Procedures and strategies for anti-counterfeiting: Italy
Contrary to common belief, the Italian legislative instruments against IP infringement are quite effective.
In 2003 specialised IP divisions were set up in 12 existing courts, and in September 2012 these were increased to 21. Moreover, since 2014 cases involving foreign companies have been concentrated in nine of these courts (Milan, Turin, Venice, Genoa, Rome, Naples, Bari, Cagliari and Catania). These divisions have exclusive competence to decide on civil actions relating to trademarks, patents, copyright and unfair competition.
The 2005 Code of Industrial Property, extensively amended in 2010, brought together the principal laws relating to IP matters – expressly including unregistered trademarks, trade secrets and appellations of origin as IP rights, which were already protected under Italian law, but can now benefit from the special procedural rules provided for IP rights – with two exceptions:
- copyright, which is covered by the separate Copyright Law; and
- the main criminal provisions, which are contained in the Criminal Code (largely amended and improved in 2009).
In 2006 both the Code of Industrial Property and the Copyright Law were amended in order to implement the EU IP Rights Enforcement Directive (2004/48/EC), with a view to strengthening procedural instruments for the protection of rights holders.
As an EU member state, Italy applies all the relevant EU regulations (including those on border measures) and has implemented the Agreement on Trade-Related Aspects of Intellectual Property Rights and the main international agreements in this field. In 2018 and 2019, respectively, Italy implemented the EU Trade Secrets Directive (2016/943/EC) and the EU Trademark Directive (2015/2436).
Italy is also a party to the Agreement on the Unified Patent Court (ratified in November 2016) and in July 2015 joined the enhanced cooperation on the unitary patent system. It has also been decided that Milan will host the Italian local division of the court. In 2019 new rules were introduced aimed at better coordinating national patents and unitary patents, in particular regarding the commencement of the effects of the unitary patent and free use of the patent.
Further, in 2015 Italy implemented an extremely favourable system of tax reductions on revenues deriving from the exploitation and assignment of patents, know-how, software and designs. Trademarks were originally included in this list, but they were removed in 2017.
Border measures (including measures on goods in transit, where EU trademarks are concerned) are regulated by the relevant EU regulations. Implementation is entrusted to the Customs Agency, which has become a highly efficient body. The government has also reached agreements to coordinate operations with a number of countries from which counterfeit goods originate, in particular China.
The activities of the Customs Agency are supported by multimedia databases, which gather together information on how to distinguish fake goods at the borders. The databases are updated directly by rights holders requesting protection for their goods.
Restrictive provisions on the labelling and Italian origin of products are in force, even if they are suspected of infringing EU provisions (see also European Court of Justice (ECJ) ruling C-95/14, 16 July 2015).
The efficacy of criminal prosecution has increased with the implementation of the Anti-counterfeiting Information System, a computerised platform which also allows rights holders to send information on their infringed products for ready reference by the control agencies in the field.
Depending on various criteria, an infringement can be either a criminal or an administrative offence. Criminal offences are set forth by Articles 473, 474 and 517ter of the Criminal Code, which were strengthened by Law 99/2009, with the exception of ‘petty offences’ (Legislative Decree 28/2015). They provide for:
- a prison term of between six months and three years, plus a fine of between €2,500 and €25,000, for the infringement of registered marks;
- a prison term of between one and four years, plus a fine of €3,500 to €35,000, for the infringement of patents, designs or models; and
- a prison term of up to two years, plus a fine of up to €20,000, for the import, possession for business purposes, sale or circulation of goods bearing counterfeit or altered marks or distinctive signs, or the violation of other IP rights.
Law 99/2009 also introduced a specific aggravating circumstance – infringement involving large quantities or committed in a continuous and organised fashion attracts a sentence of between two and six years (Article 474ter). A penalty of up to two years plus a fine of up to €20,000 was also introduced for the infringement of denominations of origin of agricultural foodstuffs (Article 517quater).
Article 517 of the Criminal Code applies to unregistered marks. It provides that a party that sells or otherwise puts into circulation products bearing marks which may mislead the buyer as to the origin, provenance or quality of those products will be subject to a prison term of up to two years or a fine of up to €20,000.
Under Decree-Law 135/2009, the penalties laid down by Article 517, increased by one-third, apply to the use of “a sales indication which presents the product as entirely produced in Italy” in relation to goods which were not actually “completely produced in Italy” – such products being understood as those whose “design, planning, production and packaging were exclusively carried out in Italy”. Similarly, an administrative penalty of between €10,000 and €250,000 was introduced for the “use of the trademark by the holder or licensee in such a way as to lead the consumer to believe that the product or good is of Italian origin”, unless the foreign origin is indicated. However, these rules seem to present problems of compatibility with EU law and Article 3 of the Constitution.
