IP Enforcement

Reputation Parasitism- Threat to IP Protection

INTRODUCTION

Have you ever wondered if Louis Vuitton could sue you just for posting a picture with that fancy bag on Instagram? Or if Salvatore Ferragamo could go after you for posting a picture in that luxurious satin scarf? Naturally, the answer is no, since you have purchased the product and you own that luxurious item.

Now, what happens if you use the same brand names to promote your products? What if you are a famous fashion designer and you post a picture of yourself wearing a scarf manufactured by Louis Vuitton and a handbag manufactured by you? Can then Louis Vuitton sue you for tarnishing its image or for “Reputational Parasitism” as they call it?

This post will mainly discuss the position in the latter situation.

THE CURIOUS CASE OF PHILIPS AND FERRARI

The Philips and Ferrari Feud is similar to the situation mentioned in the latter part of the question. This situation is similar to the one in which you are the fashion designer.

In this curious and interesting case of a famous German fashion designer, Philips Plein, the designer posted a picture of sneakers manufactured by him on the hood of his “personal” Ferrari Car. In some posts, he had also posted pictures of women dressed in clothes (sexually explicit) designed by him alongside his Ferrari. Plein is known to use Instagram as his brand marketing tool, where he posts pictures of his supercars, private jets, and his adventure. Some of his posts are also alongside Rolls-Royce cars.

Well, this doesn’t go too well with the Italian car manufacturer. According to a statement in a letter sent to Plein, Ferrari stated that Plein’s actions “tarnish Ferrari’s brand image and cause more material harm to Ferrari.” They have also alleged that by this act Plein is trying to promote his brand and denigrate Ferrari’s iconic image. The brand asked Plein to delete the posts, instead, he retaliated citing what can be called a more human rights approach. According to Plein, he has just exercised his right to post whatever he wanted to on his private social media account (as long as it does not cause any harm to anybody).

Ferrari has an issue with his use of images of its Italian-made sports cars alongside products from his 15-year old label, and the automaker’s counsel is troubled by a specific photo. The one that features a limited-edition pair of Plein’s sneakers featuring atop of Plein’s green Ferrari, with Ferrari’s word mark and legally-protected prancing horse logo.

HOW DOES REPUTATION PARASITISM COME INTO PICTURE HERE?

Reputation parasitism, reputation leeching, or credibility leeching is a legal term regarding marketing.  This happens when an advertiser uses the good name of another brand to commercialize its own company. It mostly applies to product counterfeiters or competitors who exploit a firm’s reputational resource or goodwill.

The trademark laws, therefore, are structured in such a way, that any kind of infringement is prohibited and the right to reap economic gain is exclusively reserved for the trademark’s registered holder.

Given the position of Plein’s footwear in the picture – i.e., directly next to the Ferrari logo and taking into account the coordinating colors, customers may be persuaded that both brands operate in partnership, which would lead to an argument for trademark infringement. According to Ferrari, Plein’s actions are “unlawfully appropriating the goodwill attached to them.” Thus, at the outset, it appears to be a clear case of reputational parasitism.

The features of the host brand are seen alongside the brand, which typically commands higher goodwill. It draws tremendous attention and often highlights the other brand. Thus, people are following these ethical approaches to support their own brand’s rapid growth. It should be recalled, however, that using the host brand attributes would undoubtedly lead to a violation of various intellectual property rights consisting of the brand name, logo, and product design.

Actions by Philipp demonstrated how he was seeking to leech on the goodwill of Ferrari. Just like Rome was not built in one day, it takes a brand, years to create the desired image in the commercial world.  Leeching thus is not only illegal but also immoral as a business activity. Ferrari has collaborated with a variety of brands and allowed its licensees to exchange their trademarks. Therefore, trademark licensing as a replacement for leeching is technically permissible for the intended intent.

Ferrari’s undesired relation, on one side to the shoe line of Philipp Plein and the dubious manner of promoting them, on the other, adversely interferes with the right of selection of Ferrari licensees who are entitled exclusively to use Ferrari’s [footwear] trademarks.

PERSONAL POST OR AN IP INFRINGEMENT?

This portion of the article includes an overview of rights under trademark law, the regulation of brand ownership, and marketing laws that can be imposed if a third party uses the name without advertising authorization and it deals with the legal aspect of the feud.

