Ermenegildo Zegna Corp. v. Lanificio Mario Zegna S.P.A.

Ermenegildo Zegna Corp. (EZC) (plaintiff) was a New York corporation that sold men’s luxury clothing in the United States and Canada. EZC owned several trademarks that included the name Zegna. Lanificio Mario Zegna, S.p.A. (LMZ) (defendant) was an Italian wool business. LMZ and EZC were part of the same family, which initially had operated a single textile company and later split into different businesses, resulting in EZC and LMZ entering into an agreement in 1949 concerning the use of the Zegna name so that the potential for disputes would be minimized. After many years, EZC sued LMZ in federal district court for trademark infringement. EZC and LMZ settled the dispute, and the district court issued an order containing the settlement terms, which included specific guidelines for the proper use of the Zegna name. The settlement order included an arbitration clause and a no-contest clause. The arbitration clause stated that “any” dispute between the parties regarding the interpretation of the agreement or the rights, duties, and obligations arising under the agreement should be arbitrated. The no-contest clause stated that the parties would not contest the order’s validity or seek to set it aside, and that if a provision of the order was found invalid, it did not render any other provisions invalid. Changes in Italian trademark law prompted LMZ to initiate Italian arbitration proceedings to modify the order on fairness grounds. EZC sued LMZ in federal district court for enforcement of the order, and LMZ moved for a stay of proceedings and compelled arbitration.