Category: Bulgaria

Kinstellar has advised Park Lane Developments on its sale of the Park Lane Office Center in Sofia to SAP. Wolf Theiss advised the buyer.

According to Kinstellar, this represents “the largest investment deal on the Bulgarian office market for the last three years.”

The property already hosts Allianz Bulgaria’s headquarters, with SAP Labs deciding to invest in the property and relocate all its employees in Bulgaria to the new office center.

The Kinstellar team included Partner Antonia Mavrova and Managing Associate Atanas Mihaylov.

The Wolf Theiss team consisted of Partner Anna Rizova, Counsel Katerina Novakova, Senior Associate Jasmina Uzova, Associates Georgi Todorov, Kristian Yabalkarov, and Teodor Toshev, and Legal Trainee Ivan Ivanov.

Wolf Theiss has advised the EBRD on its acquisition of a stake in Bulgaria’s Euroins Insurance Group for EUR 30 million. As part of the same deal, KGM Law reportedly advised Eurohold, the parent company of Euroins, on a EUR 12 million equity injection.

Euroins Insurance Group is one of the largest independent non-life insurance groups in central, eastern, and south-eastern Europe.

According to the EBRD, “the funds will be used for the development and growth of the largest insurance entity within the group, Euroins Romania Asigurare Reasigurare.”

The Wolf Theiss team included Managing Partner Anna Rizova, Partners Richard Clegg and Katerina Kraeva, Consultants Irina Dekova and Radena Tsvetanova, Counsels Hristina Dzhevlekova and Katerina Novakova, Associates Nikoleta Ratcheva and Kristian Yabalkarov, and Legal Trainee Ivan Ivanov.

Тhe current political atmosphere in Bulgaria is turbulent and hectic, as the country faces an unprecedented situation of running its third extraordinary Parliament elections in a row within a single year, according to Kolev, Angelov & Miteva Law Firm’s Partner Nikolay Kolev.

“The next parliamentary elections scheduled in mid-November will be held together with the Presidential elections, which adds even more complexity to the situation,” Kolev begins. According to him, the political scene faces fragmentation, with political parties racing to reach the 4% barrier for entry into Parliament. “The attempts for political coalitions are opportunistic as parties lack a real common conceptual background,” he adds. “Recent surveys indicate that six or even seven political parties will be able to enter the Parliament, which is very challenging, given the size of the Bulgarian population.”

Kolev reports that it is difficult to identify any recent major legislative updates, “as the Parliament functioned only for a few months and currently, the country is in the middle of two election campaigns.” However, a controversial topic is “Bulgaria’s largest labor union’s new proposal, suggesting an increase of the social insurance burden over the employees and entrepreneurs with the highest incomes,” he adds. According to Kolev, if adopted, this measure will have a significant impact on businesses and might lead many companies to exit the Bulgarian market.

“Other notable proposed legislative changes relate to various aspects of corporate income taxation, VAT, excise duties, and trademark disputes, but they are still under discussion,” Kolev notes.

As for the country’s economy, Kolev reports, that the real estate sector has a 20% increase in sales compared to the same period of 2019. “SAP’s recent EUR 50 million acquisition of Park Lane Office Center marks the biggest real estate transaction for the last three years in Sofia,” he continues. “Simultaneously, many companies are trying to change the office spaces rented by them and to move to а new location. Earlier this year the famous IT company Chaos rented four floors of Sofia Office Center.” According to Kolev, other growing fields of the economy are IT and fintech, as well as medical equipment and consumables trade, and some interesting M&A transactions involving companies in these areas might be expected.

On the other hand, Kolev notes that the COVID-19 crisis has led to many negative consequences in Bulgaria. “Many companies are having financial difficulties and are trying to reorganize their business to overcome the current economic situation,” he adds. “We expect an increase in the next few months in the number of insolvency cases and voluntary liquidations. Many distressed assets and enterprises will be open for sale or will be seeking financial injection which might be а good opportunity for local and foreign investors who have the free cash for such an investment,” Kolev reports. In addition, “many office centers and shopping malls management companies are preparing themselves for potential re-negotiations or disputes with their lessees given the risk of another lockdown in the coming weeks,” Kolev says.

