Simont Braun ranked Band 1 in FinTech by Chambers & Partners

For the first time, Chambers & Partners ranked the best FinTech law firms in Belgium. Simont Braun’s Digital Finance Team is extremely proud to be the only law firm ranked in Band 1, and recognised as a leading law firm amongst its peers by this guide of reference on the global legal market.

They’re a great firm and much closer to FinTechs than others. They’ve got more of a soul and act as a group who you can rely on, instead of looking at you as an opportunity to bill extra things to.”

Two members of the team are also ranked individually: Catherine Houssa in Band 1, and Philippe De Prez as Up and Coming.

About Catherine, one source said that “She is extremely proactive by nature and didn’t create mountains for us that didn’t exist.”. As for Philippe, comments say that he “tries to find a solution that works, with an international outlook.”

In 2014, Simont Braun created a multidisciplinary Digital Finance Team to anticipate and respond to the legal and regulatory challenges related to the arrival of new technologies and disruptive players such as FinTechs, InsurTechs or RegTechs in the traditional world of bank-insur-finance. The Digital Finance Team gathers lawyers in Banking & Finance, IP, IT and Data Protection, with a particular interest for technology. The team was the very first of its kind on the Belgian market and a trendsetter for other firms in Belgium.

Five years later, Simont Braun is the expert and go-to firm in Belgium regarding Digital Finance.

We would like to thank our peers and clients for their trust and feedback! Needless to say, our Digital Finance Team is even more motivated and looking forward to handling your next innovative project!

All rankings and quotes are available here.

Simont Braun ranked Band 1 in FinTech by Chambers & Partners

Insurance – National Bank of Belgium published the Multilateral Memorandum of Understanding on supervisory cooperation and exchange of information

Recognising the need and the benefit of mutual assistance in ongoing supervision and on-site inspections and in the exchange of information concerning (re)insurance undertakings with cross-border establishments in the UK and the EEA, the UK authorities and EEA authorities responsible for the supervision of the insurance industry have agreed on the establishment of cooperation agreements between the UK authorities and each single EEA authority, subject to the Multilateral Memorandum of Understanding (MMoU).

The MMoU, being a statement of intent and hence not legally binding on the signatory UK authorities and EEA authorities, serves to establish a formal basis for co-operation between the UK authorities, on the one hand, and each single EEA authority, on the other hand. The MMoU is therefore not intended to create commitments for the UK Authorities in relation to each other, nor for the EEA Authorities in relation to each other. The supervisory cooperation includes the exchange of supervisory information (where permitted or not prevented under applicable law) and supervisory assistance in order to ensure adequate levels of policyholder protection and to promote the prudential soundness of the insurance industry and the financial stability in their respective countries.

Although it does not create directly or indirectly any legally enforceable rights or obligations for the signatory authorities or third parties, this MMoU shows the intent to safeguard prudential supervision of (re)insurance undertakings with cross-border establishments in the UK and the EEA after the finalisation of the Brexit. This ensures that the prudential supervision of those undertakings does not merely fall back on the regime for supervision regarding (re)insurance undertakings established in or with cross-border establishments in third countries as is provided by the Law of 13 March 2016 on the status and supervision of insurance or reinsurance undertakings. Also, this memorandum and the cooperation agreements that will normally follow may have an impact with regard to supervisory activities on outsourcing arrangements between such (re)insurance companies and undertakings in third countries.

The MMoU enters into force on the date the European Treaties and EU secondary legislation have ceased to apply in the UK. To view or read the MMoU in full, please click here.

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For any question, please contact Thomas Derval or Charlotte De Thaye

 

Code of Companies and Associations: What changes on 1 January 2020?

Since May 2019, Belgium prides itself on a modern Code of Companies and Associations (CCA). The legislature provided for a gradual entry into force of the new Code. This newsletter discusses what changes on 1 January 2020.
The CCA entered into force on 1 May 2019 for newly incorporated companies, associations and foundations. It was not yet applicable on those which already existed at that time. However, such existing companies, associations and foundations could voluntarily choose to “opt-in” and already render the CCA applicable through a modification of their articles of associations.

1. Entry into force for existing companies, associations and foundations

As of 1 January 2020, the CCA is applicable to all companies, associations and foundations (i.e. not only the new ones). This means, first, that all provisions in their articles of association which conflict with the CCA’s mandatory rules are null and void and that, second, the CAA’s non-mandatory rules are also applicable, however, only to the extent that the articles of association do not deviate from these.

As a consequence, as of 1 January 2020, the following rules e.g. automatically apply:

  • Companies have to use the new denominations and abbreviations of their corporate forms in all communication and acts. This obligation exists even if the articles of association have not been amended to reflect the new denomination. g., a private limited liability company (“BVBA” or “SPRL”), is now called a private company (“BV” or “SRL”); a limited liability cooperative company (“CVBA” or “SCRL”) is now called a cooperative company (“CV” or “SC”).
  • The paid-up part of the capital of a private company (“BV” or “SRL”) and the paid-up part of the fixed capital of a cooperative company (“CV” or “SC”), as well as their legal reserve are in the company’s accounts automatically abolished and without any formality transformed into a statutory unavailable equity account. The unpaid part of the capital of a private company and the unpaid part of the fixed part of a cooperative company are similarly transformed into a separate equity account “unclaimed contributions”.
  • Private companies (“BV” or “SRL”) can only distribute profits applying a double test: a net assets and a liquidity test. This means g. that the directing body which decides on the distribution must establish that the company will have sufficient cash to meet its obligations for the next 12 months. This requirement correlates with the abolishment of the concept of capital in private companies.
  • Directors in private companies (“BV” or “SRL”) and public limited liability companies (“NV” or “SA”), as well as the members of the management board and the supervisory board in public limited liability companies, may not exercise their mandate under an employment contract. This is a generalisation of the existing prohibition, which applied to directors of public limited liability companies.
  • The new general provision that a director who has a conflict of interest is not allowed to participate in the deliberation of that decision applies to all directors of private companies (“BV” or “SRL”), public limited liability companies (“NV” or “SA”) and non-profit associations. This means that a director who has an interest of a patrimonial nature, which conflicts with the company’s interest (g. he wants to rent real estate to the company), is not allowed to participate in the deliberation on that decision. If all directors have a conflicting interest, the decision is submitted to the general meeting.
  • The new provisions on voting at the general meeting and the neutralisation of abstentions in extraordinary general meetings apply. The latter means that abstentions are not taken into account in the calculation of the special majority. Under the old regime, abstentions were treated as votes against the proposed decision.
  • Private companies (“BV” or “SRL”) and public limited liability companies (“NV” or “SA”) have to draft a special report in case of issuance of new shares and file it with the enterprise court registry. This report must contain a justification of the issue price and a description of the consequences on the patrimonial and membership rights of the shareholders. Up until now, such a report was only required in public limited liability companies when these new shares were issued below the fractional value of the old shares.

