Online brand enforcement in Italy: urgent remedies, ISP liability and arbitration

Online trademark infringement disputes in Italy are handled by the specialised judges of the IP courts, which are based in all Italian regions with the exception of Valle d’Aosta.

Urgent remedies available in court proceedings

The specialised IP courts are highly efficient, particularly in Milan and Turin, and generally allow trademark owners to obtain sound protection in a matter of a few weeks through the urgent remedies available, which include:

  • injunctions;
  • seizures;
  • search orders; and
  • interim transfer of domain names.

These remedies can be requested alone or jointly within the same motion, in which case they are dealt with in the same urgent proceedings.

The most important remedies in online brand enforcement cases are urgent injunctions, as they result in the infringer being swiftly prohibited from any further infringement. Penalty provisions in case of breach of or delay in complying with the injunction are also helpful.

Injunction orders can be granted ex parte (ie, without giving prior notice to the counterparty), if it can be demonstrated that the enforcement of the order would be jeopardised if the defendant was warned in advance or the harm suffered by the applicant during the time required for the defendant to be heard would become irreparable. Italian courts rarely grant injunctions ex parte; however, they should not be excluded from consideration.

One main advantage of preliminary injunction orders is that, unlike other urgent remedies, they become final if they are not appealed and overturned, with no obligation on the trademark owner to subsequently commence proceedings on the merits. This is particularly useful when it comes to infringements causing small damages, as the trademark owner – who is presumably disinterested in carrying out merits proceedings to seek damages – can stop the infringing activity in a matter of three or four weeks. Nevertheless, it must be considered that proceedings on the merits may be commenced in any case by the counterparty, including overturning the preliminary decision.

In case the injunction is granted, the trademark owner is also entitled to request that the infringer is ordered to publish the order at their own cost in one or more newspaper or magazine, and/or on the counterparty’s website homepage, which is particularly valuable in online trademark infringement cases.

Further, in case of infringing domain names, in addition to the injunction the trademark owner can also request that the infringing domain name is provisionally transferred to them by way of urgency. A condition can be placed on the transfer order whereby the trademark owner must post a guarantee should it turn out that they are not entitled to the domain name and the provisional transfer damaged the counterparty. According to Italian authorities, this remedy is final, with no need to commence merits proceedings if the counterparty does not appeal the interim order and have it overturned. Nevertheless, there is no known published case law on this topic.

Other urgent remedies available are helpful when the online trademark infringement relates to the sale of goods bearing infringing trademarks. In particular, the trademark owner can apply for a search order that will authorise them to inspect the infringer’s premises together with a court official, in order to collect evidence of the infringement (eg, pictures of the infringing goods, copies of the relevant advertising and commercial materials, and a copy of the accounting documents relating to their purchase and sale). These orders are often granted ex parte, which makes them extremely effective precisely because the counterparty is not prepared for the inspection. In many cases, where the execution of the inspection enables the collection of significant evidence of an infringement and its entity, the infringer will be inclined to try and reach a settlement before merits proceedings are commenced.

Finally, as regards seizure orders, the trademark owner is authorised to access the infringer’s premises with a court official. In such case, the trademark owner is entitled to have the infringing goods and relevant commercial and accounting documents seized by the court official. This can be granted ex parte, which would make the seizure order much more effective. The infringing goods may be destroyed at the end of proceedings of the merits if the court finds in favour of the trademark owner.

However, search orders and seizure orders require the commencement of proceedings on the merits within 20 working days or 31 calendar days (whichever expires later), otherwise they will expire.

Remedies available at the end of proceedings on the merits include:

  • final injunctions;
  • damages;
  • orders of withdrawal of the infringing goods from the market;
  • orders of destruction of the infringing goods and production tools;
  • final transfer of domain names; and
  • final revocation of the domain names.

