International Commercial Law Blog

The return of the Italian mandatory mediation procedure

On 24 October 2012, the Italian Constitutional Court declared invalid the provision of Legislative Decree n. 28 dated 4 March 2010 which had implemented the mandatory mediation procedure for the resolution of certain disputes.

Article 87 of the Italian Decree Law No. 69 of 21 June 2013 reintroduced the mandatory mediation for cross-border and domestic disputes, which had been covered by Italian Legislative Decree No. 28 of 4 March 2010.

The mediation procedure includes disputes on insurance matters (with the exception of motor third party liability litigation), medical and hospital liability.

Furthermore, among other changes it has been introduced Section 185 bis into the Italian Code of Civil Procedure, which requires the Court to “(…) formulate a proposal for amicable settlement or arrangement to the parties (…)”, also specifying that “(…) the rejection of the proposal made by the Court, without a justified reason, shall constitute conduct that may be considered (…) for the purposes of the ruling”.

The new provisions concerning the mandatory mediation shall enter into force on 21 September 2013.

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A landmark in a long battle over European Union privacy laws

Advocate General’s Opinion in Case C-131/12 Google Spain SL, Google Inc. v Agencia Española de Protección de Datos, Mario Costeja González considers that search engine service providers are not responsible, on the basis of the Data Protection Directive, for personal data appearing on web pages they process.

In early 1998, a newspaper widely circulated in Spain published in its printed edition two announcements concerning a real-estate auction connected with attachment proceedings prompted by social security debts. A person was mentioned as the owner. At a later date an electronic version of the newspaper was made available online by its publisher.

In November 2009 this person contacted the publisher of the newspaper asserting that, when his name and surnames were entered in the Google search engine, a reference appeared linking to pages of the newspaper with these announcements. He argued that the proceedings had been concluded and resolved many years earlier and were now of no relevance. The publisher replied that erasure of his data was not appropriate, given that the publication was effected by order of the Spanish Ministry of Labour and Social Affairs.

In February 2010, he contacted Google Spain and requested that the search results show no links to the newspaper when his name and surnames were entered into Google search engine. Google Spain forwarded the request to Google Inc., whose registered office is in California, United States, taking the view that the latter was the undertaking providing the internet search service.

Thereafter he lodged a complaint with the Agencia Española de Protección de Datos (Spanish Data Protection Agency, AEPD) against the publisher and Google. By a decision on 30 July 2010, the Director of the AEPD upheld the complaint against Google Spain and Google Inc., calling on them to withdraw the data from their index and to render future access to them impossible. The complaint against the publisher was rejected, however, because publication of the data in the press was legally justified. Google Inc. and Google Spain have brought two appeals before the Audiencia Nacional (National High Court, Spain), seeking annulment of the AEPD decision. In this context, this Spanish court has referred a series of questions to the Court of Justice.

In today’s Opinion, Advocate General Niilo Jääskinen addresses first the question of the territorial scope of the application of national data protection legislation. The primary factor that gives rise to its application is the processing of personal data carried out in the context of the activities of an establishment of the controller (according to the Data Protection Directive, the “controller” is the person or body which alone or jointly with others determines the purposes and means of the processing of personal data) on the territory of the Member State. However, Google claims that no processing of personal data relating to its search engine takes place in Spain. Google Spain acts merely as commercial representative of Google for its advertising functions. In this capacity it has taken responsibility for the processing of personal data relating to its Spanish advertising customers.

The Advocate General considers that this question should be examined taking into account the business model of internet search engine providers. This normally relies on keyword advertising which is the source of income and the reason for the provision of a free information location tool. The entity in charge of keyword advertising is linked to the internet search engine. This entity needs a presence on national advertising markets and that is why Google has established subsidiaries in many Member States. Hence, in his view, it must be considered that an establishment processes personal data if it is linked to a service involved in selling targeted advertising to inhabitants of a Member State, even if the technical data processing operations are situated in other Member States or third countries. Therefore, Mr Jääskinen proposes that the Court declare that processing of personal data takes place within the context of a controller’s establishment and, therefore, that national data protection legislation is applicable to a search engine provider when it sets up in a Member State, for the promotion and sale of advertising space on the search engine, an office which orientates its activity towards the inhabitants of that State.

Secondly, as for the legal position of Google as an internet search engine provider, Mr Jääskinen recalls that, when the Directive was adopted in 1995, the Internet and search engines were new phenomena and their current development was not foreseen by the Community legislator. He takes the view that Google is not generally to be considered as a “controller” of the personal data appearing on web pages it processes, who, according to the Directive, would be responsible for compliance with data protection rules. In effect, provision of an information location tool does not imply any control over the content included on third party web pages. It does not even enable the internet search engine provider to distinguish between personal data in the sense of the Directive, which relates to an identifiable living natural person, and other data. In his opinion, the internet search engine provider cannot in law or in fact fulfil the obligations of the controller provided in the Directive in relation to personal data on source web pages hosted on third party servers.

Therefore, a national data protection authority cannot require an internet search engine service provider to withdraw information from its index except in cases where this service provider has not complied with the exclusion codes or where a request emanating from a website regarding an update of cache memory has not been complied with. This scenario does not seem pertinent in the present case. A possible “notice and take down procedure” concerning links to source web pages with illegal or inappropriate content is a matter for national civil liability law based on grounds other than data protection.

Thirdly, the Directive does not establish a general “right to be forgotten”. Such a right cannot therefore be invoked against search engine service providers on the basis of the Directive, even when it is interpreted in accordance with the Charter of Fundamental Rights of the European Union (in particular, the rights of respect for private and family life under Article 7 and protection of personal data under Article 8 versus freedom of expression and information under Article 11 and freedom to conduct a business under Article 16).

The rights to rectification, erasure and blocking of data provided in the Directive concern data whose processing does not comply with the provisions of the Directive, in particular because of the incomplete or inaccurate nature of the data. This does not seem to be the case in the current proceedings.

