Prize contests in Italy: more exemptions for the production of literary, artistic or scientific works

(The original Italian version is also published on Diritto 24 – Il Sole 24 Ore)

On 20 November 2014, the Italian Ministry of Economic Development issued a circular in which it substantially expands the range of contests that are not subject to Italian Presidential Decree no. 430/01 (the “Decree”).

As known, the Decree regulates prize contests and poses a number of requirements for those who want to run contests in Italy: among them, the obligation of prior notification of the contest’s regulation to the Ministry, the provision of a security equal to the value of the prizes, the need for the contest to be run in and limited to the Italian territory and the impossibility of carrying out the contest on social networks like Facebook.

Because of the aforementioned requirements, which are more stringent than those of other countries, so far many multinational companies have given up trying to run competitions in Italy. The Ministry has taken this issue into account in the circular in question, by which it admittedly aims to overcome the problem.

Thus, in the circular the Ministry states the scope of Article 6(1)(a) of the Decree, based on which “the following are not to be considered as prize contests: a) contests organised for the production of literary, artistic or scientific works, and for the submission of projects or studies in the commercial or industrial field, where the award of the prize to the author of the chosen work constitutes the consideration for the work carried out, or is the recognition of personal merit or an encouragement in the public interest”.

“For the contest to fall within this exemption“, the Ministry says, “it must be a contest for which no prior purchase is required“, and for which the prizes consist of:
i) a consideration for the work: “for example, prize contests in which the promoter undertakes to buy or use, or however reserves the right to use the works evaluated as the best and chosen by the same promoter, so the awards will take the form of payment for the work carried out by the participants“;
ii) a recognition of personal merit: this exemption applies “when the “winning” is, in itself, more important than the actual value of the prize, or in any case when the award has not the character of a consideration“; then it “is applicable in particular, but not exclusively, to those initiatives that confer recognitions of national or international value, similar to those of the best known literary, artistic and scientific contests“;
iii) an encouragement in the public interest: “in this case the main aim of the initiative and of the award must be to reward the best works on matters of scientific interest (e.g. smoking, drug addiction, alcoholism, ecology etc.), literary interest (e.g. certamen latinum etc.), educational interest (e.g. the best essay on the various issues of social nature etc.) and the like. ln other words, the more generic value of the prize… must be connected to the interest of the community and not primarily to the commercial and promotional interest of the contest’s promoter“.

With regard to the above requirements, the Ministry recognises that to them, in the past, further explanations have been added through interpretation, arguing, for example, that the award for a project, to come under the exemption, must necessarily be directed to the actual subsequent use of the project by the promoter; or that the exemption for literary, artistic or scientific prizes was applicable only after evaluation of the notoriety and the level of competition; or that the awards conferred by way of encouragement fell within the exemption only after evaluation of the actual importance of the work for the collective interest. It is instead now necessary, says the Ministry, to follow “a more consistent interpretation of the wording of that provision that does not restrict its scope and does not result in uncertainties in the confines of its application“.

So for example, says the circular, the exemption covers contests run by companies operating in the IT sector “publicising important contests that do not require any prior purchase of products and promise to reward the best projects or studies presented in this IT area – that definitely falls under the commercial or industrial field – with prizes awarded as a recognition of personal merit or by way of encouragement in the public interest to the dissemination and development of computer science, or even in consideration of the acquisition of the technological project in question, regardless however of any commitment about its actual subsequent use that is clearly conditioned by independent market valuations“.

In such cases, therefore, not only are the contests not subject to the requirements provided by the Decree, but rather – says the Ministry – “any further statements to that effect by the promoters after the present clarifications may be deemed discriminatory and misleading, as it would not match, or not match anymore, the actual situation of the Italian legislation“.

In conclusion, it seems that competitions based on so-called “user generated contents” may be more widespread in Italy now, without the need to meet the requirements provided by the Decree. However, it remains appropriate to check with an experienced professional if the contest one intends to run falls within this exemption or not, and what requirements the contest must still meet in order to respect the Italian law: even where the Decree does not apply, in fact, the general rules of our legal system would still apply, such as those relating to advertising and consumers’ protection.