Written by Marco Farina, Italian lawyer, PhD in Civil Procedural Law at the University La Sapienza of Rome – Adjunct Professor of Civil Procedural Law at the University LUISS of Rome

In a judgment rendered on 16 September 2021, the Italian Supreme Court (Corte di Cassazione) reversed a decision from the Court of Appeal of Rome, which had denied recognition and enforcement of a monetary judgment issued by the Royal Court of Guernsey, due to a breach of the fundamental rights of defence allegedly occurred in the proceedings.

The Court of Appeal of Rome reasoned under Article 64 (b), of the Italian Act on Private International Law (Law 31 May 1995 no. 218), which provides, inter alia, that a foreign judgment may be not recognized and enforced if fundamental rights of defence have been breached in the foreign proceedings.

The Court of Appeal found that a relevant breach of the fundamental rights of defence had occurred because, at the outset of the proceedings, a worldwide freezing injunction (associated with a disclosure order) had been issued against the defendant. In the Court of Appeal’s opinion, the injunction and its effects altered the procedural equality of the parties before the foreign court, since it was a “highly coercive measure against the defendant who is not only severely affected in the free disposal of his assets, but is also exposed to the risk of even being deprived of his personal freedom, if he does not cooperate with his counterpart in the identification of his assets to be seized” (English translation).

This relevant alteration of the procedural equality of the parties existed, according to the Court of Appeal, because, whilst the defendant was impacted by this order, the plaintiff was not.

In the end, the Court of Appeal held that the injunction issued against the defendant had “the concrete ability – in the absence of any conduct of the defendant indicating that he intended to harm the claimant’s rights – to limit, restrict, diminish the defendant’s ability to defend itself, both in imposing significant limitations on the free disposal of his assets and in constraining him to collaborate with the claimant before of preparing its own defence. All this, while nothing of the same kind affected the assets or the defensive opportunities of the claimant. The defendant, therefore, found himself in a much weaker defensive position than his counterpart” (English translation).

The Supreme Court found several flaws in this reasoning.

Firstly, the Supreme Court held that if, in principle, it could not be denied that a relevant alteration of the procedural equality might amount to a breach of the fundamental rights of defence, the mere fact that the judgment to be recognized and enforced in Italy had been preceded by a provisional order – in the form of an injunction (associated with a disclosure order) – could not, in any case, lead to such a breach.

Regarding the functioning of a freezing injunction issued by a common law court, the Supreme Court asserted that (i) the injunction is sought to preserve the defendant’s assets until judgment can be obtained or satisfied, (ii) the injunction may be rendered when the claimant has shown a good arguable case and a risk of dissipation exists, (iii) it operates in personam; therefore, its effectiveness depends on the threat of punishment for contempt of court, and (iv) it is usually associated with other orders, which are aimed at rendering the freezing injunction more effective, thus constraining the affected party to identify its assets and their location (disclosure order) under the threat of being excluded (debarred) from the proceedings (unless order).

Having said that, the Supreme Court went on to state that, in the case at hand, the injunction was associated with a disclosure order but not with an unless order. So, even if the defendant were not to comply with the injunction and the disclosure order, he remained fully entitled to participate in the proceedings defending himself as no exclusion and/or debarring was pronounced against him.

In the light of the above, the Supreme Court had good reason to observe that the Court of Appeal should not have found any breach in the fundamental rights of defence (in terms of the alteration of the procedural equality of the parties) since – as the same Italian Supreme Court held in its previous judgment (judgment no. 11021 rendered on 9 May 2013 in the well-known Gambazzi case, following the decision from CJEU in Case C-394/07, 2 April 2009, Gambazzi) – the right to a fair trial should be considered breached in the event of “manifest and disproportionate infringement of the defendant’s right to be heard” (English translation).

Thus, the Supreme Court noted that, if a judgment rendered against a defendant who – due to his failure to comply with a disclosure order associated with a freezing injunction – had been excluded and/or debarred from the proceedings, must be recognized and enforced in Italy (see again judgment no. 11021 of 9 May 2013 in the Gambazzi case), a fortiori a monetary judgment rendered against the defendant whose participation in the proceedings had not been prevented notwithstanding its failure to comply with the disclosure order associated with the freezing injunction, ought to be recognized and enforced in Italy.

