No Transfer of Trademark in Real Estate Sale

Industrial Property Code, Arts. 12(1) and 19(2) – Hotel Britannique

Headnotes by the Editorial Office

1. The sale of real estate does not automatically imply the transfer of an unregistered trademark.

2. The cessation of a business does not automatically entail the cessation of existence of an unregistered trademark or the loss of its ownership.

3. The likelihood of confusion is not ruled out by the fact that an unregistered trademark belongs to an inactive company. The company may still resume direct use of the trademark or monetise its value by selling it to third parties.

4. In certain circumstances, a trademark registration may be invalidated on the grounds of both lack of novelty and bad faith.

Supreme Court of Cassation (Corte Suprema di Cassazione), judgment of 5 March 2024 – 5866/2024

Facts and previous instances

The Court of Appeal of Rome, with judgment No. 5199/2022 published on 27 July 2022, reformed the first instance decision by the Tribunal of Rome in the proceedings started by Hotel Britannique Srl (hereinafter also HB) – a company that from 1979 to mid-2016 had owned and managed the Hotel Britannique, a hotel facility located in N (…) – and by BB, the company executive officer, also on his own behalf, against Palazzo AA Spa (hereinafter also PC), which in 2016 had signed with the plaintiff first a purchase option agreement and, then, a preliminary contract of sale and later, in January 2017, a final contract of sale relating to the real estate where the Hotel Britannique was located.

The plaintiffs initiated the lawsuit to have the Italian trademark ‘Britannique’ – filed in December 2016 by Palazzo AA and granted in February 2017 – declared invalid. This was pursuant to Art. 12 of the Italian Industrial Property Code (hereinafter IPC) for lack of novelty with respect to the corresponding pre-used unregistered trademark owned by HB, as well as for filing the mark in bad faith pursuant to Art. 19(2) of the IPC, given that HB’s ownership of the unregistered trademark implied a legitimate expectation for the registration of the sign. The plaintiffs also claimed the subsequent ban on the use of the sign and the publication of the judgment.

In these proceedings, Palazzo AA objected that: the transfer of the unregistered trademark from Hotel Britannique to Palazzo AA itself took place; the use of the unregistered trademark by Hotel Britannique had ceased at least since 2016; the use of the unregistered trademark was only local; the hotel business by HB had ceased anyway and, therefore, there was no likelihood of confusion and/or unfair competition; and the filing of the trademark application was in good faith. In the light of the above and in the absence of any impeding uses and/or registrations at the time of filing the trademark application, Palazzo AA brought its counterclaims, seeking a declaration of the validity of its registered trademark ‘Britannique’ and of the invalidity of the trademark ‘Hotel Britannique’ filed by HB in May 2018, for lack of novelty and for filing in bad faith.

The Tribunal of Rome, by judgment No. 18107/2021, rejected the plaintiffs’ claims and upheld the counterclaims of the defendant Palazzo AA (invalidity of the trademark filed by the plaintiffs HB and BB in 2018 and prohibition on the use of the sign ‘Britannique’), also declaring that BB lacked legal standing to claim the invalidity of the registered trademark pursuant to Art. 12 IPC, whereas it had legal standing with respect to the invalidity of the trademark ‘Britannique’ pursuant to Art. 19(2) of the IPC.

In particular, with reference to the unregistered trademark invoked by HB, the Tribunal upheld that: (a) there was no likelihood of confusion or association, under Art. 12(1)(b) IPC, with the trademark registered by the defendant, due to the fact that the plaintiffs were no longer in the hotel business; and (b) the pre-use of the unregistered trademark by the plaintiffs had resulted in merely local reputation.

With reference to the further arguments and counterclaims of Palazzo AA, the Tribunal upheld that: (a) there was no bad faith in the filing of the trademark ‘Britannique’ by Palazzo AA, since it was made after the cessation of the hotel business by HB and ‘after the signing between the parties of the preliminary contract of sale of the property described above, in accordance with their mutual agreements’. The filing was also not ‘intended to prevent a similar filing by the plaintiffs, nor to create an obstacle to the registration of the distinctive sign by the latter, but rather to protect the trademark “Britannique”, with which the defendant intended to distinguish its hotel business to be undertaken in the property purchased from the plaintiff, on the assumption the latter’s similar business had ceased’; (b) the mark Britannique of Palazzo AA was valid because it was not filed in bad faith and it was not preceded by the alleged unregistered trademark of HB; (c) the trademark filed by HB was invalid, because it was filed after the registered trademark of Palazzo AA; and (d) the subsequent injunction and publication orders had to be issued.

