Substantial and procedural issues surrounding acquiescence in Italian Trademark Law: Decision no.18736/2018 of the 1st Chamber of the Court of Cassation

With the above decision, published on 13 July 2018 (and available at this link), the Court of Cassation (the Italian Supreme Court) took stock of some substantive and procedural issues concerning the so-called acquiescence. Acquiescence refers to the situation in which the owner of a prior trademark loses the right to seek a declaration of invalidity and to object to the use of a later, identical or similar registered trademark, if it consciously acquiesced in its use for five or more consecutive years, and the two conflicting trademarks end up coexisting (see Article 28 of the Industrial Property Code). In Italian legal parlance, this is also called “convalidazione” (“validation”) of the later trademark.

In the case under consideration, the owner of the later trademark filed his application for registration of the contested sign – which, however, he was already using – only after receiving a warning from a licensee of the prior trademark. However, nine years had passed between that warning and the action in Court, jointly brought by the owner and the licensee of the prior trademark before the Court of Milan. The Milan Court of Appeal, in a reform of the first instance judgement – in favour of the plaintiffs – “validated” the later trademark, considering the continued use, the ultra-five-year tolerance by the owner of the earlier trademark and the absence of bad faith in the application for registration. In regard to the last point, the Court, taking into account the use of the sign made by the applicant before the registration, ruled out the intention to undermine the right of others.

In annulling the Court of Appeal’s judgement, and thus ruling out limitation for acquiescence, the Supreme Court took the opportunity to remark the following:

– the effects of acquiescence cannot be prevented by extrajudicial warnings, but only by an invalidity or an infringement action;

– the conditions for acquiescence are a later registration, in good faith, of a trademark which is identical or similar to that of others; the awareness, by the owner of the prior trademark, of the registration and use of the new trademark (conscious acquiescence); the over five-year continuous use of the later trademark;

– the term runs from the date of registration of the later trademark;

– the bad faith of the owner of the later trademark must be meant as the positive intention of the second registrant to take advantage of the public recognition achieved by the earlier trademark. To this end, the mere awareness of the existence of the prior trademark is not decisive in itself, taking into account the specific factual circumstances in which the registration of the later trademark was applied.

From a procedural point of view, the Supreme Court stated, instead, that the burden of proof of the conditions for validation of the later trademark lies on the later registrant; and that, given the exceptional nature of the provision, which is strictly applicable, the proof must be “rigorous”. Accordingly, the Supreme Court overturned the decision of the Milan Court of Appeal, also considering that the continuous and tolerated over five-year use of the later trademark had not been ascertained with the necessary stringency.

Again from a procedural point of view, in accepting a further ground of appeal, the Court also stated that the application for a declaration of invalidity of others’ later trademarks not submitted in the first pleading, but onlyin the first counter-defence following the defendant’s claim of validation, cannot be considered late: in fact, it is a form of reconventio reconventionis admitted by the rules of civil procedure.