Damages are calculated based on Article 125 of the IP Code, which sets three main criteria:

  • the rights holder’s lost profit and consequential damages;
  • the reasonable royalty that the infringer would have paid had it obtained a regular licence to use the trademark (which constitutes an alternative way to determine the rights holder’s lost profit); and
  • the infringer’s profit, as opposed to the rights holder’s lost profits, or insofar as they exceed them.

In order to assess damages, the trademark owner can also request the judge to order the alleged infringer to disclose banking, financial and commercial documentation (including accounting records) to quantify the amount of sales and revenue related to the infringing goods. In addition, it can request that the infringer be ordered to disclose information related to the origin and distribution of the infringing goods.

IP courts often appoint accountant expert witnesses to support the calculation of damages.

ISP liability

Articles 14, 15, 16, and 17 of Legislative Decree 70/2003, implementing EU Directive 2000/31 (known as the E-Commerce Directive), dictate the terms of the internet service providers (ISP) safe harbour regime.

Under these provisions, ISPs established in Italy are, in principle, not required to monitor the contents which they transmit or host, but they are under a duty to inform the competent (administrative or crime enforcement) authorities if they become aware of illegal activities carried out through their services and, at the request of judicial authorities, to provide without delay such information as would enable the identification of the users involved.

Access providers are exempt from any liability for the information transmitted, as long as they do not select or modify such information. Hosting providers are also exempt from any liability on condition that they are not aware of facts from which the unlawfulness of the information stored on their servers is made apparent and that on obtaining knowledge of the facts through the competent authorities they act expeditiously to remove or disable access to such information.

Because of this limitation (which is not contained in the E-commerce Directive), Italian hosting providers have in several cases successfully argued that their failure to act on a takedown notice sent by rights holders did not make them liable for subsequent damages. This glitch in the Italian legal system has been corrected over the years, as the Italian IP courts have embraced the ‘active role’ theory, along the lines of the 2011 European Court of Justice ruling in L’Oréal v eBay. Oddly enough, although that ruling was given in respect of trademarks, in Italy the ‘active role’ theory has been put to test almost exclusively in copyright litigations; however, there is no reason to believe that IP judges would apply it any differently in a trademark case.

Although there are dissimilarities between different IP courts in the practical application of the ‘active role’ theory, a few general lines may be drawn. An ISP will lose its neutral status in respect of infringing content hosted on its platform if it plays a role in the organisation of the same content and/or profits from the content by way of targeted ads, banners or subscription fees, among others, and has failed to act on a detailed takedown notice from the rights holders specifying the infringing content.

Regardless of the ‘active role’ rule, ISPs’ liability towards rights holders may arise from failure to inform the authorities of illegal activities of which they are aware, or failure to comply with an authority’s request to provide information on infringing activities or disable access to or remove infringing content. Such liability, in other words, does not rest on the trademark infringement itself, but rather on the breach of secondary protection duties.

Injunctive relief is independent from liability. Under Legislative Decree 70/2003, ISPs may be required by administrative and judicial authorities to prevent or terminate infringements occurring on their networks. These rules, which are not trademark-specific, are echoed by specific provisions in the IP Code, allowing the issuing of injunctive relief against an intermediary whose services are used to commit infringement (including host or access providers).

Often, ISPs are based abroad, which raises jurisdiction concerns; however, the criterion of the ‘harmful event’ – covering both the place where the damage occurred and the place of the event giving rise to it – which is applicable in tort lawsuits is often invoked to ground the jurisdiction of Italian courts in ISP-related litigations (although European trademarks are governed by their own jurisdiction rules). Trademark infringements are a form of tort in the Italian legal system, meaning that a rights holder can seek award of damages from an Italian IP court against an ISP based abroad – including outside the European Union – if they are established in Italy or allege that the ISP infringed trademark rights are valid in the Italian territory.

Alternative dispute resolution for domain names in Italy

The procedure for re-assigning a domain name in the ‘.it’ country code top-level domain (ccTLD) is based on the criteria adopted by the Internet Corporation for Assigned Names and Numbers and is governed by the regulations contained in the Dispute Rules.

