COPYRIGHT INFRINGEMENT ON DATABASE AND UNFAIR COMPETITION. THE MILAN COURT EXAMINES FACEBOOK’S APPLICATION “NEARBY”
The Court of Milan, with partial judgment published on 1 August 2016, upheld the claims of Business Competence s.r.l., finding the defendants Facebook s.r.l., Facebook Inc. and Facebook Ireland Ltd liable for copyright violation of the electronic database made of the plaintiff’s application “Faraound”, as well as for acts of unfair competition pursuant to article 2598 no. 3 of the Civil Code. The Court also issued an injunction – together with a penalty – for any further use of the application “Nearby” of Facebook, and the publication of the judgment, and adjourned the case in order to assess and quantify damages.
In the present case Business Competence s.r.l., a company which is active in the industry of online marketing services, developed in 2012 an application for mobile phone that selected and organized data of users’ Facebook profiles and allowing to view the nearest shops, together with the relevant data, offers and reviews, called “Faround”. The application was registered in the Facebook App Center, which contains applications tested and approved by Facebook, and then included in the App Store of the latter. About two months later, however, Facebook announced the launch of “Nearby”, an application similar to “Faround” and that copied the core of the same, according to the plaintiff’s interpretation, changing only the layout.
The Court of Milan – after having rejected the objections of lack of jurisdiction and lack of locus standi submitted by the defendants – has confirmed the liability of Facebook Inc., Facebook Ireland Ltd and Facebook Italia s.r.l. both for copyright infringement on database and for unfair competition acts under article 2598, no. 3, of the Civil Code.
The Judges first of all qualified “Faround” as database, implemented in the form of a computer program, having a creative character – as confirmed by the court-appointed expert during the proceedings on the merits – and stated that in order to assess such creative character only the selection or arrangement of the material should be relevant.
The Court held that Facebook’s “Nearby” is an elaboration of the program “Faround” of Business Competence, that was made possible by the analysis of the same program by the defendants and in particular by the delivery of the executable file of “Faround” for testing purposes. On the other hand, Facebook has not demonstrated that it has developed autonomously and independently its own application, nor – despite the judge’s request – has never filed in the proceedings the related source code, thus impeding the analysis and detailed comparison with the other party’s application.
The Court also confirmed the responsibility of the defendants for infringing article 2598 no. 3 of the Civil Code, as it exploited unfairly others’ investments for the creation of a work of considerable economic value, abusing the relationship of trust based on the contacts and the contractual relationships established with the developer Business Competence and violating the obligations of good faith, trust and fairness.
In this regard, the Court stated that Facebook was not allowed to analyze the “Faround” program to develop a similar application that was also addressed to the same users. That is because article 64ter of the Copyright Law allows analysis activities only to the extent that they are intended for using the program and for its typical functioning, while it prohibits such activities for commercial purposes, under penalty of nullity of the related contract clause. Therefore, the clauses in the agreement between the parties, that allowed Facebook to “analyze the applications, contents, and data for any purpose, including commercial ones”, should be considered void.