Capital Companies and Partnerships

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COMMERCIAL LAW

By Marek Salamonowicz, Ph.D.

Chair of Commercial Law

University of Warmia and Mazury

Definition

is the body of law that governs

business organizations and

commercial transactions.

Sensu stricto - part of civil law.

Sensu largo – industrial property law,

unfair trade practices, competition

law, etc.

Capital Companies and Partnerships

Corporation

Entity – A separate legal entity and

taxed as such

Creation – created by the state upon

application in required legal form;

evidenced by charter or articles of

incorporation

Duration – Perpetual corporate life

General Partnership

Not a legal entity but has certain

characteristics of one.

Created by formal agreement of its

members

Life limited to term set by partnership

agreement


Corporation

Ownership – by shareholders

evidenced by shares of stock held

Transfer of ownership – shares

normally transferred at will of

shareholder. Consent of corporation

or other shareholders not necessary

General Parntership

By individual partners in proportions

agreed

Partnership interest may be

transferred at will of partner but

assignee does not become a partner

unless all partners agree.


Corporation

Liability of owners – shareholder has

no personal liability for corporate

obligations; only risk is loss of

investment

Management – by board of directors

and officers acting under it;

shareholders generally limited to

voting in election of directors

General partnership

All partners personally liable for

partnerships obligations; liability not

limited to investment in parntership

All partners have right to manage the

business; each is the agent of

partnership and of his or her

copartners

Registered Partnership

Creation of a

partneship.

Partnership assets.

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Profits and losses

partition.

Civil liability for

partnerships’ debts.

Companies’

representation.

Withdrawal from a

partnership.

Dissolution and

dissolvation of

company.

Non-compete

obligation

Creation of a company

[Form of articles] The articles of

association shall be made in writing,

or else they shall be invalid.

[Business name] The business name

of the registered partnership shall

include the surnames or business

names of all the partners, or the

surname or the business name of one

or several partners and the additional

words (“registered partnership").

shall be created upon its registration

in the register.

The articles of association of the

registered partnership

1) the business name and the seat of the

partnership,

2) the description of the contributions made

by each of the partners and their value,

3) the objects of the partnership,

4) the term of the partnership, if it is

specified.

Partnership assets

any property contributed to the

partnership

acquired by the partnership in the

course of its existence.

[Contributions of partners]

In case of doubt, the contributions of

the partners shall be deemed to be

equal.

The partner may make the

contribution by transferring or

encumbering the right of ownership of

things or other rights, and by

providing other performances to the

partnership.

Profits and losses

partition

Each partner shall be entitled to an

equal share in the profits and shall

participate in the losses in the same

proportion, irrespective of the type

and value of the contribution.

A partner's share in the profits

defined in the articles of association

shall also apply, in case of doubt, to

his share in the losses.

The articles of association may

release a partner from participation in

losses.

A partner may request that the entire

profits be divided and distributed at

the end of each financial year.

Capital share

The capital share of the partner shall

equal the value of the contribution

effectively made.

A partner may demand every year a

5% interest on that partner's capital

share, even if the partnership has

sustained a loss.

Civil liability for partnerships’ debts

Each partner shall be liable for the

obligations of the partnership without

limitation with all his assets jointly and

severally with the remaining partners

and the partnership.

(subsidiary liability of the partner) A

creditor of the partnership may

conduct execution from the partner’s

assets where execution from the

assets of the partnership proves

ineffective.

1) Unlimited; 2) Joint and several; 3)

Personal; 4) Direct; 5) Subsidary

Partnerships’ representation

Each partner have the right to

represent the partnership.

The right of the partner to represent

the partnership shall include all acts in

court and out of court.

May not be limited with effect

towards third parties.

(Way of representation) singly,

independently or only together with

another partner or agent.

[Deprivaton of right to represent]

1) The articles of association

2) only for significant reasons under a

final and non-appealable court

judgement.

Management of affairs

of partnership

Each partner shall have the right and

obligation to manage the affairs of

the partnership.

Each partner may, without a prior

resolution of the partners, manage

the affairs within the ordinary

business of the partnership.

a resolution of the partners is

required, the unanimity of all

partners who have the right to

manage the affairs of the partnership

shall be required.

Management of affairs

of partnership

[Matters outside ordinary course of

business]

the consent of all partners shall be required,

including those who are excluded from

managing the affairs of the partnership.

