CRYPTO ASSETS: THE NEW DORA REGULATION.
On 27 December 2022, Regulation (EU) 2022/2554 (Digital Operational Resilience Act – DORA) was published in the Official Journal of the European Union. DORA aims to ensure digital operational resilience in the financial sector in the event of failures.
The regulation is part of the EU Commission’s wider ‘Digital Finance Package’, which includes two other pieces of legislation: the proposal for the MiCA regulation on market in crypto-assets and Regulation (EU) 2022/858 regulating the pilot regime for market infrastructures based on distributed ledger technology (DLT), as well as the necessary amendments to existing directives.
For the first time DORA brings together in a single piece of legislation the standards for information and communication technology (ICT) risks in the financial sector. The purpose is to establish a standard set of requirements for the security of networks and information systems of entities operating in the financial sector and critical third parties providing ICT-related services, such as cloud platforms or data analytics services. The definition of ‘ICT’ in the DORA regulation is quite broad, encompassing digital and data services provided through ICT systems. DORA therefore represents an important regulatory development for a wide range of financial services companies, as well as for ICT service providers in the financial sector.
DORA will apply to financial entities, including insurance and reinsurance companies, institutions for occupational retirement provision (IORPS), credit institutions, payment institutions, e-money institutions, investment firms, crypto-asset service providers, UCITS and AIF fund managers and insurance intermediaries (“financial entities”). Third party ICT service providers are also recipients of DORA.
DORA has five main regulatory interventions:
1. ICT risk management requirements: financial entities must have a robust ICT risk management system, including a business continuity policy and disaster recovery procedure, to keep pace with the rapidly evolving cyber threat landscape and to better align business strategies and ICT risk management. At the same time, the financial entities’ management bodies have the ultimate responsibility for the management of the ICT risk, resulting in the body’s ongoing obligation to monitor the management of this risk.
2. ICT incident management, classification and reporting: financial entities must implement an ICT incident management process, including early warning indicators, to detect, manage and report ICT incidents by establishing a consistent reporting mechanism.
3. Digital operational resilience testing: financial entities must establish a comprehensive digital operational resilience testing programme. This programme must be proportionate to the institution’s size, activities and risk profile. In addition, some financial entities will be required to conduct penetration tests of their ICT tools, systems and processes at least every three years.
4. Third-party ICT risk management: financial entities must manage third-party ICT risk as an integral part of ‘ICT risk’ within their risk management framework. This means, among other things, that contracts governing the relationship with third parties must include certain contractual elements, such as: an indication of where data will be processed and a description of services and guarantees for access, recovery and return in the event of failure. The contractual requirements are closely aligned with the EBA guidelines on outsourcing agreements but they include some additional elements. Third-party ICT service providers must meet minimum requirements and comply with additional requirements when providing certain outsourcing services;
5. Information sharing agreements: DORA includes provisions to facilitate the sharing of cyber threat information and intelligence, including cybersecurity tactics, techniques, procedures and alerts, by financial entities to enhance the digital operational resilience. All voluntary information sharing agreements between financial entities will be conducted in trusted environments, in full compliance with EU data protection regulations, such as the GDPR.
DORA came into force on 16 January 2023 and will apply from 17 January 2025 to give EU member states time to make changes to national law.
However, as with Regulation (EU) 2022/258 (the so-called TLD Regulation), DORA remains subject to a review by the Commission. A first review to assess the inclusion of statutory auditors and audit firms in the scope of DORA is foreseen by 17 January 2026, while a second and more comprehensive review of the provisions is foreseen by 17 January 2028.
Despite the objective difficulties in harmonising and regulating an extremely fast-moving and ever-evolving sector that all legislators around the world are grappling with, the EU legislator’s commitment to making Europe attractive in the fintech sector is certainly to be welcomed, as it will reduce the pockets of illegality that often overshadow digital finance, while promoting market stability and integrity.
m.divincenzo@macchi-gangemi.com
a.buttarelli@macchi-gangemi.com
LOUBOUTIN/AMAZON: CJEU’S GUIDANCE ON THE INTERPRETATION OF INTERNET SERVICE PROVIDERS’ LIABILITY FOR TRADEMARK INFRINGEMENT.
