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Central and Eastern Europe is not as sexy as it was prior to the 1997-98 global economic crash, and it may not fully recover full momentum for quite a while. Indeed, with international law firms such as Linklaters, Garrigues, DLA Piper, Clifford Chance, Simmons & Simmons, and, most recently, White & Case and Gide Loyrette Nouel pulling out of various CEE markets (January 30, 2014 and February 10, 2014), many firms seem to feel the region  – with the exception perhaps of Turkey – is less attractive than it was during the 2004-2007 boom. CEE Legal Matters sought to explore the market potential of CEE countries for international law firms considering an entry by speaking to those who will ultimately sign off on the bill: General Counsels.

   

Oraz Durdyev, Legal Director and Compliance Officer for CEE, Anheuser-Busch InBev

We reached out to 27 country or regional General Counsels (we will use that term for ease of reference, although a number of lawyers we spoke to have a “Head of Legal” title instead) across CEE for input, in the process primarily targeting Fortune 500 companies, to offer a 20,000-foot view as to the receptiveness of potential clients to having more international firms set up shop in the region. 

In order to explore the demand side of the question as to whether or not international firms should still be looking at CEE markets, we explored what the general preferences of General Counsels are, if any, regarding working with international firms or local players, the perceived unique selling points that the former have, and the importance of geographic proximity in providing superior service. 

International Firms: What We Pay For

When asked whether they generally prefer to work with international or local firms, almost all General Counsels we spoke to explained that their answer depends on the nature of a given deal. Perhaps unsurprisingly, 23 out of the 27 General Counsels we asked expressed a strong preference towards working with an international firm on cross-border work. Oraz Durdyev, the Legal Director and Compliance Officer for CEE at Anheuser-Busch InBev, explained that in “international M&A or in any case with an international element we involve ILFs, due to their helicopter view.” According to Ahmed Dogan, Vice-President and General Counsel at Anagold in Turkey, “for cross border transactions or arbitration, an international firm is a must.”

   

Mustafa Gunes, former General Counsel, Multi Development

Aside from cross-border M&A, Przemyslaw Witas, General Counsel at CEDC International in Poland, also points to finance matters as ones where he generally prefers working with international firms: “On work related to bond issues, or any other type of complicated financial transactions, international banks appear in the equation meaning that international firms are generally better positioned to help.” And Attila Bocsak, the CEE Head of Legal for Turk Telekom, feels that ILFs are stronger in particularly cross-border forms of dispute resolution as well, saying that“complex international arbitration may also require the specialized knowledge that mostly international firms have.” However, one Legal Director in Russia that we spoke with, who asked not to be named, pointed out that this is not absolute and that there are “very well experienced local law firms as well that we work together with on international projects as well.” 

In contrast, local firms tend to be preferred for local dispute resolution issues.  According to Cosmin Vinatoru, Legal Director at Nobel in Romania, for “local projects, conducted exclusively in Romania and especially for litigations, local firms are preferred.” Szekely Gergely, Head of Legal at Allegro Group in Hungary, has a similar position:“Litigation co-operation with a local legal expert is much more favorable.” Other local issues such as basic corporate matters, labor law, or debt collection were also cited as areas where General Counsels emphasized a preference for local firms. 

This makes sense in light of one of the elements that always plays a part when picking external counsel: Budgets. Bocsak explains that “the more specialized knowledge is required the higher rates can be justified, which, on the other hand, means, that it does not really make sense to engage an international firm for basic corporate or labor law work.” Marian Radu, Head of Legal at GRIVCO in Romania, has a similar take: “I am fully aware that many people still prefer working with an international firm just because they associate it with higher quality legal support but, at the end of the day, a lawyer from a local firm can prove to be the better solution if you take in consideration the whole package, including the financial one.”

So what are the unique selling points of international law firms? One is implicit in the tendency to use them in international transactions. As Gergo Budai, General Counsel and Deputy CEO at Invitel, expresses it, they simply “have the capability to do complex work in parallel across multiple jurisdictions.” And Vinatoru points out that, as an organization, “they have knowledge of multiple law systems and are able to combine them in the most effective way, often resulting in innovative solutions.” While this idea seems to be the main element for most of the General Counsels we spoke with, it is not irresistible. According to Witas, “having offices in multiple jurisdictions definitely helps as it offers a one-stop solution but it is not an absolute must. We have had transactions where we simply coordinated the work of various local counsels in different jurisdictions ourselves. It is not ideal, but not an impossible task”

   

Marian Radu, Head of Legal, GRIVCO Romania

Organizational culture was another common theme. Durdyev, for example, explains that “international firms often share the business culture of multinational companies.” And many of the General Counsels we spoke to noted that, as multinational entities themselves, international law firms may be especially attuned to the challenges faced by multinational clients, Mustafa Gunes, former General Counsel at Multi Development in Turkey, also explains that this has to do with “their relative closeness to the headquarters of the multinationals,” Witas also links to communication styles and explains that CEDC International’s expatriate board members find it much easier to coordinate with-London based lawyers.

One of the interesting elements that some of the General Counsels we spoke with highlighted as a unique selling point of international firms was their strong brand reputation. In fact, nine of the 27 we spoke to acknowledged that international firms tended to have considerably stronger brand names, which presumably provides a safer cover when explaining the decision to retain a firm to a company’s Board or CFO.

Of course, with that “brand” recognition comes an assumption of quality. But that may not be as strong a factor as it once was. Witas asserts that, in Poland, international law firms used to attract the best lawyers, but the skill gap between them and the local law firms has shrunk considerably in recent years. General Counsels in Hungary, Romania, Russia, and Serbia pointed to the same trend. Ultimately, Witas and others emphasize that in many instances, what really matters is the lawyer you are working with, not what firm’s name appears on his business card. 

   

Cosmin Vinatoru, Legal Director, Nobel Romania

Still, when asked if the generally higher rates of international firms are justified by their unique selling points, 19 of the General Counsels we spoke to responded that, in general, they do. Budai did mention that, at times, “the starting rates are over the acceptable levels and need to be negotiated.”And of course higher rates generate higher expectations. As Radu notes, “in time higher rates must be justified by high quality deliverance, otherwise your clients may become reluctant to pay big money for something they can have with less expenditure.”Bocsak recognizes that international firms are often caught between a rock and a hard place: “I many times feel that international firms are stressed because of the discounted blended rates or price caps, which maybe lower than their guideline rates. Despite this, clients do expect high quality solutions from international firms irrespective of rebates.” On the other hand, Izabela Wisniewska, Head of Legal at Zara in Poland, points out that, “unfortunately there are inglorious examples where the high rates may only be justified by the known brand.“

Do You Need To Be On the Ground?

In working with external counsel, 11 of the General Counsels we spoke to emphasized the need to build a strong relationship based on trust. The question then becomes, to what extent is developing that relationship possible from a distance? General Counsels in Hungary, Russia, Romania, Serbia and Turkey in particular expressed a need for frequent face-to-face meetings. As Radu describes it, “I like to be able to speak to a lawyer in person, to get to know him a little, in order to make our collaboration smoother.” He conceded, however, that“good results can also be obtained by working with somebody you never get to know” — a feeling that is shared by most General Counsels that we spoke with. 

While not impossible, many point to the ease of building those relationships from a simple logistical standpoint: “to interact personally is far more productive and faster then endless conference calls,”explains Durdyev. He also explains how you know that “you can rely on your Partner for a long relationship if he can be in your office in 24 hours if it is urgent.” The extent to which that is possible for a lawyer operating a CEE desk from London is debatable. However, Witas says of many of the better international firms without a presence on the ground  “their efficiency in communicating and generally great responsiveness is still better than many of the local players.”

First-hand local knowledge is also perceived to be critical. Gergely states that “when it comes to support on local matters, having a office on the ground with high ranking local staff is essential.” Gunes explains that a good adviser should have local knowledge, but also should possess, “a good sense of the jurisdiction as well, which is simply national.”Naturally, this is relevant only for firms looking to gain market share in a specific country. As Bocsak explains for example “in our business we do not require a local office since international telecom contracts are just the same in London, Berlin, Istanbul, or Hong Kong.”

All Hail Competition

When asked if he would want to see more international firms opening up an office in Hungary, Budai replied simply “absolutely, to increase competition.”Asked the same question, Vinatoru in Romania had the same answer:“the more, the better. The competition will be high and the quality of services will definitely increase.”Radu agrees: “From clients’ point of view, the more, the better.”Indeed, with the exception of Russia and Poland, where most General Counsels feel the market is already saturated with international players, almost all General Counsels we spoke to said they would welcome more competition in their markets to drive up the quality of service and drive down rates. While no firm wants to engage in a race to the bottom for fees, the fact that so many General Counsels are open to new entries in the market should be a positive sign. Even in Russia, where the market does not seem to ache for more competition on the market, it has been voiced that expansions in the market with niche practice areas would be welcomed. 

While Witas agrees that competition is always welcomed, he points out an additional benefit for firms considering opening an office. He believes that there is potential for many elite firms to carve out market share if they are on the ground since that will allow an additional  number of potential clients to be exposed directly to their capabilities. 

Ultimately, of course, decisions about when and where to open are often-hotly contested evaluations of profit, cost, market conditions and potential, actual and potential clients, portfolios of interested partners, and personal whim.  There is no simple answer that applies to all firms for all markets.  But as CEE rebounds from the crisis, we look forward to more market participants soon.

