Italy: Brief Notes On The Budweiser Case

Last Updated: 30 March 2001
Article by Luigi Mansani

The Circumstances

The case at issue in the ruling of the Milan Court of Appeal ( which upholds almost in full the decision of the Court of Milan 26 November 1998 in Giur. ann. dir. ind., 1998, p. 992 ) is fairly complex and has given rise to a suit of worldwide proportions. " Budweiser" beer, produced by the U.S. company Anheuser-Busch and known also as "Bud", has been, for some decades now, the world’s best-selling beer, sales of which currently amount to around an annual 30.000 billion lire. In a number of countries, above all European including Italy, its marketing has been impeded or, at any rate, challenged by a Czech Republic state-owned company named Budejovicky Budvar narodni podnik. This firm registered the name " Budweiser " some time ago both as a trademark and as an appellation of origin, to designate a beer that has, for many years, been produced in a city called Ceské Budejovice but which, in certain periods of its history, also bore the German name " Budweis". Some time after the said registration, the Czech company registered the term " Bud " as a trademark and as an appellation of origin.

Anheuser-Busch ( which, in the first half of the 19th century, had signed agreements with the Czech company concerning the use of the name " Budweiser " in North America ) claimed that the trademarks of the Czech company, in addition to having lapsed due to non-use lasting more than three years ( in the case in question the trademark law previous to reform was applied ), were also invalid for lack of novelty, prior use having occurred. In order to demonstrate this prior use, Anheuser-Busch stated the fact that its beer was sold in NATO bases in Italy and in the small markets which had developed around them and that the trademarks " Budweiser " and " Bud " which it bore had been, prior to the registration of the Czech company, heavily advertised in newspapers, magazines, T.V. sports programmes and films also distributed in Italy and were, at any rate, well-known according to Art. 6bis of the Paris Convention. The Czech company replied to these arguments by stating that only an effective use to distinguish products sold in Italy would be able to deprive its trademarks of their novelty.

For what concerns the registration of the word " Budweiser " ( and, all the more so, "Bud" ) as an appellation of origin, by the Czech company, Anheuser-Busch contended that it was invalid both because " Budweis " had not been for some time the real name of the city of production and because the natural and human factors that should characterize the so-called "geographic environment" of production under Art. 2 of the Lisbon Agreement were now non-existent for a product like beer which could be produced industrially without its quality being affected by local factors. For its part, the Czech company argued that "Budweis " was effectively a geographic term, or at least its translation was, and that beer brewing was still greatly affected by environmental and human factors which could not be replicated elsewhere.

Another issue under discussion was the lawfulness of the change in the title of those registrations as appellations of origin, carried out initially only for Budejovicky Budvar narodni podnik and then extended more generally to all the region’s breweries. According to the Czech company, such a modification was entirely legitimate as it was only the rectification of the original title. Anheuser-Busch challenged this, both with Art. 5/1 of the Lisbon Agreement which seems to rule out the possibility of holders of registrations being indeterminate subjects and with Art. 5/4 of the same Agreement which appears to require a new registration if the original one is modified.

Prior to the Appeal Court decision, the Anheuser-Busch beer was sold in Italy only under the trademark " Bud " whilst the trademark " Budweiser "was used by the Czech company to distinguish its beer. The first instance ruling, although coming to almost the same conclusions as the Appeal Court decision, did not place an injunction on the Czech company’s use of the name " Budweiser ".

Advertising And The International Renown Of The Trademark

One of the typical privileges belonging exclusively to the holder is that the use of a mark in advertising suffices to give rise to an effective use of the mark, endowing it with renown and thus depriving subsequent trademarks of novelty. Although this is expressly provided by Art. 1 of the Law on Trademarks only rarely has case law decided in this way. Among the few rulings in which this principle has been affirmed see Court of Rome, 7 March 1973 in Giur.Ann.dir.ind., 1973, p. 488; Court of Parma, 18 January 1969, in Riv.dir.ind.,1969,II, p. 386; Appeal Court of Bologna, 20 December 1956 in, 1957, I, 2, p. 996. In legal theory see MAYR, Misura e modalità nell’utilizzazione del marchio depositato, in Riv.dir.civ.,1980, II, p. 347 and, for some suggestions, ASCARELLI, Teoria della concorrenza e dei beni immateriali, Milan, 1960, p. 509; R. FRANCESCHELLI, Profilo differenziale dell’istituto della decadenza del brevetto nelle sue applicazioni alle invenzioni e ai marchi, in Riv.dir.ind., 1966, I, p. 154ff. The latest legal theory considers advertising use " use in the real sense " of the mark ( see for all VANZETTI-DI CATALDO, Manuale di diritto industriale, III ed., Milan, 2000, p. 188 ), and states, moreover, that this use, like any other, including affixation of the mark on products placed on the market, must give rise to " a widespread and fairly strong renown " for it to be able to deprive a subsequent trademark liable to create confusion of its novelty. The Court of Milan also seems to be aligned to this position when it stresses that public knowledge of the mark and the product bearing said mark is crucial since advertising use endows the mark with renown and therefore has an invalidating effect on subsequent trademarks which are liable to create confusion.

