IP in business transactions: Italy overview

A guide to intellectual property law in Italy. The IP in business transactions Q&A gives an overview of maintaining an IP portfolio, exploiting an IP portfolio through assignment and licensing, taking security over IPRs, IP and M&A transactions, and the impact of IP on key areas such as competition law, employees and tax.

To compare answers across multiple jurisdictions, visit the IP in business transactions Country Q&A tool.

This Q&A is part of the global guide to IP law. For a full list of jurisdictional Q&As visit www.practicallaw.com/ip-guide.

Davide Bresnerand Lydia Mendola, Portolano Cavallo
Contents

Overview of main IPRs

1. What are the main IPRs in your jurisdiction? How are they protected?

Patents

To be patentable, an invention must:

  • Be novel (over the state of the art).

  • Involve an inventive step.

  • Be capable of industrial application.

  • Be lawful.

  • Be provided with an adequate description.

Patent protection lasts for 20 years from the filing date.

Utility model patents can have as their objects new models capable of conferring a particular effectiveness or ease of application or use, either to machines (or part of them), instruments, tools or objects of general use, such as:

  • New models.

  • Particular conformations.

  • Dispositions.

  • Configurations.

  • Combinations of parts.

Utility model patent protection lasts for ten years from the filing date.

In Italy, patents for inventions are protected by:

  • Italian patent registration filed with the Italian Patents and Trade Marks Office (Ufficio Italiano Brevetti e Marchi) (UIBM) (www.uibm.gov.it).

  • European patent registration filed with the European Patent Office (EPO) (www.epo.org).

  • Patent Co-operation Treaty (PCT) patent registration filed with the UIBM, the EPO or the World Intellectual Property Organization (WIPO).

Trade marks

Trade mark registration can cover:

  • Any graphically representable sign (by means of particular words) including personal names, designs, letters, figures, sounds, the shape of goods or their packaging, their combinations or chromatic shades.

  • Provided they can differentiate goods or services of one enterprise from those of other enterprises.

To be registered, a trade mark must:

  • Be novel.

  • Have distinctive character.

  • Be lawful.

In Italy, trade marks are protected by:

  • Italian trade mark registration filed with the Patents and Trade Marks Office.

  • Community trade mark registration filed with the European Union Intellectual Property Office (EUIPO).

  • International trade mark registration filed with the WIPO.

Trade mark protection lasts for ten years from the filing date, and can be renewed indefinitely for ten-year periods.

As long as it does not imply a reputation for that mark, the prior use of a mark grants a right to continue use of the trade mark within the limits of its pre-use to pre-users.

Copyright

To be protected by copyright, works must be original and creative.

In addition, they must be an expression of the personality of the author.

Music, literature, artistic works, databases, software, sound recordings, films, designs and broadcasting can all fall within the scope of copyright protection.

No registration is required to benefit from copyright protection, which is automatically granted on the creation of any original and creative work. Copyright protection lasts for the author's lifetime and for 70 years after his death.

Despite not being mandatory, registration with the Italian Society of Authors and Publishers (Società Italiana degli Autori ed Editori, SIAE) is advisable, as it provides evidence of the:

  • Creation date.

  • Publication date.

  • Author's name.

  • Right holder's name.

Authors of copyright-protected works are granted:

  • Moral rights, which are perpetual and non-assignable.

  • Economic rights, which last for the above period and are assignable.

Design rights

In relation to designs and models, protection can be granted to their appearance, either as a whole or a given part, which results from the features of their lines, contours, shapes, texture, or materials of the product itself. To be registered, a design must:

  • Be novel.

  • Have individual character.

  • Be lawful, that is, not contrary to law or morality.

However, features that are only determined by the technical functioning of a product cannot be registered.

In assessing which features fall among these, a design is regarded as incorporated into a material product. Its mere abstract representation is not protected by law.

Designs are protected by:

  • Italian registration filed with the Patents and Trade Marks Office.

  • Community design registration filed with the EUIPO.

  • International design registration filed with WIPO.

Design protection lasts for five years from the date of submission of the request for registration, and is renewable for periods of five years up to a maximum of 25 years.

Trade secrets and confidential information

Confidential information is granted legal protection if it meets all of the following conditions:

  • It has not been made available to the public.

  • It has an economic value that is inherent to its secret nature.

  • Security measures have been implemented to keep the information secret.

