Category: Austria

On 28 November 2022, the European Commission published its proposals for a Regulation amending Community Design Regulation No 2/2006 as well as a proposal for an amendment of the Community Design Directive.

The revisions aim to ensure that design protection is fit for purpose in the digital age and more accessible and efficient for individual designers, SMEs and design-intensive industries in terms of lower costs and less complexity, increased speed, greater predictability and legal certainty.

Proposals for changes in the Community Design Regulation
With the planned amendment of the CDR, we highlight content that is to be revised or supplemented as follows:

• Terminology update: The outdated term “Registered Community Designs” or “RCDs” is replaced by the modern term “Registered EU Design” (“REUDs”), thereby also aligning the terminology with both the Lisbon Treaty and the EU Trademark Regulation.
  Definitions of “design” and “product”: These definitions have been updated, clarified and broadened to render them future proof in the light of technological advancement, in particular to cover new technological designs, which are not embodied in physical products. The new definition of a “design” now includes movement, transition or any other sort of animation of features that can contribute to the appearance of designs, in particular those not embodied in a physical object. As for a “product”, the new definition means “any industrial or handicraft item other than computer programs, regardless of whether it is embodied in a physical object or materialises in a digital form”. This will provide for design protection for 3D print models or for virtual designs in the metaverse.
• Object of protection: To increase legal certainty with regard to the “visibility requirement”, it is proposed that design protection should be granted (only) for those features of appearance which are visibly represented in the application for EU design registration.
• Limitation of the rights conferred: The list of permitted uses will be enlarged by the addition of referential use, criticism and parody.
• Repair clause: The transitional “repair clause”, which is currently contained in Art 110 CDR, is to be converted into a permanent provision. The scope of application of the repair clause will be restricted to component parts whose appearance is dependent on the appearance of the complex product concerned and it should be made explicit that the repair clause can be used as a defence against infringement claims only if consumers are duly informed of the origin of the product to be used for repairing the complex product.
• Design notice: A “D” in the circle will be made available as an indication of a design registration.
  Specification on requirements of design representation: It will be possible to adopt implementing acts in which details will be specified that must be included in the application (including the updating of the standards of design representation) of a registered EU design in order to make it suitable for the digital age.
• No filing of specimen: Given the negligible number of specimens filed, the option of filing a specimen instead of a representation of the design will be abolished.
• Multiple applications: Multiple applications will be possible irrespective of the so-called “unity of class” requirement, thus without such having to be limited to products of the same Locarno class.

Reduction of the level of the application fees.

Proposals for changes in the Community Design Directive
In parallel to the proposals regarding an amended Community Design Regulation, the Commission also suggested a recast of the Directive on the legal protection of designs. This concerns essentially the following points:

• Adaptation of substantive provisions and procedural rules to the amendments proposed for the CDR.
• National design protection through registration only: The discretion for EU Member States to grant design protection at national level not only in registered, but also in unregistered form, will be removed. However, the protection for unregistered EU design rights remains in place.
• Exhaustive statement of grounds for refusal: The grounds for non-registrability of EU designs should be set out in an exhaustive manner, ensuring that the procedure for obtaining a registered design presents the minimum cost and difficulty to applicants, as with the EUIPO.
• Mandatory grounds for invalidity: Previously optional grounds for invalidity (e.g. use of a distinctive sign in a later design or if the design constitutes an unauthorised use of a copyrighted work) will be converted into mandatory grounds for invalidity, which must now also be provided for on a national level. This will enhance predictability and consistency with the EU design system (where those grounds were mandatory before).

Outlook
The two proposals will now be transmitted to the European Parliament and the Council for adoption under the ordinary legislative procedure. When the new proposals are adopted, the new rules of the Design Directive will be transposed into the national law within two years. As regards the Community Design Regulation, part of the changes will become applicable within three months after its entry into force, and the rest when the delegated and implementing acts are enacted (18 months after entry into force). Therefore, we will definitely hear more about the upcoming changes in European design law in 2023.