By means of its Judgement delivered on 22 December 2022, in joined cases C‑148/21 and C‑184/21, the Court of Justice of the European Union (‘CJEU’ or the ‘Court’) established that the operator of an online marketplace may be held directly liable for trademark infringement because of advertisements of third-party infringing goods displayed on such a marketplace and delivery thereof. The evaluation focuses on host providers which not only allow third parties to operate on their platform, but also offer their own competing products and services alongside third-party offers.
Christian Louboutin is a French designer holding EU trademark no. 8845539 registered on 10/05/2016 for goods in class 25 of the Nice Classification, consisting of the colour red (Pantone 18.1663TP) applied to the iconic sole of his high-heeled shoes. We all know Amazon, namely the operator of various websites incorporating, along with its own sales offerings, an online marketplace for third-party sellers. The shipping of goods offered for sale on that online marketplace may be handled either by those sellers or by Amazon, which then stocks those goods in its distribution centres and ships them to purchasers from its own warehouses.
Those websites regularly display advertisements for red-soled shoes in violation of Mr Louboutin’s trademark registrations.
Against this background, Mr Louboutin brought cases against Amazon, both in Luxembourg and Belgium, alleging that the advertisements relating to the infringing goods formed part of its own commercial communication. As a consequence, Amazon could not be regarded as a mere website host or a neutral intermediary considering, moreover, that it provides assistance to third-party sellers, in particular regarding how best to present their offers.
In that context, the “Tribunal d’arrondissement de Luxembourg” and the “Tribunal de l’entreprise francophone de Bruxelles” decided to stay the proceedings and to submit a request for a preliminary ruling to the CJEU concerning whether Article 9(2)(a) of Regulation 2017/1001 on the European union trademark (‘EUTMR’) must be interpreted as meaning that the operator of an online sales website incorporating an online marketplace, apart from its own sales offerings, may be regarded as itself using a sign which is identical with an EU trade mark for goods which are identical with those for which that trade mark is registered, where third-party sellers offer for sale on that marketplace, such goods bearing that sign, without the consent of that trade mark’s proprietor.
By recalling its previous case law concerning information society service providers’ (‘ISSPs’) liability for trademark infringement, the CJEU firstly noted that the expression ‘use’ involves active behaviour as well as direct or indirect control of the act constituting such use (see, to that effect, judgment of 2 April 2020, Coty Germany, C‑567/18, EU:C:2020:267, paragraph 37 and the case-law cited); secondly, such ‘use’ shall be performed under that person’s own initiative and in their own name, that is in its own commercial communication (judgment of 2 April 2020, Coty Germany, C‑567/18, EU:C:2020:267, paragraph 39 and the case-law cited).
Turning to the operator of the online marketplace and the type of liability which could be imposed on it, because of third-party sellers’ own use of a registered trademark without authorization, the Court considered that such use should be exclusively attributable to the sellers who are customers of that operator, and not to the operator itself, since the latter does not use that sign in its own commercial communication (see, to that effect, judgments of 12 July 2011, L’Oréal and Others, C‑324/09, EU:C:2011:474, paragraphs 102 and 103, and of 2 April 2020, Coty Germany, C‑567/18, EU:C:2020:267, paragraph 40).
Looking at the factual circumstances of the case, however, the Court explicitly departed from the case law cited, more favourable to Amazon, by observing that to find a direct liability for trademark infringement against third-party sellers’ advertisement of counterfeits, account should be taken of whether that advertisement may establish “a link between the services offered by that operator and the sign in question, on the ground that a well-informed and reasonably observant user might believe that the operator is marketing, in its own name and on its own account, the goods for which the sign in question is being used” (par. 48).
For these purposes, the CJEU observed that the following factors are relevant when determining ISSPs’ liability for trademark infringement: a uniform method of presenting the offers published on its website, displaying both the advertisements relating to the goods sold in its own name and on its own behalf and those relating to goods offered by third-party sellers on that marketplace (para. 51); the fact that it describes the various offerings, from itself or a third party, without distinguishing them as to their origin, as ‘bestsellers’ or ‘most sought after’ or ‘most popular’ for the purpose inter alia of promoting some of those offerings (para. 52); and the fact that it offers third-party sellers, in connection with the marketing of goods bearing the sign at issue, additional services consisting e.g. in the storage, shipping and management of returns of those goods (para. 53).
