Posts

Intellectual Property Protection in New Zealand

Before international franchisors enter into the New Zealand market, they should ensure that their intellectual property is protected in New Zealand. The term “intellectual property” encompasses trade marks, registered designs, copyright and patents.  The protection of the rights to intellectual property is fundamental to any franchised business.

In New Zealand the franchisor’s intellectual property can be protected as follows:

Trade Marks

It is imperative for a franchisor to obtain formal trade mark or service mark protection as a basis for any trading operation.  There are 42 classes of goods and services in which trade mark protection can be obtained in New Zealand and of those classes 34 relate to goods and 8 to services.  For example, there are 3 food classes and 2 classes covering products such as beer, alcoholic beverages, fruit juices and mineral water. There is also a service class to protect advertising and business services.

The nature and extent of any trade mark protection needs to be considered for each particular case.

Trade marks may comprise any word, brand, label, symbol, device or logo which serves to distinguish the particular goods or services of one party from the goods or services of another party and the Trade Marks Act 2002 governs registration of all marks.

The principal function of a trade mark is to indicate the origin of goods and services.  It is important to select a distinctive trade mark in order that the public will associate your goods and services with the unique brand.

Trade marks are protected by registration in the Intellectual Property Office of New Zealand (IPONZ).  Once you have selected or designed your trade mark then as a precautionary move it is possible to obtain a search of the Trade Mark Register to ensure that it does not conflict with anyone else’s mark.

Assuming that the trade mark is available, its protection is afforded by filing an application and paying the requisite fee.  This obtains a filing date and application number from the Trade Mark Office.

The benefits of registration are as follows:

(a) It can be used to prevent any competitor from using the same or similar mark on any goods or services in New Zealand.

(b) It serves as public notification of your rights in that trade or service mark.

(c) It can prevent registration of an identical or confusingly similar mark.

(d) Trade mark registration is a valuable business asset.

It is also possible to have common law rights in an unregistered mark which can be protected by the tortious action of Passing Off.

Registered Designs

Registered Design protection pursuant to the Designs Act 1953 is available for a wide range of products.  Protection may be obtained for novel features of shape, configuration, pattern or ornament applied to an article by an industrial process. The features protected by a registered design must appeal to and be judged by the eye such as design on china and cutlery.

It is possible to obtain a preliminary search in the Designs section on the Intellectual Property Office of New Zealand website and this search can provide advice as to whether or not the proposed design is likely to infringe an existing registered design and/or whether it is in fact registrable.

Copyright

Under the Copyright Act 1994 the labour, skill and judgment which an author, artist or creator has expended in the creation of an original literary, artistic, musical or dramatic work is protected.  Copyright arises automatically in the work.  It is not the ideas that can be protected but the tangible form the ideas take such as the manual, the logo or the advertising jingle.

Protection is in the form of a right to prevent anyone else from copying or reproducing the work or a substantial part of the work without the author’s permission.

Patents

You can obtain patent protection under the Patents Act 2013.  In broad terms, patent protection may be obtained for inventions (ideas) which are novel, involve an ‘inventive step and be useful. An inventive step is a non-obvious improvement over known technologies.

Patent rights are granted by statute and the system operates as a reward for technical innovation by granting exclusive monopoly rights for a defined period.

In order to obtain a valid patent the invention must be new.  An invention should not have been used, sold, published or otherwise known in New Zealand by the applicant or any third party prior to the date of application.

Conclusion

New Zealand welcomes international brands but it is essential that international franchisors have protected their intellectual property before they start appointing franchisees in New Zealand. A typical clause in the franchise agreement would also set out that the franchisee is bound by the confidentiality and secrecy provisions in relation to confidential information and intellectual property. The franchisee can only use the intellectual property in order to operate the business and does not have any ownership rights over the intellectual property.

You should obtain expert advice regarding protection of your intellectual property. If you have any questions about protection please contact SGL.

New Unfair Contract Terms and Unconscionable Conduct Regime

The Fair Trading Amendment Act 2021 (“Amendment Act”) extends the existing prohibition on unfair contract terms in consumer contracts to standard form small trade contracts worth under $250,000 (including GST). The Amendment Act also introduced a new prohibition on unconscionable conduct.