The Directive also grants any person the right to object at any time, on compelling legitimate grounds relating to his particular situation, to the processing of data relating to him, save as otherwise provided by national legislation. However, the Advocate General considers that a subjective preference alone does not amount to a compelling legitimate ground and thus the Directive does not entitle a person to restrict or terminate dissemination of personal data that he considers to be harmful or contrary to his interests.

It is possible that the secondary liability of the search engine service providers under national law may lead to duties amounting to blocking access to third party websites with illegal content such as web pages infringing intellectual property rights or displaying libellous or criminal information. In contrast, requesting search engine service providers to suppress legitimate and legal information that has entered the public domain would entail an interference with the freedom of expression of the publisher of the web page. In his view, it would amount to censorship of his published content by a private party.

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Where a Member State grants national companies the right to convert, the same right must also be granted to companies incorporated in another Member State

Hungarian law authorises Hungarian companies to convert, but does not allow a company governed by the law of another Member State to convert to a Hungarian company.

The Italian company Vale Costruzioni S.r.l. was incorporated and added to the commercial register in Rome in 2000. On 3 February 2006, that company applied to be deleted from that register as it wished to transfer its seat and business to Hungary, and to discontinue business in Italy. On 13 February 2006, the company was removed from the Italian commercial register, in which it was noted that ‘the company had moved to Hungary.

Once the company had been removed from the register, the director of Vale Costruzioni S.r.l. and another natural person incorporated Vale Építési Kft. The representative of Vale Építési Kft. requested a Hungarian commercial court to register the company in the Hungarian commercial register, together with an entry stating that Vale Costruzioni S.r.l. was the predecessor in law of Vale Építési kft. However, that application was rejected by the commercial court on the ground that a company which was incorporated and registered in Italy could not transfer its seat to Hungary and could not be registered in the Hungarian commercial register as the predecessor in law of a Hungarian company.

The Legfelsőbb Bíróság (i.e.: Supreme Court, Hungary), which has to adjudicate on the application to register Vale Építési Kft., asks the Court of Justice whether Hungarian legislation which enables Hungarian companies to convert but prohibits companies established in another Member State from converting to Hungarian companies is compatible with the principle of the freedom of establishment. In that regard, the Hungarian court seeks to determine whether, when registering a company in the commercial register, a Member State may refuse to register the predecessor of that company which originates in another Member State.

In its Judgment in Case C-378/10 VALE Építési Kft. the Court of Justice of the European Union notes that, in the absence of a uniform definition of companies in EU law, companies exist only by virtue of the national legislation which determines their incorporation and functioning. Thus, in the context of cross-border company conversions, the host Member State may determine the national law applicable to such operations and apply the provisions of its national law on the conversion of national companies that govern the incorporation and functioning of companies.

However, the Court of Justice points out that national legislation in this area cannot escape the principle of the freedom of establishment from the outset and, as a result, national provisions which prohibit companies from another Member State from converting, while authorising national companies to do so, must be examined in light of that principle.

In that regard, the Court finds that, by providing only for conversion of companies which already have their seat in Hungary, the Hungarian national legislation at issue, treats, in a general manner, companies differently according to whether the conversion is domestic or of a cross-border nature.

However, since such a difference in treatment is likely to deter companies which have their seat in another Member State from exercising the freedom of establishment, it amounts to an unjustified restriction on the exercise of that freedom.

Moreover, the Court notes, firstly, that the implementation of a cross-border conversion requires the consecutive application of two national laws to that legal operation. Secondly, the Court states that specific rules capable of substituting national provisions cannot be inferred from Articles 49 TFEU and 54 TFEU. In such circumstances, national provisions must be applied in compliance with the principles of equivalence and effectiveness designed to ensure the protection of the rights which individuals acquire under EU law.

Consequently, the Court finds, firstly, that the application by Hungary of the provisions of its national law on domestic conversions governing the incorporation and functioning of companies, such as the requirements to draw up lists of assets and liabilities and property inventories, cannot be called into question.

Secondly, where a Member State requires, in the context of a domestic conversion, strict legal and economic continuity between the predecessor company which applied to be converted and the converted successor company, such a requirement may also be imposed in the context of a cross-border conversion.

However, the Court finds, thirdly, that EU law precludes the authorities of a Member State from refusing to record in its commercial register, in the case of cross-border conversions, the company of the Member State of origin as the predecessor in law of the converted company, if such a record is made of the predecessor company in the case of domestic conversions.

Finally, the Court answers that, when examining a company’s application for registration, the authorities of the host Member State are required to take due account of documents obtained from the authorities of the Member State of origin certifying that, when it ceased to operate in the Member State of origin, that company did in fact comply with the national legislation of that Member State.

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The free movement of goods may be restricted on grounds of protection of copyright

In its Judgement in Case C-5/11 Titus Alexander Jochen Donner, the Court of Justice of the European Union ruled that a Member State may bring an action under national criminal law against a transporter for the offence of aiding and abetting the prohibited distribution of copyright-protected works on national territory, even where those works are not protected by copyright in the vendor’s Member State.

Mr Donner, a German national, was found guilty by the Landgericht München II (Regional Court, Munich II, Germany) of aiding and abetting the prohibited commercial exploitation of copyright- protected works. According to the findings of the regional court, between 2005 and 2008 Mr Donner had distributed replicas of furnishings in the so-called “Bauhaus” (these included chairs from the Aluminium Group, designed by Charles and Ray Eames, Wagenfeld lights, designed by Wilhelm Wagenfeld, seating, designed by Le Corbusier, the occasional table called the “Adjustable Table” and “Tubelight” lamps, designed by Eileen Gray, and tubular steel cantilever chairs, designed by Mart Stam) style, which was protected by copyright in Germany, for sale to customers residing in Germany.

These replicas originated from Italy, where they were not protected by copyright between 2002 and 2007, nor were they fully protected at the relevant time because, according to Italian case-law, that protection was unenforceable against producers who had reproduced or offered them for sale and/or marketed them for a certain time. The replicas had been offered for sale to customers residing in Germany by the Italian undertaking Dimensione Direct through advertisements and supplements in newspapers, direct publicity letters and a German-language internet website.