The appeal judges, on the contrary, upheld HB’s and BB’s appeal, declaring the invalidity for lack of novelty and bad faith registration – pursuant to Arts. 12(a) and (b) and 19 IPC – of the trademarks ‘Britannique’ No. (…) of 29 December 2016 to 15 February 2018 and No. (…) of 17 September 2019 to 6 July 2020, registered by Palazzo AA, with an injunction preventing the company Palazzo AA Spa from using the trademark ‘Britannique’ and other similar signs, or signs including that name, and with the transmission of the judgment to the Italian Patent and Trademark Office, the publication of the judgment and the rejection of the counterclaim brought by Palazzo AA Spa.

In particular, the court of appeal upheld, first of all, that on the date of filing of the application for registration by Palazzo AA of the trademark ‘Hotel Britannique’, the unregistered trademark ‘Hotel Britannique’ – which had remained in the ownership of HB – enjoyed a general, not merely local, reputation and could not be said to be abandoned simply because the company did not carry out any activity.

With regard to Art. 12 IPC and the protection of the prior use of an unregistered trademark against a subsequent identical or similar registered trademark, the court of appeal stated that ‘the unregistered trademark Hotel Britannique is undoubtedly distinctive, it was used for a long time by the appellants in their hotel business with the same name in N. and it belongs to that category of signs that have enjoyed general reputation in the past and that at present, although they have not maintained the same fame, enjoy that particular reputation which comes from being rooted in a prestigious past and that, for this reason, through their mere use, maintain over time a general and not merely local reputation, even at international level, thanks to the historical fame acquired’. Here, the likelihood of confusion has to be assessed in relation to the normal possibility of expansion of the activity of the holder of the unregistered trademark, on the basis of an ex ante assessment with respect to the time of filing of the application for registration of the trademark similar to the pre-used one.

Considering the history of the Hotel Britannique, its prestigious past, and the documents filed in the proceedings, it had to be noted that the hotel had enjoyed a great reputation over time and, in more recent times, it had continued to operate as a four-star hotel until the signing of the preliminary contract of sale in 2016. It had not just hosted local guests, meaning the unregistered trademark Hotel Britannique had enjoyed a general and widespread reputation. Nor could it be held that such unregistered trademark had ceased to be in use on the date of the filing of the contested application for registration, also considering that such application by Palazzo AA (in December 2016) took place only a few months after the hotel business had ceased by virtue of Art. 5 of the preliminary contract of sale of July 2016. Under Art. 5 of the preliminary contract of sale the company HB granted the cessation of the hotel business before the signing of the final contract of sale and the return of the licences and authorisations by 15 September 2016 ‘without the latter and the hotel business as a whole being transferred to third parties’. This provided for the prohibition of the transfer of the whole business to third parties, depending exclusively on the request, by the purchaser, of the licence to operate the hotel business on the same property. The prohibition was therefore ‘temporally limited to the date of the issue of the hotel licence to Palazzo AA, to be exercised on the premises in Corso (…), and such licence has been issued’.

Indeed, the mere cessation of the hotel business in the building in N. (having HB transferred the relevant licence in September 2016) on the date of filing of the application for registration by Palazzo AA did not in itself exclude the likelihood of confusion ‘with the unregistered trademark Hotel Britannique and with the same company name’, pursuant to Art. 12(a) and (b) IPC.

Therefore, the court of appeal upheld the appeal on the point of the non-transfer of the unregistered trademark and rejecting the argument of Palazzo AA that, if an unregistered trademark ‘Britannique’ existed, it was connected to the building as its historical name and had to be understood as having been transferred by HB to Palazzo AA with the sale of the property. The court stated that the business and the unregistered trademark had not been transferred to Palazzo AA and remained in the ownership of Hotel Britannique. Only the real estate portions that were the object of the sale were to be understood under the ‘accessories, accessions, dependencies and easements’, sold together with the real estate, while the unregistered trademark, i.e. the name ‘Hotel Britannique’, could not be included in it. This was because ‘only in the case of transfer of the whole business the trademark, like any other asset, would also be transferred, in so far as it is included in the sale contract, which conceives the business as a complex organised unit, comprising the existing contractual relationships as well as the tangible and intangible assets’.

