Parody under copyright and trade mark law: key guidance from Zorro .. and the Italian Supreme Court

Zorro in the Brio Blu ad

Last week, the Italian Supreme Court issued an important – if not truly seminal – judgment on the interplay between IP and freedom of expression (decision 38165/2022, CO.GE.DI. International – Compagnia Generale Distribuzione s.p.a. v Zorro Productions Inc.).

In delivering its new judgment in the long-running (15+ years and counting!) legal battle over the character of Zorro, the Supreme Court has provided important guidance on the requirements and limits of parody under both copyright [see also here for a recent French case] and trade mark law.

Let’s see what happened.

Background

Back in 2007, US company Zorro Productions sued CO.GE.DI. over a TV and radio advertisement which the latter had commissioned on behalf of bottled water brand Brio Blu. Said advertisement featured actor Max Tortora dressed up as popular character Zorro.

Zorro Productions claimed that it owned copyright and several trade marks over the character of Zorro and that the advertisement inter alia infringed its rights under both regimes.

Further to a victory for Zorro Productions at first instance, the Court of Appeal of Rome sided with CO.GE.DI., holding that the character of Zorro had fallen in the public domain.

In 2017, the Italian Supreme Court rendered a first judgment, holding that Zorro would be still protected by copyright, as the 70-year post mortem auctoris term available under Italian law should also apply to foreign (in this case: American) authors. The Supreme Court thus sent the case back to the Court of Appeal for a new assessment.

In 2018, the Court of Appeal ruled that Zorro is a protected fictional character and its alleged parody in the advertisement would be prohibited given that:

• Italy did not expressly transpose Article 5(3)(k) when it implemented the InfoSoc Directive into its legal system; and
• A parody requires in any case a creative re-elaboration of an earlier work.

In all this, the Court of Appeal held that no trade mark infringement had occurred, since the reference to Zorro had been done without any "distinctive intent" (intento distintivo), that is: the use of the sign had not been undertaken as a trade mark.

At this point, a further appeal to the Italian Supreme Court could not but follow.

Parody under copyright

Insofar as the copyright status of Zorro is concerned, the Supreme Court noted that – under Italian law – the very protectability of characters under copyright is a settled (pacifica) issue: both courts and scholars agree that protection is available irrespective of the copyright status of the works in which they appear.

Turning to parody, the reasoning of the Supreme Court is enlightening and can be summarized as follows:

• A parody does not need to be a creative re-elaboration of an existing work since – by its very nature – it implies an “unavoidable parasitic character” (ineliminabile carattere di parassitismo). A parody is a work that is autonomous from the earlier one because it is characterized by a different spirit, something that the court referred to as a “conceptual overthrow” (rovesciamento concettuale).
• It follows that a parody is not a derivative work like, e.g., a translation: holding otherwise is not only wrong as per the above, but is also contrary to freedom of expression and freedom of artistic expression, as enshrined in – respectively – Articles 21 and 33 of the Italian Constitution.
• It is true that Italy did not specifically transpose Article 5(3)(k) of the InfoSoc Directive, but the reason of all that is that the Italian legal system already allowed what is covered by that provision.
• More specifically, a parody is a type of quotation for purposes of criticism or review, in accordance with Article 70(1) of the Italian Copyright Act. The right to criticize and review can be exercised in different ways, including by means of a parody.
• Article 5(3)(k) of the InfoSoc Directive is consistent with this interpretation, and the CJEU Deckmyn decision [Katposts here] demonstrates that. The fair balance mandate that the CJEU refers to is the “limitation which the parodic exploitation of a third-party work or character is subject to” (limite cui soggiace lo sfruttamento parodistico dell’opera o del personaggio altrui), also considering that the CJEU has repeatedly held that the protection of IP under Article 17(2) of the EU Charter is not absolute.
• The three-step test is part of the fair balance mandate: the circumstance that a parody is made for profit does not rule out the very applicability of Article 70(1): what matters is not that circumstance, but rather whether the alleged parody unduly conflicts with the normal exploitation of the earlier work.

In light of all that precedes, the Supreme Court concluded that the Court of Appeal had erred in its assessment of parody under copyright, by envisaging requirements that are not to be found in the law. Hence, a new assessment will need to be conducted to determine if the advertisement at issue would satisfy the conditions above.

