Category: Czech Republic

Kocian Solc Balastik has advised Taiwan’s Yeong Chin Machinery on the acquisition of a majority stake in Trimill.

Trimill, founded in 2000 in the Czech Republic, specializes in the development, design, assembly, commissioning, sales, and service of gantry milling machines for the machining of molds and press tools.

Yeong Chin Machinery Industries is a Taiwanese company founded in 1954 and specializing in manufacturing machine tools.

KSB’s team included Partner Dagmar Dubecka and Lawyer Jan Beres.

KSB did not respond to our inquiry on the matter.

Kocian Solc Balastik has advised Ronaldsay on the sale of Hampshire Green Point to Wood & Company. Glatzova & Co advised the buyers on the deal.

According to KSB, “Hampshire Green Point developed and commissioned the Green Point project, an energy-efficient eight-story office building in Prague 5. The building, which was completed last year, comprises approximately 7,000 square meters of office space.”

“The building was sold to the Wood & Company Office sub-fund, which focuses on office buildings in major cities in CEE countries. Green Point becomes the third Prague office building, and the tenth office building in total, held by the sub-fund,” KSB announced. 

KSB’s team included Partners Dagmar Dubecka and Helena Navratilova and Lawyer Jan Beres.

Glatzova & Co’s team included Partners Vladimira Glatzova and Jiri Sixta and Attorney Tomas Kessler.

Schoenherr Head of Banking & Finance in the Czech Republic Ondrej Havlicek has been promoted to a Local Partner with the firm’s Czech office.

Specializing in banking and finance, Havlicek has been with the firm since 2019, having first joined as a Senior Associate. Previously, he spent over 13 years at Weinhold Legal, between 2006 and 2019, having first joined as a Legal Assistant, and being promoted to Junior Lawyer, Senior Lawyer, and Managing Attorney in 2007, 2011, and 2015 respectively.

Otakar Fiala, specializing in real estate, was elevated to Counsel in the same promotion round.

“Ondrej and Otakar have significantly contributed to the development of our Prague office,” Schoenherr Prague office Managing Partner Martin Kubanek commented. “Their promotions are a recognition of their professional achievements. We greatly appreciate their commitment and enthusiasm for servicing clients, and we also value them as great colleagues.”

PRK Partners, working alongside Luther, has advised the shareholder of the I.G. Bauherin Group on its sale to US automotive supplier Lear Corporation. Mayer Brown reportedly advised the Lear Corporation.

The transaction remains contingent on regulatory approval.

Located in the greater Frankfurt area, the IGB Group has been supplying the automotive industry with electric seat heating systems since 1976. In addition to seat heaters, IGB also offers ventilation systems, active cooling systems, steering wheel heaters, HOD systems, seat sensors, and electronic control modules.

According to PRK Partners, “the transaction covers all locations of the IGB Group in Germany, Canada, China, the Czech Republic, Mexico, Serbia, and Vietnam with more than 4,000 employees and, in particular, the existing customer contracts and customer relationships.”

PRK Partners’ team included Senior partner Jan Kohout and Attorneys Norbert Hink and Shiyang Zhang.

Noerr has advised Espira on the sale of Icon Communication Centres to Yoummday. Kinstellar advised the buyer.

Prague-headquartered Icon Communication Centres is a business process outsourcer and call center specializing in inside sales and account management customer experiences.

Espira Investments is a Prague-based private equity firm investing in Central European small and medium-sized enterprises.

Founded in 2016, the Munich-based startup Yoummday offers job opportunities for workers via a work-at-home operating system.

The Noerr team was led by Partner Barbara Kusak and Senior Associate Lucia Luptakova and included Senior Associate Michal Janicek and Legal Advisor Pavel Hrdy.

The Kinstellar team was led by Partner Jan Juroska and included Managing Associates Michal Kniz and Petr Bratsky, Senior Associate Martina Mazurkova, Associate Denisa Simanska, and Junior Associates Jan Palko and Simona Semanova.

This article outlines the possibilities of a legal defence against “screenscraping” – a way of automated data extraction from web sites of third parties without their consent (or even against an express prohibition).

Screenscraping may be used to provide useful and sophisticated services with an added value (integrating otherwise fragmented information) and it is therefore widely used although this is not always apparent (such as for price monitoring / comparison, etc.).

