Category: Austria

Have you ever wondered whether you can modify a registered community design (“RCD”) that is challenged by an application for declaration of invalidity by removing certain prohibited design elements to maintain the registration?

Well, under Article 25 (6) of the Community Design Regulation (“CDR”) you can. An RCD that is declared invalid because it is found to contain a distinctive sign (like a registered trademark) can be maintained in an amended form provided three prerequisites are met: (i) this is requested in a corresponding application; (ii) the amended design fulfils the general protection requirements (e.g. individual character and novelty); and (iii) the amended design is identical to the original (in a design law sense, meaning the designs must not differ from each other in more than insignificant details).

A recent decision by the General Court has given us a heads-up on this topic and urged us to take a closer look at the provision. In certain cases, knowing about this option can lead to great benefits.

Background: invalidity of an RCD containing a registered trademark?

In the case concerned, the proprietor of the European Union trademark registration for the word PIANEGONDA filed an application for declaration of invalidity against an RCD because this mark was used in the RCD. It was registered for a pendant in the shape of an elongated heart characterised by an engraving of the word PIANEGONDA in capital letters on the right side of the front part.

Pursuant to Article 25 (1) (e) CDR, a Community design may be declared invalid if a distinctive sign is used in a subsequent design and Community law or the law of the Member State governing that sign confers on the rightholder of the sign the right to prohibit such use.

Potential solution: application for maintenance in an amended form

During the invalidity proceedings, the design owner requested that the RCD be maintained in an amended form, namely without the engraving of the word PIANEGONDA.

While the application for declaration of invalidity of the RCD was granted, the GC also granted the design owner’s application for maintaining the RCD in an amended form pursuant to Article 25 (6) CDR. This provision provides that an RCD which has been declared invalid pursuant to Article (1) (b) (i.e. lack of fulfilment of protection requirements), (e) (i.e. use of a distinctive sign), (f) (i.e. the design constitutes an unauthorised use of a copyright-protected work) or (g) (i.e. the design constitutes badges, emblems and escutcheons) may be maintained in an amended form, if in that form it complies with the requirements for protection and the identity of the design is retained (which is why this solution will mostly apply if the invalidity is limited to insignificant details of the design). “Maintenance” in an amended form may include registration accompanied by a partial disclaimer by the holder of the RCD or entry in the register of a court decision or a decision by the Office declaring the partial invalidity of the RCD.

Furthermore, in order to claim the invalidity of the amended design based on lack of individual character, for example, a further application for declaration of invalidity would have to be submitted to the Invalidity Division of the EUIPO, which is competent to decide on its merits.

Conclusion

A provision providing for the possibility to amend an invalid RCD in order to maintain the registration could lead to unjustified amendments of non-protectable RCDs, which is why it can only be applied in exceptional cases. However, provided the amended form of an invalid design fulfils all the required criteria, a corresponding application during pending invalidity proceedings might be the way to save the registration of a design.

By Birgit Hirsch, Attorney at Law, Schoenherr

An important case before the ECJ that could have major legislative implications for Austria, a draft law regulating whistleblowing, and a major data center acquisition – the hottest topics in Austria right now, according to Baker McKenzie Partner Lukas Feiler.

“This June saw an interesting case make its way to the ECJ – a case that could have significant legal implications, based on how it is resolved,” Feiler begins. As he reports, the case concerns the “country of origin principle and the extent to which member states can regulate online platforms that are based in another member state. We have been representing two of the three online platforms that pled their case before the Austrian Administrative Supreme Court, before being diverted to the ECJ,” Feiler explains.

“This case raises two interesting questions,” Feiler continues. “The first one is whether, under the country of origin principle of the EU e-Commerce Directive, a member state is in a position to adopt laws that regulate entire categories of online platforms that are established in another EU member state,” he reports. The other question is “more of a procedural one, yet still highly relevant.” According to Feiler, if a member state finds itself in a position to regulate an online platform established in another EU member state (the “country of origin”), the EU e-Commerce Directive requires – even in cases of urgency – that the country of origin is notified in the shortest possible time. The question for the ECJ to answer is whether a violation of this procedural requirement renders the respective national legislation inapplicable. “Many EU members are very active when it comes to regulating international online platforms; however, notification requirements under EU law are often not complied with,” Feiler explains.

Furthermore, Feiler reports that Austria is in the process of implementing the Whistleblowing Directive, but that it is “very much behind the curve here. The current draft law is, more or less, a minimal implementation of the directive itself.” Feiler stresses that a major question here is to what extent will the “law be limited to violations of EU law or whether it will cover compliance violations more broadly.”

