'Protectionist' rule on “Made in Italy” indication introduced

Italy has introduced two new rules to tackle the issue of signs which convey a false impression as to the geographical origin of goods.
The first rule, which concerns designations of origin, should be adopted in the near future within the context of the revision of the Code of Industrial Property. The second rule, which concerns the use of the indication “Made in Italy”, has already been passed by the Italian Parliament with Law 55/2010, but is due to enter into force only on October 1 2010. The new law raises a number of problems, as it is seems to be contrary to both EU law and the Italian Constitution.
According to the proposal for the revision of the Code of Industrial Property (prepared by a commission of experts appointed by the Ministry of Economic Development), Article 30 of the code shall expressly provide protection to geographical indications against any unauthorized use which "permits the undue exploitation of the reputation of a protected name". Therefore, the protection afforded to designations of origin would resemble that given to other distinctive signs, such as trademarks, which are protected against all forms of commercial 'parasitism'. For these purposes, it would be unreasonable to make a distinction between:
  • designations of origin which inform the public of the existence of certain characteristics or of a certain level of quality connected to the geographical environment in question; and
  • designations of origin which inform the public of the existence of a certain reputation connected to this environment.
Italy will thus extend to all designations of origin the protection afforded by the EU legislation on designations of origin for agricultural foodstuffs, which is mainly to be found in Council Regulation 2081/92 (now Council Regulation 510/2006), which provides for protected designations of origin (PDOs) and protected geographical indications (PGIs). PDOs and PGIs are protected against "any practice liable to mislead the public". This provision is particularly significant, since the protection afforded to a designation of origin extends beyond the type of goods covered by the designation. Protection will thus extend outside the foodstuffs sector and, consequently, will be similar to that given to trademarks with a reputation.
The introduction of the second rule has attracted much criticism, since it attempts to hinder the practices of decentralization and production integration at the international level, which promote competition, reduce costs and benefit consumers.
Law 55/2010 (known as the Reguzzoni-Versace Law, so called from the names of its first proponents) regulates the labelling of products for textiles, shoes and leather goods. The new rule provides that all textiles, shoes and leather goods marketed in Italy, including intermediate products, should bear:
"in a clear and concise way, specific information regarding the conformity of the manufacturing process with the rules in force on labour matters, thereby guaranteeing the respect of the conventions signed within the International Labour Organization with regard to the certification of hygiene and products safety, the exclusion of the use of minors in the production of the goods, the respect of the European regulations and conformity with international agreements on environmental matters."
However, this new law is clearly contrary to EU law, since it amounts to a violation of Article 28(30) of the EC Treaty, which prohibits quantitative restrictions and all measures with equivalent effect. Such violation has been recognized by the EU courts - for example, in Verband Sozialer Wettbewerb eV v Clinique Laboratoires SNC (Case C-315/92, February 2 1994), the European Court of Justice held that, because of the prohibition contained in a German rule, one of the parties was "obliged, in that member state alone, to market its products under a different name, and to bear additional packaging and advertising costs".
Moreover, under the new law, a party may use the indication “Made in Italy” only where two stages of the manufacturing process have taken place in Italy. In contrast, the most recent version of the EU Customs Code (Article 36) establishes that:
"goods wholly obtained in a single country or territory shall be regarded as having their origin in that country or territory. Goods the production of which involved more than one country or territory shall be deemed to originate in the country or territory where they underwent their last substantial transformation."
Even more explicitly, Article 24 of Council Regulation 2913/92 provides that:
"goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose, and resulting in the manufacture of a new product or representing an important stage of manufacture."
Furthermore, as a prerequisite for the use of the indication “Made in Italy”, the new law provides that the tracing of the stages of the manufacturing process must be verifiable (which is also contrary to the EU Customs Code).
Due to the contrast between the new law and the EU legislation, Italy will be exposed to infringement proceedings under Articles 226 to 228 of the EC Treaty. In any case, the national law should be disregarded by the Italian judges (and by the administrative authorities in charge of applying it) based on the principle that "inmatters that are reserved to the European Union, the ordinary judge must apply directly the Community rule... which prevails over contrary national law" (Constitutional Court, June 8 1984, No 170; Constitutional Court, November 10 1994, No 384).
The new law also violates the constitutional principle of equality, which prohibits the use of different measures to regulate identical situations, since the rules apply only to the use of the indication “Made in Italy”, but not to other indications such as “Made in France” or “Made in Germany”.
The fact that the entry into force of the new law has been delayed until October 2010 (instead of the usual term of 15 days from publication of the law in the Official Gazette) should allow the EU authorities to express their opinion. It is thus hoped that the law will not come into force.
These latest developments concerning designations of origin highlight a recent tendency towards protectionism on the part of the Italian government. Such a tendency is in complete contrast with the evolution of IP law in Italy, which clearly follows a realistic and concrete approach to the protection of IP rights.
The European Commission is currently discussing the 2005 "Proposal for a Council Regulation concerning the indication of the country of origin of certain products imported from third countries" (Document COM (2005) 661)). More specifically, in October 2009 the commission presented a new document ("Possible options to facilitate the adoption of the proposal for a Council Regulation on the indication of the country of origin of certain products imported from third countries"), which aims to respond to the objections made against the 2005 proposal. This document is currently under examination.
Cesare Galli, IP Law Galli, Milan

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