2. Obligation to bring articles of association in conformity

Companies, associations and foundations are obliged to bring their articles of association in conformity with the CCA. When they modify their articles of association after 1 January 2020, e.g. to issue new shares or to change the governance structure, they must in principle use this occasion to bring their articles in conformity. For companies, associations and foundations which do not modify their articles of association, there is the ultimate deadline of 1 January 2024 to bring their articles of associations in conformity with the CCA. Failure to do so will give rise to joint and several liability of the directors.

3. Abolished corporate forms

The objective of the legislature to simplify the existing corporate forms has led to the abolishment of several corporate forms. The only Belgian forms that remain are: the simple company without legal personality (“maatschap” or “société simple”), the general partnership (“VOF” or “SNC”) or a limited partnership (“CommV” or “SComm”), the private company (“BV” or “SRL”), the public limited liability company (“NV” or “SA”), and the cooperative company (“CV” or “SC”).

As for a cooperative limited liability company (“CV” or “SC”), the use of this company form is abolished for companies that do not pursue a cooperative ideal (e.g. law firms and accountancy firms).

Until these legal persons have converted into one of the remaining corporate forms, the former rules remain applicable on them. However, as of 1 January 2020, the mandatory rules of their “equivalent” corporate form have become applicable.

Legal persons whose corporate form is abolished can voluntarily convert into their “equivalent” corporate form. This requires a modification of their articles of association. Although it is recommended that such legal persons convert into one of the remaining corporate forms as soon as possible, the due date to do so is 1 January 2024. If such a conversion has not taken place before 1 January 2024, these legal persons will be automatically converted on that day.

4. Easier change of registered seat

The CCA makes it possible to change the registered seat more easily, i.e. without changing the articles of association. This is because the articles of association no longer have to indicate the address of the registered seat of the company. Now it is sufficient that the articles indicate in which region the seat is located without specifying the exact address.

This gives the flexibility to the directing body to relocate the registered seat within that region without having to change the articles of association.

For existing legal persons, the legislature provided the following transitional rules:

(i) Legal persons, whose articles of association already provide that the directing body can transfer the registered seat without intervention of the general meeting, can transfer their registered seat without a modification of the articles of association. The address of the registered seat is deleted upon the first coordination of the articles of association and replaced by an indication of the region in which the registered seat is situated.

(ii) Legal persons, whose articles of association do not grant such power to the directing body, need to modify their articles of association to transfer the registered seat. However, the directing body has the power to decide upon such modification.

5. Specific issues

Not all rules are applicable as of 1 January 2020. For several specific issues, the entry into force is organised differently:

  • Companies that have a direction committee (“directiecomité” or “comité de direction”) shall continue to apply the rules of the old Companies Code on the direction committee until they bring their articles of association in conformity with the CCA, the due date being 1 January 2024.
  • Under the old rules, a non-profit association could not pursue commercial activities. The CCA abolishes this restriction and allows such associations to pursue the same activities as a company. However, this restriction is only lifted for existing associations after a modification of their articles of association to include such commercial activities.

The provisions on director’s liability (including the caps on such liability) are only applicable to such damaging acts, which take place after the date on which the CCA has become applicable. This means that those provisions will apply on damaging acts as of 1 January 2020, unless the company decided to opt-in earlier. For damaging acts that occurred before that date, the old rules will continue to apply, even when the director’s liability is invoked later.

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Steven Callenssca@simontbraun.eu
Sander Van Loocksvl@simontbraun.eu
+32 (0)2 543 70 80

For any question, please contact the authors or any other member of Simont Braun’s Corporate team.

The EU reinforces the protection of whistleblowers

Directive 2019/1937 on the protection of persons who report breaches of EU law (or “whistleblowers”) was published on 26 November 2019.

This Directive requires, among others, that all companies with more than 50 employees and public sector entities establish internal procedures to facilitate and ensure rapid follow-up on reported breaches. To ensure the effectiveness of the system, the Directive also provides for serious protection against retaliation to whistleblowers.

The Member States must transpose it by 17 December 2021 at the latest.

Material scope of application

The Directive aims to protect persons reporting:

1. breaches or abuses of EU law in the following areas:

  • Public procurement
  • Financial services, prevention of money laundering and terrorist financing
  • Product safety
  • Transport safety
  • Protection of the environment
  • Radiation protection and nuclear safety
  • Food and feed safety, animal health and welfare
  • Public health
  • Consumer protection
  • Protection of privacy and personal data, and security of network and information systemsbreaches harming the EU’s financial interests

2. given their negative impact on the proper functioning of the internal market, breaches relating to EU competition rules and corporate tax rules.

3. The Directive provides that Member States may extend the scope of protection to other areas.

Personal scope

The Directive applies to reporting people in the private or public sector who acquired information on breaches in a work-related context including, at least, the following:

  • Workers;
  • Self-employed service providers, including freelances, contractors, sub-contractors and suppliers;
  • Shareholders and members of the management body of a company;
  • Volunteers and unpaid trainees;
  • Persons working under the supervision and direction of contractors, subcontractors and suppliers;
  • Job applicants;
  • Persons whose employment relationship has ended.

The measures of protection foreseen by the Directive shall also apply to:

  • Facilitators (i.e. those who support the whistleblower when reporting);
  • Third persons connected with the whistleblower and who may suffer retaliation in a work-related context, such as colleagues or relatives; and
  • Legal entities that the reporting person owns, works for or which are otherwise connected with the whistleblower in a work-related context.

Conditions for protection

According to Article 6 of the Directive, whistleblowers benefit from the protection offered by the Directive provided that:

  • They had reasonable grounds to believe that (i) the information reported is true at the time of reporting and (ii) that this information falls within the scope of the Directive.
  • They reported either internally or externally or made a public disclosure in accordance with the Directive.

Internal and external reporting channels

In order to efficiently protect whistleblowers, Members States must ensure that:

  • All public entities and private companies with 50 or more employees set up effective internal reporting channels, ensuring confidentiality of the whistleblowers (“internal reporting channels”)
  • The national authorities designated as competent to investigate reports also establish external reporting channels enabling reporting of complete and confidential information; (“external reporting channels”)

Whistleblowers are generally encouraged to use internal channels first, but they can choose whether to report directly externally to the competent authorities.

The Directive furthermore specifies that the recipient of reporting must diligently follow up on the reports and provide feedback to the reporting person within a reasonable timeframe not exceeding three months or, for the external reporting, six months in duly justified cases.

Public disclosure

According to Article 15, whistleblowers can make public disclosure and report to the media only if:

  • No appropriate action was taken within the foreseen timeframe in response to their internal or external reporting

Or

  • They reasonably believe that:
  • There is an imminent or manifest danger for the public interest;
  • There is a risk or retaliation or a low prospect for the breach to be effectively addressed due to the particular circumstances of the case (e.g. evidence may be destroyed or collusion of authorities)

Protection measures

The Directive provides for a prohibition of retaliation in all its various forms, e.g. dismissal, negative performance assessment, intimidation, harassment, discrimination or unfair treatment; damage, including to the person’s reputation, or financial loss, blacklisting.