The validity of this line of reasoning must be inferred, according to the Supreme Court, from the injunction (and the disclosure order which was associated with it) being a provisional and protective measure aimed at preserving the claimant’s right to enforce the judgment which might be rendered in its favour at the end of the proceedings on the merits. Therefore, such measures are as much an essential part of the common law procedural system as the attachment and/or preservation orders are in Italy (sequestro conservativo, Article 671 of Italian Code of Civil Procedure).

Hence, asserting that – as the Court of Appeal did – the mere fact that a freezing injunction has been issued and enforced against a defendant (and not against the claimant) amounts to a breach of the right to a fair trial (in terms of the alteration of the procedural equality of the parties), would insinuate that a breach of the fundamental right of defence occurs in Italy every time a claimant succeeds in obtaining a protective measure against the defendant, when the former is not addressed with the same measure.

This is not an alteration of the procedural equality of the parties. On the contrary, this is the essence of litigation between two parties in an adversarial system.

It is natural in contentious civil proceedings that the party against whom a claim is brought may be affected by measures which result in finding itself in a different situation from that of the claimant. This cannot, by definition, give rise to any relevant breach of the fundamental rights of defence in terms of violation of the principle of the so-called ‘equality of arms’. For example, in the ordinary proceedings instituted by the debtor for opposing an enforceable order of payment obtained by the creditor, the debtor finds himself in different position from that of the creditor; a defendant, in ordinary civil proceedings, finds himself in a different situation from that of the claimant who has obtained – before or during the proceedings – an attachment order for the defendant’s assets.

Accordingly, provided that both parties are granted equal chances to obtain and enforce a protective and/or provisional measure, is part of the ordinary functioning of a civil proceeding that a party will succeed in obtaining it and the other will not.

In the case at hand – the Supreme Court noted – both parties were granted equal and fair chances of defence as, (i) the freezing injunction and the disclosure order were given ex parte but the defendant was given the right to apply to the court to vary or reverse the order, and (ii) the claimant had assumed the obligation of complying, under the same threat of the “contempt of court”, with any subsequent order of the Court condemning the claimant for any loss suffered by the defendant.

Moreover, the Supreme Court asserted that nothing to the contrary may be inferred from the fact that the injunction and the disclosure order operate in personam and that the infringement thereof triggered the consequences of a “contempt of court”. The Cassazione did not see any violation of the fundamental rights of defence, all the more because the Italian legal system features cases in which a failure to comply with a judicial order could amount to a criminal offence.

The judgment of the Italian Supreme Court can be read here (in Italian).

Thomas Pfeiffer/Quincy C. Lobach/Tobias Rapp (Eds.), “Facilitating Cross-Border Family Life – Towards a Common European Understanding”, Heidelberg University Publishing 2021 (link)

The EUFams II consortium has just released the project’s Final Study. The volume contains the papers presented at the project’s Final Conference. The contributors were invited to present historical developments, discuss the status quo, and draw the lines along which European family and succession law may develop. The authors hope to inspire the readership and the scientific community at large to engage in further research along and across these lines.

The book is available both online (open access) as well as in print (link). Its contributors are (in alphabetical order): Marlene Brosch, Laura Carballo Pineiro, Diletta Danieli, Rosario Espinosa Calabuig, Ivana Kunda, Quincy C. Lobach, Cristina M. Mariottini, Ulf Maunsbach, Nicolo Nisi, Cinzia Peraro, Thomas Pfeiffer, Paula Poretti, Tobias Rapp, Lenka Valkova, Ilaria Viarengo, Francesca Villata, Marcel Zühlsdorff, and Mirela Zupan.

The EUFams II project (2018-2020) was coordinated by the Institute for Comparative Law, Conflict of Laws and International Business Law of Heidelberg University. Project partners were the Universities of Lund, Milan, Osijek, Valencia, and Verona as well as the MPI Luxembourg. This blog has previously reported on some of the project’s research outputs, including the Final Conference.

This project was funded by the European Union’s Justice Programme (2014-2020). The content of this study represents the views of the authors only and is their sole responsibility. The European Commission does not accept any responsibility for use that may be made of the information it contains.

