Dorda has advised GalCap on the acquisition of a mixed-use building at Pohlgasee 26 in Vienna-Meidling from UBM and Invester. UBM was advised by solo practitioner Jakob Molzbichler.
According to Dorda, the building at Pohlgasse 26, which has 121 privately financed rental apartments and a supermarket on the ground floor, should be completed by the end of 2021.
Dorda’s team consisted of Partner Stefan Artner and Lawyer Magdalena Brandstetter.
Brandl & Talos has advised Ready2order on its EUR 5 million investment round, which was led by Reimann Investors and Speedinvest, which were reportedly advised by Schoenherr and Herbst Kinsky.
According to Brandl & Talos, “Ready2order offers a cloud-based checkout solution that has successfully held its own on the market since the introduction of a cash register in Austria. Founded in Austria in 2015, the company now has 65 employees and implements its own software solution for cash register systems on smartphones and tablets. In addition, the appropriate hardware can also be purchased.”
Brandt & Talos’s team consisted of Attorney Markus Arzt.
CMS Austria has advised Topinstallateur GmbH on the sale of a majority stake in the company to Germany’s Auctus investment fund. Auctus was advised by Herbst Kinsky.
Wohanka-Immobilien and the Managing Director of Topinstallateur GmbH, Erich Zwitkowitz, are now minority shareholders.
According to CMS, “Auctus specializes in acquiring equity interests in medium-sized companies and manages a fund capital of more than EUR 500 million. The fund’s associated companies achieve an annual turnover of around EUR 1 billion.”
“By working with the new partners Auctus and Wohanka-Immobilien,” said Managing Director Erich Zwitkowitz, “we can seize the resulting synergy effects and continue the success story of Topinstallateur into the future.”
CMS’s team included Partner Sibylle Novak and Associate Thomas Aspalter.
Herbst Kinsky’s team included Partner Wolfgang Schwackhofer and Senior Associate Alexander Weber.
Cerha Hempel has advised KTM AG on its establishment of a joint venture with Spanish engine manufacturer GasGas Motorcycles S.L.
In addition to the existing motorcycle brands KTM and Husquarna, the Austrian motorcycle manufacturer’s distribution will now expand to GasGas as its third brand.
Cerha Hempel’s team consisted of Partners Bernhard Kofler-Senoner and Anna Wolf- Posch and Associate Zakar Stepanyan.
Cerha Hempel did not reply on our inquiry on the matter.
Allen & Overy has advised Oesterreichische Kontrollbank on legal aspects of its public offering of USD 1.5 billion of 1.500% Guaranteed Global Notes due 2025. The bonds are guaranteed by the Republic of Austria and will be listed on the regulated market of the Luxembourg Stock Exchange.
According to Allen & Overy, “Oesterreichische Kontrollbank is Austria’s main provider of financial and information services to the export industry and the capital market. Its main functions include the administration of export guarantees as agent of the Republic of Austria and the financing of Austrian exports.”
Allen & Overy’s German team advising OeKB on the transaction consisted of Partner Marc Plepelits and Senior Associates Martin Schmidt and Rita Nicole Thomas.
May you resell a book that you have previously purchased? Of course. However, from a copyright perspective the reasoning is not as easy as one might think, since purchasing a copyrighted work like a book means purchasing the paper but not the rights to the content, which is the intellectual property of the author.
In respect of such intellectual property the author has certain exclusive rights. Thus, it is forbidden to publish the book on the internet, for example, since this would interfere with the author’s exclusive rights. In fact, reselling a copyrighted work is generally an act that requires the author’s consent, since the author has the exclusive right of distribution. To avoid such undue restriction of trade, Art. 4 para. 2 Directive 2001/29 (InfoSoc Directive) as well as Art. 4 para. 2 Directive 2009/24 (Software Directive) stipulate the so-called first sale or exhaustion doctrine, pursuant to which a copyright holder’s distribution right will be exhausted where the first sale or other transfer of ownership in the Community of a copy of that work is made by the copyright holder or with his consent. Thus, a physical carrier like a book may be resold (but not copied or publicly made available) without the rightsholder’s consent. It has, however, for a long time remained unclear to which extent this would also apply to works that are sold not in the form of a physical medium (such as a CD-ROM) but rather by offering them for download.
