Abstract
Judgment no. 1538/2025 of the Milan Court of Appeal addresses the case of a director who, upon leaving the company, founded a competing business. At the center of the dispute is an email with critical words (“unknown and inexperienced people”) and the accusation of having replicated the processes, relationships, and assets of the original company. The article explores the boundaries between free and unfair competition, showing how the Court downplayed the conduct at issue and raising a timely question: in a free market, does “anything really go”?
The case: The director leaves and creates a competing business
The Milan Court of Appeal, with judgment no. 1538 of May 31st 2025, examined a complex dispute between two Italian companies active in industrial inspection services. At the heart of the matter was the decision of the former director to establish a new company operating in the same sector and in direct competition with the company he had left.
The newly established company was accused of violating principles of commercial fairness. Specifically, the plaintiff company pointed to the use of an allegedly disparaging phrase (“unknown and inexperienced people”) contained in an email sent to a client. But not only that: according to the plaintiff, the defendant company had also diverted clients and employees, used computer data, and replicated organizational structures, key professionals, client lists, and contractual templates of the pre-existing company.
In the first instance, the plaintiff argued that some former employees of the defendant, previously part of its own workforce, had breached their duties of loyalty under Articles 2104 and 2105 of the Italian Civil Code. It also denounced certain acts considered to constitute unfair competition under Article 2598 of the Italian Civil Code, including:
- use of the same acronym,
- publication on the website of projects managed by the plaintiff,
- a disparaging communication,
- client diversion and employee turnover.
The Milan Tribunal, with judgment no. 10533/2023, upheld the plaintiff’s claims only in part, finding a violation of Article 2598, no. 2 of the Italian Civil Code for misappropriation of merit. In particular, the new company’s website section on “teamwork experience” listed a significant number of projects, disproportionate to its young operational age. According to the judge, this content could suggest — incorrectly — entrepreneurial continuity between the two entities. On this basis, the use of project names actually developed by the plaintiff company was prohibited.
For all other alleged misconduct — including the use of the acronym, the alleged diversion of clients and employees, and the accusations against former employees — the claims were dismissed. The plaintiff was therefore ordered to pay legal and accessory costs, except for the minimal portion in which its claims were upheld.
Hence the appeal, brought by the plaintiff before the Milan Court of Appeal. Since the claims against the former employees were not renewed and the rejection of the claim of confusing competition was not challenged, the Court focused exclusively on two issues: the alleged disparaging competition (Art. 2598, no. 2 of the Italian Civil Code) and parasitic competition (Art. 2598, no. 3 of the Italian Civil Code), linked both to staff transfers and to the company’s organizational structure. In the second instance, damages and publication of the decision were also sought.
“Unknown and inexperienced people”: Is this a disparaging statement?
On appeal, the plaintiff reiterated the issue of alleged disparagement: at the center of the dispute, an email sent by the former director to a client. In that private communication, he explained his departure from the company’s board, stating that the new management was in the hands of “unknown and inexperienced people”.
According to the appellant, such wording undermined the company’s reliability, causing reputational harm. But the Court of Appeal confirmed dismissal of the claim.
It found that the phrase, although critical, did not reach the level of harmfulness required by Article 2598, no. 2 of the Italian Civil Code, which sanctions disparaging unfair competition. Moreover, the communication was sent in an email to a single recipient, lacking the “actual dissemination to a plurality of persons” necessary for criticism to be considered unlawful. Finally, the expression used, while inelegant, did not reach the threshold of defamation nor did it appear capable of truly discrediting the competing business.
This raises the question: what does “discredit” really mean under Article 2598, no. 2 of the Italian Civil Code? And what are the boundaries between defamation and disparaging unfair competition?
In common language, discredit means loss of trust or credibility. In competition law, however, it has a more technical meaning: it refers to any act, even one that is formally lawful, which, once disseminated in the market, undermines the commercial reputation of a competing business. Case law has clarified that:
- disseminated information may concern not only products or services but also organization, management, or entrepreneurial style (Cass. 1446/2023);
- even true information may constitute unfair competition if used as a pretext for offensive judgments or gratuitous invective;
- conversely, the falsity of the information presumes its disparaging nature (Cass. 22042/2016).
But all this presupposes dissemination to the public or at least to multiple subjects, because the protection guaranteed by Article 2598, no. 2 of the Italian Civil Code aims to preserve the integrity of competition in the market, not to censor every expression of criticism between entrepreneurs.
Defamation, under Article 595 of the Italian Criminal Code, has similarities: it also involves disseminating statements damaging to another’s reputation and requires that the offense be communicated to multiple people. But it differs in key respects:
- it is a general offense, applicable to anyone, without requiring a competitive relationship;
- it protects the honor and reputation of the person (natural or legal), regardless of commercial context;
- it entails criminal sanctions (imprisonment or fines), whereas disparaging unfair competition gives rise to civil and injunctive remedies (Articles 2599 – 2600 of the Italian Civil Code).
The two overlap but do not coincide. They operate on different legal planes, with distinct purposes: on the one hand, freedom of competition (Articles 2598 c.c. and 41 of the Italian Constitution); on the other, freedom of expression (Article 21 of the Italian Constitution).
