IS THERE CRIMINAL PROTECTION FOR SUI GENERIS DATABASES? THE RECENT OPINION OF THE ITALIAN SUPREME COURT.

04/02/2020

With judgment no. 6734, published on February 12, 2019, the Italian Supreme Criminal Court ruled on the requirements for criminal protection for databases protected by sui generis law.

 

The fact
In the case examined by the Italian Supreme Court, the data contained in a well-known site concerning judicial auctions for real estate had been extracted and reused by a different operator, active in offering to the public of consumers services and consultancy for the purchase of real estate in judicial auctions, through publication on various websites. The material consisted of photographs, floor plans and files, the latter created by the judicial auctions site, showing the main characteristics of the properties subject to enforcement proceedings.

The application of Articles 171-bis and 102-bis of Law No. 633/1941 by the Italian Supreme Court
The Court of Lucca, before which the case was appealed, held that the conduct described above shall be considered punishable under Article 171-bis of Law no. 633/1941.
It should be noted that this provision punishes conduct committed in violation of Articles 64-quinquies and 64-sexies and Articles 102-bis and 102-ter of Law no. 633/1941. Article 64-quinquies provides for a series of exclusive rights of the author of the database, if it qualifies as an intellectual work, and in particular the rights of reproduction, translation or adaptation, distribution to the public, presentation, demonstration or communication to the public, transmission by any means or in any form. Otherwise, Articles 102-bis and 102-ter grant to the database maker- even if referred to a non-creative database – the right to prohibit the extraction or reuse of all or of a substantial part of the database, if the maker has made a significant investment in the constitution of the database, of a qualitative or quantitative nature.
In the present case, the Court before which the appeal has been filed, held that the conduct of republishing the data concerning judicial auctions was punishable under Article 171-bis of Law No 633/1941, since it was suitable for integrating the case of extraction or reuse, in order to make a profit, of all or of substantial parts of the contents of a database. Therefore, the Court of Lucca had confirmed the preventive seizure of the web site containing the data extracted and reused without authorisation, by means of the shoutdown of the web site and by blocking the accounts referable to the owner of the web site.
The basis of the crime in dispute had therefore been based on the protectability of the database made up of the data collected at the judicial offices and organized exclusively, through the activity carried out by the party offended by the crime. The circumstance that the activity in question was complex, and therefore required a significant investment, had indeed ensured that to the offended party was attributed the status of creator of a database, in accordance with previous decisions (1). According to the Court of Lucca, the extraction of the data contained in the information sheets produced by the offended party would also have compromised the efficiency of the advertising assignment commissioned by the public body, reducing the number and quality of access to the official website, given the unauthorised access and therefore liable to cause unjustified prejudice.

The opinion of the Court of Cassation
The defendant contested the qualification of the offended party as a database maker. According to the appeal, the web site of the offended party is merely a form of primary and obligatory advertising under Article 490 of the Italian Code of Civil Procedure. In particular, it was pointed out that the offended party is not the author of the public data published on its website, but only the person in charge of the publication of data already present on the Portal of the Ministry of Justice (for example, the order of the judge, the estimate report and the notice of sale of the professional delegated) and “in any case without any right of exclusivity”. Therefore, there is a lack of legitimacy to invoke the protection provided by copyright law.

