Category: Croatia

CMS has advised the Warner Music Group on its acquisition of a minority stake in Croatian label Dancing Bear Records. Kramaric & Partners reportedly advised Dancing Bear.

The Warner Music Group is an American multinational entertainment and record label conglomerate headquartered in New York City.

“This investment by Warner Music is a vote of confidence in the future of music from the West Balkans,” said Co-Founder and Managing Director of Dancing Bear Silvije Varga. “We look forward to working together to take music from our existing roster to the wider world, and to uncover the next generation of local talent.”

The CMS team included Partner Marija Zrno Prosic and Attorneys at Law Mario Vrdoljak, Manuel Kralj, and Dina Celikovic.

The concept of exhaustion of trademark rights is a nuanced aspect of intellectual property law that might seem counterintuitive to those unfamiliar with the field.

This article explores this concept, focusing on how it is applied within the jurisdictions of Western Balkan countries. By systematically breaking down which rights are exhausted and whose they are, we aim to clarify this complex legal principle.

Trademark Exhaustion: Limiting Rights After First Sale

First and foremost, one of the primary rights of a trademark holder is the exclusive ability to market goods bearing the registered mark. However, this right can be restricted by the doctrine of exhaustion of rights.

For instance, imagine a pair of sneakers from a beloved brand. The company that produced these sneakers typically holds the trademark and can prevent any unauthorized first sales. However, once the sneakers are sold by an authorized seller, the trademark holder’s rights over this specific pair are exhausted. This does not permit the buyer to produce new sneakers with the same mark or to license the mark to others.

Types of Exhaustion of Intellectual Property Rights

The concept of exhaustion of rights represents a form of limitation on intellectual property rights. It restricts the freedom of the rights holder to exercise further control over goods bearing their marks after they have been initially placed on the market in a specific territory.

Depending on the geographical area to which the exhaustion of intellectual property rights applies, we can identify three types/systems of exhaustion:

1. National: The right holder is entitled to prohibit the use of their trademark in connection with goods that have not been placed on the market by the trademark holder (or by authorized persons) in the territory of a specific country. Therefore, parallel imports to the country applying the principle of national exhaustion of trademark rights are not allowed.
2. Regional: The right of the trademark holder is considered exhausted when the holder or an authorized person put goods labeled with their trademarks into circulation for the first time in any of the countries belonging to a certain region/group of countries. Therefore, parallel imports to the region/group of countries applying the principle of regional exhaustion of trademark rights are not allowed.  
3. International: The right of the trademark holder is considered exhausted when the trademark holder or any person with consent of the trademark holder put goods marked with trademarks registered in the name of the right holder into circulation for the first time anywhere in the world. Consequently, parallel imports will be allowed to the country applying the principle of international exhaustion of trademark rights.

Exhaustion of Rights in Western Balkans: A Country-Specific Overview

Interestingly, Western Balkan countries accept different types/systems of exhaustion of rights, despite their efforts to harmonize their intellectual property legislation with that of the European Union. For clarity, below is the list of Western Balkan countries with explanations of the systems/types of exhaustion of rights they accept:

• Albania: Adopts national exhaustion of rights. Once goods bearing the trademark are placed on the market in Albania by the holder or by an authorized person, further circulation of such goods in Albania will be allowed.

• Bosnia and Herzegovina: Adopts international exhaustion of rights. Once goods bearing the trademark are placed on the market anywhere in the world by the holder or by an authorized person, further circulation of such goods in Bosnia and Herzegovina will be allowed.

• Montenegro: Initially adopts national exhaustion of rights. Once goods bearing the trademark are placed on the market in Montenegro by the holder or by an authorized person, further circulation of such goods will be allowed.

• North Macedonia: Adopts national exhaustion of rights. However, there may be issues in enforcing trademark rights against parallel imports as enforcement authorities are not keen to apply the principle of national exhaustion of trademark rights currently in force, as they consider this principle to be too restrictive from competition perspective.

• Serbia: Adopted the international system of exhaustion of rights under the Trademark Law enacted in 2020, replacing the previous national exhaustion of rights system.
• Kosovo* (UN 1244): Perhaps the most interesting approach to this concept is found in this legally challenging jurisdiction. The Law on Trademarks enacted in 2022 combines multiple systems/types of exhaustion of rights, creating a new regional-national system.