Once HB had surrendered the licence for the hotel business in that property, it ‘could further monetise the other company assets, in addition to the property, by transferring the unregistered Hotel Britannique trademark to third parties, with or without the whole business, in favour of legal subjects with licences in other properties’ or, after changing the company’s purpose, by promoting its hotel business in other properties or by registering the trademark in question – as it later did – even without carrying out any hotel business.

The court of appeal, therefore, also upheld the ground alleging bad faith registration – pursuant to Art. 19(2) IPC – of the trademark ‘Britannique’ by Palazzo AA, which can occur even if the earlier trademark has been abandoned. The court stated that, since at the time of the application for registration of the trademark by the defendant, ‘the name “Hotel Britannique” did not correspond to the name of a building located in N, such as e.g. Palazzo AA’, since the sale of the building, located in Corso (…), and the cessation of the hotel business in that building did not entail the loss of ownership of the unregistered trademark ‘Hotel Britannique’ by HB, which had been using it for decades. Since the unregistered trademark ‘Hotel Britannique’ ‘enjoyed general and widespread reputation, despite the cessation of the hotel business by that company, that name persisted in the memory of the national and international public, thereby determining a case of registration in bad faith, according to the majority view’. The court then specified that the nullity of the trademark for registration in bad faith, pursuant to Art. 19(2) IPC, absorbed the ground of appeal on the legal standing of BB, confirming the first instance ruling in this regard.

Palazzo AA appealed on the law against this decision […] with nine grounds, against Hotel Britannique Srl and BB (which filed a counter-appeal). Both parties have filed their written pleadings.

Reasons for the judgment

1. The appellant claims the following:

(a) With its first ground of appeal, infringement and/or misapplication of Art. 23 IPC (on the transfer of the trademark) and of Art. 2573 of the Italian Civil Code (on the transfer of the trademark), pursuant to Art. 360(1)(3) of the Italian Code of Civil Procedure. The court of appeal wrongly upheld that only the transfer of the whole business also entails the possibility of transferring the trademark.

b) With its second ground of appeal, failure to examine a decisive fact of the case, discussed between the parties, pursuant to Art. 360(1)(5) of the Italian Code of Civil Procedure. The court failed to examine the real estate sale contract, in particular with reference to the clause contained in Art. 4 on page 5 and filed as doc. 10 in the first and second instance proceedings (which states as follows: ‘The sale is agreed at an overall price and not according to the size of the property, together with all accessories, accessions, dependencies, active or passive easements, as owned by the seller, as well as with any and all rights of the seller company in any way inherent in the property complex’).

c) With its third ground of appeal, infringement and/or misapplication of Arts. 1362 and 1366 of the Italian Civil Code (‘Intention of the contracting parties and Interpretation in good faith’), pursuant to Art. 360(1)(3) of the Italian Code of Civil Procedure. The court of appeal did not consider or investigate in any way the intentions of the parties or interpret the contract in good faith, limiting itself to an aseptic and decontextualized reading of the literal wording.

d) With its fourth ground of appeal, failure to examine a decisive fact of the case, pursuant to Art. 360(1)(5) of the Italian Code of Civil Procedure. The court of appeal ignored documents proving historical facts decisive for the judgment, namely the witness statements annexed as documents 6 and 7 of the case-files of the first and second instance proceedings.

e) With its fifth ground of appeal, infringement and/or misapplication of Art. 19(2) IPC, pursuant to Art. 360(1)(3) of the Italian Code of Civil Procedure. It is alledged that, since nullity for bad faith is a residual and closing rule which cannot be invoked when an earlier right is claimed (as clearly stated by this Court’s case law), in the present case Hotel Britannique could not also invoke the nullity for bad faith by invoking the nullity of the later mark of Palazzo AA for lack of novelty in relation to its own alleged unregistered trademark. Nevertheless, the court of appeal declared both nullity for bad faith and nullity for lack of novelty.

