(The original Italian version is published on Diritto24 – Il Sole 24 Ore)

A recent order by the IP Court of Brescia (Docket no. 16565/17, Judges Mr Del Porto, Mr Scaffidi and Mrs Agnese) confirmed that bankrupt companies enjoy protection against unfair competition. This is a particularly important ruling at a time when bankruptcies have increased exponentially, and very often official receivers struggle to monetise the assets of bankrupt companies because of former employees who misappropriate them.

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In the present case, a company that recently went bankrupt, and which was previously active in the field of flexographic printing machines, found that two of its former employees and two former collaborators had set up a new company which manufactured and marketed machines based on the projects of the bankrupt company, constituting confidential information of the same. As a consequence, such projects, the value of which had been estimated to amount to hundreds of thousands of euros, became almost impossible to sell by the official receiver: no market operator was interested in paying for them knowing that another company had already obtained them, and moreover without having paid a penny. Hence the start, by the bankrupt company, of urgent injunction proceedings against the newly-established company, among other things for violation of confidential information pursuant to Arts. 98 and 99 IP Code and for unfair competition pursuant to Art. 2598 Civil Code.

The Judge in charge of the case dismissed the motion for allegedly excessive complexity, which would have required technical investigations incompatible with the summary nature of interim proceedings, amongst other thing in order to determine the actual confidentiality of the information. The bankrupt company hence lodged an appeal against the decision, emphasising in particular that, even admitting that the violation under Arts. 98-99 IP Code required a verification of the confidentiality measures that was too complex for the interim judgment, the evidence submitted in Court allowed the Judge to conclude that the misappropriation of the information itself constituted unfair competition pursuant to Art. 2598 Civil Code. To this allegation, the defendant opposed among other things that the bankrupt company, not being operative on the market, could not enjoy protection against unfair competition due to the lack of any relationship of competition between the parties.

In accepting the defences of the bankrupt company, the Brescia IP Court noted the following: “The pieces of evidence provided overall appear homogeneous and sufficiently adequate, given the nature of the present proceedings, to be considered as having demonstrated the existence of serious and irreparable damages to the right of the bankrupt company to monetise its intangible assets without other subjects, and in particular the defendant, being able to nullify these legitimate expectations by illegitimately putting on the market machinery that derive from projects, drawings and information of the bankrupt company. There is an actual risk that the right of the petitioner, pending full-scale proceedings, may suffer an imminent and irreparable damage, given by the permanent loss of value of the intangible asset that the official receiver has the task of monetising as soon as possible. In this regard, it should be noted that the finding of unfair competition does not appear to be incompatible, for the purpose of granting the required precautionary measure, with the bankruptcy of the petitioner, as the illicit behaviours identified so far are likely to frustrate the fruitfulness of the sale expectations of the bankrupt company.

As a result, the Court upheld the appeal and enjoined the defendant from manufacturing and marketing the machinery in question, setting a penalty of € 50,000 for each violation of the injunction and ordering the defendant to pay litigation costs.