Moreover, adequate remedies shall be taken in case of retaliation, including reversal of the burden of proof in proceedings and interim relief pending the resolution of legal proceedings.

Whistleblowers should also not incur liability for breach of NDAs provided that they had reasonable grounds to believe that the reporting or public disclosure of such information was necessary for revealing a breach, and provided that no criminal offence was committed.

Members Sates also keep the possibility to introduce or maintain more favourable provisions in their national regime.

Sanctions

Member States shall provide for effective, proportionate and dissuasive penalties applicable to natural or legal persons that:

  • hinder or attempt to hinder reporting;
  • retaliate against persons protected by the Directive;
  • bring vexatious proceedings against these persons;
  • breach the duty of maintaining the identity of reporting persons confidential.

Safeguards for concerned persons and the credibility of the system

The Directive also implements measures of protection for the “concerned person(s)”:

  • Persons concerned by the reports fully enjoy the presumption of innocence, the right to an effective remedy and a fair trial, and the rights of defence;
  • Competent authorities shall ensure, in accordance with national law, that the identity of the persons concerned is protected as long as investigations triggered by the report or the public disclosure are ongoing.
  • Member States shall provide for effective and proportionate sanctions to dissuade malicious or abusive reports.

Entry into force and implementation in Belgium

This Directive shall enter into force on 16 December 2019, and Member States shall transpose the Directive by 17 December 2021, with a possible extension until 17 December 2023.

Given that Belgium, unlike France, Sweden or Italy, does not already have a comparable general system, the way in which transposition will be handled by our future government should be closely observed. We will keep you informed…

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Pierre Van Achter
pierre.vanachter@simontbraun.eu
+32 2 543 70 80

Restrictions of cross-border sales under EU competition rules

Companies are in principle free to establish in Europe the distribution system that best serves their interests, including selective distribution where their products are put on the market through qualified distributors only.

However, recent fines imposed by the European Commission confirm that licensing and distribution systems must nevertheless comply with Article 101 and 102 TFEU which respectively prohibit anti-competitive agreements and abuses of dominant position.

Under Article 101 TFEU, agreements whose object or effect is to restrict cross-border sales in Europe, are in principle not allowed. In conformity with some EU regulations and case law, such agreements may benefit from an exemption under Article 101, § 3 TFEU in well-defined hypotheses only.

Under Article 102 TFEU, unilateral measures by which a dominant company restricts cross-border sales in Europe, are in principle not allowed either. Such restrictions may only be considered legal if the company is in fact not in a dominant position, or is in a dominant position but can objectively evidence that these restrictions are justified by, and proportionate to, a legitimate business behaviour, a legitimate public interest or efficiency considerations.

Nike and Sanrio: agreements restricting cross-border sales in Europe

Early 2019, Nike and Sanrio were both fined by the Commission under Article 101 TFEU, which prohibits agreements between companies that may affect trade between Member States and whose object or effect is to prevent, restrict or distort competition.

During more than ten years, licences had been granted in Europe by Nike for the manufacture and distribution of products featuring the brands of football clubs and federations, and by Sanrio for the distribution of products featuring Hello Kitty characters.

In both cases, the Commission found that the agreements concluded by Nike and Sanrio were in breach of EU competition rules because they imposed restrictions on cross-border sales by licensees in the form of direct measures (such as clauses prohibiting these sales) and indirect or additional measures (such as audits to ensure compliance with these restrictions).

These recent decisions confirm that, after having paid less attention to them for some years, the Commission has decided to focus increasingly on vertical agreements in particular to fight illegal restrictions of cross-border sales in Europe. Such restrictions are regarded as “by object” and cannot enjoy the de minimis regime.

Regarding selective distribution systems, the Commission considers that the appointed distributors should be free to sell actively and passively to all end-users, everywhere, offline or online. Therefore, such vertical agreements restricting (active or passive) sales by members of a selective distribution system cannot benefit from an exemption under Article 101, § 3 TFEU.

More generally, in conformity with the CJEU case law, the Commission considers that the licensing of IP rights in the context of a distribution agreement cannot justify the imposition on licensees of restrictions to sell the licensed merchandise across borders (see, in particular, CJEU, judgment of 6 October 2009, C‑501/06 P, C-513/06 P, C-515/06 P and C‑519/06 P, GSK, para. 59 to 61).

Based on these elements, it appears increasingly difficult for agreements restricting cross-border sales in Europe to benefit from an exemption under Article 101, § 3 TFEU.

In general, and in conformity with Article 4, b), of the (block exemption) Regulation n°330/2010 (applicable to vertical agreements), there are only four hypotheses where vertical agreements (distribution systems) containing cross-border sales restrictions may still benefit from an exemption, namely when (further to complying with the other exemption requisites in the Regulation):

  • the agreement restricts active sales into the exclusive territory of an appointed distributor, without restricting the sales by the customers of the distributor concerned;
  • the agreement restricts sales by a wholesaler to end-users, in order to keep the wholesale and retail level separate;
  • the agreement restricts sales by an appointed distributor (selective distribution) to an unauthorised distributor in a selective distribution territory;
  • the agreement restricts sales of components by an appointed distributor to a competitor of the supplier.

Furthermore, in selective distribution systems, territorial restrictions are not allowed at the end-users level and between appointed distributors either (letters c) and d) of said Article 4).

Based on the above, companies are advised to refrain from concluding agreements whose object or effect is to restrict cross-border sales in Europe, except in the cases where they may benefit from an exemption based on Regulation n°330/2010.

Under Regulation n°316/2014 (applicable to technology transfer agreements), a vertical technology transfer agreement imposing some territorial restrictions on sales may also benefit from an exemption in this respect, provided the other exemption requisites are complied with, but only in well-defined hypotheses, and depending on whether the parties are competing undertakings or not. It is a complex regime requiring a detailed analysis of the market situation and the contractual provisions or practices at stake.

One can simply note here that also under this regulation, in selective distribution systems, a vertical technology transfer agreement may not restrict sales (active or passive) to end-users by a non-competing licensee operating at the retail level (letter c) of Article 4, § 2).

AB InBev: unilateral measures restricting cross-border sales in Europe

Early 2019, AB InBev was fined by the Commission under Article 102 TFEU, which prohibits abuses of a dominant position that may affect trade and prevent or restrict competition.

During approximately eight years, the market strategy of AB InBev had consisted in restricting the possibility for Belgian retailers to buy Jupiler beer at lower prices in the Netherlands in order to maintain higher prices in Belgium.

After finding that AB InBev was in a dominant position on the Belgian beer market, the Commission concluded that it had abused its market power by taking unjustified unilateral measures, such as the modification of the packaging of its products supplied in the Netherlands to make them harder to sell in Belgium.

In that context, the Commission underlined that such restrictions of cross-border sales would also qualify as an infringement under Article 101 TFEU if they resulted from an agreement between independent companies irrespective the supplier was dominant or not.

This decision confirms the scrutiny of the Commission as regards restrictions of cross-border sales, be it on the basis of Article 101 or 102 TFEU, as well as the difficulty for dominant companies to justify the imposition of such restrictions.

