An Overview of the Legal Issues On E-Store & Metatags Under Italian Law and Case Law

In the last few years, the success of eBay and the diffusion of online stores, providing goods and services at better prices than the traditional sellers has made e-commerce more and more common. Furthermore, e-commerce allows 24 hour shopping with a simple click!

However, the ease in which an e-store can be opened, may lead the owner to undervalue, amongst others, the legal issues that we briefly quote and comment in this article. The Italian legal provisions which apply to B2C e-commerce are as follows:

• Consumer protection in distance contracts (20 May 1997 n. 97/7/CE, implemented in D.Lgs. 22 May 1999 n. 185 and D.Lgs. 206/2005 Consumer Code);
• Electronic commerce (2000/31/CE, enforced by D.Lgs. 9 April 2003, n. 70);
• Reforms of the rules of commerce (D.Lgs 31 March 1998, n. 114).

The definition of distance contract is provided with by Article 50 of the Consumer Code:

"The contract concerning goods or services between a professional and a consumer in the area of a sale or of services at distances organized from the professional who, for that contract, exclusively employs one or more means of distance communication until the conclusion of the contract, including its conclusion,";

while technical means of distance communication, are, pursuant to Article 50 of D.Lgs. 206/2005:

"any means, without simultaneous physical presence of the professional and the consumer, which can be used for the contract's conclusion between the given parties." 

The duty of disclosure
The level of information that the seller is required to make available to potential parties is the crucial issue in these rules (there is a biphasic informative process: information that must be disclosed before the conclusion of the contract and information that must be disclosed after the conclusion of the contract). In addition, the regulation of the development process of the online contract is of particular importance.

According to Article 52 of D.Lgs. 206/2005 the consumer is notified of certain information such as the identity of the professional, the essential characteristics of goods or services, the price of goods or services, etc.

The seller must give written confirmation, or other lasting support, of the supply of all the information required by art. 52, before the conclusion of the contract, or, at the very latest, at the time of the conclusion of the contract. At that time, the consumer is to be informed of the transaction details such as the information regarding the service, pursuant to Article 53.

The importance of being compliant with this duty of disclosure is reflected in the Antitrust Authority rulings.

At times, the Antitrust Authority does find the existence of an Unfair Commercial Practice (UCP) due to incompleteness and lack of information required under Consumer Code art. 52 and art. 7 and 12 D.Lgs. 7/2003. Indeed, the Authority stated that a UCP includes indication of on-line availability of a product when it has not actually been purchased by the supplier, a lack of product availability information, the absence of an exact delivery date, etc.

Unfair Contract Terms
E-commerce allows users to purchase at a distance; therefore, the contract and the general terms and conditions are usually drafted by the seller and the online contract is concluded when the buyer accepts the seller's conditions. Where unfair terms are included, i.e. clauses that involve a strong imbalance in favor of one party (e.g. clauses that limit or exclude the manufacturer's liability), these clauses are more delicate. In article 33 of the Consumer Code, a list of these clauses (so-called, black-list) that are deemed to be unfair terms is provided.

According to Article 34, the presumption of unfairness may be overruled by giving evidence that the clause has been negotiated by the parties.

Return and Refund Policy
Return and refund policies protect consumers who buy products at a distance.  Art. 64 of the Consumer Code states that the consumer has the right to terminate the contract within 10 working days, without penalty and without giving any reason, incurring no charge (except the cost of returning the goods, if previously sent). This period shall be calculated as follows:
- For sale of goods: from the day of their receipt by the consumer
- For supply of services: from the day of the conclusion of the contract.

Where the contract includes services which have been supplies, termination is effective from the moment it is served (i.e. services already provided are not affected by the termination). 

Article 47 of the Consumer Code states that the consumer must be informed on the right to terminate the contract. The said information must be given in writing and contain the terms and conditions for the Return and Refund policy.

Pursuant to Article 55 of the Consumer Code, the Return and Refund Policy does not apply to certain type of services, such as supply contracts for foodstuffs, drink, housing and leisure.

Privacy
A delicate and usually underrated issue concerning e-commerce deals with privacy compliance. According to Legislative Decree 196/2003, the Data Controller, who is usually the owner of the e-store, must provide the user with the information on the process and method of processing the data and the extent of the dissemination of the data, according to article 13.

The consent is required when the Data Controller intends to send promotional material or profiling. However, "if the owner uses an e-mail address supplied by the buyer for direct sales of products or services, the owner may not require consent.  This exclusion of consent applies if services were similar to those included in the sale and if the person is properly informed and refuses to allow such use either initially or during subsequent communication.  The person shall be advised of the possibility to object, easily and for free, to any communication." (Article 130 of Legislative Decree 196/2003).

It is important to remember that the data collected for promotional purposes can be kept in custody for a maximum of 24 months, while the data collected for profiling purposes can be kept no longer than 12 months.

Using Someone Else's Trademark
E-commerce can involve particular aspects concerning Industrial Property, connected to the use of trademarks on e-stores.

In regards to article 21 of the Industrial Property Code (IPC), allowing third parties to use trademarks within some limits, states that "the rights in registered trademarks do not allow the holder to prohibit third parties the use in commercial activity, as long as the use complies with principles of professional correctness of  (...) the trademark in case it is necessary to indicate the destination of the product or service, in particular when the products are accessories or spare parts".

This provision leaves space and legitimacy to the supposed descriptive use of another's trademark that occurs when the trademark indicates that the product is only one ingredient, component, or part of a combination of different products offered.

Supreme Court ruling no. 17734/2009 states that Article 21 IPC "prevents the risk of confusion and of simple association between trademarks; use of another's trademark must meet two conditions: it must be descriptive and it must adhere to the principles of professional accuracy; therefore, to avoid reference to another trademark that may result in unfair exploitation of the reputation of that brand (i.e. the risk of coupling), the use of another's trademark must be for the essential use of indicating the purpose of the product; it is against professional integrity to use another's trademark for other purposes."

Keywords and Metatags: Italian law and community
The final interesting issue is the use of another's trademarks as keywords both on the website (which means that the trademark is visible to the consumer) or inside of the metatag (which means that the trademark is not visible to the consumer).

Very recently, in its March 23, 2010 judgment - C-278/08, the European Court of Justice clarified that if a trademark is used as a keyword, the owner of the trademark may not claim the exclusive rights to that trademark against Google; however, he may claim the said rights against the advertisers who employ their trademark in order to charm users by confusing them on the origin of the goods or services. The confusion is created as the advertisers appear immediately after the user has entered the search term and the logo is seen at the same time as the search term.

Even more recently, the Court of Justice ruled on the use of keywords with the ruling C 558/08 published on 07/08/2010 between Portakabin Ltd Portakabin BV v Primakabin. The case referred to the purchase of keywords for the publication of advertisements on Google. Primakabin sells products on its website that are similar to the products sold by Portakabin and second-hand products of Portakabin. When advertising, Portakabin used keywords such as; "Portakabin", "portacabin", "portokabin" and "portocabin". Therefore, Portakabin brought legal action against Primakabin for the use of its trademark in the search words.

The Court ruled that a trademark owner has the right to ban an advertiser for advertising goods or services identical to those which the trademark in question pertains to, in the event that the advertising does not permit or allow the average internet user to understand whether the goods or services referred to in an advert come from the owner of the trademark or are instead linked to the trademark by a third party.

Francesca Alerci, Ceriani e Associati Studio Legale
t: +39 02 45472049   e: cceriani@cealex.it