• LATEST NEWS & INSIGHTS 24 February 2023

    Posted on: 24/02/2023



    A first instance ruling has been rendered holding Hermès successful in its US lawsuit against Mason Rothschild for the use of ‘MetaBirkin‘ in relation to NFTs. The landmark decision sets a precedent for IP right protection in the Metaverse, providing principles expected to find multiple jurisprudential applications, such as in the ‘Yuga’ case pending before the U.S. District Court for the Central District of California.


    On 24th June 2022, in fact, Yuga Labs Inc. (Yuga), a company specializing in the development of digital collectible assets, sued conceptual artist Ryder Ripps (Ripps), alleging misconduct relating to trademark infringement, unfair competition, deceptive advertising, cybersquatting. Specifically, Yuga claimed the unlawful use of the trademark ‘BORED APE YACHT CLUB’ and, in general, of the distinctive signs relating to the eponymous NFT collection of 10.000 Bored Apes (BAYC Trademarks) in the context of the creation, promotion and marketing of a competing NFT collection entitled ‘Ryder Ripps Bored Ape Yacht Club’ (RR/BAYC), and obtained by exploiting the same imagery devised by Yuga as well as the URL addresses incorporated within the smart contracts relating to the collection.


    In its defensive brief, Ripps described RR/BAYC as an example of ‘appropriation art’ and, as such, qualifying as ‘protected speech’ within the meaning of former case law set out in Rogers v. Grimaldi (Rogers v. Grimaldi – 875 F.2 d 994 (2d Cir. 1989)), pursuant to which the First Amendment of the U.S. Constitution protects expressive works incorporating third-party trademarks, provided that (i) the mark is artistically relevant to the work and (ii) the work is not expressly misleading as to its source of origin and/or relevant content.


    As to the use of BAYC Trademarks, Ripps further argued that this ought to be regarded as ‘fair use’ of a merely descriptive nature.


    Dismissing Ripps’ arguments in full, the Court ruled out, first, the applicability of the so-called ‘Roger Test’, assuming that the RR/BAYC NFTs are not expressive of an idea or a point of view, merely ‘pointing to the same online digital images associated with the BAYC collection‘ and describing the defendant’s conduct as ‘commercial activities aimed at selling counterfeit goods‘ thus devoid of any artistic connotation, like ‘the sale of a counterfeit bag‘. Finally, with reference to the ‘fair use’ argument, the Court rejected the latter by stating that the defendant’s use of BAYC Trademarks was primarily conceived for the marketing of RR/BAYC NFTs instead of the plaintiff’s BAYC collection.


    The case is still pending, and we will see whether and how the Hermès ruling will have any impact in the final decision.


    The BAYC collection was also featured in another landmark case decided on October 21st, 2022, whereby the Singapore Court acknowledged, for the first time in Asia, the right of ownership of NFTs and granted interim measures against an unknown defendant in ‘Janesh s/o Rajkumar v. Unknown Person‘ (Chefpierre). In this case, the claimant Janesh s/o Rajkumar, was the holder of a BAYC NFT serving as collateral for cryptocurrency loans, mostly regulated by a contractual provision preventing the lender from exercising the foreclosure option without first providing Janesh with a reasonable chance to fully redeem the amount of the loan obtained.


    Following the claimant’s default, in the context of a loan agreement with the user Chefpierre.eth, under the above contractual provisions, the latter directly exercised the foreclosure option, resulting in the immediate transfer of the NFT within its crypto-wallet.


    Against this background, Janesh filed an interim claim before the Singapore High Court in order to regain the rightful possession and property of the NFT unlawfully misappropriated by Chefpierre.


    Upholding the applicant’s arguments, the Court, first, determined its jurisdiction notwithstanding the decentralized nature of the blockchain, based on the applicant’s residence, being a company operating in Singapore.


    On the substance of the case, the Court granted interim measures by defining NFTs as a property asset, pursuant to the cumulative requirements of the ‘Ainsworth’ case law (National Provincial Bank Ltd v. Ainsworth [1965] AC 1175) insofar as:


    – the right must be definable whereby the asset must be capable of being isolated from other assets whether of the same type or of other types and thereby identified;

    – the asset must have an owner capable of being recognized as such by third parties;

    – the right must be capable of assumption by third parties; this in turn involves two aspects, namely that: a) third parties must respect the rights of the owner in that asset; b) and the asset must be potentially desirable;

    – the asset must have some degree of permeance or stability.


    The importance of the definition of NFT as a property asset, in the Asian case, leads to the conclusion that also cryptographic assets may be protected by means of interim remedies, such as seizure and/or injunction, capable of providing an increasing level of protection to the benefit of NFT owners in the enforcement of their digital items.


    Last but not least, it seems worth mentioning the further procedural implication in the case at issue, concerning the faculty granted in favor of the successful claimant to serve the ruling to the respondent by means of Twitter and/or similar platforms (e.g. Discord), including the text messaging feature of the crypto-wallet owned by the losing party.


    Both decisions, Hermès and Janesh, are likely to significantly – and profoundly – affect subsequent global NFT and crypto litigation. We will keep closely watching the pending Yuga case and other similar ones which may arise in the next future. Stay tuned!









