Monday, 9 May 2016

From Elvish and Klingon to C++: languages should or should not be subject to copyright protection Part 2?

So our story continues. The Software directive has since been replaced by Council Directive 2009/24/EC but without relevant alterations in substance in this regard, and therefore the principles expressed here are still valid:

Article 1: “Protection in accordance with this Directive shall apply to the expression in any form of a computer program. Ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protected by copyright under this Directive” and “A computer program shall be protected if it is original in the sense that it is the author’s own intellectual creation. No other criteria shall be applied to determine its eligibility for protection”

The same idea of protecting merely the expression is found also in the TRIPS agreement and the WIPO agreement, which were also both referred to in the case. The CJEU referred to Article 5(3) of the Software Directive, stipulating that a person who has obtained a copy of a computer program under a licence is entitled, without the authorisation of the owner of the copyright, to observe, study or test the functioning of that program so as to determine the ideas and principles which underlie any element of it, provided that those acts did not infringe the copyright in the program. Authorisation for such acts, to the extent that these included loading and running the program, is not required if they are necessary for the use of the program by the lawful acquirer in accordance with its intended purpose, including for error correction. The CJEU expressly confirmed that licensing agreements cannot be used to try to protect the ideas and principles underlying any element of the program: Thus, any agreement terms seeking to prevent the studying, observing and testing of licensed software are unenforceable.

CJEU held that neither the SAS Language nor the functionality of the SAS System were protected by copyright under the Software Directive, and no infringement could take place. However, the Court also found that “the finding (referred to here) cannot affect the possibility that the SAS language and the format of SAS Institute’s data files might be protected, as works, by copyright under Directive 2001/29 if they are their author’s own intellectual creation”. Thus, while the court confirmed that these elements were not protected, it did leave the window open as to that they COULD be protected; This leads to the conclusion that while emulating the functionality of software is allowed, reproducing a copyright work consisting of a programming language or data file format could not be.

To further clarify the matter, quite a clear statement in this regard can be found in another CJEU’s ruling given quite at the same time as the SAS ruling (and in fact, the SAS ruling refers to this as well), namely its ruling in case Bezpecnostni softwarova asociace, where it stated that: “the object of protection under Directive 91/250 includes the forms of expression of a computer program and the preparatory design work capable of leading, respectively, to the reproduction or the subsequent creation of such a program.”

Conclusions to follow in the final part, but in the meanwhile have a pleasant working day!



Friday, 6 May 2016

From Elvish and Klingon to C++: languages should or should not be subject to copyright protection Part 1?

While being involved in interesting licensing arrangements in TMT sector recently, I must admit that this  case truly caught my eye in the latest in Hollywood Reporter:

"When Paramount and CBS closed out 2015 with a lawsuit over a crowdfunded Star Trek fan film titled Axanar, the two studios probably had no idea that they were about to get mired in an esoteric legal debate about the protectability of the Klingon language. But that's exactly what's happened, and with the language of digital coding hanging in the background, a California federal judge's forthcoming decision could hold significance — so large, in fact, that this otherwise run-of-the-mill copyright action has now drawn an amicus brief from a language society that quotes a Klingon proverb translated as "we succeed together in a greater whole."

To review, after the Star Trek rights holders filed their complaint, the defendant production company demanded particulars of the franchise's copyrighted elements. In response, Paramount and CBS listed many, but what drew most attention was claimed entitlement to the Klingon language. The defendant then reached back to a 19th century Supreme Court opinion for the proposition that Klingon is not copyrightable as a useful system."

The conclusion of the brief states the following:

We had an interesting discussion in ITechLaw's London conference on the copyright protection of programming languages and there seems to be an interesting connections between these two cases and therefore I wanted to write about this topic. So main questions, can one infringe a copyright in J.R.R Tolkien’s Elf language by writing a book with that language? Or more interesting is C++ different to Klingon language discussed above?

As a start I think it is needed to cite SAS v. World Programming Ltd (WPL) - case briefly although the case itself is most likely quite known by my learned colleagues (English High Court (Arnold Judge), ruling in July 2010; ECJ case 406/10 (ruling on 2 May 2012), English Court of Appeal (21 November 2013). 