For transport to customers residing in Germany, Dimensione recommended using the Italian transport undertaking In.Sp.Em, of which Mr Donner was the principal director. The In.Sp.Em drivers collected the items ordered by German customers in Italy and paid the relevant purchase price to Dimensione. The In.Sp.Em drivers then collected the purchase price and freight charges from the customer on delivery in Germany. From a legal point of view, ownership of the goods sold by Dimensione was transferred in Italy to the German customers. The transfer of the power of disposal over the goods, however, did not take place until the goods were handed over to the purchaser in Germany, with the help of Mr Donner. Thus, according to the regional court, the distribution for the purposes of copyright did not take place in Italy, but rather in Germany, where it was prohibited in the absence of authorisation from the copyright holders.

Mr Donner appealed on a point of law against the judgment of the regional court to the Bundesgerichtshof (Federal Court of Justice, Germany). That court seeks to know whether the application of German criminal law gives rise, in the present case, to an unjustified restriction on the free movement of goods, as guaranteed under EU law.

In its judgment delivered today, the Court of Justice observes, firstly, that the application of criminal law in the present case presupposes that there has been, on the national territory, a “distribution to the public” for the purposes of EU law (Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society in OJ 2001 L 167, p. 10). In that regard, it finds that a trader who directs his advertising at members of the public residing in a given Member State and creates or makes available to them a specific delivery system and payment method, or allows a third party to do so, thereby enabling those members of the public to receive delivery of copies of works protected by copyright in that same Member State, makes, in the Member State where the delivery takes place, such a distribution. In the present case, the Court leaves it to the national court to determine whether there is evidence supporting a conclusion that that trader did actually make such a distribution to the public.

Secondly, the Court finds that the prohibition on distribution in Germany which is sanctioned by national criminal law does constitute a restriction on the free movement of goods. Such a restriction may, however, be justified by reasons relating to the protection of industrial and commercial property.

The restriction in question is based on the differing conditions of copyright protection operating across the EU. These differences are inseparably linked to the very existence of those rights. In the present case, the protection of the right of distribution cannot be deemed to give rise to a disproportionate or artificial partitioning of the markets. The application of criminal law provisions may be considered necessary to protect the specific subject-matter of the copyright, which confers inter alia the exclusive right of exploitation. The restriction in question thus seems to be justified and proportionate to the objective pursued.

Accordingly, the Court’s answer is that EU law does not preclude a Member State from bringing an action under national criminal law for the offence of aiding and abetting the prohibited distribution of copyright-protected works where such works are distributed to the public on the territory of that Member State (Germany) in the context of a sale, aimed specifically at the public of that State, concluded in another Member State (Italy) where those works are not protected by copyright or the protection conferred on them is not enforceable as against third parties.

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Under EU law on freedom of establishment and freedom to provide services, economic operators cannot be required to have a share capital of EUR 10 million in order to be entitled to collect local taxes

Italian legislation on the reorganisation of local taxationauthorises the provinces and municipalities to organise their own revenues, including taxes, by means of regulations. Local authorities may choose to award the tasks of assessment and collection of taxes and all local revenues to third party operators. In that case, those activities are awarded by means of concessions which comply with EU legislation on the tendering of the management of local public services.

The concession holders first collect the tax revenue covered by the contracts and then, after retaining a “collection charge”, pay the amounts in question over to the public authorities at the end of each quarter. The profit of the concession holders is also generated by financial market transactions carried out using the funds which they hold.

Italian legislationalso provides that private companies seeking to carry out those activities must be entered in a register of private undertakings authorised to perform activities relating to the assessment and collection of taxes. They must have a fully paid-up share capital of EUR 10 million, whereas companies in which a majority of the share capital is in public ownership are not subject to that condition. The award of those services to operators which fail to satisfy that financial requirement is null and void. Such operators may not be awarded new contracts, and may not participate in tendering procedures initiated for that purpose, unless they increase their share capital accordingly.

The Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court, Lombardy) is required to rule in several sets of proceedings between private companies and regional municipalities in Lombardy. Those private undertakings submitted tenders for the award of concessions but were excluded from the procedure because they did not have a fully paid-up share capital of EUR 10 million.

The Italian court has referred questions to the Court of Justice concerning the compatibility of the Italian legislation with European Union law and, in particular, with the rules on freedom to provide services and freedom of establishment.

In its Judgment in Joined Cases C-357/10 to C-359/10 Duomo Gpa Srl and Others v Comune di Baranzate and Others, the Court’s reply is that the Italian legislation amounts to a restriction on freedom of establishment and freedom to provide services inasmuch as it contains a condition relating to minimum share capital and forces private operators wishing to pursue those activities to incorporate and to have a fully paid-up share capital of EUR 10 million.

Consequently, such a provision impedes or renders less attractive the freedom of establishment and the freedom to provide services.

The Court then goes on to examine whether such a restriction may be justified by overriding reasons in the public interest.

The only ground of justification raised before the Court is the need to protect public authorities against possible non-performance by the concession holder, in the light of the high overall value of the contracts which have been awarded to it. In practice, the concession holders, by first collecting the tax revenue, hold and deal with millions of euros which they are required to pay over to the public authorities.

The Court does not rule out the possibility that such an objective may constitute an overriding reason in the public interest – and not a reason that is purely economic in nature. However, it notes that a restriction of the fundamental freedoms may be justified only if the relevant measure is appropriate for ensuring the attainment of the legitimate objective pursued and does not go beyond what is necessary to attain that objective.

According to the referring court, however, other provisions are capable of providing adequate protection for public authorities; proof, on the part of the operator concerned, of its technical and financial capacity, creditworthiness and solvency, or, in addition, the application of minimum thresholds for share capital that vary depending on the value of the contracts actually awarded to the concession holder.

Consequently, the Court finds that, as the Italian provision goes beyond the objective of protecting the public authorities against non-performance by concession holders, it contains disproportionate, and therefore unjustified, restrictions of the fundamental freedoms.