The 2022 Law on Trademarks in Kosovo* formally kept the principle of national exhaustion of trademark rights as the previous Trademark Law. However, the new Law on Trademarks introduced several significant exceptions from national principle, making the whole system of exhaustion of trademark rights specific and hybrid.

In a nutshell, trademark holders can prevent circulation of goods bearing their trademarks (national principle), as long as those goods were not placed in any of these jurisdictions/regions (exceptions):

1. Kosovo*;
2. EU and EEA member states (Iceland, Liechtenstein, and Norway);
3. Western Balkan countries (Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia); and
4. Countries with which Kosovo* has trade agreements signed (currently the UK and Turkey).

Common Provision and Strategic Approaches

A common feature of all provisions in Western Balkans countries regulating exhaustion of rights is the provision that it will not apply in cases where the trademark holder has a justified reason to oppose further placing on the market of goods bearing the trademark, especially if there has been a malfunction or other significant change in the condition of the goods after their initial placement on the market.

While intellectual property law is highly harmonized globally, each jurisdiction within the Western Balkans has unique applications of trademark exhaustion. It’s crucial for trademark holders and businesses to understand these variations to navigate the legal landscape effectively.

This text is for informational purposes only and should not be considered as legal advice. Should you require any additional information, feel free to contact us.

By Dusan Kovacevic, Counsel, ZMP

The Act on Restrictive Measures (OG No. 133/2023, the “Act“) entered into force on 15 November 2023 (with the application of certain main provisions as of 15 May 2024). The Act establishes more effective due diligence and reporting procedures and mechanisms, which will enable the Republic of Croatia to implement new and more complex sanctions regimes from the European Union and United Nations.

The Palette of Restrictive Measures

Restrictive measures generally include:

• restrictions on the disposal of assets;
• prohibition of entry into the national territory of the Republic of Croatia or prohibition of transit through it;
• total or partial termination of economic relations;
• total or partial restriction on trade, imports, exports, transit, provision of services and postal traffic, electronic, and other communications;
• embargo on weapons and military equipment;
• termination of diplomatic relations; and
• other measures in line with international and European law.

Scope of Application

Entities under the supervision of the following institutions need to comply with the obligations set out under the Act:

• the Croatian National Bank;
• the Croatian Financial Services Supervisory Agency;
• the Financial Inspectorate, and
• the Tax Administration – which in fact means all legal entities active in Croatia.

New Set of Obligations as of 15 May 2024

As of 15 May 2024, the entities need to comply with the following main obligations:

• adopt written policies, controls, and procedures regarding the implementation of restrictive measures;
• appoint a person within the organisational structure to be responsible for compliance with restrictive measures;
• establish appropriate reporting channels;
• keep data regarding the application of restrictive measures.

Monetary Fines

In case of non-compliance with the new statutory provisions, monetary fines ranging from approx. EUR 4,500 to EUR 90,000 for legal entitles, and from approx. EUR 600 to EUR 4,500 for the responsible person within legal entities, may be triggered.

Zoom-Out

For the wider context, on 24 June 2024, the European Union adopted a 14th package of restrictive measures imposing restrictions on an additional 69 individuals and 47 entities in respect of Russia. Restrictive measures already in force exert pressure on targeted entities by limiting their access to services and resources, forcing affiliated companies to navigate these restrictions carefully in order to ensure compliance.

By Dora Gazi Kovacevic, Partner, and Alan Vuckovecki, Associate, Wolf Theiss

Lovric, Novokmet & Partners has advised Entrio on a EUR 9 Million investment from Invera Equity Partners. Schoenherr advised the fund.

Entrio is an event management platform.

Invera Equity Partners is a private equity fund manager.

The Lovric, Novokmet & Partners team included Partner Mate Lovric, Senior Associate Katarina Simac Tot, and Associate Lucija Zelenkovic.

The Schoenherr team included Partners Ivan Einwalter and Luka Lopicic, Attorney at Law Dina Vlahov Buhin, and Associate Doroteja Strum.

White & Case has advised Energean on its divestment of its Egypt, Italy, and Croatia exploration and production assets to an entity controlled by Carlyle International Energy Partners for an enterprise value of up to USD 945 million.

The transaction remains contingent on regulatory approval.

