Abstract
A registered trademark is much more than just a logo: it is reputation, identity, and market differentiation. It represents the commercial origin of a product or service and decisively contributes to building a company’s value.
For this reason, its use cannot be arbitrary. Even when there is a contractual relationship — such as a license or a franchise agreement — the use of the trademark must comply with specific limits. Exceeding them, even unintentionally, can have significant consequences: among them, contract termination for breach and, in more serious cases, an obligation to pay damages.
This article will examine when a violation occurs, the legal consequences, and what contractual measures can help prevent future problems.
The registered trademark and its contractual relevance
Registering a trademark with the Italian Patent and Trademark Office (UIBM) or at the European Union Intellectual Property Office (EUIPO) grants the owner an exclusive right, protected by the Italian Industrial Property Code (Legislative Decree 30/2005, particularly Articles 7 and 20). This means that any use that does not comply with the terms of the contract may constitute a violation of the exclusive right, with potentially very serious consequences.
Unauthorized use of a registered trademark occurs whenever a party employs the distinctive sign in a manner that differs from the agreed contractual terms, or without valid legal grounds. This is not limited to clear cases of counterfeiting by unrelated third parties, but also includes more subtle situations. For example, a licensee may continue to use the trademark after the agreement has expired, or a franchisee may use the sign on promotional materials or product lines not covered by the contract, thus undermining the uniformity of the corporate image.
Other common forms of unlawful use include:
- unauthorized territorial expansion (e.g., promoting or selling in countries not covered by the license);
- graphic or stylistic modifications to the trademark that may alter — sometimes irreparably — its perception;
- associating the trademark with low-quality products or services, contrary to contractual quality standards;
- using the trademark in contexts that damage its reputation, even indirectly.
It is important to note that abuse can occur in good faith: for instance, a former business partner may mistakenly believe they can continue using the sign after the contract ends. However, the subjective intention is irrelevant to determining a violation: what matters is the objective deviation from the authorized terms of use.
In any case, unlawful use infringes upon the owner’s exclusive right, who not only has the power but, in some contexts, also the obligation to control how their trademark is used to maintain its consistency and value. Even partial or limited misuse can undermine the trademark’s distinctive function, create consumer confusion, and damage the reputation built over time.
When does a violation occur?
When a registered trademark is used unlawfully, even by merely exceeding the agreed contractual limits, the trademark owner can treat such conduct as a serious breach, justifying termination of the contract under Article 1453 of the Italian Civil Code. Termination for breach applies when one party fails to fulfill obligations in a way that undermines trust in the contractual relationship and makes the continuation of the contract impossible or pointless.
In contracts governing the use of a trademark — such as licenses or franchise agreements — it is common to include express termination clauses clearly stating that unauthorized use of the trademark is an immediate ground for termination. These clauses are lawful and fully enforceable, provided they are drafted with sufficient specificity. Even in the absence of explicit clauses, a violation of the exclusive right can be considered a “material” breach by nature, as it directly affects the core of the agreement: the management and control of the owner’s commercial identity.
Beyond termination, unauthorized trademark use may lead to an obligation to pay damages, which can include direct economic losses as well as harm to the brand’s image and reputation. In certain circumstances, the owner may also seek urgent remedies such as injunctions to stop the use or seizure of goods bearing the unlawfully used trademark.
In summary, contract termination under Italian law has concrete consequences and represents a powerful remedy for trademark owners to quickly end relationships that no longer align with their economic and strategic interests.
Legal and operational consequences of unlawful use
Unauthorized use of a registered trademark, in addition to justifying contract termination, can trigger a series of operational, economic, and reputational consequences, often underestimated by those committing the violation. First, the breaching party may immediately lose the right to use the trademark, directly affecting their business continuity. In franchise contracts, this often means having to cease operations, remove signage, redesign the brand, and replace packaging and marketing materials.
From an economic perspective, the company harmed by the unlawful use may claim damages for brand value loss, unfair competition, or market confusion. Damages can be assessed based on lost profits, reputational harm, or the cost of restoring corporate identity. In more serious cases, urgent measures such as immediate injunctions or even the seizure of counterfeit goods may be sought.
Finally, there is a less obvious but very real damage: the loss of control over the distinctive sign. Every registered trademark derives its value from consistency and recognizability; when third parties misuse it, even briefly, the trademark’s image and distinctive power are weakened. This is why trademark owners tend to act decisively, even against former partners or licensees.
Preventing violations: the role of contractual clauses
To avoid disputes over improper trademark use, it is essential to draft clear, detailed, and forward-looking contracts. Companies granting trademark rights should include specific clauses that precisely define the scope of the granted rights: time limits, authorized territories, product categories, quality standards, and permitted distribution channels. Clarity on these points greatly reduces the risk of abuse or ambiguous interpretations.
It is equally important to include express termination clauses, making it clear from the outset that certain behaviors—such as using the trademark outside the agreed scope, after contract expiration, or in association with unapproved products—will result in automatic termination of the agreement. Well-drafted clauses strengthen the trademark owner’s contractual position and simplify dispute management.
Clauses allowing for monitoring and control are also important, enabling the owner to periodically verify proper trademark use by the other party, through audits or reporting obligations. Finally, in the event of contract termination, it is advisable to regulate the return of any materials supplied by the licensor and the cessation of trademark use, thus avoiding dangerous “lingering effects.”
Protecting a trademark therefore requires not only registration and potential legal action but, above all, a solid preventive contractual strategy. A well-drafted contract is often the best tool to avoid disputes and preserve the value of a trademark.
© Canella Camaiora S.t.A. S.r.l. - All rights reserved.
Publication date: 14 August 2025
Textual reproduction of the article is permitted, even for commercial purposes, within the limit of 15% of its entirety, provided that the source is clearly indicated. In the case of online reproduction, a link to the original article must be included. Unauthorised reproduction or paraphrasing without indication of source will be prosecuted.
Margherita Manca
Avvocato presso lo Studio Legale Canella Camaiora, iscritta all’Ordine degli Avvocati di Milano, si occupa di diritto industriale.