f) With its sixth ground of appeal, infringement or misapplication of Art. 12(1)(a) IPC, pursuant to Art. 360(1)(3) of the Italian Code of Civil Procedure. The court of appeal infringed the provisions of Art. 12 IPC by confusing the reputation of a sign with its use and by affirming that the reputation derives from the simple use (which does not imply any reputation) of a sign that was previously widely used (and therefore, again erroneously, considered very well-known). This resulted in a double misunderstanding of the concept of pre-use that leads to a rule not provided for by Art. 12 IPC;

g) With its seventh ground of appeal, the violation or misapplication of Art. 12(1)(a) IPC, pursuant to Art. 360(1)(3) of the Italian Code of Civil Procedure. The court wrongly ‘upheld the protection of an unregistered unused trademark, belonging to an inactive company, without any realistic prospects or will to resume its activity’;

h) With its eighth ground of appeal, violation or misapplication of Art. 12(1)(a) IPC, pursuant to Art. 360(1)(3) of the Italian Code of Civil Procedure. The court of appeal misinterpreted the concept of likelihood of confusion as provided for by Art. 12(1)(a) IPC.

i) With its ninth ground of appeal, violation and/or misapplication of Art. 2729(1) of the Italian Civil Code, pursuant to Art. 360(1)(3) of the Italian Code of Civil Procedure. The court used a presumption to establish the general reputation of the unregistered trademark ‘Britannique’ without the legal requirements, in particular without such presumption being serious enough according to the principle established by the Supreme Court.

2. The counter-appellant preliminarily objected that the appeal was inadmissible, because it did not challenge all the rationes decidendi.

It is submitted that:

a) the second-instance judgment declared the invalidity of the trademarks ‘Britannique’ registered by Palazzo AA on the basis of two distinct and autonomous grounds for invalidity of the same, namely for lack of novelty – expressly pursuant to subparas. a) and b) of Art. 12(1) IPC – as well as for registration in bad faith pursuant to Art. 19 IPC;

b) Article 12(1)(a) and (b) IPC regulates two distinct and autonomous grounds of nullity of the trademark for lack of novelty, namely letter a) for conflict with other trademarks, while letter b) concerns the hypothesis of conflict with other earlier distinctive signs, such as, for example, the company name, domain names, etc;

c) notwithstanding, as seen, the existence of two distinct and autonomous rationes decidendi of nullity of the trademarks ‘Britannique’ of Palazzo AA, ascertained and expressly declared in the second-instance judgment, the appellant Palazzo AA has challenged only the part relating to Art. 12(1)(a) IPC;

d) the only sentence in Palazzo AA’s appeal in which any reference to Art. 12(1)(b) IPC is to be found is

‘Article 12(1)(a) and (b) IPC grants to the unregistered sign a protection similar to that of registered trademarks, with the related exclusive right on the sign, only when the use of the unregistered trademark is actual and current and has resulted in general reputation’ (see para. 122 of Palazzo A.A.’s appeal, within the ninth ground).

This sentence is unsuitable as a basis for an appeal against the autonomous part of the judgment under appeal which declared the invalidity of the ‘Britannique’ trademarks according to Art. 12(1)(b) IPC, also because that paragraph refers exclusively to the ‘use of the unregistered trademark’ with general reputation and certainly not to other distinctive signs. The objection is groundless.

Indeed, even if no challenge is specifically raised (except for the ninth ground of appeal) by the appellant in relation to the finding that the trademarks registered by Palazzo AA in 2016 are invalid for lack of novelty pursuant to Art. 12(1)(b) IPC because they conflict with the earlier distinctive signs owned by Palazzo AA¹ (company name, …), the overall content of the complaints, however, regard the violation of Art. 12 IPC, without any specific reference to subparas. a) or b), and, in the appeal on the law, the appellant argues that the contract between the parties also involved the transfer of the intellectual property rights owned by HB (first of all, the unregistered trademark) to PC.

3. Moving on to the analysis of the grounds of appeal, the first one is inadmissible, as it does not grasp the overall ratio decidendi.

The appellant complains – challenging a sentence in the reasoning of the appealed judgment (‘only in the case of transfer of the whole business, the trademark, like any other asset, would also be transferred as part of the subject matter of the sale contract, which conceives the business as a complex organised unit, comprising the existing contractual relationships as well as tangible and intangible assets’) – that no rule prevents the transfer of a trademark, whether registered or not, independently of the transfer of the whole business.

However, considering the reasoning as a whole, the court of appeal did not hold that a trademark can be transferred exclusively together with the business. On the contrary, it upheld that:

a) the trademark ‘Hotel Britannique’ had not been the subject of any transfer agreement in favour of Palazzo A.A, thus excluding the relevance of Art. 23 IPC and Art. 2573(1) of the Italian Civil Code;

b) the contractual relations between the parties had never given rise to the transfer of the whole business, but rather to the simple sale of the real estate;

c) and that therefore, the transfer of the trademark ‘Hotel Britannique’ in favour of Palazzo AA could not be presumed even under Art. 2573(2) of the Italian Civil Code.