These changes will come into force on 16 August 2022 and affect standard form small trade contracts. A contract is a standard form small trade contract if it falls within the following definition:

  • Each party is engaged in trade (i.e. two businesses);
  • It is not a contract between a business and a consumer; and
  • The relationship between the two parties in trade in relation to the goods, services or interest in land provided does not exceed the annual value threshold of $250,000 (including GST) per annum for goods, services or an interest in land when the relationship first arises (i.e. when you first sign the contract).

Any contract signed prior to 16 August 2022 will not be subject to the new amendments. However, if the contract is varied, amended or renewed and it falls within the definition of a standard form small trade contract above then the new regime applies to the varied, amended or renewed contract.

The unfair contract terms previously only applied to contracts between a consumer and a business, for instance gym membership agreement. The new amendments will ensure that small businesses also receive protection against any unfair contract terms.

The following is taken into consideration when assessing whether a term is unfair:

  • Whether the term would cause a significant imbalance in the parties’ rights and obligations arising under the contract;
  • Whether the term is reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
  • Whether the term would cause detriment (whether financial or otherwise) to a party if it were applied, enforced or relied on.

The new amendments will not apply to the following contractual terms:

  • Definition of the main subject matter of the contract.
  • Setting the upfront price payable under the contract, so long as the price term is clear and unambiguous.
  • Any terms that are required or expressly permitted by any legislation.

The extent to which the term is clear and the context of the contract as a whole will also be taken into account. However, the new amendments will not disadvantage a business that has a legitimate business interest and the term is necessary to protect that interest. At this stage the Commerce Commission has not updated its guidance regarding unfair contract terms but we assume this will be issued soon to assist businesses.

Penalties

The Commerce Commission can apply to a Court for a declaration that a term in a contract is unfair. If it is found to be unfair by a Court then that business must not include a term (or is amended with the Court’s approval) or attempt to enforce or rely on the term. A business may also face:

  • In the case of an individual fines not exceeding $200,000 and a company a fine not exceeding $600,000.
  • Court orders stopping that business from applying or enforcing that term and or orders directing a refund or payment of damages.

Unconscionable Conduct

The unconscionable conduct in trade provisions are much broader as it applies to all conduct not just contractual terms. The term unconscionable conduct is not defined but the Amendment Act states that a Court can take the following into consideration:

  • The relative bargaining power of the parties;
  • The extent to which the parties acted in good faith;
  • Whether the affected person was reasonably able to protect their interests; and
  • Whether unfair pressure or tactics were used.

It may be that New Zealand will take guidance from Australian cases but at this stage no guidance or comment has been provided by the Commerce Commission.

Penalties

The Commerce Commission can seek penalties and fines as above. The Commerce Commission could also could bring civil proceedings; for example seeking a declaration from the Court in relation to unfair contract terms. The remedies include damages, injunctions and other Court orders.

Conclusion

Whether the new amendments apply to any contract will depend on whether it falls within the definition of a standard form small trade contract. When looking at the annual value threshold this is assessed when the relationship first arises.

Khushbu Sundarji is a franchising lawyer and partner of Stewart Germann Law Office at Auckland, New Zealand. She can be contacted on 09 308 9925 or at khushbu@germann.co.nz.

Gradual Reduction of IOF Rate on Foreign Exchange Transactions

The Tax on Financial Transactions (IOF) is a federal tax provided for in art. 153, item V of the Federal Constitution. Its function is not merely to collect taxes, but to intervene and regulate market situations, which justifies the ease with which its calculation can be modified.

Regulated by Decree no. 6.306/2007, it may be applied to five distinct situations: foreign exchange operations; insurance operations in general; credit operations; bonds and securities; and operations with gold.

Despite the importance of the tax on credit operations, that is, when financial assets are transferred between legal entities, or between individuals and legal entities, we propose here to comment on the recent changes made in the calculation of IOF on foreign exchange operations.

The IOF tax is charged on foreign exchange transactions upon delivery or availability of national or foreign currency, in cash or a document representing cash, and is calculated on the value in Real after conversion. The tax is due on settlement of the exchange operation and may be charged at a rate of up to 25%.

