The relevance of profit for the qualification of an act of communication to the public according to the Italian Court of Frosinone

The decision of the Court of Frosinone, published on February 2017 (available here), relies on a criminal investigation carried out by the Italian Tax Police earlier in 2014 against several websites that shared protected contents without the authorization of the right holders. Among these websites, there was also filmakerz.org.

The users of filmakerz.org were allowed to access without right holders’ consent a large number of movies and TV series through hyperlinks posted on the website. However, before being able to check the list of links that redirected to other websites, users were forced to see advertising banners.

The Italian Tax Police initially requested the Review Court of Rome, competent to rule on precautionary measures, to grant the preventive seizure of the website to exclude any further access to the infringing material. Other than expected, the Court rejected the request considering that the information insofar collected by the Tax Police was insufficient to prove the capacity of the advertising banners to produce profit in favor of the website’s holder, considering the profit purpose crucial to grant any precautionary measure against filmakerz.org.

Following further investigations, the Tax Police found out that after the first instance request, the websites filmakerz.org and the affiliated websites filmakerz.me and filmkerz.biz, automatically redirected to the website cineteka.org. According to the Tax Police, it was highly reasonable that all the domains were managed by the same person (filmakerz.org‘s holder), who set the redirection to bypass any possible block applied against filmakerz.org and the other affiliated websites.

The evidence presented before the Prefecture of Frosinone in the administrative proceedings was instead considered sufficient by the Judge to issue a fine of Euros 546,528.69 according to Article 171-ter, para. 2, letter a-bis of the Italian Copyright Act (which punishes everyone who “In violation of art. 16 of the Copyright Act, for profit, communicates to the public a copyright-protected work or part of it, by entering it into a system of telematic networks, by means of connections of any kind”).

The infringer appealed the administrative sanction before the Court of Frosinone which overruled the Prefecture’s decision. According to the Court the Italian Copyright Act requires the unauthorized communication to the public to be performed for profit, namely the intention to gain a consistent economic advantage or patrimonial increase from the infringer’s illegal conduct. It follows that the hyperlinker cannot be sanctioned for the sole act of linking to unauthorized protected material, but it is necessary that this leads to a considerable economic benefit.

In the case at stake, the evidence collected was deemed not sufficient to prove that the creator of filmakerz.org, filmakerz.me, filmkerz.biz and cineteka.org was obtaining any significant profit from his/her activity.

The Court of Frosinone has been one of the first in Italy to deal with the linking issue after the CJEU recent cases (particularly Svensson, GS Media and more recently the Pirate Bay case).

The meaning of “profit” – and the possibility to detect the existence of such purpose – assumes in the case at stake a prominent relevance. The same factor has been considered also in the CJEU case law, leading to different conclusions.

In the GS Media case (available here), the CJEU did not clarify what should be intended as “lucrative purpose”, though the Court specified that the presence of the profit intention is relevant to determine whether the conduct of the hyperlinker amounts to an “act of communication to the public”. In fact, in case hyperlinking is made for profit it must be assumed that it has been made following previous controls, from which the hyperlinker should have verified that the work in question is not unlawfully published on the site to which those hyperlinks refer. Even though no lucrative purpose is detected, hyperlinking can still be considered an “act of communication to the public” if the hyperlinker is aware – or should have been reasonably aware – of the fact that said work had been published on the Internet without authorization. In the GS Media case the CJEU asserted that a profit purpose existed. But the absence of lucrative purpose would not have directly led to the exclusion of the hyperlinker’s liability: it would have just implied the need for further evidence (based on the awareness criterion).

In the Pirate Bay case (available here) the EU Court stated: “there can be no dispute that the making available and management of an online sharing platform, such as that at issue in the main proceedings, is carried out with the purpose of obtaining profit therefrom, it being clear from the observations submitted to the Court that that platform generates considerable advertising revenues”. In this case, the presence of the profit intention is strictly connected to the fact that the hyperlinker was obtaining “considerable advertising revenues” from its activity, in a way which highly resembles the case held before the Court of Frosinone. Indirect income, such as the one obtained from the advertising banners, might be qualified as source of profit in the way intended by the CJEU in the Pirate Bay case. Moving from this decision, the Court of Frosinone might have qualified the profit incoming from the advertising banners, placed on the websites under investigation, as sufficient to consider fulfilled the requirement prescribed by Article 171-ter of the Italian Copyright Act.

The other way around, the Italian Court seems to have considered that the investigation did not provided enough evidence to prove that the infringer gained an economic benefit from his/her conduct. Without clarifying if, in the Court’s view, this circumstance relied on the impossibility to qualify the advertising banners as a source of profit or, conversely, on the inability to prove that the economic advantage gained was “considerable” (that is the term used by the Court). Such consideration would require assessing when the economic benefit can be deemed “considerable” within the scope of the Italian Copyright Law, in contrast with Article 171-ter which refers only to the profit intention itself regardless any quantification.

The above considerations remain however unanswered since the decision does not share any in depth reasoning about the grounds on which the Court ruled, probably without taking into consideration to the CJEU caselaw.

Miriam Loro Piana

Court of Frosinone, docket No. 1766/2015, 7 February 2017, Unknown vs Prefecture of Frosinone (Judge Gemma Carlomusto)

 

The EU General Court dismissed an action to invalidate a Registered Community Design held by Nike for electronic wristbands.

In 2012, Nike registered successfully a Community Design for an electronic wristband. One year later, Mr. Murphy filed for a declaration of invalidity of Nike’s design on the basis of a prior registered design for “Flexible LCD watch bands”.

murplhy design.jpgwristband.jpg

Mr. Murphy argued that Nike design infringed Article 6(1)(b) of the Community Designs Regulation, submitting that it lacked individual character as the overall impression on the informed user did not differ from that produced by Murphy’s prior design.

Neither the Invalidity Division of the EU Intellectual Property Office (EUIPO) nor the EUIPO Board of Appeal agreed with Mr. Murphy.

The case came before the EU General Court upon Mr. Murphy’s appeal of the Board of Appeal decision.

The General Court rejected Murphy’s application for a declaration of invalidity of the Nike design on the following grounds (here).

