In a judgment published on 19 April 2024, the Italian Supreme Court (“SC”), provided some interesting guidance about exclusive licences granted by joint owners of a trade mark. The case concerned a long-standing Italian company, Legea S.r.l., and its founding family (Acanfora). Legea S.r.l. has operated in Italy since 1966, and is involved in the manufacture, production and marketing of sportswear, sports apparel and related articles under the following trade mark:
Facts
In 1993, all members of the Acanfora family – who at that time jointly owned the Trade Mark LEGEA – granted to Legea S.r.l. (“Legea”) a license to use the Trade Mark, indefinitely and free of charge.
In or around December 2006, one of the co-owners, Mr. Giovanni Acanfora (“Mr. G. Acanfora”) expressed his disagreement with the continuation of the licence.
Thereafter, the license continued with the consent of only the majority of the owners.
As a result, a dispute arose between Legea and the Acanfora family. Legea commenced proceedings in 2009 before the IP Specialized Division of the Court of Naples (“Court”).
In a nutshell, Legea’s claim was whether the licence in respect of the Trade Mark could continue if the majority of co-owners consented to the licence. Put another way, whether the licence to use the Trade Mark could only continue under the law if there was not unanimous consent by all the co-owners.
We recap some of the events that took place during the proceedings and the findings made by the SC below.
The first and second instance decisions by the Court and Appeal Court of Naples respectively
In 2009, Legea sued Mr. G. Acanfora before the Court, and sought a declaration of invalidity of certain trade marks (national and international) registered by Mr. G. Acanfora that comprised of or contained the name “LEGEA”. Legea also sought, in the alternative, revocation of certain trade marks for non-use and Legea’s right to registration and use of a related sign.
Mr. G. Acanfora contested the claims as a counterclaim, declarations of the invalidity of some of Legea’s trade marks that comprised of or contained the name “LEGEA”. He also sought a declaration of infringement due to Legea’s unauthorized use of the trade marks that were in the family’s name (including the Trade Mark defined above).
Subsequently, other members of Acanfora family were joined as parties to the proceedings. The Court of Naples:
- upheld the right of only the members of the Acanfora family to jointly register the “LEGEA” trade mark in equal shares;
- declared that Legea’s trade mark registrations for “LEGEA” were invalid; and
- declared that the use of the “LEGEA” trade mark (including the Trade Mark) by Legea was legitimate and was in accordance with the will of the owners until 31 December 2006 but was illegitimate after that date, given the dissent expressed by one of the co-owners, Mr. G. Acanfora.
On appeal, point iii. was overturned. The Appeal Court’s reasoning was that after 31 December 2006, the majority of the joint owners of LEGEA Trade Mark would have consented to the continued use by Legea of the Trade Mark.
The third instance before the SC and the reference for a preliminary ruling to the ECJ
The case was then brought before the SC. The SC however, decided to refer the case to the ECJ to decide some preliminary questions. Relevantly, the SC considered that there is no specific regulation or precedent in the European Union on this question.
In particular, the SC referred the following two questions to the ECJ:
- “Do the relevant Community rules[1]…, in providing for the right of exclusivity in the hands of the proprietor of an EU trade mark and at the same time also for the possibility of ownership belonging to several persons on a pro rata basis, imply that the grant of the use of the common trade mark to third parties on an exclusive basis, free of charge and for an indefinite period, may be decided by a majority of the joint proprietors or whether it requires instead unanimous consent”;
- “in the latter case, in the case of national and Community trade marks in common between a number of parties, is an interpretation which makes it impossible for one of the joint proprietors of the trade mark granted to a third party by a unanimous decision, free of charge and for an indefinite period, to exercise unilaterally the right to withdraw from that decision; or alternatively, should an opposite interpretation, that is to say, one which excludes that the joint proprietor is bound in perpetuity to the original manifestation, so as to be able to withdraw from it with effect from the deed of concession, be regarded as consistent with Community principles?”.
The EJC’s judgment was delivered on 27 April 2023 (C-686/21), and provided that (our emphasis added):
“the First Council Directive 89/104/EEC … must be interpreted as meaning that the question whether the grant of a licence to use, or the termination of the relevant contract, a national trade mark or a European Union trade mark held in co-ownership requires a unanimous decision of the co-owners or a decision taken by a majority of them must be resolved on the basis of the applicable national law”[2].
Applying this principle, the SC concluded that according to Article 6 IPC, the consent by the majority as to the continuation of a trade mark licence in respect of a jointly-owned trade mark, is not enough (unless other evidence is provided by the parties). If one of the co-owners changes their mind, the co-owners and licensee need to re-negotiate the terms of the license.
The SC’s reasoning on this point was as follows:
- “in the case of a jointly owned trade mark, the contract of exclusive licence of use to third parties requires, for its execution, the unanimous consent of the co-owners, because the granting to the licensee of the exclusive licence deprives the co-owners of the direct enjoyment of the object of the joint ownership …; and
- where the licence has been granted on an exclusive basis with the unanimous agreement of the proprietors, it is always possible for one of them to cease to wish to continue, which is not bound in perpetuity to the original expression of will; this circumstance implies the need to renegotiate the deed by means of a new license, to be agreed again with unanimous consent”.
Practical and broader significance
We have previously discussed joint ownership of patents (see here). Having regard to our discussion on that topic and the above, it is clear that co-ownership of IP rights raises difficult factual and legal issues. The implications of joint ownership, including where an exclusive licence is terminated by one or not all the co-owners, should be contractually regulated.
In this respect, the decision issued by the SC provides guidance in cases where trade mark co-owners have not contractually agreed or set out, the decision-making processes relating to the grant and termination of trade mark licenses. In particular, the SC specified that, in Italy, unless otherwise agreed, any grant or termination of trade mark licenses (especially where the licence is exclusive) must be decided on a unanimous basis by all the co-owners of the trade mark in question.
Therefore, if you or your company own a trade mark jointly with others, or if you are licensed to use a trade mark that is jointly owned, it is a timely reminder to check how the decision-making processes are regulated between the relevant parties. Dealing with this issue proactively will help avoid future disputes and ensure that all co-owners’ rights and obligations in relation to the jointly owned trade mark are managed effectively.
[1] In particular, ratione temporis, First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks and Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, subsequently replaced with identical wording by Directive No 2015/2436-EU and Regulation (EU) 2017/1001.
[2] “In Italy, the relevant law is Article 6 of Italian IP Code which provides that: “1. If an industrial property right belongs to more than one person, the relevant faculties are governed, unless otherwise agreed, by the provisions of the Civil Code relating to community, insofar as they are compatible”.
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