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DECISION OF THE EURUPEAN COURT OF JUSTICE: THE SALE OF COMPUTERS WITH PRE-INSTALLED SOFTWARE DOES NOT OF ITSELF CONSTITUTE AN UNFAIR COMMERCIAL PRACTICE

20/09/2016

The CJEU, with judgment C-310/15 filed on 7 September 2016, has decided that the sale of a pc that comes with a pre-installed operative system does not contravene the norms on professional ethics and, especially, does not distort the economic behavior of consumers. Additionally, the Court held that omitting the price of each of the pre-installed programs does not amount to an unfair commercial practice.

With the above mentioned judgment the Court put an end to a sequence of events that started in France in 2008, when a consumer purchased a Sony computer that came with a Windows Vista operating system: upon using the software for the first time, the purchaser refused to enter into the software license agreement, requesting that Sony refund the price of the pre-installed program. Sony rejected the request of the client, and instead proposed to annul the complete purchase and refund the entire price. The dispute reached the French Supreme Court, which decided to remand the issue to the EU judges, in order to obtain clarifications concerning directive 2005/29 on unfair commercial practices of corporations in their relations with consumers of the internal market.

The European judges held that the sale of a computer having pre-installed computer programs does not, of itself, amount to an unfair commercial practice, considering that an offer of this type does not contravene the norms on professional diligence and does not distort the economic behavior of consumers. In the case at hand, the Court observed that “as noted by the connected market survey, the sale by Sony of computers having pre-installed computer programs meets the expectations of the vast majority of consumers, who prefer the purchase of a computer having such software pre-installed and immediately utilizable as opposed to purchasing separately the computer and the programs”. The judges of the Court of Justice stated that, in any case, it is the duty of the national judge to evaluate whether the consumer has been properly informed, before the purchase, of the fact that a given model of computer is sold with pre-installed programs. In the case under scrutiny, Sony had conformed to the norms on professional diligence, having provided the consumer with the option of receding from the sale.

As concerns the second question, the Court held that the omission of the prices of the pre-installed programs does not prevent the consumer from making an informed commercial decision nor does it provoke him or her to make a commercial decision that he or she would not have taken otherwise. Indeed, considering that the price of these programs does constitute relevant information which the vendor is obliged to give to the purchaser, the failure to indicate the price of each of the pre-installed computer programs cannot be considered an unfair commercial practice.

CRITERION OF INTERPRETATION OF CORPORATE BYLAWS

13/09/2016

The clause of a public limited company’s bylaws requiring a wide majority for the resolution having as object the issues concerning certain matters is aimed at protecting minorities in order to allow the latter to have the opposition power to preserve the balance existing inside the company. Therefore, an interpretation of this clause which allows its amendment through a most limited majority seems contradictory, in the light of the good faith criterion and on the basis of the common intention of the parties, with the consequent annulment of the relevant resolution. The clause of the bylaws protecting the minorities imposing a wide majority for the resolution concerning certain issues cannot be modified through a limited majority.

The First Civil Section of the Supreme Court, with decision no. 4967 of March 14, 2016, returned to the controversial matter of interpretation of the bylaws.

The lawsuit concerned the challenge by certain shareholders of a Public Limited Company (hereinafter the “Company”) of a resolution of the extraordinary shareholders meeting adopted in September 2001, which modified article 17 of the relevant bylaws. Article 17 of the bylaws required a wide majority — equal to 60% of the share capital — in case of a shareholders meeting that, in the first and second call, resolves upon certain items on the agenda, expressly listed, among which the amendment of article 17 of the bylaws did not appear.

The extra-ordinary shareholders meeting of the Company proceeded therefore with the amendment of article 17 of the bylaws according to the majority provided by art. 2369 of Italian Civil Code (in its former provision before the relevant amendment occurred by Legislative Decree 6/2003) and, therefore, through a majority equal to over one third, lower than that provided in the same article 17.

The shareholders challenged the resolution before the Court and the Court of Appeal in order to obtain the relevant annulment for the lack of observance of the majorities provided herein.

The Court of Appeal rejected the appeal submitted by the minority shareholders of the Company, while the Supreme Court recalled the laws regarding the interpretation of a contract (art. 1362 and following of Italian Civil Code) in order to annul both the challenged decision and, resolving on the merit, the part of the resolution of the Company which amended article 17 of the bylaws without observing the majority provided hereto.

The Supreme Court deemed that the interpretation of the bylaws pursuant to good faith, in accordance with the provisions of articles 1369 and 1366 of Italian Civil Code determines that, in presence of a clause of the bylaws which protects the minority of the shareholders providing for a wide majority of votes in case of resolution of the shareholders regarding certain matters, even the resolutions aiming at amending the clauses in which the wider majorities are provided must be subject to the same wide majorities. As a consequence, a non-qualified majority of the shareholders cannot on its own, even in case of lack of provision of the bylaws, modify the clause governing such wide majorities.

This decision of the Supreme Court has crucial value since it refers to the debate regarding the applicability to the bylaws of the “subjective” interpretative criterion provided by the general discipline of contract law (articles 1362-1366 of Italian Civil Code), aimed at giving more value to the purpose followed by the parties and to the behaviors of the latter after the execution of the contract, instead of the objective criterion provided for the interpretation of the law in general (article 12 preliminary disposition of Italian Civil Code), based, above all, on the literal meaning of the single provisions.