The procedures are managed by special organisations referred to as dispute resolution service providers, which have lists of experts that verify the ownership of a domain name. The choice of dispute resolution service providers lies with the party that starts the procedure and which will also bear the relevant costs in full. The Milan Chamber of Arbitration is one the most well reputed and active Italian dispute resolution service provider.

For the validity of the reassignment procedure, the domain name must previously be challenged by means of an opposition procedure, in order to give the parties the possibility to settle the dispute. Once the opposition is activated, the registry adds the challenged status to the domain name and the registrant cannot be modified. The petitioner will renew the challenge every 180 days, unless there is a court judgment, arbitration or a reassignment procedure pending. It may not be renewed more than twice.

The procedure aims to transfer the domain name to the person who has the right to it, if the petitioner proves that the registrant is not entitled to its use or disposal and that the domain name was registered and used in bad faith. The petitioner should demonstrate ownership of its rights to the domain name, in particular that:

  • the domain name is identical to or such as to cause confusion with an intellectual or industrial property right (eg, trademarks, copyrights, rights of name and trade name, company, logo and an individual’s own name and surname);
  • the defendant has no right to the domain name under dispute; and
  • the circumstances proving the bad faith under which the registrant has registered and maintained the domain name.

The defendant will retain the right to the domain name if they can prove that:

  • before receiving notice of the opposition, they used or prepared to use, in good faith, the domain name or a corresponding name for the offering of goods and services to the public;
  • they are known by the same name as the registered domain name; and
  • they are making a legitimate non-commercial use or commercial use of the domain name without the intention of misleading the petitioner’s clients or of breaching the registered trademark.

Proof or registration and bad-faith use includes:

  • any circumstance that leads to the conclusion that the domain name has been registered with the primary aim of transferring the domain name to the petitioner or a competitor of the same for monetary or other compensation;
  • damaging a competitor’s business;
  • attracting internet users creating the likelihood of confusion with a name covered by a recognised right with the purpose of making profit; and
  • preventing the owner of the right from using the same name in a corresponding domain name when the domain name is used for activities in competition with those of the petitioner.

The above list is not exhaustive. Elements of bad faith can also be inferred from circumstances other than the above.

All individuals or corporate bodies with the requirements for the registration of a domain name under the ccTLD ‘.it’ can start a re-assignment procedure. The proceedings can also be started on one’s own behalf and on behalf of individuals or corporate bodies not belonging to the European Union, providing that the petitioner is acting as a licensee under a licence right recognised by the holder, or under an explicit legitimate granting of another right, the breach of which has a bearing on the re-assignment procedure and is proved in the procedure.

The petitioner can request that the dispute resolution service provider appoint a one-man panel or a panel of three experts. If the panel comprises three experts, a majority decision is taken.

The re-assignment procedure cannot be activated and/or will be interrupted if a judicial or arbitration proceeding regarding the same opposed domain name is pending or has started. Each party can always appeal the decision or start a judicial or arbitration proceeding within 15 days following the notice of the decision.

The re-assignment procedure is conducted in Italian. The panel can decide whether to conduct it in another language, taking into account the circumstances and on request from one of the parties. The procedure is carried out entirely in writing. In exceptional cases, the panel can decide to question the parties personally or admit witnesses.

The list of the procedures underway and any decisions are made public on the registry’s website and the website of the dispute resolution service provider that took the decision. In exceptional cases (eg, if publication could seriously damage the image and reputation of one of both parties), the dispute resolution service provider’s panel may decide not to publish, either in full or in part.

If the panel has ordered the transfer of the domain name, the registry immediately informs the parties and the dispute resolution service provider of the date when it intends to implement the decision.

The procedure can be declared closed by the panel only:

  • when the decision is made;
  • if an agreement is reached by the parties before the panel’s decision; or
  • if one party starts a judicial or arbitration proceedings while the re-assignment procedure is pending.

A procedure can be re-proposed by the same parties for the same domain name when new facts emerge or such facts were not known before.

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