Category: unfair competition

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

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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 Court of Turin ruled that shape of Ruinart champagne bottle has not distinctive character and rejected lookalike claims

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The Court of Turin issued an interesting decision about the possibility to protect the shape of the bottle of the renowned Ruinart champagne (see the Italian text of the interim decision in the 2014 here, confirmed by the appeal in 2015, here). The action was brought by the French company MHCS, producer of Ruinart, against a south-Italian wine maker, Farnese Vini S.r.l. MHCS claimed that two bottles of Farnese spumante, Cuvée Cococciola and Gran Cuvée Rosè:

cuvee

recall all distinctive elements of Ruinart bottle (capsule, neckband, label, and particularly the shape), thus (i) infringing 3 community (3D and figurative) trademarks owned by MHCS:

New Picture (2)

and (ii) constituting an act of unfair competition (an confusing lookalike).

The Court first considered the single elements covered by MHCS trademarks (limited to: label, capsule, neckband, coat of arms on the main label and on the neckband, color, and Ruinart name). In relation to the capsule and the neckband, the Court found that, also in light of their necessary nature, the different features adopted by Farnese (colors, words, boards, etc.) sufficiently differentiate the two elements. In relation to the labels, the unique similarity is the oval/elliptic shape (although not perfectly overlapping). The Court considered the label’s form strictly connected to the shape of the bottle (for practical need of adhesion of the label to the bottle and for aesthetic reasons) which is oval as well, and therefore not protectable per se.

As to the shape of Ruinart bottle (not protected by MHCS community trademarks), the Court held it cannot be protected as a de facto trademark. Indeed, the Court considered the shape of the Ruinart bottle quite common and lacking of distinctive character (which occurs only when the shape is original and unusual within the market). Farnese demonstrated that its bottle is in fact a commonly available model named “Abram”, similar to the typical champagne bottle (in Italian, the so called Champagnotta prestige cuvée).

Finally, the Court excluded that Farnese bottles could be considered as a confusing look alike of the Ruinart’s ones. According to the Court of Turin’s case law, slavish imitation requires 3 conditions. Indeed, the shape of the product (or at least the combination of its single elements) must (i) be original (i.e. elaborated with respect of common shapes); (ii) not be technically necessitated; and (iii) show distinctive character (i.e. the ability to characterize the goods as originating from that particular company). Conversely, each element of Ruinart bottles claimed by MHCS (including the shape) is necessitated or common, nor their combination is distinctive.

On the contrary, the Court held that the real distinctive features of Ruinart bottles are (i) Ruinart name, (ii) the coat of arms, (iii) the label colors, and (iv) the chromatic combination between label and writings: all elements not reproduced by Farnese bottles. Moreover, the average consumer of Ruinart wines should be a careful one, thus further reducing any risk of confusion.

This decision follows the leading Italian case law on unfair competition, which is mainly focused on a “risk of confusion” analysis. However, it is worth noting that in recent years a different case law has followed a look-alike analysis beyond confusion (see Court of Milan 20 March 2014 and Court of Bari 20 October 2011). In this regard, the use of very similar elements of a packaging/aspect of a product, even without an actual risk of confusion, may be considered as an attempt to recall the most renowned product and the successful image/aura of the competitor’s brand, thus taking advantage of its commercial strategy. This analysis is based on a concept similar to the “link” required by the CJEU between the mark with a reputation and the similar sign (Adidas, C-408/01). However, even if said Milan and Bari Courts’ approach had been followed, the decisum would not have probably changed, since the similar elements and their combination were in fact considered as common and not distinctive.

Francesco Banterle

Court of Turin, 24 October 2014 and 17 April 2015, MHSC v. Farnese Vini S.r.l. et al.

The Court of Rome on the imitation of a mannequin head model

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With its 5 August 2015 ruling (full text here, in Italian), the Court of Rome granted an interim injunction and a seizure order against an Austrian luxury legwear and bodywear company which – one year after terminating a long commercial relationship with an Italian mannequin manufacturer, relating to supply of a mannequin head model – began using a mannequin head model in some of its stores which was almost identical to the one designed by the Italian manufacturer but was neither supplied nor produced by said manufacturer.

The mannequin head model was not the subject-matter of a design registration. Having been on the market for decades, the model was not even protectable as a non-registered community design. As for its possible copyright protection, which the Italian mannequin manufacturer tried to claim, this was not granted by the Court of Rome (at least at the interim stage of the proceedings). Nevertheless, the Court of Rome found the use of the imitating mannequin heads made by the Austrian company to be an act of unfair competition, contrary to honest practices, under Article 2598 no. 3 of the Italian Civil Code (CC) – and enjoined the Austrian company from further displaying the mannequin heads in its stores. The use of the “imitating” mannequin heads, said the Court, would allow the Austrian company to exploit the commercial and creative efforts of the Italian manufacturer. Moreover, it added, this use would make the mannequin heads less appealing on the market, diluting their uniqueness.

