Thom Browne wins against adidas in stripes war

Andrea Terragni - Partner

New York designer Thom Browne's company (part of the Ermenegildo Zegna Group since 2018) recently prevailed in a dispute brought by adidas before the District Court for the Southern District of New York to protect its famous trademark consisting of the characteristic three parallel stripes. The U.S. Court recognised that Thom Browne, a designer known for his high-end tailored clothing, had not infringed the German multinational company's trademark rights by affixing a motif consisting of four parallel stripes to his clothing and footwear models.

In reality, the trademark dispute between the two companies had already been pending for a few years. Indeed, as early as 2018, adidas had filed an opposition before the European Union intellectual property office (EUIPO) against a Community trademark application filed by Thom Browne to protect a sign consisting of four parallel stripes. That opposition was followed in 2020 by other oppositions before the United States Patent and Trademark Office in which adidas challenged three trademark applications for red, white and blue stripes to distinguish the footwear produced by the New York designer. adidas considered that all of the above-mentioned trademarks applied for by Thom Browne were confusingly similar with its own earlier registrations claiming the famous three stripes.

Returning to the current decision of the Southern District Court of New York, the German sportswear giant had filed a lawsuit against Thom Browne in June 2021, claiming that Thom Browne's use of a sign consisting of parallel stripes infringed its trademark rights and constituted confusingly unfair competition in the sportswear sector.

In fact, the German company claimed that Thom Browne's use of a mark similar to its own famous three-stripe mark used by adidas for over fifty years caused confusion among consumers as to the origin of the goods themselves, or otherwise led them to believe that there was some collaboration or affiliation between the two companies. In particular, adidas challenged Thom Browne's use of the stripes in a manner similar to its own three-stripes sign, thereby creating confusion in both the aesthetic appearance and the overall commercial impression that such products provided. adidas claimed that, in particular, the products in the category of sportswear and sports shoes manufactured by the American company were identical to the same categories of products that had long been marked with its own three-stripe mark.

In addition to the obvious similarities between the trademarks of the parties, adidas' accusation was also strongly focused on the element of competition because, in order to ground its claim for damages of approximately $8 million, the German company had pointed out to the U.S. judge that Thom Browne was not only using the four stripes in its core business, i.e. high fashion clothing, but was invading in an increasingly aggressive manner the sportswear segment and in general the sectors where adidas is market leader. And this not only with the expansion of its sportswear range, but also through promotional agreements such as the one concluded by Thom Browne with the famous Spanish club F.C. Barcelona.

Arguing the total difference between the respective distribution channels of luxury and sportswear, as well as the wide gap between the prices of the respective products, the American company's defensive argument was obviously centred on the absence of any risk of confusion for consumers. Perhaps more interesting and less obvious is what Thom Browne's defence also argued in noting how adidas waited a long time before taking legal action against its own use of the stripes. As already did in other jurisdictions, also before of the New York Court Thom Browne pointed out that adidas had already objected to Thom Browne's use of three horizontal stripes on his garments as early as 2007, but then tolerated for a long time the use of four parallel horizontal stripes on his apparel products, which Thom Browne had begun on purpose in order to distance himself as far as possible from the German company's trademarks.

In essence, Thom Browne thus argued that adidas' delay in taking action to prevent him from using its own four-stripe trademark was unreasonably long because the German sportswear giant knew, or reasonably should have known, that Thom Browne was using a four horizontal stripes design. For the New York designer's counsel, this would also have constituted implicit proof that the respective striped brands had in fact co-existed on the market for a long time without adidas having suffered any damage.

While Thom Browne obviously welcomed his own acquittal, pointing out that for over twenty years his company has been an innovative brand in the luxury fashion segment, where it offers a completely unique and distinctive design that combines classic tailoring with American sportswear sensibilities. On the other hand, adidas has already declared that it will appeal the New York District Court ruling, a decision that not surprisingly comes on top of other negative ones suffered by the German multinational in the EUIPO and that have already called into question the distinctive character of its three-stripe brand.

Italian version

Intellectual Property

Trademarks

The "transfer of employees" between free enterpreneurial initiative and act of unfair competition

Stefano Bonacina - Associate

The transfer of employees from one legal entity to another may integrate, at the occurrence of specific conditions, a case of unfair competition as provided for in article 2598 n. 3 of the Italian Civil Code which provides that "acts of unfair competition are committed by anyone who: (...) 3) uses directly or indirectly any other means not in accordance with the principles of professional fairness and suitable to damage the other company”.

