Shareholders' loans: related risks and instructions for use

Matteo Molesti - Partner

Stefano Bonacina - Associate

Some of the most important legal profiles and practical aspects linked to the loans made by shareholders in favor of the companies they own, in the light of the widespread use of this instrument, have often led to critical issues, that have not been adequately assessed ex ante, as well as the emergence of controversial topics. This is even though the legislator and the case law have tried, over the years, to provide a partial regulation and an interpretation of the matter that is as much as possible straightforward and in line with practice.

Article 2467 of the Italian Civil Code - which provides the express subordination of these credits deriving from financing with respect to the repayment by the company of the credits claimed for different reasons by other creditors - addresses, in fact, the problem of their qualification with the awareness that, even though the fact that in many cases they appear, in the form and intentions of the lending shareholder, as loan capital disbursements (therefore subject to a theoretical obligation of restitution by the borrower), in substance, however, they must be more correctly framed as contributions of risk capital because they have been made in moments of the company life when it would have been reasonable to expect the contribution of risk capital.

However, the same rule has not been sufficiently precise in identifying in which precise moment the existence of the conditions of "excessive imbalance of indebtedness with respect to the shareholders' equity" or of "financial situation of the company in which a contribution would have been reasonable" must occur for the functionality of the subordination mechanism, and the case law has therefore intervened in this grey zone, clarifying, in brief, that "the company is obliged to refuse the shareholder the reimbursement of the loan, in the presence of the indicated situation, where existing at the time of the financing arrangement of the loan and at the time of the request for reimbursement" as well as "until the Court decision, since it is condition of non-performing of the loan” (in this sense Court of Cassation 12944/2019 and, inter alia, Court of Milan July 9, 2021, Court of Milan October 21, 2020, Court of Rome February 6, 2017 and Court of Milan June 13, 2016).

The aforementioned rule, the case lax interpretations provided over time and the particular nature of the these loans raise therefore concrete critical issues to be taken into due consideration when assessing whether or not carrying out the financing and which are the costs and benefits for the granting shareholder.

The issue and the related risks must therefore be carefully considered by the shareholder, understanding that, in order to avoid or, at least, mitigate the risk of subordination with respect to the other company creditors, it is not only relevant the time at which the loan was granted, but also every possible subsequent change in the company's equity and financial situation in relation to the punctual or untimely repayment of the loan. Up to the possible total loss of the conferred capital in the event that the beneficiary company should not recover from the phase of supervening financial difficulty.

A further issue to be considered is the need to agree with the beneficiary company the methods and terms of repayment of the loan provided through the signing of a detailed agreement.

From an operational point of view, when carrying out a loan in favor of an owned company, it is advisable to proceed with the necessary cautions, especially if the shareholder is not authorized, as director and legal representative of the beneficiary company, to independently arrange the repayment of the loan in his capacity.

Such cautions should consist of:

• in the adequate prior understanding of the economic-legal assumptions for the application of subordination, briefly discussed here;

• in the execution of specific loan agreements between the shareholder and the company where the possible interest rate applied (in the case of interest-bearing loan) and, above all, the terms, conditions, methods and timing of repayment of the loan by the lending shareholder are expressly provided for.

In other words, it is not sufficient to make a simple bank transfer in favor of the company (as very often happens in practice), even if with a detailed reason of the transfer indicated, as well as it is extremely risky not to agree on a specific repayment term. In fact, in case of failure to provide for such a term and in case of failure to reach an agreement with the beneficiary company, the lending shareholder, in the event of a dispute, will have to take proceedings against the company in order to request the judicial establishment of a term for the repayment of the loan pursuant to article 1817 of the Italian Civil Code (a rule that is often not adequately taken into consideration).

Italian version

• Corporate 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

Is a pay-off (or slogan) registrable as a trademark?

Laura Bussoli – Senior Counsel

Very often we are asked to register as a trademark a certain slogan (pay-off) and the answer is often not so obvious.

When we talk about pay-off in this field, we immediately think of the well-known “JUST DO IT” by Nike - which has over one hundred registrations worldwide - or the equally well-known "I'm lovin it" by McDonald's - which has also been registered by the American multinational worldwide.

However, the pay-off is not always registrable as a trademark, even though other forms of protection, alternative and different from the registration, are possible.

Recently, for example, the Court of the EU with the sentence of 30 June 2021 has rejected on appeal the application for registration of the figurative trademark

by an Italian company manufacturing bathroom products, specifically for "flushing cisterns for WCs; toilet [WC] cups; water distribution systems."

Prior to this, other decisions at the European level, and not only, had also denied the registrability of certain slogans, noting their lack of distinctiveness: among them, the judgment of the EU General Court 30/04/2015 (joined cases T-707/13 and T-709/13) on the word mark "BE HAPPY" for stationery, giftware (cups and kitchenware) and toys.

Despite the fanciful and original character of the sign, the Community judges denied that the latter could perform the typical and main function of the mark, namely that of indicating the entrepreneurial source of the product or service to which it refers.

Similarly, in its judgment of March 9, 2017, in Puma/EUIPO, T 104/16, the General Court had denied the registrability of the Forever Faster sign for footwear and sporting goods, holding that the trademark would be perceived by the relevant public "as a mere laudatory formula or information about the desired qualities and purpose of the goods in question."

Otherwise, however, there are other precedents that have instead approved the registration of pay-off apparently not very dissimilar to the others just seen. Thus, the Sentence of the EU Court of Justice of 21.1.2010 handed down in judgment C-398/08 P (Audi AG) considered Audi's pay-off "vorsprung durch technik" ["Forward thanks to technology"] as registrable as a figurative trademark.

In this case, according to the General Court, "even assuming that the slogan 'Vorsprung durch Technik' conveys an objective message, according to which technological superiority enables the manufacture and supply of better goods and services, this circumstance does not allow the conclusion that the mark applied for is entirely devoid of inherent distinctiveness". The same judgment states: "All marks consisting of signs or indications which are also used as advertising slogans, indications of quality or expressions inciting the purchase of the goods or services designated by such marks convey by definition, to a greater or lesser extent, an objective message. Such a situation may in particular arise when these marks are not reduced to an ordinary advertising message, but possess a certain originality or richness of meaning, require a minimum of interpretative effort or trigger a cognitive process in the relevant public.

So how can we distinguish between registrable and non-registrable slogans?

The EUIPO, on the basis of the case law produced in recent years, has made available a series of guidelines (available on the site https://guidelines.euipo.europa.eu/1922901/1802830/direttive-di-marchi/4-slogan--valutazione-del-carattere-distintivo) useful for identifying when the slogan has not only an advertising value but also a distinctive character:

"It is possible for an advertising slogan to be distinctive whenever it is considered more than a simple advertising message extolling the qualities of the goods or services in question, in that:

• constitutes a play on words and/or
• introduces elements of conceptual intrigue or surprise, so that it can be perceived as an imaginative, surprising or unexpected sign, and/or
• has some particular originality or resonance, and/or
• triggers in the mind of the target audience a cognitive process or requires an interpretive effort. In addition to the above, the following characteristics of a slogan can contribute so that its distinctiveness can be recognized:
• unusual syntactic structures
• the use of linguistic and stylistic devices, such as alliteration, metaphors, rhyme, paradox, etc.

In the light of these guidelines and the recent judgment of the European Court of Justice on the “GO CLEAN” trademark, the picture seems to be clearer: without prejudice to the function of origin indicator that the trademark must have, this can also be fulfilled through an advertising slogan if the same is not reduced to a "simple laudatory formula". The trademark must therefore, first of all, indicate to the public the provenance of a product or service from a certain entrepreneurial source. Secondly, the trademark undoubtedly also has an advertising function. But when does the distinctive function of the trademark persist despite its distinctly advertising character? Clearer than the precedents cited above, appears the latest decision of the Tribunal according to which:

"41 - It is in fact sufficient, in order to establish the absence of distinctive character, to note that the contested mark indicates to the consumer a characteristic of the product relating to its commercial value which, without being precise, derives from information of a promotional or advertising nature which the relevant public will primarily perceive as such, rather than as an indication of the commercial origin of the goods. 42 - Well, in the present case, the relevant public will not need to make any interpretative effort to understand the phrase "go clean" as an expression that incites to purchase and that emphasizes the attractiveness of the products in question, addressing directly to consumers and inviting them to buy products that offer them greater cleanliness and better hygiene".

It could be said, therefore, that when the slogan is not trivial and obvious but imposes on the consumer a certain interpretative effort in order to grasp its meaning, it is a candidate to be accepted as a trademark.

It is good to remember that a fundamental parameter to evaluate the distinctive character of a sign is the "relevant public".

Therefore, a slogan can be registered as a trademark if it has sufficient distinctive character and is perceived by the relevant public as a sign indicating the entrepreneurial origin of a product or service and not just a laudatory expression or a simple promotional message: "31 Such a trademark must be considered devoid of distinctive character if it is capable of being perceived by the reference public only as a simple promotional formula".