Just how humans and animals are identified by their names, a brand is often associated with a mark that is often associated with specific goods [or services]. Therefore, there is an international classification of goods [and services] for the purposes of trademark use. Trademarks must help in identifying the owner’s products or services, and this contributes to the doctrine of functionality. Marks shall not be used to discourage the fair use of services for goods but only to serve the distinctive role of a source. Because Ferrari has been valued above most of the products of its rivals, it has been recognized over time as an aristocratic brand. It gives the consumer a sense of societal recognition. The brand name and its logo, therefore, have significant importance for the company, apart from the benefit derived from the product or service.

If a trademark is renowned (which in this case is), one may prohibit third parties from using a trademark which is equivalent to or identical to that trademark for any products or services where this is used unfairly or at the expense of the distinguishing character or prestige of that trademark. Nowadays, as we speak about the most famous organizations, the origins are frequently forgotten by the public, which offers outstanding goods and services. Ferrari’s emblem has made a significant contribution to its popularity and sales.

A variety of main elements form the basis for advertising. Marketing collateral also includes brand or product names, logos, slogans, unique packaging and changes, domain names, and other signs. The use of this content without authorization as such may lead to liability or a violation under trademark law. It could also violate advertisement laws.

The functionality doctrine tends to be a rational trademark law principle. This represents a trademark’s purpose, which is the defense of product characteristics, not of product monopoly.

  • Can this be counted as a Trademark infringement?

The simple answer is yes since it qualifies the following criteria:

  • Does Philip has an unfair advantage and Did Philip use the trademark for his benefit?

From the positioning of the footwear in the product, over the hood of the Car, the Trademark Ferrari is explicitly visible. Thus, it can be deduced that it was an unfair advantage. Consumers can associate this and the color coordination as some kind of association with Ferrari or that it comes from the brand.

  • Is it detrimental to the distinctive character-Does it cause any confusion in the distinguishing characteristics of the Brand Ferrari?

Yes, it does.

  • Is it Detrimental to the reputation of Ferrari-Is the association with Philip’s company detrimental to Ferrari’s iconic brand name?

Yes, it is. In his posts, the logos and cars of Ferrari are related to lifestyles that are incompatible with the image of the Ferrari brand. About performers who make sexual innuendos and use the cars of Ferrari as guidance, it is “per se distasteful.”

Trademark infringement claims are of particular concern as the company has a long history of stamping prancing horses’ logo ranging from Tod’s loafers to the Oakley sunglasses (as a result of its numerous retail associations and 60 plus licensing agreements), the second is that it holds a valuable trademark and licensed trademarks internationally for the footwear brand and logo.

Before sending a cease and desist letter to the Plein, Ferrari should have asked the following questions:

  • Has someone else allowed this use in the business?

For eg., Rolls-Royce didn’t object to this kind of use.    

  • Is it wrong? As the brand can be marketed free of charge and earn an enhanced profile. On a lighter note, there is hardly anyone who hasn’t heard the iconic name of Ferrari.

In this case, it is unfair and inappropriate. Leeching can, in common, be seen as unjustified food for other resources.   In terms of IP, leeching occurs when the illegal use of the brand to support one’s brand takes place. In these cases, the wrongdoer pretends to be the rightful owner of the IP nor acknowledges counterfeiting actions.

  • How urgently is that necessary? Is an injunction adequate?

In this case, it is extremely necessary since, it interferes with the brand image of the brad and negatively affects the rights of those licensees, who are exclusively “allowed or given the right under the law”, to use the trademark of Ferrari.

The undesired connection between the trademarks of Ferrari on the one hand and the shoe line of Philip Plein and the inappropriate way in which they are promoted. The right of selected Ferrari licensees to use Ferrari’s trademarks exclusively to produce and promote [footwear] as branded by Ferrari, is, adversely affected.

Ferrari, almost 80 years old, has a legal and commercial reputation to protect. Although it is usually appropriate that the trademarks of brands may be used in a descriptive, decorative, or other non-source capacities (this is why they continue to appear without any issues in films, music videos, and even other advertisements campaigns of brands), here it seems like there is more than that happening. Similar to the position in the United States, the holder of registered trademarks in Italy has the right to prohibit any third party from using identical or similar trademarks.

However, it is worth noting that it is not appropriate for the applicant to show a risk of confusion for well-known marks under European Union trademark law when the unauthorized usage “sees to ride with a reputation on the coat-tails of the label.”