As smartphones, e-readers and higher internet speeds have become ever more abundant and important parts of our lives, such means of distribution have also become increasingly popular due to their convenience. Computer games and e-books alongside plain software are, thus, routinely obtained from online sources nowadays. But does the European first sale doctrine still apply in such circumstances? May such digital goods be resold without the rightsholder’s consent?
The CJEU’s UsedSoft decision
For software this has been answered by the CJEU in the famous UsedSoft1 and Ranks2 decisions, pursuant to which the distribution rights in software could also be exhausted by offering them for download if the following criteria are met:
Most importantly, a copyright holder could not limit this digital exhaustion by contractual means but would even have to hold the work available for download for future acquirers of the program.3
As copyright in software is largely governed by the Software Directive, it is still open to discussion whether the findings of UsedSoft and Ranks could be transposed to copyrighted works governed in general by the InfoSoc Directive.
The CJEU’s recent e-books decision
The CJEU now had to decide on this question in a case regarding the reselling of e-books online. In the subject case4, Tom Cabinet operated an e-book reading club, which in return for payment offered its members “second-hand” e-books which had been either purchased by Tom Kabinet or donated to it free of charge by members. In the latter case, those members were required to provide the download link for the book and declare that they have not kept a copy. Tom Kabinet then uploaded the e-book from the retailer’s website and placed its own digital watermark on it, which served as confirmation that it was a legally acquired copy.
Tom Kabinet claimed that the copyright holder’s distribution right in the e-books was exhausted pursuant to the digital exhaustion doctrine as laid out in the UsedSoft decision and that such exhaustion would also cover the online reselling of these e-books.
The CJEU, however, held that any communication to the public of a work other than the distribution of physical copies does not fall under the concept of “distribution to the public”, which triggers exhaustion.
Offering second-hand works for download could therefore never be qualified as distribution (in respect to which exhaustion would apply) but rather as a communication to the public pursuant to Art. 3 InfoSoc Directive, which is not covered by the first sale doctrine.
The CJEU’s assessment seems to contradict its prior assessment in the UsedSoft decision pursuant to which the existence of a transfer of ownership changes an act of communication to the public provided for in Art. 3 InfoSoc Directive into an act of distribution referred to in Art. 4 of that Directive.5
The CJEU, therefore, explicitly distinguished between software as covered by the Software Directive and other works protected by the InfoSoc Directive. The wide digital exhaustion doctrine as stipulated in the UsedSoft and Ranks decisions would only apply to software as the Software Directive specifically concerns the protection of computer programs, which for the purpose of exhaustion makes no distinction between tangible and intangible copies of a work and constitutes a lex specialis in relation to the InfoSoc Directive.6 Such assimilation of tangible and intangible copies of works would not have been desired by the EU legislature when it adopted the InfoSoc Directive.7
In this regard, the CJEU held that especially Recitals 28 and 29 of the InfoSoc Directive clearly stipulate that exhaustion would only apply to tangible works explicitly excluding any exhaustion in conjunction with works transmitted online.
It can be reasoned from these conclusions of the CJEU that the concept of “distribution” is to be construed differently with regards to the Software Directive and the InfoSoc Directive.
Lastly the CJEU briefly held that the assertion that at least parts of an e-book might qualify as computer programs would not change anything in its assessment. Referring to a similar assessment on the nature of video games in a prior decision8, the CJEU held that even if an e-book would contain a computer program, such a program would only be incidental in relation to the work contained in such a product (in the subject case: the book) and thus would fall in its entirety under the InfoSoc Directive.9
It is thus clear that the digital exhaustion doctrine for software as laid out in the UsedSoft and Ranks decisions does not extend to works that – alongside software – predominantly consist of other kinds of works (such as music, literature or visual arts).
Impacts
Considering that digital content is increasingly provided in the form of streaming and subscription services (and thus rather leased than “sold”), the CJEU’s decision might have a declining practical impact.
Overall, however, the decision is an important clarification on the scope of digital exhaustion, as it clearly stipulates that a rightsholder’s distribution right cannot be exhausted as regards any works distributed in intangible form predominantly not consisting of software (e.g. music, e-books, audiobooks, videos or photos).
