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Hogan Lovells has advised the TMF Group on its acquisition of the UCMS Group. TMF Group funded the acquisition from existing cash resources, and financial terms of the transaction were not disclosed. Wolf Theiss advised the TMF Group on Romanian law matters, George Z. Georgiou & Associates advised on Cypriot law matters, and Walder Wyss advised on Swiss law matters. Keystone Law advised the sellers on the deal.

The TMF Group is a leading provider of high value business services to clients operating and investing globally. UCMS Group is one of Central Eastern Europe’s most established independent payroll, HR, and accounting providers. 

Founded in 2006 and headquartered in Budapest, with other offices in Hungary, Poland, and Romania, UCMS Group is managed by Group CEO Bela Kakuk, who will remain involved with the business following completion of the acquisition. Kakuk commented: “This deal is a significant milestone for the business and presents multiple opportunities. Becoming part of TMF Group combines our skill-set and leverages their global reach, to continue premium delivery of payroll, HR and accounting services in the Central Eastern European region. It will be exciting to build on our successes with TMF Group.”

With 300 employees across CEE, UCMS Group is well-known for its technological capability in delivering effective payroll, HR and accounting services for established corporates, as well as businesses looking to enter the region. 

Juraj Gerzeni, the Regional Director for EMEA at TMF Group, commented: “This transaction helps TMF Group in our vision to grow the business in Central Eastern Europe. UCMS Group has a strong foothold there, providing payroll, HR and accounting services to many blue-chip international companies. This is an excellent operational fit, supported by high quality management; I look forward to working with Bela and the team.”  

In 2015, UCMS Group sold its operations in Russia and Ukraine to 1C, a software and service provider in Russia and the former CIS countries. UCMS Group Russia will continue to operate in Russia and the former CIS countries, delivering services to its customers under the UCMS brand.

TMF Group’s financial advisers to the transaction were PriceWaterhouseCoopers. The seller’s advisers were Concorde MB Partners.

The cross border Hogan Lovells team was led by Budapest-based Partner Christopher Noblet, supported by Senior Associate Laszlo Jen. Other members of the team included Hogan Lovells Warsaw-based Partner Marek Wroniak and Counsel Tomasz Zak. 

The Keystone Law team advising UCMS was led by Corporate and Commercial Consultant Solicitor Matthew Duggan.

From Wolf Theiss, Partner Bryan Jardine and Associate Mircea Ciocirlea primarily advised on this transaction in Romania. 

CMS has reported that, on May 18, 2016 the Regional Court in Warsaw dismissed the statement of claim of Wytwornia Sprzetu Komunikacyjnego “PZL-Swidnik” — the Polish subsidiary of Finmecanica Helicopters — against the Polish State Treasury in a case involving a tender for the supply of 70 multi-functional helicopters to the Armed Forces of the Republic of Poland with a value of approximately EUR 3 billion. CMS represented Airbus Helicopters — the winner of the tender — and was supported on offset issues by lawyers from White & Case in Poland.

As originally reported on February 29, 2016, PZL Swidnik had demanded that the tender concerning utility helicopters for the Polish Armed Forces be closed without being resolved and without selecting any bid. As a result of the May 18 decision by the Warsaw Regional Court, that demand has been denied, and the result of the tender indicating the selection of the bid of Airbus Helicopters S.A.S. has been upheld. The judgment is not final and binding.

CMS’s team representing Airbus Helicopters consisted of new CMS Poland Managing Partner Malgorzata Surdek, Advocates Adam Kempa and Adam Jodkowski Senior Associate Jacek Liput and Associate Agnieszka Starzynska.

The White and Case team consisted of Local Partner Maciej Zalewski and Associate Maciej Szymanski.

As reported in the February 29 article, Drzewiecki Tomaszek represented PZL Swidnik.

Sorainen Lithuania has advised the Aurika Group, a holding company, on its acquisition of a minority interest in daughter company Aurika.

