FOOD LAW: the new regulation of unfair trade practices in the food industry

Clovers reports an important new regulation with important effects in the field of contracting and commercial practices in the food industry.

THE NEW REGULATION OF UNFAIR COMMERCIAL PRACTICES IN THE AGRI-FOOD SECTOR

As you may already know, the recent implementation in Italy of EU Directive 2019/633 has introduced stringent rules to which companies operating in the agricultural and food supply chain must comply from 15 December 2021.

The main novelties of this reform concern both the contracts (in existence or to be stipulated), and the discipline of competition between companies operating in a sector that is of vital importance in the promotion of Italian excellence and that involves products ranging from milk to plants, passing through wine and tobacco.

In order to ensure compliance with the new regulations, penalties are also foreseen, which can reach the threshold of 10% of the transgressor's turnover in the financial year preceding the assessment.

You will find below the most relevant aspects of the new discipline, divided by thematic areas of interest.

What is this about

The reform deals with the regulation of contracts, commercial practices, the practice of selling below cost and other important aspects that regulate the agri-food chain in Italy.

To whom it is addressed

It is a discipline that applies only to B2B relations, excluding, therefore, contracts with final consumers.

The recipients are both suppliers and buyersoperating in the agro-food supply chain sector:

  1. who are involved in the transfer of agricultural and food products,
  2. in cases where the supplier is established in Italy,
  3. whatever their turnover is.

Novelties regarding contracts

As far as supply contracts are concerned, the regulation provides for compliance with precise obligations regarding content, duration and form and establishes that all existing contracts must be adapted by June 15, 2022at the latest.

1. obligations (and prohibitions) regarding content

  • When negotiating new contracts or adapting existing ones, the key rule is clarity: the legislation spells out precisely which provisions must be included in contracts and which are prohibited:
  • From a practical point of view, all contracts between suppliers and purchasers must always include precise indications regarding the quantities and characteristics of the products sold, the price (which may be fixed or determinable on the basis of criteria established in the contract) the duration, the delivery and payment methods for the goods supplied.
  • On the other hand, it is expressly forbidden to include in contracts agreements aimed at:
    • establishing payment terms of more than 30 days for perishable products and more than 60 days for other agricultural and food products
    • allowing cancellation by the buyer of orders for perishable products with less than 30 days notice, with some exceptions;
    • unilaterally changing terms and conditions regarding the frequency, method, location, timing or volume of supply or delivery of products, quality standards, payment terms or prices, or regarding the provision of ancillary services;
    • allowing the supplier to be required to make payments which are not related to the sale of the agricultural and food products or to bear the costs of deterioration and/or loss of products occurring on the buyer's premises or otherwise after such products have become the property of the buyer, where such deterioration or loss has not been caused by the supplier's negligence or fault;
    • imposing, directly or indirectly, unjustifiably onerous conditions of sale, purchase or other contractual terms;
    • selling agricultural products and foodstuffs on contractual terms that are unduly burdensome, including selling at prices that are manifestly below the cost of production;
    • imposing on the buyer products with expiration dates that are too short;
    • imposing contractual constraints on the maintenance of a certain assortment of products;
    • imposing on the purchaser the inclusion of certain products in the assortment;
    • imposing on the purchaser the obligation to reserve for certain products privileged positions on the shelves or in the stores.
    • excluding the application of default interest to the detriment of the creditor or the costs of debt collection; provide for the supplier's obligation not to issue an invoice until a certain period of time after delivery of the products, with certain exceptions;

and more generally

  • apply objectively different conditions for equivalent services;
  • subordinate the conclusion and execution of contracts and the continuity and regularity of commercial relations to the performance of services which, by their nature and according to commercial usage, have no connection with the subject matter of the contracts and commercial relations; and
  • impose the obligation to provide services and ancillary services which have no objective connection with the products transferred under the contract
  • impose an unjustified and disproportionate transfer of economic risk from one party to its counterparty.