In connection with the now reiterated case law on a uniform legal qualification of complex products, this could have implications for all products containing other kinds of works besides software, as a careful assessment must now be made of whether such software could be considered merely incidental to the main product, in which case digital exhaustion would not apply.
The economically most important example for this likely would be video games, as video games only in part consist of software, but also of musical and graphical works and works of literature (dialogues and story) falling within the scope of the InfoSoc Directive and have already been held as a complex product exclusively falling under the InfoSoc Directive.10 Until only recently, video games were mostly sold on a physical medium (e.g. Blue-Ray-DVDs). The “classical” exhaustion pursuant to Art. 4 para. 2 InfoSoc Directive would then apply regardless to that physical carrier. Meanwhile, however, video games are increasingly sold as download keys for redemption at video game distribution services or directly held for download by such services. Only recently the Paris Court of First Instance11 applied the first sale doctrine to computer games sold via download on a very popular distribution service and ruled contradicting contractual provisions as null and void. In light of the present decision, such an assessment might no longer be valid.
1 CJEU 3 July 2012 C‑128/11, UsedSoft.
2 CJEU 12 October 2016 C‑166/15, Ranks.
3 CJEU 12 October 2016 C‑166/15, Ranks, paragraph 50.
4 CJEU 19 December 2019 C-263/18, Nederlands Uitgeversverbond und Groep Algemene Uitgevers.
5 CJEU 3 July 2012 C‑128/11, UsedSoft, paragraph 52.
6 paragraph 53; CJEU 3 July 2012 C‑128/11, UsedSoft, paragraph 58.
7 paragraph 56.
8 CJEU 23 January 2014 C-355/12, Nintendo and Others, paragraph 23.
9 paragraph 59.
10 CJEU 23 January 2014, C-355/12, Nintendo and Others, paragraph 23.
11 ipkitten.blogspot.com/2019/10/guest-post-paris-court-on-digital.html – retrieved on 20 January 2020
By Alexander Pabst, Associate, and Dominik Hofmarcher, Counsel, Schoenherr
Wolf Theiss has advised Raiffeisen Bank International AG on the issuance of a Ordinary Senior Eligible bonds worth EUR 750 million under its EUR 25 million Debt Issuance Program. Banco Santander, S.A., BNP Paribas, Citigroup Global Markets Limited, Morgan Stanley & Co International, and RBI were joint lead managers.
According to Wolf Theiss, the bonds, denominated at EUR 100,000 and listed on the Luxembourg stock exchange, were aimed at qualified investors. The bonds have a term of five years and the coupon is set at 0.25% per annum.
Wolf Theiss’ team included Partner Alexander Haas, Senior Associate Nevena Skocic, and Associate Sebastian Prakljacic.
Wolf Theiss did not reply to our inquiry.
“The political situation in Austria has been stable, as you would expect, even more so, given that a new government is in place following the elections we had last year,“ reports Florian Klimscha, Partner at Freshfields Bruckhaus Deringer in Vienna. “Also the interim government – largely made up of experts and public officials – that was in place during the recent coalition talks was up to the task.“
The new government is good for business, he says. “It’s good to have a government that is now more output-orientated and does not only consist of experts,” he says, “and that does more than mere administrative functions.“ According to Klimscha, “we have seen focus being placed on both improving the business environment and on making development to be sustainable.“ Indeed, to that end, he reports, the new government is expected to put greater value on green financing.
Klimscha reports that changes to the tax code resulting in generally lower taxes will be rolled out over the next year and a half, “with one focus on the tax on wages and the corporate tax.“
He adds that, while there are not a lot of infrastructure projects currently in development in Austria, the ones that do exist are particularly noteworthy. “The Glass Fibre infrastructure project in Lower Austria started last year and it has already seen major investor interest,“ he says. In addition, he says, he expects to see changes in the automotive supply industry in Austria. “Given the recent occurrences in this area in Germany, I believe we can expect to see a spillover into Austria, which I think may result in some restructuring of the sector.“
Ultimately, he’s upbeat. “Even though it is still early to say what kind of an impact the new government will have on business,“ Klimscha says, “compared to what the economy went through in the previous year and a slight dip we’ve found ourselves in – I feel that it’s circling back to doing good.”