Specifically, this refers to conducts that do not comply with professional integrity or dignity of the profession and are aimed at the illegitimate appropriation of a competitor’s market space and/or clients. A prerequisite for the offence is in fact necessarily the existence of a situation of competition between two or more entrepreneurs, deriving from the simultaneous exercise of the same industrial or commercial activity in a territorial area that is even only potentially common and a connected potential commonality of clients.

In order to clarify when there is a real risk of integrating a case of unfair competition and distinguish it from its physiological phenomenon, it becomes crucial to identify the boundary, often blurred, between a simple act of hiring, even multiple, of employees of third parties, falling in general in the free entrepreneurial initiative and a real act of transfer of employees to be considered as an act of unfair competition which gives rise to civil liability.

In this regard, some relevant judgments on the merit have clarified that "the transfer of employees from one company to another does not constitute in itself an act of unfair competition under article 2598 n. 3 of the Italian Civil Code. ...but becomes unlawful when it is accompanied by a series of elements - such as the number of employees transferred, their professional competence, the role they played in the transferred company - which highlight the unlawfulness of the conduct of the transferring company, which takes advantage in a parasitic way of the training investments made by the transferred company on its employees transferred" (Court of Turin, February 4, 2009 and inter alia Court of Milan, specialized business section February 26, 2018) and also that "in terms of unfair competition for diversion of customers the unlawfulness of conduct must not be sought episodically, but must be inferred from the tendential qualification of the acts put in place to damage the competitor, or to systematically take advantage of its goodwill in the market)" (Court of Cassation n. 12681/07, Court of Milan, February 1, 2022 and also Court of Milan, March 22, 2019).

In the light of these principles, the same case-law has therefore identified some significant indicators of the transfer of employees specifying that, by way of example, such case of unfair competition is integrated when the disloyal competitor acts:

• in violation of labor law regulations (for example, as regards the notice periods) and of the other absolute rights of the competitor (such as reputation and intangible property rights and confidential information);
• in ways that are not physiological, as they are potentially risky for the business continuity of the entrepreneur who suffers the trasnfer in his competitive ability, taking into account, on the one hand, the normal dynamics of the labor market in a specific economic context and, on the other, the internal conditions of the loyal company (for example, it has been held that, in cases of business crisis or situations of difficulty, the breaking up of the workforce and the increased outflow of employees are to be considered a physiological effect);
• with methods that have a shock effect on the ordinary activity of offering goods or services of the transferred company and that potentially jeopardize the business continuity of the entrepreneur in its competitive capacity, or cause alterations beyond the threshold of what can be reasonably foreseen and therefore not susceptible of being absorbed through an adequate reorganization of the company.

The material conducts described above must also be carried out with the so-called animus nocendi, to be understood as a will, that cannot be justified in relation to the principles of professional correctness and suitable to create distorting effects in the market and to cause damage or destroy the competitor: in other words, the transfer of employees is only forbidden if implemented with the precise intention of damaging the competing company, which can, however, be assessed presumptively in the light of a series of objective indicators, identified by case-law in the quantity and quality of the transferred personnel, in its position within the transferred company, in the difficulty that can be linked to its replacement and in the methods that may have been adopted to persuade employees to transfer to the transferring company.

Only when all the abovementioned requirements are met and proven, at least in an indicative and presumptive manner, the case of transfer of employees will be configured and the author of such unfair competition act may be called upon to compensate the damage, often significant, suffered by the transferred competitor.

Italian version

• Unfair Competition

The commercial success of a fashion item does not automatically entail recognition of copyright protection (in the absence of proof of creativity and artistic value)

Gaia Bellomo - Associate

Legal protection of fashion designers’ creations counts several means: from unfair competition to design protection, shape marks, to the protection offered by copyright law (L. No. 633/1941): these instruments offer different kinds of protection and can be used only if specific requirements are met, which must always prooved.

It is common in this field seeing fashion labels trying to "dress up" their products with a variety of intellectual property titles, registering them, for example, as shape marks or as industrial design, in order to increase the level of protection against possible imitations.