A suggestion could be that of not immediately filing a slogan, but to wait until it has acquired a certain diffusion and fame among the public, a so-called secondary meaning, which makes it immediately reconnectable to a certain product (rectius: to a certain entrepreneurial source).

In this case, in fact, the distinctive function of the trademark is "saved" because it is guaranteed by the so-called secondary meaning.

Italian version

• Intellectual Property

Prohibition of competition in the transfer of a company: silence can cost you dearly

Mattia Raffaelli – Of Counsel

Sofia Mercedes Bovoli– Trainee

An important provision that must be taken into consideration when preparing for the transfer of a company, a company branch or, in any case, an operation similar/comparable to the same, is art. 2557 of the Civil Code concerning competition.

Art. 2557 of the Civil Code sanctions, for the specific protection of the purchaser of a company, the prohibition for the transferor, following the completion of the operation, to conduct competitive activities, for a maximum period of five years from the transfer. Therefore, as a natural and automatic effect of the transfer, whoever proceeds to the alienation of a company will have to refrain from starting a new business which, due to its object, location or other circumstances, is likely to divert the customers of the transferred company.

There are two issues that need to be highlighted: on the one hand, the automatic application of the prohibition and, on the other, the extensive force and analogical application of the same.

Analyzing by points:

(a) The automatic application of the prohibition: the prohibition of competition is placed by the legislator as a natural effect of the business transfer, underlying the social economic function of the transaction itself. Therefore, in the silence of the parties, this prohibition will unfold its effects independently of an explicit will in this sense. Consequently, unless otherwise provided for, the prohibition will automatically apply within the limits and under the conditions imposed by the legislator.

However, the parties are allowed to derogate from the non-competition clause either by weakening or strengthening it. First of all, with regard to its duration, it is possible to provide for a duration shorter than the 5 years provided for by the legislator, but never longer, in order to protect the private initiative of the assignor. In addition, the scope of application of the prohibition can be limited from the point of view of object or location and therefore the assignor can be prevented from exercising the activity in competition only in a delimited territory and for specific activities. On the contrary, in a specularly opposite manner, it is possible to envisage limits that extend the effectiveness of the regulatory provision, extending the object of the prohibition to further activities with respect to those already exercised through the transferred company. In any case, any "worsening" derogations imposed on the transferor cannot be such as to effectively prevent him from carrying out of any professional activity.

b) Extensive force and analogical application of the provision: The Supreme Court has, on more than one occasion, reiterated the non-exceptional nature of the prohibition and has, therefore, acknowledged, on several occasions, the analogical application of article 2557 of the Civil Code. Consequently, it seems appropriate to identify the cases and the operations assimilated to the transfer of a company to which it is possible to extend this prohibition.

Doctrine and jurisprudence agree in considering possible the analogical application of the prohibition to all the hypotheses in which, in substance, operations similar and analogous to the transfer of a company or a branch of it are carried out. Jurisprudence has recognized the automatic application of the prohibition also in the case of the transfer of majority shareholdings in a company. Moreover, the violation of this prohibition would take place both in the event that the transferring shareholders set up a new company with the same corporate purpose as the one transferred and in the event that they take on the role of directors in a competing company. The need to protect the transferee is always the same, consider, for example, the possibility of diversion of clients deriving from the taking over of the management of a subject who, being known to the clientele, of which he knows the tendencies and habits, may have a considerable capacity to attract them. Therefore, in order to evaluate the possible analogical application of the provisions of art. 2557 Civil Code, also because of its automatic application, it is necessary to evaluate case by case the underlying will of the parties and the economic result they intend to pursue with a certain operation. In fact, not infrequently, the choice between transferring a company or a shareholding is mainly determined by reasons of fiscal opportunity or limitation of the transferee's responsibilities.

It should be pointed out that violation of the non-competition clause governed by art. 2557 of the Civil Code would entitle the transferee to request

a) termination due to breach of contract.

b) compensation for the damage suffered and incurred as a result of the violation (equal, for example, to the loss of earnings or the reduction in the value of the company due to the diversion of customers);

c) the inhibition, as a precautionary measure, of the illicit conduct pursuant to art. 700 c.p.c..

In conclusion, taking into account the automatic effect of the regulations analyzed here, when we are about to undertake operations that in fact realize a substitution of one subject for another in the running of the company and in the exercise of a given activity, it is necessary, in order to avoid incurring unpleasant surprises, to move accordingly, regulating the application and scope of the prohibition.

Italian version

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

Repayment of provincial additional tax on excise duties on electricity paid in 2010 and 2011: last call for "final consumers”?

Andrea Terragni - Partner

Stefano Bonacina – Associate

Until December 2012, electricity suppliers automatically charged end-users in their bills the provincial additional tax on excise duties on electricity, for an amount that varied according to the province of supply. However, in 2011, the Court of Justice of the European Union declared the incompatibility between the European legislation and the Italian legislation that had established the additional provincial tax on excise duties and, consequently, the latter was repealed in Italy with effect from 1 December 2012.

This gave rise to an extensive and troubled strand of litigation that culminated in 2019, when the Supreme Court of Cassation – with several pronouncements quite similar to each other – ruled few cases in which end-user companies had generally acted against the Italian Customs and Monopolies Agency to request the reimbursement of the excise duties paid. In these decisions, the Supreme Court addressed and resolved two specific issues: (i) the incompatibility of national regulations on excise duties with EU legislation and (ii) the consequent possible reimbursement to the user of additional taxes unduly collected.

In particular, the Supreme Court expressed the following principles: 1) the party obliged to pay excise duties to the Customs and Monopolies Agency is solely the electricity supplier; 2) the supplier may charge the excise duties paid to the final consumer in full; 3) the relationship between the supplier and the customs authorities on one hand, and the supplier and the final consumer on the other one, are autonomous and do not interfere with each other; 4) as result of the aforementioned autonomy, the final consumer - even in the event of the tax being charged by the supplier - is not entitled to request reimbursement of the excise duties unduly paid directly to the Customs and Monopolies Agency; 5) the right to claim for reimbursement to the Customs and Monopolies Agency is recognized solely to the electricity supplier, who may exceptionally exercise it: a. in the event that he has not charged the tax to the final consumer, within two years from the date of payment (which becomes the starting point for the limitation period of the right to request reimbursement); b. in the event that the final consumer has successfully brought legal action against him to recover undue payments, within ninety days of the related decision becoming res judicata; 6) in the event that excise duties and surtaxes are charged to the final consumer, the latter may bring a civil action to recover undue payments directly against the electricity supplier.

The above-mentioned rulings of the Supreme Court of Cassation have, therefore, recognized the unequivocal right of the final consumer, who has a direct relationship of a private nature with the electricity service provider, to take civil action exclusively against the electricity suppliers in order to ascertain the undue payment made as provincial surcharge on the excise tax on electricity in the 2010-2011 reference period and thus request the full reimbursement.

It has also indirectly emerged that it is substantially impossible for the electricity suppliers to reach a settlement agreement with the final consumer, either out of court or in court, as the former in turn may only exercise their right to claim reimbursement against the Customs and Monopolies Agency only in the event that the final consumer has successfully exercised legal action to recover undue payments and within ninety days of the related judgement becoming final (i.e. res jucicata). This implies that the final consumer, although his right to do so has been clearly recognized, will be able to obtain reimbursement of the excise duties and surcharges unduly paid to his electricity supplier in the two-year period in question (2010-2011) only by successfully bring the related legal action.

This was followed, at the end of 2020, by the first significant judgments of merit (Court of Milan and Court of Mantua) where, accepting in full the claims for reimbursement of undue payments pursuant to art. 2033 of the Italian Civil Code made by end-consumer companies against the electricity suppliers, the Courts consequently ordered the electricity supplier to return to the plaintiff companies the amounts paid as additional excise duties in 2010 and 2011.

Having ascertained the right to the reimbursement of the additional taxes unduly paid, it is now burden of end-user companies, before being able to start the eventual judicial procedure for reimbursement, to take the necessary legal steps required to promptly and correctly interrupt the running of the limitation period for the action for recovery of undue payments, which is equal to 10 years. After this term, in fact, every claim and right of the final consumer against the electricity suppliers will be definitively prejudiced. Therefore, for those who have not interrupted the limitation period for 2010, there is still the possibility to do so at least for 2011.

Italian version

The Court of Justice considers valid the Trademark for the Shape of a single Groove of a Tire (Yokohama Rubber vs Pirelli Tyre)

Gianpaolo Todisco - Partner

A few days ago, the European Court of Justice ("ECJ") issued a decision by which it rejected the invalidity action brought by the tire manufacturer Yokohama against the trademark application filed by Pirelli to protect a mere part of the tread of a tire as a trademark.