Parody under trade mark law

Moving on to trade mark law, as stated, the Court of Appeal had concluded that the advertisement had not infringed Zorro Productions’ trade mark rights because:

• The actor playing Zorro was not depicted while drinking the bottled water commercialized by CO.GE.DI (though he held it!), and
• The image of Zorro was not affixed onto Brio Blu bottles.

According to the Supreme Court, such an assessment was (way) too superficial.

Like Articles 10(2) EUTMD and 9(2) EUTMR, Article 20 of the Italian Industrial Property Code (in its pre-2019 wording, though for the Supreme Court the 2019 amendment did not really result in a material change) states that use of a sign can be prohibited if done “in the course of trade” (recently, see Mitsubishi).

A parody could be indeed done not in the course of trade. Nevertheless, it would be erroneous to think that that is always the case. After all, the one at issue in the present case is an advertisement – and advertising is one of the types of uses specifically indicated by law as being potentially infringing.

According to the Supreme Court, thus, the key issue is not really whether the use of a sign is done in the course of trade, but rather whether it is use thereof as a trade mark.

And here comes the interesting bit: according to the court, it is erroneous to think that a trade mark – especially a well-known one - is just an indicator of origin and that the only use that matters is that of a sign in this sense (for all: L'Oréal).

Zorro-Kat and -Kitten

Case law of the CJEU shows that trade mark infringement can also occur when a sign is used non-distinctively: for example, in Arsenal the fact the trade mark was used a badge of affiliation/loyalty did not exclude an infringement. The same approach was adopted in cases like Adidas Solomon in relation to decorative uses.

In sum, held the Court, a trade mark with a reputation is something more than a badge of origin: “what matters … is whether a proximity is created between signs that is such as to have an impact on the perception, by the consumer, of the messages communicated by the trade mark for which protection is being sought.”

In the case of a parody, a parasitic free riding could come indeed into play: the humorous evocation of a third-party well-known trade mark might result in an undue exploitation on the side of the author of the parody, in the dilution of the value of the trade mark, or both. If that is the case, the parody at hand must be regarded as a trade mark infringement.

From all the above it followed that, also in this regard, the Court of Appeal’s decision should be annulled, and a new assessment must be conducted.

Comment

As stated, this is a very important decision that will likely also have an impact in jurisdictions other than Italy.

Insofar as copyright is concerned, some of the notable points are the following:

• Article 5 of the InfoSoc Directive is unduly complex! I agree with the Supreme Court that a parody, caricature, or pastiche is indeed part of the quotation exception. If we move this debate to an international level, we see that quotation is formally the only mandatory exception in the Berne Convention (this is not the case under the InfoSoc Directive). An argument can plausibly be made that the same is true of its sub-sets, that is parody, caricature, or pastiche .. at least - again - under international law.
• So far the CJEU has not really referred to the ‘fair balance’ mandate as a general principle of EU law, as the Italian Supreme Court instead did. Given however the trends in more recent CJEU case law and the increasingly visible and elaborate emphasis on fundamental rights and the EU Charter, it seems likely that the CJEU may also adopt such a perspective, whether by spelling out more clearly the content of Article 52 of the EU Charter and/or considering ‘fair balance’ as an expression of what is for sure a general principle of EU law: proportionality. Such an approach would not be unprecedented, as cases like Flos and Poland [Katposts here] suggest.
• In line with CJEU case law (Pelham, para 62; Spiegel Online, para 46; Funke Medien, para 61), the three-step test also contributes to the fair balance between exclusive rights and exceptions and limitations, including having regard to the guarantee of effectiveness of the latter and compliance with the EU Charter rights and interests.

As to trade mark law, it is well known that the EU trade mark system does not contain an express defence based on freedom of expression, including parody. It surely cannot be said that the timid reference to freedom of expression, as found in recitals 27 EUTMD 21 EUTMR, does the 'trick' lacking a more solid footing in the body of either legislation. 

The Italian Supreme Court’s reasoning appears correct overall and reminds us that, indeed, a trade mark with a reputation is something more than a mere indicator of origin. 

Given the inherently parasitic nature of parodies, it might well be the case that a parody takes undue advantage of the reputation and power of attraction of a well-known trade mark if the sign at issue is used as a trade mark. To clarify: while use of a sign highly similar to a well-known trade mark in the context of an artistic expression would not be use as a trade mark, things would be different when a sign identical or similar to a well-known trade mark is used in a context other than that.