by Laura Spagnoli and Elena Martini

With an order dated December 3, 2019 in the proceedings brought by Satispay S.p.a. and Satispay Ltd. against Sisal Group S.p.a., the Court of Milan ascertained that Sisal committed acts of parasitic unfair competition to the detriment of Satispay, ruling on the case with a temporary limited injunction.

The case arose from the facts presented below. The two claimants, owners of the well-known app named “Satispay” which was designed to simplify digital payments, had negotiated with the counterparty the incorporation of that app into Sisal’s sales network. After the failure of the negotiations, Sisal had launched onto the market an app named “Bill”, considered by the claimants comparable to Satispay both from a technical and commercial point of view. In particular, according to Satispay, Sisal had unlawfully copied, in breach of Copyright Law, the source code of the Satispay app; had systematically reproduced the features developed over time by Satispay and the related graphic and linguistic choices; had copied the related database using Satispay’s confidential information; finally, had reproduced the promotional methods used by Satispay. Satispay had therefore brought an action before the Court of Milan to have Sisal enjoined from committing copyright infringement and acts of parasitic unfair competition, which were allegedly threatening the market position gained by the two start-ups.

In its entry into appearance, the defendant first of all contested the existence of the fumus boni iuris requirement, claiming that Bill – which was different from Satispay in nature and functionalities – had been developed independently, with huge investments and without any unlawful use of Satispay’s confidential information. Secondly, it contested the existence of the periculum in mora requirement, claiming among other things that it had in no way undermined the applicants’ market position.

In the order commented upon here, the Court of Milan, endorsing the observations of the expert witness appointed by the same Court, assessed that Bill could not be qualified as a derivative work of Satispay with reference to the source code, being instead the outcome of Sisal’s independent development, which also applied to Bill’s database. The Judge therefore ruled out the existence of copyright infringement with reference to the source code and the database.

By endorsing the expert witness’ opinion, the Court of Milan also dismissed the request to grant protection under Copyright Law to Satispay’s features. According to the expert witness, in fact, although Bill shared 26 functions with Satispay, most of these services were already known for quite some time to the relevant market and, in any case, lacked the characteristics of originality and creativity required for protection under Copyright Law. Furthermore, only one of those 26 functions (the Weekly Budget) had been implemented in Bill without any original or creative independent effort, thus consisting of a parasitic copy of the corresponding Satispay’s function. In all other cases, Sisal had instead implemented the functions at issue by an independent and creative reworking of the idea on which the service was grounded: in other words, the same functions had been implemented in Bill with a form of expression different from that for which the plaintiffs invoked protection. After having recalled that ideas and concepts cannot be monopolised as such, the Judge concluded that “the implementation of the same functions – where not deriving from the plagiarism of the source code or the related database – cannot be considered per se unlawful. In fact, it must be assumed that the competitor – without having access to the source code – observed and experimented with the software to reproduce its features”; which, according to the EU Court of Justice in case C-406/10, does not constitute copyright infringement.

On the other hand, the Judge found that Sisal had committed acts of parasitic competition pursuant to Article 2598 no. 3 of the Italian Civil Code, through the systematic copying of Satispay initiatives, which had allowed Sisal to quickly enter the relevant market without making the investment  in cost and time necessary to develop an independent solution. In particular, the Court of Milan ascertained the existence of a parasitic behaviour with reference to: the implementation in Bill of the same Weekly Budget service available in Satispay; the copying of part of Satispay’s Regulation on Cashback; the use of terminologies invented by the plaintiffs, whose reproduction could not be justified by the descriptiveness of the terms or their common use; the use of promotional material completely similar to that of Satispay.

Finally, the Judge confirmed the existence of the periculum in mora requirement, on the assumption that Sisal’s illicit behaviour was sufficient to undermine the strategic position gained in the market by Satispay.

In conclusion, the Court of Milan enjoined Sisal from committing acts of unfair competition and imposed a penalty of Euro 2,000 for each infringement. However, the injunction was temporally limited for the period of one year from its serving. According to the Court of Milan, in fact, after this period, the parasitic conducts of Sisal may “be considered reabsorbed or generalised in the common commercial practice, no longer constituting an element of particular appreciation by the customers” (e.g. Weekly Budget will become commonly used in apps for digital payments). Otherwise, the lack of this limitation would grant an unlawful advantage to other competitors that, once the possible profiles of parasitic competition exhausted, could freely carry out the same conducts for which Sisal had been permanently enjoined from.