In that regard, the Commission and the CJEU have gradually recognised that companies can rely on three categories of “objective justifications” to establish that their behaviour is, in fact, not abusive, namely:

  • a legitimate business behaviour, such as the protection of one’s own commercial interests (see CJEU, judgment of 14 February 1987, C-27/76, United Brands, para. 189);
  • a legitimate public interest objective, such as environmental concerns (see Commission, decision of 21 October 1997, 97/745/EC, Port of Genoa, para. 21);
  • efficiency considerations, showing that the exclusionary effect may be counterbalanced by advantages in terms of efficiency which also benefit the consumer (see CJEU, judgment of 15 March 2007, C-95/04, British Airways, para. 86).

These justifications are, however, very uneasy to invoke in practice. The proportionality test is of the essence. For example, regarding cross-border sales, the CJEU found that a pharmaceutical company had abused its dominant position by refusing to supply patented medicines in order to impede parallel trade, and took the view that the company had not adopted a “legitimate business behaviour” even in the presence of a State intervention in fixing the prices for pharmaceuticals (see CJEU, judgment of 16 September 2008, C-468/06 to C-478/6, Sot. Lélos kai Sia, para. 70 to 77).

Based on the above, dominant companies should be extremely cautious in imposing unilateral measures aiming – or having as an effect – to restrict cross-border sales in Europe, except in the very few cases where they may rely on the doctrine of “objective justifications”.

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Fernand de Visscher and Romain Meys

 

 

The information presented in this site is not a legal advice or opinion. You should seek the advice of a legal counsel of your choice before acting upon any of the information in this site.

La fin du courrier sous film plastique ? Pas si vite…

Il y a quelques mois, nous vous annoncions que le Gouvernement wallon avait adopté, le 28 février 2019, un arrêté visant à diminuer certains déchets et favoriser la propreté publique (Voir notre news de juin 2019).

Pour rappel, cet arrêté considère que « la mise sous film plastique des publications gratuites n’est pas indispensable à leur distribution, et que les alternatives avérées sont disponibles sur le marché, notamment pour le regroupement des publications, leur protection éventuelle et leur adressage ».

Il interdit l’envoi d’imprimés publicitaires sous film plastique sur le territoire de la Région wallonne, tout en octroyant un temps d’adaptation aux acteurs sur le marché.

Mais la réalité s’est avérée plus compliquée que prévu, et une requête en annulation, accompagnée d’une demande de suspension, a été introduite devant le Conseil d’Etat fin juin 2019.

Suspension de l’arrêté

Selon le requérant en suspension et en annulation, l’arrêté serait entaché d’illégalité en raison du défaut d’alternative appropriée au film plastique.

Le Gouvernement wallon peut prendre des mesures pour limiter la production de déchets de papier et de plastique provenant de publications gratuites, pour favoriser leur recyclage et lutter contre les problèmes de propreté publique liés à leur distribution. A cette fin, il peut notamment interdire les films plastiques autour de ces publications, mais seulement lorsqu’il existe des alternatives appropriées. La section de législation du Conseil d’Etat avait d’ailleurs rappelé, dans son avis sur le projet d’arrêté du Gouvernement wallon, cette condition sine qua non.

Selon le requérant, il n’y aurait pas à ce jour d’alternative appropriée à l’emballage sous film plastique. Selon lui, une alternative appropriée serait « celle qui est facilement accessible pour les distributeurs, qui est proposée à un coût acceptable et qui offre une facilité d’utilisation raisonnable ».

Le Conseil d’Etat a considéré que la condition qu’il existe des alternatives appropriées « n’aurait aucun effet utile si elle imposait seulement d’identifier abstraitement d’autres procédés comme la distribution sous enveloppe en papier ou le remplacement de la distribution postale par des messages électroniques, ce qui tombe sous le sens ». La simple affirmation qu’il existerait des alternatives appropriées n’est pas suffisante. Le Conseil d’Etat a donc conclu qu’aucun élément du dossier législatif n’a permis de constater que l’existence d’alternatives appropriées avait été sérieusement vérifiée.

Ce 30 septembre 2019, le Conseil d’Etat a suspendu l’arrêté du Gouvernement wallon en attendant la décision sur l’annulation. Dès lors, cet arrêté est pour le moment dépourvu de tout effet juridique et les autorités ne pourront pas l’exécuter. De même, les acteurs économiques ne sont plus tenus de le respecter et peuvent continuer à envoyer leurs imprimés publicitaires sous film plastique.

La décision définitive se prononçant sur l’annulation n’est pas attendue avant la fin de l’été 2020.

Absence d’alternatives?

A notre sens, les alternatives appropriées sont effectivement limitées sur le marché. Toutes les potentielles alternatives que nous avons rencontrées (en ce compris les films comportant une teneur en biosourcé) tombent sous la définition (très large !) de « film plastique » au sens de l’arrêté du Gouvernement wallon. Le film plastique y est en effet défini comme tout emballage en matière plastique, le plastique étant quant à lui tout « polymère […] auquel des additifs ou d’autres substances peuvent avoir été ajoutés, et qui est capable de jouer le rôle de composant structurel principal de l’objet ».

Selon l’administration toutefois, même un film ne comprenant qu’une quantité limitée de polymère tomberait sous la définition du « plastique », et dès lors sous l’interdiction prévue par le décret wallon.

En conséquence, la seule alternative qu’il semblait rester aux entreprises pour l’envoi de leurs imprimés publicitaires était d’une part, de les envoyer sans emballage, ou d’autre part, de les envoyer dans un emballage papier nettement plus coûteux.

Les récents événements risquent donc à nouveau de bouleverser le comportement des entreprises qui n’avaient pas trouvé d’« alternatives » satisfaisantes. Espérons toutefois qu’elles optent déjà pour des films plastiques plus écologiques, comme les films biodégradables conformes à des normes européennes, une alternative à la fois responsable et réalisable, mais qui tombaient sous l’interdiction de l’arrêté du Gouvernement wallon.

Affaire à suivre…

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Laurent de Brouwer et Charlotte Behets Wydemans

Does the reform of the CoBAT favour the establishment of retail businesses in Brussels?

Manuela von Kuegelgen, Partner in Real Estate, Public & Administrative law, deciphers the impact on the retail sector of the Brussels Code for town planning in the Trends Retail Guide published on 7 November.

The article is available here.

 

Europe pushes companies one step further towards sustainable investments

The European Commission has underlined the importance for companies to publish sufficient, reliable and comparable sustainability-related information to effectively direct capital towards sustainable investments. Although disclosure of climate-related information by reporting companies has improved, the Commission finds that there are still significant gaps and that further improvement in the quantity, quality and comparability of disclosures is required.

The Commission’s guidelines on the disclosure of climate-related information

In March 2018, the Commission published the Action Plan on Financing Sustainable Growth. One of the three major aims was to reorient capital towards sustainable investment. As part of this objective, the Commission has published on 20 June 2019 new guidelines on the disclosure of climate-related information by companies. The Guidelines were adopted to meet the objectives set out in the 2015 Paris Agreement on Climate Change, the United Nations’ Sustainable Development Goals and the Special Report of the Intergovernmental Panel on Climate Change and are line with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) of 2017.

