-use.
EU - UK agreement (so-called “Brexit”): the birth of the “comparable trademark”
It is well known by now that on 24 December 2020 the European Union and the United Kingdom reached an agreement for regulating their future commercial relations following “Brexit”.
This agreement seals the definitive separation between the British and European legal systems and, starting from the date of its enactment (i.e., 1 January 2021, namely the end of the transition period), the rules of European Union law will no longer apply to the United Kingdom, including those concerning intellectual and industrial property rights.
With a view to ensuring an orderly transition towards the new legal regime, the European Commission published a series of “Notices of Withdrawal” (related to the main sectors of European economy) which set out the main practical consequences that will affect the owners of intellectual and industrial property rights.
In particular, the Notice concerning trademarks specifies that, among other things, the owner of an EU trademark registered before 1 January 2021 will automatically become the owner of a “comparable trademark” in the United Kingdom, resulting as registered and subject to opposition in the United Kingdom, in accordance with the laws of that country.
This notion of a “comparable trademark” appears to be new within the field of IP rights, in so far as it was specifically introduced for the purpose of protecting those who – before the definitive withdrawal of the United Kingdom from the European Union – had obtained protection for their EU trademark which, at the time, produced effects also with respect to British territory.
The European Commission – evidently aware of the novelty of this legal concept – in the same Notice clarified that such “comparable trademark”:
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- consists of the same sign that forms the object of EU registration;
- enjoys the date of filing or the date of priority of the EU trademark and, where appropriate, the seniority of a trademark of the United Kingdom claimed by its owner;
- allows the owner of an EU trademark that has acquired a reputation before 1 January 2021 to exercise equivalent rights in the United Kingdom;
- cannot be liable to revocation on the ground that the corresponding EU trademark had not been put into genuine use in the territory of the United Kingdom before the end of the transition period;
- may be declared invalid or revoked or cancelled if the corresponding EU trademark is the object of a decision to that effect as a result of an administrative or judicial procedure which was ongoing before 1 January 2021 (on a date following the “cloning”).
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The British Government has confirmed that it will fall to the competent office of the United Kingdom to proceed without cost with the “cloning” of EU trademarks in the United Kingdom, where they will become “comparable trademarks”. It is not required of the owners of EU trademarks to file any request, nor to commence any administrative procedure in the United Kingdom, nor is it necessary for them to have a postal address in the United Kingdom for the three years following the end of the transition period.
Despite the precise description of the main features of the new “comparable trademarks”, there are – inevitably – uncertainties surrounding the practical application of this legal concept.
In particular, it is puzzling to find that the “comparable trademark” continues to be influenced by European administrative and judicial occurrences (see point e) above), which conflicts with the alleged independence of the United Kingdom from European laws and regulations.
Such inconsistencies evidently have already been noted, in so far as the Notice specifies (in a footnote) that the parties have acknowledged that the United Kingdom “is not obliged to declare invalid or to revoke the corresponding right in the United Kingdom where the grounds for the invalidity or revocation of the European Union trade mark … do[es] not apply in the United Kingdom”. It would seem therefore that the United Kingdom is invested with the power to not conform itself to European decisions.
However, it is not clear what should prevail in this “contest”: the invalidating decision of the European proceedings or British power to deny the effects of such European decision?
Furthermore, if the European proceedings – albeit commenced before the end of the transition period – should last for several years, how should the owner of the “cloned” trademark in the United Kingdom behave? Again, how are we to reconcile the existence of a “comparable trademark” – contemporaneously subject to European and British jurisdiction – with the known principle of territoriality applicable to the world of trademarks?
The situation appears somewhat uncertain and, in our opinion, it cannot be excluded that other issues concerning this new “comparable trademark” may arise in the future and form the object of open debate by those operating in the IP industry.
This is a key point that concerns not just acquired rights (which the British Government has undertaken to protect), but also the future political relations between the EU and the United Kingdom; indeed, it is interesting to note in this regard how such a seemingly innocent subject, namely trademark law, may in fact reveal the frailty of an agreement which is formally commercial but in reality turns out to be predominantly of a political nature.
In light of all the above, it would seem that the EU and the United Kingdom have chosen to follow the easiest path for protecting owners of EU trademarks in the midst of an orderly transition towards a new legal regime imposed by Brexit; on the other hand, this decision raises several legal questions, some of which have been anticipated above, which introduce a measure of uncertainty concerning the new “British hybrid” trademark.
Finally, we cannot fail to note how this new legal concept may represent an interesting precedent in the event that other Member States may decide in the future to leave the European Union. In that regard, we find ourselves before a new concept that certainly seems interesting from a legal standpoint, but potentially may also be “dangerous” from a political point of view and, as such, deserving of close attention in the coming years.