Valentino wants a handful of the claims that the similarly-named Mario Valentino filed against it tossed out of court. In a motion to dismiss that it filed late last month, Valentino alleges that Mario Valentino and its licensee March Capital (the “defendants”) have failed to plausibly allege the contributorily liability claims that they lodged against their bigger rival on the heels of Valentino filing suit in July 2019, accusing the Italian fashion brand of blatantly breaching the co-existence agreement that the two brands entered into in 1979 in an effort to avoid legal complications stemming from their nearly-identical names and similar offerings.
According to its December 23 motion to dismiss, Mayhoola for Investments-owned Valentino argues that in response to the lawsuit that it filed during the summer of 2019, Mario Valentino (“MV”) filed a number of claims of its own, arguing that Valentino has similarly run afoul of the law by engaging in contributory trademark infringement, contributory false association contributory false advertising, and contributory unfair competition.
At the heart of MV’s contributory liability counterclaims: the way that one of Valentino’s authorized retailers is allegedly marketing Valentino’s products, namely, the brand’s coveted handbags. According to Valentino’s motion, “MV alleges that it ‘recently discovered that at least one of Valentino’s authorized retailers” – the Revolve-affiliated e-commerce site FORWARD by Elyse Walker – “is infringing MV’s trademarks by advertising [Valentino’s] products as ‘VALENTINO BAGS’ but making no reference to the term ‘GARAVANI.’”
“In its counterclaims, MV has identified a single instance of a third-party retailer selling Valentino handbags in a manner that MV alleges infringes its trademarks,” Valentino asserts, and as a result, is attempting to “hold Valentino contributorily liable under the Lanham Act and California Unfair Competition Law for this one retailer’s conduct because Valentino allegedly ‘failed to adequately instruct all its authorized retailers to respect the MV trademarks.’”
Valentino argues that MV’s previously-asserted contributory liability counterclaims fail and should be dismissed because they are “devoid of any factual allegations that meet [the relevant] standard,” namely, that Valentino: (1) engaged in “‘affirmative acts’ … that encouraged a third-party to infringe the trademarks [at issue],” and (2) “knew of specific evidence of Forward’s purported infringement.”
In terms of the first prong, Valentino claims that MV “does not allege that Valentino engaged in any affirmative acts specifically encouraging Forward to infringe.” Specifically, MV “does not allege that Valentino had any involvement in creating Forward’s website or social media accounts,” or that “MV or anyone else notified Valentino of Forward’s alleged infringing activity.” Still yet, Valentino contends that “MV does not identify any example of any other authorized Valentino retailer engaging in allegedly infringing conduct.” Instead, MV alleges that Valentino “failed to adequately instruct all its authorized retailers to respect the MV trademarks.”
“This allegation amounts only to an alleged failure to act, which is insufficient as a matter of law,” according to Valentino. Because the Lanham Act “does not impose any duty to seek out and prevent violations;” it “‘narrowly circumscribed’ to [impact] defendants who undertake ‘affirmative acts’ to encourage infringement or who continue to supply products to a third-party after being notified or otherwise learning of the third-party’s infringement,” which is not what is going on here, according to Valentino. Given that MV “does not allege that Valentino engaged in any affirmative acts,” Valentino argues that its “counterclaims fail to state a claim for inducement.”
As for the second contributory infringement prong, Valentino, citing Inwood Labs., Inc. v. Ives Labs, claims that “manufacturers may be held liable if they continue to supply a product ‘to retailers whom they knew or had reason to know were engaging in infringing practices.’” MV similarly fails on this front, per Valentino, as “MV’s only attempt at factual allegations are that (1) Forward has allegedly publicly infringed MV’s trademarks on the Internet,” and (2) Valentino “failed to adequately instruct all its authorized retailers to respect the MV trademarks.”
“These allegations establish, at best, that Valentino could have done more to educate its retailers on how to avoid infringing conduct,” Valentino argues, and thus, they “fall far short of establishing that Valentino knew that Forward was infringing or that Valentino had information suggesting that Forward was infringing and willfully blinded itself to discovering such infringement.” Because MV does not plead “any facts plausibly suggesting Valentino knew of Forward’s alleged infringement, MV fails to state a claim for contributory trademark infringement.”
Addressing MV’s contributory false advertising counterclaim, Valentino contends that this claim fails, as well, for a number of reasons, including that “MV does not allege that Forward misled [consumers] about the nature, characteristics, qualities, or geographic origin of the goods.” More than that, Valentino also notes, “as a threshold matter,” that the Ninth Circuit “has never recognized a claim for contributory false advertising,” and thus, it is “doubtful the Ninth Circuit would approve of an extension of liability in this case.”
Finally, in terms of MV’s contributory unfair competition counterclaim, Valentino argues that this fails, as well, as California state law mandates that “a defendant’s liability must be based on his personal participation in the unlawful practices and unbridled control over the practices,” and in this case, “MV does not allege that Valentino directly participated in Forward’s alleged conduct, nor does MV allege Valentino had ‘unbridled control’ over its practices.”
With the foregoing in mind, Valentino – which characterizes itself as “one of the world’s most iconic and successful fashion houses,” with its “products sold by retailers in every corner of the globe,” and its handbag sales accounting for “over $700 million in revenue in the past five years, with over $100 million in the U.S. alone” – says that the court should grant its motion to dismiss MV’s contributory liability counterclaims in their entirety.
The case got its start in July 2019 when Valentino filed suit against MV, alleging that its older-but-smaller rival was breaching their 41-year old co-existence agreement, which, Valentino says (in its recently-filed motion to dismiss) “prohibits MV from referring to itself as ‘Valentino,’” and instead, “must instead refer to itself as ‘MV’ or ‘Mario Valentino,’” while Valentino has “‘the right to use the name Valentino by itself, unless expressly prohibited by the Coexistence Agreement.” The expressly prohibited part – which is hardly insignificant given the nature of Valentino’s business – prohibits Valentino from using just the “Valentino” name on handbags, and requires the brand to use either the word “Garavani” or “Couture” along with the “Valentino” name.
UPDATED (April 9, 2021): In a multi-pronged order, Judge John Kronstadt sided with Valentino in part, granting its Motion to Dismiss Yarch and Mario Valentino’s Contributory trademark infringement, false advertising, and unfair competition claims on the basis that the defendants failed to show “constructive knowledge on behalf of Valentino” in connection with the contributory trademark infringement claim; “have not alleged any false advertising, but only false association;” and did not “sufficiently allege [Valentino’s] ‘personal participation’ in the unfair practices identified.” Not a total loss for the defendants, the court granted them leave to amend the claims.
Another win for the defendants, the court refused to strike the unclean hands defense (one of the 25 affirmative defenses set out by the defendants), in which they argue that Valentino breached the co-existence agreement, namely by way of advertisements run by Valentino that “do not include, or include in substantially reduced size, the term ‘GARAVANI.'”
*The case is Valentino S.p.A., v. Mario Valentino S.p.A.; Yarch Capital, LLC, 2:19-cv-6306 (C.D.Cal.).