On those grounds, the Court ruled that ‘Article 9(2)(a) EUTMR must be interpreted as meaning that the operator of an online sales website incorporating, as well as that operator’s own sales offerings, an online marketplace may incur in direct liability for trademark infringement against third-party sellers’ offering for sale of counterfeits on such marketplace, if a well-informed and reasonably observant user of that site establishes a link between the services of that operator and the sign at issue, which is in particular the case where, in view of all the circumstances of the situation in question, such a user may have the impression that that operator itself is marketing, in its own name and on its own account, the goods bearing that sign’.
The decision under scrutiny is a welcome ruling vis-à-vis the uplifting trend of counterfeits’ sales online, providing a guideline for when to ascribe direct liability for trademark infringement to marketplaces such as Amazon, in light of a definition of ‘use’ that is less restrictive and stresses the importance of the users’ perception, with a view to ensuring greater protection for both IP holders and consumers by calling upon ISSPs to effectively increase their monitoring of third-party sellers’ advertisements within their platforms.
Indeed, a landmark ruling concerning liability of Internet Service Providers.
m.baccarelli@macchi-gangemi.com
m.lonero@macchi-gangemi.com
THE CONVENTIONAL WARRANTY AND THE NEW LIABILITY OF THE MANUFACTURER: IS THERE REALLY SOMETHING NEW UNDER THE SUN?
A new manufacturer liability has been provided by the Italian Consumer Code when a conventional warranty is granted: in such a case, the Consumer is entitled to start a legal action against the manufacturer directly in order to declare the existence of defects of the goods and obtain their repair. Previously, a similar action had only been admitted by an isolated court decision.
One of the novelties provided by the new Italian Consumer Code that probably deserves more attention is the reform of Conventional Warranties; this kind of warranty was previously regulated by the Article 133 I.C.C. and is now set by the new Article 135 quinquies I.C.C..
The previous provision simply included the obligation to offer warranties according to the declaration made to the consumer or included in the advertisement; that rule also provided a minimum content of the rights granted to the contracting party, without prejudice to the obligations to provide the warranty in writing or other durable medium and to draft it in Italian “… with print that is no less evident than that of any other languages” (par. 4 Article 133 I.C.C.).
The new Article 135 quinquies I.C.C., apart from stating similar rules already provided in the past with some additional indications regarding the content of the warranty statement (e.g. the obligation to indicate the name and address of the entity granting the warranty and the indication of the procedure to be followed to assert one’s rights), has introduced a direct liability of the manufacturer which is offered to the consumer “…when a conventional warranty is granted regarding the durability of certain goods within a certain period of time …” (see Article 135 quinquies mentioned above).
Previously, the seller was always and solely responsible for the conventional warranty towards the consumer; undoubtedly, the manufacturer of the goods could have been held liable for defects but only at a later stage in case of an action of recourse by the seller according to the Article 131 I.C.C.; therefore, the Consumer did not have any direct legal action against the manufacturer.
With reference to the application limits of Article 133 I.C.C., in case of conventional warranty of the manufacturer, the Italian Supreme Court stated that “In the chain of sale of consumer goods, under Article 131 of Italian Legislative Decree No. 206/2005, the buyer is entitled to initiate a contractual action which can be claimed exclusively against the seller in the event of lack of conformity of the good, as well as an extra-contractual action against the manufacturer for damages suffered as a result of defects which make the item dangerous; nor does a possible voluntary performance by the manufacturer of a conventional warranty, according to article 133 I.C.C., determine a derogation from such principles, so that the final user (consumer) does not have any direct judicial action towards any of the subjects in the distribution chain, but must necessarily address the action to the immediate seller (final seller), who is the last link of the said chain and the cause giver” (see Italian Supreme Court, Section II, 27/07/2017, n. 18610; similar see Court of Appeal of Ancona, Section I, No. 551/2020 and Court of Appeal Catanzaro, No. 1590/2019).
