Kiko Milano's new store concept.

MILAN — Italian beauty company Kiko Milano has secured another victory in court as part of legal battle with its prime competitor Wycon Cosmetics to defend the concept of its stores.

With a sentence filed on March 26, the Milan Court of Appeal validated a previous verdict at a lower court in the city, dating back to 2015, which prohibited Wycon Cosmetics from using any store decor element characteristic of Kiko Milano’s stores. At the time, Wycon Cosmetics was ordered to pay compensation of 716,250 euros, in addition to changing the interior concept of its points of sale. Wycon Cosmetics then took the case to the Court of Appeal. Now the latter is ordering Wycon Cosmetics to change the concept of its Italian stores within 150 days from the notification of the executive verdict, with the additional payment of 10,000 euros for each store that is not restyled by the due date.

The appeals court reiterated that the interior design of Kiko Milano’s shops has an original and creative character, which deserves protection by copyright law. It called Wycon’s concept “a slavish imitation” of the commercial and promotional activities of Kiko Milano and defining this “parasitic competition.”

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A Kiko Milano store.

A Kiko Milano store.  Courtesy Photo

Reached for comment on Tuesday, Wycon Cosmetics released a statement affirming that the company disagrees with the verdict and will move the suit forward by appealing to Italy’s highest Court, the Corte di Cassazione, the country’s equivalent of the U.S. Supreme Court.

“Wycon believes that Kiko’s queries are unfounded, as other legal procedures confirmed both in Italy and abroad,” the company said.

“In particular, in an urgent procedure, the court of Lisbon affirmed with a sentence filed on March 31, 2017 that the setting of Wycon’s stores is different from Kiko’s shops in many aspects and the common elements are generally used by other players of the industry, too. So the court of Lisbon affirmed Kiko’s store concept is not original and can’t be protected.” This verdict was confirmed by Lisbon’s Court of Appeal.

The statement mentioned a similar case with the court of Liege, Belgium, underscoring that these sentences “are in line with the prior precautionary warrants of the courts of Milan and Rome in 2010 and 2012, respectively.”

A Wycon store.

A Wycon store.  Courtesy Photo

As reported, both companies are facing a transition. Kiko Milano reportedly hired Rothschild as adviser to find a minority shareholder and Apollo, Carlyle and Peninsula are said to be among the main funds interested in taking a stake.

The Italian beauty retailer is looking for a capital increase of about 100 million euros to reschedule its debt with creditor banks, reported to be 200 million euros. In the U.S., Kiko is shutting nearly all of its 29 bricks-and-mortar units and closing its New York headquarters, after its American subsidiary filed for bankruptcy in January.

Founded in 1997 by entrepreneurs Stefano and Antonio Percassi, Kiko’s revenue for 2017 was 610 million euros, up 3 percent on the previous year. The brand operates more than 1,000 doors in 21 countries, including its largest flagship in Milan and an e-commerce platform spanning 35 countries.

Last month, Wycon Cosmetics confirmed it has hired Ethica Corporate Finance as adviser to sell a minority stake. At the time the company said the move has “the goal to accelerate the brand’s international development.”

Founded in 2009 by Raffaella Pagano and Gianfranco Satta, Wycon Cosmetics registered revenues of 60 million euros in 2016 (the most recent year for which numbers were released by the company), up 88 percent compared to 2015. It operates 181 stores in Italy and 44 abroad, and its products are carried in 32 countries across Europe, Asia and the Middle East.

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