4. The second ground is inadmissible.

The appellant complains, pursuant to Art. 360(5) of the Italian Code of Civil Procedure, of the failure to examine a decisive fact for the judgment, namely the sentence ‘as well as with any and all rights of the seller company in any way inherent in the property complex’, contained in the second part of Art. 4 of the contract of sale of 30 January 2017. According to Palazzo AA, the content of that clause would be decisive in that it would make it possible to prove that, together with the property complex, the transfer also involved the name of the building, namely ‘Hotel Britannique’.

The objection is not decisive, because the court of appeal ascertained that no agreement concerned the trademark ‘Hotel Britannique’ and that the name ‘Hotel Britannique’ was not the name of the building, so the inclusion of the trademark ‘Hotel Britannique’ within the ‘rights inherent in the property complex’ is entirely incompatible with the interpretation of the second instance judgment. The latter clearly rejected the arguments of Palazzo AA and excluded that the respondent’s trademark constitutes the name of the building subject of the sale.

5. The third ground is inadmissible, because it is not self-standing. Indeed, the claim, based on the non-application of a rule of contractual interpretation, ‘cannot merely recall the rules of Arts. 1362 et seq. of the Italian Civil Code, but, instead, it must specify the rules breached in practice and, in particular, the passage and the manner in which the previous judge departed from those rules, since the challenge cannot solely be based on the contrast between the appellant’s interpretation and that of the judgment under appeal’ (see Cass. No. 25828/2021; Cass. No. 2516/2024). Moreover, the ground of appeal is inadmissible because, ‘when two or more interpretations of a clause are possible, the party that proposed the interpretation disregarded by the court is not allowed to complain before the Court of Cassation that another interpretation was preferred’ (Cass., section I, ord. No. 25828/2021).

However, the ground is also baseless. The proposed interpretation of the expression contained in the contract ‘as well as with any and all rights of the seller company in any way inherent in the property complex’ as including trademark rights, is contrary to Art. 7 IPC. According to this a trademark is the sign adopted by an undertaking to distinguish its products and services from those of others, and not a right related to a building that is the subject of a real estate sale.

6. The fourth ground of appeal, on the failure to examine a decisive fact, pursuant to Art. 360(1)(5) of the Italian Code of Civil Procedure – because the court of appeal ignored documents proving historical facts decisive for the judgment in relation to the alleged consent by Hotel Britannique to the use of the trademark ‘Hotel Britannique’ – is inadmissible, since it amounts to a request for re-examination of the evidence.

It is no longer possible to challenge before this Court the assessment of the evidence made in the second-instance judgment. Moreover, even if we decide to focus on the factual circumstances alleged by the counterparty, as set out in the witness statements, those are mere allegations, that were challenged by Hotel Britannique in the previous proceedings and that were the subject of an implicit negative assessment by the court of appeal, which ruled out any transfer of the trademark ‘Hotel Britannique’ in favour of Palazzo AA.

6. The fifth ground is baseless.

The appellant claims that the nullity for bad faith under Art. 19 IPC constitutes a residual and closing rule and it cannot be invoked when an earlier right is claimed. Since in the present case Hotel Britannique invoked the nullity of the later trademark of Palazzo AA for lack of novelty with respect to its own alleged unregistered trademark, it could not also invoke nullity for bad faith. However, the court of appeal declared nullity for bad faith, after having also asserted nullity for lack of novelty.

The precedent quoted in the judgment under appeal is also recalled here (Cass. No. 10390/2018) to reiterate that, as asserted therein, ‘registration in bad faith operates, in fact, as a closing rule: as it has been observed by many scholars, Art. 19(2) IPC is called upon to define the conflicts that the legislator has not expressly resolved, since the law does not regulate the same situation several times. In this sense, the legal rule in question cannot be invoked by a person who, being the holder of an earlier right (because, for example, he/she was the first to register or can claim the non-local pre-use of the sign), already receives protection by reason of that right. In other words, it is to be believed that where the conflict between the signs is settled by providing for the invalidity of the subsequent registration, the holder of the earlier and prevailing right may invoke the latter, and not also the other’s prohibition to register the trademark in bad faith’.

