Intellectual Property has become one of the most valuable assets of most businesses across the EU and elsewhere. European policies recognize this and offer comprehensive EU protection of IP rights. Design rights are among the most common rights across industrial sectors. According to the European Office of Industrial Property, today 62% of EU companies use design in their business.

The importance of these rights deserves focused attention, especially as the risk of copying and counterfeiting is ever-present. Successful design adds value to products and therefore deserves protecting.

We start with the presumption of the existence of a registered Community design (RCD) that has allegedly been violated. In such case, it is first necessary to consider the merit of an infringement action before any formal action is initiated. Merit should be confirmed by an appropriate test for RCD infringement.

To support infringement action against an RCD violation, the design in question must be incorporated in or applied to a product in relation to which an infringing act has taken place, i.e., “offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is attached, or storing such a product for those purposes.”

For a design to be infringing, it must not create on the informed user a different overall impression to the design protected under the RCD. The scope of protection is set out in Art. 10 of the Council Regulation on RCDs: “The scope of the protection conferred by a Community design shall include any design which does not produce on the informed user a different overall impression. In assessing the scope of protection, the degree of freedom of the designer in developing his design shall be taken into consideration.”

An “overall impression” depends on the existing design corpus, the nature of the product, the industrial sector and the level of freedom of the designer.

Designs are to be assessed from the perspective of an “informed user”. This can be defined as a physical person who is a user of the product in which the design is intended to be incorporated, and who is not a designer or a manufacturer or seller. The term “informed user” in this context is understood as a person who perceives the designs as a whole without analyzing any details and, at the same time, does not observe in detail any minimal differences that may exist.

If the application of the test indicates an infringement, we must consider to which court we will apply for legal remedies such as an interim injunction and further action on the merits of the matter. When dealing with EU cross-border cases or even global overseas cases with infringement impact on the territory of a Member State, we must carefully follow the provisions of the Council Regulation on RCDs to prevent any refusal or possibly serious delay in our action against the infringement.

Despite the provisions of the Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters, signed in Brussels on 27 September 1968, disputes concerning the infringement and validity of Community designs are in general decided by Community design courts. Under the provisions of the Council Regulation on RCDs, each Member State was asked to communicate to the EU Commission not later than March 6, 2005 a list of so-called “Community design courts”, indicating their names and their territorial jurisdiction.

If a Member State has not communicated the list of its Community design courts, jurisdiction for any relevant Community design proceedings remains with the court of the Member State in question that would have jurisdiction ratione loci and ratione materiae in proceedings relating to a national design right of that State.

Provided that the Community design courts were duly communicated to the European Commission, the following rules will apply.

Proceedings with respect to actions and claims relating to an infringement of an RCD shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment. If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment.

If neither the defendant nor the plaintiff is so domiciled nor has such an establishment, such proceedings shall be brought in the courts of the Member State where the EI Intellectual Property Office (EUIPO) has its seat, i.e. in Alicante, Spain.

The relevant Articles of the above-mentioned Convention shall still apply if the parties agree that a different Community design court shall have jurisdiction, or if the defendant enters an appearance before a different Community design Court.

Furthermore, proceedings for infringement actions and, if permitted under national law, actions with respect to a threatened infringement of Community designs may also be brought in the courts of the Member State where an act of infringement has been committed or threatened.

When considering the Community design court’s jurisdiction, we recommend paying special attention to UK overseas territories. It could very well be the case that such overseas UK territories have not designated a Community Design court, and there would be the likelihood that infringement proceedings would need to be commenced in the United Kingdom (such as in case of Gibraltar, despite Gibraltar’s particular position within the EU). To conclude, be observant.

Prague 23/11/16

REHAK LEGAL

As intellectual capital and more precisely intellectual property (IP) and intellectual property rights (IPRs) play an increasingly important role in corporate strategy , the accurate valuation of IP remains a major obstacle to their emergence as a tradable asset class. Though there are several generally accepted ways to measure the value of IC/IP, the introduction of more transparency in IP valuation procedures may render the trading of IP rights significantly more efficient and profitable which can be used in legal cases.