According to Sorainen, “Aurika is the leading flexo printing house in the Baltic States, providing high-quality labels, packaging and related services. Aurika printing products and services are used by large, medium and small food, beverage, cosmetic, chemical, alcohol and pharmaceutical industrial product manufacturers. More than half their orders are made for export.”

The Sorainen team advising the Aurika Group throughout the acquisition process was led by Partner Algirdas Peksys, supported by Associates Lina Ragainyte and Gerda Bernotaite, and Legal Assistant Ieva Krivickaite.

Martin Tamme, the Managing Partner of Varul in Estonia, says that “from my perspective, the big news is still the merry-go-round” that accompanied the recent news of his firm’s merger with Tark Grunte Sutkiene.

He refers to the move as being part of the “start of the second phase” in the market that has led to the establishment of what he calls the “Big 4 Baltic law firms” (including, along with Tark Grunte Sutkiene, also Sorainan, Cobalt, and Raidla Ellex). He also refers to the increased marketing/public relations push he’s seeing in the market in the last few months, which he says is a new paradigm. For instance, it is reported that Cobalt has been buying up front page advertisements to get their trade name out in the industry. He expects all firms to step up their efforts similarly. “Each of the Big Four will have their own personality,” he says,“and it will become more of a ‘brand’ business in upcoming years.”

As another aspect of the upheaval in the market, Tamme points to the “serious head-hunting going on now as a result.” Tamme notes that, “we want to grow, Raidla Ellex wants to grow, and Sorainen needs to fill in the gap left by 4 senior litigators who established their spin-off Nove,” as Cobalt continues to deal with the integration process following its 2015 merger with the former Lawin office in Estonia. He agrees that it’s a good time to be a good lawyer in the market, with all the major firms competing for talent. 

Despite this competition, Tamme says legal recruiters are rarely employed in Estonia. He refers to the legal market as a “village,” and says that personal contacts are a much more common source for lateral hires.

There’s nothing very much coming in the near future in terms of political, legislative, or regulatory developments, Tamme says. Gas should be stronger for the next few years, as Estonia pursues a policy of energy independence from Russia. Many projects are in their early stages, Tamme notes, though he says few of them have actively started generating revenue yet.

Finally, Tamme notes that Estonia is continuing to experience a mini-boom in private sector real estate, discernible still in M&A and JVs and innovative financial schemes. He is realistic about the process, though, noting that people are “taking bets as to when it will turn to insolvency work.” He sighs. “I expect to see it happen within a few years.

Editors’s Note: This article is part of our newly-expanded “The Buzz” feature, which provides regular coverage of the events, trends, and developments of significance in and across CEE’s legal markets from the perspectives of senior lawyers who work within them.

On Monday, April 4, 2016, CEE Legal Matters reported that Tuca Zbarcea & Asociatii has advised the international media group Ringier on its majority stake acquisition of Imobiliare.ro — Romania’s largest real estate portal.

Ringier Chief Legal Officer Adrian Dudle agreed to answer Five Questions about the deal.

A.D: Ringier is looking at synergies related to marketing, sales, and product development, mostly. As far as marketing is concerned, we can obviously better cross-promote our brands and add value to imobiliare.ro’s brand equity by better communicating it on our content platforms and thus increasing not only awareness but also traffic and leads.

There is also a pool of data that is being enhanced by adding imobiliare.ro to our portfolio helping us in better targeting our users with appropriate advertising, content and to provide better conversions to our clients on all our platforms.

In sales we can use our capabilities (sales team, data, and marketing knowledge in general) to increase digital advertising revenues on imobiliare, including programmatic display, native, etc.

In product development there will be a constant exchange of knowledge between Ringier’s job board eJobs and imobiliare and also the synergistic use of skilled human resource (i.e., web developers, product managers). 

A.D: Apart from additional operational issues deriving from the newly acquired business whose legal aspects will mostly be dealt with by our local in-house counsel, the acquisition of Realmedia Network S.A. and its subsidiaries will result in a somehow increased complexity in the field of corporate law and governance to be supervised on a group level.   

