Italy introduces changes to historical trademarks of national interest

Historical trademarks in Italy

In 2019, the Italian government introduced a new category in intellectual property law: the "historical trademarks of national interest" (historical trademarks). According to Article 11-ter of the Italian Intellectual Property Code (IPC), historical trademarks are those marks that have been registered or continuously used for at least fifty years in relation to products or services of an Italian "production undertaking of excellence historically linked to the national territory".

Upon request from their owners or exclusive licensees, historical trademarks can be registered in the "register of historical trademarks of national interest" (Register of Historical Trademarks), established by Article 185-bis IPC, and thus make use of the historical trademark logo (depicted here below) with their brand.

The rules on historical trademarks raised a number of concerns In particular, Article 185-ter IPC (now repealed) was heavily criticized. On the one hand, this provision established a fund to support the owners or licensees of historical trademarks. On the other hand, Article 185-ter IPC imposed a burdensome procedure to the owners/exclusive licensees of historical trademarks that were planning to close their main production site in Italy.  This included administrative fines and mandatory information to be sent to the Ministry of Economic Development.

Recently there have been developments in this area. First, the Register of Historical Trademarks was published on the Italian Patent and Trademark Office (IPTO) website (at this link). As of August 6, 2020, it lists 13 trademarks of companies active in different fields, from fashion (""), to food ("FRATELLI CARLI"), to cosmetics ("LA FELCE AZZURRA"). All the trademarks are registered and belong to companies which are part of Italian history.

Second, the Decreto Rilancio (i.e. Rebound Decree, Law Decree 34/2020) – a new set of urgent measures to address the economic and social impact of the COVID-19 pandemic in Italy, that was recently converted into law with amendments by Law 77/2020 – repealed Article 185-ter IPC, introducing a new fund to support owners or licensees with different (and more lenient) rules. 

We address these developments here below and provide some additional background on historical trademarks.

Why were historical trademarks introduced?

Historical trademarks were introduced in Italy in the midst of the Pernigotti case. Pernigotti is a famous Italian chocolate producer that was purchased by a Turkish company, part of the Toksöz Group. In 2018, the new owners announced that they intended to shut down the Italian plant in Novi Ligure, where Pernigotti was first established in the early '900s, laying off some workers. This project was heavily featured in the news and in the political discourse, mostly because the Toksöz Group apparently intended to continue using the Pernigotti marks while moving the production to Turkey (which was per se legitimate under trademark law).

The Italian government attempted to address the perceived shortcomings of trademark law in in similar cases through the Decreto Crescita (i.e. Growth Decree, Law Decree 34/2019, converted into law with amendments by Law 58/2019) introducing Articles 11-ter, 185-bis and 185-ter to the IPC.

The Decreto Crescita was implemented through two decrees of the Ministry of Economic Development (dated 10 January 2020 and 27 February 2020), and a decree of the IPTO Director (dated 27 February 2020). These decrees provide the practical requirements and procedures for being recorded in the Register of Historical Trademarks and for use the historical trademarks logo.

Historical trademark requirements

According to Article 11-ter IPC, historical trademarks are those "trademarks registered for at least fifty years or for which it can be demonstrated that they have been continuously used for at least fifty years, used for products or services made in a national production undertaking of excellence historically linked to the national territory".

The definition of historical trademark in Article 11-ter IPC makes use of non-technical terms and has been criticized for its vagueness. The temporal requirement, however is clear: only trademarks registered for more than fifty years or unregistered trademarks (de facto trademarks) used continuously for more than fifty years in Italy may be recorded in the Register of Historical Trademarks. In case of trademark restyling, the IPTO clarified at the summer 2020 assembly that the historical trademark logo can be used with the original styling of the trademark.

The other requirements are more subjective. In particular, the requirement that the products and services distinguished by the trademarks come from an undertaking "of excellence" that is "historically linked" to the Italian territory.

To appreciate an undertaking's "excellence" is a discretionary assessment. It is equally difficult (and discretionary) to assess how close the "link" to the Italian territory must be for the company to qualify for an historical trademark. The required level of attachment is not clearly defined. From the examples currently on the Register of Historical Trademarks, it seems necessary to prove that the undertaking has been a well established part of a local entrepreneurial fabric. Most of the businesses listed were started more than 100 years ago, with products that are well-known on the Italian market (e.g. Gruppo Cimbali S.p.A., the company behind the famous coffee machines, or Scandalli Accordions S.r.l., which has been producing accordions since 1900).

