Italy: Opportunity and risk in the online environment

Expo 2015 in Milan – the worldwide event dedicated to agricultural produce, wine and food – will allow Italy to promote its excellent agricultural and food products. The Internet is a crucial tool for increasing the visibility of high-quality Italian products, as shown by various initiatives already underway. However, as well as providing new opportunities, the Internet exposes businesses to various risks, in particular counterfeiting.

Global reach

In advance of Expo 2015, Unioncamere – the Italian association of chambers of commerce, industry, craftsmanship and agriculture – and the Chamber of Commerce have launched the Italian Quality Experience Portal, www.italianqualityexperience.it, an innovative project designed to present Italian food on the international stage by sharing the experiences and expertise of Italian companies, their typical products and the territories in which they are based. It is hoped that the portal will attract 60 million people from all around the world. It is designed to help 700,000 Italian companies within the agricultural and food production sector to increase their visibility and to provide visitors with reliable information.

The initiative demonstrates the important role played by the Internet and, in particular, by e-commerce. A shop window with no geographical or structural limits is a crucial channel through which to advertise gastronomic products with protected designations of origin, geographical indications and traditional specialties to a worldwide audience.

Moreover, the Internet allows companies to interact directly with customers, which can improve the marketing process.

Data suggests that the number of companies relying on the online promotion of Italian wine and food products is constantly growing. About a year ago, Google launched the platform Made in Italy (www.google.com/culturalinstitute/project/made-in-italy), which was designed by Google’s Cultural Institute in collaboration with Unioncamere and the Ministry of Agricultural, Food and Forest politics.

The search giant came up with the idea of a digital exhibition of Italian products, so that users could look them up and familiarise themselves with everything from Parmesan to Chianti, from Campania buffalo mozzarella cheese to Castel Franco’s red radish. The platform is designed to provide an overview of all products made in Italy.

Meanwhile, food giant Eataly – a leader in the distribution of top-quality Italian food – has launched its agricultural and food website, www.eataly.co.uk. This aims not only to allow customers to purchase Italian food products, but also to host a broad range of initiatives and information designed to advertise Italian culture and gastronomy.

The newly created eBay Gusto has an entire section dedicated to food and wine, which is designed to promote Italian gastronomical excellence abroad and to provide a trading channel for Italian food. So far, it has allowed Italian eBay sellers to reach customers in 176 countries across the world.

In addition, in February 2015 the Ministry of Economic Development presented a Plan for an Extraordinary Promotion of Made in Italy and Investment Attraction in Italy, which has been allocated €260 million in funding. The aim is to increase the volume of exports in this sector through a series of initiatives designed to exploit major markets and promotional activities involving agricultural productions.

The first stage is an intensive advertising and awareness campaign, using not only traditional media, but also social networks and blogs. Specific attention will be paid to trademarks and certifications of quality and origin, as well as to any advertising for Italian-sounding goods. Actions will be taken jointly with agricultural and wine-producing associations whose goods bear protected designations of origin and geographical indications.

Counterfeits

As confirmed by the significant resources invested in the food industry and the increasing number of small to medium-sized food companies that are seeing their visibility and business grow through e-commerce, the Internet represents a great opportunity. However, it also involves a great amount of risk, as a result of the difficulties of controlling the online market, as well as the alarming amount of counterfeit products being sold under the ‘Made in Italy’ designation.

In fact, the Internet has become an ideal channel for the spread of Italian-sounding goods. It is on the Internet that one is most likely to find counterfeits, knock-offs and fakes – from a wine kit for do-it-yourself powdered wine through a cheese kit for fake parmesan to actual fakes of Pecorino and other popular cheeses.

In addition, irregularities with regard to expiry dates, product information and labelling often arise when goods are sold online. The foodstuffs that are most frequently targeted by this type of fraud include traditional local and regional products, and semi-finished products such as sausages, sauces and preserves.

In January 2015 the Federation of Italian Farmers, the Institute for Political, Social and Economic Studies and the Organised Crime Watchdog issued their third report examining links between organised crime and agriculture. The report suggests that e-commerce has provided counterfeiters with a preferred channel for the sale of fake Made in Italy products. While a person buying a counterfeit from a brick-and-mortar shop can generally tell whether a product is a fake, it is much harder to make this distinction in an online purchase.