Central and Eastern Europe is not as sexy as it was prior to the 1997-98 global economic crash, and it may not fully recover full momentum for quite a while. Indeed, with international law firms such as Linklaters, Garrigues, DLA Piper, Clifford Chance, Simmons & Simmons, and, most recently, White & Case and Gide Loyrette Nouel pulling out of various CEE markets (January 30, 2014 and February 10, 2014), many firms seem to feel the region  – with the exception perhaps of Turkey – is less attractive than it was during the 2004-2007 boom. CEE Legal Matters sought to explore the market potential of CEE countries for international law firms considering an entry by speaking to those who will ultimately sign off on the bill: General Counsels.

   

Oraz Durdyev, Legal Director and Compliance Officer for CEE, Anheuser-Busch InBev

We reached out to 27 country or regional General Counsels (we will use that term for ease of reference, although a number of lawyers we spoke to have a “Head of Legal” title instead) across CEE for input, in the process primarily targeting Fortune 500 companies, to offer a 20,000-foot view as to the receptiveness of potential clients to having more international firms set up shop in the region. 

In order to explore the demand side of the question as to whether or not international firms should still be looking at CEE markets, we explored what the general preferences of General Counsels are, if any, regarding working with international firms or local players, the perceived unique selling points that the former have, and the importance of geographic proximity in providing superior service. 

International Firms: What We Pay For

When asked whether they generally prefer to work with international or local firms, almost all General Counsels we spoke to explained that their answer depends on the nature of a given deal. Perhaps unsurprisingly, 23 out of the 27 General Counsels we asked expressed a strong preference towards working with an international firm on cross-border work. Oraz Durdyev, the Legal Director and Compliance Officer for CEE at Anheuser-Busch InBev, explained that in “international M&A or in any case with an international element we involve ILFs, due to their helicopter view.” According to Ahmed Dogan, Vice-President and General Counsel at Anagold in Turkey, “for cross border transactions or arbitration, an international firm is a must.”

   

Mustafa Gunes, former General Counsel, Multi Development

Aside from cross-border M&A, Przemyslaw Witas, General Counsel at CEDC International in Poland, also points to finance matters as ones where he generally prefers working with international firms: “On work related to bond issues, or any other type of complicated financial transactions, international banks appear in the equation meaning that international firms are generally better positioned to help.” And Attila Bocsak, the CEE Head of Legal for Turk Telekom, feels that ILFs are stronger in particularly cross-border forms of dispute resolution as well, saying that“complex international arbitration may also require the specialized knowledge that mostly international firms have.” However, one Legal Director in Russia that we spoke with, who asked not to be named, pointed out that this is not absolute and that there are “very well experienced local law firms as well that we work together with on international projects as well.” 

In contrast, local firms tend to be preferred for local dispute resolution issues.  According to Cosmin Vinatoru, Legal Director at Nobel in Romania, for “local projects, conducted exclusively in Romania and especially for litigations, local firms are preferred.” Szekely Gergely, Head of Legal at Allegro Group in Hungary, has a similar position:“Litigation co-operation with a local legal expert is much more favorable.” Other local issues such as basic corporate matters, labor law, or debt collection were also cited as areas where General Counsels emphasized a preference for local firms. 

This makes sense in light of one of the elements that always plays a part when picking external counsel: Budgets. Bocsak explains that “the more specialized knowledge is required the higher rates can be justified, which, on the other hand, means, that it does not really make sense to engage an international firm for basic corporate or labor law work.” Marian Radu, Head of Legal at GRIVCO in Romania, has a similar take: “I am fully aware that many people still prefer working with an international firm just because they associate it with higher quality legal support but, at the end of the day, a lawyer from a local firm can prove to be the better solution if you take in consideration the whole package, including the financial one.”

So what are the unique selling points of international law firms? One is implicit in the tendency to use them in international transactions. As Gergo Budai, General Counsel and Deputy CEO at Invitel, expresses it, they simply “have the capability to do complex work in parallel across multiple jurisdictions.” And Vinatoru points out that, as an organization, “they have knowledge of multiple law systems and are able to combine them in the most effective way, often resulting in innovative solutions.” While this idea seems to be the main element for most of the General Counsels we spoke with, it is not irresistible. According to Witas, “having offices in multiple jurisdictions definitely helps as it offers a one-stop solution but it is not an absolute must. We have had transactions where we simply coordinated the work of various local counsels in different jurisdictions ourselves. It is not ideal, but not an impossible task”

   

Marian Radu, Head of Legal, GRIVCO Romania

Organizational culture was another common theme. Durdyev, for example, explains that “international firms often share the business culture of multinational companies.” And many of the General Counsels we spoke to noted that, as multinational entities themselves, international law firms may be especially attuned to the challenges faced by multinational clients, Mustafa Gunes, former General Counsel at Multi Development in Turkey, also explains that this has to do with “their relative closeness to the headquarters of the multinationals,” Witas also links to communication styles and explains that CEDC International’s expatriate board members find it much easier to coordinate with-London based lawyers.

One of the interesting elements that some of the General Counsels we spoke with highlighted as a unique selling point of international firms was their strong brand reputation. In fact, nine of the 27 we spoke to acknowledged that international firms tended to have considerably stronger brand names, which presumably provides a safer cover when explaining the decision to retain a firm to a company’s Board or CFO.

Of course, with that “brand” recognition comes an assumption of quality. But that may not be as strong a factor as it once was. Witas asserts that, in Poland, international law firms used to attract the best lawyers, but the skill gap between them and the local law firms has shrunk considerably in recent years. General Counsels in Hungary, Romania, Russia, and Serbia pointed to the same trend. Ultimately, Witas and others emphasize that in many instances, what really matters is the lawyer you are working with, not what firm’s name appears on his business card. 

   

Cosmin Vinatoru, Legal Director, Nobel Romania

Still, when asked if the generally higher rates of international firms are justified by their unique selling points, 19 of the General Counsels we spoke to responded that, in general, they do. Budai did mention that, at times, “the starting rates are over the acceptable levels and need to be negotiated.”And of course higher rates generate higher expectations. As Radu notes, “in time higher rates must be justified by high quality deliverance, otherwise your clients may become reluctant to pay big money for something they can have with less expenditure.”Bocsak recognizes that international firms are often caught between a rock and a hard place: “I many times feel that international firms are stressed because of the discounted blended rates or price caps, which maybe lower than their guideline rates. Despite this, clients do expect high quality solutions from international firms irrespective of rebates.” On the other hand, Izabela Wisniewska, Head of Legal at Zara in Poland, points out that, “unfortunately there are inglorious examples where the high rates may only be justified by the known brand.“

Do You Need To Be On the Ground?

In working with external counsel, 11 of the General Counsels we spoke to emphasized the need to build a strong relationship based on trust. The question then becomes, to what extent is developing that relationship possible from a distance? General Counsels in Hungary, Russia, Romania, Serbia and Turkey in particular expressed a need for frequent face-to-face meetings. As Radu describes it, “I like to be able to speak to a lawyer in person, to get to know him a little, in order to make our collaboration smoother.” He conceded, however, that“good results can also be obtained by working with somebody you never get to know” — a feeling that is shared by most General Counsels that we spoke with. 

While not impossible, many point to the ease of building those relationships from a simple logistical standpoint: “to interact personally is far more productive and faster then endless conference calls,”explains Durdyev. He also explains how you know that “you can rely on your Partner for a long relationship if he can be in your office in 24 hours if it is urgent.” The extent to which that is possible for a lawyer operating a CEE desk from London is debatable. However, Witas says of many of the better international firms without a presence on the ground  “their efficiency in communicating and generally great responsiveness is still better than many of the local players.”

First-hand local knowledge is also perceived to be critical. Gergely states that “when it comes to support on local matters, having a office on the ground with high ranking local staff is essential.” Gunes explains that a good adviser should have local knowledge, but also should possess, “a good sense of the jurisdiction as well, which is simply national.”Naturally, this is relevant only for firms looking to gain market share in a specific country. As Bocsak explains for example “in our business we do not require a local office since international telecom contracts are just the same in London, Berlin, Istanbul, or Hong Kong.”

All Hail Competition

When asked if he would want to see more international firms opening up an office in Hungary, Budai replied simply “absolutely, to increase competition.”Asked the same question, Vinatoru in Romania had the same answer:“the more, the better. The competition will be high and the quality of services will definitely increase.”Radu agrees: “From clients’ point of view, the more, the better.”Indeed, with the exception of Russia and Poland, where most General Counsels feel the market is already saturated with international players, almost all General Counsels we spoke to said they would welcome more competition in their markets to drive up the quality of service and drive down rates. While no firm wants to engage in a race to the bottom for fees, the fact that so many General Counsels are open to new entries in the market should be a positive sign. Even in Russia, where the market does not seem to ache for more competition on the market, it has been voiced that expansions in the market with niche practice areas would be welcomed. 

While Witas agrees that competition is always welcomed, he points out an additional benefit for firms considering opening an office. He believes that there is potential for many elite firms to carve out market share if they are on the ground since that will allow an additional  number of potential clients to be exposed directly to their capabilities. 

Ultimately, of course, decisions about when and where to open are often-hotly contested evaluations of profit, cost, market conditions and potential, actual and potential clients, portfolios of interested partners, and personal whim.  There is no simple answer that applies to all firms for all markets.  But as CEE rebounds from the crisis, we look forward to more market participants soon.

Interview with Dan Matthews, Managing Partner of Baker & McKenzie’s Istanbul Office.

   

Dan Matthews

 CEELM: So, how did you end up as an expatriate lawyer, traveling the world as a foreign lawyer?

DM: It’s not something you plan when you go to law school; it just turned out that way. I had been a Soviet Studies major in college – back when there was a Soviet Union – and had considered going into the Foreign Service but I went to law school instead. Nine years later, Baker & McKenzie was looking for people to go to Moscow, and I said, “I’ll go.”

 CEELM: So were you at Baker & McKenzie at the time?

