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02 May 2016
On February 15 2016 Marina Tavassi, president of the Court of Milan's IP and Company Specialised Division, rendered a landmark decision regarding trademark, software and trade secret violations as part of broader unfair competition activities which aimed to transfer the business of the Italian subsidiary of the multinational audit group Mazars to a major competitor, BDO. This is potentially the biggest ever case in this field in Italy.
The court order barred BDO Italia and former partners of Mazars that were involved in the unfair competition activity – including BDO Italia's chief executive officer Simone Delbianco – from using the MAZARS trademark and proprietary software that was custom-made for Mazars. The extensive use of the MAZARS trademark by BDO was meant to present the illicit activity as a merger – which never in fact occurred – of the Italian subsidiaries of Mazars and BDO. The court ordered the seizure of a large amount of confidential documents held in the BDO Italia offices and various materials bearing the MAZARS trademark. BDO Italia was also ordered to inform former Mazars clients of the circumstances and to allow them to terminate their audit contract for due cause.
The defendants were also ordered to publish – at their own cost – details of the court order in two major Italian newspapers and on the home page of the BDO Italia website. This was the first time such a specific order had been granted in Italy (the appeal decision of April 18 2016 later postponed such a publication to the end of the proceedings on the merits).
This Court of Milan decision followed its first order, granted ex parte in October 2015. This order granted an extensive search of the premises and personal computers of BDO Italia and the individuals involved in the unfair competition activity, including Delbianco. The results of the search confirmed the alleged trademark infringement and unfair competition activities.
With its decision, in addition to barring BDO Italia from using the MAZARS trademark and its other distinctive signs in any form and context and granting the seizure of materials bearing these signs, the Court of Milan ordered BDO Italia to send written notice to all former clients of Mazars clarifying what had happened within 30 days and inform them of the possibility of exercising the right of withdrawal within three months.
Further, according to the court, the proprietary software in question had been created exclusively for Mazars and was licensable only to subsidiaries affiliated with Mazars and "could not have been assigned [to BDO Italia] even if the business unit had been assigned also". As a result, the court ruled that BDO Italia's use of the software was unlawful and thus prohibited. Further, the fact that BDO Italia and former partners at Mazars "had access to Mazars' confidential information and sensitive documents that had been unduly accessed" was judged to be unlawful. Consequently, the court ordered the seizure of these documents, which had been discovered during the search of BDO Italia's premises.
The court granted the seizure of sensitive documents and confidential information regarding Mazars that the defendants held "in print and/or electronic format, on PC, laptop, but also on smart phones, tablets, servers, USB keys and iCloud" (the April 18 2016 appeal decision ordered Mazars to allow the defendants to use a copy of the seized documentation for defence purposes only).
The importance of the Court of Milan's IP and Company Specialised Division's decision goes beyond the specific case, which is undoubtedly noteworthy per se. It establishes a code of conduct that clearly distinguishes what is lawful and unlawful when the transfer of auditors en bloc from one company to another occurs – and in particular it requires strict compliance to the rules regarding IP rights and business secrets. The decision therefore confirms the high level of protection afforded to IP rights in Italy and the speed and efficiency of IP specialised divisions.
For further information on this topic please contact Cesare Galli at IP Law Galli by telephone (+39 02 5412 3094) or email (email@example.com). The IP Law Galli website can be accessed at www.iplawgalli.it.
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