It is allowed, as long as it is clearly written and agreed upon by the contracting parties (see the following paragraph on the so-called "grey list"), to include clauses that provide that:

  • the buyer returns unsold agricultural and food products to the supplier, without paying any payment for such unsold products and/or their disposal;
  • the supplier is required to make a payment as a condition of storing, displaying, listing or marketing its products;
  • the buyer requires the supplier to bear the cost of discounts on agricultural and food products sold by the buyer as part of a promotion, with some exceptions;
  • the purchaser requires the supplier to pay the cost of advertising the purchaser's products;
  • the purchaser requires the supplier to pay the costs of the purchaser's marketing of products;
  • the purchaser requires the supplier to pay the costs of staff to organise the supplier's product sales space.

Duration

An important indication concerns the duration of contracts, which must be at least 12 months, unless proven requirements arising, e.g., from the seasonality of the products to be supplied, specifically agreed by the parties or through trade associations; outside this exception, contracts entered into with a shorter duration, will be considered valid for up 12 months.

Written form

Again with the aim of reducing the margin of uncertainty between suppliers and purchasers as much as possible, the new regulations require contracts to be in writing.

NB: good business practice

Among the most important innovations, the regulation expressly provides for the possibility for operators in the supply chain to use in their activities advertising messages bearing the following wording: "Product conforms to good commercial practices in the agricultural and food supply chain", when not only the criteria set out in point 1 regarding the content of contracts are met, but it is demonstrable that the parties are acting in accordance with fairness, transparency and good faith in the reference market.

The use of this claim is always subject to verification by the ICQRF.

Prohibited commercial behaviors and in "Grey list".

The new regulations list in detail a series of prohibited commercial behaviors that must always be avoided by all companies operating in the agri-food sector, regardless of the existence or not of contractual relationships.

These are so-called "unfair commercial practices" which are distinguished, according to their seriousness, as follows

1. commercial practices that are in any case prohibited (so-called "black list") and

  1. practices that would be prohibited unless previously agreed between the parties in the transfer contract or in another subsequent agreement. (so-called "grey list")

1. The so-called "black list"

Prohibited practices include all the conduct already examined with reference to prohibited content in contracts between suppliers and buyers, but there are also others, which are independent of an existing supply relationship between the parties, including:

  • the unlawful acquisition, use or disclosure by the buyer of the supplier's trade secrets;
  • the threat of, or the very act of, commercial retaliation against the supplier when the latter exercises his contractual and legal rights
  • the sale of agricultural products and foodstuffs through the use of tenders and electronic auctions with double discounts;
  • the omission of at least one of the conditions required by Article 168(4) of Regulation (EU) No 1308/2013 on the common organization of the markets in agricultural products;
  • the imposition, directly or indirectly, of unjustifiably burdensome sales, purchase or other contractual conditions;

and, more generally:

  • the adoption of any further commercial conduct that is unfair even taking into account the complex of commercial relations that characterize the conditions of supply.
  1. The grey list

As seen above, on the other hand, it is possible to escape censure of competitive unfairness for these provisions, if they are included in a clear and determined manner in the contract:

  • the buyer returns unsold agricultural and food products to the supplier, without paying any payment for such unsold products and/or their disposal;
  • the supplier is required to make a payment as a condition for the storage, display, listing or marketing of its products;
  • the buyer requires the supplier to bear the cost of discounts on agricultural and food products sold by the buyer as part of a promotion, with some exceptions;
  • the purchaser requires the supplier to pay the cost of advertising the purchaser's products;
  • the purchaser requires the supplier to pay the costs of the purchaser's marketing of products;
  • the buyer requires the supplier to pay the costs of staff to organise the supplier's product sales space.

Who monitors?

The Authorities in charge of supervising the implementation of the new rules are the newly established Central Inspectorate for the protection of quality and fraud repression of agro-food products (ICQRF), which can act both ex officio and following a complaint (even anonymous) and the Antitrust Authority (AGCM), without prejudice to the possibility for the parties concerned to resort to mediation procedures or alternative dispute resolution mechanisms.

Summing up

The new discipline, effective immediately, deals with both contracts and behaviors of companies active in the agro-food chain in Italy and establishes precise rights and obligations between the parties, subjecting market operators to the inspection and sanctioning power of specific public authorities.

