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In commenting on Civil Cassation No. 19954/2021, this article presents the recurring case of unfair competition between advertising agencies competing for the privilege of working for certain prestigious clients. In particular:
The case concerned two advertising agencies: the agency Alfa Srl had complained that the agency Beta Snc had published the names of several of its clients. To be more precise, Beta Snc had mentioned these clients – in its public portfolio – merely because it had started collaborating with a professional who had actually worked with them (when he was working at the previous agency, i.e. Alfa Srl).
The Court of Florence had held that such conduct could not be considered unlawful or unfair. Although on the basis of different motivations, the Court of Appeal had come to the same conclusions: the clients’ names cannot constitute a ” merit” of the agency, but mere historical evidence of the entrepreneurial level achieved, thereby creating false/unfair advertising to the detriment of the market and not of the former individual agency.
Before we discuss the Supreme Court’s reasoning (judgment of 13/07/2021 no. 19954), let’s see what the law says on the subject of unfair competition for appropriation of the ” merits” of others.
The Italian Civil Code requires companies to operate on the market according to rules of fairness and loyalty, so that no one can take advantage of methods contrary to professional and commercial ethics.
In particular, it is explicitly forbidden for entrepreneurs to take advantage of the market by appropriating the merits of a third party entrepreneur, causing confusion among consumers and/or taking away value from a competitor.
Paragraph 1, point 2, of Art. 2598 of the Italian Civil Code provides that “Without prejudice to the provisions concerning the protection of distinctive signs and patent rights, acts of unfair competition are committed by anyone who: […] 2) disseminates news and comments on the products and activity of a competitor, which are likely to bring it into disrepute, or appropriates the merits of a competitor’s products or enterprise…“.
The article is located in book five (of employment) within Title X (of the regulation of competition and consortia) and in chapter I, section II (of unfair competition). Thus, the conduct of “appropriation of merits” is integrated by the boast made by an entrepreneur about the characteristics of his company borrowed, in truth, from those of another competing entrepreneur.
The Italian Supreme Court’s decision of 13/07/2021 No. 19954 outlines the limits of the case of unfair competition, also clarifying what is meant by the notion of ” merit “. Whenever an entrepreneur boasts publicly by attributing to himself, without any specific merit, positive qualities that actually belong to a competitor, this constitutes unfair competition by so-called “hooking” within the meaning of Art. 2598, no. 2.
The offence also occurs without an actual misleading of customers (so-called tort of danger). By claiming to possess qualities, peculiarities or characteristics acknowledged to a competitor, the entrepreneur deceitfully advertises himself: the products, services or customers of which he speaks are not part of his/her business, but belong to the competitor, and thus he/she substantially misappropriates the competitor’s reputation.
As a matter of fact, the Court clarified that the entrepreneur appropriates the merits of a third party “when, in a communication addressed to a third party, he operates a so-called self-attribution of qualities, peculiarities or characteristics recognised in the other’s business. In this way, he actually refers to himself, by means of the advertising medium, characteristics of products, services or enterprise of others, but as if they were products, services or characteristics already part of his own business activity, thus appropriating the activity of a third party and causing in the potential customers an undue accreditation, with respect to activities, services or products not corresponding to the actual activity carried out until that moment“.
“Clients” can be considered as “assets“. The notion of “appropriation of merit” in the Court’s reconstruction has the following characteristics
According to the Supreme Court, what matters most is the act of communicating the merits to the public that is capable of bringing about the aforementioned reputational connection.
In the Court’s opinion, in the case at hand, the advertising agency boasted on its website a carnet of clients belonging to another agency, implying that it had itself taken care of the previous advertising campaigns and unreasonably boasting an entrepreneurial history that was not its own, by ” hooking ” itself on that of its competitor.