So, the case involved the so called SAS System, a software program enabling its users to perform certain data processing and analysis tasks. As background, the SAS System was and is quite a profitable one, based on roughly 35 years of experience and development.  WPL saw a market for alternative software, which would be able to execute application programs written in the SAS Language. For this purpose WPL had licensed the Learning Edition of the SAS System, which it carefully studied and tested. On the basis of its observations, it developed the so called WPS system that was competing with the SAS System. WPL openly admitted that this was in fact also its purpose, and did not even try to excuse itself in respect of its purposes.  What turned out to be rather crucial to the case was that WPL had developed its system without access to the SAS source code or object code, and furthermore, its system was written in a different programming language. Probably the most important merit of this competing system, and definitely one of the reasons why SAS had such a major interest to dispute the case in different instances, was that it enabled users of the SAS System to change their system significantly more easily than before, as the WPS system was able to read the SAS programming language. This saved the customers from the trouble of rewriting their existing applications in a different language in order to change their systems, and thus significantly reduced to costs (and, naturally, the threshold) of such change. The courts focused most on the evaluation of whether the claimed components of the SAS System were protected by copyright in the first place, and thus SAS’s claims were largely examined in this respect.

Next time we further elaborate this so stay tuned!



Thursday, 3 March 2016

TRUSTin alkuvuoden transaktiokuulumisia!!!

TRUSTin vuosi 2016 on lähtenyt liukkaasti kuin suksi ja ajattelin lyhyesti kirjoittaa kuulumisia toimistostamme. Kävimme ensinnäkin vierailulla International Bar Associationin konfrenssissa Pariisissa, jossa aiheena oli yrityskaupat ja ajankohtaiset trendit. Tätä edelsi itse asiassa Lontoo, jossa kävimme tapaamassa tuttuja ja pokkaamassa  vuoden 2016 International Law Officen (ILO) Client Choice Awards -palkinnon kategoriassa Yrityskaupat (Suomi). Diilirintamalla näyttää myös vilkkaalta ja keväällä on varmasti tulossa lisää uusia referenssicaseja aina rahoitusjärjestelyistä isompiin yrityskauppoihin ja IT-projekteihin. Ajattelimme koota näkemyksiämme, ajatuksiamme ja kokemuksiamme näistä "yksiin kansiin" ja julkaista perinteisen M&A and Corporate Finance Updaten tässä lähiviikkojen aikana. Fokusoimme myös muutamiin havaintoihin tech M&A -projekteista, jotka tuntuvat olevan nousussa ja sehän sopii meille, kun olemme olleet tässä sektorissa etulinjassa mukana.

ILOn palkinto oli miellyttävä yllätys ja tämä näyttääkin olevan osoitus siitä, että kustannustehokkaalle ja transaktioihin erikoistuneelle asianajotoimistolle on  tilausta kotimaan asianajomarkkinoilla perinteisten isojen toimijoiden rinnalla. Selittävinä tekijöinä on varmasti hinnoittelumme (yrityskaupoissa erityisesti alle 20MEUR diilit ovat ydinalueellamme), sitoumuksemme johtaa projekteja tiivisti osakastasolla ja hoitaa projektit pienellä dynaamisella tiimillä aina due diligencestä neuvotteluprosessin loppuun ja post–integraatioasioihin. 

ILO:n valintaperusteet palkinnolle olivat seuraavat:

”ILO Client Choice awards recognize both individual partners and firms that are superior across the full spectrum of client service. This year’s winners were chosen from more than 2,500 individual client assessments.  Clients are asked to rate individual lawyers and law firms on the following client service criteria: quality of legal advice, value for money, commercial awareness, effective communication, billing transparency, tailored fee structures, response time, sharing of expertise and use of technology.”

Pääasia kuitenkin on, että uskon meillä kaikilla olevan yhdistävänä piirteenä se, että kaikilla on hinku päästä töihin ja oppia lisää, joka näkyy aina kaikessa päivittäisessä tekemisissämme. Mukavasti olemme päässeet tarjouskilpailuihin mukaan, mutta vielä mahtuu lisääkin!

