Category: Croatia

Schoenherr has announced that Croatian cooperating firm Mandaric & Einwalter’s Partners Vice Mandaric and Ivan Einwalter have been appointed as Local Partners with Schoenherr’s Croatian office.

Specializing in corporate, M&A, and litigation, Mandaric has been with Mandaric & Einwalter for over 11 years, since 2011. Previously, he was a Senior Associate at Savoric & Partners, from 2007 to 2011, and an Associate with Stancic-Rokotov i Sumanovic, from 2004 to 2006.

Einwalter specializes in corporate and M&A and has been with Mandaric & Einwalter since 2011. Prior to joining the firm, he spent over seven years with Savoric & Partners, having first joined as an Associate in 2004 and being promoted to Senior Associate in 2007.

Croatia’s business landscape and GDP remain quite unaffected by the war-related crises, with the country’s energy market and tech sectors growing, according to Batarelo Dvojkovic Vuchetich Partner Laurenz Vuchetich.

“War-related issues are expected to have a structural impact on Croatia’s energy market, mainly on renewable energy,” Vuchetich begins. “Both regional and international investors are already focusing attention on two key sectors within the renewables group – solar and geothermal energy. The energy market sees demand for a number of corporate power purchase agreements, allowing investors to directly enter into power purchase agreements with off-takers, rather than entering into power purchase agreements with the national energy market regulator.” Further, he notes, “the law enables energy communities, where citizen-driven energy activities can contribute to clean energy transitions.”

Another major sector that is flourishing in Croatia, according to Vuchetich, is technology. “Croatia excels when it comes to IT developers. Currently, two unicorn-valued companies in the tech sector – Infobip and Rimac – have received significant funds for growth. We are hopeful this might create a similar effect to what Skype had on the Estonian IT sector and ecosystem,” he explains. “Interestingly, these enterprises have not received financial support from the state but rather developed their businesses on their own. That is something we are proud of, making us hopeful for the future.”

“In addition to that, we just recently received an invitation from the European Commission to join the eurozone from January 1, 2023,” Vuchetich adds. “Public opinion and the business community seem to be welcoming the change, although it is interesting to see how the market will respond to prices, especially considering the current inflation rates.” According to him, this might create challenges from a consumer protection perspective. “Traders will have an incentive to increase prices, therefore consumer protection bodies should pay close attention to that in the future,” he notes.

Vuchetich reports there have not been any major changes in legislation recently. “An amendment to the Croatian Companies Act was adopted, primarily in relation to spin-offs. Companies divesting their assets into a newly formed company through a spin-off procedure are now jointly and severally accountable for all liabilities incurred prior to such a spin-off being effective, regardless of the value of assets acquired and liabilities assumed through the spin-off,” he says, noting that it is hard to predict how it will affect the M&A landscape in Croatia.

“Other than that, the crisis has not affected our GDP yet, and the business sector is in much better condition than a few years ago,” Vuchetich points out. “We don’t rely on heavy industry as much – but rather on the services business and tourism sector – and that contributes to our well-being so far. We’ll have to see how things develop,” he concludes.

A topic that has recently been the subject of discussion and reflection is the position of trademarks –protected brands used in trade to mark products and services in the Metaverse, with the question of whether such existing trademarks have protection in this new digital market.

What, until recently, seemed like a distant future and a possibility only as a work of science fiction on the movie screen or a video game/online game, is today a reality that should be taken into account and considered through the lens of legal regulation.

What is a Metaverse?

The Metaverse is a virtual environment/digital space that will replace the Internet as we know and use it today to connect the human mind and artificial intelligence using new ways of communication, interaction and cooperation, as well as being a new tool for business visibility and development, thus becoming a kind of “new/parallel reality”.

Even today, through social networks, algorithms are set up to collect an abundance of information about the user, e.g. what kind of music we listen to, where we want to travel, what food we prefer, do we have any special interests, which fashion expression is closest to us, what are our business interests. By spending even more time in the Metaverse of the future, the information the Metaverse will collect about us as users will be proportionally more significant.

Namely, the Metaverse is designed so that everyone will be able to, through their own digital avatar identity, through cryptocurrencies (classic replaceable/fungible tokens) or by exchanging NTF (Non-Fungible Token, irreplaceable token), buy everything they think they need, such a, digital paintings, virtual bags, virtual clothes, virtual shoes, virtual furniture, virtual real estate, even virtual tickets for sporting events, concerts or exhibitions… Multinational companies will be able to open their offices in the Metaverse, where they can meet business partners living on the other side of the world “face to face”. Equally, it will likely be possible in such a parallel reality to go for a drink, a concert, or an art exhibition.

