The Court of Milan on the registration of trademarks in bad faith

By judgment published on 14 July (R.G. no. 43968/11), the Business Chamber ”A” of the Court of Milan has recently dealt with the issue of bad faith trademark registration, stipulated in Article 19(2) of the Legislative Decree 30/2005 (Industrial Property Code, “CPI”). The rule confirms that “no trademark registration shall be granted to anyone who has applied for it in bad faith” in agreement with which Article 25(1b) CPI orders that a trademark registered in bad faith is invalid.

The dispute occurred between an advertising agency and a company that was a client of the agency. The client took legal action alleging that the advertising agency had registered the client’s trademarks in the name of the agency in bad faith. Therefore, the client demanded that the trademarks were declared invalid and that the advertising agency be prohibited from using them. For its part, the advertising agency claimed that it had registered the trademarks on behalf of the client and that it had refused to transfer them to the client because the client had not paid the expenses and the fees for the registration of the trademarks, or for their development by the agency.

In the ruling under consideration, the Court started by saying that “the rule regarding registration in bad faith, provided by Art. 19 CPI, is a remedy that protects the legitimate expectation of a person in respect to a particular trademark, damaged by a more prompt registration of the same mark made ​​by another person (aware of the intentions of the former) who acts in order to impede their competitor’s project.”

The judgment then continues, stating that, in this case, it was proved that the plaintiff had a legitimate expectation of the registration of the contested trademarks, which it had already used for years, and it had given the agency the sole task of proceeding with the development and the revision of the trademarks. In addition, it was proved that the agency had violated the defendant’s legitimate expectation by registering the trademarks in its own name despite knowing the rights of the client to the trademarks and by taking advantage of the contractual relationship with the client. The Court held that in this context, the agency’s bad faith could be deducted from a number of circumstances that emerged during the proceedings, namely that:

i)    the client had given an assignment to the agency to proceed with the trademark filing, but certainly not to do so in the name of the agency;

ii)   nothing in the agreement between the agency and the client could make the agency believe, in good faith, that it had been instructed to register the marks in its own name (which, as the author wants to add, does not even correspond to the practice of trademark registration);

iii) the agency had requested a “not-insignificant” payment to transfer the ownership of the trademarks to the client. “This demonstrates,” says the Court, “that the trademarks were used uti dominus and illicitly, by the defendant, which claimed the full ownership and even asked the actual owner to pay a compensation for the transfer.”

In light of these points, the Court declared the invalidity of the trademarks registered by the agency in bad faith, prohibited it from using the trademarks and ordered it to pay the litigation costs.