With this decision, the ECJ reformed an earlier ruling of the EUIPO Appellate Division, which had held that the design of a part of the tread did not in itself constitute a valid trademark in relation to class n. 12 of the Nice Classification because the groove performed a merely technical and non-distinctive function. However, in 2018, the ECJ overturned this decision and upheld the registration of the disputed mark specifically for these goods as well.

Yokohama appealed this decision before the European Court of Justice, which has now issued a final decision in this dispute (EU:C:2021:431). The European Trademark Office (EUIPO) and the European Association of Trademark Owners of the United Kingdom have also intervened in the case.

As in the previous cases, the possible technical function of a part of the Pirelli tread was once again the subject of discussion before the ECJ. Formally, both Yokohama and EUIPO claimed infringement of Article 7(1)(e)(ii) of Regulation 40/94 in the 2018 judgment of the CFI that was later appealed.

According to the ECJ, the CFI erred in holding that a single groove in a tire, which constituted the contested mark, was not in itself capable of performing a technical function within the meaning of Article 7(1)(e)(ii) of Regulation 40/94 because the groove appeared in a tire tread in combination with other elements.

Contrary to the appellant's view, the Court of First Instance had not ruled out the possibility that Article 7( 1)(e)(ii) of Regulation No. 40/94 might apply to a sign whose shape is necessary to obtain a technical result which contributes to the functioning of a product, even if that shape is not in itself sufficient to obtain the intended technical result of that product. The ECJ added that, on the contrary, the Court of First Instance had found that the evidence presented by Yokohama before the EUIPO did not show that a single groove of a shape identical to that represented by the mark at issue could achieve the technical result assumed in the contested decision.

In essence, the Court upheld the General Court's assessment by which the contested mark does not represent a tread pattern and therefore does not consist exclusively of the shape of the goods in question (namely tires) within the meaning of Article 7(e)(ii) of Regulation (EC) No. 40/94. It represents at most a single groove of a tire tread and not a tire tread, since it does not incorporate the other elements of a tire tread.

Italian version

• Intellectual Property

Support Decree-bis: what changes in terms of dismissals?

Roberto Ninno – Partner

Carlotta Pecora – Trainee

With the publication in the ‘Gazzetta Ufficiale’ of the Support Decree bis (Decree Law no. 73/2021) new guidelines have been defined on one of the issues that has certainly been the most heated and urgent since the beginning of the "Covid-19 era". The "new" Decree holds firm the deadline of June 30, 2021, with an articulated reshaping of the prohibition of dismissals in relation to the use of social shock absorbers. So what will change as of 1 July 2021?

• Until 30 June 2021: Generalised redundancy freeze
• From 1 July 2021 to 31 October 2021: Block for companies benefiting from CIGD, ASO or CISOA provided by the Support Decree
• From 1 July 2021 to 31 December 2021: Freeze on layoffs for companies that benefit from CIGO without paying additional contributions

Therefore: Until 30 June 2021 (general term)

• the initiation of collective redundancy procedures remains precluded, pursuant to articles 4, 5 and 24 of Law no. 223/1991;

• pending dismissal procedures started after February 23, 2020 remain suspended

• dismissal for objective reasons pursuant to art. 3 of Law no. 604/1966 remains forbidden;
• the procedures underway pursuant to art. 7 of the same law (Law no. 604/1966) remain suspended.

From 1 July 2021 to 31 October 2021 employers entitled to the FIS and CIGD:

• are barred from initiating collective redundancy procedures pursuant to articles 4, 5 and 24 of Law no. 223/1991;
• • pending dismissal procedures started after February 23, 2020 remain suspended
• • dismissal for objective reasons pursuant to art. 3 of Law no. 604/1966 remains forbidden;
• the procedures underway pursuant to article 7 of the same law (Law no. 604/1966) remain suspended.

From 1 July 2021 to 31 December 2021 employers who activate the CIGO or CIGS, for the duration of the treatment used and until 31 December 2021:

• the launch of collective redundancy procedures, pursuant to articles 4, 5 and 24 of Law no. 223/1991, remains precluded;
• pending dismissal procedures started after 23 February 2020 remain suspended
• dismissal for objective reasons pursuant to art. 3 of Law no. 604/1966 remains forbidden;
• the procedures underway pursuant to article 7 of the same law (Law no. 604/1966) remain suspended.

In addition to the above, it should be added that the new decree (Law Decree no. 73/2021) introduces the possibility for employers to access 26 weeks of extraordinary redundancy fund on an exceptional basis, in the period between 26 May 2021 (the date on which the decree came into force) and 31 December 2021. However, the aforesaid measure is reserved only for private employers (referred to in article 8, paragraph 1, Decree Law no. 1) who, having completed the 13 weeks of Covid interventions, could only access the ordinary CIG.

Limits to the fruition of this special CIGS are the following:

• the average reduction in working hours for employees under CIGS may not exceed 80% of their daily, weekly or monthly working hours;
• each worker may not undergo a reduction in working hours of more than 90%, with reference to the entire period covered by the CIGS.

The employer who has activated the CIGS in derogation, until 31 December 2021, is exempted from the payment of the additional contribution, as well as those who will access the CIGO or CIGS from 1 July 2021, after the period of fruition of the 13 Covid weeks. In the final analysis, paragraph 5 of article 40 of the Support Decree bis provides, in any case, for the possibility of interrupting the employment relationship in the following cases:

1. definitive cessation of the business activity, resulting from the liquidation of the company without continuation (even partial) of the activity, in the event that in the course of the liquidation there is no transfer of a group of assets or activities that can be configured as a transfer of the company or a branch of it pursuant to art. 2112 of the Civil Code
2. the existence of a company collective agreement entered into by the most representative trade unions at national level with the employer that has as its object the incentive to terminate the employment relationship
3. bankruptcy, when the provisional exercise of the business is not envisaged or its termination is ordered.

All that remains is to wait for the hoped-for end of the "state of emergency", which has now been extended until 31 July 2021, and the end of the year, in order to assess possible new scenarios in this regard.

Italian version

• Labor Law

Prize operations: relations with Facebook and Instagram

Mattia Raffaelli – Partner

Sofia Mercedes Bovoli– Trainee

It is now increasingly common to come across operations and competitions on social networks, such as Facebook and Instagram, which provide for the awarding of prizes, discounts and refunds given to users in exchange for publishing a "post" or sharing a "story" on Instagram.

These phenomena, more and more growing, are in fact winning Marketing activities that have as a central idea to make the protagonists of the promotional activity the users themselves, inviting them to create content and to personally promote a certain product.

From a legal point of view, however, the applicable legislation is very strict and, unlike prize competitions, does not give discounts.

Our legal system regulates these phenomena in the Presidential Decree N. 430/2001 which includes most of the prize contests that we are used to see on social networks and distinguishes between:

• prize competitions

• options trading

The first ones consist in promotional initiatives through which prizes are awarded without any purchase condition, therefore the awarding of the prize will depend only on fate, on a computer system or on an algorithm. The latter, on the other hand, consist of a contest in which a prize is offered to all those who have purchased a product during the launching of the promotion.

There are only a few exceptions and derogations to the discipline, for example, competitions that have social purposes, those that provide for the production of literary, scientific or artistic works or in the case where the prize is represented by a discount or objects of minimal value are excluded from the application of the regulations.

It is also necessary to point out that, in order to organize a contest on the main Social Networks, such as Facebook and Instagram, although the association with them is no longer an essential requirement, it will be necessary to comply with the specific conditions provided for by the Social Network itself and, in particular, to explicitly exclude in the regulation of the promotion any association with the same, relieving it from any liability that may arise from the launching of the operation or of the contest.

Moreover, the Ministry of Economic Development, through the updated FAQ published on 13 February 2020, has clarified some particularly thorny points of the regulations.

In fact, it has been highlighted how it is possible to exclude the association with Social Networks and consequently dispense them from any liability, only in the case where equal opportunities for all participants are guaranteed. Therefore, the registration to the Social Network cannot constitute a limit to the participation to the promotional initiative, it will be necessary, therefore, to reserve the participation to the contest only to those who were already registered to the Social Network before the beginning of the promotion or to offer to the users the possibility to participate also through different and alternative modalities.

Another important and particularly limiting element is the location of the server for the acquisition of participation in the promotion, which must necessarily be located on Italian territory.

In conclusion, the organization of operations or competitions with prizes is far from being simple and immediate, but it is necessary to provide for the drafting of a detailed regulation, to communicate notice of the call of the competition 15 days before its beginning to the Ministry of Productive Activities, to pay the deposit equal to the value of the prizes as a whole and to adopt a privacy policy in compliance with the GDPR.

Italian version

Abuse of dominance. Google/Android

Gianluca Belotti - Of Counsel

The Italian Antitrust Authority (AGCM) has shown renewed attention in combating abuses of dominance, heavily sanctioning Google (€102 million) for hindering access on Android Auto (AA - owned by Google) to an application (JuicePass) developed by Enel and aimed at searching/booking electric charging stations for cars.