Finally, Feiler reports a major transaction currently ongoing in Austria. “In what is probably the largest outsourcing deal in the last five or ten years, the ARZ data center – used by two of the largest Austrian banks as well as a number of smaller players in the financial services industry – is being sold to Accenture,” he reports. “We have been working on behalf of Accenture on the acquisition as well as negotiating new services agreements. This deal is quite important given the implications for the landscape of the financial services industry,” Feiler says, stressing the importance of technology in the value proposition of financial services. “It has become evident that Austrian banks have recognized that they cannot implement the required levels of innovation on their own, so this deal is rather indicative of the times we live in,” Feiler concludes.

DLA Piper has advised Knorr-Bremse and its subsidiary Knorr-Bremse Systeme fur Nutzfahrzeuge on their EUR 200 million acquisition of a 55% stake in Cojali.

The transaction remains contingent on regulatory approval. Knorr-Bremse is a Frankfurt Stock Exchange-listed braking system and other rail and commercial vehicle systems supplier, with over 100 sites in more than 30 countries. Spanish company Cojali is a technological solutions developer for traditional diagnostics, remote diagnostics, predictive maintenance, and telematics. The company also manufactures commercial vehicle components and has operations in more than 115 countries.

According to DLA Piper, “the founders of Cojali will retain a minority stake in the company and cooperate with Knorr-Bremse to further develop Cojali to a leading diagnostics equipment manufacturer for commercial vehicles.”

“With the acquisition, Knorr-Bremse is investing in the growing market for connectivity applications while further developing the group’s own digitalization expertise,” the firm added. “Apart from organic growth, Knorr-Bremse pursues bolt-on mergers and acquisitions to access external tech expertise and benefits from growth markets and emerging developments in the transportation industry.”

The DLA Piper team was led by Munich-based Partner Gerald Schumann and Madrid-based Partner Joaquin Echanove and included lawyers in Austria, Germany, Spain, and Portugal.

The Knorr-Bremse in-house team was led by Head of Corporate Legal M&A/Antitrust Christian Vornehm.

DLA Piper did not respond to our inquiry on the matter.

Schoenherr, working with Noerr, has advised the BTV Multimedia Group on its acquisition of STW Spleisstechnik West. Solo practitioner Georg Justich reportedly advised STW.

The transaction remains contingent on regulatory approval.

The Hanover-based BTV Multimedia Group is a group of medium-sized companies in the broadband industry that aims to provide its customers in Europe with support for broadband expansion. STW, based in Tyrol, develops fiber-optic rollout in the Alpine region. 

According to Schoenherr, “the BTV Multimedia Group will expand its activities in the broadband sector to offer STW’s customers an even wider range of services and, in cooperation with new partner companies and a strong financial investor, to pursue the efficient implementation of fiber-optic expansion projects of any size. After the acquisition, STW will continue to act as an independent and vendor-neutral partner for its customers.”

Schoenherr’s team included Partners Michael Magerl and Christoph Haid, Attorney Johannes Frank, and Associate Bettina Kranawetter.

Noerr’s team was led by Munich-based Partner Holger Ebersberger.

Wind power plants and photovoltaic (PV) plants might affect the landscape. To what extent is in the eye of the beholder.

In mid-2021, the legislature of the Austrian province Burgenland introduced a tax that is intended to compensate for the impairment of the landscape by new wind power and new PV plants.

On 7 April 2022, Burgenland’s legislature adopted the so-called “Renewable Energies Acceleration Act” (Bgld EbBG).

One cornerstone of the Bgld EbBG is the extension of the tax to wind power and PV plants that have already been erected or for which permitting procedures are still pending (existing plants). Thus, not only new plants but also existing plants should be subject to the tax in future, despite the fact that, for those existing plants, annual compensation fees for the impairment of the landscape have usually been agreed under private law between the operators and the municipalities where the plants are located.

Since the Bgld EbBG affects specific federal tax law matters, the federal government can formally object to the law within a certain period of time. If the federal government does not object, the Bgld EbBG will enter into force.

The upcoming extension of tax liability raises legal questions under constitutional law.

Current and upcoming legal framework

At present, the tax does not apply to wind power and PV plants that have already been erected or for which permitting procedures are still pending.

Existing plants are usually subject to so-called “cooperation agreements” under private law between the operator and the respective municipality. Those agreements also include annual compensation fees for certain adverse effects, such as the impairment of the landscape. In general, these contracts are long-lasting. They are concluded for the duration of the operation of the plant and end with its full dismantling. Termination rights are usually not provided.

