Intellectual property rights, in particular trademarks (but also copyright and patents), are some of the most valuable assets of any franchise system. With the growth of the Internet and global communications, this assumption is even more true than ever.
In fact, one of the first and more important point of analysis and investigation before entering the Italian market – as well as any market – for a foreign franchisor should be with respect to the availability of its IP system, and in particular of its trademark(s), for use in that market and the ability to protect them there.
Franchisors wishing to expand their horizons beyond their country of origin, by offering their products or services through franchisees in the Italian market, should consider the selection of their trademark carefully, as the same mark can be received differently by Italian consumers and intellectual property offices.
1.IP rights’ protection in Italy
IP rights in Italy are mainly regulated by the Decree-Law n. 30/2005 (Industrial Property Code, “IPC”). View the official Italian version of the IPC. To receive an unofficial English translation of the IPC, please contact us.
In addition, Italy is party to several international treaties and conventions, including:
- the Paris Convention for the Protection of Industrial Property Rights;
- the Agreement on Trade-Related Aspects of Intellectual Property Rights;
- the Madrid Agreement and the Madrid Protocol on the International Registration of Trademarks;
- the EU trademark system; and
- the Nice Agreement on the International Classification of Goods and Services.
According to the IPC, franchisors can protect as trademarks any signs that are capable of being represented graphically, as long as they are capable of distinguishing the goods and services of their holder. This includes words (including personal names), designs, letters, numerals, sounds, shapes of goods or their packaging and color shades and combinations.
Distinctiveness is, therefore, a basic requirement for registration of a trademark in Italy, as well as in most countries. If a mark is not distinctive with respect to its owner, the owner will lose the exclusive right to its use.
Under certain circumstances, the ICP allows cumulative and simultaneous protection of an item by trademark, design and copyright. In particular, logos may be protected as both trademarks and designs.
The shapes of products and their packaging, as well as designs, may enjoy both design and 3D trademark protection, provided that they fall within the limits outlined above for shapes.
2.Registering a trademark in Italy
By registering a trademark, franchisors may bar the registration and use of subsequent trademarks, identical or similar. An Italian registration confers exclusive rights on the trademark in the entire Italian territory. The same effect applies if a franchisor has obtained registration of its trademark at the European level (EUIPO) or at an international level (having registered its trademark in one State member of the Madrid Agreement or the Madrid Protocol).
According to the IPC, any person or legal entity that uses or intends to use a mark can apply for its registration in Italy, as long as the application is not made in bad faith. Marks can be used by either the applicant or an authorized third party, and use is considered genuine if it is true, continuous and effective.
All signs (word, device or shape) capable of being graphically represented and fulfilling the requirements of novelty, distinctiveness and lawfulness can be registrated as trademarks. Graphically represented sounds, color combinations or a particular shade of color are also registrable. The international classification of goods and services (the Nice Agreement) applies.
The following are excluded from registration:
- signs which cannot be represented graphically;
- signs without distinctive character;
- signs which consist exclusively of generic indications of the goods and services or descriptive indications as to the type, quality, quantity, intended purpose, value, geographical origin, time of production of goods or rendering of services or any other characteristics of the same;
- signs which consist solely of a shape that:
- is dictated by the nature of the product;
- is necessary to obtain a technical result for the product; or
- gives substantial value to the product;
- signs which are contrary to law, public order or decency; and
- deceptive signs – in particular, signs which mislead the public as to the geographical origin, nature or qualities of the relevant goods and services.
The above exclusions may be applied by the Italian Patent and Trademark Office (PTO), whereas only third parties can contest the following:
- signs which may infringe third-party author rights, IP rights or any other exclusive rights;
- signs which are identical or similar to earlier registered trademarks, where this may cause confusion among the relevant public;
- signs which are identical or similar to unregistered trademarks, company names, company signs or domain names, provided that the conditions set forth above for unregistered signs are met;
- signs which are identical or similar to an earlier trademark which enjoys a reputation for dissimilar goods or services, where use of the latter mark without due cause would take unfair advantage of or be detrimental to the distinctive character or reputation of the earlier trademark; and
- signs which are applied for in bad faith.
Trademark applications must be filed with the PTO. Once the application is filed, the PTO will perform an examination based on formal requirements and absolute grounds for refusal.
If the application does not meet formal requirements or must be refused on absolute grounds, the PTO will issue a formal notification to the applicant, which is granted a period to complete or revise the application or file observations in response to the refusal.
The PTO will then examine the applicant’s response and decide whether to accept the application or reject it, either totally or partially.
If the trademark application meets the requirements, it will then be published for any opposition or observation by third parties. Where no objections are raised by the PTO and no third-party oppositions or observations are filed, an application can mature to registration in approximately nine to 12 months.
A trademark is valid for 10 years from the filing date and can be renewed – for all or part of the originally claimed goods – for unlimited subsequent 10-year periods. However, lack of use of an Italian registered trademark continued for 5 years following its registration can cause a trademark to lapse.