The regulatory provisions do not simply represent yet another novelty for the sector, but are also an opportunity to rethink the relationships between market operators with a view to rewarding transparency, continuity and the enhancement of the supply chain.

It is in full respect of this aim that we are at your disposal to better cope with these aspects, also in terms of sharing strategies to adapt to the new regulations in the face of a possible change in consolidated relationships between your buyers and suppliers. The firm is also available to schedule a training session, if required.

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

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

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

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

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

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

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

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

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

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

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

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

Facebook must compensate the user for the unlawful removal of posts

The Court of Appeal of L'Aquila with the judgment 1659 of November 9, 2021 reconstructs the contractual relationship between the social network and the user who interacts in the community and expresses itself on the scope of freedom of expression of users within the social network.

The plaintiff filed a summary procedure to react to the suspension of his account, for 4 months, by the social network following the publication of some politically motivated posts.

In the first instance, the Court of First Instance sentenced Facebook to pay compensation of 15 thousand euros for moral damages. The present decision concerns the appeal presented by the social network before the Court of Appeal of L'Aquila.

First of all, the Court affirms, in this relationship marked by elements of internationality (intervening between a consumer resident in Italy and a supplier based in Ireland), the jurisdiction of the Italian Judge and the applicability of Italian law to decide the dispute.

It then defines its scope, since it is a contract for adhesion in which the ordinary aspects of contractual responsibility are relevant. It then pauses to analyze the nature of the relationship characterized by onerousness, recalling how free contracts are protected with less force than contracts for consideration (paradigmatic is the difference between donation and sale). The relationship is for consideration in that the patrimonial content of a service can be considered to exist also in those cases in which goods other than money are transferred as consideration for a service which, due to their potential for commercial exploitation, become susceptible to an economic and patrimonial evaluation. It is, in essence, the intrinsic suitability of personal data - legitimately acquired and processed - to be considered, because of the profitable commercial exploitation of the same by the social network.

The Court affirms another interesting principle regarding the clause that provides for the powers of Facebook to remove content and suspend accounts in case of violation of the policies of the social network. The same was considered valid and effective, not being able to be considered vexatious.

The Court finally examined the merits of the case, going to syndicate in concrete powers of Facebook: the work of social must not result in behaviors that violate the freedom of expression that, after granting permission to use their sensitive data and not for free, is the typical content and, so to speak, the raison d'être of the membership of a platform of this type, whose function is precisely to allow users to express themselves and share content that is important to them.

The Court of Appeal therefore deemed illegitimate the suspension of the account, given that "the mere publication of a photo with a comment that is limited to the expression of one's own thoughts (...) is not considered sufficient to violate the standards of the community".

Therefore, the Court ruled that, due to the content posted by the user, Facebook exceeded its censorship power, limiting, however, the compensation for damages in favor of the user to € 3,000, also considering the total number of members of the page that was about 2,500 contacts.

Cookies: the French Privacy Guarantor (the "CNIL") sanctions GOOGLE for a total of 150 million euros and FACEBOOK for 60 million euros for failing to comply with French privacy legislation.

On January 6, following investigations, the CNIL found that the sites facebook.com, google.fr and youtube.com do not allow users to refuse cookies as easily as they accept them. The CNIL thus fined FACEBOOK 60 million euros and GOOGLE 150 million euros and ordered them to comply within three months. The French authority noted, in particular, that the sites facebook.com, google.fr and youtube.com offer a button that allows the user to immediately accept cookies, while they do not provide an equivalent solution (button or other) that allows the user to refuse, in an equally simple way the use of the same cookies. Indeed, the websites under scrutiny by the CNIL provided for several clicks to refuse all cookies and only one click to accept them, thus limiting the freedom of consent, which is provided for as a fundamental element by Art. 82 of the French Privacy Law, as well as by the GDPR. In addition to the payment of the aforementioned penalties, Google and Facebook will have to comply with the CNIL's requirements within 3 months, providing users with a way to reject cookies that is as simple as accepting them. Failing this, companies will have to pay a penalty of 100,000 euros for each day of delay. These two decisions are part of the comprehensive compliance strategy launched by the CNIL over the past two years against French and foreign operators who publish websites with many visits and who engage in practices that are contrary to the legislation on cookies. Since March 31, 2021, when the deadline expired for websites and mobile applications to comply with the new cookie rules, the CNIL has taken nearly 100 corrective measures (orders and sanctions) related to non-compliance with cookie legislation. On the Italian landscape regarding cookies, we point out the Cookies Guidelines published by the Privacy Guarantor and entered into force last January 10, 2022, the details of which are provided, on our Blog

