The Vespa appearance: Italian Supreme Court considers that its artistic value may preclude trade mark protection (due to substantial value absolute ground)

A Vespa LX

Last week was an eventful one for Piaggio, the Tuscan ( ) company that has developed and owns the iconic (yes, you can say that: read on) Vespa.

First, on 28 November, the Italian Supreme Court issued what appears to be a key – yet questionable – judgment (decision 33100/2023), tackling the interplay between different IP rights and addressing among other things whether and to what extent an object protected by copyright (as Vespa is, under Italian law) can be precluded trade mark registration due to the application of the absolute ground concerning substantial value (Article 4(1)(e)(iii) TMD, as transposed into national law; Article 7(1)(e)(iii) EUTMR). Interestingly enough, in the Italian case, distinctiveness of the Vespa Italian 3D trade mark was not at issue.

Then, on 29 November, the General Court ruled (T-19/22) on the distinctiveness of the Vespa EU 3D mark, eventually ruling that the EUIPO Board of Appeal had erred in holding that registration invalid due to lack of distinctive character.

Incidentally, both proceedings stemmed from a long-running dispute between Piaggio and a Chinese company accused by the former of parasitically copying the Vespa design.

Today, we focus on the Italian Supreme Court decision, which will be of great interest not only to Vespa fans, but also to those working on overlapping IP rights, the requirements for copyright protection post-Cofemel [IPKat here], and what the elusive notion of ‘substantial value’ actually means in trade mark law and how it is to be assessed.

In 2017, the Court of First Instance of Turin dismissed the request to invalidate the Vespa Italian 3D mark (corresponding to the appearance of the 2005 Vespa LX model) and found that the Chinese company – through its own Ves model – had infringed Piaggio’s trade mark rights and copyright held in Vespa. Insofar as the latter is concerned, the Turin court also found that Vespa possesses an artistic value that exceeds its technical and functional character.

In 2019, the Court of Appeal of Turin upheld the decision at first instance.

A final appeal to the Italian Supreme Court followed. It is worth recalling that this is not a court on the merits: its role is to ensure the correct interpretation and application of legal provisions. There were 3 grounds of appeal:

1. If it is possible to register as a trade mark the 3D shape of a product that is also protected by copyright or whether, instead, the substantial value absolute ground prevents such a possibility tout court.
2. If it is an infringement of copyright in said product to realize and commercialize a product that is confusingly similar with it.
3. If copyright protection extends to subsequent variations and derivations of the original product, irrespective of any innovative character thereof compared to the original product, and if it is an infringement of copyright to realize and commercialize a product that is confusingly similar with the original version or variants thereof / derivations therefrom.

This post only discusses the first issue, as it appears to be the most important one. Let’s see what the Supreme Court answered.

In its judgment, the Court of Appeal ruled out the applicability of the substantial value absolute ground, holding that the Vespa design may be pretty, but it is not “the only characteristic” that prompts one to buy it. Technical and functional characteristics are (more) relevant, given that the product in question is a means of transport ( ).

According to the Chinese company, such an approach would be flawed: if the standard was that beauty is the only reason why one buys something, then the substantial value absolute ground could be rarely (if ever at all) invoked, given that designs – by their very nature – combine beauty and function. To this it should be added that, under the traditional Italian approach, designs would be only protectable by copyright provided that they possess ‘artistic value’: in turn, that artistic value that is needed for copyright protection to arise is the same thing that confers substantial value to the goods.

To tackle this issue, the Supreme Court recalled at the outset that the absolute grounds found in Article 7(1)(e) EUTMR / Article 4(1(e) TMD are rooted within a public policy rationale, that is to avoid that the limited duration of other IP rights (e.g., patents for technical functionality and copyright and design rights for substantial value) gets circumvented through trade mark law. That is also way those absolute grounds are really absolute, by that meaning that they cannot be overcome by distinctiveness (whether inherent or acquired).