It is possible to claim the priority of an earlier national filing in any member state of the Paris Convention within 6 months running from the date of application. A first application for an Italian trademark can be the basis for a priority claim when subsequent applications for the same trademark are filed in other states party to the Paris Convention.
3.The search for anteriority
Before submitting the application for registration of a trademark, or to use a trademark on the Italian market, it is essential for franchisors to verify the novelty requirement. It is in fact necessary that the trademark is not identical or similar to an earlier trademark, already registered in Italy, for the same class and for identical or similar products/services.
The PTO is not entitled by law to carry out any kind of search of prior rights; therefore, no official searches are available. This means that a trademark registration, even if accepted by the PTO, can subsequently be declared invalid following a request by the owner of the earlier trademark.
The search for anteriority is used precisely to ascertain the presence of trademarks already registered, identical or similar to the one to be registered, for an identical or similar product category, and which for this reason could generate an opposition or a counterfeiting action by the owner. Although such search it is not mandatory under Italian law, and does not provide an absolute guarantee, it significantly limits the risk of suffering civil or criminal legal action.
The search for anteriority of a trademark can be carried out autonomously, using the databases of the trademarks published online; however, it is highly advisable to contact qualified experts , who make use of private databases and are able to suggest the appropriate strategy to the franchisor (for example, to modify in whole or in part the trademark that one intends to register, or select the product classes appropriately).
4.Oppositions to trademark’s registrations
Oppositions against Italian trademark applications must be filed within three months of publication of the application in the Official Bulletin of Trademarks. Oppositions against Italian designations of international registrations must be filed within three months of the first day of the month following that in which registration of the international application is published in the World Intellectual Property Organisation Gazette of International Marks.
A notice of opposition can be directed against a single application and can be based on the following grounds:
- earlier trademarks that have been applied for, have been registered or have effect in Italy at the time of filing of the contested application;
- portraits and personal names to which the applicant of the contested mark has no rights; and
- well-known signs – namely:
- names of persons;
- signs used in the fields of art, literature, science, politics or sports; and
- designations and acronyms of events and those of non-lucrative entities and associations, including the relevant emblems.
Unregistered trademarks, company names, domain names, well-known trademarks under the Paris Convention and reputation claims cannot be enforced through opposition, but only through invalidation civil actions.
If an opposition is accepted, the PTO will notify the applicant of the contested mark. The parties then have a two-month cooling-off period in which they may reach an amicable settlement, which may be extended by joint request of the parties by up to 12 months. If an agreement is not reached within this period, the PTO will decide on the opposition.
In the case of an opposition against the Italian designation of an international registration, the PTO will issue a provisional refusal, setting a three-month term for the applicant to appoint an Italian representative to defend the designation. If no representative is appointed, the provisional refusal becomes final and the designation is rejected with no further action required from the opponent.
Given the above, it is very important for all franchisors using a registered trademark in Italy to supervise on the registration of other similar marks. It is therefore advisable to turn to an IP law firm not only in the preliminary phase of the search for anteriority and trademark registration, but also to subsequently monitor the conduct of competing companies.
5.The distinctive ability of the mark
The distinctive ability, in addition to representing one of the fundamental requirements for the registration of the trademark, is very important for the protection of the same, as it determines the degree of effectiveness. The distinctive ability of a trademark consists of the characteristics that the sign must have in order to be suitable for the public to identify a specific product or service with respect to other products or services of the same nature on the market. The most distinctive character of a trademark occurs when words or figures are used that have no relationship with the distinguished product or service, or when generic names or commonly used words are used that are modified and/or combined with each other in an imaginative and not descriptive way. When a mark is characterized by a strong distinctive ability, it is called “strong mark”; conversely, a trademark with little distinctiveness is called a “weak mark”. A well-known mark is also considered strong, that is, the one known by a significant part of the public interested in the products or services bearing the brand, also taking into account the amount of investments made by the company to promote it. Franchisors whose trademark is not strong by lack of distinctive ability should therefore invest in order to make it well known, in order to receive more protection. Weak trademarks benefit from lessened legal protection, as slight changes to a trademark are sufficient to avoid confusion, and therefore to be legitimately used by its owner. Conversely, when a mark is strong, minimal variations of it are not sufficient to avoid the danger of confusion; therefore the owner of a strong trademark can prohibit third parties from using all trademarks that do not differ significantly. When a trademark is formed by the combination of one or more words or one or more signs, it is defined as compound mark. The assessment of its distinctive character, in this case, leaves out the individual elements and has as its object the whole mark. Therefore it is possible that some elements of the trademark are, in themselves, devoid of distinctive character, while the entire trademark, considered as a whole, is endowed with distinctive capacity. The assessment of the distinctive capacity of a trademark is of fundamental importance, and must be carried out before proceeding with the registration, using a law firm specialized in IP.
As a general rule, also unregistered trademarks enjoy some form of protection, similar to registered trademarks. Further, according to the Paris Convention, foreign registrations that are well known in Italy may enjoy protection as unregistered trademarks.
