Apps, Social Networks and Jurisdiction of Italy’s Courts

(The original version of this article has been published on Diritto 24 of Il Sole 24 Ore)

Much has been written on Italy’s IP courts jurisdiction over IP rights infringements involving so-called “Information Society” technologies. However, a recent order of the Milan IP Court (docket no. 29942/2013), that has gone apparently unnoticed by legal commentators, tackles the subject with regard to some of the most current issues, namely apps for mobile devices and social networks; also notably, the social network provider implicated, for once, was not the intermediary, but the alleged direct infringer.

An Italian software company had developed an app for mobile devices integrated with the platform of a well-known social network service. Shortly before the commercial version of the Italian app was launched, the social network provider put one of its own on the market, with seemingly identical functionality.

The Italian developer reacted by filing a motion with the Milan IP Court for an ex parte “search and description” of the competing app, including the source code, against the Milan-based Italian branch of the social network provider. The petitioner claimed that the identical functions of the two apps, in view of the provider’s privileged access to, and preview of, the Italian one, showed a prima facie case of infringement of its software and database rights in the app, and of unfair competition.

The motion was granted and the ex parte search and description executed, although it had to be limited to the functionality of the allegedly infringing app, since the source code (not surprisingly) was not found by the court bailiff at the premises of the Italian branch.

At the hearing scheduled to revoke or confirm the ex parte order, the defendant argued that it had no role in the management of the social network, allegedly ran by the US parent company and, for the European territory, by the Irish subsidiary. The petitioner requested to join the two foreign companies to the proceedings. The request was granted and the hearing adjourned.

At the resumed hearing, the US and Irish defendants raised, among else, lack of jurisdiction of Italian courts, in accordance with a prorogation of jurisdiction clause included in the standard agreement between the social network service and developers of integrated apps. The Italian petitioner, on its part, sought an authorization to extend the search and description to the overseas premises of the additional defendants.

The Court assessed its jurisdiction against the two foreign companies with regard to both the search and description already executed in Italy and the request for a new execution overseas.

On the first subject, the Court found that every question of jurisdiction was settled by Article 10 of Law no. 218/1995 (codifying domestic private international law rules), under which, when precautionary measures are sought, jurisdiction of Italian courts exists, inter alia, when the relevant measure is to be enforced in the Italian territory. Incidentally, as regards the Irish defendant, in my opinion the Court could and perhaps should have applied to the same effect Article 31 of Regulation EC 44/2001.

The Court went on to assert its jurisdiction also over the request for an overseas search and description against the two foreign companies. On the one hand, the Court noted, the subject-matter of the proceedings was non-contractual, hence the jurisdiction clause invoked by the foreign defendants, which only applied to contractual obligations, did not come into play; on the other, in matters related to non-contractual obligations, such as copyright infringement and unfair competition, Article 3 of Law no. 218/1995 allowed for application of the “place of the harmful event” criterion, provided for by Article 5.3 of the 1968 Brussels Convention on the jurisdiction and the enforcement of judgments in civil and commercial matters. Article 3 of Law no. 218/1995, in fact, extends certain provisions of the Brussels Convention (subsequently replaced between member States by Regulation EC 44/2001) to cases that would otherwise fall outside the subjective scope of the Convention itself (here, the claims against the US company).

The rationale for this conclusion was that, even according to a strict interpretation of the place of the harmful event criterion (whereby the possibility to assert the jurisdiction of the forum where the claimant has its domicile, by reason only of the fact that he has suffered financial losses there, must be ruled out), the Court had, nonetheless, jurisdiction, precisely as the court of the place where the harm had occurred, since the infringing app was “… distributed and used via mobile devices located on the Italian territory“.

To my knowledge, this was the first time that an Italian court took into consideration the fact that a particular software application, even though integrated with a web platform such as a social network service, lacking a defined territorial dimension, is meant to be installed and used on mobile devices that are situated in the Italian territory.

As for the distribution “via mobile devices in the Italian territory” , it is actually more correct to say that apps designed for the major mobile operating systems are distributed through segmented online marketplaces, accessible from the relevant devices; what I believe only mattered to the Court, however, was the possibility of obtaining, in the Italian territory, a copy of the allegedly infringing application and use it there.

In fact, I suspect that the (allegedly) infringing app in the case at hand was distributed not only, but also via the Italian app store (hence, on mobile devices of users resident in Italy). If so, the Court would have applied, in a certain sense, the principles outlined in the recent ECJ Mediatech case C-170/12 (although it must be kept in mind that according to settled case-law of the Italian Supreme Court the judgments of the ECJ relating to Regulation EC 44/2001 can not be automatically applied to interpret the corresponding rules of the Brussels Convention, referred to by Article 3 of Law no. 218/95).
 
Despite the positive assertion of its jurisdiction, however, the Milan Court ultimately concluded that the request to authorize the execution of the search and description abroad could not be granted, on grounds concerning the substantive matter ( in a broad sense) of the case, that are of no import here.

Accordingly , the Court confirmed the search and description already executed, extending its effects to the additional defendants and fixing a deadline to start proceedings on the merits, but denied the request for authorization of enforcement overseas.

There is no way to know if the proceedings on the merits have been timely lodged by the applicant. If so, it will be worth knowing the outcome.