Vacating the interim injunction that was granted earlier this year to prevent CG Corp. Global – a Nepal-based company, registered in India from manufacturing and selling its instant noodles under the name of Wai Wai X-Press Noodles Majedar Masala in a passing-off action by ITC Ltd, the Karnataka High Court formulated detailed guidelines to ascertain the circumstances in which there will be a passing-off of a trademark and an infringement of copyright under Indian law.[1] The Karnataka High Court was exercising its appellate jurisdiction under Section 13(1A) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (CCA) that authorizes the creation of commercial courts in India. These courts are equally competent to adjudicate domestic and international disputes on matters that fall within the purview of the Act. The scope of the legislation is vast and includes, inter alia, disputes concerning intellectual property rights such as trademarks, copyright, patents, designs or geographical indications – which will be considered of a commercial nature if the value of the subject matter is more than INR 3,00,000. The Act confers jurisdiction over the Commercial Division of the High Courts – as a court of the first instance – whenever the dispute arises within the local limits of Delhi, Bombay, Calcutta, Madras or Himachal Pradesh. In all other States of India, the commercial courts created at the district level will be competent to adjudicate such matters. The legislation has been promulgated to promote trade and commerce in India by fast-tracking the settlement of such disputes. In matters of intellectual property such as these, the Act confers the Commercial Court or the Commercial Division of the High Court in some states with the exclusive jurisdiction to adjudicate such matters, which were initially within the domain of the District Courts.

The Commercial Appellate Division of the Karnataka High Court was faced with the predicament of whether the defendant, CG Corp, had damaged ITC’s goodwill and reputation by incorporating a similar colour scheme of red and orange in packaging its Wai Wai X-Press Noodles Majedar Masala. As a result, ITC claimed that the defendant’s product was deceptively similar to its Sunfeast Yipee! Magic Masala Noodles and, thus, CG Corp’s act constituted passing-off and an infringement of ITC’s copyright under Indian law.

Rejecting ITC’s contentions, the court formulated a two-pronged formula to ascertain the circumstances in which a defendant could be considered to have passed off a product as that of the claimant – to have violated the latter’s registered trademark. In doing so, the court placed emphasis on the position under English law as emphasized in Payton v Snelling,[2] Lampard; Reckitt & Colman v Borden;[3] and Pasquali Cigarette Co Ltd v Diaconicolas & Capsopolus.[4]

The first and foremost factor, as the court stressed, would be to identify the features in the plaintiff’s product that are distinctive to him or her. As the court elaborated, distinctiveness in this context refers to distinctiveness in law as opposed to distinctiveness in fact. Distinctiveness in fact, as the court clarified, are the features of the mark that are distinctive according to the claimant’s perspective. Instead, the claimant must clearly demonstrate whether the hypothetic person or the class of persons constructed and identified by the court are likely to be deceived by the similarities in the product. The identification of the hypothetical persons would essentially depend on a variety of factors and, in particular, the nature of the goods sold, the circumstances of the sale and the class of persons to whom the product is targeted. Drawing an analogy with surgical and pharmaceutical products, the court elaborated that in a product such as this, the hypothetical person would be an ordinary purchaser and one of average intelligence – who being neither too careful nor too careless and knowing more or less the peculiar characteristics of the product, accepts what he or she is given after examining the general appearance of the article. It is unlikely, as the court further substantiated, for the ordinary consumer to mentally capture every minute detail of the packaging of the product – including the colour scheme.

Having regard to the circumstances of the case, the court asserted that the dominating feature in the claimant’s product remains the verbal as opposed to the visual marks because the ‘striking and most distinguishing feature of the defendant’s wrapper was its-brand name Sunfeast Yipee! Therefore, CG’s act cannot constitute passing-off under Indian law unless ITC can demonstrate that the deception was likely to occur even if the expression Sunfeast Yippee! was missing from the CG’s product which, instead, had its own brand name (Wai Wai X-Press Noodles Majedar Masala). The court’s observation was substantiated on a variety of factors – including the claimant’s marketing strategy and central arguments in past litigation. Consequently, the court took note of a previous dispute that was initiated by the claimant against Nestle on a similar ground, where the plaintiff argued that the latter had led the customers to believe that the Maggi’s Magic Masala Noodles (sold by Nestle) and the plaintiff’s Sunfeast Yippee! Magic Masala Noodles were one and the same. In that case, the claimant, ITC, had argued that the expression ‘Magic Masala’ as distinctive to its mark.

Further, the court noted that the claimant had adopted a similar strategy in its advertising campaigns -whether the striking feature remained its brand name – Sunfeast Yippee! as opposed to the colour combination. Referring to the decisions of the English courts in Payton v Snelling, Lampard and Pasquali Cigarette Co. Ltd. v Diaconicolas & Capsopolus, the court stated that regardless of how ‘novel, original or striking’ the colour scheme may be, it was not a feature that was relied upon by the ordinary purchaser to identify the source of the product. As the court further asserted, the chief question invariably remains: what is the function that the get-up of the product actually serves and not how well that get-up has been designed to serve that purpose.