The requirement of creativity of the work according to the Supreme Court
The Supreme Court of Cassation held that the claim brought by the defendand was grounded, stating that the archives (electronic and paper) cannot be qualified as creative works, if a sufficient degree of creativity cannot be found in them, to be identified in the activities of selection and/or disposition of data. According to the Court, there are two different notions of creativity, “an objective one tending to consider that a work is creative which is objectively characterised by original and innovative elements such as to distinguish it from any other pre-existing work, and a subjective one according to which a work which has the personal imprint of its author should be considered creative”. For the Supreme Court, in line with its orientation (2) and in accordance with supranational case-law (3), the subjective notion must be considered preferable, since “the object of protection is not necessarily the idea in itself, which can be the basis of several works of genius, but the particular form it takes regardless of its novelty and the intrinsic value of its content”. On the basis of this, the Supreme Court ruled out the possibility that the database of the offended party was provided with the degree of creativity necessary to qualify it as a work of the intellect, since there was no creative activity traceable in the operation of selection and/or disposition of data.
As already anticipated, the non-creative databases can benefit, in civil matters, the protection – defined by the Court itself as a “parallel track of protection” with respect to the traditional one, concerning the database – provided for by Articles 102-bis and following of Law No. 633 of 1941. The rationale of the provision is to offer protection to the “maker”, who has sustained significant costs for the constitution of the database, independently from the protectability of the latter from the point of view of copyright. In the present case, the Court stated that “that right is independent from any copyright in the database […] and is totally independent of its creative or original character”.
According to the Court, however, the identification of the offended party as the maker of a database, and therefore the beneficiary of the sui generis protection granted by art. 102 bis, “is in no way equivalent to grant to the maker the protection typical of copyright law, including both the instruments granted in civil law in relation to moral rights and economic use, and the criminal cases provided for in criminal law by art. 171…”. In the opinion of the Court of Cassation, therefore, creativity would be an indispensable requisite for the recognition of criminal protection for all intellectual works and therefore not only for creative databases, but also for non-creative ones, with the consequence that the maker of a sui generis database could not benefit from the criminal protection of copyright law.

Conclusions
From the interpretation adopted by the Supreme Court on the requirement of creativity in the field of databases, there is a clear separation between the sui generis protection provided to the maker and the typical protection afforded by copyright to creative databases. Therefore, the protection including the criminal cases referred to in Articles 171 and following of Law No. 633/1941 is not, according to the Supreme Court, likely to be applied to databases which lack the requirement of creativity. This conclusion, however, appears to be in contrast with the letter of Article 171-bis of Law No. 633/1941. In fact, this provision regulates in criminal proceedings both copyright violations (and therefore creative databases) and violations of the sui generis right, as can be inferred from the simple reading of Article 171-bis, paragraph 2. The rule, in fact, when defining the material object of the crime, operets a reference as it punishes both the conduct committed in violation of the provisions of Articles 64-quinquies and 64-sexies, and the conduct committed in violation of Articles 102-bis and 102-ter.

(1): In particular, Trib. Roma, judgment no. 48121, 19 September 2013, in Foro Italiano 2014, 14, 11, 1, 3340, where it was held that: “In the present case, the elements acquired must be considered to be integrated with the case in point, which constitutes the related law pursuant to Article 102 bis of the Italian Civil Code, and indeed the applicant company, as a party operating in the field of advertising services for judicial auctions, carries out a complex activity, divided into several stages of processing made necessary also by the obligation to comply with the criteria and standards established by primary and secondary regulatory sources. […]. The complexity of the activity described above undoubtedly requires the preparation of adequate instrumental equipment and qualified personnel and therefore requires significant investments in terms of time, workforce and financial resources”;
(2): See Cass. civ. sez. I, 11.08.2004 n. 15496 in database online Pluris;
(3): See European Court of Justice, 1.3.2012, caseC-604/10 in AIDA 2012, 1464.

Valentina Cerrigone and Alessandro Bura


DIGITAL PUBLIC ADMINISTRATION: THE ADMINISTRATIVE SUPREME COURT STATES THAT THE USE OF ALGORITHM IN ADMINISTRATIVE PROCEDURES IS LAWFUL IF KNOWABLE AND COMPREHENSIVE

28/01/2020

With judgment no. 8474/2019, the Administrative Supreme Court recognised the lawfulness of automated administrative procedures and indicated their limits and criteria. Furthermore, by binding the lawfulness of the algorithmic decision-making to the transparency of the automated procedure, the judgment opened a new scenario between the PA and companies owning intellectual property rights on software.

 

The Administrative Supreme Court returned to the question of algorithmic decision-making in the administrative sector with judgment no. 8474/2019 filed last 13th December 2019. The Administrative Supreme Court confirmed its position expressed in judgment no. 2270 of April 2019, expanding its argumentation and extending for the first time the possibility of algorithmic decision-making also to PA’s discretionary activities, provided that certain conditions are met.