Furthermore, the criteria to be included in the Register of Historical Trademarks are not harmonized and there are grey areas: while the trademark needs to be registered (or used) for more than 50 years, it is not clear if an undertaking "historically linked" to the Italian territory may be a younger entity or even a newly established one.

Interestingly, the implementing regulation on historical trademarks now provides that in the application for the Register of Historical Trademarks the undertaking must submit, in addition to administrative documents and/or evidence confirming the continued use of the sign, also an affidavit "showing that the trademark applied for in the special register is used for the marketing of products or services made by a national production undertaking of excellence historically linked to the national territory". Essentially, it is the undertaking itself that shall prove that it is a company of excellence and the other requirements. This nevertheless, the IPTO is in charge of reviewing if these requirements are met (and shall do so within 60 days for registered trademarks and 180 for unregistered ones).

Once registered, the inclusion in the Register of Historical Trademarks is perpetual.

The former regime established by Article 185-ter IPC

As mentioned above, the most controversial provision introduced by the Decreto Crescita was Article 185-ter IPC, now repealed.

According to this provision, the owner or the exclusive licensee of a historical trademark could have benefitted from the resources of the Fund for the protection of historical trademarks of national interest (Old Fund), in the event that they decided to close their original or main production site in order to cease the activity or to relocate the plant outside Italy. The Old Fund worked by investing in the risk capital of the undertaking, hence nationalising (at least partially) the company. 

Article 185-ter IPC then provided that the owners or licensees of historical trademarks that intended to close their (original or main) production site had to notify "without delay" the Ministry of Economic Development about the project and share potentially sensitive information such as the economic or technical reasons underlying their decision and the steps taken to find a potential buyer. Violation of these information obligations entailed fines between 5.000 and 50.000 Euro.

Moreover, the obligations to inform the Ministry concerned both the undertakings whose trademarks were actually included in the Register of Historical Trademarks and to the owners and licensees of trademarks "in possession of the requirements of Article 11-ter" IPC, but not included in that Register. In other words, the rules and burdens of historical trademarks applied to any undertaking "of excellence" having trademarks over fifty years of age.

In light of this, many suggested that the Italian legislator had introduced a new mandatory procedure in the bankruptcy of historical companies and questioned if such procedure was in line with European competition law and the principles of free trade of goods and capital.

The new fund established by the Decreto Rilancio

With a marked U-turn, Article 43 of the Decreto Rilancio repealed Article 185-ter IPC, changed the structure and scope of the fund, the access requirements and, therefore, it abolished the information obligations and any administrative fines against the owners and licensees of historical trademarks.

In particular, the Decreto Rilancio established within the Ministry of Economic Development a 100 million Euro Fund for the safeguarding of employment levels and the continuation of business activity ("New Fund") with the purpose of rescuing and restructuring (i) undertakings that own or are exclusive licensees of historical trademarks registered in the Register of Historical Trademarks or (ii) limited liability companies (società di capitali) with no less than 250 employees, provided that they have financial difficulties. 

Similarly to the Old Fund mechanisms, the New Fund also intervenes "in the risk capital of undertakings ... carried out at market conditions". Companies that want to have access to the New Fund shall notify the Ministry of Economic Development certain information and, in particular

1. the actions they intend to take to reduce employment impacts, e.g. through exit incentives, early retirements, reallocation of employees within the company or the group to which the company belongs;
2. companies which have already expressed an interest in the acquisition of the company or in the continuation of the business activity; or the actions that intend to put in place to find a possible buyer, including through attraction of foreign investors;
3. opportunities for employees to submit a proposal for purchase and every other possibility they have of recovering the assets.

In short, only the undertakings actively looking for state intervention shall provide such sensitive information (on a voluntary basis, and without informative obligations) to the Ministry and these rules apply only to those who have actually registered a historical trademark. As a side note, it would appear that having a single trademark on the Register of Historical Trademarks is sufficient for an undertaking to be considered for public capital injections through the New Fund.

Comment

Further to the repeal of Article 185-ter IPC, several of the perceived disadvantages of the historical trademark system would appear to have been overcome. Although the criteria to be admitted in the Register of Historical Trademarks are still rather vague, companies that have a long established trademark in Italy in their portfolio may consider the potential advantages to use the historical trademark logo in their communication to the public and the chance to access capital from the New Fund.

Authored by Maria Luigia Franceschelli and Giovanni Trabucco