    With judgement no. 570 of 11 November 2022, the Court of Cassation once again ruled on the liability of legal persons pursuant to Legislative Decree no. 231/2001, confirming that, when assessing the fault in the organisation of the legal person, the judges must clearly separate the liability of the manager from that of the natural person charged with the offence.


    In this case, at a construction site in the eastern ring road of Milan, a worker on a scaffold was struck by a concrete support board, fell to the ground and died.


    As a result of this incident, the company was prosecuted for infringement of Article 25-septies, paragraph 3, of Legislative Decree No. 231/2001 and subsequently convicted in both cases on the merits, being held liable for taking advantage of workers who were only formally employed by another company and for failing to provide them with adequate personal protective equipment.


    However, the Supreme Court pointed out that the judgment under appeal “offers a flawed line of reasoning with regard to the liability of the company, in some respects overlapping and confusing the profiles of the criminal liability of the director/employer with the profiles of the liability for the administrative offence of the company“. In other words, the lower court judges condemned the company without proving the organisational shortcomings. They relied exclusively on the culpability profiles attributable to the director as an employer obliged to comply with the work safety rules, but not for that reason automatically imputable to the company.


    The Supreme Court argued that it is not so much the individual culpability that is important and must be duly substantiated, but rather the shortcomings of the organisational model of the company. The vagueness and inadequacy of the organisational model is not sufficient to base the liability of the company for the offence, it is also necessary to prove the organisational culpability.


    In this perspective, the Supreme Court concludes by stating that “the finalistic element of the agent’s conduct must be the consequence, not so much of a subjective attitude of the individual, but of a precise ‘negligent’ organisational structure of the company, in a normative sense, as it is based on the reproach deriving from the entity’s failure to comply with the obligation to adopt the organisational and management precautions necessary to prevent the commission of the offences envisaged among those capable of giving rise to the entity’s liability “.


    With the above-mentioned principle, the Supreme Court follows an existent case law approach which was applied in the previous judgments no. 23401 of 11 November 2021 and no. 18413 of 15 February 2022.


    In particular, with decision no. 23401 of 11 November 2021, the Supreme Court clarified that for the purposes of corporate liability for criminal offences, the existence of a link between the organisational fault and the commission of the predicate offence is necessary, even going so far as to rule out that Legislative Decree no. 231/2001 had outlined a hypothesis of entity’s objective liability, since the mere objective fact that an offence has been committed in the interest or for the benefit of the company must be accompanied by a fault on the part of the organisation which consists in not having taken the necessary preventive measures to reduce the risk of certain offences being committed, thereby reducing their importance.


    In short, in order to convict the company, the legislator requires a criminal reaction, not as a result of any form of disorganisation, but only in relation to those reprehensible corporate choices that have a certain connection with the offence that actually occurred.


    Finally, with decision no. 18413 of 15 February 2022, the Supreme Court reaffirmed that “the absence or inadequacy of specific organisational models or their ineffective implementation are not sufficient ‘per se’, since it is necessary to prove the ‘organisational fault’ that characterises the typical nature of the administrative offence and which is distinct from the fault of the perpetrators of the offence”.









    Starting from March 1, 2023 the Cartabia’s reform will amend the rules for the suspension of provisional enforceability before the Court of Appeal – Some of the new provisions will overrule previous case-law on the admissibility of such instance.


    Starting the appeal, the losing party has the right to apply the suspension of the provisional enforceability of the ruling. Such request may be included in the main appeal as well as in the incident appeal. The application to the judge may also be formalized separately whenever the judge is requested to decide on the matter before the first hearing.


    The application is governed by articles 293 and 351 of the Italian Code of Civil Procedure (ICCP), which are included in the provisions modified by the Cartabia’s reform.


    The first paragraph of article 283 (Court orders on provisional enforceability in the appeal judgment) has been redrafted and a new second paragraph has been added to the text of the article; with reference to the third paragraph, no material amendments have been introduced.


    These are the main news: first of all, the law no longer foresees the “severe and justified reasons” as a condition to apply for the suspension of the provisional enforceability of the ruling (as originally provided by article 283 ICCP prior to reform); now the law set two alternative conditions: the evident merits of the appeal, from one side, and the “severe and irreparable prejudice” resulting from the enforceability of the decision, from the other side.


    In this respect, it should be noted that, on the contratry, the previous case-law on article 283 ICCP considered mandatory the joint existence of fumus boni iuris and periculum in mora conditions (see Court of Appeal of Naples, Section I, June 1, 2018: “… the suspension of the provisional enforceability of the ruling must meet both conditions of fumus boni iuris (to be intended as a prediction on the success of the appeal judgment for the appealing party) and periculum in mora (to be intended as severe and irreparable prejudice suffered by the losing party as a consequence of the first instance ruling’s enforcement) cumulatively: these two prerequisites are not alternative conditions…”).


    The new wording of article 283 ICCP also foresees the possibility to submit the application when the decision orders a payment of money; such possibility was previously excluded by the Courts (see Court of Appeal of Venice, Section III, July 22, 2021: the Court rejected the suspension of the provisional enforceability of the ruling because money is a fungible good and it is also replaceable by equivalent – see also Court of Appeal of Venice, January 14, 2013).


