Attribution of Liability in Trademark Infringement

On May 16, 2024, Division II of the Federal Civil and Commercial Court of Appeals, in the case "ID Argentina S.A. v. Flingday S.A. y otros s/ Cese de uso de marcas. Daños y perjuicios" partially upheld the complaint filed by ID Argentina SA against Flingday SA, Luinne Corporation SA, Stensor SA, and Mr. Miguel Angel Fosati. The complaint sought to obtain the cease of use of the trademark "JOHN FOOS JF" (with the circle-star design, below), the cease of the manufacturing and commercialization of the products with this sign, the compensation for damages, and the publication of the ruling, with legal fees imposed on the defendants:

                                    “JOHN FOOS JF (with circle-star design)”

In the complaint, the plaintiff stated it was a licensee of Converse Inc. to manufacture and commercialize footwear and clothing under the trademarks "Converse," "All Star," and "star design." ID Argentina SA also held that Converse is a notorious trademark and emphasized that the infringement had been demonstrated in the injunction issued in case docket No. 8020/2009, where sneakers with the John Foos logo above were seized for infringing the following Converse Inc. trademark, among others:

                                       “Converse Chuck Taylor All Star (& design)”

Regarding the role of each co-defendant in the claim, the plaintiff stated that Flingday SA was the one commercializing and profiting with the apocryphal trademark; Stensor SA manufactured the infringing products, and Luinne Corporation SA owns the John Foos trademark in Argentina and is Flingday's licensor. Regarding Mr. Fosati, the plaintiff stated that he is the true owner of all the co-defendants as a shell partner and that the declaration of unenforceability of the legal personality applied.

On October 18, 2023, the first instance court rejected the complaint ID Argentina SA filed against Stensor SA, Luinne Corporation SA, and Miguel Angel Fosati for lack of standing to sue, and imposed the fees on the plaintiff. The court did admit the action against Flingday SA, sentencing the company to cease the use of the trademark "JOHN FOOS JF" (with a star-circle design), to stop commercializing the product with the sign, and to pay ARS 19,680,000 plus the interests accrued since the notification of the complaint until its actual payment.

ID Argentina SA and Flingday SA appealed. ID Argentina SA argued that all the co-defendants were liable for the infringement since their respective conducts were actions typified in article 31 of the Trademark Law 22362. Flingday SA, on the other hand, challenged the plaintiff’s legitimate interest to claim damages and questioned the decision that the plaintiff could be the holder of the substantial legal relationship, arguing that ID Argentina SA is not the holder of the right to the allegedly infringed trademark.

The Court of Appeals analyzed the models of John Foos sneakers and determined that the signs in conflict were confusingly similar and that there was an infringement of the plaintiff's trademark rights. The Court also reviewed the liability of each of the co-defendants and determined that all the companies were liable for the infringement, since they all benefited from the sales of the infringing products. Regarding Mr. Fosati, the Court confirmed the first instance ruling and decided that the plaintiff did not provide sufficient evidence to prove that he owned the companies and that the grounds of unenforceability of the legal personality in article 54 of the General Corporations Law 19550 were not met.

Consequently, the Court of Appeals decided to:

1. dismiss the appeal Flingday SA filed and uphold the decision of the first instance court,
2. partially admit the appeal ID Argentina SA filed, consequently overturn the appealed decision, and admit the complaint filed against Luinne Corporation SA and Stensor SA,
3. confirm the rejection of the claim against Mr. Miguel Angel Fosati.