A NEWSLETTER prepared by Graham & James LLP

May, 2000

LITIGATION OVER A PATENT FOR A METHOD OF DOING BUSINESS. The first Italian case on a patent on a method for doing business on the Internet has been recently litigated before the Court of Padova. The web-site "Netfraternity" compensates netsurfers for the time they spend surfing the Internet in exchange for the display of advertisement banners on their screen. The company running the web-site "Netfraternity" patented the method whereby data are received from a server while users surf the Internet. "Payland" is a web-site which offers a similar service and Netfraternity claimed that Payland infringes its patent. The Court issued an ex-parte judgement ordering seizure of the hard disk of the web-site Payland, thus forcing Payland to stop providing services to its 35,000 customers.

An ex-parte judgement must be reviewed by the Court after the defense of the other party is heard. Payland maintained to have created its own software to operate its services. Payland’s defense also stressed that the only similarity between the two sites concerned the service offered and argued that a mere idea can not be patented. The Court was persuaded by Payland’s arguments, reversed its ex-parte judgment and stated that no infringement took place. Netfraternity has announced its appeal against the Court’s decision.

Source: The judgement has not been published yet and was only commented in the press (e.g. www.repubblica.it/online/tecnologie_internet/netfraternity/sentenza/sentenza.html, in Italian).

EUROPEAN ELECTRONIC-COMMERCE DIRECTIVE. The final draft of the European Union directive on electronic commerce has been adopted on the 4th of May 2000. The directive aims to establish a legal framework in which e-commerce may flourish. The new legislation clarifies that the principles of free movement of services and freedom of establishment apply to on-line services too.

The directive also covers the area of on-line contracts and specifies certain information requirements which must be provided before electronic contracts are executed. Additionally, the directive places special emphasis on the transparency of on-line commercial communications. Important uniform principles are also established concerning the liability of internet providers.

European Member States have 18 months from the enactment of the directive to adopt national laws on electronic commerce along the lines set forth by the directive. Furthermore, the directive encourages development of codes of conduct, cooperation between the Member States and the Commission, as well as adoption of on-line mechanisms for alternative dispute resolution.

Source: Directive on electronic commerce, as finally adopted on the 4th of May 2000 may be found at www.europa.eu.int/comm/internal_market/en/media/eleccomm/composen.pdf .

EU - E-COMMERCE VAT DIRECTIVE ON THE MOVE. Non-EU corporations which provide e-services in Europe and which carry out a turnover exceeding Euro 100,000 will be required to register a VAT representative within the territory of the EU and invoice their non-VAT European clients accordingly. On the other hand, European VAT clients will be required to issue an self-invoice. The above requirement is expected to be adopted by the Europarliament as a consequence of the proposal of a new directive relating to e-service submitted by the European Commission on June 7, 2000. The new directive, which will harmonize the taxation of e-services between non-EU and EU companies, aims at preventing VAT exemption on such e-services provided by non-EU residents within the territory of the EU. The above requirement will amend the current provisions laid down by EU Dir. no. 388/1977 and will result in the selection of more competitive European VAT countries for VAT registration purposes(e.g. Luxembourg VAT rate 15%, Madeira VAT rate 12%).

Source: Il Sole 24 Ore

SECONDED EMPLOYEES. Legislative Decree n. 72 of 23 February 2000 implemented in Italy Directive n. 96/71/CE of 16 December 1996 on secondment of employees by professional employers.

Decree n. 72/2000:

  • provides the principle that all employees seconded to Italy must be given the same working conditions and legal protection enjoyed by the same or similar categories of Italian employees;
  • provides exceptions to the above rule, only as concerns minimum wages and minimum holiday periods, for the case of: (i) employees seconded to Italy in order to assemble or install a machinery, provided secondment is for less than eight days; (ii) employees in the construction activities listed in Annex A to the Decree;
  • provides joint liability of the principal and contractor, in case the latter seconds employees to the former. Joint liability is for the purpose to ensure that the contractor’s seconded employees are given the same working conditions of the principal’s employees;
  • provides jurisdiction of Italian labour courts to hear cases brought by employees seconded to Italy which originate from the secondment. It also allows concurrent jurisdiction of courts of any other country to which such employee is related or may be subsequently seconded, provided the country concerned is party to a convention on labour jurisdiction with Italy".

Source: Legislative Decree n. 72 of 25 February 2000 published in the Official Gazette n. 75 of 30 March 2000.

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