Interestingly, even if the threshold of discredit under Art. 2598, no. 2 of the Italian Civil Code is not reached, conduct could still be deemed unfair and damaging under no. 3 of the same article. Let us see how and when.
When does corporate “overlap” become unfair?
Among the plaintiff’s complaints was also the accusation of parasitic unfair competition under Art. 2598, no. 3 of the Italian Civil Code. According to the plaintiff, the new company, founded by the former director and staffed by former employees, relied on a “replicated” corporate asset base: use of information from the director’s company laptop, adoption of the same bylaws, use of the same accountant, reuse of the client and inspector lists, and targeted recruitment of key staff.
The Court of Appeal, however, entirely rejected this complaint, confirming the Tribunal’s evaluation. None of the elements indicated were considered sufficient, even cumulatively, to constitute unfair behavior. According to the judges, there was no proof of a structured transfer of corporate data beyond individual experience and memory, as required by Supreme Court case law to establish parasitic conduct. Absent an organized body of know-how or confidential information, mere knowledge gained during professional experience is not enough.
It must be remembered that Italian law provides several tools to protect corporate information. For trade secrets, Article 623 of the Italian Criminal Code sanctions disclosure or misuse of confidential information acquired for professional reasons. In civil law, Articles 98 and 99 of the Industrial Property Code protect non-public business information with economic value, safeguarded by adequate confidentiality measures. (see also: The case of the disloyal employee who steals confidential company information – Canella Camaiora Law Firm)
In this case, however, the Court found no evidence of confidentiality or systematic imitation. Adoption of similar bylaws, it explained, is lawful and common among companies with the same corporate purpose; likewise, using the same consultants and suppliers. Lacking additional proof, none of these aspects were interpreted as signs of an unlawful imitative plan.
All further accusations regarding staff poaching, use of data or organizational models, and creation of a “copy” of the original business thus fell away, for lack of proof or due to res judicata.
But this leaves an open question: can an email sent to a single client, though containing critical judgments about new management, never amount to disparagement? And does the systematic replication of structures, roles, relationships, and procedures by someone leaving a company to found a competitor never violate the rules of professional fairness?
The Court gave a clear answer, but perhaps not the final one. The Supreme Court’s guidelines on parasitic competition and disparagement still seem to await full application in lower courts. This case may not yet have reached its end.
And yet, something feels missing
Reading the Milan Court of Appeal judgment no. 1538/2025, one is left with the impression that something was not fully considered. Certain conduct — above all, the email sent by the former director to a client, distancing himself from the new management described as “unknown and inexperienced people” — was dismissed as non-illicit, not deemed capable of constituting disparaging unfair competition.
The reasoning was that the communication targeted a single recipient and that the tone, while critical, did not meet the threshold of discredit. From this followed the dismissal of the claim under Article 2598, no. 2 of the Italian Civil Code, which provides that “anyone who … disseminates news and judgments about the products and activities of a competitor, likely to cause discredit thereof, commits acts of unfair competition.”
Disseminates. That verb is key. Dissemination implies communication to many. But is that truly the only parameter?
The Court’s reasoning seems contradictory: on one hand, it said the assessment was not so negative; on the other, it found the necessary plurality absent… Yet even a single, well-aimed message can trigger an irreversible reputational erosion. It is the so-called initial spark — small, quiet, but enough to plant doubt in the reader.
And we know: “slander is a gentle breeze”, as Don Basilio said. Unfair competition, too, sometimes begins this way.
But the most delicate point lies elsewhere: the Court invoked “parasitism” as a category of unfair competition, but in an improper way. Here, rather than strict parasitism, there was a cumulative appropriation of information and assets — a sort of an apparently sensational takeover of the competitor’s corporate patrimony, aggravated by simultaneous disparagement.
Not isolated episodes, but a unified scheme: systematic exploitation and replication of corporate processes, enabled by the individual’s prior role. Even when the thresholds for trade secret protection under Articles 98 and 99 of the Italian Industrial Property Code are not met, the multiplicity of acts should still be considered together under Article 2598 of the Italian Civil Code. Instead, professional misconduct was fragmented into micro-episodes, minimizing its overall impact. But shouldn’t unfairness be assessed in its entirety? Does free competition really mean “anything goes”?
This, in our view, is the true shortcoming of the decision: failing to consider that cumulative conduct — combining the misappropriation of know-how with the devaluation of business goodwill built through significant investments, while simultaneously disparaging the previous company — is far more serious than isolated disparagement. To discredit what one leaves behind while exploiting what has been taken seems far too easy.
For these reasons, this “hands-off” approach by the Court is not persuasive. We believe the Supreme Court should be called upon to correct the drift that competition law is taking in the lower courts. And in that context, it will be inevitable to ask whether the law can really tolerate that a departing director, by appropriating a company’s informational and relational assets while disparaging it, can act without encountering legal limits — not even the minimal but essential ones of professional fairness enshrined in Article 2598 of the Italian Civil Code.
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Publication date: 3 September 2025
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Joel Persico Brito
Graduated from the Università Cattolica del Sacro Cuore in Milan, trainee lawyer passionate about litigation and arbitration law.