With a view to promoting greater economic integration of the country into the international community, Decree no. 10.997 was published on March 15, 2022, gradually reducing the IOF rates on foreign exchange transactions. The reduction also confirms the adoption of measures aimed at enabling the country to join the OECD (Organisation for Economic Cooperation and Development).

In the case of entry of funds into the country by way of a foreign loan, even through simultaneous operations, registered with the Central Bank of Brazil and with a minimum average term of up to 180 days, the rate has been reduced from 6% to zero, with the reduction being applied immediately.

The new decree has also regulated the gradual reduction of the tax on foreign exchange transactions for the purpose of complying with the obligations of credit and debit card companies or of cards for international use, in the cases specified therein, as well as on the acquisition of foreign currency in travellers checks and for loading prepaid international cards for journeys abroad. In this case, the rates will be reduced to: 5.38% as of January 2, 2023; 4.38% as of January 2, 2024; 3.38% as of January 2, 2025; 2.38% as of January 2, 2026; 1.38% as of January 2, 2027 and 0% as of January 2, 2028.

The 0.38% rate, currently applicable to foreign exchange operations in general, will be reduced to zero as of January 2, 2029, which in practice will result in a reduction to a zero rate for all operations, thereby enabling the country to be more competitive in the international arena.

The Stüssi-Neves team is at your disposal for any further explanation you may require.

Patrícia Giacomin Pádua

Partner in the Tax Area – São Paulo
patricia.padua@stussinevessp.com.br

Advisory Excellence Website Traffic by SEMrush

Advisory Excellence is an honest and transparent service. The more value you offer on your website, the more reasons people will have to visit it.

Our website was visited by 16,428 people between April 11 and May 10. This data was collected by SaaS platform SEMrush. SEMrush collects information about traffic and online keywords gathered from Google and Bing search engines.

Engaging content is an important asset. It has the ability to create positive experiences for your potential customers and compel them to come back for more. It’s your ticket to capturing your readers’ attention and continually reinforcing a positive brand impression.

Advisory Excellence Website Traffic by SEMrush

Advisory Excellence Website Traffic by SEMrush

Website traffic is important for many reasons. The number of visitors to your website becomes the number of opportunities for your business, generating qualified leads, promoting your brand and building relationships.

It’s not enough to produce great content and hope that people find it. Advisory Excellence has an industry leading social media network, which exceeds 65,000 followers and subscribers across 12 popular platforms and channels.

Our members have unlimited access to this network, which saves them time and money.

Not only does content marketing drive traffic to our website, but the more eyes we get on our content, the more likely those visitors are to view your profile.

The content you create communicates your message, educates your readers, and persuades them to purchase your products and services over your competition. Online adults spend an average of 7.2 hours per week discovering, reading and watching online content.

Quality content begins with understanding your audience. Our readers want content that solves real problems or issues in their lives.

Content marketing has never been more important than it is in 2022. Content has been working its way up many lists of priorities long before the pandemic.

The content marketing industry is set to achieve huge market growth.

Revision And a Look at The Future: Unlawful Terms

A contract is a legally enforceable agreement that creates, defines, and governs mutual rights and terms among its parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date.

We have already touched upon the fact that, since 1 December 2020, the B2B Act of 4 April 2019 has ensured that consideration is given to the imbalances which may exist between contracting companies and that, for this purpose, provisions have been introduced, among other things, regarding unlawful terms which are not possible, or sometimes only under strict conditions, in such contracts.

The new law on obligations now seeks to extend this to common law and thus to C2C contracts as well. We will first briefly recall the main principles of the B2B Act and then look at the Draft Law and its possible impact.

The B2B-Act

Scope

The provisions of the B2B-Act apply to enterprises as defined in Book VI of the Economic Code. Thus, the new concept of an enterprise is not used in this book and the condition of “the durable pursuit of an economic objective” is still required. A remarkable consequence of this is that the local non-profit association will more than likely not be entitled to the protection of the B2B-Act.

