Italian police seize £40m Bvlgari assets

Italian police have seized €46m worth of Bvlgari assets, including the jeweller’s flagship Roman store, in a tax evasion probe.

Police said their investigations focused on Paolo and Nicola Bvlgari, grandsons of the founder of the jeweller,

Italian Police seized assets worth €46m (£40m) from the upmarket jeweller Bvlgari today in a tax evasion inquiry.

The investigation centres on Paolo and Nicola Bvlgari, sons of the founder of the brand, and Francesco Trapani, the brothers’ nephew and chief executive of the group, as well as their lawyer Maurizio Valentini.

The men are accused of making “fraudulent declarations” in relation to €3bn worth of revenues.

Nicola Bulgari

The police allege the four men made “fraudulent declarations” related to €3bn worth of revenues from 2006 to 2011, before LVMH bought Bvlgari for €3.7bn. The focus of their investigations is the use of holding companies in the Netherlands and Ireland through which the group funnelled revenues, according to the police. No arrests have been made.

A statement from the Bvlgari holding company said it was “extremely surprised” by the allegations. “Bvlgari will take all the necessary steps to clarify its position,” it added.

“The investigations have brought to light a true ‘escape strategy’ to avoid Italian taxes and in particular tougher rules that were introduced from January 1 2006 related to the taxation of dividends,” the police said in a statement.

Bulgari is not the first luxury goods group to come into the sights of the Italian tax police.
Italian police in November confiscated €65m of assets, including a 15th century castle, from the Marzotto family and its business associates over suspected tax evasion connected to the 2007 sale of the Valentino luxury brand.

The Bvlgari family members sold their controlling stake in the Roman house to LVMH in March 2011 in an all-share deal.

LVMH’s offer put about a 60 per cent premium on the company making the deal, which was 10 years in the making, one of the sector’s most expensive.

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Guess Wins Trademark Suit in Italy

GUESS Inc. reigned victorious in its second trademark faceoff against luxury giants Gucci in Italy.

An Italian court in Milan rejected Guccio Gucci SpA’s claim that Guess had violated several of its trademarks and even took the step of canceling three of the marks Gucci had registered for Italy and the European Community. Gucci said it will “certainly bring an appeal.”

It’s a win for Guess, after Gucci prevailed last May (see Delortae Agency Report as early as last April) in federal court in Manhattan on a suit raising ostensibly the same issues. Gucci won a qualified victory, when the court awarded it only $4.7 million in damages, a fraction of the more than $221 million it sought.

The Milan decision, an 83-page verdict made public Friday, serves to cancel the diamond pattern, G logo and “Flora” pattern trademarks previously registered by Gucci in Italy and the EU, noting specifically that the “Flora” logo is “not distinct.” Additionally, the court held that Guess’s Quattro G-diamond pattern isn’t related to Gucci’s interlocking double-G pattern.

Guess sought the nullification of the designs in a counter claim following the 2009 filing of the suits in New York and Milan by Gucci.

Gucci bottom and Guess above

A Guess spokeswoman confirmed that Gucci’s other suits against Guess in both China and France are ongoing.

Paul Marciano, chief executive officer of Guess, commented, “In my opinion, the three-year battle in New York and four years in Milan was a result of massive and unnecessary litigation that should have been easily resolved with a simple phone call, which Gucci never made.”

Marciano continued, “The tactics of Gucci are nothing less than bullying. Because of their endless resources, Gucci has been forum shopping all over the world to try and stop Guess from expanding its successful accessories business. It’s fundamentally wrong and unconscionable.”

Gucci described the use of a number of G-based logos by Guess as “unlawful and parasitic free-riding on Gucci’s trademark and, in general, its brand image.”

Gucci said it would “certainly bring an appeal against the above decision, which in its view is potentially dangerous for the protection of ‘Made in Italy.’ In particular, Gucci will ask that the Court of Appeals entirely set aside said decision, by granting both its trademark infringement and unfair competition claims against Guess.”

Pier Luigi Roncaglia, of the Italian law firm Studio Legale SIB, which provided outside counsel for Gucci, said that the trademark matter was secondary in the decision and that the marks were generally not being used by the brand.

“The important aspect of the decision was unfair competition,” he told WWD. “Our main argument, and the one that was recognized in the case in New York, was that those marks were associated with the reputation of Gucci and that Guess was trying to get a free ride based on Gucci’s reputation. That was the core of the litigation and the judge [in Milan] ignored the decision in the U.S., which essentially said that Guess didn’t independently create those designs. That will be the basis for our appeal and the strongest argument for a reversal of the decision.”

Daniel Petrocelli of the law firm O’Melveny & Myers LLP, which has provided outside counsel for Guess for many years, asserted, “This case was heard in the birthplace of Gucci and the bottom line is that every single one of its claims was rejected and Guess’ counterclaim was granted.”

He said that Gucci and Guess were still waiting for the scheduling of cases in China and France.

A trademark attorney not involved in the case, Robert Tucker, a partner at Tucker & Latifi LLP in New York, said, “That a court in New York and another in Milan came down with different findings on the same issue is not unusual. Gucci was probably buoyed by the decision in New York and figured it had a slam-dunk in Italy, where it would enjoy hometown advantage.

“These two companies shouldn’t be litigating,” he said. “Any time it’s one titan versus another, it’s really important to look at the downside.”

With words like  “unlawful and parasitic free-riding on Gucci’s trademark and, in general, its brand image.” being banded about, this is sure to be a case that will continue and we will certainly follow every word!

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