    Finally, the new paragraph two of article 283 ICCP expressly allows the party to reiterate the application during the appeal “…in case of subsequent changes in the circumstances…”; such changes must be expressly mentioned in the request on penalty of inadmissibility (see new article 283 para. 2 ICCP). In addition, it should be noted that, before the Cartabia’s reform, the appealing party was not allowed to address the application for the suspension of the provisional enforceability of the ruling if the remedy provided by article 351 ICCP had been already pleaded (see Catania Court of Appeals June 14, 2002 – Milan Court of Appeals July 22nd1994).


    As to the new wording of article 315 ICCP (Court orders on the provisional enforceability), nothing has changed; as in the past:


    (i) A specific application to the President of the panel of judges before the Court of Appeal is requested.

    (ii) The suspension of the provisional enforceability of the ruling has to be considered an unchallengeable decision.

    (iii) Rightful grounds under the application are requested for the application.

    (iv) Before the Court of Appeal, the jurisdiction to decide on the application is granted to a panel of judges only.

    (v) According to article 218 sexies ICCP, the decision may be ruled at the end of an oral argument before the Court of appeal.


    Nevertheless, with regard to this latter provision there are some news: in case of appeal, if the hearing is fixed before the investigating judge, the panel of judges shall issue a Court order for the suspension of the provisional enforceability of the ruling scheduling an hearing for the closing arguments and the final oral arguments; the judges shall also grant the parties a deadline to file the final notes.


    In essence, it seems that the Cartabia’s reform did not have much impact on the previous text of article 315 ICCP.









    The 2023 Budget Law reintroduced the anti-avoidance legislation governing the rules for the deduction of the so-called “black-list” costs: the deduction of expenses and other negative items of income deriving from transactions with companies and professionals residing or located in non-cooperative countries or territorities for tax purposes is subject – again – to certain limits and conditions.


    In order to guarantee the political commitment undertaken by the Italian government within the framework of the Ecofin Council in 2019, Article 1, paragraph 84, of Law No. 197 of December 29th, 2022 (“2023 Budget Law“), (re)introduces the regime governing the deduction of black-list costs under paragraphs 9-bis to 9-quinquies under Article 110 of Presidential Decree No. 917 of December 22, 1986 (“Income Tax Code”), amended in 2015 and repealed in 2016.


    The new rule allows companies resident in Italy to deduct costs deriving from transactions with companies or professionals that are resident or located in “non-cooperative” countries for tax purposes:


    – for the entire amount, if these do not exceed the arm’s length (in this case, fair market value determined in accordance with Article 9 of the Income Tax Code); or in the opposite case


    within the limits of the fair market value, provided that the company resident in Italy gives evidence that the carried out transaction are made in view of an actual economic interest and effectively occurred.


    The list of “non-cooperative” countries for tax purposes is identified by Annex I to the EU List adopted by the EU Council (recently updated with the conclusions of the EU Council of February 14th, 2023, document no. 6375/23) and includes: Anguilla, Bahamas, Costa Rica, Russian Federation, Guam, Fiji Islands, Marshall Islands, Turks and Caicos, British Virgin Islands, US Virgin Islands, Palau, Panama, Samoa, US Samoa, Trinidad and Tobago, Vanuatu.


    Assuming that the official guidelines provided in the past by the Italian Tax Authorities with reference to the former black-list regime shall be applicable, the actual economic interest should be defined as a “valid justification of an economic nature for the benefit of the specific business activity, with particular attention to both the peculiarities of the context in which it is implemented and the practicability of alternative solutions to the one where the counterparty to the transaction is a resident of a country with privileged taxation” (cfr. Italian Tax Authorities, Circular Letter No. 1/E of January 26th, 2009).


    Pursuant to a specific regulation provided for by the Budget Law 2023, these limits and conditions do not apply to costs deriving from transactions with non-residents to which the CFC regime provided for in Article 167 TUIR is applicable.


    Relevant expenses and other negative items of income will have to be reported separately in the annual tax return, even if they do not exceed the normal value.


    Accordingly, paragraphs 85 and 86 of Art. 1 of the 2023 Budget Law updated:


    – the penalty regime set forth in Article 8, paragraph 3-bis, Legislative Decree No. 471 of 1997, which, in the event of omitted or incomplete indication of blacklist costs in the income tax return, involves the imposition of an administrative penalty equal to 10% of the total amount of the expenses and negative components not indicated, with a minimum of € 500 and a maximum of € 50,000;


    – the advance pricing agreements for companies with international activities in Article 31-ter, paragraph 1, letter a), Presidential Decree 600 of 1973, now extended also to the “advance definition of the methods to calculate the normal value of transactions under paragraph 9-bis of Article 110 of the Income Tax Code”.






    DISCLAIMER: This newsletter merely provides general information and does not constitute legal advice of any kind from Macchi di Cellere Gangemi. The newsletter does not replace individual legal consultation. Macchi di Cellere Gangemi assumes no liability whatsoever for the content and correctness of the newsletter.




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