The case
The present case concerned the adoption by the Ministry of Education, University and Research of an extraordinary recruitment plan (referred to in Law No 107/2015) entrusted to an algorithm, as a result of which the assignments and transfers of suitable teachers were calculated.
The outcome of the national mobility procedure, implemented by Ministerial Order no. 241/2016, was opposed by the teachers who had been placed in Phase C of the abovementioned extraordinary recruitment plan. Specifically, the applicants contested the outcome of the procedure carried out on the basis of an unknown algorithm, as a result of which transfers were ordered without taking into account the preferences expressed by the teachers.
This procedure was declared unlawful in first instance by the Regional Administrative Court of Lazio, because considered to be in clear contrast with the criteria regarding the use of Information Technology in administrative procedures.
The judgment was appealed by the Ministry of Education, University and Research before the Administrative Supreme Court, which confirmed the decision of the Regional Administrative Tribunal based on a different motivation.

The decision of the Administrative Supreme Court
The Administrative Supreme Court confirms the lawfulness of algorithmic decision-making in the public sector and set out in detail its limits and criteria.
The potential of the digital revolution – ASC remarks – must be exploited to ensure the efficiency and cost-effectiveness of Public Administration, also in light of the principle of good performance under Article 97 of the Constitution. These requirements must, however, be balanced with other fundamental principles of the administrative procedure, including the principle of transparency.
Among the elements of guarantee for the lawful use of the algorithm in administrative procedures, the Administrative Supreme Court mentioned:
(a) the full knowability of the algorithm used and the criteria applied;
(b) the imputability of the decision to the body of the PA holding the power, which must verify the logic and lawfulness of the choice and results delegated to the algorithm.
Thus, the judgment extends the PA’s responsibility to the verification of correspondence between the algorithm and the underlying legal rule. In order to be able to verify that the criteria, assumptions and outcomes of the robotized procedure comply with the requirements and purposes established by law, the algorithm must be knowable and comprehensible in all aspects: from the authors to the procedure used for its elaboration, to the decision mechanism including the priorities assigned in the evaluation and decision-making procedure and the data selected as relevant.
In the case at hand – ASC concludes – the Administration had postulated a coincidence between legal requirements and the algorithmic operation, which must always be demonstrated at a technical level and in relation to the concrete case, since the impossibility of understanding the functioning of the algorithm would result in an unlawful procedure.

A new scenario for IP rights holders
According to the above-mentioned decision, the relationship between software companies and Public Administration must be based on principles of transparency. Consequently, companies could not claim any confidentiality over the algorithm. The judgment is clear on this point: “companies’ claim for confidentiality could not be taken into account, since by placing these instruments at the service of the public power, they accept all the consequences in terms of transparency”.
It should be also noted that in a more recent case the Administrative Supreme Court stated that the holder of technical secrets is a counter-interested party pursuant to Article 22, paragraph 1, letter c) of Law no. 241 of August 7, 1990, since he holds an interest in contrast to those who request access to the algorithm in order to verify its correct functioning. The position as counter-interested party is justified because, in the case described, the disclosure of the algorithm can cause harm to the IP rights holder (see Administrative Supreme Court, division VI, judgment no. 30 of 2nd January 2020, in banca dati online De Jure).
These judgements open a new scenario for companies holding intellectual property rights in software and raise several questions concerning possible measures to guarantee confidentiality of technical secrets in administrative procedures. The fact that the algorithm must be knowable and comprehensible does not, indeed, result in a loss of copyright. More complex is the case of know-how, where the asset to protect is precisely secrecy.

Camilla Macrì and Luigi Goglia


FACEBOOK IS NOT FREE: THE REGIONAL ADMINISTRATIVE COURT OF LAZIO AFFIRMS THE COMMERCIAL VALUE OF THE PERSONAL DATA OF THE SOCIAL NETWORK USERS

24/01/2020

With sentence no. 261 of January 10, 2020, the first instance Regional Administrative Court of Lazio, first section, partially confirmed the fine of ten million of euros inflicted by the the Italian Competition independent Authority to Facebook for the adoption of a commercial practice considered unfair, halving it to five million of euros and recognizing the commercial value of personal data, whose economical exploitation constitutes a remuneration for the service offered by the social network.