According to White & Case, “the sale enables Energean to rationalize its portfolio and focus on its gas-weighted development strategy in Israel and Morocco. It will also free up capacity and capital to invest in new projects across EMEA and accelerate Energean’s decarbonization efforts whereby post-close its scope 1 and 2 emissions intensity will reduce by around 40% to approximately 5 kilograms of CO2 per barrel of oil equivalent. This is in addition to the company’s focus on creating a Carbon Storage Hub in Greece and the wider Mediterranean region via its EnEarth subsidiary.”

In 2023, White & Case advised on the sale of Meopta to Carlyle (as reported by CEE Legal Matters on June 6, 2023).

The White & Case team included lawyers in London, Cairo, and Milan.

White & Case did not respond to our inquiry on the matter.

As the UEFA Football Championship is now underway, football fans across Europe are buzzing with excitement. This sporting event is not just a celebration of top-tier talent and national pride but also a time when fans proudly sport their team’s colours. However, a troubling issue looms large: the rise of counterfeit football jerseys.

Why Fans Opt for Replica Jerseys

Football jerseys symbolize more than just team affiliation; they represent a deep connection to the sport and a sense of belonging with fellow fans. Wearing your team’s jersey is a way to show loyalty and passion. However, the cost of authentic jerseys puts them out of reach for many fans. High prices drive a significant number of fans towards cheaper, counterfeit football jerseys available online and at local markets for a fraction of the cost.

The Expanding Counterfeit Market

The demand for fake football jerseys is immense and continues to grow. Counterfeit sports merchandise is a multi-billion-dollar industry, with football jerseys being one of the most frequently faked items. The UEFA Championship, with its global reach, becomes a hotspot for counterfeit sellers looking to profit from the event’s massive fan base. These fake jerseys not only impact sales of official merchandise but also raise issues regarding their quality and legality.

Fighting the Flood of Fakes

Combating counterfeit football jerseys is a complex and ongoing battle. Football clubs and authorities are leveraging advanced technologies like holograms, QR codes, and blockchain to verify the authenticity of products. UEFA and national football associations frequently team up with law enforcement to crack down on the sale of counterfeit sports merchandise, especially around major events like the UEFA Euro 2024 Championship.

Education plays a crucial role in this fight. Initiatives such as UEFA’s “Real Scarf” campaign aim to raise awareness about the importance of buying official football merchandise to support local clubs and economies. These efforts are critical in helping fans understand the broader implications of purchasing counterfeit goods.

UEFA’s Approach to Counterfeit Jerseys

UEFA and its associated football clubs are dedicated to protecting their brand and merchandise. During events like the UEFA Euro 2024 Championship, several measures are implemented to deter the sale and distribution of fake football jerseys:

• Enhanced Surveillance: Increased security and monitoring at stadiums and nearby areas help identify and stop the sale of counterfeit goods.
• Educational Campaigns: UEFA and clubs launch initiatives to inform fans about the benefits of buying official merchandise and the risks associated with counterfeits.
• Collaboration with Authorities: Close cooperation with local law enforcement helps curb the availability of fake football jerseys.

Despite these efforts, UEFA’s primary focus is on preventing the sale and distribution of counterfeit football jerseys rather than penalizing individual fans who wear them.

What Fans in Germany Should Know: Will UEFA Euro 2024 Impose Fines for Wearing Fake Jerseys?

Fans wearing fake jerseys for personal use don’t need to worry about fines. Police are not going to stop and search people just for wearing a counterfeit football jersey. However, there might be issues if counterfeit jerseys are being sold or used for commercial purposes.

Here’s what fans in Germany need to consider regarding fake football jerseys:

1. Risk of Purchasing Counterfeits: Buying jerseys from unofficial sources or street vendors significantly increases the risk of ending up with a counterfeit product. Fans should be vigilant and purchase from reputable sellers to avoid unintentionally buying fakes.
2. Wearing Counterfeit Jerseys: Fans wearing fake jerseys are unlikely to face fines or penalties. German law enforcement typically does not target individuals for wearing counterfeit apparel. However, wearing fakes does bring up broader issues of ethics and quality.
3. Buying Official Merchandise: To truly support their team and the sport, fans are encouraged to buy official football merchandise. Doing so ensures better quality, supports the clubs financially, and contributes to the overall health of the sporting ecosystem.

Conclusion

While the problem of counterfeit football jerseys is a persistent challenge, fans wearing them in Germany during the UEFA Euro 2024 Football Championship are unlikely to face legal repercussions. The main focus of law enforcement and UEFA is to tackle the sale and distribution of these counterfeit goods. Nevertheless, by choosing to buy official football merchandise, fans can ensure they are contributing positively to their favorite sport and enjoying the Championship in the spirit of genuine support.