The Guidelines supplement the following instruments:

  1. Directive 2014/95/EU regarding disclosure of non-financial and diversity information by certain large undertakings and groups (the “Non-Financial Reporting Directive”);
  2. the applicable national regulation transposing the Non-Financial Reporting Directive;
  3. the previous Guidelines on Non-Financial Reporting, published by the Commission in June 2017 which contain 6 key principles for good non-financial reporting, namely that disclosed information should be: (1) material; (2) fair, balanced and understandable; (3) comprehensive but concise; (4) strategic and forward-looking; (5) stakeholder-oriented; and (6) consistent and coherent; and
  4. the recommendations of the TCFD and, if necessary, the supplementary.

Companies in scope

The Non-Financial Reporting Directive is applicable to large undertakings which are public-interest entities with a balance sheet total of at least euro 20 million or a net turnover of euro 40 million and over 500 employees in average (and on a consolidated basis in case of a group). A definition of a public-interest entity is provided by Article 2(13) of the Statutory Audit Directive 2006/43/EC. Public-interest entities are listed companies whose securities are admitted to trading on a regulated market of the EU, credit institutions, insurance undertakings and entities which are designated as public-interest entities by a Member State, for instance entities that are of significant public relevance because of the nature of their business, their size or the number of their employees.

Materiality and type of risks

Climate-related information must be disclosed if it is necessary for an understanding of the external impacts of the company from an environmental and social perspective or if affecting the financial value of the company whereas TCFD has a financial materiality perspective only. The Commission has taken a broad interpretation of materiality compared to the 2017 Guidelines which incorporate the definition of the EU Accounting Directive 2013/34 (“information where its omission or misstatement could reasonably be expected to influence decisions that users make on the basis of the financial statements”).

The result of such a broad definition is that most of the reporting companies will have to disclose climate-related information. Companies that conclude that climate is not a material issue are advised by the Guidelines to make a statement to that effect explaining how that conclusion has been reached.

Under the Non-Financial Reporting Directive, risks should be understood both as negative impacts on the climate (emission of greenhouse gases, use of fossil fuels, GHG emissions, etc.) and negative impacts on the company. A company might be impacted by transition risks (risks of litigation, reputational risks…) and by physical risks (weather-related events such as storms, fires, etc. or chronic physical risks such as temperature changes, rising sea level, etc.).

Content of the information

The recommended disclosure relates to the reporting areas listed in the Non-Financial Reporting Directive: business model, policies and due diligence processes, policy outcomes, principal risks and their management, and key performance indicators.

Disclosure on business model

  1. the impact of climate-related risks and opportunities on the company’s business model, strategy and financial planning;
  2. the ways in which the company’s business model can impact the climate, both positively and negatively; and
  3. the resilience of the company’s business model and strategy, taking into consideration different climate-related scenarios over different time horizons.

The aim of this disclosure is to make sure that stakeholders understand the company’s view of how climate change impacts its business model and strategy, and how its activities can affect the climate over the short, medium and long term.

Disclosure on policies and due diligence processes

  1. any company policies related to climate, including any climate change mitigation or adaption policy;
  2. any climate-related targets the company has set as part of its policies especially any GHG emissions targets, and how company targets relate to national and international targets and to the Paris Agreement in particular;
  3. the board’s oversight of climate-related risks and opportunities; and
  4. the management’s role in assessing and managing climate-related risks and opportunities and explain the rationale for the approach.

Information on the involvement of the board and management in relation to climate change informs stakeholders on the level of the company’s awareness of climate-related issues. A company’s policies and any associated targets that demonstrate its commitment to climate change mitigation and adaption may also be interesting for stakeholders. It will help stakeholders understanding the company’s ability to manage its business to minimise climate-related risk, limit negative impacts on climate and maximise positive impacts throughout the value chain.

Disclosure on policy outcomes

  1. the outcomes of the company’s policy on climate change, including the performance of the company against the indicators used and targets set to manage climate-related risks and opportunities; and
  2. the development of GHG emissions against the targets set and the related risks over time.


Disclosure on principal risks and their management

  1. the company’s processes for identifying and assessing climate-related risks over the short, medium and long term and disclose how the company defines short, medium, and long term;
  2. the principal climate-related risks the company has identified over the short, medium, and long term throughout the value chain, and any assumptions that have been made when identifying these risks;
  3. the processes for managing climate-related risks, and how the company is managing the particular climate-related risk that it has identified;
  4. how processes for identifying, assessing, and managing climate-related risks are integrated into the company’s overall risk management.


Disclosure on key performance indicators

Key performance indicators are measures that analyse the performance of a company and its activities. In particular, the company should disclose indicators and targets used by the company to assess climate-related risks and opportunities in line with their strategy and risk management processes. The indicators should either be integrated with other disclosures or in an additional table that presents all indicators.

Banks and insurance companies

The Action Plan on Financing Sustainable Growth insists on the systemic importance of banks and insurance companies in the transition to a low-carbon and climate-resilient economy. The Non-Financial Reporting Directive imposes the same requirements on all companies under its scope, regardless of the sector in which they operate. Hence, it does not impose additional requirements on banks and insurance companies compared to other companies. Banks and insurance companies should look at the aforementioned disclosures from the particular perspective of their business activities, including lending, investing, insurance underwriting, and asset management activities. Therefore, banks and insurance companies should disclosure certain sector-specific information. For example, it could be useful to include information about an investment, lending and insurance underwriting portfolio that contributes to climate change mitigation and adaptation, and any relevant target in this respect. The sector-specific disclosures do not apply to other financial sector companies, such as asset management companies or pension funds since those companies do not fall within the scope of the Non-Financial Reporting Directive.

Non-binding

The Guidelines are non-binding, which means that the companies falling in their scope may choose alternative approaches to the reporting of climate-related information provided they meet legal requirements. The content of climate-related disclosures may also vary between companies according to certain factors, such as the sector of activity and the geographical location.

Concluding remarks

The new Guidelines on the Disclosure of Climate-Related Information aim to increase transparency and provide for standardisation in relation to a company’s impact on the environment. Most of the reporting entities should consider that climate is material to them according to the Guidelines and adapt their reporting format to include climate-related information.

The standardisation of the format and content of climate-related disclosure is needed to enable comparisons between the reporting companies, from both a financial point of view and a social and environmental point of view.  The new Guidelines set out precisely which climate-related information should be disclosed. However, the fact that Guidelines on the Disclosure of Climate-Related Information are non-binding may impede the level of standardisation that the Commission aims to reach.

***

Vanessa Marquette
vma@simontbraun.eu – +32 (0)2 533 17 41

With the assistance of Jolien De Troyer

Élections sociales 2020 : 10 rappels-clés

Les prochaines élections sociales auront lieu entre le 11 et le 24 mai 2020 (jour Y). Toutefois, la procédure électorale – qui dure plus de 150 jours – commencera dès le mois de décembre 2019.