Firstly, it considered that, in order for a wristband to be able to fulfil its function properly, its designers would be limited by several constraints, as the need to be relatively small, thin, light, ergonomic in order to fit the wrist and to contain measuring instruments. These technical constraints led to conclude that the degree of freedom of the designer was high rather than very high, as argued by Mr. Murphy.

The degree of freedom must be taken into consideration in assessing individual character pursuant to Article 6(2) of the Designs Regulation, because the more the freedom of the designer in developing a design is restricted, the more likely it is that minor differences between the designs being compared will be sufficient to produce a different overall impression on an informed user. (see judgment of 10 September 2015, Handbags, T‑525/13, EU:T:2015:617, paragraph 29 and the case-law cited).

In any case, even taking account of a high degree of freedom afforded to the designer of electronic wristbands, the Court reiterated the position from earlier case law that the overall impression produced by the Nike design on the informed user was clearly different to that produced by Murphy’s design.

Indeed there were a number of differences between the two designs, namely that (i) the Nike design was larger and thicker than Murphy’s design, (ii) Nike’s design featured a large oval button on the surface of the wristband which was not present in Murphy’s design, (iii) the internal components of the Nike design were visible, giving it a more technical aspect than Murphy’s design, which appeared as opaque and elegant, and (iv) the Nike design had less ornamentation than Murphy’s design, on which the image of a diver and a line running along the wristband were clearly visible.

On the contrary, the clasps’ similarity in both designs alone was not sufficient to make them similar as a whole. Indeed, the overall impression must be determined in light of the manner in which the product is used and when using an electronic wristband, the informed user attaches more importance to the part displaying the data than to the clasp.

The General Court disregarded Murphy’s argument, based on UK case law, that his prior design enjoyed a higher degree of protection because it was a significant advance over the prior art in existence at the time of its registration in 2005. The Court has pointed out that it was not bound to consider decisions of national courts, even where the latter are based on provisions analogous to those of that regulation (see judgment of 29 October 2015, Éditions Quo Vadis v OHIM — Gómez Hernández (‘QUO VADIS’), T‑517/13, not published, EU:T:2015:816, paragraph 46 and the case-law cited). In addition, the new and unusual character of Murphy’s design did not prevent the informed user from perceiving the differences in subsequent designs (see, to that effect, judgment of 21 May 2015, Senz Technologies v OHIM — Impliva (Umbrellas), T‑22/13 and T‑23/13, EU:T:2015:310, paragraph 95).

Appeal has already been brought before the European Court of Justice (ECJ) (C-538/17 P). It does not seem unreasonable to predict the confirmation of the here mentioned decision. Indeed, the General Court seems to have applied the long standing principles formulated by the ECJ in relation to the assessment of the individual character and its judgment appears to be a matter of fact, that hardly may be challenged by the higher court.

Jacopo Ciani

General Court (Fifth Chamber), 4 July 2017, Thomas Murphy v European Union Intellectual Property Office, Case T-90/16

Early thoughts on behavioral advertising and the GDPR: a matter of discrimination?

How is behavioral advertising affected by the new EU General data protection regulation (GDPR)? This is probably one of the trickiest part of the new piece of legislation.

In its 2010 opinion (here), the group of EU data protection authorities (WP29) defined -online- behavioral advertising as “the tracking of users when they surf the Internet and the building of profiles over time, which are later used to provide them with advertising matching their interests”. The advertising matching is the result of an automated processing of personal data and is traditionally included in the concept of “profiling”.

When does personalized advertising entails profiling?

The threshold of profiling in perzonalized advertising is not always straightforward. The WP29 opinion distinguished among:

  1. Contextual advertising: advertising content selected based on the content currently being viewed by a user. E.g., for a search engine, the content derived from (i) the search keywords or (ii) the user’s IP address if connected to geographical location. It does not entail profiling.
  2. Segmented advertising: advertising content selected based on known characteristics of the data subject (age, sex, location, etc.), which the data subject has provided at the sign up or registration stage. It does not entail profiling.
  3. Behavioral advertising: advertising content selected based on user’s interests derived or inferred from his behavior. It entails profiling. In a recent decision (here), the Italian Garante stated that behavioral advertising entails profiling when the segmentation of the public is based both on generic data (sex, age, location) and the purchase history, as displaying different advertisement based on this data causes a diversification in the treatment of customers. This can be therefore an example of minimum level of profiling in personalized advertising.

Behavioral advertising and profiling under the Data Protection Directive

The Data Protection Directive (95/46/EC) did not specifically regulate the concept of profiling, though it already posed attention to automated data processing (which could include profiling). Article 15 was stressing that each individual should have the right not to be subject to decisions solely based on automated processing of data if they might (i) produce legal effects or (ii) significantly affect him. It left rooms for Member States to allow exceptions only in case this automated processing is (i) necessary for the performance of an agreement or (ii) authorized under national law. But behavioral advertising has not been generally included under the scope of this provision.

…and the GDPR

In the GDPR, profiling takes center stage as one of the main type of automated processing. The GDPR introduces a legal definition of profiling (Art. 4.4), that is based on the automated evaluation of individuals’ aspects to analyze or predict his/her situation, preferences, interests, reliability, behavior, location or movement. And adds right to explanation for individuals (Art. 13.2.f) and to require human intervention (art. 22.3).

Art. 22 GDPR also updates Art. 15 of Data Protection Directive, by adding “profiling” among the processing operations entailing automated decisions one has the right not to be subject to, i.e. when it might (i) produce legal effects or (ii) similarly significantly affect individuals. And introduces consent as a new legal ground for this automated processing. However, given the high risk entailed, it requires an “explicit” consent. Other legal grounds, e.g., legitimate interest, cannot be invoked. This profiling/automated processing is thus compared to special (risky) categories of personal data regulated by Art. 9 GDPR, for which “explicit” consent shall be sought.

What type of profiling entails a significant effect? Is this applicable to behavioral advertising?