[Urgent action] The partner who has the

right to manage the affairs of the partnership

may, without a resolution of the partners,

effect an urgent action, where a failure to

effect such action could cause serious damage

to the partnership.

Withdrawal from a

partnership.

[Transfer of partner’s rights and

obligations]

All rights and obligations of a partner

in a partnership may be transferred to

another person

1) only where the articles of

association so provide

2) only after the written consent of all

of the remaining partners has been

obtained

[Consequences]

the withdrawing partner and the

acceding partner shall be jointly and

severally liable for the obligations of

the withdrawing partner arising in

connection with his membership of

the partnership and for the

obligations of the partnership.

Dissolution and

dissolvation

of partnership

1) the reasons set out in the articles

of association,

2) an unanimous resolution of all

partners,

3) a declaration of bankruptcy of the

partnership,

4) the death of the partner or

declaration of his bankruptcy,

5) termination of the articles of

association by a partner or a creditor

of a partner,

6) a final and non-appealable court

judgement.

Non-compete

obligation

A partner shall refrain from any

activity which is in conflict with the

interests of the partnership.

The partner may not, without the

express or implied consent of the

remaining partners, engage in a

competitor business, in particular

participate in a competitor company

as a partner in a civil law partnership,

registered partnership, professional

partnership, a general partner or a

member of a company governing

body.

Sanctions

[Sanctions] Each partner may

demand the release to the partnership

of the benefits received by a partner

in breach of the prohibition on

competition or claim redress of

damage caused to the partnership.

Liquidation

[Actions] The liquidators shall close

the current business of the

partnership, collect the receivables,

perform the obligations and liquidate

the assets of the partnership.

New business can be transacted only

where this is necessary to close the

business in progress.

The assets of the partnership shall be

used first of all to pay the obligations

of the partnership; an appropriate

amount shall be left for repayment of

immature and disputed obligations

Liquidation

The remaining assets shall be divided

among the partners in accordance

with the provisions of the articles of

association.

The shares shall be repaid to the

partners.

Any surplus shall be divided among

the partners in the proportion in

which they participate in the profit.

Professional Partnership

A professional partnership is a

partnership created by partners for

the purpose of pursuing a profession

in a partnership which operates a

business under its own business

name.

The partnership may be formed for

the purpose of pursuing more than

one profession, unless a different law

provides otherwise.

Partners

Only natural persons qualified to

pursue professions may become

partners in the partnership.

advocate, pharmacist, architect, civil

engineer, auditor, insurance broker,

tax adviser, stock broker, investment

adviser, accountant, physician,

dentist, veterinary doctor, notary,

nurse, midwife, legal adviser, patent

attorney, property appraiser and

sworn translator.

Responsibility

A partner shall not be liable

for the obligations of the partnership

which arise in connection with the

pursuit by the remaining partners of

the profession in the partnership,

for the obligations of the partnership

which arise as a result of acts or

omissions of persons employed by the

partnership under an employment

contract or another legal relationship

who have been guided by another

partner in the provision of services

connected with the objects of the

partnership.

Responsibility


provide that one or more partners

agree to be liable as a partner of a

registered partnership

Representation

Each partner shall have the right to

represent the partnership individually,

unless the articles of association

provide otherwise.

The articles of association of a

professional partnership may provide

that the management of the affairs

and the representation of the

partnership be entrusted to the

management board.

Loss of professional qualifications

In the event that a partner have lost

the right to pursue the profession, he

shall withdraw from the partnership

at the latest at the end of the financial

year in which he lost the right to

pursue the profession.

LIMITED PARTNERSHIP

società in accomandita semplice

sociedad en comandita

A limited partnership is a partnership

whose purpose is to operate a

business under its own business

name,

(the general partner) at least one

partner of which is liable to the

creditors for the obligations of the

partnership without limitation

(the limited partner) the liability of at

least one partner is limited.

[Contribution of limited partner]

If the contribution of the limited

partner to the partnership consists in

whole or in part of a non-pecuniary

performance, the articles of

association shall define the object of

that performance (in-kind

contribution), its value, as well as the

partner making such non-pecuniary

contribution.

Contributions

The obligation to provide work or

services for the benefit of the

partnership and the remuneration for

the services provided upon the

formation of the partnership

may not represent the limited

partner's contribution to the

partnership, unless the value of his

other contributions to the partnership

is not lower than the commendam

sum.