Indeed, a bold and isolated Court’s decision had already extended a direct Manufacturer liability towards the Consumer in case of a Conventional Warranty, stating that “… The Italian Consumer Code grants, in addition to the ex-lege warranty of goods under article 129 I.C.C., a conventional warranty under article 133 I.C.C. that constitutes a quid pluris, by virtue of which the consumer can claim different and additional rights, besides those provided by the law, against the final seller, and may be provided by the seller or the manufacturer …” (see Giudice di Pace Caserta 05.11.2015 with commentary by S. Chieti, published in Giur. It, 2016, 2141).
Actually, the previous version of the Article 133 I.C.C. limited the conventional warranty to “the party who grants” it, without specifying whether it is the seller or the manufacturer; the new Article 135 quinquies I.C.C. has cleared any doubt on this regard.
DOES THE PRESENCE OF A ROAD BETWEEN TWO PLOTS OF AGRARIAN LAND EXCLUDE THE NEIGHBOUR’S RIGHT OF AGRICULTURAL PRE-EMPTION?
The choice of a site in which to invest is one of the key steps in the development of a renewable energy project. During the land acquisition phase, among the aspects deserving attention there is the verification of the possible presence of neighbours who are recognised as having the right of agrarian pre-emption, who could claim the right to purchase the adjoining plot of land in which the company developing the project is interested. Moreover, it is not unusual for adjoining land parcels to be separated by vicinal or public roads. Therefore in such cases it is necessary to understand whether the presence of a road between two plots of land excludes the right of pre-emption of the farmer of the neighbouring plot.
In the context of the development of projects in the renewable energy sector, one of the first steps is the acquisition of land deemed suitable for the construction of the plant intended for energy production. In this context, the hypothesis may arise where the land bordering the property that the company developing the project intends to acquire, is owned by a cultivator (or professional farmer), who is, as such, the holder of the so-called ‘agrarian’ right of pre-emption. In this regard, Article 7 of Law No. 817 of 14 August 1971 recognises the right of pre-emption of the owner of the neighbouring property – who is also a cultivator or professional agricultural entrepreneur – in the event of the sale of a plot of land contiguous to that cultivated by him personally for at least two years. By virtue of this provision, the contract for the purchase of the land must be notified to him for the purposes of the possible exercise of the pre-emption right, within the time limits and in the manner established by the aforementioned law.
However, what happens if there is a road between the land of the owner who intends to sell and the land held by the neighbouring farmer? In such a case it is necessary to understand if the contiguity between the lands persists which legitimises the existence of the relevant right of pre-emption to purchase. In fact, according to the ongoing interpretation of case law, the land characterised by material contiguity is to be understood as contiguous, in the sense that land separated by a road (public or vicinal), a state-owned watercourse and, in general, all land that is not suitable for cultivation as a unit, cannot be considered as such.
Agricultural pre-emption as such constitutes a limitation on the circulation of agricultural property and – in the legal sense – is recognised only in the case of neighbouring land characterized by physical contiguity, by mutual contact along the common demarcation line, without being able to be extended to the different hypothesis of the so-called ‘functional contiguity’ (i.e. land that is separate but suitable to join into a single farm).
In particular, the leading cases have held that the profile inherent in the public use of the road takes priority for the purposes of assessing the contiguity of the plots of land, with respect to which the profile inherent in the – exclusive or common – ownership of the strip of land on which the road lies becomes relevant only once the public use of the property has been excluded.