Making informed choices on where and how they purchase their jerseys allows fans to celebrate their love for football while supporting the values of fair play and authenticity.

This text is for informational purposes only and should not be considered as legal advice. Should you require any additional information, feel free to contact us.

By Ivana Ervacanin, Senior Trademark & Patent Attorney, ZMP

Vukmir & Associates has advised the Croatian National Bank on the project to design and build its new Moneterra informational-educational center in Zagreb.

Moneterra is the Museum of Money of the Croatian National Bank. 

The Vukmir & Associates team included Partners Ivan Cuk and Sanja Tkalec Kovac.

Croatia’s economic outlook is on the rise, with improvements in mergers and acquisitions activity compared to last year according to Lovric Novokmet & Partners Partner Mate Lovric who discusses the positive trends in GDP growth, investments, and key sectors like energy and tourism that are driving this upward trajectory.

“Compared to 2023, things are looking better,” Lovric begins. “This year is stronger in terms of mergers and acquisitions. Last year we saw a much slower M&A year – now, we see positive updates.” Lovric goes on to say that, in 2023, “Croatia experienced solid GDP growth, being the second country in the EU with a 2.8% increase and this trend is continuing in 2024 – investments have risen, bolstered by substantial EU grants. There are large infrastructure projects underway, such as rail developments, and significant investments in hospitality,” he reports.

Highlighting the hottest sectors in Croatia right now, Lovric notes that “energy, including solar power, and tourism continue to lead the way. Indeed, we are attracting a lot of EU funds and investments in these areas. The overall outlook, particularly from an M&A perspective, is very promising.” In fact, Lovric reports his team has “seen more M&A deals in the first half of this year than throughout all of 2023. This positive trend is also echoed by other M&A professionals and advisors – we are working on more deals and have a better overall outlook for the year.”

Specifically, focusing on the tourism sector, Lovric reports that “there are new hot spots on the market where investors are exploring quasi-time-share concepts. These initiatives are attracting considerable professional attention and could become significant for the tourism sector, however, they are still on somewhat shaky legal grounds, which we are closely monitoring.” 

Taking a step back and looking at the big picture, Lovric reports that the political climate is playing a big role. “This year is a super-election year in Croatia, which definitely impacts businesses, especially those involving the state. We already had parliamentary elections and now have EU elections, with local elections coming up – this political activity is driving Croatia’s GDP growth, and we have seen public servants’ salaries, including those of judges and clerks, increase.” This comes as a welcome change given since Lovric reports that, last year, they “experienced a significant court strike that severely affected the legal market. It underscored the importance of the courts for the economy, impacting M&A deals, company setups, mortgage registrations, etc.”

Overall, Lovric says that Croatia is experiencing a long period of political stability. “We have a continuity government for the third term in a row – it’s a centrist government with some right-wing elements. This political stability is beneficial for business, contributing to 12 consecutive quarters of GDP growth, and counting.” According to Lovric, this positive trend is expected to continue, enhancing investor confidence. “Private equity funds have regained access to liquidity and, with higher interest rates becoming more normalized, both investors and sellers are more ready to engage in transactions. The overall level of tension decreased significantly compared to last year and business is running smoothly,” Lovric concludes.

Vukmir & Associates has advised Adriagate on its acquisition of To Islands Travel. Budimir & Partners advised the sellers.

Adriagate specializes in private accommodation and holidays in Croatia. It has been operating since 2001.

Founded in 2004, To Islands Travel operates in the rental of private accommodation in Croatia.

The Vukmir & Associates team included Partners Sanja Tkalec Kovac and Tomislav Pedisic.

The Budimir & Partners team included Partner Marin Budimir and Lawyer Duje Domazet.

Bardek, Lisac, Musec, Skoko, and Partners in cooperation with CMS Reich-Rohrwig Hainz has advised Erste&Steiermaerkische Bank and Privredna Banka Zagreb on the more than EUR 130 million Valamar Collection Resort financing.

Valamar Collection Resort is a five-star luxury resort in the Pical zone in Porec.

The Bardek, Lisac, Musec, Skoko, and Partners team included Partners Ana-Marija Skoko and Jelena Nushol Fijacko, and Senior Associates Relja Rajkovic and Antonija Kanjer.