By Birgit Kapeller-Hirsch, Attorney at Law, Schoenherr

On December 28, 2022, Baker McKenzie announced that Accenture’s takeover of ARZ Allgemeines Rechenzentrum (reported by CEE Legal Matters on June 10, 2022) had closed.

According to Baker McKenzie, “the takeover of ARZ (including its entire staff) will expand Accenture’s cloud-based platform-as-a-service offering for banks, ranging from core banking services via online banking services to regulatory services for bank customers across Europe.”

As previously reported, Schoenherr had advised the sellers on the sale of ARZ Allgemeines Rechenzentrum to Accenture, while Baker McKenzie had advised the buyer.

ARZ is a technology service provider focused on the banking sector in Austria, with offices in Vienna and Innsbruck. The company was previously majority-owned by the Volksbanken group and the Hypobanken sector, as well as other private banks.

Accenture is a professional services company providing services in areas including digital, cloud, and security in more than 120 countries.

The Baker McKenzie updated team included Austria-based Partners Gerhard Hermann, Lukas Feiler, Philipp Maier, and Andreas Traugott, Counsels Claudia Fochtmann-Tischler and Robert Wippel, Associates Teresa Stuttler, Alexander Hofmann, Alissa Forstner, Balint Ozsvar, Victoria Fink, Andrea Haiden, Nina Lenhard, and Katerina Schenkova, as well as lawyers from the firm’s German offices.

The Schoenherr team was led by Partner Sascha Hoedl and included Associates Joseph Moser and Stefan Dietrich.

Dorda, working with Loyens & Loeff, has advised Croma-Pharma on entering into a business combination agreement with the European Healthcare Acquisition & Growth Company. Schoenherr, working with Sullivan & Cromwell and Houthoff, advised EHC.

The transaction remains contingent on regulatory approval.

Croma-Pharma is an Austria-based family-owned company operating in the fields of minimally invasive aesthetics and reconstructive medicine. With 550 employees, 13 subsidiaries in Europe and Brazil, two joint ventures, and 60 exclusive export partners, it distributes its products in 80 markets worldwide and operates as a contract manufacturer in ophthalmology and orthopedics.

The European Healthcare Acquisition & Growth Company is a Dutch special-purpose acquisition company listed on Euronext Amsterdam.

According to Dorda, “through this transaction, Croma will be indirectly listed on Euronext Amsterdam and thus gain access to the capital market, which is important for the financing of the further growth course.”

Dorda’s team included Partners Juergen Kittel and Christoph Brogyanyi, Attorney Clemens Burian, and Associates Philipp Partan and Isabel Maurer.

Schoenherr’s team included Partner Sascha Hoedl, Attorney Joseph Moser, and Associate Gabor Kulcsar.

Did You Know that, according to the Activity Rankings function of the CEELMDirect website, E+H Partner Ulrike Sehrschoen has worked on eight reported client matters in Austria in 2022 – more than any other lawyer? It’s been a good year for E+H, as Sehrschoen’s chief competition for the end-of-year title comes from a colleague, E+H Partner Judith Feldner, who has worked on seven reported client matters this year.

But others are still very much in the running as well. CMS Partner Alexander Rakosi has worked on six reported Austrian deals this year, as have Schoenherr Partners Christoph Moser and Thomas Kulnigg and Brandl Talos Partner Roman Rericha. Cerha Hempel Partner Heinrich Foglar-Deinhardstein, Herbst Kinsky Partner Philipp Kinsky, and E+H Partner Philipp Schrader, all of whom have worked on five reported deals in 2022, are also in the running.

Want to see which matters these lawyers have worked on this year, or which other lawyers have been particularly active in Austria in 2022? Visit CEELMDirect.com, the world’s only truly dynamic legal directory, and find out!

Bpv Huegel has advised Immofinanz on increasing its shareholding in S IMMO from CPI Property Group for EUR 337.5 million. Wolf Theiss advised CPI Property Group.

Immofinanz is a commercial real estate group whose activities are focused on the office and retail segments in Austria, Germany, Poland, Czech Republic, Slovakia, Hungary, Romania, and the Adriatic region. The real estate portfolio has a value of approximately EUR 5.5 billion and covers 260 properties.