Some guidance can be taken from the regime of the Data Protection Impact Assessment (“DPIA”) required for processing activities resulting in high risk. Indeed, Art. 35 GDPR states that a DPIA is in particular required in case of “systematic and extensive evaluation of personal aspects relating to natural persons which is based on automated processing, including profiling, and on which decisions are based that produce legal effects concerning the natural person or similarly significantly affect the natural person”. This provision basically recalls Art. 22 GDPR.

big bother eye.png

The WP29 guidelines on DPIA (here) mention as an example of profiling that does not significant affect individuals (meaning, not resulting in high risk): “An e-commerce website displaying adverts for vintage car parts involving limited profiling based on past purchases behaviour on certain parts of its website”. Probably not the most illuminating example, but in sum: profiling not systematic nor extensive. The guidelines then list the elements entailing a high risk:

  1. the use of a new technology;
  2. the time factor, i.e., the duration of the processing. For instance, in line with this, the Italian DPA (“Garante”) –in a landmark 2005 decision about loyalty programs– identified a maximum retention period for customer profiling data and their use for marketing of respectively 1 and 2 years (here). Retaining profiling data for longer periods entails a high risk and requires the Garante’s prior check –once the GDPR applies a DPIA would be required instead–;
  3. the large scale of data processed;
  4. matching or combining datasets.

An example of processing raising an high risk is: “The gathering of public social media profiles data to be used by private companies generating profiles for contact directories”. The use of social capturing tools to profile and match customer data on a large scale can be thus relevant.

“Strong” v “soft” profiling and the risk of discrimination in behavioral advertising

Based on this, one may apparently distinguish between a sort of “strong” and “soft” profiling, subject to different regimes. But the guidelines continue stating that a risk occurs also when processing may lead to discrimination against individuals.

This point is quite obscure, particularly if applied to behavioral advertising. Many say that behavioral advertising cannot have significant effects on individuals (see here and here). However, it is worthy noting that the UK DPA (“ICO”), in its public consultation about profiling (here – yet still provisional), warned about potential risks for individual fundamental rights connected even to behavioral advertising:

Profiling technologies are regularly used in marketing. Many organisations believe that advertising does not generally have a significant adverse effect on people. This might not be the case if, for example, the use of profiling in connection with marketing activities leads to unfair discrimination. One study conducted by the Ohio State University revealed that behaviourally targeted adverts can have psychological consequences and affect individuals’ self-perception. This can make these adverts more effective than ones relying on traditional demographic or psychographic targeting. For example, if individuals believe that they receive advertising as a result of their online behaviour, an advert for diet products and gym membership might spur them on to join an exercise class and improve their fitness levels. Conversely it may make them feel that they are unhealthy or need to lose weight. This could potentially lead to feelings of low self-esteem”.

One may argue that any kind of customer segmentation and profiling –resulting in different contents showed to individual– entails discrimination. It is probably too extreme. Profiling entails diversification in the treatment of individuals. It is for sure an act of processing (as it has an effect on individuals) though does not necessarily discriminate. But this risk shall not be underestimated: based on the opinions above, it appears that attention should be given to the possible effects (price discrimination, psychological effects, etc.) the envisaged targeted marketing campaigns can cause, considering the type products advertised, the way they are advertised, the type of segmentation and matching of interests, the scale, etc. Intrusive effects of profiling shall thus being considered. Not an easy exercise, but as profiling techniques are dramatically increasing their capacity of analyzing individual intimate aspects (e.g., AI advances are used to spot signs of sexuality, see here) authorities are calling for broader protection of individual fundamental rights.

What are the practical consequences?

“Risky” (or “strong”) profiling is subject to stricter formalities, requires a DPIA and explicit consent. This apply to behavioral advertising as well.

There is no definition of “explicit” in the GDPR. The WP29 (here) defined it as:  “all situations where individuals are presented with a proposal to agree or disagree to a particular use … and they respond actively … orally or in writing […] by engaging in an affirmative action to express their desire to accept a form of data processing. In the on-line environment explicit consent may be given […] through clickable buttons depending on the context, sending confirmatory emails, clicking on icons, etc.” An active choice shall be thus required.

What about behavioral advertising based on tracking cookies?

An explicit consent would require an opt-in for the use of tracking cookies. In the past, EU DPAs have exempted tracking cookies from explicit consents (see for instance the Italian Garante and the ICO decisions, here and here). Similarly, Recital 32 GDPR lists as a form of “express” consent (though not “explicit”) the setting of the browser. This seems evidently addressing the use of cookies. Some further guidance on the consent through the set up of browsers will be surely given under the e-Privacy Regulation. The current draft (here), at Art. 4a (former art. 9) and Recitals 20-22, provides further details on how browser settings will be presumably confirmed as a form of consent (though they are abandoning “cookie banner/cookie walls” solution endorsing advanced browsers settings “privacy by design” instead). But, based on the above, this kind of consent would be difficulty allow “strong” profiling (though e-Privacy Regulation is lex specialis and some guidelines will help).

Behavioral advertising and legitimate interest

On the other hand, “soft” profiling can be also based on “normal” consent, or on legitimate interest. This is clearly confirmed by Article 21 GDPR, that is however stressing that if profiling is based on legitimate interest controllers must grant data subjects with “objection rights”. The WP29 (see the guidance on legitimate interests, here) has already stated that: “controllers may have a legitimate interest in getting to know their customers’ preferences so as to enable them to better personalise their offers and ultimately, offer products and services that better meet the needs and desires of the customers.” Although it then excluded that legitimate interest can justify certain “excessive” behavioral advertising practices (see our past analysis here).

There is for sure a legitimate interest of companies in matching promotional communications to individual preferences and interests. This is the future of advertising as well as one of the main business models for free services. Without personalisation many services would loose appeal and users nowadays are expecting a certain level of personalization based on their interests. Conditioning behavioral advertising to consent collection can be burdensome. And consent does not always represent a real safeguard. For this reason, some are calling for more flexible interpretation of the above rules to avoid the risk of having Europe’s advertising market (as well as data intelligence industry) limited and less competing compared to other countries (that do not subject profiling to consent).

This shall be however balanced with the right to privacy and to have personal data processed fairly, which is a fundamental right under the EU Charter (art. 8).