Given this, what legal and technical instruments are available to rights holders to fight against the online counterfeiting of food products and to promote a more transparent online marketplace?

QR codes and customs actions

One interesting technical tool is based on quick response (QR) codes – intelligent labels that are designed to inform consumers and increase transparency. QR codes are unique to each product, allowing consumers who buy that product to verify its authenticity, as well as the industrial and agricultural chain of production, thereby establishing a dialogue between companies and consumers

Another important instrument against online counterfeiting has been provided by the EU Institute of Customs Surveillance. EU Regulation 608/2013 introduced a specific procedure for the seizure of small consignments of counterfeit and pirated goods, which allows such goods to be seized and destroyed without the need for a lawsuit. The procedure is automatically applied by Customs, provided that the rights holder has requested destruction in its application for customs action.

This is proving an extremely efficient tool for tackling online counterfeiting, as it allows Customs to stop small consignments of counterfeit goods from entering the EU territory. In many cases these goods have been ordered via e-commerce platforms or websites, with criminals then using the postal service to send counterfeit goods directly to the end user.

Unfortunately, this procedure has not yet been implemented in Italy due to a conflict with Italian criminal law.

eBay’s VeRO programme

Another important weapon in the fight against the online trade in fake agricultural products is the protocol agreed between the Central Inspectorate of Quality Protection and Fraud Suppression – part of the Ministry of Agricultural, Food and Forestry Affairs – and eBay. This protocol aims to exclude counterfeit food from the marketplace and gives a central role to eBay’s Verified Rights Owners (VeRO) programme, which allows rights holders to flag up possible violations. The inspectorate and the Italian Association of Consortia and Geographical Indications have pledged to notify eBay of any IP violations that come to their attention via the VeRO programme – especially where these pertain to protected designations of origin and geographical indications. In turn, eBay has pledged to remove ads where violations of protected designations of origin and geographical indications are identified. At the same time, the inspectorate is increasing its efforts to enforce protection procedures in order to block the trade in products that have been identified as counterfeit. Thanks to the eBay protocol, this new monitoring programme should help to combat ads for fake foods and to prevent counterfeit wines and food from being distributed through the same channels as authentic ones, stealing market share and value from the food companies.

International efforts

Just a few months ago, an example came to light of fake Prosecco being sold on tap, as well as online, in the United Kingdom under a false protected designation of origin. Sales of the counterfeit wine were blocked following a joint intervention by the inspectorate and the UK Department for Environment, Food and Rural Affairs.

Antitrust Authority

A remarkable effort against online counterfeiting has been also made by the Antitrust Authority, which has arranged the shutdown of numerous websites through which Italian users could purchase fake goods, believing that they were original. The authority acted in accordance with the Consumer Code, which authorises it to verify and take action against unfair commercial practices. The code gives it extensive investigative powers, as well as the authority to level fines of up to €5 million.

Conclusion

Internet platforms are paying serious attention and devoting significant resources to anti-counterfeiting issues, including setting up protection systems that go beyond simple notice and takedown, launching projects to value and advertise the Made in Italy brand across the world and providing tools to help consumers not only to recognise and appreciate excellent Italian products, but also to differentiate them from fakes.

Italian food companies are also making significant investments in e-commerce and are keen to protect their intangible assets. Monitoring and web-watching procedures allow fake goods to be traced, so that IP rights can be enforced online and further victories chalked up in the protracted war against online counterfeits.

Paolo Di Mella
Associate
[email protected]

Paolo Di Mella is an Italian and Community trademark attorney. He deals with matters regarding trademarks (filing, prosecution, out-of-court disputes), the Internet and domain names, copyright and designs. He is in charge of the trademark department of the Bologna office, and of the firm’s internet department.

Angela Di Blasio
Trademark and design attorney
[email protected]

After graduating in law from Seconda Università degli Studi di Napoli, Ms Di Blasio undertook a master’s in industrial and intellectual property at the University of Alicante, where she also worked for an industrial property consulting firm. She subsequently joined a prestigious law firm in Milan and, after taking the title of attorney at law, moved to Bugnion’s Rome office, where she currently works as trademark and design attorney.