In its judgment on 14 July 2021 in Case T-399/20, the General Court assessed whether there is likelihood of confusion between figurative trademarks that depict two letters from different foreign alphabets.

Especially where the relevant public does not speak any of the languages using these letter. The trademarks at issue depicted the letter “Ø” from the Danish alphabet and the letter “ф” from the Greek and Bulgarian alphabets.

Background

In 2017, the US company Cole Haan LLC submitted an application for registration with the European Union Intellectual Property Office (“EUIPO”) under Regulation (EU) 2017/2001 of the European Parliament and of the Council of 14 June 2017 on the European Union trademark (“EUTM Regulation”), seeking EU trademark protection for goods in Classes 18 and 25 of the Nice Classification (e.g. travelling bags and clothing) marketed under the figurative sign “Ø”.

In 2018, the Danish company Samsøe & Samsøe Holding A/S submitted an opposition against the application, as a holder of the international registration designating the EU of an earlier trademark also registered for goods, inter alia, in Classes 18 and 25 of the Nice Classification, marketed under the figurative mark “ф”.

The opposition was grounded on Article 8(1)(b) of the EUTM Regulation. The Danish company argued that the opposed trademark must not be registered, as due to its high degree of similarity with the earlier trademark, there is a likelihood of confusion on the part of the public in the territory in which the earlier trademark is protected.

Both the Opposition Division and the Board of Appeal of the EUIPO refused the registration of the opposed trademark, and the applicant contested the decision of the Board of Appeal. In the contested decision, the Board of Appeal concluded that there is a likelihood of confusion on the part of the relevant public, which was defined as the French-speaking public with no command of Danish, Bulgarian or Greek and displaying an average level of attention.

In its appeal, the applicant did not dispute the definition of the relevant public for which the Board of Appeal assessed a likelihood of confusion. Nevertheless, the applicant argued that there is no likelihood of confusion, alleging, inter alia, that the Board of Appeal erred in its finding that the signs at issue are visually similar to a high degree, as well as in its findings that a phonetical and conceptual comparison of the signs is not possible.

Findings of the General Court

The General Court also found that the relevant public is likely to confuse the figurative signs at issue, hence dismissing the applicant’s appeal.

In its reasoning, the court took into account the already established case law pursuant to which for an EU trademark to be refused registration, it is sufficient that likelihood of confusion exists in part of the European Union, i.e. in this case, amongst the defined relevant public, namely the French-speaking public. The court also noted that the parties each understood that the applicant’s sign depicts the letter “Ø” from the Danish alphabet, whereas the earlier trademark’s sign depicts the Greek letter “ϕ” or the letter “ф” from the Cyrillic alphabet used in Bulgarian.

As part of its argumentation, the applicant explained that the relevant French-speaking public is used to distinguishing visually similar letters, such as, “b”, “p”, “d” and “q”, “i”, “j” and “l”, capital letters “O” and “Q” and others. It also pointed out that German-speaking consumers also easily distinguish the letter “ß” from the letter “B” and Greek consumers the letter “θ” from the letter “ϕ”. The court noted that these assertions referred only to letters in the languages spoken by the relevant consumers. However, in the case under consideration, the letters “Ø”, “ф” or “ϕ” are not used in the language spoken by the relevant French public and, therefore, it cannot be presumed that they will be able to recognise that the signs are actually letters from foreign alphabets and to distinguish between them. Thus, the court concluded that the signs at issue are visually similar to a high degree.

Next, the court also confirmed the findings of the EUIPO that a phonetic and a conceptual comparison between the signs at issue is not possible. The court took into account, inter alia, the previously established case law pursuant to which it cannot be assumed that the relevant public would have knowledge of a foreign language. Thus, the court noted that there is no certainty that a French-speaking consumer would be able to correctly pronounce (if at all) a letter used in a foreign language such as Danish, Greek or Bulgarian, and that it cannot be presumed that such a consumer would be able to identify the signs as letters from foreign alphabets and, therefore, to draw a conceptual distinction between them.  

Comments

The General Court decision develops the case law on the likelihood of confusion and essentially provides a fair warning that using a sign depicting a letter as a trademark might be risky, particularly if the majority of the relevant public does not speak the language in question.