The final answer is left to the balance between the conflicting interests of companies and individuals. A balancing test for measuring the legitimate interest and excluding significant effects and discrimination shall be of crucial importance. This fits in with the spirit of the new accountability principle, that leaves to data controllers the ultimate decision on how to treat the risks of the concrete processing. Data controllers shall put in place privacy safeguards. As balancing tools, transparency and granular control for individuals on how personal data are processed will play a key role, together with an real analysis of potential risks. These efforts should concretely mitigate privacy risks in behavioral advertising.

Let’s see how EU authorities guidelines on profiling (expected before December) will clarify these aspects and ultimately discrimination risks.

Francesco Banterle

A requiem for torpedo actions? A catalogue of the most recent decisions on the issue

 

Actions

(i) relating to a European Patent

(ii) aimed at obtaining a declaration of non-infringement of different national portions of said European Patent

(iii) brought before Italian Courts

(iv) against a patentee who is not domiciled in Italy

are commonly known as Italian torpedoes (the expression is a fortunate coinage of Mario Franzosi).

These actions are often started to take advantage of the rules concerning lis pendens. Where a non-infringement action is pending before a Court (say an Italian Court) with regard to the national portion of a European Patent (say the German portion), any infringement action subsequently brought before the Court of another country (say a German Court) with regard to the same portion of the same European Patent may be stayed. This stay – and the consequent delay in ascertainment of infringement – is the goal of torpedo-launchers.

Of course, the slower the jurisdiction, the longer the stay. Thus, launching a torpedo is particularly effective in slow jurisdictions, like – at least in the past – that of Italy.

Traditionally Italian Courts have not looked with favor on such actions, seeing them as tools for misusing the (flaws of the Italian) legal system.

This traditional view was authoritatively expressed by a 2003 decision of the Joint Divisions of the Court of Cassation (the Windmöller decision), which deracinated torpedo actions on the grounds that Article 5.3 of the Brussels Convention of 1968 does not apply to non-infringement claims (Italian Court of Cassation, decision no. 19550/2003, in Giur. Ann. Dir. Ind., 2004, pp. 61 ff.). If it is the plaintiff itself which denies the existence of a harmful event, said the Court, then by definition there cannot be jurisdiction under Article 5.3 of the Brussels Convention.

A few years later, in the GAT case (here), the EU Court of Justice struck another blow against torpedoes by stating that the rule of exclusive jurisdiction laid down by Article 16.4 of the Brussels Convention of 1968 [corresponding to Article 22.4 of Regulation 44/2001] concerns all proceedings relating to the registration or validity of a patent

“irrespective of whether the issue is raised by way of an action or a plea in objection” (the principle was later incorporated in Article 24.4 of Regulation 1215/12).

As a result – and even regardless of the restrictive interpretation of Article 5.3 of the Brussels Convention given by the Windmöller ruling -, in order not to fall into the exclusive jurisdiction under Article 16.4 of the Brussels Convention and 22.4 of Regulation 44/2001, torpedo actions had to be based on pure non-infringement arguments.

In this scenario, most certainly not favorable to torpedoes, a decision of the Joint Divisions of the Court of Cassation reopened the discussion on the admissibility of this kind of action (Court of Cassation, 10 June 2013, in Giur. ann. dir. ind., 2013, pp. 60 ff.: the Asclepion case; a full English translation of the decision has been published in IIC, 2014, pp. 822 ff.). In the context of a non-infringement case brought before the Court of Rome by a German company with regard to the Italian and German portions of a European Patent owned by a US company, the Joint Divisions – quoting, word for word, the EUCJ Folien Fischer decision (here) – stated that

(aArticle 5.3 of Regulation 44/2001 … must be interpreted “as meaning that an action for a negative declaration seeking to establish the absence of liability in tort, delict, or quasi-delict falls within the scope of that provision”

and also that

 (btherefore [pertanto, in the original Italian text] with regard to the declaration of non-infringement sought … before the Court of Rome, the Italian Courts must be considered to have jurisdiction, on the grounds that they are the Courts of the place where the harmful event may occur, also with regard to the “German portion” of the European Patent” [my translation].

The 2013 Asclepion ruling certainly lent itself to interpretation as a general permit to launch torpedoes, at least when they do not rely on any arguments of invalidity. This is, indeed, what the Court said. But, looking more closely, a missing step can be seen in the reasoning of the Asclepion ruling, between statements (a) and (b). This significantly limits its practical impact.

If closing the jurisdictional door of Article 5.3 of Regulation 44/2001 to non-infringement actions, as the Windmöller 2003 decision did, fatally blocks any attempt to launch torpedoes, interpreting Article 5.3 as covering both infringement and non-infringement actions does not necessarily mean – in spite of the adverb “therefore” used by the Court of Cassation – that the Italian Courts have jurisdiction under this provision over actions concerning the foreign portions of a European Patent. To this end, something more must exist, and namely a link with Italy.

It is precisely because of the (non-) existence of this link that the torpedo actions brought before Italian Courts after the Asclepion ruling have been stopped.

In Schindler v. Otis, in line with Asclepion, the Court of Milan (Judge Dr. Marina Tavassi; decision of 27 January 2014, published in Giur. ann. dir. Ind., 2014, pp. 741 ff.) admitted that, in itself, a non-infringement action may be brought against a foreign defendant under Article 5.3. Nevertheless, it declined its jurisdiction on the non-infringement claims submitted against a US patentee, insofar as the Spanish portions of the European patent in suit were concerned. According to the Court,

Italy can be the place where the harmful event occurs or may occur only with regard to the Italian portion of a European patent, because there cannot be harm – actual or potential – caused in Italy by the alleged infringement of the Spanish portions of the patents in suit. Indeed, any national portion of a European patent is effective only in the relevant country and may be infringed only in that country” [my translation].

Therefore, in the opinion of the Court of Milan, when it comes to the infringement/non infringement of foreign portions of European patents owned by foreign patentees, there can never be a link with the country of Italy.