In any event, according to what has also been stated by the Court of Cassation, not considered as adjoining are not only the land parcels located on the sides of a public road, but also those adjoining a vicinal road not open to public transit or a private agricultural road, since the land constituting the road – even though it may result from the union of detached portions of the adjoining estates – does not remain the individual ownership of each of the conferring parties (so as to be subject to easement of passage (servitù di passaggio) in favour of others), but gives rise to the formation of a new property subject to community and enjoyed by all on the basis of a common right of ownership, thus excluding the presence of a boundary between the two agricultural estates.
m.patrignani@macchi-gangemi.com
g.pappacena@macchi-gangemi.com
THE REOPENING OF TERMS FOR THE REVALUATION (STEP UP) OF LANDS AND PARTICIPATIONS, WITH THE EXTENSION OF THE REGIME TO LISTED COMPANIES. A NEW OPPORTUNITY FOR INDIVIDUALS, PARTNERSHIPS, NON-COMMERCIAL ENTITIES AND NON-RESIDENTS HAVING NO PERMANENT ESTABLISHMENT IN ITALY.
New edition for the revaluation (step up) of lands and participations: it is possible to access this optional regime in relation to qualified assets held as of January 1, 2023, by paying a substitute tax at a rate of 16%. Payment of the substitute tax can be done until November 15, 2023.
Art. 1, paragraphs 107-109, of Law no. 197 of December 29th, 2022 (so-called “Italian Budget Law 2023”) provides for the reopening of the terms for the step up, pursuant to articles 5 and 7 of Law no. 448 of December 28, 2001, of the taxable value of land and participations.
There is a novelty in the scope of application: the redetermination is extended to shares traded on regulated markets and multilateral trading facilities, overruling thus the criticality (as identified by the Tax Authorities with Circular Letter no. 1/E of January 22nd, 2021) concerning the participations held in companies traded on the AIM Italia trading facility.
In particular, the revaluation allows certain taxpayers to reduce or cancel-out any capital gains generated on the sale of stepped-up assets utilizing the redetermined (stepped up) value:
– as arising from an “ad hoc” appraisal’s report for lands and participations in unlisted companies;
– at arm’s length (“valore normale”) for listed shares;
in lieu of the “original” tax value.
As clarified by the Italian tax authorities with Circular no. 12 of January 31st, 2002, the following taxpayers may benefit from this optional regime:
– individuals, for transactions that do not fall within the scope of their business activity;
– partnerships and similar entities identified by art. 5 of the Income Tax Code;
– non-commercial entities, if the transaction (e.g. the sale) from which the income derives is not carried out in a business activity;
– non-residents, for capital gains deriving from the sale for consideration of participations in companies resident in Italy that do not refer to permanent establishments. In this regard, please note that the provisions set forth by relevant double tax treaties excluding the taxation of capital gains in Italy shall prevail in any case.
The qualifying assets, which must be owned by qualified taxpayers as of January 1st, 2023, are:
– agricultural or building lands held by way of ownership or other property rights;
– participations represented by securities (shares), participations in the capital or assets of companies (e.g. quotas of limited liability companies or partnerships);
– or rights or securities through which the above-mentioned shareholdings can be acquired (e.g. option rights, warrants, bonds convertible into shares).
Moreover, this regime may allow the step-up of the participations in partnerships and/or foreign companies.
The revaluation is recognized against the payment of a favourable substitute tax at a rate of 16% (i.e., higher considering the 14% rate provided in the last edition of this optional regime).
The substitute tax may be paid:
– through a lump-sum payment by November 15th, 2023; or
– in instalments, up to a maximum of three annual instalments of the same amount as of November 15th, 2023 (second and third instalments expire on November 15th, 2024, and November 15th, 2025, respectively). After the first installment, interest equal to 3% shall be paid on the subsequent instalments.
To redetermine the value of unlisted participations and lands substitute tax must be calculated on the entire value of the appraisal (which must also be prepared and certified by November 15th, 2023).
Otherwise, to redetermine the cost of securities, shares or rights traded on regulated markets or multilateral trading facilities, the rule allows the possibility of assuming, in place of the purchase value, the arm’s length (“valore normale”) as of December 2022 determined on the basis of article 9 (4) (a) of the Presidential Decree no. 917 of December 22nd, 1986.
In this regard, in the event that taxpayers have already benefitted from a previous revaluation of the value of the same assets, it is possible to deduct the substitute tax due for the new revaluation from the amount of the substitute tax already paid or the request for a repayment of the substitute tax paid before..
a.salvatore@macchi-gangemi.com
f.dicesare@macchi-gangemi.com
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