It is interesting to speculate on whether the court’s conclusion would have been different if the defined relevant public spoke at least one of the three languages. For example, would it have been considered sufficient to establish no likelihood of confusion if the relevant public recognises one of the signs as a letter and, therefore, is able to distinguish that the other sign does not represent this letter?

For Bulgarian-speaking consumers, the earlier trademark is instantly recognisable as the letter “ф” from the Cyrillic alphabet and therefore should not be confused with the opposed trademark. Thus, although a Bulgarian-speaking consumer may not be presumed to recognise the opposed trademark as a Danish letter, he or she would arguably be able to distinguish that the figurative sign “Ø” does not represent the letter “ф” from the Cyrillic alphabet.

On the other hand, in our practice at Schoenherr Bulgaria we already have had the chance to successfully oppose an earlier three-letter international registration to a three-letter Bulgarian application on the grounds (among others) that there is a graphical similarity between the first letters of the respective signs – O and D. In that case, the most relevant aspect was not the knowledge or absence of knowledge of the respective languages and alphabets, but the graphical appearance/writing of the compared letters. The latter concept has already been confirmed by several decisions of the Bulgarian Supreme Administrative Court, although initially rejected by the Patent Office of the Republic of Bulgaria and some first instance courts.

Both the above discussed decision of the General Court and our Bulgarian experience show that the comparison of (single) lettered trademarks can be a complex and multi-layered exercise requiring good knowledge and understanding of current court practice and a creative approach to elaborating all the possible aspects and perspectives of the comparison process.

By Ventsislav Tomov, Attorney at Law, and Kristina Bozhinova, Associate, Schoenherr

Georgiev, Todorov & Co has successfully defended Dundee Precious Metals Chelopech in front of the Supreme Administrative Court in a tax law case against the National Revenue Agency.

According to Georgiev, Todorov & Co, Canada-based Dundee Precious Metals Inc is an international gold mining company engaged in the acquisition, exploration, development, mining, and processing of precious metals. “The mine in Chelopech is one of the largest gold mines in Bulgaria and is owned by Dundee Precious Metals Chelopech EAD. The dispute between Dundee Precious Metals Chelopech and the National Revenue Agency concerns the application of the current legislation in relation to the tax relief from life insurance policies concluded by the client’s employees and withholding of insurance prizes by the employer.”

Following the proceedings before the Supreme Administrative Court, a decision made previously by the Administrative Court Sofia District which was unfavorable to Dundee was annulled.

Georgiev, Todorov & Co’s team included Lawyers Nikolay Lazarov, Arno Mamasyan, and Tsvetelina Dimitrova.

Lex Ludens Partner Angel Angelov has joined forces with Nikolay Kolev, Iva Miteva, and Rossiza Marinova as Partners in establishing the Kolev, Angelov & Miteva law firm in Sofia.

All four KAMM partners worked together for over ten years, at Boyanov & Co, where Kolev was until recently a Partner, while Miteva and Marinova were Senior Associates. In addition to the partners, KAMM includes nine other lawyers.

Kolev will lead the firm’s Energy/Natural Resources practice and co-lead the Corporate/M&A practice. He is a graduate of the Sofia University St. Kliment Ohridski and, prior to joining KAMM, he spent 16 years with Boyanov & Co.

Angelov is Head of Projects and PPP and Co-head of Corporate/M&A. Before founding Lex Ludens in 2017, he spent over a year with Ruskova & Draganova and 11 years with Boyanov & Co.

Miteva will lead the firm’s Real Estate and Construction practice. She too is a Sofia University St. Kliment Ohridski graduate who spent 16 years with Boyanov & Co, before joining KAMM.

Marinova is the Head of KAMM’s Intellectual Property practice. Before joining the firm, she spent two and a half years with Interlus Attorneys at Law and another 16 with Boyanov & Co.

“I am extremely excited and delighted to announce that we are now joining forces with leading Bulgarian lawyers and researchers to establish a brand-new law firm,” Angelov said. “The team includes prominent professionals … as well as our rising stars … A new journey begins!”

At the beginning of 2021 the Bulgarian Competition Protection Act (CPA) was amended, among others, with the implementation of ECN+ Directive. This brought hope that the antitrust activity of the Bulgarian Competition Protection Commission (CPC) may increase.