In the more recent Basf v. Bayer case, the Court of Milan (Judge Dr. Alessandra Dal Moro; the decision, dated 14 December 2016, published in Riv. dir. ind., 2017, I, pp. 309 ff. and also available here) fully confirmed the above approach and declared its lack of jurisdiction over the non-infringement of the foreign portion of a European patent (in particular, the German portion). In doing so, the Court explicitly dealt with the reasoning of Asclepion, clarifying why, in its view, the Court of Cassation’s decision could not be read as allowing torpedoes:

the fact that article 5.3 of Regulation 44/2001 (now replaced by Regulation 1215/2012) may be applied to non-infringement actions in no way changes the stance of the Supreme Court with regard to the existence of jurisdiction in the case of infringement (or non-infringement) of non-Italian portions of European Patents. A claim seeking a declaration whereby certain conduct does not constitute infringement of a patent means that the patent is effective, and this effectiveness is geographically limited to the perimeter of the legal system to which it refers. Outside that perimeter of effectiveness, it is not possible to discuss infringing or non-infringing conduct and it is therefore not even possible to allege an, actual or potential, ‘harmful event’” [my translation].

A further decision was issued on torpedoes in 2014, but on different grounds. In Agilent v. Oerlikon, the Court of Genova (Judge Dr. Rossella Silvestri; the decision, dated 23 April 2014, is available here) declined its jurisdiction because the torpedo-launcher had raised invalidity arguments in support of non-infringement claims concerning the German portion of a European patent and a German utility model. The claims thus fell into the exclusive jurisdiction of the Courts of the place of registration.

Hence, all the torpedoes launched in Italy after the Asclepion ruling have been dismissed on the grounds of lack of jurisdiction. Does this mean that the torpedo saga has finally come to an end?

Riccardo Perotti

Shape trademarks: the Court of Florence’s innovative interpretation of “substantial value”

The Court of Florence recently expressed an interesting view on the interpretation of absolute grounds of registration invalidity provided for signs constituted by the shape of a product, and, in particular, substantial value.

The case concerned the shape of the world wide famous Hermes’ “KELLY” and “BIRKIN” bags, the shape of which was registered as 3D trademark in Italy and before the EUIPO.

Capture

Hermes alleged the infringement of its famous trademarks by an Italian company offering for sale bags highly similar to the ones protected with Hermes shape trademarks. The alleged infringer resisted claiming, as usual in these cases,  that the above trademarks were invalid since, besides other things, they consist of a shape giving substantial value to the bag.

The Court of Florence dismissed such claim, excluding the existence of a substantial value with an unusual (and deeply interesting) interpretation of this prevention.

Firstly, the decision (available heredefines substantial value as a real and concrete aesthetic plus-value – relevant per se to the product, being instead irrelevant the existence of any particular decoration or added part – that cannot be separated from the product itself and is capable of prevailing on the product’s shape features that are necessary to its function.

Then, the Court expressly excluded that the mere ornamental attitude of the product’s appearance could be of relevance in the evaluation on the existence of a substantial value. Differently from the main case law on this ground of refusal (see decision of 15 February 2012 of the Court of Venice on Crocs shoes or decision of 16 June 2015 of the Court of Milan on Flou’s Nathalie bed), the decision essentially denies that substantial value consists in the capability of the shape to influence the consumer’s choice of purchase, so to be itself the main reason why the product is in fact chosen and bought. In the Court’s view, this capability of the object’s shape to catch the consumers’ attention is connected only with trademark reputation.

Only when the aesthetic appearance of the product’s ornamental shape is so relevant to give a particular aesthetic value inseparable from the product itself trademark registration is prevented. Having this interpretation of substantial value in mind, the Court affirmed that “KELLY” and “BIRKIN” bags where valid trademarks as their shape trademark may be separated from the product itself and does not merely consist in the standard appearance of bags.

This decision interestingly tries to plot a demarcation line between substantial value and trademark reputation/distinctiveness that are often overlapped in the context of the discussions on substantial value. The distinction proposed by the Court of Florence could indeed be of help in drafting a clear and new definition of substantial value, whose interpretation is still not crystal clear when applied to real cases. As a matter of fact, and as actually noticed by the Vespa case (see here), the current interpretation of this condition often leads the trademark owner to deny the attractiveness and distinctiveness of the shape of a product when substantial value is under discussion on the basis that an actual recognition of the shape of the product on the market may lead to the assertion of the existence of a substantial value.

The interpretation of the Court of Florence would not fall into this trap and appears to be more logical in the overall context of the trademark protection, as it denies any relevance of the trademark distinctive character in the context of absolute grounds of registration invalidity provided for signs constituted by the shape of the product. This interpretation, although interesting, is however new and currently isolated. While certainly providing food for thought, it downplays the meaning, and legal sense , of the requisite of substantial value as a reason to attract consumers. If only reputation is attractive, what is the meaning, and sense, to verify the occurrence of a substantial value? ‘Substantial’ to what effect?!

Maria Luigia Franceschelli

Court of Florence, case No. 5850/2010, 31 January 2017, Hermes International Scpa, Hermes Sellier SA, Hermes Italie SpA vs. Papini Paolo & C. Snc and Corsini Giorgio di Gianna e Paola Corsini Snc.

The Court of Appeal of Milan and the active role of the ISP in selling infringing services via the e-marketplaces White Pages and Yellow Pages

The liability of the Internet Service Providers (ISPs) is still an unsettled area of the case law both at European and national level, with a lot of recent cases that deal with ISPs and the unauthorized online distribution of audio-visual contents (see CJEU case C-610/15 and Court of Appeal of Rome – case Break Media – and Court of Turin – case Delta TV). Anyway, there is also another side of the case law on the liability of ISPs that deals with the selling of goods and services which infringe IP rights via e-marketplace (the leading case of the CJEU is case C-324/09 L’Oréal Vs eBay). In a recent decision, the Court of Appeal of Milan (here) shed light on the joint liability of the ISP and the professional users of its services.