The newly sworn in Austrian government recently introduced its 326-page government plan for 2020 – 2024, which also includes some intended changes with respect to taxation. The aim of these possible changes is to lower the overall tax burden and to make the tax system more ecological.
These are some of the main proposed tax changes:
Income tax: Austria has a progressive rate of income tax, beginning at 0 % and increasing to 25 %, 35 %, 42 %, 48 %, 50 % and 55 %.
The government plan proposes reducing the progressive income tax rate from 25 % to 20 %, from 35 % to 30 % and from 42 % to 40 %. Individuals with low and medium incomes should benefit from these reductions. At present there is no proposal to reduce the progressive income tax rate of 55 %, which is one of the highest in the OECD.
In addition, it could be proposed to introduce an exemption from capital gains tax (Kapitalertragsteuer) for ecological and ethical investments and the plan also foresees a possible reintroduction of the tax exemption for capital gains from investments held by individuals on a mid- to long-term basis.
The government proposes to increase the base for the standard deduction on profits. Currently, a 13 % standard deduction on profits of up to EUR 30,000 can be claimed, allowing for a maximum deduction of EUR 3,900 per year. This base could be increased to EUR 100,000, which should result in an increase of the maximum deduction of up to EUR 13,000 per year.
Further intentions refer to possible tax changes with respect to the tax treatment of depreciation rules and retained earnings as well as an evaluation of possible reduction of ancillary wage costs.
Corporate income tax: The Austrian corporate income tax rate was last reduced from 34 % to the current 25 % in 2005.
As the average corporate income tax rate among EU countries was 21.8 % in 2019, the government has acknowledged that a reduction of the Austrian corporate income tax rate needs to be considered to attract investment and discourage profit shifting to lower-tax jurisdictions. Therefore, the new government plan foresees a possible reduction of the Austrian corporate income tax rate from 25 % to 21 %.
As Austria levies an annual minimum corporate income tax, the government plans to evaluate if it could be abolished to reduce the tax burden for small and medium-sized enterprises.
The new government also proposes to create a new incentive for businesses to enter into profit-sharing agreements with their employees.
Digital services tax: The digital services tax has been in force in Austria since 1 January 2020. According to the government programme, this digital services tax should remain in effect until an agreement is reached at the EU and OECD levels.
Environmental taxes: Several tax measures may be introduced, such as the establishment of a flight ticket levy of EUR 12 per ticket and the increase of taxes on gasoline, in order to address climate change issues. The plan also foresees encouraging climate and energy policies in Europe and support for an EU carbon border tax adjustment. With these changes driven by the Green Party the intention is to make Austria carbon neutral by 2040.
Simplification and modernisation of the current tax system: Criticism that the current tax system is too complicated and difficult to navigate has become louder. Therefore, the government could propose to rephrase the Income Tax Act to simplify and modernise the tax system. The proposed changes could be as follows:
As can be seen from the above proposals, the government has some ambitious goals with respect to taxation for the upcoming years. Nevertheless, the government plan for the 2020 – 2024 period is currently in the preliminary phase, and if any of the disclosed changes are to be realised in the future they will be subject to the Austrian legislative process. We will keep you informed about further developments.
By Maja Petrovic, Attorney at Law, Schoenherr
Brandl & Talos has advised Aws Mittelstandsfonds on an unspecified investment in Communi5 Technologies GmbH. Leitner Law advised Communi5 on the deal, which was part of a formal investment round.
Communi5 Technologies specializes in cloud-based integrated communication and collaboration applications. Aws Mittelstandsfonds is an entrepreneurial investment company based in Vienna.According to Brandl & Talos, “as part of a management buyout, the previous management, together with Aws Mittelstandsfonds and strategic co-investors, will take over the company based in Vienna. Aws Mittelstandsfonds acted as the lead investor and holds the most extensive participation among the new shareholders. With the support of investors, the company wants to expand its product solution, particularly in the areas of mobility in the world of work, simplification in IT and teamwork.”
Brandl & Talos’s team included Partner Roman Rericha and Attorneys Markus Arzt and Sabine Konrad.
The Leitner Law team included Attorney Vedran Obradovic and Associate Alexandra Santangelo-Reif.