The second factor would be to discern whether the products being manufactured and sold by the defendant are ‘deceptively similar’ to the one’s being manufactured by the claimant. However, whether the goods were in fact deceptively similar would be assessed only after it has been ascertained whether the goods bearing the mark were distinctive in law according to the criterion indicated above. In order to assess whether the defendant’s product was deceptively similar to the plaintiff’s, not merely the features that bear a resemblance with the plaintiff’s product would be considered – but also the measures that were undertaken by the defendant to eliminate the possibility of confusion would be considered.

Therefore, in situations (such as these) where there has been no direct misrepresentation, whether there has been passing-off as a result of deceptive similarity would, in turn, depend on two factors –

1. a) that the name, mark or distinctive feature had acquired a reputation among a class of persons and
2. b) that the mark or feature, being the same or sufficiently similar, had led those persons to believe that the goods are from the same or a connected source.

The comparison of the marks or features discern whether they are the same or sufficiently similar, must be done by looking at all the surrounding circumstances – and whether it is likely to cause confusion in the minds of the hypothetical customer that has been identified based on the principles to ascertain whether the mark/feature is distinctive in law. Consequently, the manner in which the goods or services were supplied would bear a strong influence in ascertaining whether the consumer is likely to be deceived. Here, the role of the mark or the feature and the various ways in which the product is being sold so as to influence the decisions of the consumers in purchasing the product will play a predominant role. In the present case, the court evaluated the significance and the role that the red and orange colour scheme had to play in the various ways in which the product has been sold – but also the way in which the ordinary hypothetical consumer is likely to behave in its ‘noodle-purchasing decisions’. Consequently, the court concluded that the fact that the defendant’s product similarly incorporated the red and orange colour scheme was of little relevance in confusing the hypothetical consumer – regardless of the way in which the product is being purchased. In digital shopping, the search words ‘Red-Orange Noodles’ did not even result in the display of the products of either of the parties – in turn demonstrating how unlikely it was for the consumers to be deceived merely by the similarities in the colour scheme. Likewise, in brick and mortar stores, it was unlikely for the consumer to ask for red and orange packet noodles instead of providing the shopkeeper with the brand name. Even if, in the very improbable situation, the consumer did ask for red and orange packet noodles, it was unlikely for the shopkeeper to directly reach out for the claimant’s product.

Having regard to the aforementioned factors, the court further noted that ITC’s copyright had not been violated, either chiefly because CG Corp has not copied the essential features of the former’s product. Merely showing some similarity in the non-essential features would not suffice and would not constitute a copyright violation under Section 51 of the Copyright Act, 1957.[5]

Despite being of persuasive value to courts outside Karnataka, by being a judgment of the High Court, the judgment is likely to have far-reaching consequences by providing the much-needed clarity under Indian law and, in particular, the provisions of the Trade Marks Act, 1999, which presently does not substantiate the circumstances that constitute ‘passing off’ under Indian law. Instead, the Act merely indicates the right to relief to the aggrieved party in the form of an injunction when its trademark has been passed off by the defendant. The judgment could also shape the decision of the mediation panel in a suit of a similar nature that was recently initiated by Nestle against the same defendant (CG Corp. Global) on the ground that the latter’s Wai Wai Noodles were deceptively similar to the Swiss-based corporation’s Maggi Noodles. As per the provisions of the CCA, the mediation proceedings would have to be concluded within ten days – failing which the matter would be transferred to the Delhi High Court under Section 7 of the CCA for further hearing.

[1] See, ITC Ltd v CG Goods (India) Private Limited, Commercial Appeal No. 105/2021 (dated 28 September 2021).

[2] 1901 AC 308.

[3] [1990] 1 All E.R. 873.

[4] 1905 TS 472.

[5] Act No. 14 of 1957.

Back in September, AG Rantos presented his Opinion in the case TOTO, C-581/20. As reported previously, at the request of the Court, the Opinion confined itself solely to the second preliminary question on the interpretation of Article 35 of the Brussels I bis Regulation.

In its judgment delivered today, the Court addresses all three preliminary questions of the referring court. These questions concern the concept of “civil and commercial matters” in the sense of Article 1(1) of the Brussels I bis Regulation (first preliminary question), subsequent application for provision/protective measures lodged before a court not having jurisdiction as to the substance of the matter (second preliminary question) and EU law- or purely national law- dependent modalities for ordering such measures (third preliminary question).

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