The denial of interoperability between JuicePass and AA meant that when the user/driver searched for charging stations on AA in order to locate and reserve one, those of JuicePass did not appear. Google, in this way, favored its own Google Maps app (and its advertising clients, competitors of Enel), which could be used on Android Auto, allowing functional services for charging electric vehicles in competition with JuicePass.

As for the threshold of dominance, we recall that Android, and therefore AA, is used by about 75% of users, a share that certainly makes it difficult to refute Google's dominance in this market. This case, again, shows the necessary caution for the requirements of antitrust law that must guide dominant companies in the definition of their commercial policies.

Italian version

Artistic value and innovative sculpting techniques

Gaia Bellomo - Senior Associate

3D printing is a versatile tool that can be used to create anything from a simple pencil to an entire building, which can be scanned, transformed into an algorithm and then re-materialized by a machine that literally sculpts it in just 48 hours.

In the artistic field, the applications are potentially boundless, and today, architects and fashion houses are increasingly making use of 3D printers to implement their projects, containing costs and also reducing the environmental impact of production.

But it is in the world of sculpture that the use of three-dimensional milling techniques have come to the forefront with a recent Italian Court case which shows that, while it is true that 3D printing is a great opportunity for innovation in the artistic world, the widespread circulation on the internet of files containing information suitable for reproduction through 3D printers can rise new between IP owners and third party users.

This is what happened with a sculpture made with innovative techniques and designed in one of the European centers of excellence of woodworking: Val Gardena.

This place, which is known in Italy and abroad as the home of religious craftsmanship; in this market, the Demetz family has been active for generations in the creation of sculptures that today it designs and manufactures through the use of advanced methods.

In order to realize a statue commissioned by an American dealer in 2019, the Demetz Art Studio L.t.d., once completed the realization of a drawing and of a first wooden example, turned to a Florentine company to carry out the robotic milling of the statue starting from a 3D scan, which was delivered to the company in a special file, with the express indication to return it or destroy it and, in any case, not to make other specimens of the statue.

Once the milling had been completed and the statue delivered to the United States, the Demetz family noticed on Facebook a post containing a photograph, taken in the same factory where the milling had been carried out that depicted the same identical statue they had commissioned; following to a surprise inspection, they also found on site another copy of the statue being processed and its image inserted in a brochure.

Not having obtained the restitution of the file of the 3D scan, which allowed the realization of the copies of the statue, Demetz Art Studio L.t.d. commenced a preliminary injunction proceedings before the Court of Florence, asking for description, seizure and injunction of the file, the copies of the statue and the promotional material on which it was represented.

The Court granted an inaudita altera parte decree and, in confirming the measure, highlighted several aspects related to the protection afforded by copyright to creative works.

The first interesting aspect of the provision concerns, in general terms, the relationship between artistic creation and new crafting technologies: according to the Court, the creativity and authorship requirements laid down in law for the protection of a work of art are not lost when the same is transposed into a digital image and then mechanically reproduced, not even in cases where the realization of these stages of processing have involved the executive intervention of third parties.

Taking a position specifically on the illicit exploitation of copyright, the Court has disregarded the argument of the respondent who claimed to have used the image of the statue on the leaflets and brochures only to show his craftsmanship.

The Court held that even the representation and use of a copyrighted work show the executive skills of a craftsman constitutes an economical use, oriented to advertising and, absent the authorization of the author, it also integrates a violation of copyright.

By recognizing the creative nature of the statue, the Court of Florence applied art. 12 paragraph 2 of the Italian copyright law, which establishes that the author has the exclusive right to use the work economically in any form and manner.

Since the use of another person's work is aimed in this case at pursuing an economic advantage, such as gaining prominence and notoriety among the public, the system of exceptions and limitations provided for by Italian copyright law could not find application.

In fact, by virtue of Art. 70 of the Italian copyright law, copyrighted work can be used for free - and without any authorization from the author - in all cases where the protection of copyright is in conflict with preminent objectives and values that are often in antithesis with it (e.g. freedom of expression and communication, protection of users' privacy, artistic and scientific progress, etc.).

In this scenario, the 2019 Copyright Directive – that will be soon transposed in Italy - has intervened by making copyright exemptions (such as quotation, criticism, review and uses for the purpose of caricature and parody) the subject of mandatory regulation for all EU member states.

Court of Florence, order of January 7, 2021

Italian version

Consumer's Right to Reconsider the Purchase in Distance Selling Contracts and Seller's Safeguarding: an Asymmetrical Protection?

Stefano Bonacina – Associate

Art. 52 of the Legislative Decree No. 206/2005 (Consumer Code) governs the so called right of withdrawal from the contract or reconsideration in favor of the consumers, i.e. the natural persons acting for purposes unrelated to business or a professional activity.

This withdrawal - to which follows the restitution of the amount paid for the purchase of goods - can be exercised in distance and off-premises contracts and can be done without any penalty and without specifying the reason, but necessarily within the term of fourteen days starting, in contracts of sale of goods, from the date of material delivery to the consumer.

The ratio of the European origin discipline of the right of withdrawal is to protect the consumer who has carried out a purchase to distance (for example online) and has not been able to view the product before the conclusion of the contract. To use the words of the Court of Justice of the European Union (Sent. no. 430/17 of January, 23 2019) "it is considered that the right of withdrawal compensates for the disadvantage that results for the consumer from a distance contract, granting him an appropriate period of reflection during which he has the opportunity to examine and test the goods purchased".

However, such right is not always and indistinctly guaranteed because art. 59 of the Consumer Code lists the cases valued by the law in which it is a priori excluded. Among the exclusions provided for by the rule is not however contemplated the different case in which the packaging and the packing of the product are materially opened and this omission has created in the course of the time a so-called interpretative grey zone not resulting clear if, in such case, it was still possible for the consumer to withdraw legitimately from the contract and to demand the restitution of the paid consideration.

After several contrasts and differing interpretations, the Court of Justice of the European Union has, however, intervened on the point by specifying that the withdrawal is allowed even after having used the object and opened the packaging (Court of Justice of the European Union, Sentence no. 681/17 of March, 27 2019). The Court has in fact held that the exercise of the right of withdrawal from the contract cannot be made conditional on the integrity of the product: apart from specific exceptions, even those who materially remove the entire packaging or the simple protective film must always be able to return the goods after use, provided that the aforementioned legal deadline of fourteen days is respected and the goods have not been otherwise damaged by the buyer.

In light of the exponential increase of the purchases online of the last years, the situation here discussed is verified by now in a growing number of cases, placing the sellers (that are not always platforms of sale in a dominant position on the market) in a complicated and problematic management of the sale process.

The product subject to return and deprived of its original packaging is in fact, in the majority of cases, not considered as new and therefore cannot be sold at the original conditions with consequent reduction of the price of the subsequent sale.

When this occurs, the exercise of a so-called right of the consumer turns symmetrically into an evident prejudice for the seller who finds himself, despite his will, having to suffer an unavoidable damage connected to the mere reconsideration of the purchase.

The latter, in order to eliminate or at least mitigate the negative effects of the right of reconsideration, could ultimately evaluate to put in place autonomously actions of "self-protection" of its contractual position (for example preparing, where feasible, a new packaging and putting on sale as new goods that in reality are not) with prejudice, ultimately, of the consumer that the EU legislator intended to protect at all costs.

Italian version

The LEGO 'brick' is Protectable as a Community Model.

Laura Bussoli – Senior Counsel

In a decision of 24 March 2021 (T- 515/19), the General Court of the European Union overruled the previous decision of the Board of Appeal at the EUIPO, which in 2019 had declared the famous Lego brick already registered as a Community model to be invalid. The ruling of the Board of Appeal of the EUIPO had in fact established that it was not possible to protect as a model the well-known Lego brick because its shape is imposed by the functional characteristics of the product. In 2016, Delta Sport Handelskontor, a German toy manufacturer and competitor of Lego, filed a nullity action against the above-mentioned Lego model, claiming that it was contrary to the provisions of Regulation 6/2002 on Community design ("CDR"), which prohibit the registration as a design of products (or parts of products) whose external appearance (the object of protection) is dictated solely by the technical function of the product itself.

According to Community law (Article 8 CDR, as well as Italian law, Article 36 of the Industrial Property Code), products, or parts of products, the external characteristics of which are dictated solely by the technical function of the product, cannot be validly registered as designs. Basically, the shape of a product can be protected even if some of its features are functional, but only if the technical result to which they are predetermined can also be obtained with alternative shapes: in such cases, in fact, the designer's choice, although conditioned by functional reasons, is still discretionary. Furthermore, features of the appearance of the product which must necessarily be reproduced in their exact form and dimensions in order to allow the product to be mechanically connected to another product, or to be placed inside another product so that the latter can perform its function, cannot be registered as designs. However, the legislation provides for an important exception for so-called modular systems: by way of derogation from the prohibition of registration as a model or design of shapes imposed by the technical function, Article 8, last paragraph, CDR allows the registration of products or parts of products when their shapes have "the purpose of allowing the multiple joining or connection of interchangeable products within a modular system". Modular products are products characterised by interchangeability and modularity in a multiple joining system. The products in question must be designed so that they can be connected to each other in different combinations.

