Damages under the IP Enforcement Directive a decade on - Italy

In Italy, the Enforcement Directive was implemented by an amendment to articles 156 – 170 of the Copyright Law dated 22 April, 1941, no. 633 (“LDA”) by Legislative Decree of 16 March 2006, no. 140. Articles 156-170 of the LDA provide for a system of defences and penalties that are intended to protect the right holder from the infringement of his intellectual property rights. Articles 156 – 167 LDA describe remedies for the right holder for the infringement of economic rights (which may still be in part applied to proceedings concerning moral rights) whilst articles 168 – 170 LDA apply to the infringement of moral rights.

Article 158 LDA sets out the damages available following a breach of copyright and/or connected rights: 

“1. Anyone harmed in the exercise of an economic use right belonging to him may commence proceedings to obtain, in addition to damages, that at the infringer’s cost the infringing product is destroyed or removed. 

2. The damages due to the injured party are calculated according to articles. 1223, 1226 and 1227 civil code. The loss of profits is valued by the judge according to article 2056, second paragraph, civil code, also taking into account the profits realised in violation of the right. The judge may also liquidate the damages as a lump sum on the basis of the fees that should have been paid, if the infringing party had requested the right holder’s authorisation to use the right. 

3. Non property damages (general damages) are also due according to article 2059 of the civil code”. 

According to the principles and rules set out in article 158 LDA, the person wishing to claim damages for infringement of his intellectual property rights, bears the burden of proving not only that he has suffered a financial loss, but also that the damage is the immediate and direct consequence of the unlawful conduct, fault or negligence of the infringing party. 

In relation to non-property or general damages (paragraph 3 of article 158 of the LDA), the reference to article 2059 of the civil code specifies that such damages may be ordered only if they are a consequence of a criminal offence. It should however be noted that doctrine and jurisprudence have gradually led to a wider interpretation of article 2059 civil code so as to extend non-property damages to the damage of any interest that is at least indirectly protected by the Constitution (such as for example, in the case of unlawful data processing or racial discrimination). Generally, non-property damages will not be punitive. 

According to the provisions of articles 1223, 1226 and 1227 civil code damages are liquidated and therefore include both damages and loss of profits, which also includes the profits realised by the infringer in breach of the right. This sanction was not previously available to IP rights holder in Italy. 

The judge can also order damages as a lump sum on the basis of the payments that would have been due if the infringing party had asked the rights owner for permission to exploit the rights. This so-called “price of consent“, was commonly used in the past by Italian courts so that, in this respect, the implementation of the Enforcement Directive has merely “codified” principles already followed by Italian judges. 

Unfortunately the Italian judges, relying on their right to liquidate damages in equity according to articles 1226 and 2056 civil code, often reduce the sums claimed by the rights holders by way of the “price of consent”. 

Since this approach appears materially different from either the German or English approach, there may well be scope for a reference to the Court of Justice of the European Union in due course to establish whether or not the Italian approach is compatible with the correct interpretation of the Enforcement Directive.