DM: No, at the time I wasn’t. Actually, I was working on a project with a law professor whose brother-in-law was a partner in Baker & McKenzie’s London office. She said, “You’d be perfect for Baker & McKenzie.” A couple weeks later, they called me up and asked “would you be interested in talking to us?” I said “sure”.

 CEELM: And when did you move to Moscow?

DM: January 95.

 CEELM: Wow. And here you are 18 years later, still …

DM: Still overseas. I agreed to go for a year. . . . (laughs)

 CEELM: And you came here in 2011, when Baker opened its office?

DM: Yeah.  The office officially opened in November 2011, but I was coming here for a few months prior to that getting everything ready.  

 CEELM: From Baku, where you were sort of permanently based?

DM: I was in Baku for 14 years.  

 CEELM: Ok, so permanently based. How did that happen? Was it your decision, or the firm’s decision, to have you come to Istanbul?

DM: Baker & McKenzie had been looking at the Turkish market for a long time. This time around, I was invited to be on the search committee to identify a Turkish law firm to team up with as I had worked with a number of Turkish firms over the years. Toward the end of the process, the Firm asked, “Would you be willing to move to Istanbul?”, and I said “sure.” (laughs)

 CEELM: But why “sure”?  You’d been in Baku for a long time.  Was that a tough call, or were you ready, or …?

DM: Honestly, I was content in Baku. We built a good practice in Azerbaijan, but after that much time you sometimes ask yourself, “will my legal career end here?” I wasn’t looking for a way out, but when Istanbul became an option, it didn’t take long to decide.

 CEELM: But they didn’t relocate you, they asked if you’d be interested, and you …

DM: Yeah, yeah. Baker & McKenzie doesn’t move people against their will.  (laughs)

 CEELM: And you stay involved with Baku right?

DM: Some. Now, much less than I did the first year. The first year I still had responsibilities in Baku and spent a lot of time on flights between Istanbul and Baku.  Now, I’ve pretty much turned it all over to people there.

 CEELM: Is your practice a Turkish/Central Asian practice, or have you moved your practice to Turkey as well?

DM: My practice is almost completely Turkish-focused now.

 CEELM: Really? After 14 years, you started a new practice.

DM: Well, I still do get calls for Baku and I still have a few Baku matters where the clients want me to stay involved because I’ve been working with them for 10 years. Our lawyers in Baku are quite capable, so my work there is limited.

 CEELM: Ok. So we touched on this earlier, but what do you think is the role, the significance, of an expat, in general?

DM: Well, the role of an expat lawyer has changed over the years. When I got to Russia in the mid-90s, there were lots of expat lawyers working with Russian lawyers just out of law school whose primary credential was the ability to speak English. That was just the market at the time. Over time, as those lawyers gained experience and developed their expertise, they eventually replaced most of those expat lawyers. Now, we’ve got only a handful of expats in Moscow and none in our St. Pete, Kiev and Baku offices. It’s just the natural progression of the development of those legal markets. There’s still a role for expat lawyers in those markets, but it is a much reduced role from 20 years ago.  

 CEELM: Is that a quality control issue, or is that sort of a branding issue?

DM: Well, quality control is the wrong word because the work product that our local lawyers generate is good quality. For local law advice to foreign clients, especially that prepared by more junior lawyers, often it’s more of a packaging exercise to ensure that local law advice is presented in a meaningful and useful way that foreign clients will understand and appreciate.

 CEELM: Does that mean that a substantial amount of your work is – I’m really not trying to put a negative spin on “polishing” or “editing” – but really is focused on taking legitimate and substantial work product and making it fit international norms, or are you able to do a substantial amount of client-related work yourself?

DM: I don’t think those are mutually exclusive. As I’ve said, a fair portion of what expatriate lawyers do is what I call “packaging.” In Turkey, in particular, expatriate lawyers are not allowed to give Turkish law advice. We’re allowed to give international advice and home-jurisdiction advice, so we take what the Turkish law advice is, as prepared by Turkish lawyers, and help fit it into a larger context.

 CEELM: And do you do much English-language editing?

DM: I used to do a lot more until we hired an English-language editor. (laughs)

 CEELM: There we go. Good thinking.

DM: I still review a lot the written advice. In any law firm, anywhere in the world, a partner’s going to review and edit work product and challenge the reasoning and conclusions.

 CEELM: I remember from as an associate myself how often my writing was deemed not quite what they were looking for. (smile). Coming from outside, what are your thoughts, in general terms, of the Turkish legal market?

DM: The thing that springs to mind immediately is that this market is so competitive in pricing, so competitive.

 CEELM: More than Baku?

DM: Oh, absolutely. There’s no comparison. In Russia, when I first got there in the mid-90s, there was very little price competition. You said, “This is the price”, and everybody paid it. Now that more firms have opened offices there – there’re probably 50 or 60 foreign firms in Moscow now, plus the big local firms – you have to be competitive, but it’s still reasonable. But here, you’ll come across transactions where the winning bid for an IPO is $25,000 – which we can’t go near for a multiple of that. But there’re just enough local firms out there with people who left international firms to flood tenders with these kinds of proposals. What we’re seeing now, a little bit at least, is that, when people are putting out tenders for legal services, they’ll just invite the major firms – so you have a better sense of where the competition is. If you just make a tender open to everybody and say “everyone submit your best offer and we’re going to pick the best offer,” well, then, I’m not even going to submit a proposal.

 CEELM: Yeah, the bigger firms aren’t even going to be able to compete with that.

DM: With only a little hyperbole, I can’t run the photocopier for $25,000 for an IPO.

 CEELM: What is your opinion on the skill and the quality of the work product in Turkey?  Because I’ve even heard some lawyers – some Turkish lawyers – have been fairly critical of it.

DM: As in any place, it depends on the individual lawyers and their experience. There are many smart good lawyers in the market but surprising few with truly valuable experience. At Esin, our Turkish firm, the lawyers have been doing M&A transactions for 10 to 12 years, some longer. When they do an M&A closing, it’s with military precision. For closing M&A and Private Equity transactions, I mean, there are rehearsals. The lawyers all have their role and they go in and practice it. If an issue comes up at closing, you know there’s a person there who’s on that …

 CEELM: Did you say there’s rehearsals before a closing?

DM: Oh, yes, we rehearse before every closing.

 CEELM: Did they do that before you or was that something you brought in?

DM: It was something Esin had always done.  For closing M&A and Private Equity deals, they didn’t need Baker & McKenzie to show them how to do it.  

 CEELM: Ok. Has your presence in Turkey personally improved the quality of work at the firm?

DM: I like to think so. (laughs). For example, in addition to bringing new practices into the office, the office is divided into practice groups, and each lawyer has the opportunity to work on the same types of issues over and over. It increases their legal expertise, and equally important, their knowledge of the market and the industry sector. The more they work in a single industry, such as Pharma, Technology, Banking and Communications, the more valuable they become to our clients.

 CEELM: And Energy …

DM: … and Energy, but Energy is broader because, of course, it cuts across so many practice areas. For example, Esin Law Firm had a lot of experience doing M&A transactions in the Energy sector, but less experience with Financing. We’ve now developed that expertise as well.

 CEELM: You talked about the restructuring of the firm. Is that something that happened after Baker came in, did you help restructure the firm with the practice areas?

DM: Yes, and added several new practices. Esin’s practice was primarily M&A, Private Equity, Dispute Resolution and a couple of others. We’ve added Pharma, Tax, IT, IP, Compliance and other practices.  Now we have specialist teams — an Employment team, we have a Tax team, a team for each practice … that’s what they do.

 CEELM: Hmm. And is the firm modeled by – I understand these are separate firms, Baker & Esin – but does the model reflect general Baker & McKenzie modeling, is it operating on the same practice areas?

DM: Yep. The practice groups at Esin are the same ones that we organize regionally and globally.

 CEELM: Interesting. How much time do you spend here, in Turkey?

DM: All of it, except when I’m traveling for work or on vacation.

 CEELM: Okay, just a few lighter questions, not legal-industry specific. What are your thoughts about Turkey?  Do you like it here, are you happy?

DM: Yeah, I am! People keep asking me if I like Istanbul better than Moscow or Baku. I enjoyed my time in all three cities. I like all of them for different reasons. 

 CEELM: When you have people come from out of town, what do you take them to do?

DM: Well, when people come to visit, they already know to see Hagia Sofia, the Grand Bazaar, Topkapi Palace, and places like that, so I like to take them to good restaurants in Bebek, Ulus and Levent, places they wouldn’t see if they stayed in the tourist areas.

 CEELM: Last question, for you personally.  Is this your last stop?  What’s next for you?

DM: Right now, my plan is to stay in Turkey indefinitely.  I didn’t plan to be in Baku for more than a decade and, when I went to Russia, I thought I’d only be there for a year, so …

 CEELM: So it’s not like six months.  At some point down the road …

DM: The Firm does not encourage you to leave a place once you’re there because, over time, you become more valuable in that place — you know more people, have more connections, have more local experience.  So right now my stay in Istanbul is indefinite.

 CEELM: But you’re not thinking of relocating to Almaty or …

DM: No, no, no.  When I do decide to go, I’m almost 100% sure that I’ll be returning to the US. I mean, we’re running out of countries to open offices in. I was fairly early in Moscow; I opened Baku, now I opened Istanbul. What’s left? Lagos? (Laughing)

 CEELM: I was going to say, you never know!

DM: True! (laughing).

Interview with Murat Vanlioglu, Head of Legal for Shell Companies in Turkey.

   

Murat Vanlioglu

 CEELM: How did you get to Shell? How did your career end up with you here?