Liability

(commendam sum) - the amount up

to which each of the limited partners

is liable vis-a-vis the creditors.

The limited partner shall be liable for

obligations of the partnership vis-a-vis

its creditors only up to the

commendam sum.

[Contribution and liability]

The limited partner shall be free from

liability to the extent of the value of the

contribution contributed to the partnership.

Representation

The partnership shall be represented

by the general partners, who are not

deprived of the right to represent the

partnership under the articles of

association or a final and non-

appealable court judgement.

[Limited partner as attorney in fact]

A limited partner may represent the

partnership only as an attorney in

fact.

Managing affairs of partnership

A limited partner shall not have the

right or obligation to manage the

affairs of the partnership, unless the

articles of association provide

otherwise.

The consent of the limited partner

shall be required in matters which fall

outside the ordinary course of

business of the partnership, unless the

articles of association provide

otherwise.

Participation in profits and losses

A limited partner shall participate in

the profits of the partnership

proportionately to his contribution

actually made to the partnership,

unless the articles of association

provide otherwise.

The profit shall be used first of all to

supplement his contribution actually

made up to the value of the agreed

contribution.

In case of doubt, a limited partner

shall participate in the loss only up to

the value of the agreed contribution.

Limited Liability Company

A limited liability company may be

incorporated by one or more persons

for any purpose allowed by law.

The shareholders shall not be liable

for the obligations of the company.

[Share capital]

The share capital of the company shall

be divided into shares of equal or non-

equal nominal value.

Creation

1) the conclusion of the articles of

association,

2) the making by the shareholders of

contributions to finance the entire

share capital, and where the share is

subscribed for a price higher than the

nominal value, also contributing of the

balance,

3) the appointment of the

management board,

4) the constitution of the supervisory

board or the audit committee if this is

required by the law or by the articles

of association,

5) the registration in the register.

Creation – the articles of association

1) the name and seat of the company,

2) the objects of the company,

3) the amount of the share capital,

4) whether or not the shareholder

may have more than one share,

5) the number and nominal value of

the shares subscribed for by individual

shareholders,

6) the term of the company, if it is

defined.

The articles of association shall be

made in the form of a notarial deed.

[Company in organisation]

Upon conclusion of the articles of

association, a limited liability company

in organisation shall be created. It is

an legal subject - entrepreneur.

The company in organisation shall be

represented by the management

board or by an attorney in fact

appointed by a unanimous resolution

of the shareholders.

Equal and indivisable

The articles of association shall

determine whether a shareholder may

have one or more shares. If the

shareholder may have more than one

share, all shares in the share capital

shall be equal and indivisible.

Shares in-kind contributions

If the value of in-kind contributions

has been considerably inflated in

relation to their sale value

the shareholder who made such a

contribution and members of the

management board who, knowing

this, filed the company in the register,

shall be jointly and severally liable to

make good the outstanding balance to

the company.

Recurrent non-pecuniary

performances

If a shareholder is to be obligated to

provide recurrent non-pecuniary

performances, the articles of

association shall stipulate the type

and the scope of such performances.

Remuneration shall be paid

Additional contributions


obligate the shareholders to make

additional contributions up to a

certain specified amount in proportion

to the share.

Transfer

A transfer of the share, its part or a

fraction of the share shall be effected

in writing with signatures certified by

a notary.


stipulate that a transfer of the share,

its part or a fraction of the share shall

be subject to the consent of the

company or otherwise restricted.

Share register

The management board shall keep a share

register where the surname and first name or

the business name and the seat of each

shareholder, the address, the number and the

nominal value of his shares and the creation of

the pledge or usufruct and the exercise of the

right to vote by the pledgee or the holder of

the right of usufruct shall be entered, together

with all changes of the shareholders and their

respective shares.

Preference (Privileged) shares

Such privileges may concern in

particular:

the right to vote,

the right to dividends

The right to participation in the

division of assets in the event of

liquidation of the company.

Such privileges in respect of the right

to vote may attach only to shares of

equal nominal value.

privileged dividends

Each preference share which is a

preference share as regards dividends

may give entitlement to dividends

larger by not more than half than the

dividend payable on non-preference

shares

Management Board

shall manage the affairs of the

company and represent the company.

shall include one or more members.