On the other hand, it may also infringe the legitimate rights of the parties whose information is being used, in particular in the area of

(i) intellectual property (copyright) and database rights,

(ii) general terms and conditions of businesses, or web site use (certain web sites expressly prohibit scraping or copying their content and its further use),

(iii) laws regarding “computer hacking“ and

(iv) laws protecting fair competition. 

The question of the legality of screenscraping is at present the core of several legal disputes across the EU with somewhat unclear contours so far. Given its practical implications in many sectors, it is important for businesses directly carrying out screenscraping, as well as for those indirectly utilising the scraped data, and likewise for those businesses wishing to protect themselves against such practices.

Ryanair versus online travel agencies / Preliminary court protection against screenscraping

The legality of screenscraping and the right to prohibit its data from being scraped is at the core of the disputes between Ryanair and various online travel agencies, such as Kiwi.com, lastminute.com and other (“OTAs”), which are illustrative of the underlying issues.

Ryanair has been challenging the right of OTAs to use data scraped from its website to offer flight combinations and intermediate the sale of its air tickets. Ryanair expressly prohibits such use of its website as it prefers to sell its services directly or through authorised distributors, thus being able to generate additional profit on ancillary services (car hire, hotel booking, etc.).

In the context of this dispute, courts of various EU jurisdictions are required to consider the legality of this business activity and the possibility of a competitor to prevent it with a preliminary injunction.

The prevailing view of the courts so far has seemed to be that screenscraping was not prohibited per se by national or EU law (namely Italian, Irish, Swiss and German courts have issued complex decisions considering the main legal questions in detail). 

On the other hand, Ryanair has recently (May 2022) succeeded in the Paris Court of Appeal. In 2021, it succeeded in Czech courts, which have issued a preliminary injunction. However, it was subsequently overturned by the Czech Constitutional Court, mainly on the grounds of the fundamental right to ownership and business activity and the right to a fair trial.[1]

The decision of the Czech Constitutional Court recognised that the preliminary injunction would effectively put into jeopardy the entire business model on which the OTAs operate. Furthermore, it was issued without a hearing (in an inter partes proceedings) and it was without any detailed analysis of the legality of screenscraping, violating the essential procedural rights of a party.

In summary, while the disputes over the legality of screenscraping are likely to be complex and lengthy, for claimants, it will be worth seeking immediate preliminary protection against such behaviour on the grounds of one or more of the arguments outlined below.

On the other hand, such a preliminary injunction is likely to cause significant damage to the defendant (equal, at a minimum, to lost profit), thus carrying the risk for the claimant that it will later be obliged to compensate the damage, should the injunction be overturned or should the claim not be successful on merits.

Screenscraping x copyright and database protection

Firstly, it is possible to seek protection based on copyright / database protection laws, although in the EU also the importance of data mining activities, and of the “data-driven economy” is acknowledged. 

The main document relevant for data mining in the EU is Directive (EU) 2019/790 on copyright and related rights in the Digital Single Market (“DSM Directive”), which sets out a more detailed framework and guidance on this activity.

The DSM Directive harmonises the treatment of databases under copyright law and the sui generis right for the creators of databases which do not qualify for copyright. If the screenscraping is carried out within the limits of the DSM Directive, it should not infringe copyright or database protection, although the limits of such protection are not always entirely clear.

The limits of copyright and database protection were also the subject matter of preliminary question proceedings in front of the European Court of Justice (“ECJ”) in the context of the dispute between Ryanair and PR Aviation BV regarding the previous legal regime under Directive 96/9/EC on the legal protection of databases. Further insight may be drawn from the ECJ decision.[2]

In summary, contractual restrictions must not be imposed on the use of publicly available databases protected by copyright or database rights under the Directive. On the other hand, providers of databases that are not protected by copyright or database rights are free to impose contractual limitations on their use. 

Screenscraping x General Terms and Conditions  

Screenscraping is often prohibited by the general terms and conditions of businesses or the terms of use of their websites (which must be accepted prior to accessing these websites). Therefore, an explicit or implied consent and agreement with the terms and conditions is typically required. Breach of the terms and conditions is then regarded as a breach of contract.

This was also argued in the case of Ryanair, whose terms and conditions explicitly prohibit screenscraping and similar activities on its website. Ryanair alleges that it makes its prices and flight schedules available on the internet for comparison purposes only, while it prohibits other use of this data and any resale of its airline tickets.

