How would the US deal with Ferrari vs Plein?

14 Aug 2020 , 4:29pm

An Italian court has sided with Ferrari against an Instagram influencer using Ferrariā€™s Marks for commercial promotion but, asks Milton Springut, what would happen if the same case came to court in the US?

Until recently, the heated, online dispute between Ferrari and German designer-influencer-badboy Phillip Plein was played out mostly in the media, with Plein posting Ferrari’s cease and desist letter and then posting complaints and other antics in an attempt to deflect the suit.

But, an Italian court, the Court of Genova, recently sided with Ferrari, finding that Plein’s use of Ferrari’s images and logos infringed on Ferrari’s trademark rights.

What was the dispute between Plein and Ferrari about?  Why did the Italian court side with Ferrari?  And how would the same issue be treated under US law?

Ferrari and Plein’s dispute

German designer Phillip Plein cultivates a reputation as an over-the-top, outlandish self-promoter. His Instagram page features not only his own designs, but depictions of his lavish lifestyle, including photos of several of his very expensive cars.

In 2019, Plein posted several pictures of his products alongside one of his Ferraris.  One set of photos featured pictures of Plein’s limited edition, $800 sneakers, which had emerald-green trim that closely matched the color of his Ferrari. 

Another set of images (and a video) featured several bikini-clad models, wearing the same sneakers, and either washing, leaning on, or dancing on the same green Ferrari automobile. 

Unamused, Ferrari sent Plein a cease-and-desist letter, charging that his use of Ferrari’s logo and images as part of commercial promotion misappropriated its goodwill, infringed its trademarks and tarnished its brand.  Ferrari demanded he take down the images within 48 hours.  

Plein refused, instead posting the letter on Instagram and accusing Ferrari of “blackmail.”  He engaged in other PR antics, such as suggesting publicly they settle their dispute with a mutual contribution to one of several charities devoted to racial justice, and then berating Ferrari for racial insensitivity for failing to accept. 

So, not surprisingly, Ferrari and Plein ended up in court; and the Italian court held that Plein’s use of Ferrari’s marks violated both Italian and European Union law.

The Court’s decision

According to the Court of Genova, the images posted by Plein, which feature his footwear “positioned on the body of a [Ferrari] car … may lead consumers to believe that Ferrari brand is in some way connected to the Philipp Plein brand” when no such affiliation exists. 

According to the court, this potential for consumer confusion is “reinforced,” by the fact that the color of Plein’s products, the green decorated sneakers, is “almost the same” as the color of the car, which could prompt people to believe that there is “an association between the two companies and their products.” 

And, Ferrari itself has some 60 license deals with other companies, that allow them to use the Ferrari logo and name on other products, so the possibility that Ferrari would have licensed its rights is not at all far-fetched. 

The court rejected Plein’s argument that the designer/influencer was within his right to post the imagery featuring his cars, as the photos are not commercial in nature, but instead, a reflection of Plein’s lavish lifestyle.  The court acknowledged that the depiction of one’s personal life on social media will often include his/her consumption habits and will thus include the distinctive signs of consumer goods brands.  

But, the Italian court held, “the use of third-parties’ trademarks by an influencer” is “considered lawful only when such use is authorized by the owner of the distinctive trademark, or when the images are descriptive of life scenes of the influencer or of third persons,” and are not merely being used for “commercial or advertising purposes.”  Plein’s use fell into the latter category, as their clear purpose was meant to advertise and promote Plein’s brand and products. 

The Italian court also held that the use of photos of scantily clad models (and videos of those same models dancing on Plein’s Ferrari) tarnished Ferrari’s brand, and hence constituted dilution by tarnishment. So, the Court of Genova affirmed an injunction against Plein.  (Monetary damages are to be taken up in later proceedings.)

So, what would happen under US law?

What if a similar suit was brought in the US by a trademark owner against an influencer using its brand and products to promote other products?  Ferrari asserted both trademark infringement and dilution, both of which are recognized under US law.  Each have their own requirements.

Trademark Infringement

To be liable for trademark infringement, U.S. law requires for any trademark infringement claim that the trademark owner show a “likelihood of confusion.”  And, there are various kinds of confusion which could qualify under U.S. trademark law for infringement.  

Among other things, U.S. law, like EU law, recognizes what is termed “confusion as to sponsorship.”  This means that while the public does not think the trademark owner produced the goods, but the owner somehow sponsored, licensed, or is affiliated with the product.  Ferrari’s history of having some 60 licensing deals is not uncommon for many famous brand owners and make it more likely that this type of confusion will happen.

U.S. courts will look to the totality of circumstances to determine whether such confusion is “likely.”  The factors identified by the Italian court would likely weigh on the side of finding confusion.  But in most cases, a trademark owner would be well advised to conduct a consumer survey (now typically undertaken online) to see what level of confusion there is. 

The ultimate question would be, what do consumers take away from viewing the Ferrari marks and logos in Plein’s promotional Instagram posts?  Do they believe that Ferrari somehow sponsors Plein’s product line? Or do they merely believe that Plein is simply engaged in outrageous self-promotion?  These questions need to be tested by a survey.

Because the issue to be determined is fairly subtle, proper design of such a survey is critical.  Among other things that a trademark owner like Ferrari would have to consider is what is the appropriate universe of survey respondents; what questions would accurately gauge whether consumers believe that Plein is sponsored by Ferrari, and what kinds of controls should be used to test the accuracy of the survey.  

A strong showing of confusion from a well-designed survey would likely result in a trademark owner like Ferrari prevailing.

Trademark dilution

Also, like EU law, U.S. law recognizes a claim for “dilution,” which includes “dilution by tarnishment.”  Notably, claims of dilution do not require proof that consumers would likely be confused.  

Rather, what is required to be shown is that the defendant’s use of the mark would somehow be associated with the owner, and cause tarnishment of the goodwill of the trademark owner.  This typically occurs when trademarks are used in conjunction  with objectionable material, such as pornography or extreme political views.

In a US litigation, a trademark owner like Ferrari would likely assert dilution by tarnishment.  

Here too, a survey would be critical for a trademark owner to prove its case.  Such a survey would test whether consumers retain an association between the Ferrari mark and the Plein products, and whether Ferrari’s brand has been harmed through negative associations with Plein’s racy (albeit not pornographic) content.  Again, survey design is critical, and would include issues like the appropriate universe of respondents, questions which test the legally relevant issues, and controls. 

Lessons to be learned

The unauthorised use of another’s trademark is often fraught with problems, and trademark owners, concerned with maintaining the value of their brands, will often react strongly to such unauthorised uses.

The line that Plein seems to have crossed is between using a brand to express or comment on lifestyle issues and using a brand for commercial promotion.  Brands are no doubt an important part of modern culture and referencing them for artistic or critical purposes is usually on the permitted side of the line, indeed Constitutionally protected.  But unauthorized use of a trademark for commercial promotion will in many cases be considered improper by courts, both in the US and Europe.

The phenomenon of influencers on social media often straddles the line between artistic commentary and commercial promotion and as influencers become more and more prevalent, there will likely be more and more cases involving objections by brand owners to use of their brands.