A.D: Dragos Apostol, the Partner in charge at Tuca Zbarcea & Asociatii, was known to us from a previous transaction when he was retained by the counterparty. He gave us quite a hard time during the negotiations so that we felt it would be better to have him on our side this time…

A.D: The most sensitive issue (once more!) was to deal with the fact that some of the sellers were members of the management which we absolutely wanted to retain as managers (and shareholders) post closing. Thus, whilst trying to preserve our best interests as buyers during the negotiations, we had to be careful not to “upset” them too much in view of the future common undertaking…  

A.D: I was personally involved in the negotiations (which took partly place physically in Romania), in particular with regards to the structuring and the main topics of the transaction. However, I was at all times assisted by external (local) counsel; this was – typically – the case during the last days prior to signing and closing respectively.

The Esin Attorney Partnership and Baker & McKenzie have assisted ING with its provision of a EUR 36.1 million Euler Hermes-covered term loan facility to Saglik Hizmetleri ve Ticaret A.S. (“Acibadem”), one of Turkey’s leading healthcare groups, for the purchase of healthcare equipment from a German manufacturer.

Remarking on the matter, Partner Mushin Keskin commented that, “the healthcare system in Turkey has gone through a series of crucial reforms in recent years. The EU accession and harmonization process has also provided additional momentum for the implementation of changes in the healthcare system. In an effort to modernize the provision of healthcare services, the service providers, such as Acibadem, which is operating one of the largest high-quality hospital chains in the country, are heavily investing in equipment, technology and human resources. We are happy to be part of the financing for these investments which will, of course, take the quality of Turkish healthcare services to another level.”

Lawyers from the Esin Attorney Partnership, a member firm of Baker & McKenzie, and Baker & McKenzie’s Frankfurt office advised ING, a branch of ING-DIBA AG, on the loan. The team was led by Banking & Finance Partners Muhsin Keskin in Istanbul and Oliver Socher in Frankfurt, with support from Istanbul-based Associate Berkay Ozludil and Frankfurt-based Associate Silke Fritz. 

The Esin Attorney Partnership reported that this matter was the 17th transaction on which it had advised ING in the last three years, including on a 2014 covered loan facility to Izmir’s Metropolitan Municipality (as reported by CEE Legal Matters on May 16, 2014), on a 2015 loan facility provided again to the Izmir Metropolitan Municipality for the procurement of light rail cars (as reported by CEE Legal Matters on June 25, 2015), and on a syndicated loan obtained for trade finance purposes (as reported on June 16, 2016).

Dentons has announced that on May 19, 2016 it launched its shared services strategy with the announcement that it will be opening a new business services center in Warsaw later this year.

Dentons Business Services EMEA (DBSE) is a joint initiative between the UK Middle East and Africa (UKMEA) and Europe regions of the Firm. The center will be based in downtown Warsaw.

DBSE will be led by Director Piotr Macieja, who joins from global professional services provider TMF, where he headed their Service Delivery Coordination Center. It will serve as a center of excellence, supplying business services for lawyers and professionals predominantly in the firm’s UKMEA and Europe regions across finance, business development and marketing, human resources, and IT. By pooling together in one location certain tasks currently performed across numerous offices, Dentons will be able to leverage both regions’ combined scale and resources more effectively, and create better service for its clients as a result of achieving greater efficiencies within the business.

“We are always looking for new ways to better serve our clients,” said Global Chairman Joe Andrew. “After the firm’s rapid expansion of the past few years it is a logical step for us to leverage our scale and resources more effectively while continuing to invest in harmonization so that we can achieve our objective of building the law firm of the future now.”

“DBSE is yet another way that Dentons is working to increase the value it offers clients,” said Global CEO Elliott Portnoy. “As we have grown our talent, legal experience and geographic reach, it is important for us to build on this momentum by delivering the benefits of a one firm experience to all of our lawyers and clients, while recognizing that as a polycentric firm we respect the legal traditions and cultures in all of our markets. By bringing together those service offerings that have the scope to be harmonized across the UKMEA and Europe regions DBSE represents a major step towards achieving this objective.”