The Supreme Criminal Court ruled that trademark infringement under Articles 473 and 474 of the Criminal Code also includes post-sale confusion (Case 12926, 17 March 2004). The court also ruled that in the case of products bearing infringing marks, the more severe penalty provided under Article 648 of the Criminal Code must be applied – even if the defendant was only handling the goods (Supreme Criminal Court, Full Bench, Case 23427, 7 June 2001).
The introduction of administrative measures has further strengthened trademark protection (see, in particular, Article 146 of the Code of Industrial Property, as amended in 2010).
Trade secrets are also subject to criminal protection under Article 623 of the Criminal Code, which following the 2018 reform now expressly punishes the violation of all secrets protected by the Industrial Property Code.
In the case of infringement, police investigations, undercover operations and seizure measures are available. They must be confirmed by a court and may be subject to re-examination. If criminal organisations are running the counterfeiting operation, the more severe penalties under Articles 416 and following of the Criminal Code are also applicable.
The high level of efficiency of the civil courts is due in part to their keenness to:
- grant urgent measures (eg, injunctions, seizures and orders for the withdrawal of goods from the market); and
- order the judicial investigation of evidence (eg, description orders, normally granted ex parte).
Under Article 131 of the Code of Industrial Property, urgent measures may be granted in case of an imminent IP rights violation or a risk of repeated violation, even if the violation has been going on for some time (see Court of Naples, 19 September 2009 and Court of Turin, 3 May 2012).
Urgent measures are typically examined and granted quickly – normally in a few days for trademarks and designs (such measures are often granted ex parte), and within a few months for patents (where a court expert is usually appointed). An injunction is usually backed by a fine for each violation to be paid to the rights holder. Violation of an injunction is also subject to criminal penalties (a prison term of up to three years or a fine) under Article 388 of the Criminal Code, recently expanded in its scope.
Urgent measures, including protective measures, are granted by an individual judge appointed by the president of the competent specialised division. They may be subject to appeal before a panel of three judges belonging to the same division. The panel, which does not include the first judge, normally issues a decision within one to two months.
A court held that an order for withdrawal from the market, even granted at a preliminary stage, may compel the infringer to buy back illicit products directly from the professional users or stores where they were sold, at their market price (Court of Turin, 27 June 2012; Court of Milan, 7 September 2016, in a case of patent infringement).
Article 132 of the Code of Industrial Property, as amended in 2010, expressly states that injunctive relief (including a fine or an order for withdrawal from the market) granted in urgency proceedings may become final, unless any of the parties starts proceedings on the merits. Therefore, proceedings on the merits are necessary only to ask the court to order the infringer additionally to:
- pay compensation and surrender profits made from the infringement;
- pay the costs of publication of the ruling in newspapers or magazines; and
- hand over the infringing goods to the rights holder or arrange for the destruction of the goods at the expense of the infringer itself.
The accounts of the alleged infringer are often seized facilitating the calculation of any compensation to be paid. Following the implementation of the EU IP Rights Enforcement Directive, the rights holder may receive a sum which corresponds to either the infringer’s profits or rights holder’s lost profits, whichever is the greater. Compensation for any further damage, such as expenses incurred for responding to the infringement or damage to image, may also be added to the amount. Compensation for damage caused to rights holder’s image is often calculated as a fraction of the advertising expenses incurred by the rights holder or the cost of an advertising campaign to mitigate the negative impact of the infringement on the public. Relevant damages are often awarded (eg, on 31 January 2013 the Court of Brescia awarded €2 million damages for trade secret violations; on 16 June 2015 the Court of Milan awarded €3.35 million damages for copyrighted design infringement; on 14 June 2016 the same court awarded more than €2 million damages for patent infringement; and on 6 November 2017 the Court of Florence awarded more than €6 million in damages for trademark infringement made by a subcontractor).
From a substantive perspective, IP protection is rigorous. In particular, well-known marks are normally protected against any use in trade of an identical or similar sign, even where there is no likelihood of confusion.
Key decisions in this area have come from:
- the Court of Florence (6 November 2017), which protected the well-known trademarks BULGARI and BVLGARI against a huge overproduction by a subcontractor;
- the Court of Catania (29 November 2016), which held that the sale of the products by an unauthorised dealer that does not meet the quality standards imposed by a selective distribution system causes harm to the reputation of the same trademarks and amounts to unfair competition; and
- the Court of Milan (20 October 2009), which protected the colour red as the non-registered trademark of Ferrari against its use for products connected to Formula 1, including clothing.
In all of the most recent cases, public perception was key to the ruling, in line with the decisions of the EU courts.
In patent matters, preventive measures can also be obtained on the basis of a national or European patent application. In the case of a European application, a translation of the claims must be filed with the Italian Patent and Trademark Office. The judge will always appoint an expert to ascertain validity and infringement – even in urgency proceedings (as expressly laid down by Article 132 of the Code of Industrial Property, as amended in 2010) and at the appeal stage. The expert conclusions often form the basis of the ruling. However, it is not uncommon for judges to deviate from the expert opinion (see Court of Rome, 6 September 2010) or to appoint a new expert or panel of experts, especially during the appeal stage.
