Protection of well-known trademarks: Ferrari wins suit against Philipp Plein AG (again)

Thanks to Marianna Riedo  for collaborating on this article.

For the second time, the car manufacturer Ferrari S.p.A. (“Ferrari”) has won a suit against Philipp Plein International AG (“Philipp Plein AG”), a fashion clothing company run by the German designer Philipp Plein. The case was brought before the Court of Milan. As a result of the proceedings, Philipp Plein AG was ordered to remove unlawful images and videos from all online platforms and to pay Ferrari EUR 300,000.00 in damages for unlawful use of its trademark, plus EUR 25,000 in legal fees.

The case had its start back in June 2017. Philipp Plein AG staged a fashion show to launch its 2018 spring/summer collection, and as part of the show it organized a performance of acrobatic stunts that took the form of an homage to the Fast and Furious movie franchise. Philipp Plein AG rented several luxury sport cars from Ferrari, as well as from Lamborghini, BMW, McLaren, and others. Ferrari then complained about the commercial exploitation of its cars and trademark during the show and after it — as images of the performance were subsequently distributed. This was due to the fact that Philipp Plein AG’s distinctive signs were placed on its cars next to the well-known prancing horse sign.

A relevant judicial precedent between Ferrari and Philipp Plein AG

It is worth noting that Ferrari and Philipp Plein AG recently confronted each other in a similar case brought before the Court of Genoa, concerning the unlawful use of the Ferrari trademark in two promotional videos uploaded to Instagram by Philipp Plein AG. Both these videos showed a pair of Philipp Plein shoes placed on the hood of a Ferrari car with the trademark and logo of the prancing horse clearly visible. The Court in Genoa issued an injunction, as it deemed the video misleading to consumers in the theory that it would lead them to believe that Philipp Plein AG had a partnership with Ferrari. The Court of Genoa based its reasoning on Article 20.1.c of the Italian Code of Industrial Property (Legislative Decree No. 30 of February 10, 2005 – “IPC”) and Article 9.2.c of Regulation (EU) 2017/1001 on the European Trademark (“Regulation”). According to those provisions, the owner of a well-known trademark (like Ferrari) has the right to prevent any third parties from using the trademark for commercial purposes, with the notion of “commercial purposes” including any purpose other than the identification of products and services. Indeed, in this regard, the Court of Genoa emphasized that the unauthorized use of a trademark by a third party (including an influencer) is lawful to the extent that the images depicting the trademarks are not perceived by the general public as having commercial or promotional purposes, but instead as scenes that depict the third party’s real life (or the lives of others). However, the Court of Genoa did not believe that Philipp Plein AG was using the Ferrari trademark in this lawful way. Therefore, it was leading consumers to believe that there was a partnership between the two brands, which was considered a strategy of a purely commercial nature.

Bearing these principles in mind, the Court provided useful guidelines on the lawful use of third-party trademarks by influencers (read more about this case here).

Philipp Plein AG’s defensive arguments

Before the Court of Milan, Philipp Plein AG argued that it had no intention of using Ferrari’s cars and trademark for commercial purposes, and it followed the same defensive strategy it had employed before the court of Genoa. However, while in the Genoa case the Philipp Plein AG defense was based on the assertion that the reported videos reflected “scenes of daily life” with a merely descriptive purpose, i.e., only to represent a lifestyle, in the Milan case the defense had to deal with specific trademark law provisions. In fact, Philipp Plein AG claimed it had merely used the cars without any purpose of economic exploitation of the Ferrari trademark. In this regard, the designer relied on a specific trademark exception, claiming that the principle of trademark exhaustion applied to the case at issue. According to this principle, as set forth in article 15 of the Regulation, if a trademark owner places goods on the market in the European Economic Area together with its trademark or with its consent, the owner loses the right to exclude third parties from the use of said trademark. Nonetheless, the rule does not apply when the trademark owner can legitimately oppose any further commercialization of the goods, especially where such items are modified or impaired after placement on the market.

The judgement of the Court of Milan

The Court of Milan did not agree that the trademark exhaustion exception applied to Philipp Plein AG’s actions. Indeed, the judge stated that the defendant widely disseminated on the web the images of the 2017 show “for advertising and boasting purposes,” giving undeniable prominence to the use of the Ferrari cars during the performance. At the same time, all the Ferrari cars were decorated in such a way as to combine the logo of the prancing horse with graphic details related to Philipp Plein AG (e.g., writing “PLEIN” or “Philipp Plein” on the hoods or on the sides of the vehicles). Therefore, the use of Ferrari cars by Philipp Plein AG should be classified as “substantial alteration” of these cars.

Moreover, the court agreed with reference to Article 9.2.c and Article 20.1.c of the IPC, as advanced by the plaintiff. The judge recognized the Ferrari trademark as a renowned trademark possessing a distinctive character and therefore one that enjoys extensive protection as described in relevant European and national case law. Moreover, it acknowledged the risk that the two companies would appear, from the consumer perspective, to be linked by an apparent – but nonexistent – partnership.

Indeed, the rules mentioned above protect not only the distinctiveness of the trademark itself, but also – and above all – its appeal and suggestive power. Therefore, contrary to what happens to trademarks that do not display any distinctiveness, the protection granted to renowned trademarks is independent of both the degree of similarity between the well-known and the allegedly infringing trademark and the risk of confusing them in the context of similar or identical products or services. Instead, what is relevant is the possible undue competitive advantage resulting from the association of a third-party company or product with the well-known trademark.

Amount of the damages awarded to Ferrari

Based on the above, the court ruled that the use of Ferrari cars, decorated with the distinctive signs related to the Philipp Plein brand and used during a fashion show for the crystal-clear purpose of promoting a new clothing collection branded “Philipp Plein,” constitutes unlawful use of the Ferrari trademark. More specifically, the Court of Milan acknowledged the following infringements of the Ferrari trademark:

  • Dilution of the trademark: use of the trademark that weakens its capability to identify the products of the trademark owner;
  • Corrosion of the trademark: conduct that compromises the power of attraction that the trademark exercises upon consumers due to unlawful use by a third party;
  • Free riding (“parasitism”) by the infringing party: the undue advantage obtained by the infringing party due to the use of a sign identical or similar to the well-known trademark, without the trademark owner’s consent.

As far as the amount awarded, the judge adhered to Ferrari’s reference to the “price of consent,” to be intended as the price that the plaintiff would have accepted to license the use of its trademark to a third party. However, the judge decided to lower the request made by Ferrari by assessing such price against the actual use of the trademark by Philipp Plein AG, which was limited to the use of cars (four different models) during the fashion show. In addition, the judge considered (i) the relevance of the fashion show as a pivotal event for a brand operating in the fashion business; (ii) that the images remained available online for a considerable length of time and were widely distributed online, making it difficult for Ferrari to control the consequent negative effects.

In view of the significantly intense and insidious nature of Philipp Plein AG’s conduct, the court awarded compensation of EUR 200,000 for pecuniary damages and ordered Philipp Plein AG to remove the unlawful content from the internet. Additionally, the judge ordered Philipp Plein AG to pay Ferrari a further amount of EUR 100,000 as compensation for non-pecuniary damages due to the degradation of the Ferrari trademark deriving from undue association with Philipp Plein’s clothing brand.

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