MV: A head-hunter found me. It was just a coincidence. They were looking for a legal manager for Shell, and they found someone who “gave up” a couple of days later after she began to work, and so they urgently needed to find a counsel. They found me through a colleague that was working in their office who knew me from my previous career with Sabanci Holding. She called Sabanci and said “where’s Murat?”, and they were directed to my new office, stating that “I found you from this this this this,” and asked if I was interested in a new job opportunity. I said no, because at that time I was working for Toyota, and would be having an expat job in Brussels at Toyota’s center. But she said “don’t say no immediately – this is Shell.” And I said “I’ll consider it.” (laughing)

 CEELM: Did they bring you on as Head of Legal?

MV: Yes. I was recruited as Head of Legal in 2006 and worked as a Head of Legal at Toyota as well.  

 CEELM: Ok. And you were at Ernst & Young before that, right?

MV: Yes; I was in charge of Mergers & Acquisitions in particular cross-border deals as well as some privatization projects of state owned banks.  

 CEELM: You were at several banks in the beginning as well, right?

MV: Yes, I started my career with banks as an Execution and Bankruptcy attorney, collecting credit card debts. It was a challenging way to learn how a contract can be executed in real life. That period of my career taught me that without properly understanding the execution process of  contracts, a lawyer should not draft it. So I worked hard and spent long working hours during the first 3 or 4 years of my  career in banks. Indeed, I started from scratch, and began my career by bringing files from the archives of the court execution office.

 CEELM: Really?

MV: Yeah. In Pamuk Bank I first started to chase after credit card debts, then afterwards I went on dealing with commercial credits, bigger loans that were requiring liquidation of mortgages, and more complicated things. Then I said “this is enough – no more debt collection.” At that time there was a newspaper advertisement, and I applied. It was Toyota, and they hired me. I was the only one that never had any sponsor behind me. Out of the hundreds of applicants, they all had some connection with someone else, and I was the only one who has no connection with anyone.

 CEELM: You didn’t have a particular interest in the Oil & Gas industry starting out?

MV: Starting out, no.

 CEELM: Ok. Are there special challenges to that industry now?

MV: Yes. Different. Actually, before I was recruited, in the interview, the CEO of the company said, “it is too challenging.” And I said, “no, it’s not too challenging.  It’s a piece of cake. I am a lawyer, I can do anything, anywhere, and the legislation is almost the same, except some specific industry related issues.” And I was right. The primary laws are the same: corporate laws, commercial laws, and code of obligations are the same. What was different was the energy laws – and some different industrial practices. In the motor vehicle industry people hardly sue each other.  

 CEELM: You mean competitors?

MV: No, dealers! They have 50 or 60 dealers, those are indeed big investors, good businessmen, very reputable persons in their local areas, and they would feel ashamed to be in court. So you can sign any kind of deal – negotiated, of course, but you do everything through negotiation. I had just 10 litigation cases throughout my employment in Toyota. In the oil industry everybody sues each other.  (laughing).  It’s crazy. Dealers sign the contracts with a distribution company, and 5 minutes later another company offers a bit more, then the dealers break the contract they had just signed with you 5 minutes ago. Then we have to go to court. There are hundreds of cases like that. This is the world, completely different.

 CEELM: Okay. How would you describe your job, what you do?  I know that’s a general question, but what’s your job?

MV: Actually I am the country legal head. I do everything. From corporate, I’m the corporate secretary of the joint venture – I’m in charge of keeping everything in compliance with the law and regulations, and everything in accordance with the principles. 

 CEELM: The “joint ventures” are Shell and Turcas?

MV: Shell and Turcas.  Turcas is the minority shareholder/local partner. This is the downstream joint venture. There are also other joint ventures. This is the reason why I tend to describe myself as a joint ventures expert. I’ve been working with joint ventures starting with Toyota for almost 17, 18 years. In a joint venture all corporate issues, decisions, you name it, need to be governed in line with the joint venture agreement’s principles. Neither the shareholders nor the expat officers know the details of it.  The partners signed the contract with their lawyers, then they put it on the shelf. Therefore, when holding Board Meetings, or getting investment resolutions, I have to ensure full compliance with the joint venture agreement. For example, investments exceeding a  certain limit need to be approved by the Board. So if you miss that kind of thing it may create a conflict between the shareholders, which you never want. These kinds of things are important.

 CEELM: You must have the joint venture memorized by now.

MV: Not memorized, but it is a really good agreement, so you need to be careful about it. Other than this, I founded various joint ventures with different companies, for example for upstream organization, Shell established three joint ventures with a national oil company in Ankara, for an onshore unconventional project and two conventional deep water projects. It is important to know how to negotiate a JV agreement, where to look in the joint venture agreements. If you know the priorities and which provisions you need it is easier to conclude the agreement. Each party has different priorities, discussing them openly and finding mutual solutions to both parties’ needs indeed brings pretty quick deal closings. So I created that kind of value, in terms of negotiations with counter-parties.  

 CEELM: I see. You also oversee the litigation process, right?

MV: Sure. I am the head of the litigation process; I draw up the strategy and give priorities to my colleagues who are going to follow the case. After we agree on the framework, my colleagues follow up the case by themselves. There is full delegation and my colleagues get the full pride of the job they are doing. Sometimes, based on the peculiarity of the case, we hire external counsel to follow the case, but it is generally done in-house. Strategy is indeed important and sometimes you even need to challenge the expert barrister following the case.

Just an example. There was a decision from the Court of Istanbul about an inconvenient forum. The court decided that it was not authorized to hear the case. And then decided to send the docket to Bakirköy courts, which is about a kilometer away. The barrister at that time proposed not to appeal. He said, “it is just a matter of two kilometers away.” I said, “no, you should go to the Court of Appeal, because the justification of the award is very risky for us, and it may lead to us losing the main case in the future. By appealing we’ll lose a year, this is for sure. But its very likely that the decision of the court of first instance will be repealed by the Court of Appeal, and then we will have a strong ground to defend against the same judge.

 CEELM: This is another sort of general question: What do you like about working with Shell? 

MV: Shell is, first of all, an honest company. Honest, straight-forward, respectful of people. You are supposed to comply with the law and regulations, in particular those against corruption. For instance you cannot provide gifts to an officer, and you cannot accept gifts from someone else – you need to do your job with honesty and integrity.

 CEELM: That’s too bad.  No gifts for you. (laughing)

MV: No, it’s really good. It’s really good indeed. Sometimes people abuse it. So if you start accepting gifts – one porcelain cup, for example, as a new year’s gift, then it starts coming with a silver mug next year (laughs). And there’s no end to it. This principle of Shell is very good. Shell values people, Shell values diversity. What is important is that Shell values intelligence and opinion. So you are always free to speak your mind. You can challenge whatever your boss says. All employees feels that everybody is equal, you are free to speak your mind, you are invited to challenge, your are free to blow the whistle, and you are provided with equal opportunities to climb the career ladder.

 CEELM: And you are empowered to …

MV: … to speak your mind.  Even in front of the CEO of the group.

 CEELM:  And that’s not just an advertising slogan? You’re being honest with me?

MV: Absolutely. All employees know that if someone or management does something wrong, or does not follow Shell business principles and ethics, they have the right to blow the whistle and contact the business integrity department, the complaint will surely be investigated and consequences applied. A whistle-blower’s identity is always kept secret so he is never exposed. This creates trust with your employer. Honesty and integrity are always valued by Shell.

 CEELM: But even in terms of the working environment and culture, people are encouraged to challenge and think, and … interact.

MV: Yes, indeed people are encouraged to challenge. Also the organization is flat, rather than a vertical organization. So everyone is able to speak their minds. This is embedded in the Shell culture. This is the way I like it. I did not observe same thing with most of the companies unfortunately .

 CEELM: I was going to ask. You’ve worked enough other places. Do you think that’s relatively unusual about Shell? I mean in Turkey.

MV: (nodding head): I enjoy Shell. In Turkey this is also unique. Our culture is in-between East and West. Eastern company cultures are more hierarchical, more strict than our culture. You are from the West (gestures at me), and your culture is much more similar to what I am explaining here in Shell.  But some eastern companies are on the extreme. You are unable to speak your mind. It can be considered rude to speak in front of a senior person without getting permission and often only a senior guy can speak unless you are asked something. You would not feel valued under such a culture

 CEELM: And that filters down even to the Turkish offices?

MV: Everything, everything.

 CEELM: And the Shell model filters down here as well.

MV: Some Eastern companies prefer to hire average persons from average universities. Deliberately avoid hiring high fliers. Average people tend not to challenge but follow the standard path: Follow the rules, follow the bureaucracy, and do not challenge the boss. 

 CEELM: I see. So it’s the system that’s going to guide that, whereas at Shell it’s the personalities, intelligence.

MV: Exactly, exactly. Here, the intelligence of people is creating something. And in particular the higher levels of the Shell organization are full of high-fliers, they have bright ideas, lead people, motivate people. Leadership attributes are really important with Shell.  

 CEELM: When you started here, what was the most surprising thing you found here? Was there something about the culture, or the work?

MV: Comparing my past work experiences there is a full compliance culture here. I have seen in some companies that they prefer not to follow the rules sometimes. For example some companies didn’t allow the establishment of a union in their factories despite the fact that it is absolutely a legal right for employees. I also observed that some companies fired people just because those people were member of a union. Here in Shell such things never happen. Besides Shell actively supports employees to form a union and perform their rights and duties thereof. Therefore it is a completely different compliance culture and I appreciate it very much.

 CEELM: Ok. How would you describe your personal management style?

MV: Open, transparent and collaborative. And I always act with a commercial mindset. Ah, I can say it’s a round-table policy, first of all. Round-table is important. Round-table means everyone is equal and can speak their minds.

 CEELM: It sounds like the Monday morning meetings is an example of that.