However, although protection by registration of intellectual property rights in the fashion industry is particularly widespread, the temporary nature of the rights conferred by registration may be an obstacle to the protectability of garments or accessories when their commercial success is particularly long-lasting: in these cases, in order to have access to protection extended in time and which goes beyond the formalities required for registration, it is necessary to prove not only the particular liking of the public, but also the creativity and artistic value of the product to aim to copyright protection.

An emblematic case of the possible coexistence of several levels of protection for fashion items and of the difficulties connected to the proof of the creativity and artistic value of a product aiming to be considered as copyrighetd is the one recently dealt with by the Court of Milan.

The case concerned the marketing of bags imitating the famous "Le Pliage" bag by Longchamp, protected by two European Union three-dimensional trademark registrations claiming its peculiar trapezoidal shape, and also characterised by the combination of further original elements, such as the rounded flap, the tubular handles and the contrast in colour and materials between the nylon and leather elements.

The plaintiff claimed that the "Le Pliage" bag model was created in 1993 and has been still marketed worldwide through more than 1,500 sales outlets and also online and requested protection against imitations, invoking not only the protection provided for on the basis of three-dimensional trade mark registrations (pursuant to articles 2 and 20 C.P.I. and art.9 EU Reg. no. 2017/1001), but also the violation of the rights of the author and of the principles protecting fair competition on the market (art. 2598 c.c.).

The Court first of all recognised the infringement of the plaintiff's three-dimensional European trademarks insofar as it was established not only their distinctive capacity due to the manner of use and presentation of the trademark itself and the information and suggestions conveyed through advertising and the perception that the shape determines on the consumer public, but also the taking over, by the imitative bags, of all the distinctive elements of the "Le Pliage" model.

With regard to the invoked copyright protection, referring to its own case law on this point, the judgment ruled that it was not possible to identify in this case the actual existence of the artistic character necessary for the form of the bag to enjoy such protection.

The Judges found that, apart from the undeniable commercial success gained on the market, the plaintiff had not enclosed the elements that should have confirmed the presence of an artistic value in the creation of the external appearance of the bag model in question.

In other words, there was no evidence at all of the requirements of creativity and artistic value which presuppose the applicability of Art. 2.10 of the Copyright Act.

As is well known, artistic value can be inferred from a series of objective parameters, such as the recognition by cultural and institutional circles of the existence of aesthetic and artistic qualities, exposure in exhibitions or museums, publication in specialist magazines, the awarding of prizes, the acquisition of a market value so high as to transcend that linked solely to its functionality or the creation by a well-known artist and, in the absence of evidence, it is not possible to have access to the protection provided for by the law on copyright.

Italian version

• Intellectual Property

• Fashion Law

Publishing other company’s customer portfolio on another company’s one amounts to unfair competition, Supreme Court says

Gaia Bellomo - Senior Associate

Maria Sole Torno - Stagista

Are names of high value customers a boast for a company?

Nowadays, the reputation among the public and the distinctive character of one's own brands and trademarks are undoubtedly of great interest for companies and unfair market conducts might threaten their competitive value. From a legal point of view, the Italian Civil Code (“I.C.C.”) regulates the behaviour of companies at an individual level, protects them from unfair behaviours and aims to ensure the correct development of market dynamics with its articles reserved to competition regulation (see, among the others, Art. 2598 I.C.C.).

The Italian Supreme Court of Cassation has recently dealt with the subject of unfair competition, ruling on the prohibition of misappropriation of attributes of a competitor’s company or products in particular, making reference to Art. 2958, paragraph 1, no. 2 of the I.C.C..

The case examined by the Court involved the advertising agency 055 Communication S.r.l. and its competitor Senza Filtro S.n.c., the latter having been accused of having published on its own website the name of high value customers of 055 Communication without authorization.

The Supreme Court was asked to provide a ruling on the issue of whether the names of a company's customers should be considered as a competitive asset. In this respect, the Court of Appeal of Florence had already previously expressed its opinion by rejecting the thesis according to which customers’ names may constitute a company's asset, considering them instead to be only historical elements of the business level reached.

