Trademark issues among ‘Youngtimers’: Ferrari and Testarossa

5 Oct 2018 , 2:30pm

Ben Natter and Jessica Sblendorio of Haug Partners LLP highlight the importance of maintaining historic unused trademark rights.

Strategic registration

Due to an apparent lack of suitable automotive marks, automotive manufacturers have long aimed to keep registrations alive despite a lack of use and seemingly despite any attempt to resume use of the marks. Given the close relation between automotive parts and automobiles, many manufacturers are strategic and renew such registrations only for replacement parts. This topic is of particular importance in the intellectual property space as ‘Youngtimer’ vehicles, or well-kept cars that are generally between 20 to 30 years old (such as the “classic” cars of the 1980s and 1990s), soar in popularity across Europe and these vehicle product lines once again have associated merchandise opportunity.

Case study: Ferrari’s “TESTAROSSA” word mark cancelled in Germany

In late 2015, Kurt Hesse and his toy company, Autec AG, sought to use the mark “TESTAROSSA” for some of their products, including electric shavers and electric and pedaled bicycles. Autec AG launched an action against Ferrari (a company well-known as a manufacturer of expensive, Italian sports cars), the owner of the mark “TESTAROSSA,” to cancel Ferrari’s registration on the grounds of non-use under German law. The action was relying on the provision in the German Trademark Act that allows for an interested party to request the deletion of a registered trademark if that mark has not been used for five years, arguing that Ferrari had not used the name “TESTAROSSA” commercially for more than two decades. Ferrari argued that the mark was still in use for after sale maintenance services, certification services, repair services, and spare parts manufacturing for their former road cars, the Testarossa and 512 TR. However, in August 2017, the German court sided with Autec AG and cancelled the registration, finding that services offered by Ferrari were primarily under the brand name and not “TESTAROSSA,” and Ferrari had failed to adequately prove that its reliance on the spare parts business was sincere use of the mark.

As background, Ferrari registered its “TESTAROSSA” mark in 1986 under international class 12, which includes “Land, air and water vehicles and parts thereof; Engines for land vehicles; Car accessories, namely trailer hitches, luggage racks, ski racks, mud flaps, snow chains, wind deflectors, headrests, seat belts, safety child seats.” Among other reasons, the Testarossa car model achieved widespread fame due to its constant references in one of the most popular television series of the era—Miami Vice. Such historical fame, though, was not enough to protect the “TESTAROSSA” registration from cancellation in Germany and demonstrated that a trademark owner must actively use a mark to maintain exclusive rights on the brand.

This court decision resonated in the global trademark community because the mark in question, “TESTAROSSA,” was one of the more famous automobile marks worldwide. The key fact leading to the cancellation of the “TESTAROSSA” mark was that Ferrari ceased production of the Testarossa car model in 1991. Therefore, Ferrari itself had sold no cars bearing the “TESTAROSSA” trademark since 1991. Ferrari’s non-use in this manner compromised its ownership in the “TESTAROSSA” mark.

Counsel for Ferrari, though, argued that this fact should not have been dispositive, and that the automaker continued to use the “TESTAROSSA” mark in other ways. For instance, Ferrari showed that: (1) it offered German consumers the maintenance (e.g., repair and restoration) and certificates of authenticity of used Testarossa vehicles; (2) it offered German consumers original spare parts for Testarossa vehicles; (3) it promoted the Testarossa brand on its German website under the heading “all Ferrari models of the past”; and (4) commerce existed for second-hand Testarossa vehicles. Accordingly, Ferrari claimed that it still demonstrated use in the mark, making it improper to cancel the mark for non-use.

The German court rejected these arguments. First, the court found that providing maintenance and certificates of authenticity for old Testarossa vehicles did not constitute genuine use of the trademark because those services were offered under the “Ferrari Classiche” brand, not under the “TESTAROSSA” brand. Second, while selling spare parts under the “TESTAROSSA” brand could qualify as a non-cancelling use, Ferrari only sold a marginal number of Testarossa spare parts (mainly oil filters), and that such use was found to be mostly symbolic, as opposed to a bona fide use. Third, the court found that Ferrari’s website use of “TESTAROSSA” cannot be qualified as use in commerce because Ferrari’s overwhelming intention with its website was to boost Ferrari’s overall image, as opposed to an intention to sell Testarossa vehicles. Finally, the court found that second-hand sales of Testarossa vehicles failed to constitute use of the mark because, by that point, Ferrari’s exclusive right in the “TESTAROSSA” mark was exhausted.

Application of the “TESTAROSSA” case study to the United States

The application of this case study is important to automotive manufacturers who may employ similar strategies to prolong the life of registrations for famous marks for models no longer being sold through the continued use of the mark on parts and repair services for those cars. Similar to the challenge by Autec AG in the Ferrari case, under the Lanham Act, the federal trademark statute in the United States, a car manufacturer facing a similar challenge to its mark through cancellation would undergo a similar key inquiry of “use” of the mark - namely through allegations of non-use or abandonment. Whether Ferrari would have succeeded defending its “TESTAROSSA” mark in the United States today under comparable facts is uncertain, given the lack of recent, definitive case law on parallel circumstances regarding “use” of a mark in the automotive industry. There are several reasons, though, indicating that a United States court would have reached a different conclusion in the “TESTAROSSA” matter. 

First, the United States has a history of case law that precludes a finding of abandonment of an automobile mark when such a mark is used in conjunction with the sale of car parts (for example Shelby vs Ford Motor Co. or Ferrari S.p.A. Esercizio Fabbriche Automobili e Corse v. McBurnie). Second, the burden of proof is on the party seeking cancellation, and the party seeking cancellation must additionally prove that the trademark holder has no intent to resume future use of the mark; this high burden of proof would be an obstacle to a plaintiff seeking cancellation of a registration for the mark “TESTAROSSA” due to non-use. Finally, if the mark is as well-regarded as Ferrari claims, then a finding of cancellation under the Lanham Act would undercut public policy to permit others to use the “TESTAROSSA” mark (or another mark under similar factual circumstances) in association with other goods, as it would inevitably lead to consumer confusion regarding Ferrari’s association to said goods.

Conclusion

Germany’s cancellation of Ferrari’s “TESTAROSSA” trademark registration may not necessarily foreshadow a similar downfall of certain other automotive trademarks internationally. However, the “TESTAROSSA” case demonstrates that mere reputation may not be enough to protect a mark, even for a mark with a famous and well-established mark with a long history. If the core product bearing the mark is no longer manufactured, it is important that brand owners take any steps necessary to maintain the trademark rights. Trademark holders in the United States, especially in the auto industry, should take necessary precautions to safeguard their trademarks. Especially in light of the German “TESTAROSSA” case, such precautions should certainly include actual use of a mark in connection with the sale of branded goods and services listed by the mark’s registered class.