In fact this implementation was fully completed in June 2018. CPC adopted regulations which further developed some of the tools envisaged by the ECN+ Directive and by the amended CPA. Most of them are already in force, such as: the new Rules for examining commitments proposals under CPA; the new Leniency programme and Rules for application of the Leniency Programme; and the new Methodology for determination of fines under CPA.

On 1^st November 2021 another regulation adopted in June will become effective – the Rules for prioritizing of requests for opening of proceedings under chapter nine and twelve of the CPA (Priorities Rules).

The aim of the Priorities Rules is to ensure that CPC focuses on and uses its resources for prevention and termination of the most material violations of competition.

The Priorities Rules are adopted on the ground of a new provision in the CPA (in compliance with the ECN+ Directive). As per the provision CPC may reject to open an antitrust investigation upon request of prosecutor, leniency request or request of a damaged person, if the case does not fall within the enforcement priorities of the CPC. These priorities are defined in the special regulation adopted by the CPC and published on the CPC’s website – the Priorities Rules.

Once CPC receives request for investigation of antitrust violation under CPA or under article 101 or article 102 of the TFEU (by the damaged entity, under the Leniency Program or by prosecutor), CPC will assess the request whether it is in the scope of the CPC’s priorities considering the following criteria:

• Significant еffect on competition on the relevant market – Priority will be given to requests for investigation of cartels and structural abuses of dominant position as well as violations concerning prices, quality and variety of the goods/services.
• Possible material importance for the consumers’ well-being – Violations result or may result into higher end-prices, offering of less quantities or less variety of products/services and offering of products/services with lower quality and no innovations will also have priority because they can have material direct or indirect impact on the consumers.
• Strategic relevance for the enforcement competition policy – Repeated/multiple violations, violations concerning new market events which have not been investigated by the CPC so far, violations which affect competition directly and violations concerning procedures or mechanisms for use of public and EU funds will be priority.
• Likelihood for finding violation and possible effects of the CPC actions – CPC will assess the likelihood for finding violation on the basis of the pieces of evidence which are enclosed to the request or collected during the preliminary investigation. Further, CPC will consider whether it is better placed to decide on the case than other competent authorities, such as sector regulators or the court.
• Effective use of resources – CPC will consider what type and how much resources it has to involve in the investigation. In this connection, the purpose and duration of the investigation will be also relevant and will be assessed.
• Annual priorities set and published by CPC each year before 31 January.

In order to verify relevant facts and circumstances in connection with the priority assessment, CPC is allowed to conduct preliminary investigation. During this preliminary investigation CPC may request information and all types of evidence, written or oral explanations from the concerned parties as well as information and support from the national competition authorities of the Member States and from European Commission. The collected information will be attached to the file, if such will be opened.

The case is in the scope of CPC’s priorities, if it covers one or several criteria listed above. If the case falls within the CPC’s priorities, the official investigation is opened. If not, CPC’s chairman rejects to open investigation with order. In the order all factual and legal grounds of the rejection have to be elaborated in details. The order can be appealed before the court.

It will be seen in the following months and years whether the amendments of the CPA and the Priorities Rules (together with the other CPC’s regulations) will really push the antitrust enforcement in Bulgaria which seems to be at its lowest level. In addition, it is also very important the antitrust to be brought back in the public agenda. The business has to be further and continuously educated how it can defend its rights and commercial interests in the context of competition law daily as well as before the competent authorities. Anyway, actions will be necessary from both sides – CPC and competition law practitioners outside CPC.

By Mariya Papazova, Partner, PPG Lawyers

PPG Lawyers has advised HeleCloud on its sale to SoftwareOne. Fieldfisher also advised HeleCloud on the deal, while Wolf Theiss and Pinsent Masons reportedly advised SoftwareOne.

Financial details were not disclosed.

According to HeleCloud, a UK-headquartered Amazon Web Services premier consulting partner, SoftwareOne is a provider of end-to-end software and cloud technology solutions. HeleCloud’s current leadership team and employees will integrate into SoftwareOne’s AWS practice.

PPG’s team included Managing Partner Irena Georgieva, Partner Mariya Papazova, and Of Counsel Georgi Georgiev.