Tivian kanssa olimme järjestämässä "Onnistunut IT-ulkoistus"-seminaarin, jossa Hannes Snellmanin, Liaisonin ja 2NS:n kanssa käsittelimme ulkoistuksia eri näkökulmista. Omassa puheenvuorossamme kävimme läpi mm. kilpailutusprosessien käytäntöjä juristin  näkökulmasta, mitä  vaikutuksia  erilaisilla  kilpailutuksilla   ja  nykyisillä  trendeillä  (mm.   pilvipalvelut,  bimodaliteetti, cloud brokerage)  on  palvelu-­ulkoistuksen  sopimusehtoihin  ja   sopimusrakenteisiin, kuinka  huomioida  muuttuvat  regulatory compliance -­asiat ja   tietosuojakysymykset, ja lopuksi, miten  sopimuksessa  ylipäänsä varmistetaan  ulkoistusprosessin  tavoitteiden   saavuttaminen. Kiinnostuneille koulutuksen aineisto on saatavilla täältä. Meiltä on myös pyydetty keskeisimpiä kohtia konsernitasoisten CRM, ERP tai vastaavien liiketoimintakriittisten IT-projektien hankinnoista ja mitkä ovat sellaisia tekijöitä, joilla on suurimmat kaupalliset merkitykset ja joita harvemmin osataan ottaa huomioon. Totta kai vastaamme huutoon ja laadimme ns. top #3 listan muutamasta mielestämme keskeisimmästä tekijästä, joihin olemme itse törmänneet ja näistä lisää siis tulossa tälläkin blogilla jatkossa.

Näin lopuksi haluan kuitenkin vielä TRUSTin tiimin puolesta kiittää vielä ILOn äänestykseen osallistuneita ja toki myös kaikkia muitakin asiakkaitamme, jotka ovat tehneet tämän mahdolliseksi. Tästä tunnustuksesta kiitollisina lupaamme pyrkiä työskentelemään entistä ahkerammin!



Friday, 4 December 2015

SPA Series Part 10: Negotiating M&A Deals in Finland - Conditions Precedent, Merger Control and Miscellaneous

So next in our blog we move forward to conditions precedent (or CP clauses as these are called). The substance of these CP clauses consists of the items that need to be satisfied before the deal is actually done and transaction completed. When these conditions precedent are completed, then you can have a closing and finally after all closing formalities, and of course champagne, title to the shares passes from the seller to the purchaser. We will in our next blog talk about an issue whether to have a simultaneous or separate signing and closing so we do not go there yet, but save that fascinating topic for later date. The main concern for the seller is in CP terms is that if these are too flexible, these give to a buyer a way out of the deal or exit so to speak without incurring any liability so one needs to be careful. But do you know what are the typical conditions precedent that seller or buyer should require?

As to the seller I would say that at the minimum there should be reference to approvals by the Competition Authorities, or a waiver that merger clearance is not needed. This could be expanded to cover other licenses and regulatory approvals, as well as violations of laws, judicial orders or similar.

Regarding merger control I think it is also worth explaining how this Finnish system works. So the applicable law in Finland is the Competition Act (No. 948/2011) (the Competition Act), which entered into force on 1 November 2011, which mainly harmonize the Competition Act with EU rules. The meaning of the merger control is to protect the effective competition in the Finnish market and control particularly such concentrations which results in creation or strengthening of a dominant position. The procedure in merger control matters is that the Finnish Competition and Consumer Authority (FCCA) investigates a concentration in the first stage and either clears it or submits a request to the Market Court to prohibit it. Clearing of the concentration may be subject to conditions. This is an area were we have lots of interesting clauses like “hell or high water” or similar and perhaps I write on these separately at some point. The Market Court shall investigate the case on the basis of FCCA’s request and it has also an authority to review appeals made from FCCA’s decisions. The decisions made by the Market Court can be further appealed to the Supreme Administrative Court. FCCA’s investigation right depends on the turnover threshold set in the Competition Act. Parties are obligated to make concentration notification if the combined aggregate worldwide turnover of the parties exceeds €350 million and the aggregate turnover in Finland of each of at least two of the parties exceeds €20 million. Parties must file the notification prior to the implementation of the concentration. Filing of the notification is made free of charge but sanctions are possible if the transaction is closed before clearance of concentration. The fine which can be up to 10 percent of the total turnover of the relevant undertakings will be imposed by the Market Court on the basis of FCCA’s request.

Another typical condition precedent for the seller is that there shall have occurred no breach of the buyer’s undertakings. There could be a discussion whether this breach should be material or not or whether this breach is incapable of being remedied. Finally, financing for the Purchaser and all corporate authorizations and resolutions to be secured and reviewed before the signing of the Agreement could be one to be require as well.