Burgenland’s Spatial Planning Act (Bgld RPG) stipulates that such compensation agreements regarding the impairment of the landscape cannot be concluded for new plants subject to the tax.

On the other hand, the Bgld RPG does not interfere with ongoing contracts for existing plants, nor does it prevent the conclusion of new or additional contracts for existing plants.

According to the explanatory remarks of Burgenland’s legislature from 2021, those provisions should avoid double burdens for operators of existing plants. Either the plant is subject to the tax or to contractually agreed compensation.

The now-adopted Bgld EbBG obviously contravenes this aim:

• All wind power and PV plants (not only new but also existing⁴ plants) will be subject to the tax.
• For existing plants, the tax will be gradually increased on a linear basis for a period of four years. Thereafter, the full tax must also be paid for existing plants.
• Ongoing contracts for existing plants are not interfered with. Therefore, the agreed compensation fees for the impairment of the landscape are still to be paid to the respective municipality.
• However, new wind power and PV plants are only subject to the tax. Agreements regarding compensation fees cannot be concluded for new plants.

Thus, operators of existing plants will be burdened at least twice as much as operators of new plants, as they must pay the tax as well as the agreed compensation fees.

Especially given that operators of existing plants have been contributing to the energy turnaround for years, if not decades, can this be constitutional?

Are these double burdens for existing plants constitutional?

The legislature – whether at the provincial or federal level – is bound by the constitutionally guaranteed principle of equality. Unless there are objective reasons, equal matters are to be treated equally and unequal matters unequally.

These double burdens with which operators of existing plants will be faced lead to unequal treatment compared with operators of new plants that cannot be objectively justified.

As already mentioned above, in 2021 Burgenland’s legislature highlighted the aim to avoid double burdens for existing plants due to agreed compensation fees on the one side and the tax on the other. Existing plants were therefore not subject to the tax. Now, the legislature is seeking the opposite, without any further reason.

Moreover, these double burdens are not compatible with the public interest in the expansion of renewable energies, which the legislature explicitly emphasises in its explanatory remarks.

Also, the amount of the tax does not take into account the agreed compensation fees that operators of existing plants pay to the municipalities.

Finally, contrary to the legislature’s opinion, the contractual agreements between operators of existing plants and municipalities do not end within the next few years. Since there are usually no termination rights, those contracts are rather long-lasting.

Therefore, there is no objective reason why operators of existing plants should pay twice for the impairment of the landscape. The now-adopted Bgld EbBG lacks the constitutionally required distinction between new wind power and PV plants and existing plants. Therefore, the extension of the tax violates the principle of equality.

Comment

As already stated, the Austrian Financial Constitution law grants the federal government’s right to object to the Bgld EbBG within a certain period of time.

Even if the Bgld EbBG enters into force it is likely that the (extended) tax will be challenged before the Constitutional Court.

By Christian Holzer, Associate, Schoenherr

Schoenherr has advised Red Bull and Arbeitsgemeinschaft Teletest (AGTT) on the establishment of a joint venture.

According to Schoenherr, the aim of the joint venture is to improve the device-based collection of TV audience figures by AGTT with internet-based TV consumption measurements, which will enable the real-time measurement of TV viewing behavior and targeted playout of commercials.

Red Bull Austria is an energy drinks company based in Fuschl am See and a sporting and media conglomerate. AGTT is a group of Austrian television providers.

The Schoenherr team was led by Partner Peter Madl and Attorney-at-Law Michael Marschall and included Partners Hanno Wollmann and Gunther Leissler, Attorneys-at-Law Valerie Ditz-Stimakovits and Lisa Todeschini, and Associate Gabriel Ebner.

Trademark professionals have noted growing interest in protecting trademarks for “virtual goods”. This leaves trademark specialists as well as IP offices grappling with how to correctly classify these goods. 

Why do trademarks need to be protected for virtual goods?

Besides the real world, people are spending more and more time in the metaverse, defined by the Online Cambridge Dictionary as “a virtual world where humans, as avatars, interact with each other in a three-dimensional space that mimics reality”. As virtual environments grow in variety, people are keen to outfit their avatars with branded products known in the real world. For example, no self-respecting avatar wants to visit a virtual event without proper – preferably branded – clothing.

Does the Nice Classification help with the classification of virtual goods?

An analysis of Class 9 of the Nice Classification provides some clues as to the correct classification of virtual goods by stating: “[…] digital goods such as music or electronic books which are intended to be downloaded onto an end user’s electronic device are in Class 9, whereas the provision of non-downloadable digital goods online is considered to be a service in Cl. 41; online retail services for these goods would, however, be in Cl. 35.”