MV: This is a good example indeed. Although it’s not a round table, it’s a rectangular table (laughing). So we have breakfast, freely speak everything, we make jokes. It’s a very warm environment. Even the post-graduate students working on training contract basis. Everybody is free to speak. So we discuss everything. We generally discuss day-to-day issues. Sometimes there are strategic issues, and we organize specific meetings to review those kinds of cases. But what is most important for me is  openness, transparency, and free communication. Open communication first builds bridges between people, people do not second-guess what you say. It develops a strong buy-in from people to the tasks that we are going to perform. It improves motivation and most importantly it helps development of young talents because they learn from others in an open environment.

 CEELM: If they have questions they can pop their head in and ask?

MV: Sure, yes. And they can challenge! Sometimes I am wrong. I do honestly accept their views. In law there is no senior view that is prevailing over others, there are different views, and arguments – which is natural. Therefore we discuss freely, sometimes I accept even the students’ point of view, which may be right rather than mine.  

 CEELM: Okay. I want to ask a few questions about how you work with external counsel. How do you decide what matters – you said most litigations you keep internal – what do you do with external counsel?

MV: The jobs that are not in our professional experience, such as criminal issues. We prefer to hire expert external lawyers in such matters.  

 CEELM: IP, Criminal Law, those are the main issues?

MV: Main areas. And some serious matters, I mean, there are some court cases that are high value cases.  I personally follow Administrative cases with government authorities.

 CEELM: I see. And how do you select those firms you work with, when that happens?

MV: Depending on the knowledge and experience in the industry. There are two law firms here certified by Shell.

 CEELM: Certified internationally, or …?

MV: Certified internationally, those we call “panel law firms.” We sometimes work with them for some global issues. But there are other lawyers, known in specific areas. For example, Professor Cevdet Yavuz is an expert in the code of obligations. Once a case comes to us related with his area, we consult with him. We generally take a written opinion from him, and then we establish our case based on the legal opinion. For commercial issues we go to another professor, for example Professor Hamdi Yasaman, who is very good in commercial cases.

 CEELM: So you generally have consulting professors, rather than law firms.

MV: It does not necessarily have to be professors; let’s say experts in a relevant area.

 CEELM: Individuals, not so much firms.

MV: Individual lawyer is much more important for me rather than the name of the law firm. In the end it is the individual who does the job, not the expensive firm.

 CEELM: When you hire laterally, when you bring lawyers on to your team, what do you look for more? Do you look for lawyers coming from in-house, maybe even in the Oil & Gas industry, or from law firms? What’s more important?

MV: It doesn’t matter. What we look for is honesty, integrity, collaboration, and working in harmony. Of course intelligence is important to learn and deliver quickly.

 CEELM: So does that mean an interview is more important for you than the resume?

MV: Yes. The interview is much more important. And in the interviews we give candidates a case study, where he reads something for 20 minutes, then there are questions out of the case study, so it gives the candidates legal background, ability to interpret things, his mindset and how to approach business issues. Then we can understand, this is a person we can work with.

Interview with Przemyslaw Witas, General Counsel at CEDC Poland.

   

Przemyslaw Witas

 CEELM: You’re the GC for CEDC in Poland. How much of your time is spent on IP matters?

PW: CEDC is a brand-oriented company, as is the entire Russian Standard Vodka group that we are a part of. Our brands make us unique player on what is a very competitive alcohol beverages market. This is the absolute must for me to spend time on the IP matters. They take from 30% to 60% of my time, depending on the brief. However, there are days when it is 100%. 

This is a very interesting development for me; I joined CEDC as the senior Corporate/M&A person. That was my main profile after many years at Clifford Chance. During recruitment, I was told that IP would be on my agenda, but initially it was not a priority, as we focused on building the in-house legal function from scratch. I joined CEDC, originally the distributor, in a transition time, as they were becoming more and more brand-oriented. CEDC was built through acquisitions, with key brands inherited from a state-owned company. When CEDC wanted to expand its business, including exports, it became clear thattrademark issues had not been attended to properly by the previous owner. This is when IP entered my agenda. 

I remember that after my first few months, management asked me to sort out the payment issue with the US IP counsel in New York. I got in touch with him and started to discuss different issues, and my eyes opened wider and wider. The conclusion was: There is a lot to do to protect our brands. Apparently, the cash flow opened the IP world for me. We reviewed relations with external IP counsel regarding our trademark portfolio in different jurisdictions. Shortly, we established an in-house IP function to handle issues from regular maintenance to ad hoc litigation. This is how my IP journey started and it continues. 

I do not have the comfort to attend to IP issues exclusively, but indeed, I spend a lot of time on IP, managing key projects. It is a good example that lawyers must be ready to learn new things all the time. It is a challenge, but an enjoyable one! 

 CEELM: Is Poland’s protection of trademarks fairly robust compared to other European markets?

PW: Yes, Poland definitely provides a robust system. The awareness of IP rights continues to grow among businesses, the courts, and other authorities. The relevant legal environment is in place. IP protection at the customs level works very well in Poland. There are both administrative and civil law regulations that provide all necessary protection if used professionally. 

On the civil law track, the Court for the Community Trademarks and Designs proceeds very efficiently, rendering fact-track and well-supported decisions, maintaining a unified approach. On the administrative law track,  Poland’s Patent Office proceeds relatively slowly, but there is also a lot of improvement in both the speed and the quality of its decisions – which are based on both Polish and EU case law.  

 CEELM: Do you see/expect any significant changes in IP practices, regulation, or legislation coming soon? 

PW: The European Commission prepared a large revision of the Trademark Directive and Trademark Regulation. When implemented, Poland would need to shift from the current system of the ex officio examination of the relative grounds for refusal of trademark protection to the system which is used by the EU trademark authority, the Office of Harmonization of Internal Market (OHIM). There would be no ex officio examination of relative grounds (just  absolute ones), and this kind of examination would be possible upon opposition or cancellation only. 

As far as national legislation is concerned, there is a plan to revise our main IP act – the Industrial Property Law of 2000. The legislative works are at an initial phase but the current guidelines suggest important changes, such as the long-awaited introduction of the so-called letters of consent, streamlining of the procedures at the Polish Patent Office, and improving the use of electronic communications with the Patent Office.

 CEELM: Have you had any particular problems registering or protecting CEDC’s trademarks, in Poland or anywhere else?

PW:  IP protection is dependent on the subjective interpretation of some general rules by the courts and authorities – and this is where some frustration comes from. The Patent Office tends to be more conservative, as its decisions are linked to a simple trademark similarity examination, while the civil law courts are more open to a market-orientated approach and the business context of trademark infringement. The common issue across different industries is that trademark owners’ expectations with regard to the scope of protection are wider than to the ones established under the court or authorities’ decisions. 

In recent years, the trademark authorities have tended to limit the scope of protection of registered trademarks. This concerns especially the complex, non-traditional trademarks consisting of various elements (e.g. word, figurative, three-dimensional). New conflicting trademarks are often found dissimilar  and oppositions are dismissed. This is not something specific for Poland, as it happens in other jurisdictions across Europe as well. 

As we have a significant international trademark portfolio, we also face some local issues in jurisdictions outside Poland. For example, the lack of publicly-used trademark databases maintained by local Patent Offices (a particular problem in Kazakhstan, for instance) or unusually lengthy application and maintenance procedures (such as in India, where our application filed in 2006 is still pending). 

The concept (established in the US and other jurisdictions) of strict trademark use as a necessary requirement to obtain and maintain a trademark registration, although based on an “open market” concept, is also a challenge since the labels evolve and change and it is sometimes difficult to correlate product launch with mandatory procedures of local trademark offices.

 CEELM: Do you see a benefit in retaining international law firms to handle your IP matters, or are you comfortable/confident in retaining IP boutiques?

PW: One global counsel certainly provides a comfort, but it comes at huge costs since you need to pay for all coordination work that they provide. Only at a certain level does it make sense to go for this system. 

At CEDC Poland we use the IP boutique model at the moment. We usually instruct different counsel in different jurisdictions, based on our know-how and the counsel matrix that we developed over the years. I still believe that a choice of legal counsel should be based on the lawyer, and not firm-driven. We can still afford this type of approach. 

Obviously, the top international law firms usually provide  top quality service across different jurisdictions, so you still end up using them for your major international projects. The level of service integration achieved by some of the London-based firms is impressive. 

On the other side, New York elite firms still act through their referral firms when it comes to Poland or other CEE markets, and they can achieve very positive results. The only workable solution for us is to come out of a comfort zone, use know-how and experience and make the effort to search for the best solution in the circumstances instead of sticking to the regular, well-familiar choices of the past.  

 CEELM: Do you have lawyers working under you – in-house – who focus only on IP matters?

PW: Yes, we do. I have one experienced IP lawyer on my team, handling ongoing trademark maintenance as well as innovative projects from brand development to litigation. We work closely together as I need to stay on the top of all important IP projects, due to the high focus of our management on  IP-related issues. My IP colleague handles domestic maintenance work in-house and manages local counsel on different projects in different jurisdictions. Our “crown jewel” trademark – Zubrowka – is registered in different forms in more than 100 jurisdictions. There is a lot of a work at CEDC when it comes to trademarks!

 CEELM: What would you like to see – what would help you sleep better at night – from an IP perspective?

PW: Generally, I would like all those in the market place to focus on their own inventions and play fair. Only fair competition brings value for the business and the consumers. Unfortunately, there are still those “smart” individuals around whose main agenda is to build on others’ ideas and assets. This is why the legal function is crucial for any brand-orientated business. 

We need to protect IP assets continuously, otherwise we would end up with a diluted brand of no value meaning we can close the business. This is the general brief that we implement every day. When it comes to the legal environment, despite all the improvements made by the Polish legal system in recent years, I would be happy to see even faster proceedings along with more consistent, transparent, and predictable case-law. 