In case of the Buyer these conditions precedent typically arise from due diligence investigation and these might cover wide variety of situations so this list is not in any way exhaustive. The same as mentioned above for the Seller apply here as well, but in addition, there could be for example:

  • Approvals from third parties are satisfactorily acquired which could include whatever approvals there are from the transfer of governmental licenses to change of control - approvals in material agreements;
  • The representations and warranties of the Seller herein contained having been true and correct as of this date and continuously until the closing;
  • The related agreements have been signed (e.g., transition services, distributions or delivery agreements or similar) 
  • There could be classical MAC –clause (so no “Material Adverse Change” having taken place between signing and closing, as naturally if there were material adverse change the buyer might want to walk away);
  • Key employees could be required to sign new agreements, lock-in agreements or similar;
  • The Company has not received, e.g., claims or terminations relating to most important agreements typically referred to as “Material Agreements”; and
  • Many others depending on the situation.

In IP-intensive deals there is often a need to fulfill some loopholes like require assignments IP rights to the company retrospectively from the owners, employees or partners. I have a good example on the last one when we advised one venture capital investor in the Finnish game-sector company some time ago. There was a situation that most parts of the software engine that was running target company’s online game were coded by the founders of the company prior to the time the company was incorporated. Here we did not find a single document that would have granted the company any right to use such code not to mention a document in which copyright and all intellectual property rights should be assigned to the company. Gladly they were able to secure retrospective assignments as conditions precedents and the deal went forward. Finally, while these are conditions precedent, these are still something that the buyer should be allowed to waive these rights if they wish to proceed.

Hopefully this helps someone and I wish all of you very pleasant weekend!



Friday, 20 November 2015

Greetings from Housewarming Parties of TRUST!

Dear All,

This time I thought that I share something completely different and I go back in time to last week's Thursday when we had TRUST's first housewarming parties. I was so impressed to see so many of you there. Here are these few lines from my speech in which I also tell a bit about us to those of you who do not know us yet and for those who participated I hope it brings to your mind good memories.

"Hei, olen Jan Lindberg ja haluan toivottaa kaikki ystävämme sekä muut rakkaat ihmiset lämpimästi tervetulleiksi asianajotoimisto TRUSTin tupareihin.

Meillä on mahtava ilta tulossa. Teitä onkin jo viihdyttänyt DJ Hammeri ja myöhemmin illasta esiintyy myös Anssi Kela, joista molemmat ovat ainakin luvanneet esittää juuri tähän tupaantulijaistilaisuuteemme sopivaa musiikkia. Lisäksi paikalla on oma kvintettimme eli viisikkomme, jonka esittelen hieman myöhemmin.

As we also have some non-Finnish-speaking friends here, I shall continue in English.
As some you might know, the history of trust goes all the way back to the misty and dark Harry Potter like surroundings of Oxford University some 13 years ago, where we studied with Mika, and thought for the first time that it would be great to create something of our own. As is well visible also here today, we have wanted to keep the Oxford theme visible in Trust’s brand and image as well, since it reminds us of our roots and academic vibe as well as represents our passion for solving complex problems.

After many steps and a few side-steps we ended up with the current set-up, and I belive at this stage it is a good time to introduce our team. So I let this handsome young stallion next to me introduce himself but here somewhere is Kiira, Jenni and the backbone of our office Maija.

We have many reasons to celebrate today. More precisely, not only do we celebrate our ”almost three year birthday” and new premises here at Forum, but we also want to celebrate your enormous support to us, and thank you as we would not be where we are today without your encouragement and recommendations.

Our road will continue and it definitely looks promising. An example of this a recently received piece of news, that we have been exclusively selected in one respected publication as the M&A law firm of the year in Finland, but more information on this will follow early next year. Now I hope to you all not only excellent but also magical evening!"

This was not part of the speech, but I want to use this opportunity to thank SKM Photo for great pictures, Marja Oinonen for all help -  tip for all those in need of a top notch project leader and marketing professional Marja is looking for new opportunities at the moment, DJ Hammeri - awesome beats and sounds, Alexandra Finckenberg-Widner of Cakehouse for excellent catering, Luiano for wines, Nina and other good people at Business Meeting Park - for all support and help, as well as our top star of the evening Anssi Kela - you rock!

Best wishes and finally thank you for those who celebrated with us,