The members of the management

board may be drawn from among the

shareholders or other persons.

A member of the management board

shall be appointed and dismissed by a

resolution of the shareholders.

Representation

If the management board comprises

several members, representations in

the name of the company may be

made by two members of the

management board acting jointly or

by one member of the management

board acting together with a holder of

the commercial power of attorney.

Shareholder’s right to control

The right to control shall be enjoyed

by each shareholder.

For this purpose, a shareholder may

at any time inspect the books and

documents of the company, draw up a

balance sheet for his use or request

explanations from the management

board.

Refusal

The management board may refuse

to give explanations to the

shareholder or provide the company

books and documents for inspection,

if there exists a justified concern that

the shareholder may use them for

purposes contrary to the interests of

the company and as a result may

cause material damage to the

company.

Supervisory board

The articles of association may create

a supervisory board or an audit

committee or both.

The supervisory board shall consist of

at least three members appointed and

dismissed by a resolution of the

shareholders.

Tasks

The supervisory board shall exercise

permanent supervision over all areas

of the activities of the company.

The supervisory board shall not have

the right to give the management

board any binding instructions with

respect to the management of the

affairs of the company.

In order to perform its duties, the

supervisory board may review all

company documents, request reports

and explanations from the

management board and the

employees, and review the state of

the company's assets.

General meeting

1) consideration and approval of the

management board report on the operations

of the company, the financial report for the

previous financial year and the granting of

approval of the performance of duties by the

members of the company governing bodies,

2) decisions on claims for redress of damage

caused upon formation of the company or its

management or supervision,

3) disposal of or tenancy of the enterprise or

its organised part and the creation of a limited

right in rem over them,

4) acquisition and disposal of real estate, the

right of perpetual usufruct, or a share in real

estate, unless the articles of association

provide otherwise,

Ordinary general meeting

The ordinary general meeting shall be held

within six months of the end of each financial

year.

Shall have on its agenda:

1) consideration and approval of the

management board report on the operations

of the company and of the financial report for

the previous financial year,

2) adoption of a resolution on division of

profits or financing of losses

3) granting approval of the performance of

duties by the members of the company

governing bodies.

Action for annulment of resolution

A resolution of the shareholders

which contravenes the articles of

association or good practices, and

harms the interests of the company or

is aimed at harming a shareholder

may be challenged in an action

brought against the company for an

annulment of the resolution.

Action for declaration of invalidity of

resolution

The shareholders may bring an action

against the company for a declaration

of the invalidity of a resolution of the

shareholders which is contrary to the

law

European public limited-liability

company

(Societas Europaea or SE)

by Marek Salamonowicz

Main features

1496 SE’s established 11 November

2012

have legal personality, SE shall acquire

legal personality on the date on which

it is registered

The capital of an SE shall be divided

into shares. The subscribed capital

shall not be less than EUR 120000.

Employee involvement Directive

2001/86/EC

No shareholder shall be liable for

more than the amount he has

subscribed

Examples: Allianz SE, Porsche

Automobil Holding SE, BASF SE,

STRABAG SE, MAN SE

Creation of SE

Public limited-liability companies may

form an SE by means of a merger

Public and private limited-liability

companies may promote the

formation of a holding SE

Companies and firms within the

meaning of the second paragraph of

Article 54 of the Treaty may form a

subsidiary SE by subscribing for its

shares

Conversion of an existing public

limited-liability company into an SE

Formation by merger

provided that at least two of public

limited liability companies are

governed by the law of different

Member States.

the procedure for merger by

acquisition - the acquiring company

shall take the form of an SE when the

merger takes place.

the procedure for merger by the

formation of a new company - the SE

shall be the newly formed company.

Formation of a holding SE

Public and private limited-liability

companies

Transnational aspect - at least two of

them: (a) is governed by the law of a

different Member State, or (b) has for

at least two years had a subsidiary

company governed by the law of

another Member State or a branch

situated in another Member State.

Further info’s

Company promoting formation shall

continue to exist

The management or administrative

organs of the companies which

promote such an operation shall draw

up draft terms for the formation of

the holding SE. report explaining and

justifying the legal and economic

aspects of the formation and

indicating the implications for the

shareholders and for the employees of

the adoption of the form of a holding

SE.

Further info’s

The draft terms shall fix the minimum

proportion of the shares in each of

the companies promoting the

operation which the shareholders

must contribute to the formation.