The case at stake is based on the alleged infringement of the trademarks of some major manufacturers of domestic appliance (Electrolux, Candy, Ariston, Bosch, Hoover, Smeg and others, collectively the “Claimants”) by the company ABB, with others (the “Defendant”) via some adverts on the Italianonline’s websites White Pages and Yellow Pages. ABB offered maintenance and support services for domestic appliances – on the White Pages and Yellow Pages edited by Italiaonline – using the ABB’s registered trademarks “Boschexpert”, “Candyexpert”, Aristonexpert” and so on. The Court of Milan in first instance held that ABB’s trademarks were void and found ABB liable of trademark infringement and unfair competition against the manufacturers, since the consumers were misled by the use of ABB’s trademarks on the real origin of the support and maintenance services. Italiaonline has been found jointly liable of such IP violations and both ABB and Italiaonline have been ordered to jointly pay damages to the Claimants. Italiaonline reached a settlement with the Claimants while ABB appealed the Court’s ruling of first instance.

The Court of Appeal of Milan has confirmed the ruling of the Court of first instance in terms of determination of the illicit conduct and quantification of the damages but has clarified the position of Italiaonline as ISP whose electronic means have been use for committing an IPR infringement. Indeed, in the first instance Italiaonline has been fully indemnified by ABB since ABB had a preeminent role in the illicit conduct. This seemed to ABB inconsistent, since Italiaonline has been declared jointly liable for the same illicit conduct. According to ABB, Italiaonline as a technical ISP is the sole responsible of the search engine for the adverts on the websites White Pages and Yellow Pages, which results are misleading and determining confusion to the consumers.

According to the Court of Appeal, Italianonline’s websites can be considered Information Society Services pursuant to E-commerce Directive (despite the fact the White Pages and the Yellow Pages are published both in paper and in electronic form). This leads to the fact that Italianonline can be considered a host provider pursuant to Article 14 of the E-Commerce Directive for the websites White Pages and Yellow Pages, since it technically hosts on such websites the adverts of its professional clients, such as ABB. More in detail, in this case the ISP cannot invoke the safe harbour provision pursuant to Article 14 of the E-Commerce Directive due to its active role for the third-party adverts in return for payment, where Italiaonline does not merely technically process third party adverts but also edits promotional messages coupled with the third-party adverts and identifies the key-words for its search engine. While playing this active role – according to the Court of Appeals – the ISP is responsible for lack of control and for not having expeditiously removed the infringing adverts after the notices of the Claimants (the earliest ones dated 2003).

With regards to the relation between the infringing activity of ABB and the cooperation of Italialonline, the Court of Appeal found that, even if jointly liable, ABB had effectively a preeminent role in terms of relevance and wilfulness of the conduct and that the joint liability must be evaluated according to Article 2055 of the Italian Civil Code, pursuant to which, where two or more parties are held jointly liable, the party paying the damages can recover from the other parties the pro quota of damages attributable to the level of wilfulness and to the consequences of the conduct of the other parties (so called, right of recourse). The request raised by Italianoneline for indemnification of the damages determined by ABB is considered by the Court of Appeal as a right of recourse aimed at clarifying the pro quota  of responsibility of Italiaonline. The right of recourse is applicable pro quota also to ABB as party paying the damages. In light of this interpretation, the Court of Appeal awarded also to ABB a recourse against Italiaonline equal to the 30% of damages to be paid to the Claimants.

This precedent seems of interest because the Court of Appeal of Milan, while making clear application of the principles set forth by the Court of Justice in the leading European case law L’Oréal Vs eBay (an e-marketplace cannot invoke the safe harbour provisions under E-Commerce Directive if it plays an active role by optimizing and promoting the selling of infringing products or services), has even moved forward by clarifying a possible criterion for the attribution of responsibility between professional users and e-marketplaces. It would be of interest verifying whether the same approach could be adopted by other foreign jurisdictions, since the regime of joint responsibility under tort law seems to be matter of domestic jurisdiction.

Gianluca Campus

Court of Appeal of Milan, case No.  1076/2014, 14 December 2016, Italiaonline Spa Vs ABB Srl and Others (President of the Court: Hon. A.M. Vigorelli; Judge-Rapporteur Hon. F. Fiecconi)

The shape of the worldwide famous Vespa obtains protection in Italy under copyright law

Piaggio, the Italian company producer of the world wide famous Vespa scooter, was recently sued by the Chinese company Zhejiang Zhongneng Industry Group (“ZZIG”) in a quite complex case.

ZZIG offered for sale three scooters named “Revival”, protected by a Community design registration no. 001783655-0002, “Cityzen” and “Ves”, the shape of which was not covered by any registered IP right in Italy or in the European Union.

Capture ZZIG

As to Piaggio, the company owns the Italian 3D trademark no.1556520 claiming priority of the Community trademark no. 011686482, filed on 7 August 2013 and registered on 29 August 2013.

Capture Vespa

When Piaggio obtained the seizure of the three above motorbike models in the context of a Fair held in Milan, the Chinese company started an ordinary proceeding on the merits before the Court of Turin against Piaggio, seeking the declaration of non-infringement of Piaggio Vespa 3D trademark by its “Revival”, “Cityzen” and “Ves” scooters. Besides, it asked a declaration of invalidity of Piaggio’s Vespa trademark, based on the fact that it was anticipated by their design and thus not novel. Also, it held that the 3D trademark was void, as it does not respect the absolute ground for refusal established by the law.

Piaggio resisted and asked the Court of Turin to reject the above claims, declare that the Vespa shape is protected under copyright law, trademark law and unfair competition law and that those rights were infringed by ZIGG three models of scooters. As a matter of fact, Vespa was offered for sale by Piaggio since 1945.

First of all, the Court of Turin declared that the Vespa trademark does not lack of novelty, as it reflects a model of Vespa marketed since 2005, before the commercialization of ZZIG first scooter, i.e. “Cityzen”. Moreover, the Court of Turin excluded the existence of any absolute ground for refusal, stating that its shape was not technical nor standard and not even substantial as the reason why consumers chose the Vespa were not merely aesthetical. Based on these findings, the Court finally affirmed that only the “Ves” scooter constitute an infringement of Piaggio trademark.

This  said, the Court of Turin further held that the Vespa shape is eligible for protection under copyright law, as it is since long time worldwide recognized as an icon of Italian design and style, shown in advertising and movies, presented plenty of times at museum and exhibitions and part of many books, articles, magazines and publications. All considered, safe and sound evidence show that the shape of Vespa is unequivocally believed to be an artistic piece of designs by the main communities of experts worldwide. Nevertheless, the Court held that, again, only Ves scooter infringed Piaggio rights vested on its scooter as it presents features similar to the ones protected both under the Vespa trademark and copyright.