On those grounds, the Court ruled that Articles 43 EC and 49 EC must be interpreted as precluding a provision, such as that at issue, under which economic operators, except companies in which all or a majority of the share capital is in public ownership, are required, if necessary, to increase their fully paid up capital to a minimum of EUR 10 Million in order to be entitled to pursue the activities of assessment, verification and collection of taxes and other local authority revenue; and the award of those services to operators who fail to satisfy the minimum requirement of share capital is to be null and void, and it is prohibited to obtain new contracts or participate in tender procedures for the operation of those services until the abovementioned requirement to adjust share capital has been met.

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A clause in a selective distribution contract banning the distributors from selling the products online amounts to a restriction on competition by object

Article 101 TFEU prohibits agreements which have as their object or effect the restriction of competition. Article 101(3) TFEU provides, subject to certain conditions, for agreements which improve the distribution of products or contribute to promoting economic progress to be granted an individual exemption. In addition, various regulations provide that certain categories of agreements may qualify for a block exemption. One of those regulations, the Vertical Agreement Block Exemption Regulation, provides such an exemption for distribution agreements which meet certain conditions. However, that regulation contains a list of agreements which may not benefit from a block exemption.

Pierre Fabre Dermo-Cosmétique (“PFDC”) is one of the companies in the Pierre Fabre group. It manufactures and markets cosmetics and personal care products and has several subsidiaries, including, inter alia, the Klorane, Ducray, Galénic and Avène laboratories, whose cosmetic and personal care products are sold, under those brands, mainly through pharmacists, on both the French and the European markets.

The products in question are not classified as medicines and are, therefore, not covered by the pharmacists’ monopoly laid down by French law. However, distribution contracts for those products in respect of the Klorane, Ducray, Galénic and Avène brands stipulate that sales must be made exclusively in a physical space and in the presence of a qualified pharmacist, thereby restricting in practice all forms of internet selling.

In October 2008, following an investigation, the Autorité de la concurrence (French Competition Authority) decided that, owing to the de facto ban on all internet sales, PFDC’s distribution agreements amounted to anti-competitive agreements contrary to both French law and European Union competition law. The Competition Authority found that the ban on internet selling necessarily had as its object the restriction of competition and could not benefit from a block exemption. The Authority also decided that the agreements could not benefit from an individual exemption either.
PFDC challenged that decision before the Cour d’appel de Paris (France), which has asked the Court of Justice whether a general and absolute ban on internet selling amounts to a restriction of competition “by object”, whether such an agreement may benefit from a block exemption and whether, where the block exemption is inapplicable, the agreement may benefit from an individual exemption under Article 101(3) TFEU.

In its Judgment in Case C-439/09 Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la Concurrence and Others, the European Court of Justice recalls that in order to assess whether a contractual clause involves a restriction of competition “by object”, regard must be had to the content of the clause, the objectives it seeks to attain and the economic and legal context of which it forms a part.

As regards agreements constituting a selective distribution system, the Court has already stated that such agreements necessarily affect competition in the common market. Such agreements are to be considered, in the absence of objective justification, as “restrictions by object”. However, a selective distribution system is compatible with European Union law to the extent that resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion, that the characteristics of the product in question necessitate such a distribution network in order to preserve the product’s quality and ensure its proper use, and, finally, that the criteria laid down do not go beyond what is necessary.

After recalling that it is for the referring court to examine whether a contractual clause which de facto prohibits all forms of internet selling can be justified by a legitimate aim, the Court provides the referring court for that purpose with guidance on the interpretation of European Union law to enable it to reach a decision.

Thus, the Court points out that, in the light of the freedoms of movement, it has not accepted – as it has already stated in the context of the sale of non-prescription medicines and contact lenses – arguments relating to the need to provide individual advice to the customer and to ensure his protection against the incorrect use of products, put forward to justify a ban on internet sales. Similarly, the Court rules that the need to maintain the prestigious image of PFDC’s products is not a legitimate aim for restricting competition.

As to whether a selective distribution contract may benefit from a block exemption, the Court recalls that the exemption does not apply to vertical agreements which have as their object the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade. A contractual clause which de facto prohibits the internet as a method of marketing at the very least has as its object the restriction of passive sales to end users wishing to purchase online and located outside the physical trading area of the relevant member of the selective distribution system. Consequently, the block exemption does not apply to that contract.

However, such a contract may benefit, on an individual basis, from the exception provided for in Article 101(3) TFEU, if the referring court finds that the conditions laid down in that provision are met.

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A trade mark containing the geographical indication “Cognac” cannot be registered to designate a spirit drink not covered by that indication as the commercial use of such a mark would adversely affect the protected indication

Under the regulation on the protection of geographical indications for spirit drinks (see Regulation (EC) No 110/2008 of the European Parliament and of the Council of 15 January 2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks and repealing Council Regulation (EEC) No 1576/89), it is possible to register as a geographical indication the name of a country, region or locality from which a spirit drink originates, where a given quality, reputation or other characteristic of that drink is essentially attributable to its geographical origin. A registration of that kind is made upon application by the Member State of origin of the drink. The application must be accompanied by a technical file listing the specifications which the drink must meet if it is to be able to be designated by the protected geographical indication.

Furthermore, the regulation prohibits the registration of trade marks which may adversely affect a protected geographical indication and states that, as a general rule, where such a mark has already been registered, it must be invalidated. The regulation mentions “Cognac” as a geographical indication identifying wine spirits originating from France.

Gust. Ranin Oy, a Finnish company, applied in Finland for the registration, for spirit drinks, of two figurative marks in the form of a bottle label bearing descriptions of the spirit drinks containing the term “Cognac” and its Finnish translation, “konjakki”. Although the Finnish authorities have accepted the application for registration, the Bureau national interprofessionel du Cognac – a French organisation of cognac producers – contests the legality of that registration before the Finnish courts.