This said, the Court held that (the translations from Italian are mine):

• ‘Substantial value’ means a ‘non-trivial aesthetic value’ which is such as to make the shape of a product a symbol or even a social icon and render the good to which it is affixed particularly appealing. In essence, ‘the external appearance of the product must be characterized by an appeal that is suitable to influence or even determine consumers’ purchasing decisions, thus conferring a competitive advantage to its owner.’
• In this sense, ‘there is substantial value when the shape of the product is an element – even though not the only one – that plays a very important role in consumers’ choice’.
• The factors that one needs to take into account to determine whether there is substantial value include: (i) consumers’ perception; (ii) the nature of the product; (iii) the artistic value of the shape; (iv) the higher price thereof; (iv) the development of a promotional strategy aimed at highlighting the aesthetic features of the product.
• The notion of ‘substantial value’ is not limited to purely aesthetic objects, it being applicable to objects that combine aesthetic with functional/technical value.

The Vespa Italian 3D mark

Hence, the Court of Appeal erred in its interpretation of the absolute ground: the substantial value ground also applies in situations in which the aesthetic appearance of a product plays a ‘very important’ role, without that being the exclusive or even prevalent one.

The Italian Copyright Act still provides that designs are protectable by copyright provided that they possess artistic value. The Supreme Court noted that the Italian legislature did not err when it made this choice, given the wording of Article 17 of the Design Directive. The Court also acknowledged that – in light of CJEU case law (notably Cofemel and Brompton) – the emphasis should now be on originality rather than artistic value. Nevertheless the result would not change in the case at hand, given that the artistic value of Vespa has been already acknowledged by lower courts in Italy and the question of compatibility of Italian law with EU law was not the subject of the present appeal.

All the above considered, the Supreme Court concluded that the subsistence of an artistic value is precisely what confers substantial value, and this precludes registration of such a shape as a trade mark.

As a result, the Supreme Court sent the case back to the Court of Appeal for a fresh assessment in order to determine whether the shape of Vespa confers substantial value to the goods to which such a shape is applied.

If the Italian Supreme Court was right in its reasoning, then all designs that have been deemed protectable under Italian copyright law and the traditional artistic value standard could be precluded trade mark registration and/or be vulnerable to invalidity challenges. Considering that, as stated, the substantial value absolute ground cannot be overcome by distinctiveness, the consequences would be dramatic and far-reaching for holders of many iconic designs.

How can this conclusion be right?

While it is true that the rationale of the absolute grounds under Article 4(1)(e) TMD / Article 7(1)(e) EUTMR is to prevent that trade mark law is used for an (undue) extension of time-limited rights and to avoid that someone acquires a monopoly right when limited options are available or when the aspect of the shape at issue is indissociable from the goods in question, nothing prevents that an object protected by, e.g,, a copyright and/or design right could also access trade mark protection if the relevant conditions thereunder are satisfied. 

Lunapop also considered Vespa iconic

But more importantly in the case at hand, the assessment of whether there is a substantial value-conferring shape requires considering whether that value stems directly from the shape, not aspects such as the reputation of the trade mark owner or the efforts that they have put into making such a shape ‘iconic’ or an ‘artistic object’.

Indeed, if one reads in particular the Opinions of Advocate General Szpunar in Louboutin [IPKat here], all this is clear (and helpful). 

The question that you need to ask yourself is the following: do you like Louboutin shoes because the red sole is attractive in itself or rather because they are Louboutins? If the answer is the former, then – ok – the substantial value absolute ground would apply; if it is the latter (as most likely is and has been established), correctly, the substantial value absolute ground would not apply. A trade mark owner cannot be ‘punished’ for their commercial success and investments made into creating a reputation for themselves and their products.

This twofold key consideration appears to be missing from the Supreme Court’s judgment: why do we like Vespa? I think that the answer is because it has become – through the efforts made by its owner over a very consistent period of time – a symbol of Italian design in the world and a product that conveys ideas of a certain lifestyle, sense of self, and outlook on things [If you’re an Italian (or European) millennial, you cannot but promptly recall Lunapop’s 50 Special as evidence of all this!]. It is not the Vespa shape in itself that does that: it’s decades of efforts made by its owner.

To conclude: the Supreme Court’s broad reading of the notion of substantial value and scope of application of the absolute ground does not appear to be right. But what do readers think?