We also need more understanding from the authorities when it comes to protection of reputable trademarks, to find a proper balance between the interest of a reputable trademark holder and the interest of other market participants. Holders of reputable trademarks make huge investments in their brands to keep a high quality level and a sophisticated image. Due to different case law still in place, there is lack of certainty on the part of the holders of reputable trademarks as to the real borders of protection, including which trademark infringement cases can be successfully pursued.

Interview with Murat Vanlioglu, Head of Legal for Shell Companies in Turkey.

   

Murat Vanlioglu

 CEELM: How did you get to Shell? How did your career end up with you here?

MV: A head-hunter found me. It was just a coincidence. They were looking for a legal manager for Shell, and they found someone who “gave up” a couple of days later after she began to work, and so they urgently needed to find a counsel. They found me through a colleague that was working in their office who knew me from my previous career with Sabanci Holding. She called Sabanci and said “where’s Murat?”, and they were directed to my new office, stating that “I found you from this this this this,” and asked if I was interested in a new job opportunity. I said no, because at that time I was working for Toyota, and would be having an expat job in Brussels at Toyota’s center. But she said “don’t say no immediately – this is Shell.” And I said “I’ll consider it.” (laughing)

 CEELM: Did they bring you on as Head of Legal?

MV: Yes. I was recruited as Head of Legal in 2006 and worked as a Head of Legal at Toyota as well.  

 CEELM: Ok. And you were at Ernst & Young before that, right?

MV: Yes; I was in charge of Mergers & Acquisitions in particular cross-border deals as well as some privatization projects of state owned banks.  

 CEELM: You were at several banks in the beginning as well, right?

MV: Yes, I started my career with banks as an Execution and Bankruptcy attorney, collecting credit card debts. It was a challenging way to learn how a contract can be executed in real life. That period of my career taught me that without properly understanding the execution process of  contracts, a lawyer should not draft it. So I worked hard and spent long working hours during the first 3 or 4 years of my  career in banks. Indeed, I started from scratch, and began my career by bringing files from the archives of the court execution office.

 CEELM: Really?

MV: Yeah. In Pamuk Bank I first started to chase after credit card debts, then afterwards I went on dealing with commercial credits, bigger loans that were requiring liquidation of mortgages, and more complicated things. Then I said “this is enough – no more debt collection.” At that time there was a newspaper advertisement, and I applied. It was Toyota, and they hired me. I was the only one that never had any sponsor behind me. Out of the hundreds of applicants, they all had some connection with someone else, and I was the only one who has no connection with anyone.

 CEELM: You didn’t have a particular interest in the Oil & Gas industry starting out?

MV: Starting out, no.

 CEELM: Ok. Are there special challenges to that industry now?

MV: Yes. Different. Actually, before I was recruited, in the interview, the CEO of the company said, “it is too challenging.” And I said, “no, it’s not too challenging.  It’s a piece of cake. I am a lawyer, I can do anything, anywhere, and the legislation is almost the same, except some specific industry related issues.” And I was right. The primary laws are the same: corporate laws, commercial laws, and code of obligations are the same. What was different was the energy laws – and some different industrial practices. In the motor vehicle industry people hardly sue each other.  

 CEELM: You mean competitors?

MV: No, dealers! They have 50 or 60 dealers, those are indeed big investors, good businessmen, very reputable persons in their local areas, and they would feel ashamed to be in court. So you can sign any kind of deal – negotiated, of course, but you do everything through negotiation. I had just 10 litigation cases throughout my employment in Toyota. In the oil industry everybody sues each other.  (laughing).  It’s crazy. Dealers sign the contracts with a distribution company, and 5 minutes later another company offers a bit more, then the dealers break the contract they had just signed with you 5 minutes ago. Then we have to go to court. There are hundreds of cases like that. This is the world, completely different.

 CEELM: Okay. How would you describe your job, what you do?  I know that’s a general question, but what’s your job?

MV: Actually I am the country legal head. I do everything. From corporate, I’m the corporate secretary of the joint venture – I’m in charge of keeping everything in compliance with the law and regulations, and everything in accordance with the principles. 

 CEELM: The “joint ventures” are Shell and Turcas?

MV: Shell and Turcas.  Turcas is the minority shareholder/local partner. This is the downstream joint venture. There are also other joint ventures. This is the reason why I tend to describe myself as a joint ventures expert. I’ve been working with joint ventures starting with Toyota for almost 17, 18 years. In a joint venture all corporate issues, decisions, you name it, need to be governed in line with the joint venture agreement’s principles. Neither the shareholders nor the expat officers know the details of it.  The partners signed the contract with their lawyers, then they put it on the shelf. Therefore, when holding Board Meetings, or getting investment resolutions, I have to ensure full compliance with the joint venture agreement. For example, investments exceeding a  certain limit need to be approved by the Board. So if you miss that kind of thing it may create a conflict between the shareholders, which you never want. These kinds of things are important.

 CEELM: You must have the joint venture memorized by now.

MV: Not memorized, but it is a really good agreement, so you need to be careful about it. Other than this, I founded various joint ventures with different companies, for example for upstream organization, Shell established three joint ventures with a national oil company in Ankara, for an onshore unconventional project and two conventional deep water projects. It is important to know how to negotiate a JV agreement, where to look in the joint venture agreements. If you know the priorities and which provisions you need it is easier to conclude the agreement. Each party has different priorities, discussing them openly and finding mutual solutions to both parties’ needs indeed brings pretty quick deal closings. So I created that kind of value, in terms of negotiations with counter-parties.  

 CEELM: I see. You also oversee the litigation process, right?

MV: Sure. I am the head of the litigation process; I draw up the strategy and give priorities to my colleagues who are going to follow the case. After we agree on the framework, my colleagues follow up the case by themselves. There is full delegation and my colleagues get the full pride of the job they are doing. Sometimes, based on the peculiarity of the case, we hire external counsel to follow the case, but it is generally done in-house. Strategy is indeed important and sometimes you even need to challenge the expert barrister following the case.

Just an example. There was a decision from the Court of Istanbul about an inconvenient forum. The court decided that it was not authorized to hear the case. And then decided to send the docket to Bakirköy courts, which is about a kilometer away. The barrister at that time proposed not to appeal. He said, “it is just a matter of two kilometers away.” I said, “no, you should go to the Court of Appeal, because the justification of the award is very risky for us, and it may lead to us losing the main case in the future. By appealing we’ll lose a year, this is for sure. But its very likely that the decision of the court of first instance will be repealed by the Court of Appeal, and then we will have a strong ground to defend against the same judge.

 CEELM: This is another sort of general question: What do you like about working with Shell? 

MV: Shell is, first of all, an honest company. Honest, straight-forward, respectful of people. You are supposed to comply with the law and regulations, in particular those against corruption. For instance you cannot provide gifts to an officer, and you cannot accept gifts from someone else – you need to do your job with honesty and integrity.

 CEELM: That’s too bad.  No gifts for you. (laughing)

MV: No, it’s really good. It’s really good indeed. Sometimes people abuse it. So if you start accepting gifts – one porcelain cup, for example, as a new year’s gift, then it starts coming with a silver mug next year (laughs). And there’s no end to it. This principle of Shell is very good. Shell values people, Shell values diversity. What is important is that Shell values intelligence and opinion. So you are always free to speak your mind. You can challenge whatever your boss says. All employees feels that everybody is equal, you are free to speak your mind, you are invited to challenge, your are free to blow the whistle, and you are provided with equal opportunities to climb the career ladder.

 CEELM: And you are empowered to …

MV: … to speak your mind.  Even in front of the CEO of the group.

 CEELM:  And that’s not just an advertising slogan? You’re being honest with me?

MV: Absolutely. All employees know that if someone or management does something wrong, or does not follow Shell business principles and ethics, they have the right to blow the whistle and contact the business integrity department, the complaint will surely be investigated and consequences applied. A whistle-blower’s identity is always kept secret so he is never exposed. This creates trust with your employer. Honesty and integrity are always valued by Shell.

 CEELM: But even in terms of the working environment and culture, people are encouraged to challenge and think, and … interact.

MV: Yes, indeed people are encouraged to challenge. Also the organization is flat, rather than a vertical organization. So everyone is able to speak their minds. This is embedded in the Shell culture. This is the way I like it. I did not observe same thing with most of the companies unfortunately .

 CEELM: I was going to ask. You’ve worked enough other places. Do you think that’s relatively unusual about Shell? I mean in Turkey.

MV: (nodding head): I enjoy Shell. In Turkey this is also unique. Our culture is in-between East and West. Eastern company cultures are more hierarchical, more strict than our culture. You are from the West (gestures at me), and your culture is much more similar to what I am explaining here in Shell.  But some eastern companies are on the extreme. You are unable to speak your mind. It can be considered rude to speak in front of a senior person without getting permission and often only a senior guy can speak unless you are asked something. You would not feel valued under such a culture

 CEELM: And that filters down even to the Turkish offices?

MV: Everything, everything.

 CEELM: And the Shell model filters down here as well.

MV: Some Eastern companies prefer to hire average persons from average universities. Deliberately avoid hiring high fliers. Average people tend not to challenge but follow the standard path: Follow the rules, follow the bureaucracy, and do not challenge the boss. 

 CEELM: I see. So it’s the system that’s going to guide that, whereas at Shell it’s the personalities, intelligence.

MV: Exactly, exactly. Here, the intelligence of people is creating something. And in particular the higher levels of the Shell organization are full of high-fliers, they have bright ideas, lead people, motivate people. Leadership attributes are really important with Shell.  