Food retail

The performance of the Food Retail sector in 2021 is showing positive signs even though it is obviously still affected by the negative socio-economic reverberations of the Covid-19 pandemic. During 2020 the health emergency hit hard the whole catering sector which, due to the prolonged and intermittent lock down phases, experienced dramatic moments. In terms of legal assistance and consultancy to the Food Retail sector, 2020 was marked by prolonged negotiation activity aimed at finding a balance between the reasons of the landlords and the requests of the companies for redevelopment of the rent. The result of this activity has been, on average, positive, in terms of reaching balanced agreements on rent revisions, but overall the impact of the pandemic factor has been very severe in terms of a drop in turnover for the entire sector, which has also seen a succession of numerous business closures that have certainly affected mostly, but not only, those companies that had previous problems of capitalization and financial instability already in the pre-covid era. The operators in the sector have, moreover, noted a lack of effectiveness and proportionality of the economic support measures arranged by the Government. In 2021, especially in the second half of the year, despite the persistence of widespread uncertainty regarding short and medium-term economic scenarios, and in conjunction with the beginning of a recovery in companies' cash flows, although certainly not equal to pre-covid levels, encouraging signs were also seen regarding the resumption of development plans. Negotiations were thus more focused on negotiations for new openings, which saw a cautious revival of initiatives to acquire commercial premises and other retail locations. On the other hand, even the obvious and in some cases favorable opportunities offered by the market are often approached with a certain degree of caution, determined by the awareness that the period of emergency is far from over. As far as the target of the positioning is concerned, there is a clear predisposition to search for locations equipped with large outdoor dehors, due to the changed habits of customers who certainly prefer an offer with characteristics of greater outdoor livability. On the other hand, a possible obstacle to development is the chronic lack of qualified personnel.

SUPER GREEN PASS: what happens if the area where I live changes color?

The Super Green Pass has become mandatory with effect from 6th December 2021, but what is it?

The Super Green Pass, that you have been hearing about for a while consists of the Covid-19 green certification obtained only with vaccination or with the recovery from the SARS-COV-2 Virus, remaining excluded the certification obtained after the negative result of the antigenic swab (the so called rapid swab). As for the validity of the Super Green Pass, it has already changed more than once: from the November DL (no. 172/2021) to the December DL (no. 221/2021) it went from a duration of 12 to 9 months and then decreased further. In fact, from February 1, 2022 the duration of the vaccine Super Green Pass is reduced from 9 to 6 months. While waiting for all the changes that will take place until the end of the state of emergency - set for March 31, 2022 - and even after the end of the state of emergency, it seems appropriate to point out what changes if the zones switch, now known, white, yellow, orange and red.

• WHITE ZONE

All activities are open, there are no restrictions on travel. You need the basic Green Pass to:

  1. take public transportation, trains and planes;
  2. go to the gym and swimming pool;
  3. go to the hotel and to the attached restaurants;
  4. use the ski facilities.

You need a Super Green Pass to:

  1. go to an indoor restaurant;
  2. go to the movies and theater;
  3. go to the stadium;
  4. attend parties and public functions.
  • YELLOW ZONE
  1. Outdoor mask requirement.
  2. In indoor bars and restaurants, you can consume meals only if you have a Super Green Pass.
  • ORANGE ZONE
  1. You can not leave the municipality of residence, if not for reasons of work, necessity and urgency.
  2. All activities remain open but many will be accessible only with Super Green Pass.