That proportion shall be shares

conferring more than 50 % of the

permanent voting rights.

Formation of a subsidiary SE

Companies or firms formed in

accordance with the law of a Member

State and having their registered

office, central administration or

principal place of business within the

Community shall, be treated in the

same way as natural persons who are

nationals of Member States.

‘Companies or firms’ means

companies or firms constituted under

civil or commercial law, including

cooperative societies, and other legal

persons governed by public or private

law, save for those which are non-

profit-making.

Conversion of an existing public

limited-liability company into an SE

A public limited-liability company,

formed under the law of a Member

State, which has its registered office

and head office within the Community

may be transformed into an SE if for

at least two years it has had a

subsidiary company governed by the

law of another Member State

STRUCTURE OF THE SE

SE shall comprise:

(a) a general meeting of shareholders and

(b) a supervisory organ and a management

organ (two-tier system)

an administrative organ (one-tier

system) depending on the form adopted in the

statutes.

Two-tier system

The management organ shall be

responsible for managing the SE. A

managing director or managing

directors shall be responsible for the

current management under the same

conditions as for public limited-

liability companies that have

registered offices within that Member

State's territory.

The member or members of the

management organ shall be

appointed and removed by the

supervisory organ.

Supervisory organ

No person may at the same time be a

member of both the management

organ and the supervisory organ of

the same SE.

The supervisory organ shall supervise

the work of the management organ. It

may not itself exercise the power to

manage the SE.

The members of the supervisory organ

shall be appointed by the general

meeting.

Further info’s

may require the management organ

to provide information of any kind

which it needs to exercise supervision

shall elect a chairman from among its

members

The management organ shall report

to the supervisory organ at least once

every three months on the progress

and foreseeable development of the

SE's business.

The one-tier system

The administrative organ shall manage the SE.

A managing director or managing directors

shall be responsible for the day-to-day

management

The member or members of the

administrative organ shall be

appointed by the general meeting.

The administrative organ shall meet

at least once every three months at

intervals laid down by the statutes to

discuss the progress and foreseeable

development of the SE's business.

Each member of the administrative

organ shall be entitled to examine all

information submitted to it.

The administrative organ shall elect a

chairman from among its members.

Rules common to the one-tier and

two-tier systems

Members of company organs shall be

appointed for a period laid down in

the statutes not exceeding six years.

quorums and decision-taking in SE

organs shall be as follows:

(a) quorum: at least half of the

members must be present or

represented;

(b) decision-taking: a majority of the

members present or represented.

General meeting

An SE shall hold a general meeting at

least once each calendar year, within

six months of the end of its financial

year.

General meetings may be convened at

any time by the management organ,

the administrative organ, the

supervisory organ or any other organ

or competent authority in accordance

with the national law.

General meeting

One or more shareholders who

together hold at least 10 % of an SE's

subscribed capital may request the SE

to convene a general meeting and

draw up the agenda therefor.

Amendment of an SE's statutes shall

require a decision by the general

meeting taken by a majority which

may not be less than two thirds of the

votes cast.

EU Competition Law

by dr Marek Salamonowicz

Cartels prohibition

The following shall be prohibited as

incompatible with the common

market:

1) all agreements between

undertakings,

2) decisions by associations of

undertakings

3) concerted practices

which may affect trade between

Member States and which have as

their object or effect the prevention,

restriction or distortion of competition

within the common market

Types of cartels

(a) directly or indirectly fix purchase or

selling prices or any other trading

conditions;

(b) limit or control production,

markets, technical development, or

investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to

equivalent transactions with other

trading parties, thereby placing them

at a competitive disadvantage;

(e) make the conclusion of contracts

subject to acceptance by the other

parties of supplementary obligations

which, by their nature or according to

commercial usage, have no

connection with the subject of such

contracts.

Sanctions

Any agreements or decisions

prohibited shall be automatically void.

Fines: up to 10 % of annual income.

Temporary fines

Leniency program

Exemption possibility

Those agreements which:

1) contributes to improving the

production or distribution of goods or

to promoting technical or economic

progress,

2) while allowing consumers a fair

share of the resulting benefit,

Which does not:

(a) impose on the undertakings

concerned restrictions which are not

indispensable to the attainment of

these objectives;

(b) afford such undertakings the

possibility of eliminating competition

in respect of a substantial part of the

products in question.