However, in this case, it was held that registration in bad faith did in fact take place, since it concerns, with respect to the invalidity for lack of novelty, an autonomous conduct, based on two different factual requirements: (a) registration in bad faith presupposes ‘the presence of a dishonest state of mind or intention, and it must also be understood in the context of trademark law, which is that of commerce’ (EU General Court No. 250/2022),² since it may be inferred from ‘objective circumstances and his concrete actions, his role or position, the knowledge he had of the use of the earlier sign, his contractual, pre-contractual or post-contractual relations with the applicant for a declaration of invalidity, the existence of reciprocal duties or obligations and, more generally, from all the objective situations of conflict of interests in which the trademark applicant found himself’ (EU General Court No. 350/2022); and (b) the prerequisite for the declaration of invalidity under Art. 12 IPC is the assessment of the registration requirements of the later trademark in the light of the existence of earlier trademark rights or rights over other distinctive signs.

In the present case, the judgment under appeal found that Palazzo AA had attempted to parasitically exploit the reputation of HB’s trademark ‘Hotel Britannique’ and emphasised that Palazzo AA’s conduct was unequivocally intended to hinder Hotel Britannique’s commercial activity.

Moreover, the claim is also inadmissible for lack of interest, given that the invalidity of the trademark was in any case assessed and declared for lack of novelty.

7. The sixth ground of appeal, on the alleged misunderstanding of the concept of pre-use of the unregistered trademark pursuant to Art. 12 IPC, is inadmissible.

The court of appeal took a vast and complex body of documentary evidence into consideration. From a temporal point of view this traced the history of the Hotel Britannique from its foundation at the end of the 19th century until 2016, when HB temporarily suspended the activity that had been carried out until then in the building sold to Palazzo AA. The court of appeal concluded that the trademark ‘Hotel Britannique’, at the time of the filing of the application for registration of the trademarks ‘Britannique’ by Palazzo AA, enjoyed an evident general reputation, perhaps not equivalent to that achieved in the past but, in any case, never reduced to that purely local reputation that would be incapable of invalidating a later trademark registration.

The court of appeal ruled out in the most absolute manner ‘that the unregistered trademark Hotel Britannique had ceased to exist due to non-use’. This was because ‘at the time of the application for registration by the company Palazzo AA Spa, on 29 December 2016, only a few months had passed since Hotel Britannique Srl had not used its unregistered trademark’.

There is no violation and/or misapplication of the provision under consideration, nor any confusion between the concepts of ‘use’ and ‘reputation’.

8. The seventh ground of appeal, according to which the court of appeal wrongly ‘upheld the protection of an unregistered unused trademark, belonging to an inactive company, without any realistic prospects or will to resume its activity’, is also inadmissible.

The court of appeal held that there was a likelihood of confusion not only in view of the possibility – which then actually occurred – of resumption of direct use of the ‘Hotel Britannique’ trademark by HB, but also in the light of the opportunity for HB to ‘monetise’ the value of its distinctive sign by selling it to third parties.

The ground takes the form of a request for a new and inadmissible assessment of the facts of the case.

9. The eighth ground of appeal is inadmissible because it is not self-standing, in the absence of identification of the acts and documents on which it is based, and, in any event, it consists of an inadmissible request for a review of factual/evidentiary assessments, which, as such, are the task of the first and second instance judges and are consequently outside the sphere of competence of this Court.

10. The ninth ground of appeal, on the infringement of Art. 2729 of the Italian Civil Code in relation to the assessment of the reputation of HB’s earlier signs, which continued until the filing of the applications for registration of the ‘Britannique’ trademarks by Palazzo AA, is inadmissible.

The court of appeal did not presume that the trademark ‘Hotel Britannique’ still enjoyed general reputation in 2016 on the basis of past reputation. On the contrary, it came to that conclusion in a, so to speak, ‘direct’ manner, by examining the unequivocal findings of the evidence. In any case, the presumptions on which the decision is based are clearly endowed with the requirement of seriousness set forth in Art. 2729 of the Italian Civil Code.

Now, on the subject of presumptive evidence and the application of Art. 2729 of the Italian Civil Code, according to the opinion of this Court (Cass. No. 2944/1978), the judge of first or second instance, in assessing the hints and presumptive elements on which the decision is based, exercises a discretionary power consisting in the choice of the most reliable elements and in the assessment of their seriousness and soundness. In doing so, while deciding the case, they encounter no other limitation than the need to apply the principles of presumptions, namely, to unequivocally deduce an unknown fact from known facts by means of a logical reasoning based on the criterion of id quod plerumque accidit. Such an assessment of the facts, if correctly motivated, is exempt from the review of this Court.