Europe CEO Tomasz Dabrowski added, “Closer integration is one of our key strategic objectives as a firm and this is a vehicle for the UKMEA and Europe regions to achieve this and ultimately improve the way we do things. We are operating in a very competitive environment and our clients expect us to deliver services consistently and in the most cost effective way possible, while maintaining and enhancing the high performance culture that exists throughout the Firm.”

FKA Furtek Komosa Aleksandrowicz has advised Viking Malt Oy on Polish aspects of its May 11, 2016, acquisition of 100% of the shares of Danish Malting Group (DMG), a Finnish malt producer, from the Carlsberg Group. The global advisor was Finland’s Hannes Snellman law firm, with Gorrissen Federspiel advising on Danish law.

As a result of the deal, two Polish malting plants (located in Sierpc and Strzegom) were incorporated into the Viking Malt Oy group and will going forward be performing under new names: Danish Malting Group Polska Sp. z o.o. as Viking Malt Sp. z o.o., and Slodownia Strzegom Sp. z o.o. as Viking Malt Specialities Sp. z o.o. With its acquisition of the Polish malting plants, Viking Malt Oy now has operations in Finland, Sweden, Denmark, Lithuania, and Poland.

FKA provided assistance with due diligence and advised on commercial agreements and corporate, infrastructure, and tax issues. FKA also represented Viking Malt Oy in merger control proceedings before the President of the OCCP. 

FKA’s team advising was supervised by Partners Tadeusz Komosa and Mariusz Aleksandrowicz, supported by Senior Associates Barbara Zalecka, Marta Ignasiak, and Agnieszka Skrok. 

The relationship between hyperlinking and copyright is much debated. Although recent decisions of the ECJ have shed some light on the question, many questions still remain when hyperlinking to copyrighted content should be considered a copyright infringement.

Some of these questions have been addressed by the Austrian Supreme Court in a recent judgment (Decision by the Supreme Court dated 23 February 2016, 4 Ob 249/15v).

The facts

The Plaintiff makes available several private radio channels on the internet via streaming. When accessing such channels via the Plaintiff’s website or via its app, users are confronted with a pre-roll ad, on the basis of which the Plaintiff receives revenues. The Defendant provides hyperlinks to several digital radio streams, inter alia the Plaintiff’s. When users click on such hyperlinks, they are confronted with an ad placed by the Defendant before the channel becomes audible. The Plaintiff’s pre-roll ad is not visible anymore. The Plaintiff explicitly objected to the Defendant’s hyperlinks.

Based on the neighboring rights in the streams and on unfair competition law, the Plaintiff requested, inter alia an injunction in order to stop this practice.

The decision 

After clarifying certain aspects relating to the scope of the neighboring rights of broadcasting organisations (under Austrian law), the Supreme Court addressed the question of whether the hyperlinks implemented by the Defendant should be considered communications to the public that require the right holder’s consent. The court held that the explicit objection by the Plaintiff did not render the links unlawful. However, it decided that the Defendant, through its links, circumvented specific factual requirements created by the Plaintiff to access the streams, namely that the users have to endure a pre-roll ad placed by the Plaintiff, before being able to access the stream. The Supreme Court held that the Defendant thereby communicated the broadcasts to a new public and therefore infringed the Plaintiff’s exclusive broadcasting right.

As the Supreme Court granted the requested remedy on the basis of the Austrian Copyright Act, it did not have to assess whether the Defendant’s conduct (also) was an unfair commercial practice (“free riding”).

Discussion

The Supreme Court’s reasoning is based on recent case law of the ECJ: In C-466/12, Svensson, the ECJ held that Article 3 (1) InfoSoc Directive stipulates that the provision on a website of clickable links to works freely available on another website, does not constitute an ‘act of communication to the public’, as no ‘new public’ is addressed. On the other hand, a clickable link that makes it possible to circumvent restrictions put in place by the site on which the protected work appears in order to restrict public access to that work to the site’s subscribers only, would communicate the content to a ‘new public’, which was not taken into account by the copyright holders when they authorised the initial communication. The right holders’ authorisation is required for such a communication to the public.