The legal basis for such protection lies in Legislative Decree No. 131/2010, which became effective from 2 September 2010 and amended Legislative Decree No. 30/2005 (IP Code). It covers all business information and technical-industrial expertise, including commercial expertise, which is subject to the owner's legitimate control.

Other

The IP Code also protects domain names. It is prohibited to use a domain name that includes and exploits signs that are identical or similar to third parties' trade marks.

For further information about the main IPRs, see Patents, trade marks, copyright and designs in Italy.

 

Maintaining IPRs

Search and information facilities

2. What facilities are available to conduct IP searches and obtain IP information on registered IP rights?

IP searches and all IP information on registered IP rights can be carried out online at the official websites of the Patents and Trade Marks Office, EUIPO or EPO.

In addition, it is advisable to seek the assistance of a professional service provider, such as a trade mark agent, patent agent or specialised IP attorney. They are in a better position to conduct further searches and identify any potential conflict with other applications or registrations.

Maintenance of main IPRs

3. What steps must a business take to maintain the registration and legally protectable status of its main IPRs?

Patents

To preserve the effectiveness of a patent registration, the owner must:

  • Pay all annual fees due (in default, the patent will be revoked).

  • Realise the patented invention within three years from the granting of the patent (if not, any interested third party can obtain a compulsory licence).

Trade marks

To preserve the effectiveness of a trade mark registration, the owner must:

  • Renew it every ten years, paying the relevant fee.

  • Use the trade mark (if he does not use it during a period of five years or more, the non-use can be deemed continuous and the trade mark revoked).

Design rights

To preserve the effectiveness of a design registration, the owner must renew it every five years (up to a maximum of 25 years).

Monitoring infringement

4. What steps can a business take to avoid infringing another party's IPRs and to monitor whether another party is infringing its IPRs?

It is sensible to monitor the market and IP public databases, and possibly to subscribe to IPR watch services. Also, training staff on IPRs and related issues is advisable.

However, for anything that goes beyond ordinary activities, it is always recommended to seek assistance from an IP professional.

 

Exploiting IPRs

5. What are the main steps in conducting an IP audit in your jurisdiction to determine the content of an IP portfolio?

When conducting an IP audit to determine the content of an IP portfolio, the main steps to be taken can be summarised as follows:

  • Status verification of existing IPR registrations.

  • Status verification of existing domain name registrations.

  • Identification of copyright, know-how and secret information.

  • Inventory and analysis of existing agreements relating to IPRs (purchase, sale and licence agreements).

  • Listing of pending and potential litigation concerning the IP portfolio.

 

Assignment

Scope of assignment

6. On what basis can the main IPRs be assigned?

Registered and non-registered IPRs are assignable by agreements between the parties. They can concern the whole territory in which an IPR is valid or only part of it.

Trade marks

Trade marks are assignable in full or in part. For instance, a trade mark can be assigned only in relation to a few of the claimed products/services.

Copyright

For copyright, the only assignable rights are economic rights. These are assignable in block or individually.

Formalities for assignment

7. What formalities are required to assign each of the main IPRs?

In terms of formalities, there are no particular legal requirements to assign IPRs. Despite this, it is advisable to do it in a written contract, for both registered and non-registered IPRs.

The law does not expressly require an assignment to be registered at the Patents and Trade Marks Office registry. However if it is not registered, the assignment will not be effective if a third party purchases the IPRs and registers its title.

Main terms for assignments

8. What main terms should be included in an assignment of IPRs?

The main terms for assignments of IPRs are:

  • Identification of IPRs and related ownership.

  • Support in registering the assignment.

  • Scope of the assignment (in terms of territory, class of products and duration).

  • Existence of pending proceedings over the IPRs.

  • Confidentiality.

  • Payment details.

  • Date of effect of the assignment.

  • Liability and indemnification.

  • Remedy in case of breach of contract.

  • Regulation of technical assistance and training.

  • Governing law and jurisdiction.

 

Licensing

Scope of licensing

9. On what basis can the main IPRs be licensed?

Patents

Patents are licensable through different kinds of licence agreement (depending on the number of people who will be able to exploit the patent):

  • Under an exclusive licence, only one licensee has the right to exploit the patented invention. The owner cannot do so.

  • Under a non-exclusive licence, there are one or more licensees with the right to exploit the patented invention. Also, the owner of the IPRs can reserve the right to exploit them.