Vous trouverez ci-après quelques rappels pour vous aider dès les étapes préalables à l’organisation des élections proprement dites qui, rappelons-le, peuvent désormais être organisées de façon électronique.

1. Dans quelles entreprises organiser des élections sociales?

Un conseil d’entreprise (CE) doit en principe être instauré dans les entreprises occupant en moyenne 100 travailleurs tandis qu’un comité pour la prévention et la protection au travail (CPPT) doit être instauré dans les entreprises occupant en moyenne 50 travailleurs.

Nouveauté ! La période de référence pour calculer le taux moyen d’occupation s’écoule désormais du 1er octobre 2018 au 30 septembre 2019 pour les travailleurs liés par un contrat de travail ou contrat d’apprentissage, et le 2ème trimestre de l’année 2019 pour les travailleurs intérimaires (sauf s’ils remplacent un travailleur fixe).

L’occupation moyenne des travailleurs est calculée, sauf pour les intérimaires, en prenant le nombre total de jours calendriers enregistrés en Dimona pour chacun de ceux-ci entre le 1er octobre 2018 et le 30 septembre 2019, à diviser par 365.

2. L’entreprise = l’UTE

– Les élections sociales doivent être organisées au niveau de l’unité technique d’exploitation (UTE) définie à partir de critères économiques et sociaux. Cette notion d’UTE ne coïncide pas nécessairement avec celle d’entité juridique. Une entité juridique peut ainsi être composée de plusieurs UTE et inversement.

Concrètement, c’est l’existence d’une certaine autonomie en matière économique et sociale qui déterminera le niveau auquel le CE et le CPPT devront être mis en place. En cas de doute, les critères sociaux prévalent sur les critères économiques.

– La loi ne précise pas ce qu’il y a lieu d’entendre par « critères économiques et sociaux ». On se réfère ainsi à la jurisprudence rendue en la matière.

Les critères économiques sont notamment : l’identité d’activités, une comptabilité commune, des services juridique et administratif communs, une politique économique et budgétaire commune, une direction composée de façon identique, un actionnariat commun, etc.

Les critères sociaux se rapportent quant à eux aux éléments suivants : emploi de langues communes, direction et politique du personnel commune, règlement de travail identique, organisation d’activités communes, système d’évaluation et de promotion similaire, politique salariale identique, intranet commun, etc.

– En fonction des cohésions existantes sur le plan économique et social au sein d’une même entreprise, plusieurs entités juridiques peuvent former ensemble une seule UTE. La législation détermine à cet égard les conditions en vertu desquelles plusieurs entités juridiques sont présumées, jusqu’à preuve du contraire, former une seule UTE. Ces présomptions sont les suivantes :

  • soit les entités juridiques font partie du même groupe économique ou sont administrées par une même personne ou par des personnes ayant un lien économique entre elles, soit ces entités juridiques ont une même activité ou bien leurs activités sont liées entre elles;
  • soit il existe certains éléments indiquant une cohésion sociale entre ces entités juridiques, comme notamment une communauté humaine rassemblée dans les mêmes bâtiments ou des bâtiments proches, une gestion commune du personnel, un règlement de travail ou des conventions collectives de travail communes ou comportant des dispositions similaires.

– Inversement, il est possible qu’une entité juridique doive être scindée en plusieurs UTE. Ce faisant, il se peut que les UTE qui en découlent (ou à tout le moins certaines d’entre-elles) n’atteignent isolément pas le nombre d’effectifs requis en vue de l’organisation d’élections sociales.

La loi impose toutefois aussi l’organisation d’élections sociales dans les entreprises qui – en tant qu’entités juridiques (en non plus en tant qu’UTE) – occupent en moyenne 50 ou 100 travailleurs. Dans ces cas, il conviendra de suivre une procédure dite de « regroupement » des UTE d’une même entité juridique jusqu’à ce que celles-ci atteignent les seuils de 50/100 travailleurs.

3. Catégories de personnel représentées

Au terme des élections sociales, des travailleurs représenteront leurs collègues au CE et au CPPT. Cette représentation sera répartie entre les différentes catégories de travailleurs présents dans l’entreprise : employés, ouvriers, jeunes travailleurs (s’il y a au moins 25 travailleurs de moins de 25 ans au jour des élections) et cadres (si au moins 15 cadres sont occupés au jour X).

Les « cadres » sont définis comme étant les employés qui exercent dans l’entreprise une fonction supérieure, réservée généralement aux titulaires d’un diplôme d’un niveau déterminé ou à celui qui possède une expérience professionnelle équivalente. Les personnes qui appartiennent au personnel de direction ne peuvent par ailleurs être considérées comme des cadres.

Les cadres sont en réalité des personnes qui exercent une fonction « supérieure », du fait de l’autorité qu’ils exercent ou simplement en raison du contenu de leur tâche. La fonction de cadre implique une certaine autonomie décisionnelle dans l’exécution du travail, certaines compétences de direction et/ou des responsabilités importantes. Cette notion sera appréciée in concreto et dépendra de la nature de l’entreprise ainsi que de sa structure.

4. Début de la procédure – Première communication et décision

La procédure électorale débute à X-60 (soit entre le 13 et le 26 décembre 2020 en fonction de la date d’élections choisie), c’est-à-dire au plus tard le 60ème jour précédant l’affichage de la date des élections au sein de l’entreprise (jour X).

A cette date, l’employeur doit communiquer aux travailleurs ainsi que, le cas échéant, aux CE et CPPT, toute une série d’informations, dont la liste des fonctions de direction et les critères économiques et sociaux qu’il entend prendre en considération en vue de la détermination de l’(ou des) UTE.

Débute alors une période de 25 jours dite de « consultation » avec le CE et/ou le CPPT ou, à défaut, avec la délégation syndicale. Au cours de cette période, seront notamment évoqués les critères retenus par l’employeur ainsi que son intention d’éventuellement diviser une entité juridique en plusieurs UTE ou inversement de (ne pas) regrouper plusieurs entités juridiques en une seule UTE.

A l’issue des 25 jours (soit à X-35), l’employeur communique sa décision écrite dans laquelle il indique le nombre d’UTE qu’il a décidé de retenir ainsi que leur description. Un recours peut être introduit contre cette décision par les travailleurs et/ou leurs organisations syndicales.

5. Personnel de direction = ?

Comme expliqué ci-avant, à X-60, l’employeur doit communiquer la liste des fonctions de direction présentes au sein de l’entreprise. Cette première annonce devra être confirmée au jour X-35 (soit entre le 7 et le 20 janvier 2020 en fonction de la date d’élections choisie). L’employeur désignera parmi ce personnel de direction ceux qui siégeront au CE et/ou au CPPT à ses côtés. Ceux-ci ne pourront donc poser leur candidature en tant que représentant des travailleurs et n’auront pas le droit de voter.

La loi organisant les élections sociales définit le personnel de direction comme « les personnes chargées de la gestion journalière de l’entreprise qui ont pouvoir de représenter et d’engager l’employeur, ainsi que les membres du personnel directement subordonnés à ces personnes, lorsqu’ils remplissent également des missions de gestion journalière ».