Two aspects of the decision deserve a mention.

First of all, the imitation of products not covered by IP rights was traditionally repressed under Article 2598 no. 3 CC only where the imitation was of a systematic nature and concerned a plurality of products [the so called “parasitic unfair competition”, on which see the leading case Court of Cassation, 17 April 1962, no. 752, Motta v. Alemagna and more recently Court of Cassation, 29 October 2015, no. 22118]. The decision of the Court of Rome – concerning the imitation of a single product – goes further, in line with a recent trend in Italian case law, which has more and more frequently repressed as unfair competition under Article 2598 no. 3 CC the imitation of single products or economic initiatives (see for instance Court of Milan, 5 May 2012, in DeJure), notwithstanding the absence of provisions specifically prohibiting their imitation, on the grounds that the costs and investments borne by a competitor are, in themselves, worthy of protection and that exploiting these costs and investments without remunerating the competitor is therefore unlawful. Compatibility of this approach with the freedom of economic initiative under Article 41 of Italian Constitution is far from being certain.

Secondly, it was not clear – at the interim stage of the proceedings – whether the Austrian company directly manufactured the mannequin heads at stake or commissioned them from a third manufacturer. However, the Court of Rome found that this circumstance was not decisive with regard to the liability of the Austrian company for unfair competition, stating that, even if the mannequin heads had been simply commissioned by the Austrian company from a third party, the Austrian company would still be liable for its “significant and substantial” contribution to the unlawful conduct. On this point, the decision seems to be consistent with the well-established Italian case law concerning third party liability for acts of unfair competition, whereby all parties who play a role in the unlawful conduct are liable for unfair competition, included those who are not competitors, provided that the unfair competitor takes advantage of the conduct of the non-competitor.

Riccardo Perotti

Court of Rome, 5 August 2015, Almax v Wolford

The Court of Milan bans UberPop on grounds of unfair competition

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On 25 May 2015 several Taxi Drivers Association obtained an interim injunction from the Court of Milan (Mr. Marangoni – full Italian text here) restraining, pursuant to unfair competition grounds, Uber from providing, on the Italian market, the “Uber Pop” application which is the digital platform connecting demand for car rides with offerings from private car owners.

First of all, the Court of Milan has noted that Taxi service in Italy is heavily regulated by public laws.

Secondly, the Court stated that Uber Pop is a direct competitor of taxi drivers. In fact, even though Uber Pop is a private transport service (drivers use their own cars), it actually has the same features as a public transport service, such as taxis. Indeed, the drivers are contacted by the users through a phone app and they have to drive the user to the destination they choose. Uber pop may not be considered as a car sharing or a ride sharing: in these cases the car owners aim at sharing the costs of the drive for reaching their personal destination.

Having said that, the Court stated that Uber’s “surge pricing” system (i.e. when drivers are scarce, and demand is high, prices go up), actually allows Uber to apply fares that are much lower than the taxi fares. Uber’s drivers are able to apply the “surge pricing” system because they are not subject to, nor have to comply with, the laws regulating the Taxi service, hence they do not have to bear the expenses required to the owners of a transport license (like taxi drivers), such as costs for installing meters, insurance obligations or purchase of a car exclusively dedicated to third parties’ use, frequent maintenance checks, etc.

According to the Court’s opinion the breach of  public laws constitutes an act of unfair competition by means of art.  2598 n. 3 Italian Civil Code if (i) it constitutes the “main and direct cause” of  the decrease of a competitor’s advantage or if (ii) a connection can be established between the breach of public law and the competitive advantage reached by a competitor.

In the Court’s view, the lack of authorization and the non-regulated behaviour of Uber Pop’s drivers entail a competition advantage and, therefore, constitutes an act of unfair competition.

With this decision, the Court of Milan confirms a long standing  Italian case law according to which a breach of a public law amounts to an act of unfair competition by means of Art. 2598 n. 3 of the Italia Civil Code only if the competitor, by virtue of the breach of law, obtains a competitive advantage that would not be reached but for that  breach, hence damaging (subtracting clients to)  its competitor  (see Supreme Court n. 8012/2004).

The interim injunction has been confirmed by the well-grounded appeal decision (Mrs. Tavassi – full Italian text here) dated 2 July 2015. It must be noted that some consumers’ associations joined the appeal proceedings; the decision highlighted that not all the associations have the same position on Uber’s activity and the Judge seemed to share the position of the association Movimento Consumatori which filed a complaint before the Italian Antitrust Authority.

Gianluca De Cristofaro

Court of Milan, 25 May 2015, Taxi Drivers Association vs. Uber

Court of Milan, 2 July 2015, Taxi Drivers Association – Consumers’ Association vs. Uber