 CEELM: When you started here, what was the most surprising thing you found here? Was there something about the culture, or the work?

MV: Comparing my past work experiences there is a full compliance culture here. I have seen in some companies that they prefer not to follow the rules sometimes. For example some companies didn’t allow the establishment of a union in their factories despite the fact that it is absolutely a legal right for employees. I also observed that some companies fired people just because those people were member of a union. Here in Shell such things never happen. Besides Shell actively supports employees to form a union and perform their rights and duties thereof. Therefore it is a completely different compliance culture and I appreciate it very much.

 CEELM: Ok. How would you describe your personal management style?

MV: Open, transparent and collaborative. And I always act with a commercial mindset. Ah, I can say it’s a round-table policy, first of all. Round-table is important. Round-table means everyone is equal and can speak their minds.

 CEELM: It sounds like the Monday morning meetings is an example of that.

MV: This is a good example indeed. Although it’s not a round table, it’s a rectangular table (laughing). So we have breakfast, freely speak everything, we make jokes. It’s a very warm environment. Even the post-graduate students working on training contract basis. Everybody is free to speak. So we discuss everything. We generally discuss day-to-day issues. Sometimes there are strategic issues, and we organize specific meetings to review those kinds of cases. But what is most important for me is  openness, transparency, and free communication. Open communication first builds bridges between people, people do not second-guess what you say. It develops a strong buy-in from people to the tasks that we are going to perform. It improves motivation and most importantly it helps development of young talents because they learn from others in an open environment.

 CEELM: If they have questions they can pop their head in and ask?

MV: Sure, yes. And they can challenge! Sometimes I am wrong. I do honestly accept their views. In law there is no senior view that is prevailing over others, there are different views, and arguments – which is natural. Therefore we discuss freely, sometimes I accept even the students’ point of view, which may be right rather than mine.  

 CEELM: Okay. I want to ask a few questions about how you work with external counsel. How do you decide what matters – you said most litigations you keep internal – what do you do with external counsel?

MV: The jobs that are not in our professional experience, such as criminal issues. We prefer to hire expert external lawyers in such matters.  

 CEELM: IP, Criminal Law, those are the main issues?

MV: Main areas. And some serious matters, I mean, there are some court cases that are high value cases.  I personally follow Administrative cases with government authorities.

 CEELM: I see. And how do you select those firms you work with, when that happens?

MV: Depending on the knowledge and experience in the industry. There are two law firms here certified by Shell.

 CEELM: Certified internationally, or …?

MV: Certified internationally, those we call “panel law firms.” We sometimes work with them for some global issues. But there are other lawyers, known in specific areas. For example, Professor Cevdet Yavuz is an expert in the code of obligations. Once a case comes to us related with his area, we consult with him. We generally take a written opinion from him, and then we establish our case based on the legal opinion. For commercial issues we go to another professor, for example Professor Hamdi Yasaman, who is very good in commercial cases.

 CEELM: So you generally have consulting professors, rather than law firms.

MV: It does not necessarily have to be professors; let’s say experts in a relevant area.

 CEELM: Individuals, not so much firms.

MV: Individual lawyer is much more important for me rather than the name of the law firm. In the end it is the individual who does the job, not the expensive firm.

 CEELM: When you hire laterally, when you bring lawyers on to your team, what do you look for more? Do you look for lawyers coming from in-house, maybe even in the Oil & Gas industry, or from law firms? What’s more important?

MV: It doesn’t matter. What we look for is honesty, integrity, collaboration, and working in harmony. Of course intelligence is important to learn and deliver quickly.

 CEELM: So does that mean an interview is more important for you than the resume?

MV: Yes. The interview is much more important. And in the interviews we give candidates a case study, where he reads something for 20 minutes, then there are questions out of the case study, so it gives the candidates legal background, ability to interpret things, his mindset and how to approach business issues. Then we can understand, this is a person we can work with.

Interview with Przemyslaw Witas, General Counsel at CEDC Poland.

   

Przemyslaw Witas

 CEELM: You’re the GC for CEDC in Poland. How much of your time is spent on IP matters?

PW: CEDC is a brand-oriented company, as is the entire Russian Standard Vodka group that we are a part of. Our brands make us unique player on what is a very competitive alcohol beverages market. This is the absolute must for me to spend time on the IP matters. They take from 30% to 60% of my time, depending on the brief. However, there are days when it is 100%. 

This is a very interesting development for me; I joined CEDC as the senior Corporate/M&A person. That was my main profile after many years at Clifford Chance. During recruitment, I was told that IP would be on my agenda, but initially it was not a priority, as we focused on building the in-house legal function from scratch. I joined CEDC, originally the distributor, in a transition time, as they were becoming more and more brand-oriented. CEDC was built through acquisitions, with key brands inherited from a state-owned company. When CEDC wanted to expand its business, including exports, it became clear thattrademark issues had not been attended to properly by the previous owner. This is when IP entered my agenda. 

I remember that after my first few months, management asked me to sort out the payment issue with the US IP counsel in New York. I got in touch with him and started to discuss different issues, and my eyes opened wider and wider. The conclusion was: There is a lot to do to protect our brands. Apparently, the cash flow opened the IP world for me. We reviewed relations with external IP counsel regarding our trademark portfolio in different jurisdictions. Shortly, we established an in-house IP function to handle issues from regular maintenance to ad hoc litigation. This is how my IP journey started and it continues. 

I do not have the comfort to attend to IP issues exclusively, but indeed, I spend a lot of time on IP, managing key projects. It is a good example that lawyers must be ready to learn new things all the time. It is a challenge, but an enjoyable one! 

 CEELM: Is Poland’s protection of trademarks fairly robust compared to other European markets?

PW: Yes, Poland definitely provides a robust system. The awareness of IP rights continues to grow among businesses, the courts, and other authorities. The relevant legal environment is in place. IP protection at the customs level works very well in Poland. There are both administrative and civil law regulations that provide all necessary protection if used professionally. 

On the civil law track, the Court for the Community Trademarks and Designs proceeds very efficiently, rendering fact-track and well-supported decisions, maintaining a unified approach. On the administrative law track,  Poland’s Patent Office proceeds relatively slowly, but there is also a lot of improvement in both the speed and the quality of its decisions – which are based on both Polish and EU case law.  

 CEELM: Do you see/expect any significant changes in IP practices, regulation, or legislation coming soon? 

PW: The European Commission prepared a large revision of the Trademark Directive and Trademark Regulation. When implemented, Poland would need to shift from the current system of the ex officio examination of the relative grounds for refusal of trademark protection to the system which is used by the EU trademark authority, the Office of Harmonization of Internal Market (OHIM). There would be no ex officio examination of relative grounds (just  absolute ones), and this kind of examination would be possible upon opposition or cancellation only. 

As far as national legislation is concerned, there is a plan to revise our main IP act – the Industrial Property Law of 2000. The legislative works are at an initial phase but the current guidelines suggest important changes, such as the long-awaited introduction of the so-called letters of consent, streamlining of the procedures at the Polish Patent Office, and improving the use of electronic communications with the Patent Office.

 CEELM: Have you had any particular problems registering or protecting CEDC’s trademarks, in Poland or anywhere else?

PW:  IP protection is dependent on the subjective interpretation of some general rules by the courts and authorities – and this is where some frustration comes from. The Patent Office tends to be more conservative, as its decisions are linked to a simple trademark similarity examination, while the civil law courts are more open to a market-orientated approach and the business context of trademark infringement. The common issue across different industries is that trademark owners’ expectations with regard to the scope of protection are wider than to the ones established under the court or authorities’ decisions. 

In recent years, the trademark authorities have tended to limit the scope of protection of registered trademarks. This concerns especially the complex, non-traditional trademarks consisting of various elements (e.g. word, figurative, three-dimensional). New conflicting trademarks are often found dissimilar  and oppositions are dismissed. This is not something specific for Poland, as it happens in other jurisdictions across Europe as well. 

As we have a significant international trademark portfolio, we also face some local issues in jurisdictions outside Poland. For example, the lack of publicly-used trademark databases maintained by local Patent Offices (a particular problem in Kazakhstan, for instance) or unusually lengthy application and maintenance procedures (such as in India, where our application filed in 2006 is still pending). 

The concept (established in the US and other jurisdictions) of strict trademark use as a necessary requirement to obtain and maintain a trademark registration, although based on an “open market” concept, is also a challenge since the labels evolve and change and it is sometimes difficult to correlate product launch with mandatory procedures of local trademark offices.

 CEELM: Do you see a benefit in retaining international law firms to handle your IP matters, or are you comfortable/confident in retaining IP boutiques?

PW: One global counsel certainly provides a comfort, but it comes at huge costs since you need to pay for all coordination work that they provide. Only at a certain level does it make sense to go for this system. 

At CEDC Poland we use the IP boutique model at the moment. We usually instruct different counsel in different jurisdictions, based on our know-how and the counsel matrix that we developed over the years. I still believe that a choice of legal counsel should be based on the lawyer, and not firm-driven. We can still afford this type of approach. 

Obviously, the top international law firms usually provide  top quality service across different jurisdictions, so you still end up using them for your major international projects. The level of service integration achieved by some of the London-based firms is impressive. 

On the other side, New York elite firms still act through their referral firms when it comes to Poland or other CEE markets, and they can achieve very positive results. The only workable solution for us is to come out of a comfort zone, use know-how and experience and make the effort to search for the best solution in the circumstances instead of sticking to the regular, well-familiar choices of the past.  

 CEELM: Do you have lawyers working under you – in-house – who focus only on IP matters?