Following this decision, 055 Communication S.r.l. appealed to the Court of legitimacy for violation or misapplication of art. 2598, paragraph 1, no. 2, of the Civil Code. Indeed, it claimed that the conduct of an entrepreneur, who shows, contrary to the truth, on its c website another entrepreneur's customers as its own, can amount to an act of unfair competition contrary to professional fairness. Moreover, according to the appellant, Art. 2598, paragraph 1, no. 3, of the Civil Code had also been violated by Senza Filtro S.n.c., since its conduct had been also detrimental to professional correctness, to the extent that it exploited others’ entrepreneurial endeavor.

In its judgment, the Supreme Court deemed it appropriate to deal with both grounds of appeal jointly and to pay reference to its previous decision No. 25607 of 2018 where it already stated that the typical conduct of unfair competition identified as misappropriation of attributes of the products or of the company of others occurs when "an entrepreneur, in advertising or equivalent marketing activities, attributes to its products or company attributes such as medals, awards, qualities, indications, requirements, virtues, not really possessed by him, but belonging to the products or to the company of a competitor, in a way which limits consumers' freedom of choice".

In the present case, the Court states that a competing entrepreneur misappropriates the attributes of another one when, in a communication addressed to third parties, he makes a self-attribution of qualities, peculiarities or characteristics acknowledged to the other one.

According to the Supreme Court, the conduct put in place by an entrepreneur pretending to enjoy a customer portfolio he did not actually have constitutes a case of misappropriation of another company’s qualities.

On the basis of these considerations, the Court set aside the previous judgment of the Court of Appeal of Florence, in the light of the principle according to which "the conduct of "misappropriation of attributes", covered by Art. 2598, paragraph 1, no. 2 of the I.C.C., is integrated by the boast performed by an entrepreneur of the characteristics of his firm, actually taken from those of another competing company, whenever such boast has the capability to make the former wrongfully acquire merits on the market he does not really have and resulting in act of unfair competition for the so-called misappropriation.".

Supreme Court of Cassation, decision of May 19, 2021

Italian version

• Unfair Competition

Registered design protection prevails on unfair competition and look alike provisions (absent robust evidence)

Gaia Bellomo - Senior Associate

The market for plant care products is shared by companies facing each other on the shelves of few specialized b2c shops like garden centers and nurseries, which mainly offer products for sale by type and allocate them in contiguous spaces.

To distinguish its products from those of its competitors, Vigorplant, a company which produces and markets potting soils and fertilizers, launched in 2019 a new range of five potting soils, characterized by packaging with a different color per product type and a new top-of-the-line product.

These packagings featured a peculiar division into two parts of the bag and the placement of three pictograms, exemplifying the performance of the product, in a specific area, in addition to the choice of a single color for each potting soil that it contained.

The top-of-the-line potting soil, had, its own packaging, colored with iridescent blue and was also registered as a simple design.

Shortly after the launch of this packaging, Vigorplant found on the market the products of a competitor, Tercomposti S.p.A., presented in packs that reproduced not only Vigorplant classification by color and its reference products’s stylized representation, but also the same pictograms placed in the same position as those on Vigorplant's packaging.

Sensing a threat of jeopardization of the commercial success of its new potting soils, Vigorplant applied for a PI injunction and seizure against Tercomposti's packaging, acting against slavish imitation and look-alike (under Art. 2598 of the Italian Civil Code) and, with specific reference to the packaging of the top-of-the-line potting soil, enforcing its registered design (pursuant to Art. 31 of the Italian Civil Code).

In examining the fumus boni iuris requirement, the Court took position on the infringement of the registered design, establishing that the enforced registration met all the requirements for validity set out in Articles 32 - 33 bis of the Industrial Property Code, namely: lawfulness, novelty and individual character. With specific reference to the latter requirement - despite the fact that it is not possible to claim exclusivity regarding those elements depicted on the packaging such as flowers, the earth, informative pictograms and the color blue - the general appearance of the bag was deemed to be well characterized by the specific arrangement of the above mentioned elements and by the predominance of the color blue with an iridescent effect, characteristics which were deemed not to be present in other products launched on the market prior to registration but, on the contrary, could be found in the Tercomposti bags, which created the same overall impression as Vigorplant's one.

Not differing sufficiently from the Vigorplant packaging design, the Court held that Tercomposti’s bags were infringing the claimant’s exclusive rights and granted an injunction, backed by penalty, against the latter with reference only to the product named “Superterriccio”.