Il s’agit, dans la pratique, des deux niveaux les plus élevés dans la hiérarchie de la structure du personnel qui sont chargés de la direction journalière de l’entreprise.

Pour pouvoir évaluer ces deux niveaux, il y a lieu d’examiner les circonstances de fait et la pratique journalière de l’entreprise. En d’autres termes, analyser qui se charge de la direction journalière, effective, indépendante et continue de l’entreprise, le titre de la fonction n’étant en soi pas déterminant.

Pour cet exercice, l’organigramme de l’entreprise peut constituer un outil d’aide important.

Depuis les élections sociales de 2016, les personnes de confiance ne peuvent plus représenter l’employeur au sein du CE et du CPPT ni se présenter comme candidat. Elles bénéficient ainsi du même statut que les conseillers en prévention.

6. Combien de mandats ?

Le nombre de mandats à attribuer dépend du nombre de travailleurs occupés au jour X. En fonction de ce nombre, le nombre de mandats effectifs à attribuer sera de :

Nombre de mandats effectifs Nombre de travailleurs au jour X
4 Moins de 101
6 101 à 500
8 501 à 1000
10 1001 à 2000
12 2001 à 3000
14 3001 à 4000
16 4001 à 5000
18 5001 à 6000
20 6001 à 8000
22 Plus de 8000

Il y aura par ailleurs un nombre équivalent de mandats suppléants. Il est enfin possible d’ajouter des mandats supplémentaires pour les cadres.

Le nombre de mandats une fois défini, il convient de répartir ceux-ci entre les différentes catégories de personnel. La priorité est donnée aux jeunes travailleurs, ensuite la répartition se fait proportionnellement par catégorie de travailleurs dans l’entreprise, étant entendu que chaque catégorie doit disposer d’au moins un mandat.

7. Quels candidats ?

Pour être candidat, il faut remplir un certain nombre de conditions le jour du vote (Y):

  • être lié par un contrat de travail ou d’apprentissage;
  • être occupé dans l’UTE où ont lieu les élections;
  • avoir au moins 18 ans (16 ans si l’on est candidat jeune travailleur) et ne pas avoir atteint l’âge de 65 ans (25 ans si l’on est candidat jeune travailleur);
  • ne pas être membre du personnel de direction ni être conseiller en prévention;
  • appartenir à la catégorie de personnel pour laquelle on se porte candidat (jeune travailleur, ouvrier, employé, cadre);
  • avoir une ancienneté minimale soit de 6 mois ininterrompus, soit de 9 mois discontinus en 2019 dans l’entité juridique ou dans l’UTE que forment plusieurs entités juridiques.

8. Qui a le droit de vote ?

Auparavant, seuls les travailleurs disposant d’au moins trois mois d’ancienneté bénéficiaient du droit de vote. Nouveauté ! A présent, l’intérimaire se voit également accorder le droit de vote chez l’utilisateur.

Pour cela, l’intérimaire doit remplir deux conditions cumulatives :

  1. il doit avoir travaillé en tout au moins trois mois consécutifs ou, en cas de périodes d’occupation interrompues, compter en tout au moins 65 jours ouvrables de travail, pendant la période allant du 1er août 2019 à la date d’affichage de l’annonce de la date du scrutin (à savoir le « jour X » – donc en février 2020) ;
  2. au cours de la période qui débute le jour X pour se terminer le 13e jour avant la date des élections (à savoir le jour Y-13), il doit avoir été occupé durant au moins 26 jours ouvrables.

On prend à cet égard en compte l’occupation dans l’entité juridique de l’utilisateur ou dans l’UTE de l’utilisateur qui est constituée de plusieurs entités juridiques.

9. Protection contre le licenciement

Les candidats et les représentants du personnel élus au CE et au CPPT sont protégés contre le licenciement. Ils ne peuvent être licenciés que pour un motif grave préalablement reconnu par les juridictions du travail ou pour des raisons d’ordre économique ou technique préalablement reconnues par la commission paritaire.

Cette protection débute à la date X-30 (soit pour les élections 2020, entre le 12 et le 25 janvier 2020), date à laquelle l’employeur n’a pas encore connaissance des listes des candidats, celles-ci devant lui être transmises pour le jour X+35. On parle ainsi de « protection occulte ». Elle prend fin à la date d’installation des candidats élus lors des élections sociales suivantes.

Compte tenu des sanctions financières attachées au non-respect de cette protection (jusqu’à 8 ans de salaire), chaque employeur devra, dès le début 2020, être extrêmement prudent aux licenciements dont il décide. En effet, tout travailleur licencié peut se porter candidat aux élections et bénéficier de ce fait, de façon rétroactive, d’une protection contre le licenciement.

10. Recours judiciaires

Des recours spécifiques peuvent être formés à plusieurs moments au cours de la procédure d’élections sociales (au jour X-28, au jour X+21, au jour X+52, au jour X + 61 et au jour Y+15). Des délais très courts doivent être respectés à cet égard et en principe aucun appel n’est possible. Nous pouvons vous fournir une assistance particulière à cet égard si nécessaire.

***

Pierre Van Achter

Pour plus d’informations ou une assistance spécifique, n’hésitez pas à contacter l’auteur: +32 (0)2 533 17 36 ou pierre.vanachter@simontbraun.eu

When should a pharmaceutical company apply for a trademark for its medicinal products?

The pharmaceutical market presents unique challenges to pharmaceutical companies seeking to launch new medicinal products. Before they can introduce a new medicinal product on the market, they must go through a lengthy process of executing clinical trials as a prerequisite for obtaining a market authorisation. A crucial question in this context is whether they could already register their trademark during the clinical trials phase, without risking revocation of their trademarks (i.e. due to non-use when the marketing approval process outlasts the five-year grace period).

In its decision dated 3 July 2019, the CJEU stated that when choosing to register a trademark for their medicinal product early on, pharmaceutical companies will either have to make sure that they are certain to obtain a marketing authorisation within the five-year timeframe or to make sure that they invest sufficient financial resources to reasonably expect obtaining a marketing authorisation within the five-year timeframe.

The case brought before the CJEU

On 3 July 2019, the Court of Justice of the European Union (CJEU) rendered an important decision for pharmaceutical companies. The case revolved around a trademark dispute, in relation to medicinal products, that raised two far-reaching issues concerning the scope and definition of the requirement of genuine use within the provisions of Article 58 of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trademark (“EUTMR”). You can read the judgement here (in Dutch, currently not available in English).
The decision was given in the context of an appeal brought by Viridis Pharmaceutical Ltd. (“Viridis”) against the judgment of the General Court in Case T-276/16, Viridis v European Union Intellectual Property Office (“EUIPO”). The primary proceedings concerned the revocation by the EUIPO of the EU trademark “Boswelan”, registered by Viridis for class 5 of the Nice classification (pharmaceutical and sanitary preparations), following the application filed by Hecht-Pharma GmbH to have the trademark revoked due to lack of genuine use for a period of more than five years by Viridis.