Recently the European Commission (EC) appointed panel of European IP valuation experts drawn from a range of disciplines including those involved with accounting, business valuation, IP consulting, litigation and damage award activities.

The panel's task was to consider how IP valuation plays a part in the policy for the "Innovation Union" and the bottlenecks that occur. This Expert Group focused on valuation methods for IP and their use; to identify bottle necks in the valuation methods used for the purpose of a company’s financial reporting, access to finance and litigation; to identify good practices; and to recommend possible policy actions. The intangible assets created through the processes of innovation represent a major share of the value of today's businesses. The IP rights associated with those assets are the legal underpinning for potential returns on investment in that innovation. Despite their fundamental importance, the understanding of IC/IP and IP rights does however differ widely amongst businesses large and small.

There is a clear need to increase market actors’ confidence and certainty in IC/IP valuation methods as a way to stimulate IC/IP transactions, to support IC/IP based financing and to give companies the tools to provide information about their IC/IP. This will also allow investors to better understand the business and the value of the company itself and even to provide decision makers with the required information to decide whether to enforce or to license IC/IP.

However, the Expert Group has demonstrated that it is not the lack of valuation methods per se, or even standards for valuing IP that are missing, but rather other barriers that are having a greater influence on business and lenders. As IP is, by its nature, innovative and therefore different, each case for valuation requires investigation, rather than having an automated approach to IP valuation. As a result, IP valuation of a company’s assets is an opinion, at a particular point in time – similar in many respects to the way that a legal opinion is given.

Although an informed layman might proffer a good guess, it is important to note that in the same way that one cannot automate the judgment on a law suit, one cannot automate judgment on an independent IP valuation. There are many factors involved and evidence and purpose can have a large impact.

The valuation of IP assets is a challenge but , new measuring systems and accounting systems are entering the business scene and will contribute to decisions when IP is protected by rights such as patents and trademarks, where a requisite for obtaining such rights is that the IP starts to exist. Valuation involves assumptions and judgment by the valuer derived from and justified based on a bespoke, rigorous analysis of the IP within its business context, together with its importance versus

The bottleneck for the improvement of an IP market is not in the lack of accepted methods or standards, their content or consistency, but in the limited dissemination of the fact that they exist and the little confidence in their results.

This expert group has firstly investigated European best practice in IP valuation as performed by financial institutions that are providing capital, particularly to SMEs. This report presents the results of this research and their approach to IP backed financing – the successes and failures and whether IP valuation is actually carried out as part of the financing process.

The findings of the research carried out are summarized under the headings of equity financing and debt financing and some examples of current practice are provided. We note that there is a significant difference in the approach to lending to SMEs and start-ups compared with larger corporate that have a strong trading history. A solution is needed to fund the commercialization of innovative ideas, with the value of the IP asset acting as collateral.

Overcoming the barriers to lending against IP assets is therefore attractive at a national and European Level.

It must be noted that cases of intangible asset based lending (IABL) have occurred in certain circumstances. Combined asset based lending has been achieved whereby a bank provides a loan to a pension fund against tangible assets and the pension fund then provides a sale and lease-back arrangement against intangible assets. IABL from pension funds (on a sale and lease back arrangement) rather than banks, provides a route for SMEs to obtain loans that is gaining increasing attention. One reason given for this uptake in IABL between a company and director pension funds is the growing number of SMEs who have difficulties in securing bank loans.

In the Accounting and Reporting section the Expert Group reports that there are limitations on when and how it is possible to place the value of IP assets on the balance sheet of the company. The complexity of IP from an accounting perspective leads to problems in its reporting, which may result in the vulnerability of firms which base most of their performance on IP. The existing regulatory situation implies that IP will be recognize in more and more cases . In the past historical cost based on a previous acquisition of such IP. It is difficult to recognize internally generated IP as, when the expenditure to develop the IP is incurred, it is usually unclear whether it will generate benefits in the future. As a consequence, an important part of internally generated IP was not recognized in the balance sheet of an enterprise, meaning that potential investors are not receiving some relevant information about the company.