The other bags by Tercomposti were not, however, deemed to be in breach of Vigorplant's packaging, as they diverged more from the overall impression created by the registered design.

From the unfair competition’s standpoint, the Court found that the claims of parasiticity and slavish imitation had not been supported by sufficient evidence: according to the Court, Vigorplant should have highlighted all the elements that could prove the distinctiveness of its packaging.

In the same way, the decorative elements with different colors and layout on Tercomposti packaging were deemed not to illicitly hooking to Vigorplant’s ones in a way apt to create that link between the two products which case law qualifies as look alike (i.e. taking over the characteristics of a well-known product).

Regard synchronic parasitic competition (which takes the form of the simultaneous resumption of all or many of a competitor's products), the Court held that there was not an overall resumption of Vigorplant's commercial proposals by Tercomposti.

In view of the findings of this case, it is clear that an action for unfair competition, in all its forms (parasitic, slavish imitation, tying) must always be supported by robust evidence to substantiate the claim.

Court of Milan, order of 4 May 2021

Italian version

• Intellectual Property

UNKNOWN BANSKY IS A REGISTERED TRADEMARK.

The Court of Milan has recently expressed itself on the protection of the works of the street art artist known as Banksy, whose identity is, as many will perhaps know, unknown.

 The case was commenced by Pest Control Office Ltd which is the company that protects the artist's rights. Pest Control Office is also the owner of certain trademarks ("Banksy") but also of the distinctive signs that represent some of his most famous works, such as the little girl with the red balloon and the flower launcher. Pest Control therefore sued 24 Ore Cultura s.r.l. complaining the infringement of its trademark rights by the Sole 24 Ore that organized the exhibition “The art of Banksy. A visual protest ".

 According to Pest Control, the title of the exhibition violated Basnky's rights on the same registered trademark. Likewise the violation would have been perpetrated through the use of images of the little girl with the red balloon and of the flower thrower in the promotional material of the exhibition.

 On one hand, the Court considered the use of the signs in question on the merchandising of the exhibition to be unlawful, as a mere commercial use for the promotion of generic consumer products without relevance to the exhibition, and therefore not considered as a legitimate descriptive use of the other people's brand.

 On the other hand, instead, the Court considered that the use of the Banksy sign and those corresponding to the aforementioned works in the promotional material of the exhibition constitutes a lawful use of the brand of others, having a merely descriptive purpose of the exhibition itself.

 The Court also rejected the defendant's defense based on the fact that the owners of the exposed Banksy works (aliases of the multiples of his street art works sold by him) had expressly granted the defendant also the right to reproduce these works.

 In fact, according to Italian copyright law, "the transfer of one or more copies of the work does not matter, unless otherwise agreed, the transmission of utilization rights, ". In this context, the Court stated that, "Case Law has already made clear for some time that even the photographic reproduction of a figurative work of art in an exhibition catalog represents a form of economic use of the pictorial work and falls within the exclusive right of reproduction reserved to the author ”.

 Notwithstanding the foregoing, the Court ruled that unauthorized reproduction of the works in the catalog also constituted unfair competition to the detriment of the defendant. This case, in fact, requires not only the unlawful conduct, but also that this can actually cause damage to the competitor who complains about the offense.

 Having therefore ascertained that the only offense attributable to the defendant is the use of the appellant's trademarks on merchandising products, the Court inhibited the further marketing of the merchandising products, with the setting of a penalty sentencing of the defendant to pay part of legal fees incurred by the Recurrent.

THE FIRST ROUND OF THE BATTLE DIESEL/ZARA GOES TO...

Otb, the group founded by Renzo Rosso, which includes brands such as Diesel, Maison Margiela and Marni, recently won a judgment before the Milan court against the Inditex group that controls the well-known Zara brand. The company founded by Renzo Rosso has seen to welcome from the Court of Milan its arguments sustained in the case started in 2015 against the Spanish company, accused of having reproduced with the Zara brand of jeans produced by Diesel and sandals designed by Marni.

Although the Iberian group supported the existence of substantial differences between its own products and those of Otb, claiming the impossibility of the Court award damages being a foreign company without headquarters in Italy, the judges decreed violation of the registered design of the Skinzee-sp jeans model and the unregistered design of the Fussbett footwear.