Some cases economic factors

ICI

Whitebread/Moosehead

Hilty

Autoglass cartel / Saint Gobain /

Pilkington

Michelin/Continental

IMAX

AstraZeneca

Market position of parties and its

competitors and buyers, entry

barriers, maturity of the market

Abuse of dominant position

Any abuse by one or more

undertakings of a dominant position

within the common market or in a

substantial part of it shall be

prohibited as incompatible with the

common market in so far as it may

affect trade between Member States.

Art. 102 TFEU

Porto di Genova, United Brands, Tetra

Pack, Hilti,

Relevant market

1) geographical

2) assortiment

3) time (Christmas, All Saints, Valentine’s Day,

Halloween)

Unilateral, soly act on the market –

rise prices, market power

Abuse of dominant position

may consist in:

Predatory pricing

(a) directly or indirectly imposing

unfair purchase or selling prices or

other unfair trading conditions;

contingent

(b) limiting production, markets or

technical development to the

prejudice of consumers;

Contractual discrimination

(c) applying dissimilar conditions to

equivalent transactions with other

trading parties, thereby placing them

at a competitive disadvantage;

Forms of abusement

Tie-in and tie-out

(d) making the conclusion of contracts

subject to acceptance by the other

parties of supplementary obligations

which, by their nature or according to

commercial usage, have no

connection with the subject of such

contracts.

(2009/C 45/02)

Communication from the Commission

— Guidance on the Commission's

enforcement priorities in applying

Article 82 of the EC Treaty to abusive

exclusionary conduct by dominant

undertakings

The assessment of dominance

will take into account the competitive

structure of the market, and in

particular the following factors:

— constraints imposed by the existing

supplies from, and the position on the market

of, actual competitors

(the market position of the dominant

undertaking

and its competitors)

— constraints imposed by the credible threat

of future expansion by actual competitors or

entry by potential competitors

(expansion and entry)

— constraints imposed by the bargaining

strength of the undertaking's customers

(countervailing buyer power)

Definition

Dominance has been defined under

Community law as a position of

economic strength enjoyed by an

undertaking, which enables it to

prevent effective competition being

maintained on a relevant market, by

affording it the power to behave to

an appreciable extent independently

of its competitors, its customers and

ultimately of consumers.

This notion of independence is

related to the degree of competitive

constraint exerted on the

undertaking in question.

Procedures

EC Regulation 1/2003

Agreements, decisions and concerted

practices caught by Article 81(1),

which do not satisfy the conditions of

Article 81(3) shall be prohibited, no

prior decision to that effect being

required.

the burden of proving an infringement

of prohibition, shall rest on the party

or the authority alleging the

infringement.

The entity claiming the benefit of

exemption shall bear the burden of

proving that the conditions of that are

fulfilled.

Further Info’s

Where the competition authorities of

the Member States or national courts

apply national competition law to

practices which may affect trade

between Member States, they shall

also apply Article 81 of the Treaty to

such practices.

Where the competition authorities of

the Member States or national courts

apply national competition law to any

abuse prohibited by Article 82 of the

Treaty, they shall also apply Article 82

of the Treaty.

Powers

For the purpose of applying Articles 81

and 82 of the Treaty, the Commission

shall have the powers provided for by

this Regulation.

The competition authorities of the

Member States shall have the power

to apply Articles 81 and 82 of the

Treaty in individual cases.

Decisions

Acting on their own (Member States’

competition authorities) initiative or

on a complaint, they may take the

following decisions:

— requiring that an infringement be brought

to an end,

— ordering interim measures

Decisions

— accepting commitments,

— imposing fines, periodic penalty payments

or any other penalty provided for in their

national law.

Where on the basis of the information

in their possession the conditions for

prohibition are not met they may

likewise decide that there are no

grounds for action on their part.

Powers of national courts

National courts shall have the power

to apply Articles 81 and 82 of the

Treaty.

Private enforcement

Damages actions for breach of the EC

antitrust rules

Commission White Paper: to draw up

a framework with pragmatic, non-

binding guidance for quantification of

damages in antitrust cases, e.g. by

means of approximate methods of

calculation or simplified rules on

estimating the loss.

Finding and termination of

infringement

Where the Commission, acting on a

complaint or on its own initiative,

finds that there is an infringement of

Art 81 or of Art 82 of the Treaty, it

may by decision require the

undertakings and associations of

undertakings concerned to bring such

infringement to an end.

