Litigation concerning unfair competition in commercial law is subject to a constant evolution due to the juridical comparison/conflict among businesses operating in the global market.
Jurisdiction regarding unfair competition. Specialised divisions and ordinary court
Due to the complexity of the subject at hand and to the consequences that the potential abuse of unfair competition bears on entrepreneurships, the judicial system has established specialised divisions of the Court, with jurisdiction on cases of unfair competition, in order to settle law disputes concerning competition. This being said, it is not always this tribunal to be called to judge on disputes between businesses about unfair competition. In some cases, jurisdiction still belongs to the ordinary court. Before examining more closely when the ordinary court is called to settle controversies, and when the specialised division, let us shed some light on the concept of unfair competition, on what the acts of unfair competition are, and how to protect our business from unfair competition.
What unfair competition is
It is only natural that in a free market, several companies sell the same product or service and operate in a regimen of competition using various resources and strategies to get larger market shares as compared to their competitors. However, worldwide legislators have set limits to said competition, which is ruled by commercial law and competition law, which respond to two fundamental principles:
- an entrepreneurship must not suffer damages caused by wrongful behaviours put in place by a competitor;
- the information supplied to final consumers, and consequently their evaluation and judgement in the purchase of a good or service, must not be false, misleading or confusing.
For these reasons, unfair competition legislation has been established. “Unfair competition” means a series of specific unlawful behaviours that cause a wrongful damage to an entrepreneurship, or that mislead consumers to an error of judgement and assessment – for instance, with acts generating confusion, such as the use of rightfully registered names or distinctive signs, or the imitation of goods produced by a competitor.
Other acts of unfair competitions are the following:
- transferring employees in order to obtain information about a competitor;
- customers diversion;
- conflict of interest of an associate who takes part in two or more companies in the same market, insider trading and theft of information.
The only licit form of competition involving the specific mention of a company operating in the same market is comparative advertising. In this case, comparative advertising does not infringe any individual property right, being based on information reporting objective facts and therefore easily verifiable by the consumer. This practice, however, must not generate confusion in the consumer nor in the market and must not denigrate other competitors.
Unfair competition behaviour
The examples of unfair competition regard those examined above, and can be categorised in:
- acts of confusion;
- acts of denigration and appropriation of merit;
- other acts that do not comply with professional fairness.
However, cases may vary very quickly, because of the evolution of digital technology and the multiplication of communication means and production displacement. In this regard, Turin Court, Businesses Division, decree 15/1/2021 envisaged unfair competition in the behaviour of a company that markets a product which, by reproducing characteristic connotations of another product, is capable of generating confusion in the average consumer about its origin, despite its 3-years valid “protection of the unregistered model” having expired. The decision stems from the principle of consumer protection and the risk of confusion and improper association between products and entrepreneurships, from which the average customer is to be protected. Even the crowding of the market – such as the telephone operators and mobile devices ones, objects of the decision – does not allow in any case to market a product that is substantially identical to that of a competitor, despite the protection having expired. One of the reasons for this decision is that in the market of telephone operators the forms for the different models are not necessary: there is a wide choice, and if anything, the will of uniforming or copying competitors’ models has the purpose of confusing the customer by making products as similar as possible.
In which cases the ordinary court decides on unfair competition
A specialised court with jurisdiction over commercial disputes has been established in every Tribunal. However, there are cases in which the ordinary court is called to decide on unfair competition.
In this regard, the Italian Court of Cassation (Cass. civ. Sez. VI – 1 Ord., 09/05/2017, n. 11309 (rv. 644610-01)) stated that the jurisdiction over unfair competition matters belongs to the Ordinary judge, but only when there is no infringement of any sole right or exclusivity right. The case is, for example, the acquisition of corporate know-how due to directors diversion. In this case, the mere transfer of directors is not sufficient to prove the ulterior damage, which constitutes the unfair competition behaviour. Therefore, according to the Court of Cassation, the jurisdiction over the application for assessment of a potential unfair competition act – where the infringement of interests and the protection of industrial property of the damaged company regards the appropriation of corporate information, information about production processes and commercial know-how through the diversion of directors – belongs to the ordinary court, according to article 3, Decree 168 of 2003. According to jurisdiction rules, the Court has reaffirmed that the jurisdiction to proceed belongs to the specialised commercial divisions only when the potential unfair competition regards a violation of exclusivity rights, or other intellectual property rights, directly or indirectly resulting as constituting elements of the competition infringement.
In which cases the specialised commercial division decides over unfair competition
An example of attribution to the specialised commercial division is a case which has been ruled by the Court of Turin in November 2020. The case in point saw the opposition filed by the cooperative Produttori Moscato d’Asti Associati against the commercial agreements of a third society wanting to sell one of their wines abroad. The Court of Cassation has established with Decree n. 24674 that the case had to be judged by the specialised commercial division. With this decision, the Court of Cassation granted the request of Coop. Produttori Moscato d’Asti to oppose the decision to move the case to the ordinary court and rule over the cancellation of commercial contracts for the promotion of Nanticò trademark and the sale of the wine produced with the name mark in overseas markets.
In this regard, the Court of Cassation has reiterated that the requests of suppression of wrongful interfering competition acts “based on behaviours interfering with a right of exclusivity” must be judged by those sections of Tribunals specialised in industrial and intellectual property. Whereas for all requests concerning acts of pure unfair competition, where the infringement of exclusivity rights does not represent the constitutive element of the unlawful competition act, the ordinary court is competent. In this case, all exceptions raised by the plaintiff involve the rights on the trademark, as a crucial element of the damages suffered. Therefore, it is the specialised commercial division of the Court of Turin to be entitled to decide on the matter.
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