According to Bpv Huegel, Immofinanz now has a controlling stake in S IMMO, standing at “50% plus one share. The transaction will be financed through a long-term credit facility provided to Immofinanz by CPIPG.”

Bpv Huegel’s team included Co-Managing Partner Christoph Nauer, Partners Ingo Braun, Nicolas Wolski, Daniel Reiter, and Jasmin Slavik, and Attorney at Law Roland Juill.

Wolf Theiss’ team included Partners Florian Kusznier and Claus Schneider.

Dorda, working with Bird & Bird, has advised Nosto on its acquisition of Findologic Gesellschaft. Schoenherr, working with Roschier, advised the shareholders of Findologic.

“With Findologic’s extensive footprint in the Shopware ecosystem, this acquisition reaffirms Nosto’s longstanding commitment to the global e-commerce platform, making it the most comprehensive commerce experience solution in the online retail technology ecosystem,” Schoenherr informed. “The transaction was closed on December 15, 2022.”

Nosto is a Finnish e-commerce company that provides an AI-powered commerce experience platform and uses shopper behavioral data.

Findologic is an Austrian e-commerce software provider operating in Germany, Austria, and Switzerland.

The Schoenherr team was led by Partner Thomas Kulnigg and included Partners Michael Woller and Miriam Simsa, Counsel Veronika Wolfbauer, and Associates Clemens Pretscher, Maximilian Czernin, and Alexander Pabst.

The Dorda team was led by Partner Christian Ritschka and included Partners Bernhard Muller, Bernhard Rieder, and Heinrich Kuhnert, Counsel Andreas Seling, Attorneys-at-Law Alexandra Ciarnau, Sarah Plasser, Katrin Antl, Magdalena Nitsche, Julia Sophie Haumer-Moerzinger, and Florina Thenmayer, Associates Julia Huber and Felix Zopf, and Paralegals Mirko Marjanovic, Emina Dedic, Philipp Proske, and Paul Traar.

The amendment to the Austrian Copyright Act introduces a whole range of new provisions on copyright contract law, strengthening the position of authors and performers.

In our first Legal Insight (“Austria: The (new) Copyright Contract Law”) we provided some background information and an overview. In our second and third Legal Insights, we introduced the new remuneration provisions (“Austria: The (new) copyright remuneration rules for authors and performers”) and the transparency obligation (“Austria: The (new) copyright transparency obligation”), which are based on the DSM Directive. We continued with provisions additionally adopted from the German Copyright Act, starting with the transfer of rights by the purpose of the contract (“Austria: The (new) transfer of rights by purpose in copyright contract law”).Now it’s time for the fifth and final Legal Insight of this series about unknown exploitation forms (Section 24c para 2 and 3 Austrian Copyright Act; Section 31a German Copyright Act) and the right of second exploitation (Section 31a Austrian Copyright Act; Section 40d German Copyright Act):

New provision on unknown exploitation forms (Section 24c para 2 and 3 Austrian Copyright Act)

To protect the author, the provision limits the possibilities of granting rights for as yet unknown forms of exploitation (since the author cannot foresee the economic relevance at the time such rights are granted). As a reminder, a form of exploitation describes the scope and “field of use” of exploitation rights. Accordingly, a contract granting right to unknown exploitation forms must be in writing and the author has a right of revocation that cannot be waived in advance.

What is unknown?

Whether a type of exploitation is known is not only determined by the fact that the technical possibilities for it exist, but also by the economic relevance. New forms of exploitation usually come along together with technical revolutions and ground-breaking inventions that would happen frequently, but not every day. Therefore, unknown forms of exploitation are those that may be assumed by technical experts but are not known to the average author or the general public.

Written form requirement

Written form is required for the granting of rights to unknown forms of exploitation. This means that, in principle, a handwritten signature or qualified electronic signature is required from both parties.

Revocation right
In addition, the author has a right to revoke the grant of rights at any time insofar as it relates to unknown forms of exploitation. Such a right cannot be waived in advance. This is intended to give the author the opportunity to reconsider their earlier decision as soon as the new form of exploitation has become known.