The exception is justified by the fact that in the case of modular systems (as opposed to spare parts, for which the exception does not apply), the imitator could enter directly into the market for finished goods by offering himself a complete and autonomous system competing with that of the owner of the first model. While the spare part is therefore a functional part of the product, the part of the modular system is itself the product and benefits from the exception under Article 8 CDR. Well, in a decision of 10 April 2019, the EUIPO Board of Appeal, at the request of the German company, had held that the Lego model was void because all the aesthetic features of the product were, in the opinion of the Office, solely dictated by the technical function of the product, namely to allow assembly and disassembly with the rest of the bricks. According to the Commission, that function is the only factor which determined the appearance characteristics of the product affected by the contested design. In particular, the Commission had taken into account the following elements: (i) the row of 'buttons' on the upper face of the brick; (ii) the row of smaller circles on the lower face of the brick; (iii) the two rows of larger circles on the lower face of the brick; (iv) the rectangular shape of the brick; (v) the thickness of the walls of the brick; and (vi) the cylindrical shape of the 'buttons'. The Commission had therefore held Article 8(1) CDR to be applicable to the present case. Furthermore, since the features of appearance of the product covered by the contested design, as identified by the Board of Appeal, must be reproduced in their exact dimensions in order to enable them to be connected, they are also covered by Article 8(2) CDR.

The Board of Appeal also failed to consider Lego's objection on modular systems under Article 8(3) CDR as inapplicable to the present case and out of time. Faced with the declaration of invalidity, the Danish company therefore brought an action before the General Court of the European Union in order to have that decision annulled. The General Court upheld Lego's application on the basis of the following considerations: (i) For a design to be declared invalid, all the external features of its appearance must be considered and imposed exclusively by the technical function of the product to which they relate. Otherwise, if at least one of the features of the appearance of the product affected by a design is not imposed exclusively by the technical function of that product, the design cannot be invalidated. In the present case, the Lego brick has a smooth surface on two long sides and this feature is not among those examined by the OEIC, although it is a feature of the appearance of the product which does not appear to affect its functionality. (ii) The General Court also clarified the correct assessment procedure to be followed with regard to the validity of a design within the meaning of Article 8 CDR: it is necessary, first, to determine the technical function of the product concerned, second, to analyse the characteristics of the appearance of that product within the meaning of Article 8(1) of the Regulation and, third, to examine, in the light of all the relevant objective circumstances, whether those characteristics are dictated exclusively by the technical function of the product concerned.

In other words, it is necessary to examine whether the need to fulfil that technical function is the sole factor which determined the designer's choice of those characteristics, without any other considerations, in particular those relating to the visual appearance of that product, having played any role in the choice of those characteristics. (iii) Finally, the General Court's complaint concerned the failure of the EUIPO Commission to take account of the exception under Article 8.3 CDR on modular systems, which may well apply to the present case. The Lego brick therefore remains valid as a registered Community design with the consequence that the protection of 25 years from the date of registration applies to it. Moreover, it cannot be reproduced in its individualising features by competitors within the meaning of the Regulation.

Employee Inventions: Balancing Opposing Interests and Rights

Andrea Terragni - Partner

Roberto Ninno - Of Counsel

Carlotta Pecora - Trainee Lawyer

It is not uncommon in the increasingly modern business world to come across employees who, through personal technical knowledge and potential creative skills, create intellectual inventions.

Well, in cases of creative production of the employee, the latter must be clear - from the outset - to whom are entitled the rights of economic exploitation of their inventions, on the assumption that the authorship of the work and the moral rights are indisputably recognized to them under Article 2590 of the Italian Civil Code.

However, the protection of the recognition of the paternity of the work by the employee must be balanced with the protection of the employer-entrepreneur who, by entering into an employment contract whose object is the performance of inventive activities, bears the cost and economic risk that - inevitably - derives from the uncertainty of the inventive result.

Our current legal system outlines a specific distinction between different types of inventions, maintaining the tripartition of the previous legislation between service inventions, business inventions and occasional inventions.

The regulation of inventions, which is generally referred to in Article 2590 of the Italian Civil Code, was initially contained in Royal Decree no. 1127/1939, now expressly repealed by Legislative Decree no. 30/2005 (hereinafter IPC), which analyses the three types of inventions in Article 64.

The rationale of the rules in paragraphs 1 and 2 and those in paragraph 3 of Art. 64 of the Industrial Property Code is completely different: in the first two hypotheses the basic principle of labour law that the results of subordinate work belong to the employer applies, while in the third hypothesis the general rule on inventions applies according to which the patrimonial rights belong to the inventor, with the sole limitation of the recognition of the right of option to the employer.

Paragraph 1 of article 64 of the Industrial Property Code governs the so-called service inventions, i.e. those inventions which the employee makes in the execution and fulfilment of the employment relationship in which the inventive activity is envisaged as the object of the employment obligation and which are remunerated for this purpose: in this case the legislation provides that the ownership of the inventions belongs exclusively to the employer, and that no additional remuneration is due to the inventor, who is attributed solely the authorship of the work .

With regard to the element of remuneration, it is worth specifying how the majority doctrine considers that in order to classify the case in the context of the first paragraph of art. 64 one must look at the duties actually performed by the employee, which is why the element characterising the case of service invention must be found in the object of the contract and not in the remuneration .

With regard to the so-called business inventions, the second paragraph of Art. 64 of the Industrial Property Code provides that they are made in the execution or performance of a contract or employment relationship but there is no ad hoc remuneration for the performance of the inventive activity. In this case, although the rights of economic exploitation of the invention remain with the employer - except for the moral right - the employee is entitled to a fair bonus for the inventive activity carried out if the employer or its successors in title obtain the patent or use the invention under a secrecy regime. To determine the fair prize, specific parameters are taken into account such as "the importance of the invention, the tasks carried out and the salary received by the employee, the contribution received by the employee from the employer's organisation" .

Finally, the third paragraph of article 64 of the Industrial Property Code governs the so-called occasional inventions made outside the employment relationship but relating to the activity carried out by the employer, cases in which there is no objective connection between tasks and invention. Unlike in the previous cases, in the case of occasional inventions, the ownership of the invention and the relative patrimonial rights to the invention are vested in the employee, but the employer has the right of option on the use, exclusive or otherwise, or on the purchase of the relative patent. The law expressly allows the employer to obtain the patent already obtained by the employee, but authoritative doctrine holds that the employer may also obtain from the employee the right to the grant of the patent, in the event that the latter does not wish to submit the patent application.

In the event of the exercise of the option or purchase right by the employer, the "inventor" employee is entitled to a royalty or price that is commensurate with the value of the invention, net of the sums corresponding to the aid received by the employer to achieve the invention.

In the event of disputes arising between an employer and an employee, jurisdiction has been removed from the Labour Court and is now unquestionably attributed to the ordinary judge - Specialised Business Section.

It should be noted that, pursuant to paragraphs 4 and 5 of article 64 Industrial Property Code, without prejudice to the jurisdiction of the ordinary judge as to the ascertainment of the right to a fair premium (company inventions) and to the fee or fair price (occasional invention), the determination of the quantum is referred to a panel of three arbitrators, who may decide on the amount of the same with a fair assessment pursuant to article 1349 of the Italian Civil Code. The arbitrators will be appointed, two by each party and the third either by the first two arbitrators or - if they disagree - by the President of the competent specialised Section according to the criterion of the place where the inventor habitually carries out his work.

Distributed Ledger Technology, non Fungible Tokens and Cryptocurrency: Perfect Autarkic systems?

Matteo Molesti - Partner

Crypto assets such as Bitcoin are a representation of digital value that is not issued or guaranteed by a central bank or public entity and which are not necessarily linked to a legally established currency, do not possess the legal status of a currency or coin, but are accepted as a method of exchange and can be transferred, stored, and exchanged electronically. (EU Directive 2018/843 of May 30, 2018, Article 1 (d).

The definition of "virtual currency" was transposed into Italian law by Legislative Decree 90/2017 (art. 1, paragraph 2, letter qq).

Cryptocurrencies are realized through digital tokens that operate through an electronic protocol managed in a decentralized manner which is distributed ledger technology (DLT) also known as blockchain.

Bitcoin (BTC) was first described in 1998 by Chinese engineer Wei Dai, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions rather than a central authority.