The decision (full text here) is indeed interesting as it critically examines the similarities and differences between the “original” good and the ones that are claimed to be infringing products and, while asserting the eligibility for protection of the Vespa shape both under trademark and copyright law, it excludes infringement for two products through a detailed and careful examination. This narrow approach is indeed interesting because it affirms the principle that the infringement of designs protected under copyright law shall be evaluated with an analytical examination similar to those applied in cases of trademark infringement.

A doubt might remain about the overlapping of trademark and copyright protection. Since the former never expires as long as the product is on the market (plus the subsequent five years, according to Italian law), one might ask what advantage for the right holder might subsist by ‘adding’ a protection limited in time, such as copyright’s. The answer might be: the dual protection functions as a ‘parachute’ for the case that one of the two, in a subsequent Judgement (Appeal or High Court: Cassazione in Italy) should be successfully challenged by a competitor.

Maria Luigia Franceschelli

Court of Turin, case No. 13811/2014, 6 April 2017, Zhejiang Zhongneng Industry Group, Taizhou Zhongneng Import And Export Co. vs Piaggio & c. S.p.a..

Design’s artistic value: no univocal definition according to the Italian Supreme Court

With the decision at stake (dated November 13, 2015, full decision here) on the possible copyright protection of an out-door seat, the Supreme Court interestingly expressed a subtle (but crucial) critic on the current approach adopted by some Italian decisions that seem to ‘generously’ recognize the existence of artistic value for design objects, leaning on apparently weak – or lonely – evidence. This appears to be, for example, the case of the recent decision of the Supreme Court affirming that Moon Boots were artistic, as allegedly proved by the fact that the boots were exposed in an exhibition of industrial design works at the Louvre Museum (see full decision here).

A more severe approach seems to be adopted by the decision in comment, concerning the design of a line of outdoor seats called “Libre”, created by the plaintiff and claimed to be eligible for protection under copyright law. The Court of first instance and the Court of Appeal of Venice excluded the existence of an artistic value and thus excluded any copyright infringement by a line of similar outdoors seat created by a competitor. So, the plaintiff asked the Supreme Court to interpret such notion.

Capture Libre

The Italian Supreme Court, after having made a useful recognition of the current trends adopted by Italian Courts in the interpretation of such requirement, affirmed that the concept of artistic value cannot be confined in one, unique and exhaustive definition. The cases being too various, it is more useful defining a number of parameters that Judges can apply on a case-by-case basis, considering in depth the concrete facts occurred. Those parameters, continues the Court, have both subjective and objective aspects.

As to the former, they consist in the capability of the object to stir aesthetic emotions, in the greater creativity or originality of the shape – compared the others normally found in similar products on the market – transcending the practical functionality of the good: aesthetic have its own independent and distinct relevance. These emotions, admits the Supreme Court, are inevitably subject to the personal experience, culture, feeling and taste of the individual doing the evaluation. The result of the assessment on the existence of artistic value may thus change depending on who looks at the piece of design. So, it is necessary to indicate more objective parameters.

It is therefore to be considered the recognition that the piece of design has received within the cultural and institutional circles with respect to its artistic and aesthetic features. This witnesses that the aesthetic appearance is considered capable of giving to the object a value and a meaning independent from its strict functionality. In concrete, this is shown by the presence of the object at museum or exhibitions, mentions in specialized newspapers and journals (not having a commercial scope), the critics, awards, prices and similar. On top of that, crucial appears the circumstance that the object has gained an autonomous value on the market of pieces of art, parallel to the commercial one or, more commonly, that it has reached a high economic value showing that the public appreciates and recognizes (and is ready to pay) its artistic merits. All the above elements are inevitably influenced by time: if a product is new it would have had no time to receive such prices, honors and awards from third parties. Even this parameter shall thus not be considered as absolute, but still connected to a case by case analysis.

With the above, wide and flexible interpretation of the concept of artistic value, the Supreme Court appears to distance itself from a jurisprudence that focused the existence of  even just one of the above circumstances.  In particular, it seems to downplay the current trend, more and more popular in the merit Courts,  whereby the presence of the piece of design in museums and exhibitions constitutes per se a sufficient evidence of the artistic merits of an object. The decision in comment seems to ask the lower Courts to be more selective and in ascertaining the existence of an artistic merit in the design object. And to do this on a case-by-case analysis, excluding any “a priori” single-criterion-based assessment.

By this decision the Supreme Court gives objectively rules in favor of small or new designers and firms, whose products could achieve protection on the basis of a concrete analysis of the single object’s potentialities, independently from its long-lasting presence on the market, huge marketing efforts, or the capability to  exhibit  the object in a museum. The current approach, criticized by the Supreme Court, seems indeed to privilege ( moreover, in an era of crisis) companies that are already solidly established and powerful on the market. This decision is good news for competition.

Maria Luigia Franceschelli

Italian Supreme Court, case No. 23292/2015, 13 November 2015, Metalco S.p.A. vs City Design S.r.l. and City Design S.p.A..

EU and China published a list of each party’s 100 Geographical Indications to be protected in view of a new bilateral agreement (expected for 2017)

On 2 June 2017 (see the joint communication here and EU Commission’s press release here), EU and China agreed to reciprocally enhance protection of geographical indications (“GIs”) and to publish a list of 100 European and 100 Chinese GIs that will be considered for benefiting from a new bilateral agreement.

The list of 100 EU GIs (here) includes food products, wines and spirits. eu dop21 EU GIs were already registered locally in China via direct application and will nevertheless be attached to the future agreement. This follows the “10 plus 10” project that in 2012 experimented granting a reciprocal protection to 10 EU and Chinese renowned GIs (here).

 

 

The negotiation of the bilateral agreement on reciprocal GIs’ protection started in 2010 and is expected to be concluded in 2017. The recent 19th EU – China Summit (here) has pushed to accelerate works. The publication of each on list of GIs for opposition is thus intended as a way to speed up the finalization of the pending negotiations. Interested parties have now two months for presenting comments to EU and Chinese authorities.