If three years from the issuing of a patent (or four years from filing of the application, whichever is the latest) the right holder (the patent holder or his successor-in-title, directly or through a licensee) has not implemented the patented invention, by manufacturing the relevant product in Italy or importing it into an EU member state, the European Economic Area (EEA) or a member country of the World Trade Organization (WTO), an interested third party can, on request, be granted a compulsory licence for the non-exclusive use of the patented invention.

Trade marks

Trade marks can be licensed on an exclusive or non-exclusive basis. A licence can cover all or part of the products or services for which a trade mark is registered, and can cover the whole territory (Italy) or part of it.

In non-exclusive licences, the licensee must expressly undertake to use the trade mark to distinguish the products or services traded or rendered in Italy with the same trade mark as the right holder, or as any other licensees.

Copyright

Copyright can be licensed on an exclusive or non-exclusive basis. A licence can cover the whole relevant territory (Italy) or part of it.

Depending on the kind of works being licensed, the licence can include different ways of exploitation of the full set of copyrights.

Future works can also be licensed.

Design rights

The IP Code does not set out specific rules for the licensing of design rights. Therefore, trade mark and patent rules apply (see above, Patents and Trade marks).

Trade secrets and confidential information

The IP Code does not set out specific rules for trade secrets and confidential information. Trade mark and patent rules apply (see above, Patents and Trade marks).

Other

The sublicensing of IPRs is allowed within the limits of the rights granted to the licensee under the licence, if the licence authorises the licensee to do so.

Formalities for licensing

10. What are the formalities to license each of the main IPRs?

In terms of formalities, there are no particular legal requirements to license an IPR. Despite this, it is advisable to do so in a written contract for both registered and non-registered IPRs.

The law does not expressly require a licence to be registered in the Patents and Trade Marks Office registry. However if it is not registered, the licence will not be effective if a third party purchases the IPRs and lawfully maintains rights to its title.

Main terms for licences

11. What main terms should be included in an IP license?

An IP licence includes at least the following terms:

  • Identification of the parties.

  • Identification of the licensed IPRs and related ownership.

  • Scope (exclusive and non-exclusive).

  • Duration/termination provisions.

  • Territory.

  • Class of products.

  • Confidentiality.

  • Remedy in case of breach of contract.

  • Obligations after termination.

  • Provisions concerning liability.

  • Provisions concerning quality control.

  • Royalties reporting duty.

  • Audit licensor's right.

  • Provisions concerning sublicensing.

  • Provisions concerning improvements.

  • Existence of pending proceedings over the IPRs.

  • Governing law and jurisdiction.

  • Regulation of technical assistance and training.

  • Terms relating to third parties' infringement of IPRs.

 

Taking security

12. What are the key issues in taking security over the main IPRs?

Taking security over IPRs is possible. In most cases, security is taken over trade marks, patents and designs.

Given that security must be based on monetary receivables, the key issues may relate to the assessment of the value of the IPRs.

 
13. What are the main security interests taken over IPRs?

Pledges are often taken over IPRs. They must be recorded in the Patents and Trade Marks Office registry for them to be effective. If more than one security interest is recorded, their priority is determined by reference to the chronological order in which they were recorded.

Security can also be taken over applications for IPRs. These can, for instance, also be pledged. In this case, pledges must be notified to the UIBM.

 

M&A

Due diligence

14. What IPR-related due diligence is commonly carried out in both a share sale or merger and an asset sale?

Share sale or merger

In a share sale or merger, IP-related due diligence usually covers:

  • Identification of the IPRs.

  • Verification of ownership and validity of the IPRs.

  • Analysis of any IP licences (inbound and outbound), in particular assessing their relevant terms, such as exclusive or non-exclusive character, duration, territory, warranties, indemnities, and so on.

  • Verification of any pending litigation in relation to the validity of the IPRs.

Asset sale

The IP-related due diligence in asset sales aims to verify the same aspects as for a share sale or merger (see above, Share sale or merger).

Warranties/indemnities

15. What IPR-related warranties and/or indemnities are commonly given by the seller to the buyer in both a share sale or merger and an asset sale?

Share sale or merger

In relation to IPRs, the seller usually provides the buyer with the following representations:

  • The disclosure of the IPRs owned by the seller is complete.

  • The seller fully and lawfully owns the IPRs.

  • A comprehensive history of the maintenance of all registrations is provided.

  • Disclosure about any pending disputes related to IPRs is complete.

Asset sale

See above, Share sale or merger.