This is changing. The filing of a “management report” together with the annual report, giving detailed information about IP value, seems to be a useful vehicle to improve publicly available information on intangibles. There are now already measure systems and accounting systems available which are in line with the IAS and IFRS accounting standards.

Finally, the Expert Group states that an issue that influences a company’s decision to protect its IP, especially in the case of SMEs, is to what extent such rights are enforceable, the time and costs involved in litigation, and the foreseeable economic results. The quality of the enforcement system has an important impact in IP protection.

SMEs and large companies need to be assured an accessible justice system in case of infringement, validity and other IPR related litigation cases, which implies the need to provide judges and professional valuers with the appropriate tools and data to facilitate valuation in litigation.

As a result of the in-depth analysis carried out in all the mentioned areas, the Expert Group recommends a number of policy actions that could have a significant impact on reducing the identified barriers in order to increase the efficient use of IP valuation and to make such valuation flexible, transparent and reliable to respond to market requirements.

Please read more on: http://bookshop.europa.eu/fr/final-report-from-the-expert-group-onintellectual-property-valuation-pbKI0114460/

ANTEIUS Advocaten - Belgium

December 2016

Typically, the provisions of the Council Directive no. 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts protect only those consumers, individuals who act outside the professional scope. The main question that arises from the perspective of the applicability of the aforementioned Directive is whether a lawyer, taking into consideration its juridical formation can be considered a consumer when concluding adherence contracts.

Although the provisions of the Directive seem not to be addressed to any professional whatsoever, in practice some exceptions appeared. The Horatiu Ovidiu Costea against Volksbank Romania SA represents one of the latest cases which clarify the conditions when an individual, practicing lawyer can be considered as a ˮconsumerˮ and benefit from the protection of the Directive’s provisions established in this concern.

The Horatiu Ovidiu Costea against Volksbank Romania SA Decision issued on September 3, 2015

Factual Situation

Mr. Costea, who practiced as a lawyer, concluded a bank loan with Volksbank but as an individual. Although the scope of the Contract mentioned by Mr. Costea was that the loan is granted to cover personal expenses, for the reimbursement of the loan Mr. Costea secured by an immovable asset belonging to the law firm of Mr. Costea. After the signing of the Contract, Mr. Costea addressed to the Court of Oradea claiming that the clauses of the Contract are abusive and requesting their annulment. The aforementioned Court decided to suspend the cause and addressed to the European Court of Justice.

The European Courts’ of Justice’s considerations

According to the Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, any individual who, in the Contracts covered by its provisions, acts for purposes which are outside his trade activity, business or profession is a ʺConsumerʺ.

In this context, the European Court of Justice analyzed whether a lawyer who concludes a bank loan can be considered to be acting as a ʺConsumerʺ if the loan is secured by an immovable asset belonging to the law firm.

The main question that arose was whether the lawyer can find himself in a position of inferiority compared to that of a seller or to that of a provider of services, not only from the power of negotiating point of view, but also from the informational level point of view. Both of the aforementioned situations can determine the Consumer, lawyer or not, to adhere to the already written contractual clauses without any power to change or modify them.

The European Court of Justice took into consideration the inequality between consumer – clients and lawyers and decided that this situation cannot exclude per se the possibility to qualify a lawyer as a ʺconsumerʺ according to the provisions of the Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts.

Even if one can assume that a lawyer possesses or should possess a high level of technical information, this presumption cannot lead to the conclusion that a lawyer is not or may not be a weaker party compared to the seller or to the provider of services.

The European Court of Justice’s ruling

 The European Court of Justice established in this particular case, that a lawyer should not be excluded from the consumer concept in case it is shown that he was acting outside the purpose of his profession, even if the loan was secured by an immovable asset belonging to his law firm.

Andreea Paducel

On behalf of Jinaru, Mihai & Notingher

 Romania, October, 2016.