In July 2014, the Court of Appeal of Milan issued a decision in relation to an appeal filed by Guccio Gucci S.p.A. and Luxury Goods Italia S.p.A. against Guess? Inc., Guess Italia SRL (together, Guess) and Zappos.com Inc. Guccio Gucci S.p.A. & Luxury Goods Italia S.p.A. v. Guess? Inc., Guess Italia SRL & Zappos.com Inc. (Court of Appeal of Milan July 10, 2014).
The District Court of Milan (the lower court) had rejected all trademark infringement and unfair competition claims filed by Gucci.
However, the Appeal Court, while finding no trademark infringement on the part of Guess, said that Guess was liable for unfair competition since the entrepreneurial behavior exhibited by Guess was “contrary to the constitutional principles of freedom of private economic initiative and freedom of competition.”
In his opinion, the judge said, “The techniques and precautions employed by Guess are such as to avoid confusion of the signs of this enterprise with the competitor GUCCI, but in an overview, there is clearly a constant tension to imitate GUCCI’s designs; such acts, taken individually, do not constitute trademark infringement , but the repetition [of same], in time, constitutes a violation of the principles of professional correctness. This emerges from a comparison of the same product categories of the two fashion houses, on public display in a limited period of time (see bags, footwear, accessories, jewels…in all cases, the product launched by GUESS, immediately after the presentation of GUCCI collections, recalls very much—in the shape, color, material, graphic and decorative choices, or also for the combination of these elements together—GUCCI’s stylistic choices. Therefore, independently from the likelihood of confusion of the products between the competitors, the fact remains that GUESS’ initiative, implemented through a plurality of acts, is guided by a systematic and massive exploitation of the initiative and creativity of others. Therefore, in the opinion of this Court, GUESS is responsible for parasitic behavior.….”
Therefore, the Court of Appeal held Guess responsible for the performance of acts of unfair competition to the detriment of Gucci and ordered Guess to pay damages deriving from the unfair conduct.
Parasitic conduct is rarely recognized by Italian courts and was not recognized in the first instance decision. A definition of parasitic conduct was set out for the first time in 1956 by the Italian author and professor Remo Franceschelli, who said it consisted of the systematic and continuous completion—by a competitor—of multiple acts of imitative behavior of others, carried out parasitically, exploiting the work, studies and, in general, the activities carried out by the imitated entrepreneur. (Franceschelli, Parasitic Competition, in Rivista di Diritto Industriale, 1956). This was confirmed to be an act of unfair competition contrary to Article 2598.3 of the Italian Civil Code by the Italian Supreme Court on April 17, 1962, in the well-known case Motta Alemagna (Case No. 752).
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