In the blockchain system, institutional authority is replaced by a complex mechanism of collective consensus among the operators of participating computers, called nodes. It is fundamentally based on an incentive system that makes it more economically beneficial and efficient for system operators to follow correct behaviors. Each end user operates through a pair of cryptographic keys: a private one, similar to a pin code, which allows to use the wallet and, in particular, to give credit instructions in favor of another user and the other public (similar to an iban code), necessary for system validation in order to perfect the transaction entered.

The Bitcoin blockchain protocol - General aspects of blockchain operation.

The Bitcoin protocol is one of the declinations of the distributed ledger technology that allows the creation and transfer of cryptocurrencies. It is a complex computer program capable of storing in a secure way (cryptographic) information accessible, manageable and verifiable (even backwards) in a shared mode by subjects operating online. DLT allows for the creation of public digital archival records. Unlike a normal central database with shared access via password, DLT allows for unalterable chronological records and decentralized process updates, without the need to rely on a third party recognized as a guarantor or a trusted custodian by law or custom.

Specifically, there are three types of DLT: public DLT protocols (or permissionless) managed entirely decentralized on the Internet, through the action of independent and autonomous subjects, specialized operators, called miners, as in the DLT of Bitcoin; private DLT protocols, where the nodes are enabled by the manager of the computer protocol "permissioned" (this class of DLT can also operate without miners); hybrid protocols, characterized by a system of decentralized validation through nodes (not all directly enabled by the manager), while leaving to the subject that promotes the protocol full control of the same.

Deciphering complex alphanumeric cryptographic codes requires computers using specific software and hardware capable of making millions of calculations per second. In the Bitcoin protocol, for example, every time a miner solves one of these mathematical problems the transaction is perfected and a new block is completed. With the solution of the problem, a certain number of Bitcoins are released which are distributed proportionally according to the computing power reported by each miner. Miners, then, who are one of the key figures in the process, are in charge of mining (hence the name) new Bitcoins and verifying the validity of the transactions.

In addition to blocks and miners, as mentioned, there are nodes. These are computers connected to the Bitcoin network that are in charge of storing and distributing an updated copy of each block. In case a node gets lost or stops working, nothing will happen to the chain. The rest of the links store all the information and it is not lost. The information is stored in all nodes and when something is entered into the blockchain it is preserved forever.

Currently, the blockchain protocol awards approximately 12.5 newly created Bitcoins to the miner who first finds the solution to the cryptographic puzzle associated with a block of transactions. The blockchain protocol was programmed to create a predefined maximum number of bitcoins (21 million units), as every 210 thousand blocks the system halves the number of Bitcoins allocated to each transaction block.

The creator of Bitcoin, the fictional Satoshi Nakamoto, predicted that this system in order to be efficient and lucrative for a long time would have to provide a limit. So was born the idea of establishing the halving, a process by which the reward that miners get from mining, ie Bitcoins, is halved, in fact, every 4 years once reached 210,000 blocks, given that the first block of Bitcoin was generated in January 2009, this translates into the fact that the last Bitcoin will be mined in 2140 or so, but already around 2030 the new BTC will be very few. Currently about 19 million BTCs out of the total 21 million have been mined.

For this reason, it is argued that Bitcoin is a deflationary instrument and - with Keynesian economists at the forefront - that BTC, while it remains an excellent medium of exchange, is not a stable store of value. Keynesians, inclined by definition to print money, place the emphasis of their criticism precisely on the (deflationary) tendency of BTC that would incentivize individuals and businesses to hoard money rather than invest it.

Virtual currencies such as BTC are fractionable (in so-called Satoshi) and can be used as the underlying for financial instruments or to finance the operations known as Initial Coin Offerings (ICOs). The first State to introduce specific legislation for the entire cryptocurrency sector and ICOs is Malta.

DLT, NFTs, and blockchain in law, economics, art, and international commerce

While there is an open contrast, perhaps irremediable for a few more years, between the subjects (also institutional) that support the investment in cryptoassets and those, instead, like the European authorities ESMA, EIOPA, EBA and Banca d'Italia, who have underlined the risks deriving from the use of these instruments, there is, instead, uniformity of view on the fact that the theme of cryptoassets (in the different typologies, cryptocurrencies included) must be separated from that of the underlying technology: the distributed ledger technology. This technology has great potential especially in the field of cryptographic storage, the use of smart contracts and some types of digital tokens.

There is also agreement on the fact that the technological development linked to DLT opens up far-reaching scenarios for the processes of intermediation and organization of markets on a large scale.

Payment tokens, for example, are digital representations of value issued by a legal entity against a unit of traditional currency. Utility tokens, represent non-transferable and non-negotiable administrative rights.

Security tokens, are transferable and tradable and represent rights such as: voting rights, rights to cash flows, ownership rights to financial assets, or shares in standardizable real assets (commodities) (ESMA, 2019).

Not Fungible Tokens (NFTs), special types of tokens that represent something unique and not replicable or modifiable. This is a new strand of art and collecting that has literally exploded in the first few months of the year. Last month alone, transactions for 400 million dollars were recorded (often settled in cryptocurrencies).

Consider, for example, that a few days ago the work of an artist who calls himself Beeple entitled "Everydays, the first 5000 days", went on auction at Christie's for the monstrous figure of $60,250,000 (!). The digital work is a composition of 5000 files that the artist added every day for five thousand days starting from May 1st 2007.

In digital it is normal to reproduce a file but Beeple's work is unique because it has been authenticated with blockchain technology. On February 16, the artist registered a file of that work via blockchain, obtaining a certificate of authenticity that makes it unique forever. Non-fungible.

Just as the blockchain was born to overcome the criticality of the so-called double spending (a completely virtual currency without a system like the one that regulates Bitcoin could be replicated indefinitely, thus losing its function that derives precisely from the limited number), crypto-art was born to enhance works that would otherwise be plagiarized and spread inevitably losing value.

It's therefore intuitive the bursting future application of DLT and NFT in many areas of law and economy as a function of certainty, authenticity and originality of a particular good, movable or immovable.

DLT allows for unalterable chronological recording and decentralized updating of processes, without the need to rely on a guarantor and/or trustworthy third party such as, for example, a public official, a public body, an insurance company or a trust.

For example, it is possible to allow a third party to approve or reject a transaction, in the event of a disagreement between the parties, without the third party having to have physical control over their money, thereby improving efficiency, time and cost, institutions such as escrow accounts or contractual schemes used to secure claims and rights, with disruptive application in all types of international trade and large-scale exchanges.

INTERNET SERVICE PROVIDER - lights and shades of Italian case-law pending transposition of Directive 2019/790

Gaia Bellomo - Senior Associate

With two recent judgments of January 20 and 21 2021, the specialized section of the Court of Rome sanctioned two internet service providers, Veoh and Dailymotion, for having broadcast on their platforms television programs owned by RTI (Reti Televisive Italiane) and sentenced them to pay damages for breach of copyright for a total sum of more than 25 million Euros.

This case concerned the unauthorized transmission of videos and clips of some of the most famous programs on R.T.I.'s schedule, such as "Uomini e Donne", "C'è posta per te", "Casa Vianello", "Melaverde".

The Court upheld R.T.I.'s argument that, as producer and broadcaster of the programs listed above, Veoh and Dailymotion infringed its exclusive right connected to the copyright of reproduction and exploitation of its own works (pursuant to Articles 78-ter and 79 of Law No. 633/1941).

The legal issue at the heart of the matter concerns the degree of liability attributable to internet service providers for the unlawful acts committed through the internet by the users of the same platforms: Veoh and Dailymotion claimed, in fact, to be simple "hosting providers" and to play a merely passive role with respect to the content shared by the users, who, by accepting the policy of use of the platform, undertake not to violate the rights of third parties and assume on their own all the liabilities.

In this regard, the European "E-Commerce" Directive provides that the hosting provider cannot be held liable for materials posted by users of the platform provided that it is not aware of its unlawfulness and, as soon as it becomes aware of it, it immediately removes the information and content that infringes the rights of third parties (Art. 14 Dir. 2000/31/EC).

The Court ruled out the merely passive nature of the hosting activities of Veoh and Dailymotion, highlighting the fact that both portals indexed the content uploaded by users by creating thematic channels and associating numerous advertisements to the programs; these activities were not considered compatible with a merely passive role of the platforms which are intended to make a service available to users without intervening. According to the Court, since the platforms’ managers through the activities of indexing and cataloguing s necessarily became aware of the content of the catalogued videos, including the fact that there are works protected by copyright, they cannot be held just as passive holders.

This approach is compatible with the interpretation provided by the Court of Justice with respect to the role of e-commerce platforms, which has held that there is a liability of the hosting service provider where the latter performs content management activity of any kind, such as optimizing the presentation of offers for sale and promoting them.