With the Super Green Pass:

  1. you can move freely, even outside your region;
  2. you can go to bars and restaurants, to the gym and indoor swimming pools, to the cinema and the theater;
  3. you can enter fairs and conventions, amusement parks, ski resorts and spas.
  • RED ZONE
  1. You can not leave the municipality of residence if not for reasons of work, necessity, urgency.
  2. Restaurants and bars are closed, but it is allowed the takeaway and home delivery.
  3. Stores closed except supermarkets, grocery stores, newsstands, tobacco shops, pharmacies and those with Ateco code allowed. The bans also extend to those who own the Super Green Pass. *

Finally, the latest news in terms of Super Green Pass are as follows:

  • from January 10, 2022: Super Green Pass requirement for: all public transportation; outdoor food services; indoor and outdoor swimming pools; gyms; spas and amusement parks; museums; hotels and accommodations; parties resulting from civil or religious ceremonies (such as baptisms or weddings); festivals and fairs; congresses; ski facilities; team sports including outdoor (e.g. soccer); game rooms, bingo halls and casinos;
  • from February 15, 2022: mandatory Super Green Pass for all workers (public and private) and professionals aged 50 years or older. Those who are not yet vaccinated will need to get their first dose of the vaccine by January 31, 2022 to get a Super Green Pass valid starting February 15, 2022.

Please refer to the reading of a useful and explanatory table of which, for convenience, is attached below the link:

https://www.governo.it/sites/governo.it/files/documenti/documenti/Notizie-allegati/tabella_attivita_consentite.pdf

Clovers Alert! Is your website compliant with the new regulations that will enter into force on January 10, 2022?

Below we analyze the new guidelines on cookies of the Privacy Guarantor

  1. Guidelines on the use of Cookies and other tracking tools

With Measure no. 231 of June 10, 2021, published in the Official Gazette no. 163 of July 9, 2021, the Privacy Guarantor has provided its guidelines to

a) indicate to website operators the rules to be applied for the use of cookies and other tracking tools and

b) to specify the correct procedures for providing information and acquiring the consent of those concerned (the "Guidelines").

The Guidelines therefore aim to supplement the previous indications of the Privacy Guarantor (Measure no. 229 of 2014) by specifying that the manifestation of will of the interested party is "unequivocal" as well as free and informed and by requiring that data protection is ensured by design and through default settings (privacy by default and by design).

  1. What needs to be done from 10 January?

The following is a summary of the obligations set out in the Guidelines, with particular reference to the methods of acquiring consent and the characteristics of the Cookies disclosure.

a) The acquisition of consent

First, the Guarantor reiterates that are not allowed, as forms of acquisition of consent, the practices:

  • of the so-called "scrolling" (i.e., the downward movement of the cursor), which can be qualified as a positive action suitable to unequivocally manifest the will to give consent to the treatment, subject to exceptions to be seen case by case;
  • the so-called "cookie wall", i.e. a binding mechanism (so-called take it or leave it) in which the user is obliged, in order to access the site, to express his/her consent to the reception of cookies or other tracking tools, except for exceptions to be evaluated on a case-by-case basis.

From an operational perspective, the Guarantor requires the following characteristics to validly acquire the consent of the surfer:

  • at the time of a user's first access to the website, no cookies or other tools other than technical ones will be placed inside the device and no active or passive tracking techniques will be used;
  • at the first access to the web page, an area or a banner will appear of adequate size and such as not to induce the user to make unwanted choices;
  • such banner will have to allow the user to express his consent, through a positive action;
  • it is therefore necessary to allow the user to maintain the default settings and to continue browsing without giving any consent, by clicking on the command to close the banner marked by an "X" positioned at the top and on the right inside the banner;
  • it is necessary to insert (besides the link to the complete informative report) a minimum informative report relative to the use of technical cookies and - previous consent, in order to send advertising messages or to supply the service in a personalized way - of profiling cookies or other tracing instruments;
  • there will also be a command through which it is possible to express one's consent by accepting the placement of all cookies or the use of any other tracking tools and the link to a further dedicated area in which it is possible to select the functions, the so-called third parties and the cookies to the use of which the user chooses to consent.