The Korkein hallinto-oikeus (i.e.: Supreme Administrative Court, Finland) asks the Court of Justice whether it is permissible under the regulation to register national trade marks containing the term “Cognac” for products which, in terms of manufacturing method and alcohol content, do not meet the requirements set for the use of the geographical indication “Cognac”.

In its judgment given today (see Judgment in Joined Cases C-4/10 and C-27/10 Bureau national interprofessionel du Cognac v Gust. Ranin Oy), the Court states, first of all, that although the contested marks were registered on 31 January 2003 – that is to say, before the regulation entered into force – that regulation is applicable in the present case. In that connection, the Court observes that the retrospective application of the regulation does not undermine the principle of legal certainty or the principle of the protection of legitimate expectations. The obligation on Member States to prevent the use of a geographical indication identifying spirits for alcoholic beverages which do not originate from the place designated by that indication has existed in EU law since 1 January 1996.

Next, the Court observes that the two Finnish trade marks, registered on 31 January 2003, cannot benefit from the derogation provided for under the regulation, in accordance with which the use of a mark which was acquired before the date of protection of the geographical indication in the country of origin (or before 1 January 1996) is permitted, even if it adversely affects the geographical indication concerned. In that regard, the Court points out that, independently of the protection it enjoys under French law, the term “Cognac” has been protected as a geographical indication under EU law since 15 June 1989.

The Court also finds that the use of a mark containing the term “Cognac” for products which are not covered by that indication constitutes a direct commercial use of the protected indication. Such a use is prohibited by the regulation in so far as it concerns comparable products. The Court finds that this may be the position in the case of spirit drinks.

Likewise, the Court finds that the fact that the two Finnish marks incorporate part of the name “Cognac” means that, when the consumer is confronted with the name of the marks on the bottles of spirit drinks not covered by the protected indication, the image triggered in his mind is that of the product whose designation is protected. The Court points out that such “evocation” is also prohibited under the regulation.

In those circumstances, the Court holds that the Finnish authorities must invalidate the registration of the contested marks.

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A prohibition against infringement, issued by a national court sitting as a Community trademark court, extends, as a rule, to the entire area of the European Union

In its Judgment in Case C-235/09 DHL Express France SAS v Chronopost SA the European Court of Justice ruled that the Council Regulation (EC) No 40/94 of 20 December 1993 on the Community Trade Mark (the Regulation) creates Community arrangements for trademarks whereby undertakings may obtain Community trademarks to which uniform protection is given and which produce their effects throughout the entire area of the European Union.

In order to ensure that protection, the Regulation provides that Member States are to designate in their territories “Community trademark courts” having jurisdiction for infringement actions and, if they are permitted under national law, actions in respect of threatened infringement relating to Community trademarks. Where a Community trademark court finds that a defendant has infringed or threatened to infringe a Community trademark, it is to issue an order prohibiting the defendant from proceeding with the acts which infringed or would infringe the Community trademark. It is also to take such measures in accordance with its national law as are aimed at ensuring that this prohibition is complied with.

In relation to this, the Court ruled that Article 98(1) of the Regulation shall be interpreted as meaning that the scope of the prohibition against further infringement or threatened infringement of a Community trade mark, issued by a Community trademark court whose jurisdiction is based on Articles 93(1) to (4) and 94(1) of the Regulation, extends, as a rule, to the entire area of the European Union.

Furthermore, Article 98(1), second sentence, of the Regulation No 40/94, shall be interpreted as meaning that a coercive measure, such as a periodic penalty payment, ordered by a Community trademark court by application of its national law, in order to ensure compliance with a prohibition against further infringement or threatened infringement which it has issued, has effect in Member States to which the territorial scope of such a prohibition extends other than the Member State of that court, under the conditions laid down, in Chapter III of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, with regard to the recognition and enforcement of judgments.

Where the national law of one of those other Member States does not contain a coercive measure similar to that ordered by the Community trademark court, the objective pursued by that measure must be attained by the competent court of that other Member State by having recourse to the relevant provisions of its national law which are such as to ensure that the prohibition is complied with in an equivalent manner.

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The Italian mandatory mediation procedure of cross-border and domestic disputes is effective as of 20 March 2011

By Legislative Decree No. 28 dated 4 March 2010 (the “Decree”), the European Mediation Directive 2008/52/EC (the Directive) has been implemented in Italy. The Directive is part of a European-wide initiative to promote and regulate the development of mediation throughout the EU. The Directive itself should apply only to mediation in cross-border disputes, but nothing should prevent Member States from applying such provisions also to internal mediation processes.

The mediation procedures introduced by the Decree, which covers both cross-border and domestic disputes, only apply to claims/rights which can be freely disposed of by the relevant parties (“Diritti Disponibili”) as opposed to rights which cannot be freely disposed of by the relevant individuals (e.g.: Italian family law).

The Decree has introduced two kinds of mediation procedure:

  • a mandatory procedure which applies to any possible litigation in relation to insurance, banking and financial agreements as well as other matters such as joint ownership, property rights, division of assets, hereditary and family law, leases in general, gratuitous loans, leases of going concern, compensation for damages due to car/nautical accidents, medical liability or defamation/libel; and
  • a non-mandatory procedure which applies to any civil and commercial litigation regarding matters other than those listed above.

The mandatory mediation procedure is effective as of 20 March 2011 except for any possible litigation in relation to joint ownership and compensation for damages due to car/nautical accidents which will be effective as of 20 March 2012.

The procedure is mandatory in the sense that from such date all plaintiffs prior to bringing legal proceedings shall have to try to settle disputes falling within this “mandatory” category by mediation. Legal advisers to the relevant parties shall also have a duty to inform their clients about mediation and are under obligation to try to resolve disputes by way of mediation.

The mediation procedures established under the Decree may be brought before any of the mediation organisations mentioned in Article 16 of the Decree and the applicable procedure shall follow the rules applied by the body chosen by the parties.