Concerning patent matters, Legislative Decree 131/2010 also clarified that:
- in case of patent invalidity actions, it is enough to summon the party indicated as the rights holder in the public register and not also the inventors who assigned the right (this rule also applies to the pending proceedings); and
- the owner of a patent which is unsure about its infringement may ask the court to appoint an expert to obtain a quick technical assessment on validity and infringement, which can then be used in further legal action or to reach a settlement more quickly.
Law 214/2016 introduced a specific rule on contributory infringement, which is fully consistent with the one contained in the Unified Patent Court Agreement.
The Italian case law on the merits of granting a supplementary protection certificate (SPC) is now fully aligned with ECJ case law (Court of Milan, 25 July 2014). Further, the process of obtaining a marketing authorisation for a generic drug may legitimately start even earlier than one year before the expiration of the relevant patent or SPC (Article 68 of the code, as amended in 2012), but Decree-Law 158/2012 subsequently ruled out the reimbursement of generic drugs by the Italian National Health System until the relevant patent or SPC has expired, which seems contrary to EU Directive 83/2001/EC. However, this rule has been interpreted restrictively – it applies only when product claims on the specific active ingredient contained in the drug are in force (Administrative Court of Lazio, 26 June 2014).
Design protection through copyright law has been available since the implementation of the EU Community Design Directive (98/71/EC). On 27 January 2011 the ECJ (C-168/09) stressed that this protection also applies to works created before the date of implementation of the foretold directive. This is expressly stated in Article 239 of the Code of Industrial Property (as amended in 2010), which states that all copied products manufactured in Italy after 19 April 2006 (and those imported after 19 April 2001) are pursuable as counterfeit. In 2012 a deadline of 19 April 2014 for selling off stocks of infringing products was granted, but this was overruled by the Court of Milan (28 April 2011), as it was deemed contrary to the directive.
The Court of Milan ruled on this issue in two cases: one protecting Cassina’s copyright on chairs designed by Le Corbusier (20 July 2012); the other protecting Flou’s copyright on the ‘Nathalie’ bed designed by Magistretti (14 to 27 September 2011, 5 June 2012 and 16 June 2015).
The strategies for enforcing IP rights online include searching and monitoring the Internet and adopting graduated responses according to how dangerous the potential violation is. Responses include:
- monitoring the content of the unlawful website and searching for information on its owner;
- making confidential contact with the infringer to resolve the conflict amicably or obtain evidence of bad faith;
- sending cease and desist letters; and
- initiating legal actions or bringing arbitration proceedings under the Uniform Domain Name Dispute Resolution Policy (which, however, does not apply to ‘.it’ domain names).
The courts have held internet service providers liable if they were aware of the presence of suspicious material, but refrained from removing it or from taking any other action (Court of Rome, 15 December 2009). In a case involving illegal downloads of copyrighted works through a peer-to-peer website, the Supreme Court (Criminal Division) held that a website owner was liable because it had supplied, through a search engine or indexed lists, information (provided by some users) that was essential for other users to download the works (Case 49437, 23 December 2009). In addition, on 1 July 2011 the Court of Bologna held that the use of another party’s trademark as advertising keyword amounts to trademark infringement and unfair competition. Further, on 3 September 2015, not only enjoined the Court of Bologna the infringer from directly using the infringing domain name, but also ordered it to remove any link to the domain name on third-party websites – that is, it held that there is a burden on the infringer to prevent the further presence of the enjoined sign on the Internet.
Further, the Italian Competition Authority can shut down clone websites selling counterfeit brands. The Telecommunication Authority also adopted Resolution 680/13/CONS, which provides a fast, economic and simplified procedure for the removal of copyright-infringing online content, especially in urgent cases. Both interventions proved to be effective and have been widely used so far. This resolution has been challenged before the Constitutional Court, which, however, deemed that it is fully valid, since it complies with freedom of expression, economic freedom and proportionality.
The relative ease with which description orders are obtained may be of great use in cross-border strategies for protecting IP rights, as they help to determine the international ramifications of the infringement. Specialised investigation agencies may also help to gather information undercover.
The courts consider that intentional cooperation between the licensee of a mark and a competitor of the mark owner in breach of the agreement between the mark owner and the licensee constitutes unfair competition. Breach of confidentiality is prohibited under the Code of Industrial Property and entitles rights holder request preventive and discovery measures, such as seizure and description orders. Thus, an appropriately drafted confidentiality agreement will be of great help in order to persuade a judge to grant preventive measures against the breaching party.
The use of authentication technology, in particular security labels, is becoming progressively more widespread, in part because it is encouraged by the public authorities (although no standard has yet been established in this regard).
The National Anti-infringement Council is in charge of coordinating the various public authorities charged with fighting infringement. Private associations such as INDICAM and Centro Studi Anticontraffazione likewise play an important role as they:
- bring key cases which promote the development of case law; and
- act as consultants to the legislature.