For what concerns the fact that a trademark may not be validly registered in Italy if it could be confused with another’s " already well-known " mark abroad, under Art. 6bis of the Paris Convention, there are no longer any doubts as this is a case of invalidity expressly indicated by Art. 17.1.b) of the Law on Trademarks. The article is usually interpreted as meaning that the invalidating effect derives from the renown gained by the mark in Italy due to its use abroad. It is not necessary for the mark to be used in Italy too: see VANZETTI-DI CATALDO, Manuale di diritto industriale,op.cit., p. 146; SENA, Il nuovo diritto dei marchi, Milan, 1994, p. 70. While the law previous to reform was in force, few decisions made direct application of this article of the Convention. All the published rulings appear, however, to take this stance: see, in particular, Court of Milan, 28 September 1972, in Giur.ann.dir.ind., 1972, p. 1197, which affirms the lack of novelty of a trademark which could be confused with a mark " well-known in Italy as a mark for the renown deriving from its use abroad "; similarly see also Court of Milan, 22 February 1988, ibid, 1988, p. 505; Court of Milan, 20 September 1990, ibid, 1990, p. 724.

The Premises For The Protection Of Appellations Of Origin.

The principle whereby " the protection provided for the appellations of origin is given only when they serve to designate a product whose quality and characteristics are due exclusively or essentially to the place of production " appears to derive from Art. 2 of the Lisbon Agreement and was affirmed by the Appeal Court of Milan, 16 October 1992, published in Giur.ann.dir.ind., 1992, p. 850 ( from which the above statement was taken ), in a ruling regarding the "Pilsner" case. The " Pilsner " decision has, on this point, numerous analogies with the Budweiser appeal decision. The principle has also been followed by the Supreme Court in its ruling in the " Pilsner " case ( Supreme Court, 28 November 1996, no. 10.587, in Giur.ann.dir.ind.,1997, p. 11; in Riv.dir.ind., 1997, II, p. 371, with note V. FRANCESCHELLI, Le denominazioni di origine di paesi stranieri e gli obblighi internazionali dell’Italia: a proposito del caso Pilsner; in, 1997, I, 1, c. 1538 ) which states that " the premise for the protection of an appellation of origin registered under the Lisbon Agreement is the connection between the characteristics of the product and the " geographic environment " ( the geographic environment in which it originates, comprising natural and human factors ). The Court of Milan followed suit, 26 November 1998, cit., in the first instance decision of the proceedings in which the Budweiser appeal decision was issued. In legal theory, similarly, see GHIDINI, Della concorrenza sleale, in Commentario al cod. civ. edited by SCHLESINGER, Milan, 1991, p. 245ff; SORDELLI, Denominazioni d’origine e indicazioni di provenienza, in Riv.dir.ind., 1981, I, p. 5; DI CATALDO, I segni distintivi, Milan, 1985, p. 176.

The assertion whereby protection cannot be given as appellations of origin to terms which do not correspond to real names of geographical areas is unpublished. What is more this, too, appears to derive directly from Art. 2 of the Lisbon Agreement.

The subject is regulated in Italy also by Art. 31 of Legislative Decree 19 March 1996, no. 198 whereby "geographic indication is taken to mean that which identifies a country, a region or an area, when it is adopted to regulate a product originating therein and whose quality, reputation or characteristics are due exclusively or essentially to the geographic environment of origin, including natural, human and traditional factors ". As regards this article see the observations of LIBERTINI, Commento all’art 31 del d.lgs. 19 marzo 1996 in Nuove leggi civ. comm., 1998, p. 161. See also CAPRA, Osservazioni in tema di denominazioni di origine, indicazioni di provenienza e marchi geografici ( note a margine del caso Pilsner ), in Riv.dir.ind., 2000, II, p. 329, where there are further references.

The Budweiser decision has again established that Art. 5/1 of the Lisbon Agreement has to be construed as meaning that the holders of a registration must be one or more specifically indicated natural persons or legal entities. Hence registration effected by a general group of subjects operating in the geographical area in question is invalid. The solution provided by the decision has rendered superfluous examination by the Court of the question of whether Art. 5/4 of the Agreement requires new registration if the title of the original registration is changed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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