However, where there are alternative mediation procedures available, the plaintiffs will have the option to use either the procedure as set out in the Decree or the alternatives. Two alternative mediation procedures are currently in force in Italy, which can be used instead of the mediation procedure under the Decree in relation to certain banking and financial disputes (see Legislative Decree No. 179 dated 8 October 2007 and art. 128 bis of the Italian Banking Law).

The European Court of Justice, in its Judgment in joined cases C-317/08, C-318/08, C-319/08, and C-320/08 for a preliminary ruling issued on 18 March 2010, held that EU directives and general principles do not preclude national legislation which imposes prior implementation of an out-of-court settlement procedure, provided that that procedure does not result in a decision which is binding on the parties, that it does not cause a substantial delay for the purposes of bringing legal proceedings, that it suspends the period for the time-barring of claims and that it does not give rise to costs – or gives rise to very low costs – for the parties, and only if electronic means is not the only means by which the settlement procedure may be accessed and interim measures are possible in exceptional cases where the urgency of the situation so requires.

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The rule of unisex premiums and benefits will apply with effect from 21 December 2012

Directive 2004/113/EC prohibits all discrimination based on sex in the access to and supply of goods and services. Thus, in principle, the Directive prohibits the use of gender as a factor in the calculation of insurance premiums and benefits in relation to insurance contracts entered into after 21 December 2007.

By way of derogation, however, the Directive provides that Member States may, as from that date, permit exemptions from the rule of unisex premiums and benefits, so long as they can ensure that the underlying actuarial and statistical data on which the calculations are based are reliable, regularly updated and available to the public. Member States may allow such an exemption only if the unisex rule has not already been applied by national legislation. Five years after the transposition of the Directive into national law (i.e.: 21 December 2012) Member States must re-examine the justification for those exemptions, taking into account the most recent actuarial and statistical data and a report to be submitted by the Commission three years after the date of transposition of the Directive.

In its Judgment in Case C-236/09 Association belge des Consommateurs Test-Achats ASBL and Others v Conseil des ministres, the European Court of Justice first points out that equality between men and women is a fundamental principle of the European Union. Reference is made to Articles 21 and 23 of the Charter of Fundamental Rights of the European Union which prohibit any discrimination on grounds of sex and require equality between men and women to be ensured in all areas and to Article 2 of the Treaty establishing the European Community which provides that promoting such equality is one of the Community’s essential tasks. Similarly, Article 3(2) of the Treaty requires the Community to aim to eliminate inequalities and to promote equality between men and women in all its activities.

In the progressive achievement of that equality, it is for the EU legislature to determine, having regard to the development of economic and social conditions within the European Union, precisely when action must be taken. Thus it was – the Court states – that the EU legislature provided in the Directive that the differences in premiums and benefits arising from the use of sex as a factor in the calculation thereof must be abolished by 21 December 2007 at the latest. However, as the use of actuarial factors related to sex was widespread in the provision of insurance services at the time when the Directive was adopted, it was permissible for the legislature to implement the rule of unisex premiums and benefits gradually, with appropriate transitional periods.

In that regard, the Court notes that the Directive derogates from the general rule of unisex premiums and benefits established by the Directive, by granting Member States the option of deciding, before 21 December 2007, to permit proportionate differences in individuals’ premiums and benefits where, on the basis of relevant and accurate actuarial and statistical data, sex is used as a determining factor in the assessment of risks.

Any decision to make use of that option is to be reviewed five years after 21 December 2007, account being taken of a Commission report, but, ultimately, given that the Directive is silent as to the length of time during which those differences may continue to be applied, Member States which have made use of the option are permitted to allow insurers to apply the unequal treatment without any temporal limitation.

Accordingly, the Court states, there is a risk that EU law may permit the derogation from the equal treatment of men and women, provided for by the Directive, to persist indefinitely. A provision which thus enables the Member States in question to maintain without temporal limitation an exemption from the rule of unisex premiums and benefits works against the achievement of the objective of equal treatment between men and women and must be considered to be invalid upon the expiry of an appropriate transitional period.

Consequently, the Court rules that, in the insurance services sector, the derogation from the general rule of unisex premiums and benefits is invalid with effect from 21 December 2012.

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Participation in the general meeting of listed and non-listed Italian companies by electronic means

Legislative Decree No. 27, dated 27 January 2010 (the “Decree”), transposed in Italy the Directive 2007/36/EC on Shareholders’ Rights, introducing several significant amendments to the legal framework applicable to the rights of shareholders of listed companies.

Among others, the Decree expressly provides that the by-laws of listed and non-listed companies may allow attendance at the shareholders’ meeting and the exercise of voting rights by “electronic means” notably any or all of the following forms of participation:

(a) real-time transmission of the general meeting;

(b) real-time two-way communication enabling shareholders to address the general meeting from a remote location;

(c) a mechanism for casting votes, whether before or during the general meeting, without the need to appoint a proxy holder who is physically present at the meeting.

The exercise of voting rights by electronic means entails an interactive Web site able to allow during the shareholders’ meeting the direct interaction in real time of shareholders, directors and auditors in different physical locations.

From 31 October 2010 the option is available for non-listed companies while Consob, by Resolution No. 17592, dated 14 December 2010 has set forth the rules applicable to the companies listed on Italian or other EU-regulated exchanges, governing remote attendance at the shareholders’ meeting by telecommunication systems and voting by mail and/or electronic means.

Reference shall be made for non-listed companies to Section 2370 subsection 4 of the Italian Civil Code, and for listed companies also to art. 127 of the Legislative Decree No. 58, dated 24 February 1998, as replaced by art. 3 of the Decree, and art. 143 bis of the Consob Regulation No. 11971, dated 14 May 1999, as amended by Consob Resolution No. 17592, dated 14 December 2010.

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Mere use of a website by the trader does not in itself trigger application of the rules of jurisdiction for the protection of consumers in other Member States

The European Court of Justice in its Judgment in Joined Cases C-585/08 and C-144/09 Peter Pammer v Reederei Karl Schlüter GmbH & Co. KG and Hotel Alpenhof GesmbH v Oliver Heller explains the rules of jurisdiction in European Union law that are applicable to consumer contracts, in relation to services offered on the internet.

