Court of Cassation Order no. 17161/19: a peculiar case of so-called “IP-related” unfair competition

With order no. 17161 of 2019, the Court of Cassation issued an unprecedented decision regarding the jurisdiction of the IP Courts in cases of so-called related unfair competition.

The appeal had been filed by Pan Chemicals Spa (“Pan Chemicals”) against an order of the Court of Bergamo dismissing a case on the grounds of lack of jurisdiction. The Court of Bergamo – before which Pan Chemicals had filed a negative declaratory action, concerning liability for damages deriving from unfair competition against its competitor Lubrimetal Spa (“Lubrimetal”) – had ruled its lack of jurisdiction in favour of the IP Court of Brescia.

For background, the Court of Appeal of Brescia had previously found Pan Chemicals and other third parties liable of unfair competition practices towards Lubrimetal in the context of a patent infringement litigation, ordering the damages to be determined in separate proceedings.

In particular, the Brescia Court of Appeal found that Pan Chemicals’ co-defendants had passed Lubrimetal’s secret know-how to the former, which had then committed related unfair practices, such as misappropriation of qualities, unfair price policing and disparagement. The confidential information had been unlawfully revealed before the filing of the plaintiff’s patent application, at a time when it did not qualify as the subject of intellectual property rights under the applicable laws.

Based on this earlier decision, Pan Chemicals had asked the Court of Bergamo to declare the absence of any damages suffered by Lubrimetal as a consequence of unfair competition. The Court of Bergamo, however, ruled out its jurisdiction on the matter, qualifying the case at issue as a so-called “IP-related” unfair competition litigation, subject to the exclusive jurisdiction of IP Courts – in the specific case, the IP Court of Brescia.

The Italian Intellectual Property Code states that IP Courts have exclusive jurisdiction on intellectual property and unfair competition matters, excluding only those cases that “do not interfere, even indirectly, with the exercise of intellectual property rights” (so-called “pure” unfair competition), as well as trade secrets.

The appellant claimed that the case before the Court of Bergamo had to be considered pure unfair competition and, as such, outside the jurisdiction of the IP Courts. Its arguments were that the decision of the Court of Appeal of Brescia had qualified the conducts in suit as unfair competition practices pursuant to Article 2598 of the Italian Civil Code, and that both parties had filed (positive and negative) declaratory judgment actions on damages deriving “from unfair competition practices established in the judgement on the an debeatur” (and not on damages deriving from the infringement of an IP right).

However, the Court of Cassation reached opposite conclusions on the very grounds that “for the purposes of jurisdiction, what matters is the claim that is the object of the lawsuit”. In particular, the Court underlined that the lawsuit filed before the Court of Bergamo made express reference to the decision of the Court of Appeal of Brescia; that decision, in turn, had been based on the existence of a patent’s right, defrauded by the unlawful disclosure of confidential information; the proceedings had also been stayed in the light of prejudicial proceeding pending elsewhere on the patent’s validity.

In other words, the Court of Appeal of Brescia had ruled on the unlawfulness of Pan Chemicals’ conduct on the basis of the existence of a valid IP right (although the behaviours at issue weren’t qualified by the Court of Appeal as infringement of that IP right), and thus, that decision concerned a case of IP-related unfair competition; according to a sort of transitive property, this quality had been passed to the proceeding before the Court of Bergamo by means of recalling it in the lawsuit filed before the latter.

On these grounds, the Court of Cassation dismissed the lawsuit, affirming the jurisdiction of the IP Court of Brescia.