Milan court applies Nintendo v Big Ben in fast fashion lawsuit against ZARA

Diesel (L) and Zara (R)

The relevance of the fashion industry to world economies has grown over time. Today it equals 2% of world's Gross Domestic Product. 

A phenomenon that has really boomed over the past few years is that of 'fast fashion', which is characterized - also raising a number of concerns, including sustainability (or lack thereof) - by very rapid production cycles, low cost and prices, and items 'inspired' - see, eg, Saint Laurent/Zara, Gucci/Forever 21, Acne/Zara - by looks seen on catwalks or those worn by celebrities.

According to statistics, fast fashion items are worn less than 5 times. Hence, also the 'wearing' cycle is short-lived.

But when does inspiration translate to an actual IP infringement? And is it worth it - or even altogether possible from a legal standpoint - for, say, a fashion house to take action in an attempt to repress the production and sale of garments that look a bit too similar to the real thing?

The Milan decision

Good news for fashion houses comes from Italy, where recently the Milan Court of First Instance (decision 5390/2018) confirmed the interim injunction granted in 2016 in favour of OTB (which is the parent company of, inter alia, DIESEL and MARNI), and found that Zara had infringed:

• Diesel's Community registered design right No 2649491-002 (filed on 10 March 2015) and unregistered design right relating to women's skinny jeans SKINZEE-SP2;
• Marni's unregistered Community design right concerning its winter sandal FUSSBET, first disclosed in February 2014.

Let's see what happened.

Background

In its action first brought in 2016, OTB sued the Zara group of companies (including, inter alia, ZARA ESPANA and ZARA ITALIA) before the Milan Court of First Instance, claiming that:

• Zara had infringed the IP rights mentioned above by marketing, respectively, jeans named BIKER CERNIERE (5899/167) and a pair of ZARA HOME sandals (15049071);
• Zara had acted contrary to the principles of fair competition under Article 2598 of the Italian Civil Code;
• It was entitled to receive compensation for the entire amount of the damages suffered in the territory of the EU due to Zara's infringements.

The defendants sought the dismissal of the action, also submitting that the Italian court would lack jurisdiction under Article 8(1) of Regulation 6/02 (Community Design Regulation) over defendants established abroad, and that this would be in line with the position of the Court of Justice of the European Union (CJEU).

Marni's FUSSBET

Jurisdiction

First, the Court addressed the claim that it would lack jurisdiction in relation to foreign defendants.

It rejected this claim, holding that jurisdiction would subsist under Article 8(1) No 1 of the Brussels I Regulation recast. This provision states that person domiciled in a Member State may also be sued "where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings".

The substantial assessment

With regard to the merits of the case, the Court focused on the notions of individual character and informed user. With regard to the latter, the Court recalled the definition as provided by the CJEU in PepsiCo. With regard to the former, it noted how account should be taken of the degree of freedom of the designer, as required under Article 6 of Regulation 6/02. 

In the case at issue such freedom would not be really influenced by functional aspects (which relate to the shape of the human body) but rather by the [note: all translations from Italian are mine] "extremely crowded character of the clothing sector (in particular, jeans)". It follows that "modest differences which may nonetheless be perceived by the informed user as different from already known shapes may justify the validity of the right". In any case attention should be paid to the overall impression provided by the designs at issue.

The Court held DIESEL's rights over SKINZEE-SP2 valid and found that ZARA had infringed such rights. In relation to Marni's claim, the Court confirmed the validity of the unregistered Community design right for the statutory 3-year term, holding that "the appearance of Marni's sandal presents enough characteristic elements to produce an overall different impression in the sector". 

'Skinny' jeans

Territorial scope

With regard to the territorial scope of the measures to be adopted and the compensation of damages, the question was whether the court in Italy would have competence to rule also in relation to activities of a defendant domiciled in Spain for the same infringing activities committed outside Italy but still within the EU territory.

The Milan judges answered this point in the affirmative, referring to the recent CJEU decision in Nintendo v Big Ben [commented on this blog here], whose background proceedings were considered "entirely similar" to the present case.

This means that, not only would the Milan court have EU-wide jurisdiction to rule on the infringement, but it would also have EU-wide jurisdiction in relation to remedies, including damages:

Indeed such measure [award of damages] - which is an ancillary request to the one seeking declaration of infringement, rooted in this case within the jurisdiction of the Community design court under Article 83(1) of Regulation 6/02 - falls within the scope of Article 88(2) of Regulation 6/02, which states that on all matters not covered by it, a Community design court shall apply its national law and its private international law. 

The Milan court held that this requires consideration - in line with the CJEU decision in Ergo Insurance - of the Rome II Regulation. According to Article 19 therein, for activities of ZARA ESPANA other than those which have given rise to the infringement on the Italian territory, the applicable law would be the Spanish one. 

The Court ordered the defendants to cease any production and selling activities related to SKINZEE-SP2 and withdraw the infringing products form the market in relation to the entire EU territory (the expiry of the right over the FUSSBET sandal meant that no such order could be made). It also ordered that the proceedings continue in order to determine the actual amount of the damage to be awarded to the claimants, also taking into account Spanish law with regard to ZARA ESPANA's activities.

Comment

The decision of the Milan court represents one the first national applications of the CJEU ruling in Nintendo v Big Ben. It confirms that in principle a design court in a EU Member State has jurisdiction to consider remedies, including damages, also in relation to infringing activities occurred outside the territory where the court seised has its seat. May this be just the beginning of a new approach in the fight, among other things, against fast fashion?

[Originally published on The IPKat on 15 July 2018]