Transfer of IPRs

16. How are the main IPRs transferred in both a share sale or merger and an asset sale?

Share sale or merger

In a share sale, there is no transfer of IPRs nor a change in their ownership.

Asset sale

In an asset sale and without any agreement to the contrary, there is an automatic transfer of the IPRs together with the business. Registration at the Patents and Trade Marks Office is required for the assignment to be effective, except for third parties who have acquired and lawfully maintained title to the IPR before the registration. If a dispute arises between different buyers of the same IPRs from the same holder, priority is given to the buyer who first registered his title to the IPR.

 

Joint ventures

17. Is it common for companies to set up joint ventures in your jurisdiction to develop projects that heavily involve IPRs?

In relation to projects involving IPRs joint ventures are rather common, especially for patents and know-how.

When setting up a joint venture that involves IPRs, the most significant provisions to be incorporated in the relevant agreement relate to:

  • Maintenance and enforcement of the IPRs.

  • Confidentiality.

  • Exploitation of previous and new IPRs and coverage of expenses.

  • Scope/aim of the joint venture.

  • Term and termination of the joint venture.

 

Competition law

Main provisions and common issues

18. What are the main provisions of your national competition law that can affect the exploitation of the main IPRs?

Law No. 287/1990 lays down the rules on Italian competition law (Competition Law). The Competition Law only regulates practices with a national dimension. It is not applicable to practices relevant at EU level, that are covered by EU law.

The Competition Law forbids three types of conduct: anti-competitive agreements, abuses of dominant position and anti-competitive concentrations.

Agreements are anti-competitive if they hinder competition by producing restrictive effects on free competition, such as those that:

  • Directly or indirectly fix purchase or selling prices, or any other trading conditions.

  • Limit or prevent production, market outlets or access, investments, technical development and technological advancement.

  • Share markets or sources of supply.

  • Apply dissimilar conditions to similar transactions, placing other trading parties at a disadvantage and therefore determining an unjustified competitive advantage for the party who applies them.

  • Subordinate the conclusion of contracts to the acceptance by the other parties of additional obligations that, due to their nature or trading custom, bear no relation to the subject of the contracts themselves.

An abuse of a dominant position by companies is prohibited. In particular, the prohibition forbids behaviour by companies in a dominant position that:

  • Directly or indirectly impose unfair purchase or selling prices, or any other trading conditions.

  • Limit or prevent production, market outlets or access, investments, technical development and technological advancement, to the detriment of consumers.

  • Apply dissimilar conditions to similar transactions, placing other trading parties at a disadvantage and therefore determining an unjustified competitive advantage for the party who applies them.

  • Subordinate the conclusion of contracts to the acceptance, by the other parties, of additional obligations that, due to their nature or to trading custom, bear no relation to the subject of the contracts themselves.

Concentrations exceeding certain thresholds that have as their object the restriction of competition are prohibited.

 
19. What are the most common national competition law issues that arise in the exploitation of the main IPRs?

The impact of IP law on competition law should be assessed on a case-by-case basis, in the light of national and European principles. Competition law governs the commercial circulation of rights created under the rules set out by the IP laws.

Exclusions/exemptions

20. What exclusions or exemptions are available for national competition law issues involving the exploitation of the main IPRs?

The Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato, AGCM) can authorise agreements prohibited under the Competition Law, upon companies' request.

 

Advertising

21. To what extent do advertising laws impact on the use of third party trademarks?

Using a third party trade mark in the context of comparative advertising is allowed if the use is:

  • Neutral and does not denigrate or diminish a competitor's trade mark.

  • Truthful.

  • Aimed at comparing products and/or services that are similar.

  • Not aimed at gaining unfair advantages from the reputation of third party trade marks.

  • Not misleading and/or damaging to the third party.

 

Employees and consultants

22. Who owns each of the main IPRs created by an employee in the course of his employment? Must compensation be paid to the employee? What main steps can an employer take to ensure it owns each of the main IPRs?

Ownership

Under Italian law, when industrial inventions are developed in the context of the performance or execution of a contract, or in the context of an employment relationship, the rights deriving from the invention are granted to the employer. However, the right to authorship in relation to the invention is always granted to the employee. In the absence of any compensation for the inventive activity and if the employer obtains the relevant patent or uses the invention as secret industrial know-how, the inventor has a right to a fair reward.

In other cases, when the invention is within the scope of the employer's activity, the employer has the right of first refusal on the exclusive or non-exclusive use of the invention, or on the purchase of the patent. Further, the employer has the right to request or purchase patents abroad for the same invention, in return for a fee or price.

