COVID-19: New measures to tackle copyright infringement and unfair commercial practices

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On May 19, 2020, the Italian government adopted decree law no. 34, setting out urgent measures with immediate effect to support health, work, and the economy, as well as social policies related to the epidemiological emergency (the “Decree”).

The Decree contained provisions for the economic and social relaunch of the country following the COVID-19 pandemic and was one of many initiatives enacted by the Italian government to deal with day-to-day matters related to the health emergency (such as the supply of personal protective equipment), but the issues it tackles go way beyond that, as they also pertain to fields other than healthcare (for a complete list of all of the measures enacted by the Italian government on the Covid-19 issue, see here). It could be said that the health emergency led the Italian government to confront pre-existing situations that were heightened by the COVID-19 pandemic.

The Decree was then converted into law no. 77 of July 17, 2020. A number of amendments were made during the process, including the introduction of Articles 195-bis (“Copyright provisions”) and 263-bis (“Antitrust Authority”). These provisions concern two highly sensitive (and long-discussed) issues for stakeholders operating in the digital environment, both of which predate the COVID-19 pandemic. Though they are far from being issues that arose during the health emergency, they have proven to be very central during the lockdown and upon enactment of social distancing measures, which triggered a significant increase in the consumption of digital services.

  1. Article 195-bis

The first provision to consider is designed to grant new powers to the Italian Communications Authority (“AGCOM”).

According to Article 195-bis para. 1, at the request of rights holders, AGCOM may order Internet service providers that even indirectly utilize national numbering resources to arrange for their services (such as instant-messaging platforms) to stop any infringement of copyright and related rights. An information society service is defined as “any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services”.

Article 195-bis para. 2 amends Article 1 para. 31 of Law no. 249 of July 31, 1997, which regulates AGCOM’s sanctioning powers: it provides that if the infringer does not comply with orders issued by AGCOM in the exercise of its functions of protection of copyright, AGCOM shall impose an administrative fine ranging from €10,000 to 2% of the annual turnover of the infringer.

The reasoning behind Article 195-bis can be traced to the significant (and increasing) number of copyright infringements committed by digital and electronic means, as well as their negative impact on the creative, entertainment, and culture industries. As recently noted by the Italian Federation Against Audiovisual Piracy (ITA: “Federazione anti-pirateria audiovisiva” – “FAPAV”), online piracy is a troublesome issue in the Italian audiovisual market. According to FAPAV, during lockdown the number of users committing acts of piracy doubled as compared to 2019, which is of great concern to rights holders and authors, considering that in 2019 the Italian audiovisual industry already lost €591,000,000 in revenues due to piracy (FAPAV/IPSOS, La pirateria audiovisiva in Italia 2016-2019 – full report accessible here).

In this context, the newly adopted provision in question provides a legal instrument to fight audiovisual piracy by enhancing AGCOM’s sanctioning powers. As a matter of fact, Article 195-bis is expressly meant to implement Article 8 of Directive 2001/29/EC and Articles 3 and 9 of Directive 2004/48/EC. In a nutshell, (i) under Article 8 of Directive 2001/29/EC Member States shall provide effective, proportionate, and dissuasive sanctions and remedies against infringement of copyright and related rights; (ii) Article 3 of Directive 2004/48/EC expresses the same principles with reference to the broader category of IP rights, so as to avoid the creation of barriers to legitimate trade and to provide safeguards against abuse; (iii) Article 9 Directive 2004/48/EC imposes on Member States the obligation to ensure that national judicial authorities are vested with the power to issue specific provisional and precautionary measures at the request of a claimant (e.g., seizure of products allegedly infringing an IP right, to prevent them from circulating in the national market).

  1. Article 263-bis

Article 263-bis amends Section 27 of Italian Legislative Decree no. 206/2005, establishing the Italian Consumers’ Code (the “Consumers’ Code”) by adding new paragraph 3-bis to Section 27 Consumers’ Code.

In detail, Article 263-bis para. 1 Decree Law empowers the Italian Antitrust Authority (“AGCM”) to order – also as a precautionary measure – that (i) suppliers of connectivity services to Internet networks, (ii) operators of other telematic or telecommunication networks; or (iii) operators, which provide telematic or telecommunication services within telematic or telecommunication networks, remove any initiatives or activities addressed to Italian consumers through telematic and telecommunication networks that may constitute an unfair commercial practice. In the event of unjustified non-compliance with such order AGCM may apply an administrative fine of up to € 5,000,000.

Based on the above, the recipients of such orders shall prohibit the use of the networks through which they provide their services as to avoid the continuation of the unfair commercial practice.

Unfair commercial practices are ruled in the Consumers’ Code and can be either misleading or aggressive. Irrespective of whether such a practice consists of an action or an omission, they are all prohibited when: (i) they are contrary to the requirements of professional diligence and (ii) they materially distort or are likely to materially distort the economic behavior of the average consumer they reach or address (to be assessed with an eye to consumers’ vulnerability).

As highlighted by the provision in question, AGCM is the authority given the power to monitor and stop the continuation of unfair commercial practices, as well as to order the removal of their negative effects. AGCM may act ex officio or at the request of an interested subject in exercising its investigative, enforcement, and sanctioning powers in accordance with the provisions of Regulation no. 2017/2394/EU on cooperation between national authorities responsible for the enforcement of consumer protection laws.

In this regard, Section 263-bis para. 1 of the Decree Law aims to align Italian legislation on consumer protection with European rules. In fact, pursuant to Section 9 of Regulation no. 2017/2394/EU, the appropriate national authorities have the power to (a) adopt interim measures to avoid the risk of serious harm to the collective interests of consumers; (b) remove content or restrict access to an online interface or order the explicit display of a warning to consumers when they access an online interface; (c) order a service provider to remove, disable, or restrict access to an online interface; or (d) where appropriate, order domain registries or registrars to delete a fully qualified domain name and allow the relevant authority to register it.

The role of this amendment is clearly even more pivotal now, considering the spike in the use of e-commerce services during the lockdown and after the lockdown when restrictions caused by the pandemic were in place. Many Italian consumers resorted to online purchasing to satisfy their material needs (or to fend off boredom), and many businesses saw remarkable profits by switching from offline to online sales. In this situation, it was urgently necessary to protect Italian consumers from unfair commercial practices in the digital environment.

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