Tag: unfair competition

Hands off my database!

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What is wrong with a content aggregator harvesting content from third parties’ database and using it to provide its own service? This is – in a nutshell – the question that, on 14 January 2021, Advocate General Szpunar tried to answer with his opinion on Case C-762/19 (full text available here).

The case brought to the attention of the CJEU concerns the scope of the sui generis right established by Article 7 of Directive 96/9/EC, following the request for a preliminary ruling issued by the Regional Court in Riga, Latvia. The dispute was established between two Latvian companies active in the internet job-advertising market: SIA CV-Online Latvia (hereinafter, “CV-Online”) and SIA Melons (hereinafter, “Melons”).

CV-Online is an internet job-advertising company that operates through a website where employers post job offers upon payment of a fee. Once submitted, the offers are collected and organized in a database, which uses microdata meta tags (a sort of key words for search engines) in order to simplify searches and indexation. Melons, on the other hand, is a specialized search engine that accesses existing job advertising websites and gathers all relevant job posts for specific users searches. In doing so, Melons includes hyperlinks to the original ads on the website of first publication and also integrates the same meta tags used, so as to be able to take advantage of better positioning results on generalist search engines.

A.G. Szpunar suggests that the violation of the sui generis rights pertaining CV-Online is apparent, as the copying and indexing of databases fall within the definition of extraction and reutilization under Article 7(1) of Directive 96/9/EC. However, the question underlined by the A.G. is: how far can the right-holder go in preventing such extraction and re-utilization?

In order for a right-holder to lawfully exercise such rights, two elements should be met: one deriving from the protection afforded by the sui generis right, the other stemming from certain specific aspects of competition.

The first condition is due to the economic connotation of the sui generis right accorded by Article 7(1) of Directive 96/9/EC. Indeed, the protection afforded by the sui generis right may be granted only to those databases which can be proved to have required a substantial investment and only if the extraction or reutilization activities negatively affect such investment.

The second condition stems from the rationale of the sui generis right, that is closer to unfair competition, rather than to intellectual property rights. Indeed, its scope is not only to ensure the recovery of the investments made by the database creators, but it is also to protect them from commercial parasitism.

That said, A.G. Szpunar stresses the importance to consider that both the conduct of third parties (like Melons) as well as the very exercise of the sui generis right could amount to an unfair competition practice. Indeed, there could be a risk that database makers, rather than intending to prevent the creation of parasitical third parties products, may aim at establishing a dominant position in a relevant market.

Consequently, A.G. Szpunar suggests that the referring court should verify whether (i) the extraction or reutilization of the database has indeed taken place; (ii) it is proved that the database required a substantial investment; and (iii) such extraction or reutilization integrates a threat to the possibilities of recovering such investment. Should all the above conditions be met, the national court should also verify whether the exercise of these rights could result in an abuse of a dominant position under EU or national laws.

Giovanni Rindi

Advocate General Szpunar, opinion of 14 January 2021, Case C-762/19, SIA ‘CV-Online Latvia’ v SIA ‘Melons’

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 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