It is not the first time that the Iberian group is involved in such accusations. Just over a year ago, the Danish "Rains" label specializing in rainwear has brought a lawsuit to Inditex in front of the Danish Commercial Court for breach of design and unfair competition by requesting the immediate termination of the sales of an allegedly infringing model and the compensation for damages for the loss of the corresponding profits.

The Shape of Audermar's Piguet "Royal Oak" is not a 3d Trademark.

The Court of Milan has recently expressed its opinion on the protection of the shape of the well-known "Royal Oak" watch created in 1972 by the Swiss company Audermars Piguet initially protected as a three-dimensional trademark.

Audemars Piguet recorded the shape of the relative lunette as an international figurative mark and complained on a trademark counterfeiting and unfair competition case for the sale of watches marketed by the Milan based start-up “D One”.

At first, the court issued an iaudita altera parte restraining order prohibiting the future commercialization of such watches however, the court overturned its initial decision and dismissed the appeal of Audemars Piguet on the grounds that "there are numerous elements of doubt about the validity of the operated trademark", as evidenced by the fact that its registration as a Community trade mark has been denied by the competent office (EUIPO).

In particular, according to the Court, the trademark seems to lack distinctive capacity, ie the ability to "distinguish products from those of another manufacturer and, therefore, perform the function of identifying the entrepreneurial origin of the product";

Again, according to the court of Milan, the three-dimensional distinctive sign does not even seem to have acquired distinctive capacity through use (so-called "secondary meaning"), "not having been documented uniform use" of the sign itself ".

Finally, the registration of the shape in question as a trademark does not even seem compatible with the provisions of art. 9 CPI, according to which "signs constituted exclusively ... from the form that gives substantial value to the product can not be registered as a trademark".

 In terms of unfair competition, the judge recalled that, to integrate the unfair competition law, the servile imitation of the product of others must "invest characteristics that are totally inexistent with respect to the function they are intended to perform", or those "arbitrary and whimsical" and "new with respect to the already known" characteristics that give originality to the product and have distinctive capacity, so that the public is led to bring them back to the company from which the product originates: only when these characteristics are concerned, servile imitation invests "elements capable of generating confusion in the public" and thus integrates unfair competition with confusion.

In this case, the judge did not recognize the existence of such an imitation, stating essentially - on the basis of what was found at the point of counterfeiting of the mark - that the imitated forms would be "structural and non-distinctive", as well as in some cases "Now acquired to the collective taste, having undergone a certain standardization", and that in any case there would be "significant differences" between the two products.

EVEN A WINE GUIDE IS A PROTECTED CREATIVE WORK.

In a recent decision, the Court of Rome ruled on an unfair competition case between two wines guides "Bibenda" (published by Bibenda Editore) and "Vitae" owned by AIS (the Italian Sommelier Association). The Court found relevant similitudes both relating to the physical format of the Guide and the descriptions of companies and wine production data, and "strong elements of consistency in the sequence of arguments".

Immediately after the interruption of a collaboration between the two parties, AIS  began to distribute a new Wine Guide to its members, called "Vitae", but it appeared to the authors of "Bibenda" too similar, under a multiplicity of points of view, to the one created by them according to well-defined editorial criteria. Criteria which, according to the judgment, are sufficiently similar to those adopted by Ais for "Vitae". For this reason the Court upheld Bibenda Editore's requests and stopped the publication of future editions of "Vitae". Ais was also sentenced to pay damages (still to be quantified) in favor of Bibenda Editore.

According to the judgment of the Court "an analysis of the guide published by the defendant (AIS) shows significant similarities with the Bibenda’s Guide in relation to the volume size, the material used for the cover, the binding and the fonts used and the format.

Significant similarities can be found in company descriptive descriptions, in both guides, with the same sequence and within an identical structural context and according to a common graphical presentation, data relating to company name, address, internet site, mail address, year of foundation, property, bottles produced, vineyards, direct sales, company visits, introductory part, name wine, typology, grapes, alcohol content, price, bottles produced, tasting, winemaking and matching.

It is also common to evaluate products with symbols placed on the right side of the pages.