Commission may impose on them any

behavioural or structural remedies

which are proportionate to the

infringement committed and

necessary to bring the infringement

effectively to an end. Structural

remedies can only be imposed either

where there is no equally effective

behavioural remedy or where any

equally effective behavioural remedy

would be more burdensome for the

undertaking concerned than the

structural remedy. If the Commission

has a legitimate interest in doing so, it

may also find that an infringement has

been committed in the past

Interim measures

In cases of urgency due to the risk of

serious and irreparable damage to

competition, the Commission, acting

on its own initiative may by decision,

on the basis of a prima facie finding of

infringement, order interim measures.

Commitments

Where the Commission intends to

adopt a decision requiring that an

infringement be brought to an end

and the undertakings concerned offer

commitments to meet the concerns

expressed to them by the Commission

in its preliminary assessment, the

Commission may by decision make

those commitments binding on the

undertakings.

Such a decision may be adopted for a

specified period and shall conclude

that there are no longer grounds for

action by the Commission.

Finding of inapplicability

Where the Community public interest

relating to the application of Articles

81 and 82 of the Treaty so requires,

the Commission, acting on its own

initiative, may by decision find that

Article 81 of the Treaty is not

applicable to an agreement, a decision

by an association of undertakings or a

concerted practice, either because the

conditions of Article 81(1) of the

Treaty are not fulfilled, or because the

conditions of Article 81(3) of the

Treaty are satisfied.

Powers of investigation

Requests for information

Power to take statements

The Commission's powers of

inspection

Powers of inspection

If a reasonable suspicion exists that

books or other records related to the

business and to the subject matter of

the inspection, which may be relevant

to prove a serious violation of Article

81 or Article 82 of the Treaty, are

being kept in any other premises, land

and means of transport, including the

homes of directors, managers and

other members of staff of the

undertakings and associations of

undertakings concerned, the

Commission can by decision order an

inspection to be conducted in such

other premises, land and means of

transport.

The decision shall specify the subject

matter and purpose of the inspection,

appoint the date on which it is to

begin and indicate the right to have

the decision reviewed by the Court of

Justice.

Public aid

any aid granted by a Member State or

through State resources in any form

whatsoever which distorts or

threatens to distort competition by

favouring certain undertakings or the

production of certain goods shall, in

so far as it affects trade between

Member States, be incompatible with

the common market.

Compatibility with common market

(a) aid having a social character,

granted to individual consumers,

provided that such aid is granted

without discrimination related to the

origin of the products concerned;

(b) aid to make good the damage

caused by natural disasters or

exceptional occurrences;

(c) aid granted to the economy of

certain areas of the Federal Republic

of Germany affected by the division of

Germany.

May be compatible

(a) aid to promote the economic

development of areas where the

standard of living is abnormally low or

where there is serious

underemployment;

(b) aid to promote the execution of an

important project of common

European interest or to remedy a

serious disturbance in the economy of

a Member State;

(c) aid to facilitate the development of

certain economic activities or of

certain economic areas,where such

aid does not adversely affect trading

conditions to an extent contrary to

the common interest;

(d) aid to promote culture and

heritage conservation;

(e) such other categories of aid as may

be specified by decision of the

Council.

Industrial property rights

in knowledge based economy

Marek Salamonowicz

Chair of Commercial Law

Intangible assets

patent for invention

utility model

industrial design

trade mark

geographical indication

topographies of integrated circuits

Know-how (trade secrets)

copyrights

Global point of view on patent

protection

International patent filings under

WIPO’s Patent Cooperation Treaty

(PCT) grew by 2.4% in 2008, to nearly

164,000 applications.

The largest number of international

PCT applications, just under a third of

the total for 2008 (32.7% or 53,521

applications) were filed by inventors

in the United States of America

Inventors from the Republic of Korea

(+12.0%), China (+11.9%) and Sweden

(+12.5%) enjoyed robust growth rates.

Inventors and corporations from

Japan, with 17.5% (28,774), Germany

(18,428), Republic of Korea (7,908)

France (6,867), China (6,089), United

Kingdom (5,517), Netherlands (4,349),

Sweden (4,114), Switzerland (3,832),

Canada (2,966), Italy (2,939), Finland

(2,119), Australia (2,028) and Israel

(1,882).