In this sense, Article 17 of the Directive on Copyright and Related Rights in the Digital Single Market (Directive (EU) 2019/790), soon to be transposed in Italy and not yet in force, now provides direct liability for the sharing activity performed by a service provider which infringes copyright works by the upload of its users and places a stricter duty of care on video-sharing platforms. The European standard now requires platforms wishing to be exempt from liability either to negotiate collective licenses with copyright holders in advance or to comply with certain cumulative requirements consisting of having made best efforts to obtain permission from right holders, to ensure that specific works and other materials for which they have received information are not available for licensing, and to demonstrate that they have acted promptly upon notice to disable access to or remove from the website the works or other materials for which they have received notice and to prevent their future uploading.

Going back to the judgments, a merely passive role of Veoh and Dailymotion cannot be recognized in the case at stake since, according to the Court, the exemption of liability provided for by Article 14 of the Directive could not apply, having RTI previously indicated to the platforms which contents to remove and having the platforms not promptly removed them all.

In this respect, the two judgments of the Court of Rome, which held that it was sufficient for RTI to have indicated to the ISPs the name and title of the program and not the URL (Uniform Resource Locator, i.e. a sequence of characters that uniquely identifies the address of a resource) appears to be inconsistent either with the orientation of the EU legislator, which established that the information provided by the copyright holder to the provider to identify the contents must be relevant and necessary, nor with the national case law, which established that the lack of indication of the URL was not sufficient to trigger the provider's obligation to remove the infringing contents (thus Tr. Turin, Dailymotion v. Deltatv Programs, judgment of 17 November 2017, where it is stated that the failure to indicate the URL is inconsistent because: "...to expect the ISP to "scan" the contents of the materials already uploaded on the platform before they were reported with a specific URL, unjustifiably goes beyond the point of balance, identified above, between the opposing roles and interests of the hosting provider and the copyright holder who complains of the infringement of his rights").

Court of Rome, judgments 20 - 22 January 2021

The Judicial Determination of the Remuneration of Directors of Limited Liability Companies

Stefano Bonacina - Senior Associate

Gilda Lucchetti - Trainee

The Italian legal system recognises the right of directors of limited liability companies to receive specific remuneration for the activities performed in fulfilment of their mandate. Exactly as any other professional activity, even such a role must be considered to be for valuable consideration, at least on a presumptive basis.

The director of a company, by accepting the office, acquires therefore the right to be remunerated for the activity carried out in the performance of the task entrusted and the amount of the remuneration may be determined, alternatively or cumulatively, in the Articles of association, in the deed of appointment or by an independent resolution of the shareholders' meeting (the determination of remuneration cannot be implied in the resolution approving the annual financial statements).

In the absence of such formal acts, the remuneration is not defined by the parties and any other different form of possible determination, such as an oral agreement between the director and the majority shareholder, is ineffective.

Therefore, if the Articles of association does not provide anything in this regard, the shareholders' meeting does not quantify such amount or if it determines it in an inadequate measure, the director can file a claim in Court in order to request a specific judicial determination, also by means of an equitable determination of the amount.

It is necessary to clarify that a minimum level remuneration does not exist and the directors may completely waive their fees or accept to be paid in a measure that is objectively inadequate to the activity performed. In the latter cases, the director must give his express consent, even if it can be deduced from tacit conduct that can be univocally interpreted as a waiving intention. Indeed mere inertia or silence are not considered to be sufficient.

As recently clarified by a decision of the Court of Milan, specialized business section (published on 22 June 2020), for the equitable determination of the remuneration due to a professional, the Court must take into account not only the nature of the mandate, but also the quantity and quality of the activities actually carried out by the director.

In particular, the Court must quantify the amount of the remuneration due to the director in proportion to the extent of the services performed by him and to the outcome actually achieved by the principal (i.e. the company), given that the determination of the remuneration can only be made on an equitable basis with a wide discretion of the Court.

In the light of the above, in the proceedings for the determination of the remuneration brought by a director of a limited liability company, it is necessary to indicate and prove the specific quality and quantity of the services actually performed. The mere allegation of the remuneration agreed in different business years or in favour of different directors in similar positions is not sufficient. The equitable determination of the remuneration due to the director must be based on the analysis of the data that can be obtained from the documents submitted. These documents must be jointly assessed in order to be able to determine the actual extension and relevance of the activity specifically performed by the director.

Prince's single 'The most beautiful girl in the world': compensation for moral damages for infringement of copyright also confirmed.

Laura Bussoli - Senior Associate

The case is not recent, (it all started in 1995...), but a few days ago the Supreme Court gave its last word on the mount of damages due to Bruno Bergonzi and Michele Vicino from the heirs of the famous American pop star, Prince Rogers Nelson, better known as Prince, for having violated the latter's copyright with the famous song "The most beautiful girl in the world".

On January 25th 2021, the Supreme Court ruled on the appeal filed by Prince's heirs against the 2018 decision of the Rome Court of Appeal awarding the two Italian authors, in addition to economic damages (in Euro 956,608.00...), also moral damages, in the lower amount of Euro 40,000.00, for the "artistic frustration" suffered by the same authors as a result of the plagiarism of their original work.

But let's take a step back: in 1995 Bruno Bergonzi and Michele Vicino together with Edizioni Chappell s.r.l. - respectively authors and assignee of the exploitation rights of the song "Takin' me to paradise" - brought an action before the Court of Rome to ascertain the plagiarism of the above-mentioned musical work by Prince Rogers Nelson, Controversy Inc. and Fortissimo Gruppo Editoriale s.r.I., respectively author and assignee of the economic rights of the song distributed under the title "The most beautiful girl in the world", with the consequent sentence to pay compensation for economic and moral damages.

On January 30th 2003, the Court of Rome rejected the application of Bruno Bergonzi, Michele Vicino and Edizioni Chappell s.r.l..

However (although after 7 years...) the first Court's decision was overturned on appeal: the Court of Appeal ascertained the plagiarism, prohibited the diffusion of the song in the Italian State and condemned Prince and Controversy Inc. jointly and severally, to pay compensation for economic damages liquidated in the amount of Euro 956.608.00 to Bergonzi and Vicino. Fortissimo Gruppo Editoriale was instead condemned to pay compensation in the lower amount of Euro 6,888.40; in this judgment, the Court of Appeal rejected, however, the claim for compensation for damages for breach of moral rights of the Italian authors, deeming insufficient the allegations of evidence in support of such damage provided by the plaintiffs.

This ruling was appealed and with judgment no. 11225 of May 29th 2015, where the Supreme Court ruled on both the extension of the effects of the conviction limited to the Italian territory and on the non-recognition of the infringement of the moral copyright, considering that the latter should instead have been recognized .

In particular, the Supreme Court held that the reasoning of the Court of Appeal of Rome was apodictic when it assessed as insufficient the evidence put forward in support of the moral damage suffered by the authors in their documents, reiterating the well-known principle, therefore also applicable to the infringement of moral copyright, according to which, in the event of an ascertained infringement of the same, the damage suffered by the author must be considered in re ipsa and as such must be demonstrated only in its extent, without the plaintiff being required to prove anything else. According to the Supreme Court, the "artistic frustration" complained of and suffered by authors as a result of plagiarism is sufficient to justify the claim for compensation for the moral right.

In 2018, the Court of Appeal of Rome issued a judgment prohibiting Prince's heirs from any further reproduction of the song "The most beautiful girl in the world" and, on the basis of the referral of the Supreme Court, sentenced them, to pay the sum of EUR 40,000.00 each, calculated on an equitable basis, plus interest for moral compensation.

This seemed to be the end of the matter, but the heirs of the famous pop star challenged the decision again, complaining - as far as is relevant here - of the incorrect application of the rules on moral copyright: this last appeal was entirely rejected by the Supreme Court in its recent ruling, which confirmed the accuracy of the argument followed by the Court of Appeal in settling damages for breach of moral copyright.

The judgment, which definitively closes the case of The Most Beautiful Girl in the World, concerns not only the already widely recognized right of the judge to settle the damage, including moral damage, resulting from copyright infringement on an equitable basis, but above all. the sure connection that can and must exist - says the Court - between the extent of moral damage (and the relative compensation) and the space-time dimensions of the plagiaristic conduct, and therefore, ultimately, of diffusion and success of the infringing work.

Patronymic Trademarks - The Supreme Court establishes the criteria for the lawfulness of use

With a decision rendered last July , the Supreme Court put an end to a dispute that took place in courts in 2011 and related to the use of the distinctive sign "Salini", which opposed two branches of the Salini family, both active in the construction sector, which for two generations shared the same entrepreneurial history.

The question brought to the attention of the Supreme Court concerned the legitimacy of the use by both parties of the common patronymic in the same economic activity (the construction of buildings), after the foundation by one of the two cousins of his own independent construction company, Salini Locatelli S.p.A., in direct competition with Salini Costruzioni S.p.A., until then the family company.

In its appeal to the Supreme Court, the appellant argued that the rule governing limitations on the use of trademarks (Article 21 of the Italian Intellectual Property Code) - which does not allow the proprietor of a trademark to prohibit third parties from using his name and address in their economic activity - should also apply to all distinctive signs, i.e. all those elements that identify a certain business activity to the public, including the company name.