With the country still helmed by an interim government, it would appear that Bulgaria remains in a position to grow and prosper and is a fruitful target for investors, according to Boyanov & Co Partner Damian Simeonov.

“The current political situation is dynamic,” Simeonov says. “We are going to have another early general election – scheduled for the middle of November – because the previous two were not able to produce a government, due to the fragmentation of Parliament and a lack of viable coalitions.” He also reports that the Bulgarian president has dismissed the Parliament and re-appointed practically the same caretaker government.

“There are but a few differences between this, new, caretaker government and the one that has been in place hitherto,” Simeonov reports. “Two of the ministers from the old one – that were the most active in their efforts to improve the ministries they headed and as a result attracted a lot of popularity – decided not to continue in the new government but instead to step up in the political spotlight and are intending to run in the upcoming elections.” He reports that these two political newcomers, who are not part of any political party, are polling “rather well” and stand to make a dent in the November election.

Seeing as how a caretaker government was in place, Simeonov says that there was not a lot of room for legislative innovations to take hold. “The Parliament did not do much (apart from amendments to the state budget to ensure the country can run until the end of the year and also increase pensions), but the caretaker government implemented some interesting changes,” he reports. “These include amendments to the way the Bulgarian Development Bank is allowed to finance legal entities.” The Bulgarian Development Bank has been, as he says, favoring large corporate entities so far, a focus the caretaker government sought to alter. “The interim government has placed a cap on how big of a loan the bank can issue, which should curb some of the potential misuse of funds.”

Furthermore, Simeonov says that the caretaker government had overhauled the business climate in general. “Efforts towards easing bureaucratic burdens and improving electronic services were taken, and a huge anti-corruption push has been made,” he reports. According to Simeonov, “the recently reported macroeconomic data paints a good picture in 2021, with a 10% increase of GDP, a 20% increase of exports, and a 4% uptick in investments, all compared to the same period in 2020.”

Also, Simeonov reports that the Bulgarian Recovery and Resilience plan, itself a part of a wider EU program for the post-pandemic economic recovery of member states, is expected to boost the economy of the country in the coming years. “These programs, in addition to recharging the economy as a whole, also present a transformation target in the form of green energy,” he says. “Bulgarian economy is based, to a degree of some 40%, on coal-produced electricity – these producers would have to have some major incentives in order to decarbonize and switch to, say, hydrogen-based fuel. Not to mention the political layer to this – because this power production is home to many jobs,” he reports.

Therefore, in the coming years, he expects the country will attract a lot of investment in renewable energy production, projects to increase energy efficiency (both of business and residential units), as well as decarbonization investments in sustainable transport to reduce the sector’s carbon footprint. So, he adds, the EU Green Deal presents a significant opportunity for Bulgaria’s economy and he expects it to generate a lot of interesting legal work.

Finally, the Recovery and Resilience Plan targets other areas for transformation, such as transport and digital services, and Simeonov feels that these sectors will see an increase in investments as well. “In addition to that, the outsourcing services sector is strong too, representing 4-5% of GDP, with projections of increasing to 8-9% in 2022,” he says, adding that this follows an effort by the EU to “nearshore corporate opportunities” more so than in the past. In conclusion, Simeonov notes there is a growing number of “fintech, edutech, and other tech companies and startups, as well as equity and startup funds that are ready to invest in them. Also, the record-low interest rates of bank lending, as well as the practically negative interest rates on bank deposits, fuel the appetite for M&A deals and investment in real estate,” he says, ending on a positive note.

CMS has advised Cordeel Group N.V. on the sale of a mixed-use logistics and office development to CTP. Hristov & Partners advised the buyer on the deal.

According to CMS, the acquisition was structured as a share deal in respect of the shares in Cordeel’s subsidiary Sofcor Logistics EOOD. “The development consists of 31,000 square meters of warehouses and 4,000 square meters of offices and is leased to Orbico, one of the largest distribution companies in Bulgaria, under a long-term build-to-suit lease.”

CMS’s team included Partner Atanas Bangachev, Counsel Jenia Dimitrova, and Trainee Diyan Georgiev.

Hristov & Partners’ team included Partners Pavel Hristov and Biliana Shagova, Senior Associate Dragomir Stefanov, and Of Counsel Kremena Stoyanova.