To establish unregistered trademark rights, the use of a sign must be effective and continuous. Such use may affect the validity of a subsequent registration only if it leads the previously used mark to become more than merely locally well known.
However, the following should be taken into account:
- unregistered marks do not benefit from any presumption of validity; the burden of proof in civil proceedings is therefore much higher than in the case of registered trademarks;
- unregistered marks cannot form the basis of an opposition and can be enforced against subsequent registration only by means of civil action;
- the prior use of a sign which results in the sign becoming only locally well known does not exclude the novelty of a subsequent trademark;
- locally well-known unregistered trademarks may still be used locally, regardless of the subsequent registration by a third party of an identical or similar trademark for identical or similar goods and services; however, such prior use does not affect the novelty and validity of the subsequent third-party registration.
Therefore, it is highly advisable for franchisors to use a registered trademark, in order to avoid the risk that third parties may legitimately use a mark identical or similar.
7.Enforcement of trademarks’ rights
As mentioned, by registering a trademark, franchisors may bar the use by third parties of trademarks, identical or similar, creating confusion (even potential) in the consumer. Counterfeiting is not necessarily linked to the intention to copy someone else’s trademark; often a company notices the existence of a competitor who has a brand that resembles its own in a completely random way, without the companies ever coming into contact with each other. Even in this case, however, the legitimate owner of the trademark is protected.
Typically, in a trademark infringement proceeding, the franchisor will request a declaration that the mark has been infringed, and compensation for damages. Italian judges usually take into account all appropriate factors to assess the damages, such as negative economic consequences – including the lost profits of the rights holder and unfair profits made by the infringer – and moral prejudice caused to the franchisor. The infringer can be forced to return all profits earned.
In cases of either imminent or ongoing violation of an IP right, the rights holder may request the court to grant provisional remedies. The main remedies that can be requested are:
- seizure (of products, tools and production plants, accounts and invoices and advertising materials);
- description (i.e., inspection of products, production plants, accounts, advertising materials and any associated documents in order to collect documentary evidence of the infringement and the extent thereof); and
- injunction (enforceable at the infringer’s premises, those of subsidiaries and warehouses, and against third parties not identified in the petition).
The average period from filing of the petition to grant of the remedy is one month.
Injunctions are very important for franchisors to obtain an order from the Judge to immediately prevent third parties to use an identical or similar trademark, anticipating the judgment to obtain compensation for damages. It is also possible to ask the Judge to determine a sum due for each day of delay in the execution of the injunction. Finally, the trademark owner can request the removal of the consequences of counterfeiting, such as the destruction of the products on which the counterfeit trademark appears. It is advisable to contact a law firm specialized in IP for the exercise of trademark counterfeiting actions.
8.Assignments and licenses of IP rights
There are no specific requirements in Italian law to finalize an assignment of IP rights, insofar as documents are concerned. However, an assignment must take written form in order to be recorded in the PTO. It may be recorded by means of the original, notarized assignment deed (foreign deeds must be legalized and include a sworn Italian translation), or by means of a simplified declaration stating that the title has already been assigned.
The declaration must be executed by both parties, but there is no need for notarization or legalization of signatures. Before recording the assignment with the PTO, fiscal registration of the assignment deed or declaration is required. It takes approximately one year for the assignment to be recorded in the register, but the assignment is effective as of the date of filing of the petition.
Trademarks can be also the object of both exclusive and non-exclusive licenses, which can relate to all or some of the goods or services protected by the registration. To protect the validity of a trademark, the mark must be licensed in accordance with the trademark license requirements .
No particular forms or formalities are required under Italian law. However, according to the IPC, the licensing of a trademark must not mislead the public as to the essential characteristics of the goods and services.
Recording a license in the PTO is not mandatory, although it is advisable for the sake of public advertisement. Effective and continuous use of a trademark by a licensee is considered genuine for the purpose of use requirements.
In addition, for a valid license to exist and for the goodwill generated by the franchisee to inure exclusively to the benefit of the trademark owner, the owner must have direct or indirect care or control over the character and quality of the wares and services offered in association with the trademark. The trademark license itself should provide for these controls and the franchise agreement and/or the trademark license agreement should address issues of liability and indemnity.
The protocols set out in the trademark license agreement should be clear and should be practiced. Failure to implement the controls set out in the license, also known as “naked licensing,” can result in the license being found invalid and the marks non-distinctive.
In the event that a franchisee fails to observe the protocols in the license to the point where the franchisor believes that the validity of the mark is in jeopardy, the franchisor might consider bringing an action to enforce the license and, if the franchisor takes the position that the franchisee is no longer a licensee, a trademark infringement proceeding.
It is highly advisable to contact a law firm specialized in IP to finalize an IP license agreement.
Avv. Valerio Pandolfini
For other in-depth articles on issues relating to franchising: visit our blog.
The information contained in this article is of a general nature and is not to be considered an exhaustive examination of the various issues, nor is it intended to express an opinion or provide legal advice. Specific legal advice must be provided with regard to individual cases.