Using electronic books as an example for the classification of the virtual counterparts of real-world products, one can surmise that the following principles apply:

• Electronic books are not classified in the same class as printed books (which would fall into class 16). Therefore, virtual goods are likely not classified in the same class as their real-world counterpart.
• Downloadable electronic books are classified in class 9, which falls in the taxonomy of the Harmonised Database under the general term “recorded content”. Consequently, downloadable virtual goods will be classified in class 9.
• Non-downloadable electronic books that are only provided online are classified as services in class 41. Thus, providing non-downloadable virtual goods is considered a service classified in class 41.
• The sale of downloadable electronic books is classified in class 35 as a retail service. Accordingly, retail services relating to downloadable virtual goods are classified in class 35.

Are there any pre-approved terms for virtual goods?

The ID Manual of the US Patent and Trademark Office already provides a wording that can be used for such virtual goods, namely:

• “Downloadable virtual goods, namely, computer programs featuring {specify nature, type, e.g. articles of clothing} for use in online virtual worlds” in class 9.
• “Entertainment services, namely, providing on-line, non-downloadable virtual {indicate goods, e.g. clothing, pets, furniture, etc.} for use in virtual environments created for entertainment purposes”.

The Harmonised Database, which contains terms pre-approved by all EU national and regional IP offices, including the EUIPO, will likely accept similar language.

Conclusion

A while ago, the notion that trademarks would be protected for “downloadable virtual suits for avatars” sounded a little surreal. Today, however, there is definitely a need for it. By carefully following the rules for the classification of goods and services outlined in the general remarks and further specified in the class analyses of the Nice Classification, the correct classes also for “virtual goods” can be identified.

By Gudrun Irsa-Klingspiegl, Head of Trademark Management – Trademark Portfolio Manager, Schoenherr

Schoenherr has advised the sellers on the sale of ARZ Allgemeines Rechenzentrum to Accenture. Baker McKenzie advised the buyer. 

The transaction remains contingent on regulatory approval.

According to Schoenherr, the acquisition will expand Accenture’s cloud-based banking platform-as-a-service offerings for banking clients across Europe.

ARZ is a technology service provider focused on the banking sector in Austria, with offices in Vienna and Innsbruck. The company is 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.

“Our vision is to develop an innovative cloud-based banking platform-as-a-service offering for new and existing clients across Europe,” Accenture Senior Managing Director Roland Smertnig commented. “By acquiring ARZ, we are expanding our digital transformation capabilities to help banks of the future as they look to move more of their core functions to the cloud, enable new business models, and reinvent the services and experiences they provide to customers.”

“With this acquisition, we are expanding our team in Austria and will develop a comprehensive center of excellence at the Innsbruck location to serve our clients in Austria and across Europe,” Accenture Country Managing Partner Michael Zettel added.

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

The Baker McKenzie team was led by Vienna-based Partner Gerhard Hermann and Counsel Claudia Fochtmann-Tischler and included Partners Philipp Maier, Lukas Feiler, and Andreas Traugott, Counsels Robert Wippel and Wolfgang Eigner, and Associates Teresa Stuttler, Ladislav Bulajcsik, Mariella Neidhart, Klara Kastner, Victoria Fink, Martina Grama, Silvia Grohmann, Alexander Hofmann, Michaela Petsche, Balint Oszvar, Filip Peric, Katerina Schenkova, Nina Lenhard, Daniel Larcher, and Abanoub Abd El Malak, as well as Frankfurt-based Partner Peter Wand and Associates Denise Tayler, Susanne Milne, Tobias Born, and Anna-Lena Busser.

Accenture’s in-house team included DACH Region Legal Director Marco Lechner and Accenture Austria Head of Legal Mathias Brandauer.

Cerha Hempel has advised Poke House on its investment in Austrian company Honu Gastronomie, operating the Honu Tiki Bowls stores in Vienna. Viehboeck Breiter Schenk & Nau reportedly advised the seller.

According to Cerha Hempel, “for the time being, Poke House acquired a 51% majority in the Austrian Honu Tiki Bowls business from its founder Kaspar Kunz. Together the parties will continue to run Honu Tiki Bowls as a joint venture.”

Founded in Italy in 2018, Poke House is an Italian poke bowl start-up active in seven countries and operating in more than 120 locations. Founded in 2018, Honu Tiki Bowls manages five poke bowl locations in Vienna. The company is operated by Austria’s Honu Gastronomie. Poke bowls are a Hawaiian dish. Poke means “cut into pieces,” referring to the sliced/cubed raw fish that is served in a bowl with rice, vegetables, and sauce/spices.