 

The event
The Administrative Court ruled on the appeal filed by Facebook Inc. appealing a decision of the Italian Competition Authority which, in December 2018, had jointly fined the companies Facebook Ireland Ltd. and its holding company Facebook Inc. for violation of the Consumer Code, imposing two fines of five million of euros each for the two censured behaviours.
The Authority’s decision concerned two conducts deemed, respectively, to be deceptive and aggressive towards consumers.
The first condemned conduct concerned the famous slogan “Sign up. It’s free and always will be” contained in the Facebook login and registration page, which emphasized the free nature of the service without however adequately informing users of the collection and use, for commercial purposes, of personal data provided by them. This practice was therefore considered misleading, as it did not allow an informed choice of the consumer, who was not made aware with sufficient immediacy and accuracy of the remunerative purposes underlying the provision of the social network service.
The second conduct condemned by the Competition Authority concerned the mechanism of transmission of personal data generated by users from the platform to third-party apps and websites and vice-versa. According to the Authority, Facebook was implementing an aggressive practice aimed at improperly conditioning the users of the service to the transmission of their data from Facebook to third party websites or apps, and vice-versa, for commercial purposes, through the adoption of a mechanism of preselection of the widest consent to data sharing. Users, in this way, would be inadvertently influenced to maintain the pre-selected choice made by Facebook.

The Court’s decision
The Regional Administrative Court, preliminarily examining Facebook’s claim on the inapplicability of the “parental liability” institution to the present case, rejects this ground of appeal, deeming the imputation of the holding company Facebook Inc. to be legitimate – jointly with its subsidiary Facebook Ireland Ltd. – for the unfair commercial practices pursued by the latter, not basing the holding company’s liability exclusively on the concept of ‘parental liability’, but finding that it has omitted to supervise the conduct of the subsidiary and that it has shared the benefit of the effects produced by the unfair commercial practices.
Moreover, the jurisdiction of the Antitrust Authority in matters of personal data has been confirmed by the rejection of the appellant’s defence, which alleged the lack of power of the Antitrust Authority for intruding in a field of exclusive jurisdiction of the Italian Data Protection Authority, due to the alleged pertinence of the censored conducts to the matter of personal data treatment, with consequent sole applicability of the “Privacy Regulation” on the basis of the specialty principle.
The Administrative Court, arguing the reasons grounding the jurisdiction of the Antitrust Authority, has the opportunity to affirm the potential commercial value of personal data, no longer merely the expression of a fundamental right of the individual’s personality, but a parameter of investigation inherent to the trading relationship between consumer and service provider.
Therefore, considering the existence of two distinct aspects of personal data to be evaluated, there is no incompatibility between the provisions for the protection of privacy and the one for the consumer protection, which, on the contrary, are complementary, since they relate to different conducts: the two provisions, in fact, in relation to their respective aims of protection, impose different information duties, functional, on one side, to the correct treatment of personal data for the usage of the platform and, on the other, to the transparency of information about the economic value of personal data and the lucrative purposes pursued through their exploitation. With this specification, the Court also excludes the danger raised by Facebook regarding the risk of multiple penalties that may be inflicted for the same conduct.
With regard to the second conduct examined by the Antitrust Authority, concerning the mechanism for the transmission of users’ personal data to third parties, the Administrative Court has revoked the penalty of 5 million of euros, deeming the Authority’s measure illegitimate given the lack of evidence on the existence of a conduct capable of influencing the consumers’ choices.

The capitalization of personal data
The decision of the Italian Administrative Court has a significant importance as it explores in a new light the extent of consumers’ economic interests with regard to the disclosure and use of their personal data.
While the protection of personal data has historically been developed in consideration of their quality as an expression of a fundamental right of the individual’s personality, with the consequent provision of forms of protection that cannot be waived, such as the right to revoke consent, the Administrative Court now analyses personal data in their quality as assets available for negotiation, susceptible of economic exploitation, potential object of trade between economic operators and consumers: the content of personal data provided by the consumer and the consequent profiling would represent the punctual remuneration provided by the user for the provision of the service.
Consequently, the estimation of personal data from a financial point of view requires economic operators to comply with the obligations of transparency, completeness and non-deception of information required by consumer protection legislation. The user must therefore be made aware of the exchange of transactions underlying the subscription to a synallagmatic contract, as it turns out to be the one for the usage of the social network.