The Supreme Court ruled that - although it is in principle admittable to include the founder's patronymic in the company name - it is in any event necessary to verify in concrete that the adoption of the patronymic is not likely to cause confusion.

Under Italian company law there is companies have to indicate the surname or the initials of the entrepreneur in the company name (Article 2563 of the Civil Code); in this regard the Court of Cassation pointed out that it is necessary to adopt a stricter judgement on the conformity of the use of the patronymic with the principles of professional correctness, taking into account both the likelihood of confusion between the two signs and the danger of association between them. A judgement of this kind cannot disregard a concrete verification of the competitive relationship between the two companies concerned.

In the present case, the two companies shared the same identifying "heart" of the sign, consisting of the word "Salini", and both were active in the same construction field; in this context, the inclusion of the element "Locatelli" was not sufficient to protect the company founded subsequently from a likelihood of confusion or association with the pre-existing company.

Referring to its well-established case law on this point (see, e.g., Italian Supreme Court, judgment no. 21403 of 14 August 2019), the Supreme Court stressed that, in the conflict between two companies using the same identifying sign, the one that is first enrolled in the register of companies with that sign must prevail. This point brought to the rejection of Salini Locatelli S.p.A.'s appeal, since the Court asceirtained the existence of a concrete likelihood of confusion and association between the two competing companies.

The judges of legitimacy emphasised the pro-competitive value of the rules limiting the exclusive right (potentially perpetual) of the owner on his distinctive signs (trademark and company name, respectively), reaffirming that the right to prohibit third parties from using a similar or confusable signs is severely limited in the event that the third party uses a similar or confusable sign in his economic activity, which, however, consists of his own name and surname.

The Italian law is clear in stating that this limitation must not result in undue exploitation of the reputation of another person's distinctive sign: only those uses of another person's sign which conform to the principles of professional fairness have to be tolerated by the trademark owner. The reference to a usage in conformity with these principles means that, if someone uses another person's distinctive sign - even if it is part of his own name and surname - in such a way as to unduly enhance his own product and in such a way that it constitutes an appropriation of the merits of others, such use must be considered unlawful as not in line with professional fairness.

Therefore, the competitor's personal name can lawfully appear on the goods and be used within the entrepreneur's distinctive signs, but on condition that any parasitic connections is excluded: the use of the patronymic reproducing an earlier distinctive sign is allowed only for the purpose of identifying the entrepreneur and therefore in a descriptive and informative way. Such descriptive use must, however, be excluded where there is a risk of confusion on the market, in light of the function concretely performed by the name in the commercial activity, aming to avoid the public being misled as to the identification of the producer and the origin of the goods.

Supreme Court, sec. I, decision of July 6, 2020, n. 13921

Agriculture and Limited Companies under Italian Law

Mattia Raffelli - Partner

Gilda Lucchetti - Trainee

1)  Farming in the form of limited companies

Agricultural activity, which historically in Italy has mainly taken the form of sole proprietorships or family businesses, can also be exercised under other corporate forms. The latter, in fact, on the one hand allow the aggregate exercise of the enterprise and on the other, are able to provide greater protection of personal assets.

2)  Criticism: the right of agricultural pre-emption

Agricultural pre-emption is the right to be preferred to others for the purchase of agricultural land when the owner decides to sell it.

According to the provisions of Article 8 of Law 590/1965, the right of first refusal belongs first of all to the direct farmer (or a farm in which at least half of the partners are direct farmers) who has been renting, for at least two years, the land offered for sale. In addition, pursuant to Article 7 of Law 817/1971, where the land is not leased to a direct farmer (or a farm), the right of first refusal arises for direct farmers (or farms in which at least half of the members are direct farmers) who own neighboring land. On the other hand, agricultural partnerships in which less than half of the partners are direct farmers are excluded from the right of first refusal, irrespective of whether they are professional farmers, and joint stock companies are always excluded, even if they have direct farmers as partners.

The ratio for these rules was, in the past, the need to encourage the purchase of agricultural land by direct farmers. In fact, the legislator's aim was to improve the productive structures of agriculture. In particular, the tenant pre-emption promotes (or establishes) new ownership by bringing together in the same person the ownership of the agricultural undertaking and the ownership of the land on which it is exercised, thus favoring the continuation of the same; the neighbor pre-emption enlarges direct farming ownership by combining neighboring land, thus creating larger and more efficient agricultural undertakings from a technical and economic point of view.

The lack of agrarian pre-emption for limited companies will therefore be an element to be carefully assessed in the choice of the form of company to be adopted in the specific case.

3)  The requirements for a farm established as a limited company

As already mentioned, farms can certainly also be set up in the form of limited companies. In fact, our legal system provides for the possibility of S.r.l. (Limited liability company), S.r.l.s. (Simplified limited liability company) e S.p.a. (limited companies), may take on the status of “Farm” provided, however, that they meet the following three essential requirements:

a) exclusive exercise of farming activities and related activities;

b) compulsory indication of “Farm” status;

c) possession of certain professional qualifications.

A. Exclusive exercise of farming activities and related activities

As regards the first requirement, companies must have as their exclusive object the exercise of agriculture and related activities.

In this regard, Article 2135 of the Civil Code introduces a definition of these activities which, in brief, concern:

- the cultivation of the land;

- forestry;

- animal breeding;

- all other related activities.

The law literally specifies that 'Cultivation of land, forestry and livestock farming are activities aimed at the care and development of a biological cycle or a necessary stage of that cycle, of a plant or animal nature, using or capable of using land, woodland or fresh, brackish or sea water'.

With regard to related activities, these are defined as:

- activities aimed at handling, preserving, processing, marketing and adding value to products obtained mainly from the cultivation of land or forests or the rearing of animals;

- activities aimed at providing goods or services using mainly farm equipment or resources;

- other activities, e.g. management of agritourisms.

Connected activities, therefore, take place alongside the main activities and aim to make the agricultural undertaking multifunctional. In order to be considered connected, account is taken of both the objective element, i.e. the activity carried out, and the subjective element, i.e. that the activity must be carried out by the same entrepreneur as the main activity.

B.   Compulsory indication of “Farm” status

The first paragraph states that the name or company name of companies whose object is the exclusive pursuit of the activities referred to in Article 2135 of the Civil Code must include the words "Farm". It should be pointed out that this is obviously not a new type of company: the companies that can be set up are still those referred to in the Civil Code, which, in the case of the exclusive exercise of agricultural activities, must bear the indication "Farm" in the name or company name.

C.   Possession of professional qualifications

As to the third and last requirement, pursuant to Article 1 of Legislative Decree no. 99/2004, at least one director must be a professional farmer (or a direct farmer if he also meets the requirements for being a professional farmer). In view of the possibility that, in limited companies, the administration may also be entrusted to non-members, this could lead to the case of an agricultural company in which none of the partners is an agricultural entrepreneur or direct farmer. Even in the case of a single-member company, the presence of at least one director with the above-mentioned requisites allows the company to qualify as a farm and gain access to the related benefits.

It should also be noted that the qualification of professional agricultural entrepreneur (in Italian, I.A.P.) can be conferred by the director to only one company, in order to avoid the creation of fictitious administrative offices, with the sole purpose of obtaining the benefits due to farms.

4)  The procedure for setting up a farm in the form of a limited company

The farm can therefore be set up in the form of a limited company if the three above-mentioned requirements are met.

Particular attention must therefore be paid to the figure of the qualified director.

First of all, a "professional agricultural entrepreneur (I.A.P.) is a person who, possessing professional knowledge and skills within the meaning of Article 5 of Regulation (EC) No 1257/1999, dedicates at least fifty per cent of his total working time, either directly or as a partner in a company, to the agricultural activities referred to in Article 2135 of the Civil Code and who derives at least fifty per cent of his total income from such activities".

Normally, if you are a direct farmer you also meet all the requirements to be considered a professional farmer, but this is not necessarily the case, because the legal requirements for these two professions operate on two different levels.

Below, without any claim to completeness, is the sequence of the most significant requirements for setting up a farm in the form of an ordinary and/or simplified limited liability company:

1)   Setting up of the farm in the form of an ordinary and/or simplified limited liability company;

2)   opening a VAT number;

3)   opening of a certified e-mail address;

4)   registration of the company in the ordinary section of the Companies' Register and in the REA (Economic and Administrative Register) of the province where the company's registered office is based;

5)   acquisition by the company of an established farm and/or setting up of a farm by the company, by means of renting the rustic fund and/or loaning it for use;

6)   submission of the application for “Inizio attività” at the Companies' Register of the province where the company's registered office is based, with simultaneous registration of the company in the “Special Farm Section”.

Finally, the most important task following the setting up of the company, the opening of the VAT number and the other tasks not included in the above list (such as the choice of the applicable VAT regime) will obviously consist in the acquisition or ex novo setting up of a farm.