As far as contractual terms in relations between undertakings covered by this definition are concerned, the B2B Act which entered into force on 1 December 2020 will be applicable as far as agreements concluded, renewed or amended after 1 December 2020 are concerned.

Unlawful terms

Very similar to consumer law, B2B-Act has attempted to deal with terms that create an apparent imbalance between the rights and obligations of parties. Specifically, this was done by introducing a general testing standard on the one hand and by working with the so-called specific “grey” and “black” list of unlawful terms on the other hand.

General testing standard

Article VI.91/3, §1 WER incorporates this general testing standard as follows: “For the purposes of this Title, any contractual term concluded between enterprises which, alone or in conjunction with one or more other terms, creates an obvious imbalance between the rights and obligations of the parties is unlawful.”

The “imbalance” should be read in terms of a “legal imbalance”. The economic balance, i.e. what parties agree on at what price, still depends on the free market in which, among other things, commercial customs are an important parameter. Paragraph 2 of the aforementioned article clarifies that this apparent imbalance must always be assessed in concrete terms in the context of all the circumstances
surrounding the agreement. Finally, the last paragraph makes it clear that the core terms, insofar as they are clear and intelligible, are not subject to this testing standard.

Black list

Article VI.91/4 contains four terms which deviate so much from the basic principles of civil law and create a serious imbalance between the rights and obligations of the parties that they are considered to be absolutely prohibited terms, hence the need for a very strict interpretation.

  1. Purely discretionary clauses
  2. Terms giving the right to unilaterally interpret the contract.
  3. Clauses excluding any means of redress
  4. Clauses establishing in an irrefutable manner the knowledge or acceptance of the other party

Grey list

Article VI.91/5 contains the terms which are presumed to be unlawful unless proven otherwise, and reads as follows:

  1. granting the company the right to change unilaterally the price, characteristics or conditions of the contract without valid reason;
  2. tacitly extend or renew a fixed-term contract without giving a reasonable notice;
  3. without compensation, transferring the economic risk to one party when it would normally be transferred to the other company or another party to the contract;
  4. inappropriately exclude or limit the legal rights of a party in the event of total or partial non-performance or defective performance by the other undertaking of any of its contractual obligations;
  5. without prejudice to Article 1184 of the Civil Code, to bind the parties without giving reasonable notice;
  6. to release the company from its liability for its wilful misconduct, its gross negligence or that of its agents or, except in cases of force majeure, for non-performance of the essential obligations that are the subject of the agreement;
  7. to limit the means of proof that the other party can use; and
  8. in the event of non-performance or delay in performance of the other party’s obligations, to fix amounts of compensation that are manifestly disproportionate to the prejudice that may be suffered by the enterprise.

In practice, this article means a reversal of the burden of proof to the strong contracting party.

The principle of this list is fairly easy to explain by means of a very actual topic. The first type of unlawful clause in the grey list is the one that grants the right to unilaterally change the price, characteristics or conditions of the contract without good reason. This clause will therefore be unlawful and considered null and void, unless the enterprise can prove that there is a valid reason and that no manifest imbalance is created between the parties. If we apply this to price alteration clauses, which are very topical in view of, among other things, the COVID-19 pandemic and today’s very unfortunate situation in Ukraine, then valid/objective reasons must be at the basis of such a clause. In principle, a price alteration clause that makes this dependent on, for example, changes in the price of resources, suppliers, regional taxes or charges, etc., will contain a sufficient objective justification so that such a clause will not be unlawful, which is to be welcomed. When including such a clause, the enterprise is well advised to be as specific and clear as possible about the criteria for changes. If one wishes to include a term which normally falls under the grey list, the parties can let their freedom of contract prevail if they can demonstrate that they really wanted to make this arrangement for legitimate economic reasons.

Sanction

Article 91/6 reads as follows: “Any unlawful term is prohibited and null and void. The contract shall remain binding on the parties if it can continue to exist without the unlawful terms.”

In principle, therefore, only the unlawful clause itself is null and void and the contract can continue to exist without it. Only if the relevant term is so crucial that it affects the entire contract will the latter be null and void.