Naturally, the addressee of this revocation will initially be the author’s contractual partner. If the contractual partner has permissibly transferred the rights, the author may revoke the agreement with the acquirer. Alternatively, they may continue to adhere to their contractual partner, because authors are not obliged to follow a chain of rights transfers. The revocation leads to an ex nunc loss of the rights granted in relation to the new forms of exploitation.

However, the author’s right of revocation will expire three months after the contractual partner has sent a notification of the intended commencement of a new form of exploitation to the author (at the last known address). Thus, the contractual partner may force the author to decide whether to revoke or not.

In the absence of notification, the right of revocation remains in force and there is a risk for the licensee that at some point the author may revoke the rights.

However, there are several exceptions where there is no right of revocation:

• cinematographic works or works used for the production of a cinematographic work (e.g. screenplay, film music);
• subordinate contributions;
• works created within the scope of an employment relationship;
• if separate additional reasonable remuneration for the new form of exploitation has been agreed upon;
• computer programs.

Applicability

The provision is only applicable to contracts concluded after 31 December 2021 and only in an author/rightsholder relation (thus not between rightsholders).

Right of second exploitation (Section 31a Austrian Copyright Act)
The provision stipulates that exclusive rights will be “converted” into non-exclusive rights after 15 years, if the exclusive rights were granted for a lump sum payment. This should give the author the chance to exploit the work again after 15 years.

Lump sum payment

A lump sum payment is a payment that is not linked to the duration of use, the intensity of use or the hoped-for or subsequently achieved success of use. It is irrelevant whether such lump sum remuneration is paid in one lump sum or in instalments.

Conversion and deviating agreement

The secondary exploitation right arises automatically after 15 years if the conditions are met. After 15 years, the exclusive licence is converted automatically into a non-exclusive licence. Sublicences should remain in force, but must consequently be converted into non-exclusive sublicences if they had been exclusive.

At the earliest five years after the beginning of the 15-year period, the contracting parties can extend the exclusivity to the entire duration of the granting of the right of use. However, this must be done in writing.

Applicability

The secondary exploitation right is only available to the author and their heirs (not to other right holders) and is only to be applied to contracts concluded after 31 December 2021. It can be assumed that the right can be waived, although the intention of the legislator in this respect cannot be clearly interpreted from the provision.

Irrespective of this, the secondary exploitation right does not apply in the following cases:

• subordinate contributions;
• works created within the scope of an employment relationship;
• works created to be used as trademarks, design and other sign (e.g. company names), whether registered or not;
• works that are not to be published or disclosed to third parties (e.g. internal expert opinions);
• computer programs;
• commercially produced cinematographic works4 and performances for cinematographic works.

Practical advice for licensees

In the era of the metaverse, AI and NFTs, new ways to exploit copyright works are appearing more and more frequently. It is therefore advisable to state in the licence agreement that rights to yet unknown forms of exploitation are granted as well. In addition, it should be borne in mind that such contracts are signed by both parties. The right of revocation remains as a risk unless one of the exceptions applies.

With regard to the right of second exploitation, it is advisable – if the work to be licensed does not already fall under the above-mentioned exceptions – to consider whether the conversion of the right is indeed desired by the parties. If this is not the case, the applicability of the provision should be excluded in the contract. If the right is not waived or if it turns out that it cannot be waived, the licensee should keep an eye on the five-year period and may afterwards try to obtain written confirmation from the author that the exclusivity is extended to the entire duration of the contract.

By Dominik Hofmarcher, Partner, and Roland Vesenmayer, Associate,  Schoenherr

Former Taylor Wessing Partner Matthias Noedl has returned to Cerha Hempel as a Senior Counsel in the firm’s Real Estate & Construction department.

Matthias Noedl, a real estate law specialist, previously spent almost nine years with Cerha Hempel, between 2013 and 2022, before leaving to join Taylor Wessing as a Partner, in February 2022. Prior to his original engagement with Cerha Hempel, he spent two years with Brand and, earlier, over two years as a Legal Counsel with Strabag, between 2008 and 2011. He began his career as a Lawyer with Pflaum Karlberger Wiener Opetnik in 2007.

