THE FIRM – INSIGNIA
The firm is the name under which the entrepreneur, proprietor of a particular business, exercises his activity.
The insignia is one of the instruments which the entrepreneur uses to distinguish his premises from his competitors’ premises. It therefore allows the public to connect exclusively certain services with an activity performed on certain premises. The insignia is an optional distinctive sign. Like other distinctive signs the insignia can consist of words, names, figures or combined elements. The right to the insignia is acquired with use. Conflict between several users can be resolved according to the criterion of prior use.
The firm is therefore the connecting factor between an activity and a particular person.
The firm, like the insignia, must be:
- “new“, it must not be able to be confused with the commercial name used by another entrepreneur exercising an analogous activity in the same territorial zone;
- “lawful“, that is to say, it must not contain words, figures or signs which are against public order or morals, or coats of arms or other signs protected by international conventions, nor indications intended to deceive third parties;
- it must have a “distinctive capacity” and must contain truthful indications on its activities.
The content of the exclusive right on the firm and on the insignia is largely the same as that of trademarks.
According to this right, the firm can be protected against all dangers of confusion. Therefore the owner can always prosecute for unfair competition, but in order to prosecute for infringement, to defend his right to the trademark, the name of the firm, or the sign, must have been protected as a trademark.
Just as with the trademark, and with the same rules, the firm can be transferred, but not separately from the business.
The firm (and therefore its protectability) lapses only when the company activity which distinguishes it is definitively finished. Usually this consequence does not occur in the case of a bankruptcy or liquidation of the company (and hence reasonably in the case of a composition with creditors too), except in the hypothesis that the activity of the Company, in a state of liquidation, is not exercised for such a long time as to be considered abandoned.
Based on an analogy with similar matters, it is generally considered that the right to the firm lasts for 2 years after the cessation of the Company.
A commercial name in which a toponym is included can be considered a lawful imaginative element only if and insofar as it is used for a company whose product is not connected to the geographic typicality in which it is expressed, and not when it surreptitiously comes to have a revealing significance of a claimed genuine nature of the product with regard to a particular and commercially significant place of production.
Company with the same name
When a Company, with a second shareholder, sets up another company intended to operate in an analogous sector, and allows the new Company to use its denomination to constitute said new Company without setting any provision for a possible withdrawal from the Company set-up, should such a withdrawal occur, the new Company has the right to continue using the denomination in question.
If the corporate name of a Company has been used by one of the shareholders as a distinctive sign of a newly constituted individual Company, in order to distribute a product of the same type as that sold by the Company, this is considered a de facto license granted by the Company to the shareholder as an entrepreneur, a license with no fixed term and which can hence always be revoked.
The law does not impose any form of constraint for the contract of transfer of the distinctive signs of the Company, and therefore this contract can be facta concludentia.
If the Company is transferred, the insignia is automatically transferred with the Company to the purchaser.
When a Company incorporates another and adopts its corporate name, it can exercise its right over the denomination back to the moment when the incorporated Company adopted said corporate name.
With regard to firms being confused, since is not only in the interest of the owners of the Companies that they are identified exactly, but also in the interest of the public and users, if the person entitled to protection does not exercise said protection for a substantial period of time, this cannot cause any prescription and a continuation of the confusion.
Abuse of the right to the insignia occurs when its distinctive part is usurped; consequently, there is a possibility of confusion even when there is a diversification of the additional terms, if these have no other functions other than that of indicating the same activity exercised.
In the case of a corporate name consisting of several words, for the purposes of judging whether there is a possibility of confusion, only one word is considered as important, that is, the one which, to be endowed with greater distinctive capacity, attracts to itself the attention of the consumer, and thus becomes like a single and exclusive point of reference in the mnemonic process of recognition. It is also the word which, due to its characteristics, intensity or suchlike, is most suitable to impress itself on the mind and sensibility of the target.
The possibility of confusion between two firms containing the same patronymic is not excluded by the indication of the company type, given that it is in any case the common patronymic - which makes up the heart of the sign - which attracts the attention of the average consumer so as to become an exclusive point of reference of the mnemonic process of recognition; nor can a suitable capacity to differentiate be recognized in a first name, because in the industrial and commercial field, unlike what happens in the field of small artisans, it is the surname which identifies the person.
Since the function of the insignia is to distinguish the building where the entrepreneur exercises his activity, the limit of protection accorded thereto, in the field of entities homologous to that which the entrepreneur intends to distinguish, is shown by the possibility of the client making a mistake when he enters premises convinced that he is entering other premises.
The immaterial goods of the company, with regard to territorial extension, must be protected with reference to the so-called place where the company operates, not in the sense of the actual place where the company operates, but in the extended sense of places where the Company has real possibilities of operating, due to its size, and its ability to penetrate the market, also considering its potential aptitude to perform complementary activities in different territories.
When a civilian name has been adopted as the firm’s name by an entrepreneur, with the function of imputing to the Company the economic activity identified, any entrepreneur who arrives later, even when he has the same patronymic as that of his competitor, must, like any other, respect the exclusivity acquired, and must integrate or modify the denomination of the Company and the related distinctive signs with indications able to differentiate it, using only the acronym or otherwise eliminating the patronymic from the firm or from the sign.
The danger of confusion deriving from the use of distinctive signs exists in the period preceding the start of activity of a Company, and can be considered unfair competition due to usurpation even for events happening in the organizational stage which are preparatory and instrumental to starting the activity. Therefore, the protection accorded by the law does not pre-suppose the existence of two entrepreneurs already competing and both operating with an actual specific and competitive entrepreneurial activity.