Again, on the subject of evidence by presumptions, it has been held that a decision in which the judge merely denied the evidentiary value of the hints acquired at trial without ascertaining whether they were incapable of acquiring it when assessed in their entirety, in the sense that they could have strengthened each other in a relationship of mutual completion (even if individually devoid of evidentiary value), can be reviewed by this Court (see Cass. No. 9059/2018; Cass. No. 10973/2017).

Therefore, the principle that the first and second instance judge’s assessment of the requisites of precision, seriousness, and soundness (required by law in order to evaluate factual elements as sources of presumptions) is not subject to scrutiny by this Court holds true, provided that the reasoning appears to be logical, free from errors of law and respectful of the principles governing evidence by presumption (Cass. No. 1216/2006; Cass. No. 15219/2007; Cass. No. 656/2014; Cass. No. 1792/2017, which affirmed how the result of the assessment of a valid presumptive evidence, if adequately and coherently motivated, ‘is exempt from the review of the Supreme Court, which is instead admissible when one or more factors having, according to shared maxims of experience, an objective presumptive value have been omitted in the reasoning, without any justification’; Cass. No. 19987/2018; Cass. No. 1234/2019, where it was reaffirmed that the Supreme Court’s review is limited to the exam of the tightness of the reasoning, within the limits indicated by Art. 360(1)(5) of the Italian Code of Civil Procedure).

11. For all the above reasons, this appeal must be dismissed.

Costs […] are to be borne by the appellant.

For these reasons, the Court dismisses the appeal;

[…]

Translated from the Italian by Eleonora Visentin,

Turin, Italy.

Case note by Edoardo Cesarini^*

I. Background and facts

The Supreme Court of Cassation ruled on a case concerning the sale of a renowned hotel property based in Naples which had been operating under the unregistered trademark ‘Hotel Britannique’ for decades.

This case provides valuable insights into the potential pitfalls that can arise when two (or more) parties involved in real estate transactions overlook the need to address intellectual property issues.

The dispute arose when Hotel Britannique Srl, which had owned and managed a hotel facility of the same name located in Naples from 1979 to mid-2016, signed a purchase option agreement with Palazzo AA, then a preliminary contract of sale, and eventually a final contract of sale relating to the real estate where the hotel was located.

Following the filing of the application (and the subsequent registration) for the trademark ‘Britannique’ by the company Palazzo AA, Hotel Britannique invoked its invalidity as they claimed the ownership of the pre-used unregistered trademark ‘Hotel Britannique’ as well as the legitimate expectation for its registration.

Namely, Hotel Britannique argued that the trademark filed and registered by Palazzo AA lacked novelty and was filed in bad faith, invoking infringement of Arts. 12, para. 1 and 19, para. 2 of the Italian Industrial Property Code (hereinafter IPC).

Article 12, para. 1, lit. b) of the IPC provides that a sign cannot be registered as a trademark if it is identical or similar to another sign already known as a company name, business name, signboard, domain name or to any other distinctive sign adopted by others if there is a likelihood of confusion (which may also consist in a likelihood of association between the two signs) due to the identity or similarity between the signs as well as to the identity or similarity of the business activity carried on by them and the goods or services for which the trademark is registered.

In turn, Art. 19, para. 2 of the IPC makes it clear that if the applicant was acting in bad faith at the moment of the filing of the application, the trademark cannot be registered.

With the first instance judgment issued in 2021, the Tribunal of Rome rejected Hotel Britannique’s claims also declaring the invalidity of the trademark ‘Hotel Britannique’ that, in the meantime, the plaintiff company had filed and registered.¹

However, following the appeal filed by Hotel Britannique, the Court of Appeal of Rome overturned the first instance decision and ascertained that the ‘Britannique’ trademark was invalid for lack of novelty² and for bad faith from Palazzo AA.

The decision was then appealed to the Supreme Court of Cassation on the basis of nine different grounds, which were all declared inadmissible or baseless.

It is worth recalling that this is not a court on the merits: it is instead tasked with ensuring the correct interpretation and application of the law. A number of the grounds brought to the attention of the Supreme Court of Cassation were indeed declared inadmissible as they were too broad and implied a re-evaluation of the evidence, which could not take place in this context.