“The return of Matthias Noedl has greatly enriched our firm and our team,” Cerha Hempel Partner and Head of Real Estate & Construction Peter Vcelouch commented.

Binder Groesswang has advises Mutares on its acquisition of Steyr Motors Betriebs and Steyr Motors Immo from Thales. Schoenherr reportedly advised Thales.

“With the acquisition, Mutares wants to further expand its presence in Austria and expand its presence in the engineering and technology segment,” Binder Groesswang reported. “The acquisition of Steyr Motors is the second buy-side deal from the recently opened Vienna office.”

Steyr Motors Betriebs is an Austrian company specializing in the production of diesel engines, including for military vehicles and locomotives.

Mutares is a Munich-based private equity investor that focuses on the takeover of parts of large corporations and medium-sized companies.

The Thales Group is a Paris-based publicly traded defense company with activities in military technology, aerospace, security, and transport.

The Binder Groesswang team was led by Partner Thomas Schirmer and Senior Associate Felix Fuith and included Partners Clemens Willvonseder and Johannes Barbist, Counsel Hellmut Buchroithner, Attorneys-at-Law Barbara Gangl and Regina Kroell, and Associate Christopher Marchel.

The Mutares in-house team included General Counsel Jan Thoele and Head of Tax Denis Ahluwalia.

In a recent decision, the Austrian Supreme Administrative Court (SAC) addressed party status and the requirements for an eligible complaint by recognised environmental organisations (EOs) in permit procedures under water law.

Facts
The present case concerns the redesign of the bank of the River Mur near the Augarten (a public park) in Graz, Styria (the Augarten lowering). In January 2019, the water law permit was granted for the project. EOs were not included in this proceeding. Due to the denial of the suspensive effect, the project was immediately implemented and completed in 2020.

Several EOs appealed against the permit to the Styrian Administrative Court, arguing that they were entitled to participate in approval procedures for projects that could have an impact on the state of the water body according to paragraph 104a of the Water Rights Act (WRA) and to file a complaint. In addition, the EOs claimed that the Augarten lowering connects with the Mur power plant. Therefore, an environmental impact assessment (EIA) was required.

The court rejected all complaints for lack of party status. The court stated that while EOs did have the right to participate in and contest water law proceedings (as far as EU environmental law is concerned) the right to assert a violation of paragraph 104a of the WRA is not available to EOs if the (possible) negative effects of a project on the water status can be “excluded from the outset”. As this was the case here, they could not file a complaint. Furthermore, the court assumed that there was no factual connection between the Augarten lowering and the Mur power plant. Therefore, an appeal by EOs on the EIA issue was not admissible.

Two EOs appealed against the decision of the court to the SAC, which overturned the court’s decision.

Decision
The SAC has in fact already dealt with the Augarten lowering in the past from the point of view of nature conservation law. According to administrative law, all necessary permits must be obtained for a project under the respective substantive laws (ie, cumulation principle).

Therefore, the SAC now also had to deal with an appeal against the decision of the water law authority regarding the same project. In this decision the following pronouncements are examined in more detail.

Rights of EOs under WRA
Following the judgment of the ECJ in the Protectcase, EOs were granted participation and challenge rights in connection with procedures carried out in the implementation of the Water Framework Directive (WFD). In the present case, the prohibition of deterioration of the WFD is particularly relevant and was implemented in paragraphs 30a et seq and 104a WRA. Paragraph 104a WRA allows an exception to the prohibition of deterioration under certain (strict) circumstances.

Derived from EU case law, the WRA was amended and EOs therefore have:

• the right to participate in the water law proceeding to prevent a possible violation of the obligation of paragraph 104a of the WRA; and
• the right to appeal to the Administrative Court against decisions in order to assert a possible violation of the obligation under paragraph 104a of the WRA.