As already noted, the two guides have strong similar elements in the sequence of arguments (...) ". On the basis of these arguments, the Court of First Instance upheld Bibenda’s claim and prevented the Italian Sommelier Association from publishing Vitae's guidebook unless significant adjustments would be made to substantially differentiate it from Bibenda's guide.

Indirect and Subliminal Advertisements on Social Media.

The advertising market is undergoing a major change and indirect - subliminal advertisements promoted through online and social networks are becoming more and more common.

Indirect advertising is a clear and explicit message that appears on unusual spaces, but not mentioned as such. Subliminal advertising, instead, isn’t evident. This practice is banned by Italian law but only with respect to TV advertising and although film and television are a fertile ground for this kind of promotion, new challenges have emerged above all on social networks. Indeed, as the world wide web represents a new opportunity to express our thoughts and interests and tastes and a new way of learning and sharing information and content, companies have also begun to use them in an explicit or tacit manner.
On the one hand, we have real advertising spots and sponsorships, although not fully controlled: Facebook and Instagram, for example, check that ads don’t have an illegal content or prohibited by rules but they don’t control the accuracy of the information communicated, nor their congruity with the regulation, since there is no discipline code to be respected.

On the other hand we notice serious “product placement” proliferation within the most clicked profiles.

In this regard, the British Competition and Markets Authority stood up against disguised advertising, which is not recognizable in photos and videos posted on social media. Recently also the American Federal Trade Commission, for the first time addressed the issue, asking “web influencers” to emphasize that hidden  recognizable through hashtags or comments.

However, there are no specific rules governing indirect and subliminal and the terms of use of social media like Instagram, provide and restriction. The question arises as to whether consumers, who shall not be subject to untruthful and deceptive ads, have also the right to distinguish the advertising contents from a “lifestyle tips”.

Recently, the Italian National Consumer Union has questioned the Competition and Market Authority (AGCM) to ask for the legitimacy of indirect and subliminal advertising on social networks. The legal basis for this controversy is the article 22 of the Consumer Code which asserts that the commercial intent must be explicitly stated if it is not obvious from the context or if it is capable of misleading the consumer.

The AGCM should soon clarify the issue and provide adequate information both on the relationships between producer and influencer, and on the obligation to declare the advertising purpose of the posts.

Meanwhile, Instagram has launched a new tag, "Paid Partnership with", so that users can include it in their stories and post. Alternatively, many bloggers, including the most famous Chiara Ferragni, have started using some "claim-hashtags" such as #ad, #advertisement, or #advertising to highlight the commercial purpose of their photo, protecting the consumer.
 

Facebook's Copyright Infringement case continues in front of the Court of Milan

The case between Facebook and Faround will be heard in front of the Milan Court of Appeal on April 4. In the first degree Facebook was sentenced for the first time for unfair competition and copyright violations against Faround, a software application created in 2012  by the Milan-based company Business Competence.

On the first instance the Milan’s Court, had held that Facebook’s application Nearby was infringing Fararound’s electronic database which is protected under Italian Law.
Faround selects data on Facebook, through the profiles of registered users, and organizes and display them on an interactive map. The map then shows shops near to the user's position, also with relatives reviews and information on discounts and offers. Indeed this information is not owned by Faround. However the Court held that the mode of their organization holds a degree of originality which should be granted copyright protection. In fact, "the previous programs developed by Facebook (Facebook Places) and by third parties (Foursquare and Yelp) did not have the same capabilities as Faround: the first was a kind of pager to reach friends and not a geolocation of shops close to the user, while others were designed on the basis of logical algorithms working on the base of data entry provided by members of their social networks, and not Facebook’s.”
For these reasons, the Business Competence Srl accused and sued Facebook for infringing the application’s concept and format, launched with the name of Nearby. In addition, Nearby attracted professional advertisers, perpetrating unfair practices on the advertising market.

The Court of Milan, found that the two applications had the same functionalities and overlapped and ruled for the publication of the decision on the newspapers "Corriere della Sera" and "Il Sole 24 Ore" and, for at least fifteen days, on home page of facebook.com. The Court also banned any further use of Nearby in Italy, placing a fine of 45 thousand euro for each day of violation of its order . Facebook has appealed the decision in front of the Appeal  Court of Milan, which, at the moment, has rejected the suspension request of the provisional measures imposed at first instance.