Draft of new law on obligations

Scope

The legislator is rightly so of the opinion that it is problematic that since the B2B-Act unlawful terms have been prohibited in both B2B and B2C relationships, yet they can still be used in C2C relationships. This is seen as a possible conflict with the constitutional principle of equality.

The Draft Law provides for the application of the unfair terms doctrine to B2B, B2C and C2C relations.

Furthermore, Article 5:52 of the Draft Law reads:

“Any non-negotiable clause which creates an obvious imbalance between the rights and obligations of the parties is unlawful and will be considered as not written.

When assessing the apparent imbalance, all circumstances surrounding the conclusion of the contract are taken into account.

Paragraph 1 shall not apply either to the determination of the main terms of the contract or to the determination of the equivalence of those terms.”

In the original version of this article in the Draft Law, its effect was limited to accession agreements. In the meantime, the legislator has abandoned this. It was clarified that the previous version was too restrictive of the effect of the prohibition, which, according to the legislator, should have a supplementary effect on the existing specific regulations that already exist in contracts between companies and consumers and between companies.

Article 5:13 of the Draft Law clarifies that it does not affect the application of specific legislation, as the Draft Law concerns so-called lex generalis. As far as B2B and B2C are concerned, the existing legislation will continue to apply without prejudice and the Draft Law can at most have a supplementary effect.

General testing standard without lists

It is clear that the proposed Law seeks to achieve the same as the B2B-Act, namely to prohibit terms which create an apparent imbalance between the rights and obligations of the parties to a contract. In the preparatory works of the Draft Law, we read that this is pursued without affecting the principle of contractual freedom or legal certainty. In other words, freely negotiated contract terms should not be affected by the doctrine of unfair terms. Partly for this reason, only ‘manifest’ imbalances are targeted, as a result of which the court can only apply a marginal review and must always look at the contract as a whole.10 In this respect, the Draft Law creates more clarity than the B2B-Act, since the latter does not exclude negotiated agreements from its application.

As in the B2B-Act, the court will not be able to touch “the main provisions of the contract, nor the equivalence of these main provisions”. Thus, for example, the agreed price will not be affected.

Sanction

Under the Draft Law, an unlawful term will have no effect by being deemed unwritten and will leave the remainder of the contract unaffected if it can continue to exist without the invalid term.

Conclusion

It is clear that the legislator wanted to resolve a possible disparity in the application of the doctrine of unfair terms by introducing it into the Civil Code in a general provision applicable to all relations, without prejudice to more specific regulations already in existence.

The result is that there are three possible sources of legislation on unfair terms, which is hardly beneficial to clarity. In addition, it appears that although the intention is the same, the situation is not entirely identical.

One can and does wonder whether, as regards the relationship with B2B legislation, after the entry into force of the provisions of the Draft Law in the New Civil Code, the interaction will not become unnecessarily complex and whether the provisions in the Civil Code may suffice. The main point of criticism is that the lists, and in particular the grey list, in the B2B-Act do not provide the intended guidance and legal certainty due to the rather vague wording, which is open to interpretation.

In any event, the legislator itself seems to be of the opinion that the Draft Law constitutes a more adequate implementation of the doctrine of unlawful terms than the B2B Act:

“In that context, the proposed text aims at introducing into Belgian contract law a general provision to prohibit abusive terms, while ensuring that their effects are limited in accordance with the principles of freedom of contract, proportionality and legal certainty. It will be up to the legislator to decide, in the light of the planned evaluation of the Act of 4 April 2019 and its assessment by the doctrine, whether this law should be maintained or whether the interests of companies are not already sufficiently protected by the general provision inserted in Book 5.”

With this, the legislator alludes to the four-yearly evaluation provided by the B2B Act in Article VI.91/7 WER.

As it now appears, the Draft Law returns to the essence, striking a balance between protecting against and combating unlawful terms without unduly restricting the contractual freedom of the parties to negotiate deviations from the “standard balance” of rights and obligations between the parties.

In that respect, the planned evaluation of the B2B-Act seems an ideal moment to take a closer look. Until then, everyone will have to find their way through the multitude of legislation on unlawful terms.

We will follow up on the developments after the above-mentioned provisions of the Draft Law come into effect.