Alessia Asaro and Tankred Thiem


GENUINE USE OF THE COLLECTIVE TRADEMARK: A NEW IMPORTANT JUDGEMENT OF THE COURT OF JUSTICE OF THE EUROPEAN UNION

14/01/2020

With its judgment of December12, 2019, rendered at the end of the case C-143/19 (available at the following link http://curia.europa.eu/juris/document/document.jsf?text=&docid=221511&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=7995923), the Court of Justice of the European Union (“CJEU”) clarified that a collective mark, shown on the packaging of products marketed by the companies affiliated to the association holder of the mark, can be considered as “genuinely used” in the territory of the European Union even with reference to the specific products contained in the packaging, not bearing the aforementioned collective mark.

 

The background.
On June 12, 1996, the German company DGP GmbH filed with EUIPO an application for the registration of the figurative sign “representation of a circle with two arrows” as a collective mark for goods in Classes 1-34 and services in Classes 35, 39, 40 and 42 of Nice Classification. According to the regulations governing use filed with the trademark application pursuant to under art. 67 of EU Regulation no. 207/2009 (now replaced by Article 75 of Regulation (EC) No 1001/2017), the trademark in question was registered “in order to enable consumers and traders to recognise packaging which is part of the DGP recycling system and for which a contribution to the financing of the system has been established, as well as goods packaged in this way, and to distinguish them from other packaging and goods”.

Following the registration of the mark, on November 2, 2012 a Slovak company applied for the partial revocation for non-use of the collective mark. By decision of May 26, 2015, the EUIPO’s Cancellation Division granted the application and declared the collective mark revoked in respect of all the goods for which it was registered, with the sole exception of goods consisting of packaging.

The revocation was upheld by the Board of Appeal of EUIPO, first, and by the General Court of the European Union, second. The latter, in particular, by judgment of September 12, 2018 (case T-253/17), stated that in the present case the collective mark holder had proved the sign’s genuine use only in relation to the packaging of the goods, and not also to the goods themselves. It added that the trademark in question would have only indicated that the packaging on which the sign was imprinted could be collected and enhanced in accordance with a specific recycling system, but this would have not guaranteed any indication of origin in relation to the individual goods. For that reason, the collective mark was declared partially revoked. The General Court therefore concluded that the EUIPO’s decision declaring DGP’s collective mark to be revoked was free from any objections on that point.

CJEU Decision.
With the judgment in question, the CJEU overturned the previous rulings and annulled the judgments of both the EU General Court and EUIPO’s Board of Appeal.

The Court’s reasoning starts from the assumption that the principle of law according to which a European Union trademark is genuinely used “when used in accordance with its essential function, in order to create or preserve an outlet for the goods and services for which it is registered” also applies unquestionably to collective trademarks, the essential function of which is – as known, unlike individual trademarks – to distinguish the goods and services of the subjects affiliated to the association which owns the mark from those of other undertakings.

On the basis of this premise, the EU judges objected the judgment of the EU General Court in so far as it merely found that DGP had failed to prove that the trademark in question was also intended to create or preserve an outlet for the goods at issue (and not only for packaging containing the goods), without first examining whether the mark was “actually” used on the market for the goods or services concerned. According to the Court, that assessment should have been carried out by taking in particular consideration the uses considered justified, in the economic field concerned, to maintain or create an outlet for the goods or services covered by the mark, the nature of those goods and services, the characteristics of the relevant market, the extent and frequency of use of the mark.

