Who: Pool Pharma Srl
Where: Court of Appeal of Milan (Italy)
When: 3 March 2016
Law stated as at:
Aboca SpA Società Agricola, a company producing and commercialising food supplements and medical devices based on herbs and natural substances for health and beauty uses, claimed that the use of the trademark “Kuratuss” on the packaging and labels of a food supplement produced by a competitor would mislead the consumer, because it suggested that the product possessed medical characteristics for treating coughs. The word “Kuratuss” is formed of two elements: “Kura” that is phonetically similar to the Italian word “cura” that means “it cures” and the word “tuss” that is phonetically similar to the Italian word “tosse” that means “cough”, and the specification “food supplement” placed near the word “kuratuss” was not, allegedly, sufficient to make the message lawful. The claimant also claimed for damages.
The Court of Appeal (Milan) stated that the use of a single misleading mark has to be considered an act of misleading advertising according to Law Decree 245/2007, on misleading and comparative advertising, and therefore an act of unfair competition according to section 2598 n. 3 of the Italian Civil Code. As a consequence the Court on the one hand ordered the defendant to cease the use of the word “Kuratuss” and on the other hand granted the claimant’s application for damages.
With regard to the damages, the Court awarded the claimant the recovery of the defendant’s profits by applying, by analogy, the provision of section 125 of the Italian Industrial Property Code that concerns IP rights such as trademarks, patents, designs, trade secrets and know how. This article provides two alternative remedies by way of compensation: the loss of profits and the recovery of profits earned by the succumbing party.
In particular, the Court stated that in the absence of evidence that the claimant would have earned equivalent profits through the sale of its own products without the presence of the “Kuratuss” products on the market the net profits earned by the defendant should be the value of the damages. However the Court stated that net profits earned by the defendant should be considered as the maximum value of the damage suffered by the claimant, taking into account the consideration of the causal nexus between the unlawful action and the damage incurred. In consideration of this, and in the absence of any elements that (in the very short period of time during which the unlawful action occurred) might lead one to consider that the action effectively neutralised the expenses borne by the claimant for research and advertising of its own product competing with Kuratuss, the Court was necessarily obliged to apply the equitable criterion in order to quantify the damages suffered by the claimant.
Why this matters:
It is becoming more and more common for Italian Judges to consider as falling within the ambit of unfair competition, not only cases of misleading advertising causing harm to the competitor by way of comparative adverts that are incorrect and untrue, but also cases in which the advertising message is directed at misleading the public to the possible detriment of all competitors.
The quantification of damages in this case is also noteworthy, with the judges introducing the principle of recovery of profits. They applied by analogy a rule (article 125) that normally applies in IP infringement cases, albeit applying this measure as the maximum limit and in any case taking into account the presence/degree of the causal nexus.