THE “BETTY BOOP” JUDGEMENT OBTAINED BY LGV IS SUPPORTED BY LEGAL COMMENTS

30/08/2016

On the third volume of the Italian legal periodical “Rivista di diritto industriale”, the first comment on the historic judgement held by the Court of Bari on February 22, 2016 (whereof it has already given notice on LGV’s website – https://www.lgvavvocati.it/en/news/page/3/) appeared. The comment supports the position taken by LGV in the proceedings, and essentially embraced by the Court, according to which the attempt to perpetuate the monopoly on the character of Betty Boop through the trademark protection must be rejected when the copyright on that character has expired (Court of Bari, February 22, 2016, in “Rivista di diritto industriale”, p. 293, with comment of Bixio, “Long live Betty Boop, the extra-protection of the fictional character”).

In a previous news of our website we talked about the historic decision of the Court of Bari in the “Betty Boop” case, where LGV defended the US company Avela, active in the field of posters and merchandising of fictional characters, supporting the thesis according to which – once a fictional character enters the public domain – a trademark covering the same character could not prevent the use of the character in other graphic representations, not having trademark function. The Journal of Industrial Law recently published a case note to the decision of the Court of Bari, which supports the correctness of the judgement in question, expressly affirming that “the line held by the Court of Bari it is more than appreciated where it wants to ward off the attempt to create upon the famous character of Betty Boop a revival of broader and longer-lasting rights than copyright’s ones”. The comment also points out – correctly – that an attempt of this kind is increasingly common, even in terms of prolongation of the duration of the protection and/or extension of the right’s object. Instead, it clearly arises from the comment on the decision of the Court of Bari, as well as from the previous case-law regarding the fictional character, the need to avoid any deceptive use of industrial and intellectual property tools (in this case the trademark), in a pro-competition perspective which is typical of the field of industrial and intellectual property. In fact, it should not be forgotten that such monopolies are born and live in accordance with their pro-competition effects, and more generally for the creation of values for a company as a whole: as a consequence, any use of the tools of industrial and intellectual property aiming – “extra legem” – at an undue extension of the protection shall be avoided (and considered out of the system), in order to prevent such an use from turning into an ultra-monopolistic defense in favor of people – already holders of an economically dominant position – who can perpetuate this position only by virtue of the economic investments that they are able to make, without having to actually perform any creative or innovative activity. The system of intellectual and industrial property, instead, never protects the investment “per se”, but only if it is aimed at creating a value (differently qualified by law as creative, original, distinctive, etc.). This is the strength and the function of the institutes analyzed herein, which must be defended by the operators, in order to avoid a drift of the institutes that could lead to their delegitimization and therefore – ultimately – to a boomerang effect for all the owners of rights of this kind.

REPARATION CLAUSE AND PROTECTION OF REGISTERED TRADEMARKS. THE COURT OF TURIN FOLLOWS THE CASE LAW OF THE COURT OF JUSTICE OF THE EUROPEAN UNION.

21/07/2016

With order dated May 23, 2016, the Court of Turin granted the precautionary protective measures for stopping production and sale, as well as conceding the seizure and withdrawal from commerce of wheel covers for automobiles manufactured by the company Wheeltrims S.r.l.. The wheels reproduced registered marks belonging to Volkswagen AG, Seat S.A. and Skoda Auto.

The decision adheres to the principle stated by the Court of Justice of the European Union in a judgment dated October 6, 2015, (C-500/14) and referred to a preliminary ruling submitted by the Court of Turin in proceedings involving Wheeltrims S.r.l.. According to the Court of Justice, the commercialization of spare parts, allowed within European territory pursuant to the reparation clause, does not, however, authorize the producers of the part in infringing the norms protecting registered trademarks.

The Piedmontese Court stated that the spare parts dealer may use the third party registered trademarks only and exclusively for the purpose of indicating the destination of the product or service, or with a view to indicating the compatibility of the dealer’s own spare part with a given automobile model. The use of registered signs is, however, inhibited when affixing the mark may result in confusion as to the origin of the product, preventing the consumer from distinguishing between the original product and that of the dealer.

The Court has reaffirmed the greater interest in protecting rights of industrial property as well as those predisposed for market transparency, so that the consumer may always ascertain the origin of the goods and the entity that has produced them.

A “BOW” OF TENDENCY. THE COURT OF MILAN IS CALLED ON TO DECIDE PROTECTION.

15/07/2016

The Court of Milan, with order dated 22 April 2016, granted the precautionary protective measures requested by the Italian branch of the Ports Group, a company that operates worldwide in the field of clothing and fashion accessories. The measures were directed against the Spanish company Fashion Retail S.A. as well as the Italian corporation Stradivarius Italia S.r.l. for marketing in their stores and on the website stradivarius.com a particular shoe characterized by a “bow/knot on the upper shoe” identical to the one created and marketed by Ports Italy.

The applicant had based this precautionary action on certain acts of unfair competition allegedly carried out by the counterparties – that is, slavish imitation and misappropriation of attributes – requesting the opposing party to be inhibited from the continuation of the illegal conducts. Specifically, Ports Italy claimed that its shoes were characterized by the particular shape of a “bow/knot on the upper shoe”, so peculiar to allow the average consumer to connect such a shape (exclusively) to the applicant’s production. Moreover, given the reputation acquired on the market by the shoes with “bow/knot on the upper” after only 4 months from their entry into the market, the defendants would have slavishly imitated the characterizing form just in order to exploit the reputation of the applicant appropriating the advantages related to its production.

The Court held that the peculiar form of the shoes with a “bow/knot on the upper” was indeed a characterizing element of the applicant’s production, considering it to have that unique quality established by Article 2598, no. 1, of the Civil Code. Moreover, given the substantial identity between the products of the two companies, the confusing effect that the rule in question aims to avoid would have certainly taken place. However, according to the Court, the misappropriation of attributes under Article 2598, no. 2, of the Civil Code did not occur, since the reproduction of the most peculiar elements of the other party’s products would lead the consumer into error as to the origin of the goods, and hence would not be intended to take possession of the strengths of others, as required by the rule at issue.