In the present case, therefore, the General Court should not have ended its judgment on the fact (considered clear) that the consumer, looking at the collective mark in question, would have understood that DGP’s system concerned the local collection and recovery of the packaging of the goods and not also the collection or recovery of the goods themselves. But it should have gone further, also investigating whether the indication to the consumer, at the time when the products were placed on the market, of the provision of such a system of local collection and recycling of packaging waste, might have been capable of creating or maintaining a certain market share even for some specific products.
In fact – concludes the Court – the nature of most of the products associated with the collective mark in question, consisting of everyday goods capable of generating packaging waste on a daily basis, in no way excludes (and indeed probably confirms) that the indication on their packaging of the affiliation to such a system of local collection and ecological treatment of packaging waste may well influence consumers’ purchasing decisions and, consequently, contribute to the preservation or creation of market shares relating to the products. Which is sufficient to demonstrate the effective use of the collective mark, so as to prevent its revocation.

Giorgio Rapaccini and Alessandro Bura


CJEU RULES THAT THE PROVISION OF EBOOKS IS AN ACT OF COMMUNICATION TO THE PUBLIC

08/01/2020

The Court of Justice of the European Union (CJEU), in its judgment Tom Kabinet C-263/18 of December 19th2019, ruled that the provision of an ebook for permanent use constitutes an act of “communication to the public” under the 2001/29 InfoSoc Directive.

 

The background:
Nederlands Uitgeversverbond (infra NUV) and Groep Algemene Uitgeversle (infra GAV), two associations representing dutch copyright owners, filed a lawsuit before the Court of First Instance in The Hague seeking a ban on the Dutch company ‘Tom Kabinet’ about reproducing and making available several ebooks to members affiliated to its book reading club on a special website of that company.
That request was based on the alleged copyright infringement by Tom Kabinet itself, on the ground that the offer of second-hand ebooks via an online platform to members of a reading club constituted in fact an act of communication to the public which was unauthorised and, therefore, in full breach of the publishers’ copyright.

CJEU Decision:
By judgement Tom Kabinet C-263/18 of December 19th 2019, the Court of Justice of the European Union held that the provision of an ebook cannot be covered by the right of ‘distribution to the public’ under Article 4(1) of InfoSoc Directive 2001/29. On the contrary, that activity must be regarded as covered by the concept of ‘communication to the public’ in Article 3(1) of that directive. Hence the inapplicability of the principle of exhaustion, which applies only to the right of distribution and that is excluded in relation to the right of communication to the public.
In support of its ruling, the Court points out that the European legislative authority, on the basis of the Copyright Treaty of the World Intellectual Property Organisation (WIPO) and on the basis of preparatory work for the InfoSoc directive itself, has made it clear that the principle of exhaustion applies only to the distribution of tangible works, such as books printed on a material medium, to the exclusion altogether of works in electronic form. Ebooks, being dematerialised, do not suffer any deterioration as a result of prolonged use and can therefore be considered as real copies equal to new ones on the secondary market.

The meaning of “communication to the public”:
In its ruling, the Court of Justice then paid attention to the meaning of “communication to the public”, pointing out that it should be understood in a broad sense, since it concerns all communications to the public not present at the place where they originate and, therefore, any transmission or retransmission of a work. The Court went on to emphasise that the mere preparation for downloading a work through a special website constitutes a genuine act of communication, without it being necessary for the individual user to proceed with the actual downloading of the work. From a substantive point of view, it is reiterated that the act in question must be included in the option of ‘making the work available to the public’, as it is also clear from the explanatory memorandum on the proposal for the InfoSoc Directive 2001/29.
In addition, the Court stated that through the platform managed by Tom Kabinet there were several users who could simultaneously or successively access the same work. This is further in support of the fact that the disclosure made must be classified as effective communication to the public.
In conclusion, the Court then pointed out that the making available of a book in electronic format (so-called ebook) is normally accompanied by a license to use it which authorizes the user who downloaded the work to read it.
Consequently, it is implicit to believe that the type of communication carried out by the Tom Kabinet company, addressed indiscriminately to all users registered on a special sharing platform, is addressed to a completely new audience, not included among the one originally considered by copyright holders, as expressly required by the notion of “communication to the public” outlined by the Court of Justice of the European Union.

Paolo Rovera