The aim of the agreement is enhancing GIs protection on a mutual basis with the hope of positively influence rural development, spreading local culture and traditions on both sides, and – most importantly – to increase consumers’ awareness and provide new tools for protecting national GIs.

Centrality of GIs in the EU framework is known (though sometimes leads to excessive registrations in terms of figures: the EU Commission counted over 3300 EU names registered plus further 1250 non-EU names registered in the EU GI system – is this really necessary for EU consumers?). And, the Commission estimated the market for EU GIs in EUR 54.3 billion, accounting for 15% of total EU food and drinks exports.

Chinese market is of course one of the largest and is important developing the demand for EU products there. On the other hand, China has a number of local GIs, mostly unknown to EU consumers, that China hopes can be spread in the EU market.

chinese GI

It is known that bilateral agreements are the main tool to extend EU GIs’ protection in other territories, and the new agreement is welcomed. Particular attention shall however be given to enforcing mechanisms (often perceived as the main problem in China, though efforts for developments are in course – see for instance here). Let’s see the next steps.

Francesco Banterle

 

 

Italian Courts and the protection of Graphical User Interfaces under copyright laws: some recent cases

In some recent cases (case “Trend for Trend Vs Pix Agency” dated 5.2.2016; case “DriveK Italia Vs Webbdone” dated 20.3.2016 and case “Esko Software Vs Beegraphic” dated 6.7.2012) the Court of Milan has ruled with regard to the legal protection of the Graphical User Interfaces (“GUI”) and more in detail on the protection of the overall aspect of the GUI (the so called “Look&Feel”). The GUI can be considered as an atypical and complex creative work based on a project that combines graphical and navigation elements allowing interaction between users and devices (both at software and hardware level).

The term “Look&Feel” is sometimes used in EU case law (AG Bot – C 309/09) and by Italian scholars (Giordano D., Software e grafica dei social network, AIDA 2011, 248) as a synonymous of GUI (see AG’s Conclusion – C 309/09: “The graphic user interface, commonly referred to as the ‘look and feel’, enables communication between the program and the user”). More precisely, some scholars (Hayes, What’s left of “look and feel”: a current analysis, in Comp. Lawyer, X 1993, n. 5) consider “Look” the combination of all the visual and/or audio elements of a computer program as presented in a GUI and “Feel” as the sequence, structure and organization of the non-literal elements into a GUI. It has been questioned whether the overall “look and feel” (i.e. the combination of visual elements and the organization of such elements for interaction with users) can be protected as a whole.

The overall “Look&Feel” and the individual elements in a GUI can be protected, under certain conditions (notably with an adequate level of creativity), by Italian copyright law (see Article 1.1 and Article 19 Italian Copyright Law). This conclusion should not be disputed in case of one-to-one copies of GUIs and/or individual elements in a GUI (i.e. in case of “literal copyright infringements”). More problematic is the case of non-literal copyright infringement of the overall “look and feel”, where it has to be clarified which elements in the overall “look and feel” are eligible for copyright protection.

An obstacle to the protection of the “Look&Feel” is represented by Article 1.2 Software Directive (2009/24/EC), according to which ideas and principles of a computer programs are not eligible for protection under copyright law (“Protection in accordance with this Directive shall apply to the expression in any form of a computer program. Ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protected by copyright under this Directive”). Such EU provision is implemented by Article 2 n.8 Italian Copyright Law. It could be argued that “Look&Feel” incorporates some basic ideas and principles of the computer program generating the GUI. According to the above, protection under Italian copyright law could be granted to the overall “Look&Feel ” without taking into consideration those elements in the GUI: (i) that are expression of technical ideas and principles at the basis of the computer program generating the GUI; and (ii) that are the necessary result of the functional organization of the GUI.

On the other hand, the “Look&Feel” of a GUI could imply a level of creativity in the sequence, structure and organization of the elements, eligible for copyright protection as “elaborated ideas”. A possibile confirmation of this type of protection can be found in a EU case related to the protection of a computer manual. The CJEU has stated that, with reference to a computer manual, also the choice, sequence and combinations of commands, options, defaults and iterations is expression of creativity and can result in an intellectual creation protected under copyright law (see CJEU case C-406/10 “[…] the keywords, syntax, commands and combinations of commands, options, defaults and iterations consist of words, figures or mathematical concepts which, considered in isolation, are not, as such, an intellectual creation of the author of the computer program. It is only through the choice, sequence and combination of those words, figures or mathematical concepts that the author may express his creativity in an original manner and achieve a result, namely the user manual for the computer program, which is an intellectual creation”).

Italian case law regarding the alleged copyright infringement of the GUI of a website has usually excluded the violation of copyright laws in case of non-literal infringement and has made in some cases application of the rules against unfair competition practice in the Italian Civil Code (namely article 2598 ICC). Nevertheless in their legal analysis the Courts have expressed their view on the protection of GUIs under copyright laws. The Court of Milan in the case Trend for Trend Vs Pix Agency dated 5.2.2016, regarding the alleged copyright infringement of the GUI of a website, held that the scope of copyright protection includes both the expression and the elaboration of ideas but found that the format of the allegedly infringed website (inclusive of a description of the GUI) filed with the SIAE was not eligible for protection and that a comparison of the GUI (without taking into consideration forms imposed by the technical nature of the services proposed by the websites) excluded any graphical coherence between the GUIs. In another case the Court of Milan dated 20.3.2016 (DriveK Italia Vs Webbdone), excluding copyright infringement of the GUI of a computer program, stated that it is on the claimant to prove the level of creativity of the GUI, also by offering a reconstruction of the state of the art in the sector of the software at stake and/or by offering a comparison with other comparable software. Finally, in a case before the Court of Milan dated 6.7.2012 (Esko Software Vs Beegraphic) the technical expert found that most of the elements of the GUIs under comparison were imposed by technical reasons and that the organization of the elements in the GUI of the defendant was sufficiently differentiated by the same elements in the GUI of the claimant.

Gianluca Campus