This is a valid argument and many websites contain specific tools which communicate with the screenscraping software making it clear that such access and use of the data on the website is not authorised. Legal questions aside, businesses are of course implementing technical solutions preventing screenscraping and this seems to be the most effective way to protect a website.

From the context of the Ryanair v. OTAs disputes, it is apparent that the real contentious issue is the competition in the downstream market for ancillary services, where Ryanair and OTAs compete (and not the resale of Ryanair airline tickets as such). From this perspective, these disputes have an important competition law aspect which may impact their outcome.

Screenscraping x competition law and abuse of dominant position

Competition law arguments have been raised in the Ryanair versus OTAs disputes (both on the EU and/or national level). The OTAs argue that Ryanair is (by attempting to prevent screenscraping of its website) effectively abusing its dominant position. To the contrary, Ryanair asserts the right to determine its own distribution policy and set the terms and conditions for the use of its website.

Generally, an undertaking is in a dominant position if it is in a position of such economic strength which enables it to prevent effective competition on the relevant market, has the power to behave to an appreciable extent independently of its competitors and customers.

Typically, an undertaking is dominant if it holds significant market share (of 40 per cent or more) and has a significantly larger market share than its next largest rival. In each case, the key question is the delineation of a specific market (considering in particular the substitutability of the respective goods or services from the customer’s perspective).

Dominant undertakings must not abuse their position, in particular by imposing prices above market level or by engaging in various discriminatory or exclusionary practices.

Practices, such as boycotting or refusal of supplies, aimed at excluding competitors from the market are prohibited. Arguably, refusal to allow screenscraping with the aim of excluding a competitor from a certain market may amount to such prohibited behaviour, given that it may harm the downstream market (as is the Ryanair case).

Obviously, it is not always straightforward to determine whether a firm is in a dominant position and whether a certain practice is discriminatory or exclusionary rather than a legitimate business behaviour.

There are a number of important underlying questions – such as the right of each undertaking to freely determine and protect its own business model and policy, and to what extent is screenscraping in a particular case beneficial to customers (consumers) as it brings value added innovations and reduced cost by promoting a competitive environment?

Screenscraping x laws against „computer hacking“ 

Unauthorised access to or use of computer data may constitute a criminal offence in a number of jurisdictions if the “hacked” data is protected (by passwords or other appropriate security measures). This is often not the case and neither are these data typically protected as business secrets (as they are publicly available on the internet).

However, even if screenscraping is not a criminal offence (depending on the circumstances), it may nevertheless be an infraction (trespassing).

Notably, in the US eBay has obtained a preliminary injunction against the company Bidder’s Edge based on the argument that eBay’s web site constituted part of its private ownership which was intentionally trespassed by Bidder’s Edge. 

Conclusions

As outlined above, at present there are a number of court proceedings pending in front of the courts of various EU states (and across the world) which raise the question of the legality of screenscraping from different perspectives. With the expansion of the digital economy, the importance of clear and concise boundaries is ever more important and lacking.

It is thus advisable that businesses engaging or utilising screenscraping seek detailed legal advice regarding any potential risks. This is equally the case for businesses “on the other side” wishing to protect themselves against such activity.

[1] I. ÚS 1440/21
II.ÚS 1440/21 ze dne 23. 8. 2021

[2] C-30/14, 15 January 2015

By Tomas Dolezil, Partner, and Zuzana Valouskova, Associate, PONTES 

Over the past few years, the phenomenon of ESG has grown in importance at a breathtaking speed. Originally an instrument in the financial markets allowing investors to better assess the risks in their investments, ESG has further evolved into a major legislative effort of the European Union.

In countries with significant financial markets, ESG has become the market standard in recent years. In Central Europe, where financial markets are less developed and where less emphasis is placed on sustainability by society and politics, the focus has lied elsewhere. In any case, this appears to be changing. Nowadays, we observe a substantially increased interest in ESG matters, be it from our clients, the public, newspapers, or social networks. ESG is the new thing everybody focuses on.

Why has Central Europe been lagging behind? There seems to be no simple answer to this complex question. In the case of the former Eastern Bloc countries with centrally planned economies and state-owned means of production, the adaptation to the so-called “capitalist” economy was certainly a challenge, as privatizations were often executed inefficiently. This single challenge may have put Central European countries behind in all of the ESG categories, perhaps with the exception of social matters – which may be the legacy of socialist labor codes.  Other factors that may have delayed ESG development include the reliance on heavy industry, fossil fuels dependency, and inability to conduct reforms. These issues, however, appear to finally have been overcome.