Therefore, a significant number of entrepreneurs realised the need for their presence in the Metaverse as a kind of new market niche and a showcase where manufacturers of specific products and service providers can offer additional, new ways of doing business and providing services, which can, in turn, contribute to further market success and higher earnings.

The products and services in the Metaverse are only the virtual appearance of the actual product or service and are not the same as the corresponding non-digital product or service. For example, clothing in the physical world is undeniably a physical product/good, but in the digital world, digital clothing is software. Because their purpose is different, digital goods and services must be treated differently from the corresponding non-digital goods and services. Such goods and services are not complementary and have different distribution channels.

However, these products and services are still protected as brands/labels (trademarks) exclusively in the physical and tangible world. They are subject to prescribed and regulated registration systems, territoriality, and legal rules that apply in the real world and particular territories. On the other hand, there are no specific regulations governing the use of trademarks in the Metaverse/virtual reality.

In connection with the above, a new problem faced by entrepreneurs, especially popular brands, is third parties’ unauthorised use of registered trademarks in the Metaverse.

The misuse of trademarks and exploitation of the reputation acquired by a trademark by unauthorised third parties in the digital space are no secret and can be considered almost a common occurrence.

Consequently, given the non-existence of any special regulation on the use of trademarks in the Metaverse that would provide the means to companies to secure their property and enable them to exercise rights against infringers of similar or identical representations of products and services in the Metaverse, companies should not rely solely on their existing registered trademarks. Namely, consumers can be deceived into thinking that digital and tangible products have an identical commercial origin, which is not always the case.

Usually, when applying for trademark registration, products and/or services must be identified and classified following the International Classification of Products and Services for Trademark Registration (Nice Classification). This list of products and/or services registered for a trademark determines the scope of protection of a trademark relating to a specific product and/or service.

No product or service class in the current Nice Classification directly covers the Metaverse.

However, despite the above, it is possible for companies right now, to take some adequate preventative actions using current regulations by (i) extending trademark protection to new virtual environments, (ii) taking measures to control their existing trademark portfolio and (iii) other necessary actions, which could consist of the following:

(i) for existing trademarks: in filing new applications and registering trademarks in additional / supplemented classes of products and services that were not covered by protection at the time of filing the trademark application;

For example, a trademark should be protected for virtual goods and services (Class 9 as a virtual good/product or goods used online and in virtual worlds or as software representing those products in a digital environment and can be downloaded to provide access to those digital products online, i.e. in classes 35, 36, 44 and 45, so that it also covers services to be provided in the virtual world), providing it satisfies the basic assumption for labelling and classification of products and/or services for which  trademark protection is requested, i.e. that products and services should be clearly and precisely identified;

(ii) devising a supervision strategy of a company’s portfolio of registered trademarks to act against new and potentially identical trademark applications for classes of products and/or services that did not previously need to be monitored so that entrepreneurs are informed and able to object to trademark applications within the prescribed legal deadlines;

(iii) creating their own NFTs of digital products and/or services;

Given that the “future” is already happening today, thinking about and choosing the right trademark protection strategy in the Metaverse is and will be a necessity.

Due to the intensive development of technology, all the above should be taken into account immediately, and the necessary and possible steps should be taken to ensure adequate and comprehensive legal protection in this area. As Charles Darwin said: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Everything that seemed unreal until recently is becoming real. It is up to us to adapt to it and choose the right ways to adequately protect ourselves, usually by seeking professional assistance in a rapidly changing and complex world.

By Suzana Cesarec Nothig, Attorney at law and Co-managing Partner, Porobija & Spoljaric

Divjak Topic Bahtijarevic & Krka has advised Unconditional and its majority owner Edvard Varda on the sale of a stake in the company to the Fressnapf Group. Schoenherr reportedly advised the Fressnapf Group on the acquisition.

According to DTB, “as one of the leading regional pet supply companies, Unconditional has effectively partnered and cooperated with the Fressnapf Group that is now its strong shareholder investing in the company’s further expansion in Croatia, Slovenia, Serbia, and Bulgaria. Since its founding in 1974 with one pet store in Split, Croatia, Unconditional has grown to nearly 300 employees today, operating 30 pet stores in Croatia and supplying over 1,000 pet stores and veterinarians in Slovenia, Croatia, and Serbia.”

The Fressnapf Group, a European pet supplies company, is currently active in 11 countries with more than 1,800 stationary and online stores.