“We are thrilled to announce our partnership with the leading poke chain in Austria, that shares our same attention for product quality, data-driven approach, and passion for its local community of poke lovers,” Poke House announced. “Together we will support each other in pursuing our mission of nourishing the whole world with positivity and wellbeing.”

The Cerha Hempel team was led by Partner Foglar-Deinhardstein and Counsel Jakob Hartig and included Partner Armin Schwabl, Senior Associate Christopher Peitsch, and Associate Nikolaus Feldscher.

An in-depth look at Christoph Moser of Schoenherr covering his career path, education, and top projects as a lawyer as well as a few insights about him as a manager at work and as a person outside the office.

Career:

Schoenherr Attorneys at Law, Partner, 2021-present

Weber & Co, Partner/Attorney at Law, 2014-2020

Baker McKenzie, Attorney at Law, 2012-2014

Schoenherr Attorneys at Law, Senior Associate/Attorney at Law, 2010-2012

CMS, Senior Associate, 2008-2010

Styria Borse Express GmbH, Senior Legal Counsel, 2007-2008

CMS, Associate, 2005-2006

Favorites:

Out of office activity: Cooking, Fine dining

Quote: “The only way to do great work is to love what you do.” – Steve Job

Book: Night Work (Die Arbeit der Nacht) by Thomas Glavinic

Movie: Wall Street

Education:

Johannes-Kepler-University Linz, Magister Juris, 2004

Top 5 Projects:

Advising Jefferies on the EUR 100 million convertible bond issue by DO & CO Aktiengesellschaft (2021);

Advising Wienerberger on an accelerated book-building EUR 81 million share placement of treasury shares (2021);

Advising OMV AG on high-volume corporate bond issuances in multiple tranches amounting to a total of EUR 4.5 billion (2020);

Advising Erste Group Bank AG (as sole global coordinator) and Goetzpartners Securities Ltd (as co-lead manager) on the IPO of Marinomed Biotech AG on the Vienna Stock Exchange (2019);

Advising Citigroup Global Markets Limited and Goldman Sachs International as well as the other underwriters on the IPO of Addiko Bank AG on the Vienna Stock Exchange (2019).

What would you say was the most challenging project you ever worked on and why?

Moser: One of the most challenging projects was certainly the IPO of Marinomed Biotech. The transaction had to be pulled at the end of the initial offering period in November 2018 due to adverse market conditions. It wouldn’t have made sense to go forward at a time when all investors were trying to stay out of the markets. For some days it looked like true turmoil in the market, and nobody knew how things would evolve in December 2018 and early January 2019. In this situation, we found quite a smart, never-before-tested way of keeping the prospectus alive by publishing a supplement and announcing that the transaction was aimed to be recommenced in early 2019. Technically, the IPO was not stopped but only paused, and we were able to convince the Austrian regulator FMA of this innovative structure. This was challenging but eventually a great success for the legal teams of all firms involved.

And what was your main takeaway from it?

Moser: If a problem looks unsolvable at first glance, look again. Keep trying, go beyond the obvious, and find a creative solution.

What is one thing clients likely don’t know about you?

Moser: Some long-standing clients might know quite a lot about me. I appreciate that a client relationship can often go beyond a business-as-usual paradigm, particularly if I am working with and for a client for a long time and with strong commitments. It happens occasionally that you talk to clients a lot about personal matters. And I like getting to know my clients better.

Name one mentor who played a big role in your career and how they impacted you.

Moser: My colleague of many years, also a Partner at Schoenherr – Peter Feyl – has been a great influence and role model for me in two regards: For one, he sets an example in terms of professional excellence, diligence, and precision in his legal advisory. Second, he has also taught me how to remain calm and level-headed, even in the middle of a perfect storm. I believe that both qualities are essential for being a successful and committed lawyer.

Name one mentee you are particularly proud of.

Moser: I am especially proud of Angelika Fischer, who started as a summer intern at our firm and has quickly grown to be irreplaceable as my right hand in day-to-day business. It was inspiring to see how much progress she made on her own initiative, only coming to me for advice with a problem after exploring a number of possible options herself. This has shown me that you can empower people by giving them room to create their own experiences.

What is the one piece of advice you’d give yourself fresh out of law school?

Moser: Take some time off, travel, get to know the world, have fun, and enjoy life before starting a committed career as a lawyer. That time will never come back.

This Article was originally published in Issue 9.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.