DOES THE ACTIVE/PASSIVE HOSTING PROVIDER DISTINCTION OF AN ISP MAKE ANY DIFFERENCE IN URGENT TRADEMARK INFRINGEMENT PROCEEDINGS?
By means of the decision no. 4186 of 13 June, 2017, the Court of Milan ruled on Rolex Italia S.p.A.’s (Rolex) request to restrict access to websites selling counterfeit Rolex watches. The at-issue websites www.rolexdaparete.com and www.tecmer.it registered in Slovenia in the name of I.T.M. SAGL TRGOVINA D.O.O. The plaintiff also summoned INNOVATIVE TECHNOLOGIE & MATERIALS SAGL, the latter being the manager of the logistics and shipments – registered in Switzerland (Respondents). The websites were hosted by the hosting platform Aruba S.p.A. (Aruba), also summoned.
Pursuant to Section 700 of the Italian Code of Civil Procedure, Rolex filed a suit on an urgency basis requesting the Judge declare that the Respondents counterfeited its products and committed acts of unfair competition. Rolex summoned also Aruba, acting as hosting provider which hosted the at-issue websites. The plaintiff requested the latter fully deactivate one website (www.rolexdaparete.com) and selectively take down some illicit content, uploaded on the other website (www.tecmer.it).
The Respondents did not appear and the Court of Milan declared their default of appearance. On the contrary, Aruba appeared and filed its statement of defense.
First of all, the Judge confirmed the Italian jurisdiction over the matter at hand. Indeed, for what pertains to the Respondents, the damaging behavior occurred in the Italian territory, therefore the jurisdiction can file the suit on the basis of the so-called forum commissi delicti (Art. 7 of the EU Regulation 1215/2012 and Art. 5, par. 3 of the Lugano Convention). Further, the order requested by the plaintiff shall be enforced in Italy, therefore the Italian jurisdiction can be based also on Art. 10 of the Law no. 218 of 1995 (on international private law).
Concerning the Respondents’ position on the merits, the Court of Milan ascertained and declared their liability for counterfeiting and unfair competition.
On the basis of a high-level analysis of the facts, typical of urgency proceedings, the Court of Milan concluded that there is no doubt that the Respondents are liable for the counterfeiting (under Section 20, lett. b of the Italian IP Code).
Further, the Judge confirmed that the Respondents’ activities might worsen the damaging consequences for Rolex, therefore the Judge can grant the requested interim measure as a matter of urgency.
As to Aruba’s defensive arguments, they objected stating that they fully complied with the provisions of Legislative Decree no. 70 of 2003, which passed into domestic law the provisions of the European directive, 2000/31/EC, on e-commerce. Consequently, they should have been able to enjoy the liability exception provided by such law. Further, Aruba claimed the plaintiff no longer had any standing because in the interim both websites had been taken down.
The Court of Milan disagreed and condemned Aruba for failure to promptly comply with Rolex’s requests.
Concerning the first requirement for urgency proceedings, i.e. the prima facie case (“fumus boni iuris”), the Court of Milan ascertained that before filing the suit, Rolex sent a cease-and-desist letter requesting Aruba fully take down the website www.rolexdaparete.com and selectively take down infringing content on www.tecmer.it.
Aruba claimed to have promptly replied to the plaintiff informing them that–in compliance with Article 17 of the abovementioned e-commerce Decree–it had notified its clients of Rolex’s requests and sent a notice to the Public Authorities.
The Judge deemed this insufficient under the applicable legislation. Recalling two case precedents of the Court of Justice of the European Union (L’Oreal / eBay and Telekabel), the Court of Milan concluded that Aruba did not adopt all the necessary means to avoid the reiteration of the illicit activity.
On this point, it seems that the Court of Milan fully adhered to the position recently taken by the Court of Appeals of Milan with the judgment issued on 7 January, 2015, in the case Yahoo v. RTI and even more recently confirmed by the decision of the Court of Turin issued on 7 April, 2017, in the case Delta v. Google/YouTube. In those cases, the Courts made clear that a detailed cease and desist letter (which contains the URLs of the pages where the content is hosted) sent by the right-holder has the same strength of a removal order issued by the competent authority, as originally envisioned by the e-commerce Decree.
In this case, the Court of Milan did not want to go into the distinction between “active” and “passive” hosting providers, addressed and resolved in an innovative way by the mentioned rulings. The Judge missed any consideration about this point, notwithstanding Aruba’s firm objection that it is a mere passive hosting provider and the plaintiff never challenged this. However, the Court of Milan stated that this issue is unrelated to these proceedings and it may be analyzed in-depth in the subsequent judgment on the merits.
In other words, it seems that according to the Court of Milan, the distinction between “active” and “passive” hosting providers seems not to be very critical, at least in urgent proceedings. As long as the activity carried out on the services provided by the ISP is prima facie illegal, the ISP is obliged to take down the illicit content once it receives a detailed cease and desist letter, no matter whether it is an “active” or “passive” hosting provider, in the meanings adopted by the abovementioned decisions.
For what pertains to the danger in the delay requirement (periculum in mora), the need to act as a matter of urgency is based on the fact that the infringing behaviors are capable of reaching a potentially unlimited public causing Rolex a very high level of harm. And this is a risk that also remains actual when the allegedly illegal conduct was ceased at the time of the issuing of the decision – due to Aruba’s intervention after they were served with the petition. Indeed, without the issuing of a Court order, the voluntary obligation unilaterally taken by the ISP can always be revoked. On this point, the Court of Milan is in line with the majority of recent case law.
As a result of the above, the Judge ordered the Respondents to cease their infringing activities. Such an order was assisted by a penalty of Euro 1,000.00 in case of violation of the order. Further, the Judge ordered Aruba to prevent anyone from accessing the websites at-issue by modifying the password and by transferring the domain names of the challenged domain names, to Rolex.
In light of the above, it is confirmed, even with reference to trademark infringement cases, that the objection of the lack of liability usually raised by ISPs in lawsuits is progressively losing legal relevance. This is something that must be taken into serious consideration in the very near future, regardless of the nature of the allegedly infringed IP rights.