Valentino garnered widespread attention late last month when it was revealed that Kering will acquire a 30 percent stake in furtherance of a strategic partnership with owner Mayhoola for Investments. Underway behind the scenes at Valentino, which is now valued at almost $6 billion, is a string of cases that pit the Italian luxury brand against like-named – but unaffiliated – fashion company, Mario Valentino, over their respective uses of Valentino-specific trademarks. At its core, the high-stakes clash – which is playing out in courts in the U.S. and Italy – centers on the co-existence agreement that the two Valentinos quietly entered into in 1979 that places notable limits on how they can use the “Valentino” brand name on leather goods.
For some background: The U.S. case, which was first reported by TFL, got its start back in July 2019, when Valentino filed suit in federal court in California. The Valentino Garavani-founded company alleged that Mario Valentino and its U.S. licensee are on the hook for false advertising and unfair competition, among other claims, for “actively engaging in a campaign to trade off Valentino’s goodwill in the U.S. handbag market.” Specifically, Valentino claimed that the rival company – whose wares can be found at Saks OFF Fifth, Nordstrom Rack, etc. – is breaching their co-existence agreement by offering up lookalike products and making use of its “V” logo, all while “downplaying or omitting entirely the fact that they are bags … [are from] Mario Valentino not Valentino S.p.A.”
In furtherance of the 44-year-old agreement, Mario Valentino is permitted (in part) to “use and register the full name Mario Valentino or M. Valentino or Valentino or the letters MV or V exclusively on the outside, together with Mario Valentino on the inside and on the packaging [of] all goods made of leather or imitation leather or other material.” The agreement prohibits it from using “the ‘V’ and ‘Valentino’ marks together” on those same types of goods.” On the flip side, Valentino is required to use “the term ‘GARAVANI’ in addition to ‘VALENTINO’” on leather goods and in any advertising for them.
In causes of action of its own, Mario Valentino alleged that, among other things, Valentino engaged in contributory trademark infringement, false advertising, and unfair competition claims by way of one of its authorized retailers. According to Mario Valentino, e-commerce site FORWARD by Elyse Walker “is infringing [its] trademarks by advertising [Valentino’s] products as ‘VALENTINO BAGS’ [and] making no reference to the term ‘GARAVANI.’” (The court tossed out the contributory claims in April 2021, holding that Mario Valentino failed to show “constructive knowledge on behalf of Valentino” in connection with the contributory trademark infringement claim; “have not alleged any false advertising;” and did not “sufficiently allege [Valentino’s] ‘personal participation’ in the unfair practices identified.”)
The case is still very much underway, with the court setting deadlines this spring for expert discovery (October 6, 2023) and all motions (November 6).
Activity in Italy
Not limited to proceedings in the U.S., though, the matter is making its way through tribunals in Italy, including actions before the Court of Milan that center on Mario Valentino’s use of more than one of the “V”, “MV”, “Valentino”, or “Mario Valentino” marks on the outside of handbags, and Valentino’s use of “V” logos other than the specific “V” logo agreed upon in the co-existence agreement. In their seventh joint stats report last month, counsels for Valentino and Mario Valentino provided the U.S. District Court for the Central District of California with updates on the international proceedings. Those include …
Court of Milan actions – The Court of Appeal of Milan previously held that Mario Valentino is prohibited from using more than one of the aforementioned logos on the outside of handbags and Valentino is prohibited from using “V” logos other than its specific “V” logo, prompting both parties to appeal to the Court of Cassation (Italy’s highest court). The court rejected both parties’ pleadings in March 2023, and the matter was remanded back to the Court of Milan for a damages determination, which is slated for October 11, 2023.
Separately, on July 12, the Court of Milan sided with Valentino in the opposition proceedings it lodged in 2019 over Mario Valentino’s attempt to obtain payment of approximately €14 million in penalties for Valentino’s use of “Valentino” for advertising and online posts. According to Valentino, such advertising violated a 2017 interim order from the court that prohibited Mario Valentino from using more than one of the aforementioned marks and “Mario Valentino” on the outside of a handbag.
Arbitration proceedings – Valentino initiated an action in the Court of Milan to invalidate the final award – which is lodged under seal in connection with the U.S. case – that was granted by an Italian arbitration panel in proceedings over the co-existence agreement. A hearing is scheduled for March 2024, after which the parties say that they “anticipate final briefing will be completed within 80 days and the case will be submitted for decision.” A ruling from the court of Milan is expected “within the next 18 to 24 months.”
Court of Naples case – Finally, Mario Valentino filed a trademark infringement and unfair competition case against Valentino in the Court of Naples in July 2021, and that case is currently “in its evidentiary phase.” In its defense, Valentino has lodged a preliminary motion to declare Mario Valentino’s claims inadmissible due to an arbitration clause between the parties. The court reserved its decision on Valentino’s motion following a hearing in May, and a decision is expected in “the next few months.”
THE BIGGER PICTURE: The bi-national clashes between the two parties over how they can respectively use the “Valentino” brand name on leather goods makes for something of a messy trademark portfolio for Valentino, which has made a very-big-business out of – and derives sizable revenues from – its leather goods. (Valentino generated revenue of $1.56 billion in 2022.) Practically speaking, the limits imposed by the co-existence agreement impact how Valentino does business with regards to this all-important category of goods (to some degree, at least).
At the same time, the larger trademark scuffle and Valentino’s inability to neatly use the “Valentino” name across all of its product categories – and corresponding advertising efforts – without caveats could create an issue from a brand valuation standpoint. It is worth noting, of course, that the limits to Valentino’s trademark usage/rights clearly have not stood in the way of interest in the 64-year-old company. The recently-announced Kering partnership – and the Mayhoola and Permira acquisitions before that – are proof. And the Kering transaction is by no means a bad one; with Valentino’s EBITDA of €350 million for 2022, the corresponding €5.7 billion valuation puts the Kering deal roughly in line with the 16.6 multiple of the headline-making LVMH, Tiffany & Co. transaction.
It will, nonetheless, be interesting (and telling) to see how the web of trademarks cases between the two Valentinos is ultimately resolved and the extent to which such outcomes will impact the potential for – and the price of – a full-buy-out of the Valentino brand by Kering come 2028. While Valentino is the much-bigger entity in this fight, sources for TFL suggest (and the robustness of its efforts to date confirm) that Mario Valentino is in this fight for the long-haul.
The case is Valentino S.p.A. v. Mario Valentino S.p.A., et al., 2:19-cv-6306 (C.D.Cal.).
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