In the present decision, the SAC dealt, for the first time, with the requirements for an eligible complaint by EOs:

• The SAC stated that EOs are limited to claiming a possible violation of paragraph 104a of the WRA (limited right of appeal). The possibility of appeal does not depend on a substantive assessment of the project by the authority (eg, whether it is assumed to have an impact on the status of the water body). Rather, this assessment is the subject of the appeal procedure and its substantive decision.
• Thereafter, the SAC addressed the fact that, in the case of an appeal, the (limited) allowance of the appeal and not the party status of EOs in the administrative procedure is to be examined.
• Finally, the SAC held that EOs must refer to paragraph 104a of the WRA in a complaint and submit why they assume that a project violates this provision.

As a result, because the provision is derived from the WFD, EOs have party status and the right to file complaints in all water law proceedings in which the status of water bodies may be affected. This was also the intention of the legislator. In the explanatory notes to the amendment, the legislator stated that even in cases where significant negative impacts on water status can be excluded, an EO has the right to appeal against decisions regarding projects with impacts on water status, which may violate the obligation under paragraph 104a of the WRA.

In this respect, the SAC clarified the provision on the party status of EOs under the WRA and the requirements imposed on EOs. Incidentally, the SAC denied the EOs’ right to appeal. The EOs did not meet those requirements because they did not state why the Augarten lowering would violate the provision.

Right of appeal of EOs regarding EIA obligation
According to the EIA Act, a determination procedure can be carried out before the EIA Authority as to whether an EIA must be performed for a project. This determination procedure can be requested by the project applicant, a participating authority, the environmental attorney or a sitting municipality. EOs can challenge a determination decision, but cannot themselves apply for a determination procedure.

In its earlier rulings, the SAC had already stated that the “public concerned” must be granted party status in the respective approval procedure (other than an EIA determination procedure) to be able to raise a possible EIA obligation for a project. This right is derived from article 9 (3) of the Aarhus Convention in conjunction with article 47 of the Charter of Fundamental Rights of the European Union (CFR).

In the present decision, the SAC stated that this must also apply in cases under water law. EOs, as the “public concerned” within the meaning of the EIA Directive, must have the opportunity to argue that a project is subject to an EIA. This party status is limited to the assertion of the competence of the respective approval authority.

However, EOs must not simply claim that an EIA is required but must demonstrate that it is required as far as possible. According to the SAC, the argument that there was a connection with the Mur power plant was such a conceivably substantiated presentation of the EIA obligation.

Whether there is actually an obligation to carry out an EIA for the Augarten lowering was not the subject of the SAC’s ruling and must now be determined by the Administrative Court.

Comment
The Augarten Bay is a project that has already been implemented. Due to the cancellation of the water law permit by the SAC, the bay is in an uncertain legal position. It is feasible that the project will be approved again, but various new conditions could be imposed. However, another possibility is that the project must be deconstructed if a new permit or an EIA permit cannot be issued.

In any case, it will probably be some time before the final decision is made. Should it turn out that there is an EIA obligation, a typically lengthy and costly procedure is to be expected. However, due to the concentration effect, an EIA permit replaces all other permits that would otherwise have to be obtained.

But that is of no use if the project has already been subject to various permitting proceedings. As this decision of the SAC shows, EOs are now party to many permitting proceedings. They can raise various objections and drag out the proceedings by filing appeals. The present decision highlights the potential for carryover by showing that the EOs did not even have reasoned arguments why the project would violate the provisions of the WRA.

These developments overshadow the benefits of conducting various permitting procedures on a normally smaller scale compared to EIA procedures.

The fact that EOs are also entitled to request a determination of an EIA obligation in the substantive procedure means that, in many cases, there is almost no way around it. As a result, project applicants should probably be advised to carry out an extensive EIA determination procedure to exclude an EIA obligation and thereby counteract appeals by EOs that delay the procedure.

However, all this only leads to even longer procedural durations. For climate protection projects, which are needed today more than ever, this is not an acceptable circumstance.

It remains to be seen whether the measures planned at Eu and national leve1 to accelerate procedures for energy transition projects will have an effect, or whether the measures will have to reckon with many more SAC decisions.

By Sarah Wolf, Jutta Mayer, Associates,  Schoenherr