Asterra Ltd (formerly Utilis Israel Ltd) is a company founded in 2013 by the Israeli scientist Dr Lauren Guy. Its proprietary "all-weather" radar-satellite technology is highly specialised in detecting the presence of water underground (and identifying its type, which allows for targeted searches to be carried out). This enables the identification of water pipeline leaks even in unfavourable weather conditions.
The Company and IP Specialised Division of the Court of Turin recently upheld the petition for an urgent declaration of non-infringement submitted by Asterra and its Italian distributor, 2F Water Venture srl.
The Court's decision was based on the report of a court-appointed expert (an independent patent attorney), who ascertained that:
- the independent claim of the Italian patent in question "does not have the requirements of valid patentability required by law"; and
- in any case, "the system and method of searching for water and water leaks in the subsoil adopted by the claimant companies Utilis Israel Ltd - 2F Water Venture s.r.l. does not appear to infringe the patent".
The Court also granted Asterra's request to prevent the counterparty (the holder of a patent in Italy, who had accused Asterra of infringement) from:
continuing and repeating the sending of communications to third parties which qualify as infringing, or in any event illicit, the use by the complainants of their system and method of searching for water underground.
The first order is a clear example of the application of the preliminary declaration of non-infringement. In Italian law, such a declaration constitutes the counterpart of the preliminary injunction. It enables a party that may suffer prejudice on the market from uncertainty as to the lawfulness of its activity (which often discourages potential purchasers) to apply urgently to the competent courts (the company and IP specialised divisions) to obtain a determination in an extremely short time.
This procedure, like the preliminary injunction procedure, is equivalent in Italian law to a summary procedure on the merits. This means that there is no obligation to bring subsequent ordinary proceeding on the merits within the time limit provided for by article 50 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (and by EC Directive No. 48/2004). The effects of the order are in fact "stabilised" and can be removed only if one of the parties decides to commence ordinary proceedings on the merits anyway, either at the end of such proceedings or during them by the court to which they are entrusted. Moreover, even without initiating ordinary proceedings on the merits, any party may ask the judge who issued the stabilised order to modify or revoke it, if new facts have arisen in the meantime that change the grounds on which it was granted.
This system enables parties to bypass ordinary litigation on the merits (which, in practice, is necessary only in order to obtain compensation for damages and disgorgement of infringer's profit). It makes the Italian IP rights process efficient and cost-effective, given the speed with which these orders are granted and the possibility of an appeal. Such an appeal must be filed within 15 days from the filing of the order and is usually decided within two-to-three months by a panel of three judges, not including the one who issued it.
The second order issued by the Court of Turin is also extremely important. For a long time in Italian case law, it has been undisputed that "[it]t is certainly unlawful to issue a warning based on a patent which was later declared null and void" and that, more generally:
The warning, with which an entrepreneur aims to block the diffusion of the competitor's product, assuming unfoundedly that the marketing of it integrates the violation of one's exclusive right, can cause liability for unfair competition, pursuant to Article 2598 nos. 2 and 3 of the Civil Code.(1)
However, thanks to the coordination between the rule allowing the issuance of an urgent ascertainment of non-infringement (and also of invalidity of the patent) and the rule allowing the urgent injunction of the repetition of acts of unfair competition, it is possible to anticipate the order prohibiting the owner of an invalid or non-infringed patent from using it to limit competition from parties legitimately operating with their own technology that does not interfere with the patent.
This is particularly important when the products or services at issue are offered to public bodies (as in the case of services to detect water pipeline leaks). In such cases, without judicial determinations such as those issued by the Court of Turin, there would be a real risk that unjustified accusations of infringement would alter the activity of the public administration, with prejudice also to the public interest.
In this way, the Italian legal system achieves a virtuous balance between the interests of IP rights holders, which can quickly obtain suitable measures to block activities in violation of these rights, if grounded, and the interests of competitors in preventing the market from being distorted by ungrounded accusations of infringement.
For further information on this topic please contact Cesare Galli at IP Law Galli by telephone (+39 02 5412 3094) or email ([email protected]). The IP Law Galli website can be accessed at www.iplawgalli.it.