Section 29(2) and 29(8) of the Indian Trade mark Act deal with Deceptive Reputation and Tarnishing Reputation respectively.

Section 29(2)-Deceptive Reputation

Every person who is a non-registered proprietor or an individual who is not licensed to use a trade mark, uses it, ‘in the course of trade’. A mark that is likely to confuse the public domain or likely to make consumers think that there is an association, because of its identification with the registered trademark and the identification of the products or services protected by the registered trade mark. The way Philipp put his pair of shoes on the car that causes the spectators to think about some association between the two brands. If Philipp is considered to be in the ‘course of trade’, then this he can be said to have allegedly acted in violation of this act.

Section 29(8)-Tarnishing Reputation

 Where such publicity or advertisement-

(a) has unfairly benefits and undermines honest practices in an industrial and commercial matter

(b) is harmful to its distinctiveness; or

(c) the integrity of the trademark shall be violated; a registered trade mark shall be considered to be breached by the publicity of such a trade mark.

Ferrari’s notice also alleged that Philipp’s use of the car (performers who make sexual innuendos next to the car) would tarnish its image. Ferrari as a company does not need any introduction, its popularity is not something that needs to be explained to people from various segments and cultures.

Under the recently enforced Consumer Protection Act, 2019, the promoter must have a specific contractual arrangement with the owner of the company/brand and are indemnified of other legal actions, litigation or claims by third parties for damages incurred by the promotion of the brand or the business. If this case was an Indian case, then, Philip would also be liable under the recently enforced Consumer Protection Act, 2019.

Unfortunately, the mass media are too often reluctant or unable to make these distinctions for Ferrari and its precious trademark rights, regardless of whether its strategy is legally acceptable (and almost certainly it is). However, it remains for Ferrari as the holder of trademark rights (which require very rigorous and careful compliance) to pursue efforts to avoid illegal usage that could deprive the value and characteristics of its marks.

CONCLUSION

Social media marketing is an important tool for brands, but there are growing challenges for private and business and commercial activities. The line between what constitutes as promoting a brand or what is personal is increasingly blurred. Effective strategies and laws must be sufficiently formulated to prevent unintended results. The risk of being embroiled by legal litigation is overlooked because of the lack of strict legislation on social media ads.

This article can be cited as:

Gyanda Kakar, Reputation Parasitism- Threat to IP Protection, Metacept- InfoTech and IPR, accessible at https://metacept.com/reputation-parasitism-threat-to-ip-protection/ .

REFERENCES

1.     Ferrari Doesn’t Want Philipp Plein Putting His Brand’s Wares Alongside its Cars (That He Owns) | The Fashion Law (2019). Available at: https://www.thefashionlaw.com/ferrari-doesnt-want-philipp-plein-putting-his-wares-alongside-its-cars.

2.     Leeching as a mode of Trademark Infringement (2020). Available at: https://www.theippress.com/2020/07/20/leeching-as-a-mode-of-trademark-infringement/.

3.     Is a fashion designer entitled to post an image of his branded sneakers atop a Ferrari if that designer is the owner of said Ferrari? – Omni Legal Group Blog (2019). Available at:https://www.omnilegalgroup.com/blog/is-a-fashion-designer-entitled-to-post-an-image-of-his-branded-sneakers-atop-a-ferrari-if-that-designer-is-the-owner-of-said-ferrari/ (Accessed: 30 July 2020).

4. LOTTO (UK) LTD v CAMELOT GROUP PLC [2003] EWCA Civ 1132 [UK].

5. MATTEL INC v 3894207 CANADA INC 2006 SCC 22 [Canada].

6. DRISTAN Trademark [1986] RPC 161(SC) [India].

7. KIRKBI AG v RITVIK HOLDINGS INC 2005 SCC 65 [Canada]

8.     Red Bull / The Bulldog: ‘parasitism’ and ‘free-riding’ of the distinctive character or the repute of the trade mark – ECJ L’Oréal / Bellure in practice (2020). Available at: https://www.twobirds.com/en/news/articles/2013/red-bull-the-bulldog-parasatism-free-riding-distinctive-character-repute-trade-mark (Accessed: 30 July 2020).

9.     Kim, Y. and Sullivan, P. (2019) “Emotional branding speaks to consumers’ heart: the case of fashion brands”, Fashion and Textiles, 6(1). doi: 10.1186/s40691-018-0164-y.

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