1. Professor Cesare Galli Attorney-at-Law, Milan IP_LAW_GALLI STUDIO LEGALE galli.mi@iplawgalli.it Internet Sales After the Fabre Judgment: IPRs OWNERS vs PURE PLAYERS (The Italian Perspective)

2. IPRs Owners vs Pure Players : The Problems IPRs Owners vs Pure Players : The Problems PURE PLAYERS = COMPANIES WHICH MARKET PRODUCTS THROUGH THE E-COMMERCE ONLY THE MAIN PROBLEMS Difficult to “trace” the origin of the products they market → EU or extra-EU Difficult to distinguish original and fake products Difficult to identify the seller and its premises

3. The general principles: Trademark protection, exhaustion and parallel imports THE GENERAL PRINCIPLE GOVERNING THIS MATTER IS THAT OF EXHAUSTION BUT ONLY INSIDE EU / EEA → DIFFICULT TO DETERMINE FOR PURE PLAYERS THERE IS, FURTHERMORE, A RELEVANT EXCEPTION: “Legitimate reasons” (Article 5 Italian Industrial Property Code: IPC) Conducts suitable of “harming the reputation of the trademark” (ECJ) In particular: advertisement (see ECJ, November 4th, 1997, C-337/95, Dior/Evora)

4. Examples in the Ialian LawExamples in the Ialian LawExamples in the Ialian LawExamples in the Ialian Law Examples in the Italian case law  The conduct of a subject who sells the original products abusing of the reputation of the trademark, for example giving the latter an absolutely disproportionate relevance in the advertisement (Court of Milan, July 23rd, 1998 in Giur. ann. dir. ind., 1998, 838 and ff.; and Court of Milan, March 9th, 1987, ivi, 1989, 96 and ff.) → IMPORTANT FOR PURE PLAYERS  Using the original products with purpose of so-called gachage, i.e. using products bearing trademarks with a strong power of attraction on the public sold at very low prices as a “bait” for customers, who once into the store/website buys also other goods (see Court of Ancona, Separate Division of Senigallia, in Giur. ann. dir. ind., 2003, 430 and ff.) → ON THE NET, MIX OF ORIGINAL AND FAKE PRODUCTS (OR NON-EEA ORIGINAL PRODUCTS) PROBLEMS: PROVIDING SUFFICIENT EVIDENCE (e.g. ID-CODES – USE OF COPYRIGHTED PICTURES – DIFFERENCES IN EXTRA-EU PRODUCTS) CONCLUSION: CONCLUSION: EFFICIENT DISTRIBUTION POLICY AS A VIABLE SOLUTION

5. Exhaustion and infringement on the net: cases and remedies THE LIABILITY OF A HOSTING PROVIDER IN THE ITALIAN CASE LAW See Court of Rome, order 12 February 2010, which upheld a previous order issued on 15 December 2009 – the following elements have been deemed determinant:  the reiterated completion of illicit actions on the involved website, notwithstanding the several warnings; and  the concrete possibility for the website of monitoring the users’ activity in order to exclude the publication of images with a pedo-pornographic content, that made evident that such a monitoring activity could have been possible also with the aim of impeding the publication of infringing products, as well as with the purpose of interrupting, in a temporary or permanent way, the furnishing of services for the most various reasons.

6. CONCLUSION  the evaluation about the liability of the provider shall be made on a case- by-case basis,  in particular, such a liability holds every time that “the provider… distributes adjunctive services and/or predisposes a control of the information and, above all, when, aware of the presence of suspicious material, refrains from ascertaining its unlawfulness and from removing it or if aware of lack of legalness omits of intervening” THIS SOLUTION SEEMS TO BE CONSISTENT WITH THE EU CASE LAW

7. Perspectives of changes in the Italian Law DRAFT BILL UNDER EXAMINATION BY THE PARLIAMENT (PROPONENT: FAVA, MP) TASK: to protect in the best way and at the same time the safety and the freedom of choice of the users and the professional operators of the web and the rights that have been exposed to the violations committed through the Internet, and in primis those relating to industrial and intellectual property rights, in conformity with the perspective of interests balancing, which constitutes indeed the basis that the Directive is built on

8. BASIC PRINCIPLES OF THE DRAFT NEW LAW THE ISP IS LIABLE WHEN:  is aware of facts or circumstances from which a diligent businessman should have held the unlawful activity or information (for that purpose making use of all the information he has available, included those conveyed by the holder of infringed right) and in this case has not acted promptly to remove any information or illegal activities, or to disable the access by those such content upon obtaining actual knowledge or when it become aware of that illegality, or  has not a mere technical role, automatic and passive, especially when it makes available to the recipient of its services equipment or services of a promotional nature, or rather it adopts course of presentation of the information not necessary in order to perform services covered by this Decree, that are likely to facilitate or to promote the marketing of products or services, or to provide significant assistance in optimizing the presentation of offers for sale and to promote such offers, or - to be continued -

9. BASIC PRINCIPLES OF THE DRAFT NEW LAW (continued) BASIC PRINCIPLES OF THE DRAFT NEW LAW (continued) THE ISP IS LIABLE (ALSO) WHEN: has not fulfilled its duty of diligence, which can reasonably be expected and is required by law in order to identify and prevent certain types of infringing activity and that includes, among other measures that enable them to undertake identification of the recipients of services which operated in the business, providing relevant information to the competent judicial or administrative authorities which requested it

10. BASIC PRINCIPLES OF THE DRAFT NEW LAW (continued) THE COMPETENT COURTS (IP SPECIALIZED DIVISIONS) MAY ORDER THE ISP:  to stop the ongoing violations, and  to adopt measures which contributes effectively to prevent further violations and which are effective, proportionate, dissuasive and which not create barriers to legitimate trade, even forcing the lender to compel of surveillance duty in specific cases, particularly in relation to products which may be dangerous to health or whose trade constitutes a crime; and provided that these orders do not impose on the provider to establish a general system for filtering all electronic communications passing through its services, particularly through programs 'peer-to-peer', which applies equally to all its customers, to preventive measure, in its sole cost and expense and without time limits. LIKEWISE THIS SOLUTION SEEMS TO BE CONSISTENT WITH THE EU CASE LAW AND MAY SERVE AS AN EXAMPLE FOR OTHER EU LEGISLATIONS

11. THANK YOU FOR YOUR ATTENTION!