The Supreme Court considers the fact that visitors to the Plaintiff’s website had to ‘endure’ a pre-roll ad comparable to the situation mentioned by the ECJ in the Svensson-decision, namely the circumvention of restrictions put in place in order to restrict public access to that work to the site’s subscribers only. Whether these situations are comparable from a legal perspective is questionable: A hyperlink circumventing a factual restriction placed on the website (eg password protected access to content for subscribers only) is making such content available also to a public not taken into account by the right holders when they authorised the initial communication. In the case at hand, access to the initial communication was not restricted to a predetermined group (subscribers), but the general public had access to such content. They simply had to ‘endure’ a pre-roll ad each time they wanted to listen to the content. Accordingly, in the present case, the right holder has taken the general public into account when arranging for the initial communication. This difference might have justified a different assessment (under copyright law), but would in any case have justified another referral to the ECJ.

By Adolf Zemann, Attorney at Law, Schoenherr

As the overall level of convergence between industries in the business world keeps increasing, it is only logical for the related legal aspects to follow suit every step of the way. Nonetheless, even though this is becoming something of a regular occurrence nowadays, there are particular legal practice areas that have been tied to their industry counterparts for quite a long time now, and perhaps none so much as the relationship between the pharmaceutical industry and intellectual property (IP) rights.

Often called the “pharmaceutical company’s most valuable resource”, IP protection is of vital importance to the functioning of such companies for a variety of reasons, many of which – contrary to popular belief – are not deriving from selfish profit-making intentions. In order to understand these reasons, one should take into consideration the highly challenging business model under which pharmaceutical companies operate. More precisely, if we were to look at the process of medicine development, official data shows that out of 5 000 – 10 000 experimental compounds (which are often researched and developed for close to 10 years while costing in the range of EUR 1-2 billion), only 1 ends up as approved by the governing body. Moreover, having in mind that only 2 out of every 10 medicines produced can recoup the costs of development, it becomes clear how important it is for pharmaceutical companies to capitalise on the few successes they find. This is where it comes down to IP protections to make this possible, since through the process of registering patents they provide resources for research and development, encouraging further innovation as a consequence. Therefore, it may be fair to assume that creating, obtaining, protecting, and managing IP should become a corporate activity similar to the way resources and funds have been raised, so that – among other things – conditions are created for the continued evolution of knowledge.

However, seeing as how pharmaceuticals present a constituting element of globalisation – they are equally essential everywhere to everyone – it comes as no surprise that a number of accompanying issues arise concerning IP protection in a broader context. A premier example in this regard being the discrepancy between the major economies of the world and the developing, emerging countries and markets. Whereas in the first and second world countries it is possible for companies to enforce their IP rights through regulations and agreements with relevant entities, emerging markets (especially those large scale ones such as China and India) – have networks of countless local manufacturers who produce cheap counterfeit versions of patented drugs – some of which even find their way back into the western countries. This has put multinational pharmaceutical companies in a rather difficult position, as they now need to account for the balance between aiming for innovation and progress by invoking their IP rights on one hand, and formulating a way to provide affordable drugs for the developing world on the other.

Finally, an illustrative, recent example in this regard, can be found in GlaxoSmithKline’s (GSK) decision to not invoke their IP rights on medicines in low-income countries and thus widen access to its products by allowing generic manufacturers to produce low-cost copies of GSK drugs with no risk of legal challenge. Such an approach on behalf of GSK should, however, be put in perspective by calling upon the recent Decision brought forth by the World Trade Organisation (WTO) that has extended the drug patent exemption for all of the least-developed-countries (LDC) of the WTO until 2033. Considering the fact that many countries from the LDC group are the same countries in which GSK has decided to rescind their IP rights, it becomes clear that their decision is somewhat less revolutionary than it might seem at first, albeit still valid in terms of what the accompanying publicity might accomplish for the treatment of the entire issue going forward.

By Relja Mirkov, Senior Associate, Karanovic & Nikolic