We can assist you in reviewing the terms of your agreements and in drafting them so as to avoid, as far as possible and foreseeable, any revision.

For further questions and information, please contact us by phone at 03/216.70.70 and by e-mail at info@studio-legale.be.

UberX: 2000 Drivers Without a Job after Court of Appeal Decision?

The courts of appeal are the main appellate courts in the judicial system of Belgium, which hear appeals against judgements of the tribunals of first instance, the enterprise tribunals and the presidents of those tribunals in their judicial area.

Since 26 November 2021, around 2000 drivers and many more passengers will no longer be able to use the app UberX. This was decided by the Brussels Court of Appeal. In the meantime, a temporary emergency ordinance has been approved in view of a later definitive Brussels taxi reform so that the Uber drivers, under strict conditions, can once again operate in the capital.

In its order to cease, the Commercial Court of Brussels imposes a ban on the application UberPop because Uber would work with private individuals who transport people for a fee. In doing so, Uber would be unfairly competing with taxi companies, as Uber drivers would not have to hold a taxi license. Per illegal ride via UberPop, the company would have to pay a fine of €10000. As a reaction, Uber launched UberX, an application whereby Uber only cooperates with drivers who possess a so-called VVB permit, a permit to rent out a vehicle with driver, like limousine drivers.

Also in Europe, the qualification of the platform Uber as a transport company was subject to discussion. As already described in our previous article: UBER – Transport company, the Court of Justice decided in 2017 that Uber’s service should be qualified as a transport service and not as an information society service.

This was prompted by a preliminary question in a dispute between Uber drivers and a professional association of taxi drivers in the city of Barcelona, on the grounds that Uber drivers were driving without a license, which would violate Spanish competition law. Uber drivers were therefore required to comply with Spanish taxi regulations to avoid committing an act of unfair competition.

Back at home, on January 16, 2019, the French-speaking Commercial Court of Brussels ruled that the ‘taxi company’ Uber complied with Brussels legislation on paid passenger transport. Uber would act as an intermediary without offering taxi services. Based on the ruling, Uber was allowed to continue offering its services in Brussels, much to the frustration of Febet, “Fédération Belge des Taxis”. The latter therefore filed an appeal against the judgment, since Uber drivers were said to be abusing their VVB licence.

It is against this appeal that the Court of Appeal has now decided to reverse the decision and extend the 2015 order to cease to the UberX application. As of November 26, 2021 around 6pm, Uber is no longer allowed to offer its services through UberX under penalty of fines. Only drivers with a taxi license would still be allowed to work via UberX.

In the meantime, on December 10, the Government of Brussels reached an agreement on a temporary solution with a view to a later, definitive Brussels taxi reform. The temporary arrangement will run until the ordinance on the reform of the taxi sector comes into force, which should establish a fully-fledged unique status for the profession. In this way, the Uber drivers will be able to get back on the road under strict conditions.

For example, they will only be allowed to drive on the basis of an exploitation license applied for by January 15, 2021 at the latest, and drivers will have to prove, among other things, that they offer their services for more than 20 hours a week on average. Also, the rides will have to be ordered in advance via a platform, physical soliciting of customers is prohibited. Finally, they will not be allowed to station themselves on public roads or at the reserved taxi stands.

“My government has worked very hard and we are pleased that today we can propose a temporary solution, which should make it possible for drivers affected by the Uber’s decision to return to work quickly. This proposal respects the court rulings of recent years on this electronic platform and at the same time paves the way for the future ordinance that will establish a fully-fledged unique status for the profession. I am very pleased about that,” said Minister President Rudi Vervoort.

But less than three weeks later, the Brussels government has opted for a different interpretation of the temporary emergency ordinance. Thus, drivers with a Walloon or Flemish Uber licence would no longer be allowed to work in the capital.

Minister-President Rudi Vervoort even threatens to withdraw the licence of Uber if it turns out that Uber deliberately allows Flemish and Walloon drivers to drive in Brussels. The Uber saga thus does not seem to have come to an end yet.

To be continued…

If you still have questions after reading this article, please do not hesitate to contact us by sending a mail to joost.peeters@studio-legale.be or by calling: +32 (0) 3 216 70 70.