“Our joint venture covering the markets in Slovenia, Croatia, Serbia, and Bulgaria is the next logical step to achieve our vision – passion and commitment to unconditional care for all our customers: pets, pet lovers, our B2B customers, and other pet professionals,” commented Varda. “Through know-how, experience, and cooperation with the Fressnapf Group, we are confident that we will enable as many people as possible to provide the best care for pets in our region.” 

DTB’s team included Senior Partner Damir Topic and Attorney Dina Salapic.

Editor’s Note: After this article was published, Schoenherr confirmed it had advised the Fressnapf Group on the acquisition. The firm’s team included Partners Markus Piuk, Christoph Haid, and Srdjana Petronijevic, Attorneys Vice Mandaric, Ana Marjancic, Ksenija Sourek, Djordje Trifunovic, and Jan Primozic, and Associates Irina Hanin, Alexandra Jelinek, Lucija Krznar, and Alan Vuckovecki.

CMS has advised Porsche on a new EUR 500 million investment round into Rimac that also included, among others, Softbank and Goldman Sachs as new investors. Reportedly, Kunstek Halle & Simac, working with Latham & Watkins, advised Rimac on the deal.

Rimac Automobili is a Croatian electric supercar maker and technology group. Last year, CMS and Kunstek Halle & Simac advised on the formation of a joint venture between Rimac and Bugatti (as reported by CEE Legal Matters on July 8, 2021). An interview featuring both CMS and KHS about the legal work on the Rimac-Bugatti combination is available here.

The CMS team included Partner Marija Zrno-Prosic, Senior Associate Karmen Sinozic, and Lawyers Mario Vrdoljak and Iva Grgic.

Editor’s Note: After this article was published Savoric & Partners informed that it had advised Softbank and Goldman Sachs on the deal, working with lead counsels White & Case and Linklaters, respectively.

The Savoric & Partners team advising on the Softbank investment was led by Partner Nina Radic Kuzik, while the firm’s team advising Goldman Sachs was led by Partner Mia Lazic.

Deloitte Legal’s Krehic & Partners has advised CME on its EUR 50 million acquisition of RTL Croatia. Wolf Theiss advised RTL Croatia.

According to Krehic & Partners, the deal closed on June 1, 2022, after being approved by the Croatian Competition Agency and the Croatian Electronic Media Agency, and is the country’s “largest media transaction in the last decade.”

CME is a subsidiary of the PPF Group, an international investment group founded in the Czech Republic in 1991.

“As a PPF company, we are always open to interesting ideas for growth and investment and see that the Adriatic is a growing region with exceptional potential,” CME CEO for the Czech Republic, Romania, Slovakia, and Slovenia Didier Stoessel commented. “We have a very successful operation with ProPlus in the region and I believe that these two Adriatic countries can work well in parallel. As in our other countries, we will focus on digitalization and local content creation, while continuing to excel in pluralistic and high-quality journalism.”

The Krehic & Partners team included Managing Partner Tarja Krehic, Partner Ivan Zornada, Attorney Valerija Cerovski, and Associates Jelena Kraljevic, Andro Mrljak, Ivana Mihaljevic, and Dino Kozul.

The Wolf Theiss team included Managing Partner Luka Tadic Colic, Partner Dora Gazi Kovacevic, and Associate Marija Lalin.

Savoric & Partners has advised Croatian retail chain company Studenac on its acquisition of Lonia Trgovina. Planinic Soljic and Partners advised the sellers.

Studenac is a Croatian chain of 750 stores, in more than 500 locations. According to Savoric & Partners, the acquisition of Lonia Trgovina is the biggest acquisition for Studenac, adding almost 300 stores and expanding its network to more than 1,000 stores. The acquisition represents a “horizontal concentration on the retail market of mixed goods, mostly food, beverages, and sanitary products, in the town of Zagreb and in the counties of Zagreb, Sisak-Moslavina, Bjelovar-Bilogorska, Pozega-Slavonija, Brod-Posavina, Karlovac, Varazdin, and Koprivnica-Krizevci.”

Savoric & Partners’ team included Partners Nina Radic Kuzik and Mia Lazic, Senior Associates Marko Kruc, Ivan Ivkovic, Natasa Trbovic, and Sandra Tomaskovic, and Associates Nives Kolonic and Martin Hren.

The Planinic Soljic and Partners team included Partners Ivana Semov-Siljeg, Kresimir Planinic, and Domagoj Soljic and Associate Fran Markic.

Editor’s Note: After this article was published, Clifford Chance announced that it had advised Bank Pekao and the European Bank for Reconstruction and Development on the financing provided to Studenac for the purposes of the acquisition. The firm’s Warsaw-based team included Partner Andrzej Stosio, Counsel Irena Floras-Goode, and Associates Piotr Weclawowicz, Artur Gladysz, Aleksander Smakosz, and Aleksandra Sierac.