PW: Yes, we do. I have one experienced IP lawyer on my team, handling ongoing trademark maintenance as well as innovative projects from brand development to litigation. We work closely together as I need to stay on the top of all important IP projects, due to the high focus of our management on  IP-related issues. My IP colleague handles domestic maintenance work in-house and manages local counsel on different projects in different jurisdictions. Our “crown jewel” trademark – Zubrowka – is registered in different forms in more than 100 jurisdictions. There is a lot of a work at CEDC when it comes to trademarks!

 CEELM: What would you like to see – what would help you sleep better at night – from an IP perspective?

PW: Generally, I would like all those in the market place to focus on their own inventions and play fair. Only fair competition brings value for the business and the consumers. Unfortunately, there are still those “smart” individuals around whose main agenda is to build on others’ ideas and assets. This is why the legal function is crucial for any brand-orientated business. 

We need to protect IP assets continuously, otherwise we would end up with a diluted brand of no value meaning we can close the business. This is the general brief that we implement every day. When it comes to the legal environment, despite all the improvements made by the Polish legal system in recent years, I would be happy to see even faster proceedings along with more consistent, transparent, and predictable case-law. 

We also need more understanding from the authorities when it comes to protection of reputable trademarks, to find a proper balance between the interest of a reputable trademark holder and the interest of other market participants. Holders of reputable trademarks make huge investments in their brands to keep a high quality level and a sophisticated image. Due to different case law still in place, there is lack of certainty on the part of the holders of reputable trademarks as to the real borders of protection, including which trademark infringement cases can be successfully pursued.

Poland is a party to all major international treaties concerning intellectual property, including the Paris Convention, Berne Convention, Madrid Agreement, the Patent Cooperation Treaty, and the European Patent Convention. Furthermore, Poland’s access to the European Union in 2004 extended the Community’s trademark and design system to Poland. All of the agreements mentioned above recognize Poland as a country with a level of IP protection that respects and complies with the European standards.

Regardless of the recent approach to the Unified Patent System, the Polish government has recognized how crucial  providing and maintaining appropriate solutions affecting an increase in innovation is for economic growth. Within the last few years, many steps have been taken and new ones approach on the horizon. The Polish government has started and continues several programs designed to assist small and medium entrepreneurs in developing innovative services and solutions. Special emphasis has been put on several areas of the economy creating special clusters, such as, for instance, an aviation cluster. In addition, a  “Patent Plus” program has been introduced, providing up to EUR 200,000 in state aid  to inventors and entrepreneurs wanting to commercialize and protect an article of intellectual property. Under this program, any new emerging creative mind may acquire a grant, which covers all steps involved in developing, building, testing, and protecting a new invention.

Improving the enforcement of IP rights is probably the most serious issue that Poland needs to resolve in the next few years. The major problem involves the scarcity of courts  specialized in IP. Cases which involve complicated IP matters such as patents are brought before random judges who often do not posses sufficient experience – if they have any at all – in litigation of issues involving IP law, let alone the technical skills to assess the object of the litigation. These situations lead often to scenarios where a judge deciding a particular case relies primarily on the opinion prepared by a court expert in the particular technological field. Experts, however, although experienced in the understanding of technical conditions of the invention, do not have knowledge of IP laws, which often results in biased and one-sided opinions. Thus, judge’s decisions are made based upon expert opinions that themselves contain only a partial understanding of the subject. 

As a result, the current system ends up putting IP owners at a great disadvantage. Results of litigated cases are difficult to predict in advance, even for experienced lawyers, and because of that risk IP owners tend to be hesitant in enforcing their rights in Poland. The sole exception is Community trademarks and designs, which are litigated in front of a specialized court in Warsaw. The speed of the proceedings and high quality of the verdicts issued by that court shows that Poland should consider establishing specialized courts for other forms of IP as well if it wants to promote innovators.

Another weakness is related to the low awareness of intellectual property rights among the public. However, this tends to slowly change. At the moment, scientists and entrepreneurs understand that IP is an extremely valuable asset that needs to be properly protected.    

By Marcin Fijalkowski, Partner, and Michal Pekala, Associate, Baker & McKenzie

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The Republic of Moldova, a former USSR country, became an independent state on August 27, 1991. Subsequently, the Republic of Moldova has become a member-state of the United Nations, a member of the Commonwealth of Independent States (“CIS”), and a full-fledged member of the international community. Currently, the Republic of Moldova promotes the EU integration vector in its external policy, and it initiated the EU Association Agreement on November 28, 2013.

Based on its international undertakings and for the purposes of better administration and application of the IP legislation, on September 13, 2004, the State Agency for Intellectual Rights Protection and the State Agency for Copyrights merged into one entity: The State Agency on Intellectual Property of the Republic of Moldova (“AGEPI”). AGEPI is vested with the right to control, register, supervise, and enforce compliance with the provisions of applicable IP legislation. In addition, AGEPI represents Moldova in its relations within the international treaties it is party to, as well as promoting and supervising the issuing of new IP legislation and any necessary changes to relevant IP laws.

Since AGEPI’s establishment, the following key IP legislation has been passed:

1. The Law on Protection of Industrial Designs no 161-XVI dated July 12, 2007: The framework piece of legislation that governs the procedure of creation, criteria of novelty, registration, and protection of industrial designs;

2. The Law on the Protection of Trademarks no 38-XVI dated February 29, 2008: Providing for the criteria of existence, novelty, and the moment of apparition of a right over a trademark, their registration, the period of protection, as well as rights and obligations of a trademark owner and third parties;

3. The Law on the Protection of Inventions no 50-XVI dated March 7, 2008: Providing the criteria an invention has to comply with to be protected, the procedure, terms and conditions of registration of an invention, as well as the limits of its protection; and

4. The Law on Copyright and Related Rights no 139, dated July 2, 2010 (the most recently approved law): Transposing the provisions of EU directives governing copyright protection.

The registration of an IP right may be done personally by the IP-right holder only if he/she/it is a resident of the Republic of Moldova. Applicants who are non-residents (i.e. foreign individuals or legal entities) may only register IP rights via authorized Moldovan IP agents.  The filing of registration applications is a standardized and transparent procedure (the applicant uses template forms approved and made available by AGEPI, both in Romanian and English languages). Filing may also be done electronically, using a digital signature. All decisions issued by AGEPI in such procedures are published in the Official Journal of AGEPI, which is also available electronically on AGEPI’s official webpage.

It is important to note that the number of requests for registration and, consequently, protection of IP rights has been fairly constant every year so far.  Thus, in 2012, a total of 6084 requests for registration of IP rights were filed with AGEPI, in 2011 there were a total of 6391 requests, in 2010 there were 6111 requests, and so on.  Moreover, almost two-thirds of these requests came from international IP-rights holders, meaning that international companies are very interested in seeking to register and protect their IP rights in the Republic of Moldova.    

By Luiza Gijga, Head of IT/IP and Roman Ivanov, Associate, Vernon|David

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In the 21st century, significant resources are invested in developing and maintaining a high standard of products and services related to information technology. In the ever-changing IT sector, companies that are involved in developing new competitive software solutions seek new ways not only to maintain the quality of their products but also to boost their competitiveness. However, the on-going threat of copyright infringement through software piracy often impedes fast development and healthy competition, as revenues are lost and additional resources are spent in tackling with the issue.

Current Status of Software Piracy in Montenegro 

According to the most recent International Data Corporation study of worldwide software piracy rates, the software piracy rate in Montenegro is a high 79%. As a result, Montenegro faces a problem causing direct impact on its GDP, tax revenues, and overall compliance with EU IP legislation. However, this is not to say that no action has been taken towards raising awareness of the importance of using legal software and the impact of legal use on the country’s economy. Joint actions taken by global software manufacturers, independent organizations, and state authorities are regularly organized across the country to draw the attention of both the public and the private sectors to the benefits that could come with the decrease of software piracy. 

Most powerful incentives for tackling software piracy issues stem from the effects of the piracy rate and its impact on employment rates (in both IT and non-IT sectors), tax revenues, and the overall GDP. In other words, the higher the piracy rate, the lower the opportunities for new employment, IT generated taxes, and overall GDP contributions. Inversely, the lower the piracy rates, the more new jobs will be created in the IT industry or related sectors, IT-generated tax revenues will grow, and ultimately the state budget will grow with it.

Continuous actions are also oriented towards educating people that authored works of intellectual property such as computer software are not things that can be used freely, but remain protected property, which entails among other things a right to financial profit. 

IP Legislation and the Solutions It Provides for Fighting Software Piracy

In Montenegro, a set of IP-specific and other laws provide mechanisms for fighting software piracy. Therefore, the Law on Copyright and Related Rights provides for general protection of works of authorship including computer programs and software. The Law on the Enforcement of Intellectual Property Rights appoints an authority to review the circulation of copyrighted works,  including computer programs and software. The Montenegrin Penal Code addresses infringement of all intellectual property rights and provides for strict criminal penalties in cases of such infringement. Finally, the Law on Optical Disks prescribes mandatory conditions that need to be fulfilled in order to be able to reproduce optical discs for commercial purposes, and mandates the  surveillance of circulation of optical discs.

However, even though most of these laws are to a great extent harmonized with EU legislation, there is always room for improvement. Hence, when implementing provisions of the law that provide mechanisms for protecting IP rights over computer programs and software, practice has shown that legislators have yet to provide a complete set of solutions to resolve all problems 

Conclusion

According to studies performed in the past year, widespread circulation of pirated optical media and use of pirated software products remains prevalent. Even though enforcement is slowly improving as relevant state bodies undergo trainings to provide them with the necessary knowledge of how to recognize and resolve these problems, the judiciary system remains relatively slow in processing IP cases and consequently in awarding the fines necessary to deter further IP infringement.

By Tamara Bubalo, Associate, Karanovic/Nikolic

This Article was originally published in Issue 1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.