The Supreme Court of Cassation upheld the findings of the Court of Appeal of Rome, confirming the invalidity of the ‘Britannique’ trademark for lack of novelty and bad faith.

II. Comment

The decision of the Supreme Court of Cassation is particularly compelling for a variety of reasons.

First, and perhaps most importantly, the judgment clarifies that the sale of a property does not automatically transfer the trademark associated with the commercial activity carried out in the same property unless explicitly stated so in the agreement.

According to the analysis of the Supreme Court of Cassation, the rights related to the property – which were explicitly transferred to Palazzo AA – do not include the trademark distinguishing the services rendered in the property.

The trademark ‘Hotel Britannique’, in fact, remains distinct from the name of the building concerned by the contract of sale.

This observation is further supported by Art. 7 of the IPC, which defines the trademark as a distinctive sign adopted by a company to distinguish its products and services from those of its competitors, being clear that it cannot be qualified as a right related to a property.

It is hard to argue with the Supreme Court’s line of reasoning and conclusion on this point. Absent an express provision, it would be unreasonable to assume that the sale of a property automatically includes the transfer of a trademark. This would go far beyond the intended scope of the contract of sale, encompassing the transfer of a trademark even though there is no provision explicitly considering this aspect.

This is especially the case when the contract solely concerns the property where a commercial activity is carried out and not the business itself, as rightly determined by the Court of Appeal of Rome and then upheld by the Corte Suprema di Cassazione. As a result, the presumption under Art. 2573, para. 2 of the Italian Civil Code that a trademark is transferred along with a business cannot apply to the present case.³

The Supreme Court of Cassation further observes that an unregistered trademark may survive the cessation of the services distinguished by the same as long as it remains well-known to the relevant public.

This finding is particularly noteworthy as it shows that a renowned trademark still enjoys protection after the interruption of the related services, allowing its owner to decide at any time to resume its commercial activity (perhaps even in a different location) or to exploit the value of its trademark by transferring or licensing it to third parties.

This conclusion is closely intertwined with the issue of bad faith: without the recognition of such ongoing protection for the trademark, the subsequent filing of anidentical or similar trademark could not be deemed to be in bad faith and, as a consequence, the declaration of invalidity of the subsequent trademark would be ruled out.

The outcome of this case, however, was quite different. The Supreme Court of Cassation has in fact confirmed the findings of the court of appeal, which in turn had recognized Palazzo AA’s attempt to unfairly exploit the reputation of the ‘Hotel Britannique’ trademark, emphasising the intention to obstruct the commercial endeavours of the company Hotel Britannique.⁴

Hence, it was inevitable that the ‘Britannique’ trademark would be declared invalid due to bad faith at the time of filing (in addition to its lack of novelty, as already mentioned).

Interestingly, the first instance judgment issued by the Tribunal of Rome had reached the opposite conclusion as it considered that Palazzo AA had filed an application for the ‘Britannique’ trademark only after entering into an agreement under which the company Hotel Britannique would cease its commercial activity.⁵

As a matter of fact, the finding of the Tribunal of Rome was quite unexpected. According to prevailing Italian case-law, bad faith can be invoked not only when the applicant aims to hinder the business activity of its competitors, but also when the same applicant seeks registration for a trademark that – despite being abandoned by its owner – still remains well-known among the relevant public.

The filing of a trademark in such circumstances has been commonly interpreted by Italian courts as efforts to create a misleading association with the earlier mark.⁶

In the case at hand, considering that the trademark application was filed before the conclusion of the final contract of sale, it is hard to exclude an attempt to exploit the reputation and the past prestige of the ‘Hotel Britannique’ unregistered trademark.

A final comment may be made in the form of a caveat. It should be noted that the present case offers valuable guidance for businesses and legal professionals engaged in transactions apparently not involving intellectual property matters (at least, not directly).

When entering in non-IP focused contracts – such as a contract of sale related to a real estate – it is crucial to anticipate and address any potential intellectual property implications to mitigate contractual uncertainty.

In doing so, the parties involved should conduct thorough due diligence and make sure to negotiate comprehensive agreements that explicitly delineate the ownership and transfer of all relevant intellectual property rights. Disregarding these aspects of a transaction can result in costly and time-consuming litigation, as well as damage to the reputation of the parties involved.

Meticulous attention must ultimately be paid to ensure that the intellectual property provisions align seamlessly with the overarching terms of the agreement, thereby forestalling any potential risk of adverse consequences.

Footnotes