The Guarantor also states that the banner will not have to be re-presented at each new access and that the user's choice must be duly recorded and no longer solicited for at least 6 months, unless significant changes in the conditions of treatment.

b) The informative report

The Cookies informative report will have to indicate the recipients of the personal data collected and the storage time of the acquired data and can also be made on more than one channel and with different modalities (for example, with pop-ups, videos, vocal interactions). If only technical cookies are used, the Cookies policy may be included in the general policy. The Guarantor then recommends that analytics cookies, used to assess the effectiveness of a service, be used only for statistical purposes.

The above is the general framework of the guidelines of the Privacy Guarantor that - with proper legal support - should be implemented on each website.

On the evidence of use of the trademark in nullity and opposition proceedings

Not everyone knows that once a trademark has been filed and registered, it must be put into effective use by its owner: the law - both national and European - provides for an initial grace period of five years from registration, after which the owner may be required to prove the effective use of his trademark.

Evidence of use can be requested both in opposition proceedings by the trademark applicant and in opposition proceedings by the trademark applicant, with the consequence that in the absence of useful evidence, the opposition is automatically rejected.

Similarly, the evidence of use of the trademark could be requested in the framework of a revocation procedure for non-use provided for at Community level by articles 18 and 58 European Union Trademark Regulation, EU 2017/1001. Also in this case the consequences are far from trivial for the trademark owner, since if the administrative judge considers the evidence insufficient, the trademark would be declared null and void as of the date of the request for revocation and therefore cancelled from the register.

Therefore, the use of the trademark is fundamental even in all cases in which the trademark is registered: it is not sufficient to have registered the trademark in a series of product classes in order to ensure the widest possible protection, if this registration does not correspond to a genuine use of the trademark within the terms of the law.

It is therefore particularly important for the owner to collect proof of use over time, especially once the five-year grace period has expired.

It is also very important to know what evidence of use is relevant to the administrative judge.

One of the most important pieces of evidence of use are sales invoices.

As repeatedly stated by the courts such invoices must show significant and frequent volumes of sales during the relevant period (five years prior to the application for nullity or, in opposition proceedings, from the time of publication).

It should be noted that offers to sell products bearing the contested trademark on websites are not sufficient in themselves to demonstrate actual use, at most they may be relevant together with other elements such as, for example, the production of supporting documents, packaging, labels, price lists, catalogs, invoices, photographs, newspaper advertisements.

On this point, the EU Court of First Instance recently expressed its opinion in case T-1/20 of October 13, 2021, rejecting the appeal of the company Mi Indutries Inc., a manufacturer of organic pet foods, confirming the decision of the Board of Appeal of the EUIPO, which had held that the extracts from the Internet site "Amazon.co.uk" where the goods bearing the contested trademark were put up for sale simply showed that the goods in question had been put up for sale, without however proving that they had actually been sold and without providing any information on the volume of any sales.

According to the case-law, the actual use of a trademark cannot be proven by probability or presumption, but must be based on concrete and objective elements that demonstrate the actual and sufficient use of the trademark in the market concerned.

According to the Implementing Regulations, furthermore, the evidence of use must cover the place, duration, extent and nature of the use that has been made of the contested trademark. It is also essential that the evidence covers the relevant five-year period: further evidence outside this period will only be considered secondarily.

Furthermore, the condition relating to the actual use of the trademark requires that it, as protected in the relevant territory, be used publicly and externally. In this respect, the Court made it clear that not only sales to final consumers but also to industrial customers and professional users (B2B sales) are relevant.

Finally, the Court pointed out that even if it is not necessary for the owner to prove constant and significant use over the entire five-year period in order to escape sanctions, the obvious absence of evidence for a significant part of the period means that the use is considered insufficient.

  • Intellectual Property

Shareholders' loans: related risks and instructions for use

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).

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

Gaia Bellomo - Senior AssociateMaria Sole Torno - Stagista

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

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

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

Goclean.png

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.

Audi.jpg

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.

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

Mattia Raffaelli – Of Counsel Sofia Mercedes Bovoli– Trainee

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.

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

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

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

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.

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

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.

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

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.

  • Labor Law

Prize operations: relations with Facebook and Instagram

Mattia Raffaelli – PartnerSofia Mercedes Bovoli– Trainee

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.

Abuse of dominance. Google/Android

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.

Artistic value and innovative sculpting techniques

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

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

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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.