Former Krehic & Partners Partner Matea Gospic Plazina and former Investment Banking Counsel at Zagrebacka Banka Lana Stojs have established a new firm in Zagreb – Gospic Plazina Stojs.

Gospic Plazina had been with Krehic & Partners in cooperation with Deloitte Legal since 2019. Prior to that, she worked for Savoric & Partners between 2016 and 2019. Earlier still, she was an Associate with Macesic and Partners between 2012 and 2016.

Prior to setting up the new firm, Stojs had been with Zagrebacka Banka, part of the UniCredit Group for 2.5 years. Before that, she also worked for Savoric & Partners, first joining as an Associate in 2006, being promoted to Senior Associate in 2009, and making Partner in 2015.

According to Stojs, the new firm’s “work so far overall covered corporate law, M&A, capital markets, and restructuring and this will be the focus going forward.”

Deloitte Legal’s Krehic & Partners has advised the Kovacic family on their sale of Aquapark Istralandia to the Looping Group. Divjak Topic Bahtijarevic & Krka reportedly advised the buyer.

Aquapark Istralandia is a water park in Croatia. With over 180,000 visitors each year, the park has six pools and 17 water slides over 82,000 square meters.

Looping is a group of regional leisure parks consisting of 20 parks operating in a number of European countries.

The Krehic & Partners team was led by Managing Partner Tarja Krehic and Partner Ivan Zornada.

Editor’s Note: After this article was published, DTB confirmed it had advised the Looping Group on the acquisition. The firm’s team included Senior Partner Damir Topic and Attorneys-at-Law Dina Salapic and Dominik Glavina.

Viruses affecting human body have been the hot topic of most conversations for over two years. However, the digital world is not spared from “viruses” which affect other aspects of human lives. Multiple malwares used for cyber-attacks are created to damage, disrupt, hack, or block a device and encrypt or lock data and can cause enormous damage both in the private and public sector.

Such attacks target operational technology (OT) or information technology (IT). One of the most famous malwares aimed at operational technology was unquestionably the infamous Stuxnet, detected in 2010. Its goal was physical impact, which was successfully done, reportedly damaging one-fifth of the nuclear centrifuges in the Iranian Bushehr nuclear power plant.

A recent IT attack that gained global attention was definitely the pro-Russian motivated attempt to disrupt voting for the Eurovision Song Contest, as reported by the Italian police.

Unlike physical destruction, malwares aimed at IT target business financial data, customer databases (including personally identifiable information), customer financial data, intellectual property (like trade secrets or product designs), IT infrastructure access, etc.

Hackers are very imaginative in the creation of ever new sophisticated malwares and diverse methods of extortion; one such being so called double extortion. With this method, the initial encryption of data is followed by form of extortion and attempts to delete backups making it more difficult for businesses to recover data.

Another aspect in data safety to be considered is remote work. Even before the lock-down, an increasing number of people had realized they could work from home or from different parts of the world. As convenient as this might be for personal life and doing business while traveling, the danger of data loss has consequently increased. People can lose devices or data could be stolen due to unsecure network. However, it is not just remote work that poses an increased risk. The risk of cyber-attack is everywhere where devices containing information are used, with the risk being even higher when the information is especially interesting to the cyber-attacker. 

As damaging as cyber-attacks can be to businesses, losses from such events are often excluded from a general liability policy. However, the insurance market is increasingly recognizing the necessity to insure events caused by cyber-attacks. Multiple losses arising from such events can cause immense damage to a company as well as to third parties, especially when data is involved. Cyber insurance policies often provide following coverage options: business interruption, notifying customers about a data breach, IT forensics, cyber extortion, litigation expenses, regulatory defense expenses/fines, reputation losses, restoring personal identities of affected customers, and recovering compromised data.

It is also important to examine territorial scope of the cyber insurance policies –  not only because employees holding important information can be located in different parts of the world, but also because businesses themselves can store data in different places around the globe.

In the EU, the General Data Protection Regulation imposes additional obligations in order to improve data protection systems which contain data on natural persons, including informing competent authority in the event of a breach. Cyber insurance policies differ significantly in the coverage of penalties imposed by the authority in the event of cyber-attack and some demand that authorities initiate a formal procedure for the insurer to pay the damage.

Finally, in the light of the ongoing political situation, it remains to be seen how cyber insurance will be further developed regarding events of cyber-attacks by organizations or other countries and legal interpretation of the exclusion of war risks.

By Janica Rakoci, Associate, Ostermann & Partners