Compensation

See above, Ownership.

Main steps

Generally, if they are developed in the context of an employment relationship that has as its object the development activity and the employee is remunerated for that, the deriving rights belong to the employer, except for the right to authorship which always belongs to the author.

If they are developed in different contexts, the employer only has a right of first refusal on the IPRs, provided they relate to the employer's area of business. In any event, and since these are general rules and the parties may agree different terms, to ensure that the employer owns the IPRs it is advisable to insert express clauses that govern the assignment of IPRs to the employer in employment contracts.

 
23. Who owns each of the main IPRs created by an external consultant? What main steps can a business take to ensure it owns each of the main IPRs?

Ownership

As far as economic exploitation rights are concerned, according to case law these are usually granted to the commissioner. However, the right to authorship in relation to the invention is always granted to the creator.

Main steps

It is highly advisable to insert express provisions regulating the ownership of IPRs into written agreements.

 

Tax

24. What are the main taxes payable by a licensor on the licensing of the main IPRs?

There are different scenarios depending on the residence of the licensors.

For a resident corporation, royalties from the licensing of IPRs are included in its business income. The tax rate is 27.5% for corporate tax (IRES) and 3.9% for regional business tax (IRAP).

For individual residents, royalties are included in personal income tax (IRPEF) and taxed on the total amount received from the licensee. If the royalties are earned from copyright, taxes are calculated only on 75% (60%, if the author is younger than 35 years) of the total amount received.

For non-residents in Italy, taxes are deducted at source, subject to any applicable double tax agreement.

In 2015, the Italian IP Box was introduced, that is, an optional tax relief programme that allows significant tax discounts to profits deriving from IPRs. In particular, the Italian IP Box provides for the exclusion, from business income, of 50% of the income deriving from the exploitation of IPRs. The programme lasts five years and is irrevocable.

 
25. What are the main taxes payable by a seller on the sale of the main IPRs?

Taxes payable by a seller of IPRs follow the same tax rules as for the licensor on the licensing of IPRs (see Question 24).

 

Cross-border issues

26. What major international IP treaties is your jurisdiction party to?

Italy has acceded to all major IP treaties, such as the:

  • Paris Convention for the Protection of Industrial Property 1883.

  • Madrid Agreement concerning the International Registration of Marks 1981.

  • WIPO Berne Convention for the Protection of Literary and Artistic Works 1971 (Berne Convention).

  • WIPO Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 1961.

  • Patent Cooperation Treaty 1970.

  • European Patent Convention 1973.

  • WTO Agreement on Trade-Related Aspect of Intellectual Property Rights 1994 (TRIPS).

  • EU regulations, such as Regulation (EC) No. 40/94 on the Community trade mark and Regulation (EC) No. 6/2002 on Community designs.

A comprehensive list of treaties can be found at www.wipo.int/wipolex/en/profile.jsp?code=IT.

 
27. Are foreign IPRs recognised in your jurisdiction?

Overall, Italy recognises foreign IPRs under international IP treaties to which it is a signatory. However, IPRs are subject to the principle of territoriality. The enforcement of foreign IPRs cannot be granted in Italy unless specifically envisaged with effect for Italy.

With specific reference to copyright, Italy has signed the Berne Convention providing for international copyright protection.

 

Reform

28. Are there any proposals for reform?

No reforms are expected in the near future.

 

Online resources

Italian Patents and Trade Marks Office

W www.uibm.gov.it

Description. The site provides guidance on the application procedure and registration of trade marks, patents and utility models. Some information is also available in English.



Contributor profiles

Davide Bresner, Associate

Portolano Cavallo

T +39 02 722341
F +39 02 72234545
E dbresner@portolano.it
W www.portolano.it

Professional qualifications. Italy, Lawyer

Areas of practice. Intellectual property; trade marks, patent and anti-counterfeiting strategies

Languages. English, Italian

Professional associations/memberships. INTA-Anticounterfeiting Committee.

Lydia Mendola, Counsel

Portolano Cavallo

T +39 02 722341
F +39 02 72234545
E lmendola@portolano.it
W www.portolano.it

Professional qualifications. Italy, Lawyer

Areas of practice. Intellectual and industrial property; trade marks and patents; design and copyrights

Languages. English, Italian

Professional associations/memberships. AIPPI (International Association for the Protection of Intellectual Property).


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