The protection of industrial design at the intersection between design rights, copyright and unfair competition in a Milan Court ruling

A recent comprehensive ruling by the IP Court of Milan provides a good example of cumulative protection afforded to industrial designs in the Italian legal system (Ruling no. 1935/2016, Chairing Judge M. Tavassi).

Thun, a company known for its round-edged, antique-looking ceramic figurines inspired by the natural world, filed a lawsuit for design infringement, copyright infringement and unfair competition against a competitor allegedly engaging in the sale of dozens of products resembling articles in Thun’s catalogue.

While part of the figurines in suit were registered as Community or international designs, others had only been entered in an archive of protected works at the Italian Ministry of Culture, a voluntary registration which does not in itself bestow any intellectual property rights upon the applicant.

One of the registered designs in suit (from the UAMI database)

The Milan IP Court not only found that the plaintiff’s registered designs were valid, but also that all the plaintiff’s products in suit – i.e. including, but not limited to, those merely filed with the Ministry of Culture – met the requirement for protection as works of art under copyright laws.

As a result, the plaintiff’s registered designs were granted both design and copyright protection, a cumulative effect that the Court noted was allowed by Italian copyright laws.

Specifically, the judges found that the plaintiff’s figurines presented “creative character” and “artistic value”, the two specific requirements for copyright protection of industrial design works under Italian law, noting that such protection is not incompatible with the reproducibility of a work on a large scale, and that nothing prevents these requirements from manifesting themselves in simple and repeatable forms.

Artistic value was assessed by the Court on the basis of parameters identified in the Italian Supreme Court’s case law, such as the products’ recognition within cultural circles; their mention in specialised magazines; their display in artistic exhibitions; and finally, the willingness of customers to pay a higher price for them than for the competition (proving that they purchased them not only for their ornamental function, but also for a purely aesthetic added value).

As for creativity, the Court observed that it does not coincide with absolute novelty and originality, but rather refers to the exterior expression of a personal and subjective interpretation of reality, which the Court found to be present in the products at issue.

Having established that the plaintiff was entitled to claim design rights and copyrights on the figurines in suit, the Court found that both had been infringed by the defendant.

With regard to the designs, the Court found that the defendant’s products depicted the same subjects as the plaintiff’s, without any significant changes in the design, but, on the contrary, by mimicking the stylistic and expressive choices that gave the former individual character. The defendant’s argument that its products were of a cruder making, with smeared colours and other inaccuracies, was dismissed on the grounds that the informed user would hardly proceed to direct comparison, instead comparing the products based on a recollection of the registered design and thus receiving the same overall impression.

With respect to copyright infringement – which the Court defined as the misappropriation of creative elements of a work in order to use them in another – the judges found that the defendant’s products’ negligible divergences from the original were merely instrumental to a “disguise” of the original works within their own.

Finally, the Court also upheld the plaintiff’s claims of unfair competition on multiple grounds.

The Court found, in the first place, that the defendant’s conduct constituted slavish imitation, which implies a likelihood of confusion caused by the imitation of a competitor’s product’s outer features. The judges considered that the shape of the plaintiff’s product had acquired the status of a de facto three-dimensional trademark and that the defendant had imitated the very exterior features of the plaintiff’s products having distinctive capacity. The defendant’s argument that the different prices, distribution channels and trademarks affixed on the packaging prevented likelihood of confusion were dismissed on the grounds that the average consumer makes their choices on the basis of the overall impression and, the often inaccurate, recollection of the product.

In what is perhaps the most interesting part of the ruling, the Court also found that the defendant had committed unfair competition in the form of misappropriation of reputation. The Court accepted the argument that the plaintiff’s “style” – which the Court had already recognised to be a trademark of Thun’s production – was a positive attribute in itself, and considered that the misappropriation of said “style”, i.e. of the most distinctive features of the plaintiff’s products, resulted in a parasitic exploitation of Thun’s reputation with the market, at the same time devaluating the plaintiff’s products by selling cheap imitations.

On these grounds, the Court granted an order against the defendant recalling the infringing goods from the market, including an injunction preventing it from further marketing, the publication of the ruling in a major magazine and on the defendant’s own website, and damages.

The latter were quantified in a lump sum, taking into account the “reasonable royalty” criterion as a minimum threshold for the calculation of lost profits. The Court did not accept the plaintiff’s argument that each item sold by the defendant had to be accounted as a lost sale for the former, since differences in quality, prices and sales channels suggested that such equivalence could not be endorsed. On the other hand, the judges found that the plaintiff had also endured non-economic losses, considering that the marketing of infringing products had resulted in a commercial debasement of the plaintiff’s market reputation, and quantified them on an equitable basis at half the economic damages.

Author’s note: The author was not involved in the proceedings and does not have any professional relationships with any of the parties.