According to the Court of Milan, an app offering functions like the ones of a competing app (almost in full and in a way nearly alike) does not amount to copyright infringement if source code is not copied, yet it can amount to unfair competition.
***
On December 3, 2019, the Court of Milan (“Court”) delivered its decision within the urgent interim proceedings on the dispute arisen between, on the one hand, Satispay S.p.A. and Satispay Ltd (together, “Satispay”) and, on the other hand, Sisal Group S.p.A. (“Sisal”).
As factual background, Satispay, owner of the namesake app launched in 2015 and intended for micropayments, has brought an urgent interim action against Sisal, a long-standing Italian group in the gambling sector and now also in the payment services, owner of an app called “Bill”, introduced in 2018.
The two apps both provide payment services, but present significant differences as to the specific technology on which they are built.
The “Satispay” app is a mobile payment system based on an e-money account, which works as a pre-paid instrument, topped-up through authorized bank transfers, and is mainly used to transfer money to stores or to other users. Payments can only be ordered within the limits of the balance available to users on their prepaid accounts.
The “Bill” app, instead, can be defined as a mobile payment system based on an actual payment account, as defined in Section 4 para. 12 of Directive 2366/2015/EU[1], registered in the name of one or more users to order payments. Unlike Satispay, Sisal’s app allows to make payment transactions by directly crediting and debiting funds on users’ payment accounts.
Back in February 2019, Satispay asked the Court to issue an injunction against Sisal’s for alleged copyright infringement and unfair commercial practices. According to Satispay, Sisal plainly replicated Satispay’s app in terms of software, database and so-called “user experience”. In addition, Satispay alleged that Sisal had systemically copied the innovative functions designed by Satispay, as well as the latter’s original graphic and linguistic choices and promotional initiatives. Such violations had been possible, Satisapy argued, due to unauthorized exploitation of sensitive yet confidential commercial information acquired by Sisal during former unsuccessful negotiations with Satispay, initially aimed at integrating Satispay’s app in Sisal’s outlets. Having failed to reach an agreement in said negotiations, in late 2018 Sisal launched the “Bill” app.
On its side, Sisal argued it ventured in the digital payments market long before, with the previous app “Sisalpay” to which “Bill” has been a direct evolution, and the latter had been created in a completely independent and autonomous way with respect to all of the aspects mentioned by Satispay.
Preliminarily, the Court clarified that there is no provision of Italian law that specifically pertains to these new technologies. Lacking any peculiar legal regime – as is the case with the digital world, whose developments are so quick they are seldom followed by timely legislation, which needs time to catch-up – the two apps are protected by Italian software and databases legislation.
Firstly, they can be protected as software or computer programs[2], both with reference to the source code and the object code. In this regard, the Court reinstated that copyright protection does not cover ideas, techniques and methods behind the software and/or computer program, but only the actual outcome of these ideas and techniques, i.e. their external and formal aspects.
Secondly, they can be protected as databases[3], as long as the arrangement and the organization of the data are the result of the autonomous and original creativity of the author (e.g., the data is arranged and organized in an unusual and non-standardized way).
Consistently with the analysis of the Court-appointed technical expert (“Technical Expert”), the Court dismissed the claim of alleged copyright infringement advanced by Satispay, declaring that “Bill” and its database are original and autonomous works. Thus, within the limits of the preliminary inquiry that can be carried out within urgent interim proceedings, the Court found that from a copyright perspective there was no interference between the two apps.
Focusing on the issue of the similar features and functionalities of the conflicting apps, the Court affirmed that there should be a presumption that any implementation of similar functions is not unlawful provided that it occurred without plagiarism of the source code – an approach in line with established case law of the European Court of Justice[4]. In fact, admitting the contrary would result in a monopoly over the idea behind the application, to the detriment of technical progress and industrial development. In other words, “by monopolizing a certain authorship expression, the idea upstream is also indirectly monopolized, which can [otherwise] be modulated in concrete terms downstream in other and different forms of expression, distinct from those for which protection is invoked resorting to the very same explanation by the Court”[5].
The Court reached different conclusions in relation to the unfair competition claim brought by Satispay pursuant to Article 2598 para. 3 Civil Code. According to Satispay, Sisal had systematically and massively copied a high percentage of the commercial choices made by Satispay, including the unlawful reproduction of the so-called “user experience” of the Satispay app for a percentage of roughly 80% to 100%, and the copy of graphic and terminological aspects of Satispay’s app.
In this respect, the Court has judged that some conducts by Sisal can be considered, taken as a whole, as unfair competition. Among others, have been identified as incorrect conducts (i) the repetition of unnecessary terminological choices; (ii) the use of images similar to Satispay’s ones; and (iii) the literal identity of entire parts of Cashback Service Regulations (a service offered by the Defendant).The Judge has reached this conclusion taking into consideration the fact that all of the choices implemented within Bill are not strictly necessary by specific and objective needs.
This way, Sisal “illegally gained a competitive advantage by offering almost entirely some options of the claimant’s platform and some methods of external presentation by entering more quickly into the same market, with an undue saving of costs and time needed to set up its own independent solution for the functionalities analyzed above”[6].
Based on the reasoning above, the Court granted the application of an injunction to Satispay, but set a time limit for this measure of 1 year. Otherwise, the Court reckoned a position of advantage could be created in favor of a company (in the case at hand, Satispay) at the detriment of another (namely, Sisal), which would be, as a result, perpetually deprived of the possibility to compete in a fair way.
In conclusion, this decision of the Court of Milan is interesting from many points of view. First, it concerns innovative instruments and technologies as mobile applications – thus, items which raise intriguing questions in terms of applicable legislation. Secondly, it has advanced a remarkable and – so far – not commonly established reasoning concerning the time duration of the injunction. In this case, the Judge has taken in specific consideration not only the legitimate interests of the claimant, which wanted to protect its commercial efforts, but also the equally legitimate interests of the defendant, which should be put in the condition to compete again, this time fairly and lawfully, with the other party (which is ultimately still a competitor). Otherwise, the Court reasoned that the protection of the successful party would be unlimited and unjustified in its extension, allowing for an exclusive right similar to the one granted by patent and/or copyright protection. Based on these considerations, the Court decided to “modulate the injunctive remedy […] within a limited time interval”[7].
[1] Directive (EU) 2015/2366 of the European Parliament and of the Council of November 25, 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC – text accessible here.
[2] Italian Legislative Decree no. 518/1992, transposing European Directive no. 91/250/EEC Council Directive of May 14, 1991 on the legal protection of computer programs – accessible here.
[3] Italian Legislative Decree no. 169/1999, transposing European Directive 96/9/EC of the European Parliament and of the Council of March 11, 1996, on the legal protection of databases – accessible here.
[4] In this regard, a competitor who reproduces the same functionalities without having access to the source code does not infringe the copyright on the computer program – among others, decision of the Court of Justice of May 2, 2012, in Case C‑406/10, SAS Institute Inc. v World Programming Ltd, accessible here.
[5] Court of Milan, decision of December 3, 2019, p. 4 – translation from the Italian by the authors.
[6] Court of Milan, cited decision, p. 6 – translation by the authors.
[7] Court of Milan, cited decision, p. 9 – translation by the authors.
