On 5 November, the Court of Milan (Business Court “A”) issued a judgment on a dispute concerning the famous “Polo Player” trademark of the Ralph Lauren group, representing a polo player hitting a ball. In fact, the plaintiff The Polo/Lauren Company (“Ralph Lauren”), proprietor of a series of figurative National and Community trademarks concerning the “Polo Player”, requested the court to declare the invalidity of two trademarks registered in Italy by the defendant R&D of Hong Kong, allegedly including a sign almost undistinguishable from the Polo Player. In addition, the plaintiff requested the court to ascertain the counterfeiting and competitively unfair nature of the production, commercialisation and advertising of products covered by the opposing trademarks carried out by the other defendant, Slingroup s.r.l., with the resulting injunction, penalties and damages compensation. The defendants, on their side, claimed the validation of their own trademarks and denied their counterfeiting nature.

In the judgment at issue, the judging Panel first examined the plaintiff’s enforced trademarks, stating that they are “complex trademarks, with graphic-denominative components, in which the polo player’s figure, due to the relevance assumed in the sign’s context, constitutes the ideological nucleon which sums up the individualising attitude (the so-called “core”) of the signs, with an independent evocative potential in the consumer’s memory”. “It is a sign”, the Panel continues, “that has certainly become more than well-known today, famous in the sportswear market, at least in the Italian market (more sensitive than others to branded products), and which has been included at an international level, in its graphic-denominative entirety, since 2009 in the group of the one hundred best-known brands in the world”. This trademark, in the end, “seems endowed, in its particularity and graphic-conceptual originality, with an undeniable distinctive character (furthermore very increased over time because of the intense promotional campaign run by the plaintiffs)“.

In this context, the Panel noted that the defendant R&D’s trademarks were almost completely identitical with the plaintiff’s Polo Player trademarks, and it therefore declared the nullity of the former for lack of novelty. Stating this, the Panel also rejected the validation exception proposed by the defendants based on art. 28 of the Italian IP Code (Legislative Decree no. 30/2005, “IP Code”), according to which the proprietor of the earlier trademark which, for five consecutive years, tolerates (consciously) the use of a later registered trademark similar or identical to its own, cannot then claim the declaration of nullity of the letter or defy its use on the basis of its earlier trademark, unless the later trademark was registered in bad faith. In this regard, the judgement at issue notes first that the defendants had not proved that the plaintiff was aware of their trademarks and that it had therefore tolerated their use: in fact, it was not sufficient for that purpose that they were registered trademarks; nor was sufficient the evidence about the commercialisation of products covered by these trademarks by the defendants, which was limited to sales of a few thousand garments in several years, conducted for short periods and by operators involved in sectors others than clothing. On the contrary, the fact that the trademarks registered by R&D were substantially identical to the plaintiff’s earlier trademarks suggested that the defendant’s registrations had been obtained in bad faith, another element that led to exclude any validation.

Based on the same considerations illustrated in relation to the nullity of the R&D trademarks, the Panel also ascertained the infringement carried out by Slingroup through the commercialisation of products covered by the trademarks at issue. In this regard, the Judges noted that “even if in practice the considerable difference in the quality of the products (which would emerge from certain allegations made in the proceedings) led to exclude, in the consumer’s eyes, any possibility of error, including on the origin from a person contractually bound with the proprietor of the “original” trademark, it has to be remembered that the judicial system no longer confines itself to  protect only the trademark’s distinctive function, but also protects (where subsistent) the attractive value of the sign and the suggestive charge that is incorporated in it”. The Panel states to be supported, in this reasoning, by the ultra-protection afforded to well-known trademarks by art. 20, letter c) of the IP Code, according to which the proprietor of a trademark has the right to prevent third parties from using in economic activity “a sign identical or similar to the registered trademark for products or services also not similarif the registered trademark enjoys a reputation in the state and where the use of that sign without due cause takes unfair advantage of the distinctive character or the repute of the trademark or is detrimental to them“. In the case at issue, notes the judgment, the Polo Player “definitely has the requirements to be considered well-known, as is attested by the very wide advertising campaign of which it has been the subject for more than a decade, and by the inclusion of the brand in 2009 among the one hundred best-known brands in the world (doc. 3 att.)“; and on the other hand the defendants’ trademarks take “in practice an unfair advantage, represented by a parasitical association of the imitator’s products to the image of the imitated trademark, which allows them to be placed on the market taking advantage of all the evocative values of the famous trademark, thus acquiring a specific space (also as “clones” or low price imitations) that they would not otherwise have taken“.

Having ascertained the infringement, the Court therefore inhibits any further production, import, export, advertising or commercialisation of garments covered by the defendants’ trademarks, setting a penalty of 100 euro for each further product found on the market, and ordering the withdrawal from the market and the destruction of the products and all promotional and advertising material covered by the trademarks at issue.

Finally, the judgement considers the quantification of damages, in application of the criteria of art. 125 CPI, which we discussed, among others, here on this blog: lost profit, reasonable royalties and infringer’s profit.

In this regard, the Judges first point out the impossibility to quantify Ralph Lauren’s lost profit based on the royalty that the infringers would have paid if they had obtained a regular licence, given that “it has be excluded that the fashion house could have granted a licence to use the Polo Player in such a rough way, so this criterion appears useless to a proper reconstruction of the infringement‘s damaging effects”. On the other hand, it doesn’t even “seem plausible that the commercialisation by Slingroup of products covered by the Polo Player could have a direct negative impact on the plaintiff’s sales (in fact these products are not concretely fungible with each other)”, so the Panel essentially excludes that Ralph Lauren’s lost profit can be calculated by applying the plaintiff’s contribution margins to the number of products sold by the defendants.

However, the use of a trademark evoking and looking similar to Ralph Lauren’s to identify poor quality and low value goods certainly caused a detriment in terms both of consequential damages (think about the partial nullification of advertising campaigns’) and of “dilution of the distinctive character” of the plaintiff’s trademark) and of its undoubted evocative meaning (also of particular quality and design), that must be compensated. The infringer’s profit criterion shall therefore be applied”. Based on such criterion, as an expert witness had assessed the defendants’ turnover achieved with the sale of counterfeit products, the Court calculates the gross margin achieved by them and orders the defendants to pay such amount to the plaintiffs, together with the legal fees.

The Court also condemns the defendants to publish the judgment’s ruling, using double the usual font dimensions, in the Italian newspaper La Repubblica, in print and in the online version, and states that “a similar publication will have to be made on the defendants’ site, on the home page, for a period of 90 days from the judgment’s publication“.