In short, the main points of discussion were whether the use of the trademark during clinical trials may constitute genuine use and, if not, whether conducting clinical trials, as a prerequisite for receiving a market authorisation, may constitute a proper reason for non-use.

Genuine use

According to settled case law, genuine use is made of a trademark within the meaning of Article 51(1)(a) of Regulation No 207/2009 (now article 58.1(a) EUTMR), when it is used, in accordance with its essential function of ensuring the identity of the origin of the goods or services in respect of which it is registered, to find or preserve an outlet for those goods or services, to the exclusion of any symbolic use intended solely to enforce the rights conferred by the trademark (judgements of 11 March 2003, Case C-40/01 Ansul, EU:C:2003:145, paragraph 43, and 8 June 2017, W.F. Gözze Frottierweberei and Gözze, Case C-689/15, EU:C:2017:434, paragraph 37 and the case law cited there).

Thus, the normal use of the trademark presupposes that it is used on the market for the goods or services protected by the trademark and not only within the undertaking concerned. The use of the trademark must relate to goods or services which have already been placed on the market or which can be placed on the market at any time, and the company is preparing to do so with a view to winning customers, in particular in the context of advertising campaigns (see, to that effect, Case C-40/01 Ansul v Commission [2003] ECR I-145, paragraph 37).

On the other hand, the affixing of a trademark to goods which are not supplied to the customer with a view to their penetration into the market for the goods covered by the trademark registration cannot be regarded as genuine use of that mark, since such affixing does not help to find a market for those goods or to distinguish them, in the interests of consumers, from goods originating from other undertakings (see, to that effect, Case C-495/07 Silberquelle v Commission [2009] ECR I-10, paragraph 21).

After recalling the settled case law and general principles on genuine use, the CJEU went on to address the first plea.

The CJEU affirmed the observations of the General Court:

  • That Viridis had adopted preparatory acts which consisted in the conduct of a clinical trial carried out in view to apply for marketing authorisation and which included certain acts in the form of advertising for that trial;
  • However, the use of the trademark during the clinical trials could not be equated with marketing or even with a direct preparatory act, but had to be regarded as an internal use, since that use had taken place outside competition, within a limited circle of participants, and without its purpose being to obtain or maintain market shares. Also, the use (400.000 capsules) had not been shown to be significant in the pharmaceutical sector;
  • In addition, Viridis did not demonstrate that the marketing of the medicinal product designated by the trademark was imminent since it had not produced any evidence to show that the clinical trial was almost complete; and
  • In any event, only the acquisition of a marketing authorisation by the competent authorities could have allowed a public and outward-looking use of the trademark, since the legislation on medicinal products prohibits the advertising of medicinal products which have not yet been the subject of marketing authorisation and, consequently, any communication intended to gain or maintain a market share. It was therefore impossible to use the trademark designating a medicinal product on the relevant market as required by the settled case law.

The CJEU dismissed the following two arguments of Viridis as irrelevant:

  • The fact that the acts of use relied on were in conformity with the applicable legal provisions; and
  • The argument that the five-year period to make genuine use is inadequate for the pharmaceutical sector and does not take into account the specific circumstances of the pharmaceutical market.

The CJEU thus followed the reasoning of the General Court and declared the first plea in law partly unfounded and partly irrelevant.

Proper reasons for non-use

Again, the CJEU started with recalling the settled case law and general principles on proper reasons for non-use. According to the case law of the Court, only obstacles which are sufficiently directly related to a trademark and render its use impossible or unreasonable and which are beyond the control of the proprietor of that mark can be regarded as ‘valid reasons’ for non-use of that mark. It must be determined on a case-by-case basis whether a change in the business strategy in order to overcome the obstacle in question would render the use of that mark unreasonable (judgments of 14 June 2007 in Case C-246/05 Häupl, EU:C:2007:340, paragraph 54, and of 17 March 2016 in Case C-252/15 P Naazneen Investments v OHIM, not published, EU:C:2016:178, paragraph 96).

Regarding the second plea, the CJEU affirmed that conducting a clinical trial may constitute a proper reason for non-use, but observed that the acts and events in the present case, were within the sphere of influence and under the responsibility of Viridis and, therefore, could not be regarded as obstacles which arose outside its control.

The CJEU argued that Viridis had already, on the basis of its own choice and not on the basis of any legal obligation, applied for registration of the trademark even though there was considerable uncertainty as to both the date and the possibility of marketing the goods designated by that mark, since those goods were in the clinical trials phase. It noted that Viridis’ application for a clinical trial had been submitted more than three years after the registration of the trademark. Also, the difficulties alleged during the clinical trial in question were, in view of the specific characteristics of the sector concerned, due to insufficient investments by Viridis.

With the above reasoning, the CJEU declared the second plea unfounded and dismissed the appeal in its entirety.

Key takeaways

It can be tricky to register a trademark in relation to a medicinal product for which no market authorisation has yet been obtained. Pharmaceutical companies will have to determine whether or not the benefit of registering the trademark early on outweighs the risk of losing the trademark due to non-use.

The judgement, read together with the opinion of AG SZPUNAR, makes it clear that the chances for a pharmaceutical company to make genuine use of their registered trademark during the clinical trial phase are, although not fully excluded, very low. The use during clinical trials, no matter how quantitatively large, is aimed at testing the medicinal product (scientific objective) and is not aimed at maintaining or creating a share in the market for the goods or services protected by the mark (economic objective). The restrictions flowing from the legal framework relating to medicinal products (prohibition of sales and advertisement of non-authorised medicinal products) make it (nearly) impossible to make genuine use of the registered trademark during the clinical trial phase.

When choosing to register a trademark for their medicinal product early on, pharmaceutical companies will thus either have to make sure that they are certain to obtain a marketing authorisation within the five-year timeframe or to make sure that they invest sufficient financial resources in order to reasonably expect to obtain a marketing authorisation within the five-year timeframe.

The CJEU confirmed that a clinical trial and the restrictions of use flowing from the legal framework relating to medicinal products that go with it may constitute a proper reason for non-use.

However, pharmaceutical companies’ own behaviour in coping with the legal barriers to use its trademark is also taken into consideration when examining the proper reasons for non-use. Waiting three years after registering the trademark to start the clinical trials with insufficient funds will clearly not suffice for the CJEU. Conversely, the reasoning of the Court does seem to suggest that a pharmaceutical company that registers a trademark and starts the clinical trials early on with sufficient funds and reasonable expectations of finishing the clinical trials and obtaining a market authorisation to make use of the trademark before the expiry of the five-year period, may successfully invoke clinical trials and the unexpected delay during the clinical trials as a proper reason for non-use.

In sum, the decision teaches us that timing, careful assessment and awareness are essential when it comes to applying for and maintaining a trademark for medicinal products in the pharmaceutical context.

***

Eric De Gryse and Christopher Dumont

You may always contact us should you have any questions.
eric.degryse@simontbraun.eu – +32 2 533 17 52
christopher.dumont@simontbraun.eu – +32 2 533 17 58