The European Union regulation on jurisdiction in civil and commercial matters (see Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) provides that actions against a person domiciled in a Member State must, as a general rule, be brought in the courts of that State. It also provides that cases resulting from a contractual relationship may be decided by the courts for the place of performance of the contractual obligation. In the case of consumer contracts, however, rules protecting the consumer apply. If the trader “directs its activities” to the Member State in which the consumer is domiciled, the consumer can bring proceedings before the courts of the Member State of his domicile and he can be sued only in that Member State.

In its judgment, the Court states that mere use of a website by a trader in order to engage in trade does not in itself mean that its activity is “directed to” other Member States, which would trigger application of the protective rules of jurisdiction in the regulation. The Court holds that, in order for those rules to be applicable in relation to consumers from other Member States, the trader must have manifested its intention to establish commercial relations with such consumers.

In order to determine whether a trader whose activity is presented on its website or on that of an intermediary can be considered to be “directing” its activity to the Member State of the consumer’s domicile, within the meaning of Article 15(1)(c) of Regulation No 44/2001, it should be ascertained whether, before the conclusion of any contract with the consumer, it is apparent from those websites and the trader’s overall activity that the trader was envisaging doing business with consumers domiciled in one or more Member States, including the Member State of that consumer’s domicile, in the sense that it was minded to conclude a contract with them.

In this context, the Court considers what evidence can demonstrate that the trader was envisaging doing business with consumers domiciled in other Member States. Such evidence includes clear expressions of the trader’s intention to solicit the custom of those consumers, for example when it offers its services or its goods in several Member States designated by name or when it pays a search engine operator for an internet referencing service in order to facilitate access to its site by consumers domiciled in those various Member States.

Nevertheless, other less patent items of evidence, possibly in combination with one another, are also capable of demonstrating the existence of an activity “directed to” the Member State of the consumer’s domicile. These include: the international nature of the activity at issue, such as certain tourist activities; mention of telephone numbers with the international code; use of a top-level domain name other than that of the Member State in which the trader is established, for example “.de”, or use of neutral top-level domain names such as “.com” or “.eu”; the description of itineraries from one or more other Member States to the place where the service is provided; and mention of an international clientele composed of customers domiciled in various Member States, in particular by presentation of accounts written by such customers. Likewise, if the website permits consumers to use a language or a currency other than that generally used in the trader’s Member State, this can also constitute evidence demonstrating cross-border activity of the trader.

On the other hand, the mere accessibility of the trader’s website in the Member State in which the consumer is domiciled is insufficient. The same is true of mention of an email address and of other contact details, or of use of a language or a currency which are the language and/or currency generally used in the Member State in which the trader is established.

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By authorising the use of the name “pure chocolate” Italy has infringed EU Law

The European Court of Justice (see judgment in Case C-47/09 Commission v Italian Republic) finds that Italy has failed to fulfil its obligations under EU law concerning the labelling of cocoa and chocolate products which harmonises the sales names for such products (see Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs Directive 2000/36/EC of the European Parliament and of the Council of 23 June 2000 relating to cocoa and chocolate products intended for human consumption).

The Commission brought infringement proceedings against Italy before the Court of Justice, claiming that Italy has introduced an additional sales name for chocolate products, depending on whether they can be regarded as “pure” or not, which constitutes an infringement of the directive and conflicts with the case-law of the Court. According to the Commission, the consumer must be informed whether or not substitute vegetable fats are present in the chocolate through the labelling and not through the use of a separate sales name.

Where they contain up to 5% of vegetable fats other than cocoa butter (“substitute vegetable fats”), their name remains unchanged but their labelling must display, in bold lettering, the specific statement “contains vegetable fats in addition to cocoa butter”.

In the case of chocolate products containing only cocoa butter, that information may be given on the labelling, provided the information is correct, neutral, objective, and does not mislead the consumer.

Under the Italian legislation, the phrase “pure chocolate” may be added to or incorporated in the sales names, or indicated elsewhere on the labelling of products not containing substitute vegetable fats, and administrative fines are laid down for any infringement of those rules.

The Court notes as a preliminary point that the European Union has introduced full harmonisation of sales names for cocoa and chocolate products in order to guarantee the single nature of the internal market. Those names are both compulsory and reserved for the products listed in the EU legislation. That being so, the Court holds that that legislation makes no provision for the sales name “pure chocolate” and does not permit its introduction by a national legislature. In those circumstances, the Italian legislation runs counter to the system of sales names created by EU law.

The Court notes also that the system of double names introduced by the Italian legislature does not comply either with the requirements of EU law concerning the need for the consumer to have information that is correct, neutral and objective, and that does not mislead him.

The Court has heldthat the addition of substitute vegetable fats to cocoa and chocolate products which satisfy the minimum contents required under EU legislation does not substantially alter their nature to the point where they are transformed into different products and therefore does not justify a difference in their sales names.

The Court holds, however, that, under EU legislation, the inclusion elsewhere in the labelling of a neutral and objective statement informing consumers of the absence from the product of vegetable fats other than cocoa butter would be sufficient to ensure that consumers are given correct information.

Consequently, the Court concludes that, to the extent it enables the coexistence of two categories of sales names essentially designating the same product, the Italian legislation is likely to mislead consumers and thus interfere with their right to obtain correct, neutral and objective information.

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Legal advice from in-house lawyers is not protected by legal professional privilege

The European Court of Justice (see judgment in Case C-550/07 Akzo Nobel Chemicals Ltd v Commission) has ruled that in the competition field the European Commission has the right to seize and use as evidence legal advice given by in-house lawyers.

In its judgment the European Court of Justice has confirmed the existing position under EU Law that legal advice from in-house lawyers is not protected by legal professional privilege.

The Court had the opportunity to give a ruling on the extent of legal professional privilege (see judgement in Case C-155/79 AM&S Europe v Commission), holding that it is subject to two cumulative conditions. First, the exchange with the lawyer must be connected to “the client’s rights of defence” and, second, that the exchange must emanate from “independent lawyers”, that is to say “lawyers who are not bound to the client by a relationship of employment”.