As to the development of ESG in the Czech Republic, there is a significant increase in the number of companies and businesses focusing on the environment. The media coverage of ESG has also increased. Only in July 2022, dozens of ESG seminars and conferences took place. These conferences help explain to Czech businessmen that ESG is not just another piece of legislation. Czech people are generally very skeptical when it comes to change. EU legislation is often understood as a complication to businesses. In our practice, we often hear clients complain that legislation is too complicated and wonder who will benefit from it or how it is going to help them. This last question is the most important one in our view. In the case of ESG, the answer is: “ESG may save your business.”

ESG is often misunderstood. We try to explain to our clients that it is not just a new piece of legislation. Companies do not understand that, in many ways, they already comply with ESG requirements. Industry is the backbone of the Czech economy. Many industrial producers have focused on the eastern markets for their exports. These markets have now collapsed due to the war in Ukraine and the growing skepticism towards China. These companies need to export to more developed countries, which in turn requires a product that is ESG-compatible. Without ESG compatibility in production and a high quality of their products, traditional Czech companies may face difficulties in their business undertakings. Such changes are beneficial and offer new opportunities. And this is particularly true for Czech companies.

Another argument often used in the Czech Republic is that ESG is just another expense to the company. This is simply not correct. Currently, we have seen several studies showing that ESG-compliant companies generate more profit, are healthier in the long term, and investors are keener on providing them with their funds and support. The European Commission also made it very clear that it would provide generous funds to support its carbon-neutral policies and industrial reform.

To conclude, our current experience proves that ESG has arrived in the Czech Republic. The business judgment rule requires decision makers in the companies to base their decisions on all information available and to always decide and act for the benefit of the company. Decisions that do not take ESG into account do not comply with the business judgment rule. ESG is part of the duty of care of a manager towards their company. ESG is already implemented in several pieces of legislation (e.g., the Accounting Act, the Act on Public Procurement). ESG is here to stay – and we are ready for it.

Marek Prochazka, Partner and Head of ESG, and Jaroslav Seborsky, Associate, PRK Partners

This Article was originally published in Issue 9.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Kocian Solc Balastik has advised Prazska Plynarenska on obtaining financing from banks and the Prague municipality to build up its gas reserves for the winter.

According to KSB, “a loan of up to CZK 2 billion is to be provided by the City of Prague and a loan of up to CZK 4 billion is to be provided by financing banks.” The financing will be used for “purchasing and ensuring gas to fill storage facilities for the next heating season,” the firm informed.

Prazska Plynarenska is a Czech publicly-owned gas and electricity supplier to more than 425,000 collection points.

The KSB team included Partners Sylvie Sobolova, Martin Krejci, and Jan Lasak, Counsel Ivo Prusa, and Lawyers Tomas Zach and Josef Kriz.

Weinhold Legal has advised Siemens Healthcare on the disposal of its full ownership interest in Meomed to Meopta.

Siemens Healthcare is a medical technology company. Meopta is a Prerov-headquartered optical, optomechanical, and optoelectronic products manufacturer.

The Weinhold Legal team was led by Partner Daniel Weinhold and included Managing Associate Tomas Cermak and Senior Associate Michal Przeczek.

Kocian Solc Balastik has advised arranger J&T IB and Capital Markets on J&T Banka’s issuance of subordinated unsecured income certificates without a maturity date.

According to KSB, the “perpetual certificates” are countable as Tier 1 secondary capital and the issuance aims to “increase regulatory capital, increase the diversification of capital sources, and raise funds for the eventual repayment of previously issued instruments. The value of the issuance is EUR 100 million, with an option to increase by 100%.”

J&T Banka is a private investment bank in the Czech Republic and part of the J&T Finance Group SE banking holding company, which also includes the Slovak 365.Bank, Croatian J&T Banka, and their subsidiaries.

In 2021, KSB also advised J&T Banka on its partnership with Amista (as reported by CEE Legal Matters on September 15, 2021).

The firm’s team included Partners Martin Krejci and Vlastimil Pihera, Associate Josef Kriz, and Junior Associate Zuzana Slaba.