As regards the second condition, the Court, in its judgment, observes that the requirement that the lawyer must be independent is based on a conception of the lawyer’s role as collaborating in the administration of justice and as being required to provide, in full independence and in the overriding interests of that cause, such legal assistance as the client needs.

It follows that the requirement of independence means the absence of any employment relationship between the lawyer and his client, so that legal professional privilege does not cover exchanges within a company or group with in-house lawyers.

The Court did not address the question of whether advice from non-EU qualified lawyers should be protected by legal professional privilege, leaving the position as it currently stands, namely that the advice is not protected.

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The Lego brick is not registrable as a Community trademark

The Lego brick is not registrable as a Community trademark as it is a sign consisting exclusively of the shape of goods necessary to obtain a technical result.

The European Court of Justice (see judgment in Case C-48/09 Lego Juris v OHIM) finds that the main purpose of the prohibition on registration as a trademark of any sign consisting of the shape of goods which is necessary to obtain a technical result is to prevent trademark law granting an undertaking a monopoly on technical solutions or functional characteristics of a product. Thus, undertakings may not use trademark law in order to perpetuate, indefinitely, exclusive rights relating to technical solutions.

When the shape of a product merely incorporates the technical solution developed by the manufacturer of that product and patented by it, protection of that shape as a trademark once the patent has expired would considerably reduce the opportunity for other undertakings to use that technical solution. In accordance with the law of the European Union, technical solutions are capable of protection only for a limited period, so that subsequently they may be freely used by all economic operators.

In addition, the Court finds that by restricting the prohibition on registration to signs which consist “exclusively” of the shape of goods which is “necessary” to obtain a technical result the legislature duly took into account that any shape of goods is, to a certain extent, functional and that it would therefore be inappropriate to refuse to register a shape of goods as a trademark solely on the ground that it has functional characteristics. By the terms “exclusively” and “necessary”, the legislature sought to ensure that solely shapes of goods which only incorporate a technical solution, and whose registration as a trademark would actually impede the use of that technical solution by other undertakings, are not to be registered.

As regards the fact that the ground for refusal covers any sign consisting “exclusively” of the shape of goods which is necessary to obtain a technical result, the Court finds that that condition is fulfilled when, as in the present case, all the essential characteristics of a shape perform a technical function, the presence of one or more minor arbitrary elements with no technical function being irrelevant in that context.

The Court also finds that the position of an undertaking which has developed a technical solution cannot be protected – with regard to competitors placing on the market slavish copies of the product shape incorporating exactly the same solution – by conferring a monopoly on that undertaking through registering as a trademark the three-dimensional sign consisting of that shape, but can, where appropriate, be examined in the light of the rules on unfair competition.

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New ISVAP Regulation No 35 2010 on transparency and advertising of insurance products

On 26 May 2010 ISVAP, the Italian insurance regulator, following a two-stage consultation process which began a couple of years ago, published Regulation No 35 (the “Regulation”) on the disclosure duties of insurance undertakings (with particular reference to pre-contractual information to proposed insured) and the advertisement of insurance products.

The Regulation shall apply to undertakings operating in the Italian market both under the freedom of establishment as set out in Article 49 of the Treaty and under the freedom to provide cross border services as set out in Article 56 of the Treaty.

The main purpose of the Regulation, which will come into force on 1 December 2010, is to strengthen the transparency and clarity of documents used in the offer of insurance products. The Regulation does not apply to reinsurance.

For the purpose of consolidating the duties of transparency and disclosure for insurance undertakings, ISVAP has introduced the obligation to deliver to the policyholders an information booklet (“fascicolo informativo“) containing all general and special terms and conditions applicable to the insurance contract, the proposal form and a information notice (“nota informativa“).

In detail, the information booklet shall include:

  • a cover;
  • an information notice, which shall be drafted in accordance with the forms attached to the Regulation and provide more information to the insured than is required at present;
  • a glossary;
  • general terms and conditions; and
  • the proposal form, if any.

With regards to the information notice, ISVAP has developed new and more detailed schemes which shall include specific “warnings” concerning inter alia exclusions, limits and deductibles of the cover making references to each article of the terms and conditions of policy. For this reason it will be necessary to prepare an information notice for each single product which contains the information requested by ISVAP and the specific references to the related terms and conditions.

The Regulation includes prescribed forms of pre-contract information notice which are dependent upon class of business. These are:

  • annex 6 (non-life insurance);
  • annex 7 (accident insurance );
  • annex 8 (health insurance).

The purpose of the Information Notice is to enable the proposed insured to “come to a reasoned conclusion concerning contractual rights and obligations”, as set forth in article 185 of the Code of Private Insurance Code (the “Code”).

Since these forms are standard forms they cannot cover all specific aspects of all insurance contracts. Accordingly, each undertaking shall need to supplement them with additional clauses to ensure that the information notice meets the Regulation’s requirements.

Particular attention shall be given to those provisions regarding “policyholders’ and insureds’ burdens and obligations, nullity, time-limits, exclusions, suspension and limitation of the guarantee, subrogation” which shall be highlighted in accordance to Section 166 of the Code, as implemented by the Regulation.

Moreover, the Regulation requires that the terms and conditions specify the policyholders’ premium payment obligations and highlight the risk that false or incomplete pre-contractual statements or representations by the policyholder may prejudice their right to performance of the contract.

In all cases, pursuant to Section 166 of the Code, the obligation to highlight the clauses mentioned above regarding the information notice shall also apply to any other part of the information booklet including the terms and conditions of policy and any other documents delivered to the policyholder prior to on or after inception of the policy.

Finally, a declaration of the contracting party confirming delivery of the information booklet shall be always included into the policy pursuant to Section 32.2 of the Regulation.

The obligations of disclosing the Information Booklet shall apply to all new insurance contracts concluded on or after 1 December 2010.

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