For the first time, a Chinese company

topped the list of PCT applicants in

2008. Huawei Technologies Co. Ltd, a

major international

telecommunications company based

in Shenzhen, filed 1,737 PCT

applications in 2008. Panasonic

Corporation (Japan) was the second

largest user of the PCT in 2008 with

1,729 international applications,

followed by Koninklijke Philips

Electronics N.V. (Netherlands, 1,551

PCT applications), Toyota Jidosha

Kabushiki Kaisha (Japan, 1,364 PCT

applications) and Robert Bosch GmbH

(Germany, 1,273 PCT applications).

Of the 100 top companies, 38 were

from the United States, 28 from Japan

and 13 from Germany.

Patentable invention

Patents shall be granted for any

inventions which are new, which

involve an inventive step and which

are susceptible of industrial

application.

1) Novelty - An invention shall be

considered to be new if it does not

form part of the state of the art. The

state of the art shall be held to

comprise everything made available

to the public by means of a written or

oral description, by use, displaying or

disclosure in any other way, before

the date according to which priority

to obtain a patent is determined.

Non-obviousness

An invention shall be considered as involving

an inventive step if, having regard to the state

of the art, it is not obvious to a person skilled

in the art.

Shall not be regarded as inventions

(i) discoveries, scientific theories and

mathematical methods,

(ii) aesthetic creations,

(iii) schemes, rules and methods for

performing mental acts, doing

business or playing games,

(iv) creations, whose incapability of

exploitation may be proved under

the generally accepted and

recognised principles of science,

(v) programs for computers,

(vi) presentations of information.

Patents shall not be granted for:

(i) inventions whose exploitation

would be contrary to public order or

morality; the exploitation shall not be

deemed to be so contrary merely

because it is prohibited by law,

(ii) plant or animal varieties or

essentially biological processes for

the production of plants or animals;

this provision does not apply to

microbiological processes or the

products thereof,

(iii) methods for treatment of the

human or animal body by surgery or

therapy or diagnostic methods

applied on human or animal bodies;

this provision shall not apply to

products, and in particular to

substances or compositions applied

in diagnostics or treatment.

Patent right

A patent shall confer the exclusive

right to exploit the invention, for

profit or for professional purposes,

throughout particular territory.

The scope of the protection sought

shall be determined by the claims

contained in the patent specification.

The patent specification and drawings

may be used to interpret the claims.

The term of a patent shall be 20 years

counted from the date of filing of the

patent application with the Patent

Office.

Patent right

A patent granted for a process of

manufacture shall also cover products

directly obtained by means of that

process.

A right holder may obtain a patent for

an improvement or an addition to the

invention, where such improvement

or addition has the characteristics of

an invention but cannot be applied

separately (patent of addition).

A patent of addition may also be

obtained for a patent of addition

already granted.

Right to exclude others

The patent holder shall have the right

to prevent any third party not having

his consent from exploiting his

invention for profit or for professional

purposes by way of performing the

acts consisting of:

(i) making, using, offering, putting on

the market a product that is the

subject matter of the invention, or

importing the product for such

purposes, or

(ii) employing a process that is the

subject matter of the invention, as

well as using, offering, putting on the

market or importing for such purposes

the product directly obtained by that

process.

Commercialization

The patent may be assigned or be subject to

succession.

The transfer contract shall be in

writing on pain of invalidity.

The transfer of a patent shall be

binding on third parties as from the

date of its entry in the Patent

Register.

The patent holder shall have the right

to authorize (license) another party to

exploit his invention (license

agreement).

Licence agreement

In a license contract restricted exploitation of

the invention may be provided for (restricted

license). Unless the license contract provides

for the restricted exploitation of the invention,

the licensee shall have the right to exploit the

invention to the same extent as the licensor

(full license).

Termination - at the latest on the

lapse of the patent.

Unless in a license contract the

exclusive exploitation of the invention

in a specific manner is reserved, the

grant of a license to one party shall

not prevent other parties from being

granted a license, as well as the

patent holder from concurrent

exploiting of the invention at (non-

exclusive license).

Licence agreement

A licensee may grant a further license

(sub-license) only with the patent

holder’s consent; grant of further sub-

licenses shall not be permitted.

Recorded in the Patent Register. The

holder of an exclusive license may

enforce his claims in the event of

infringement

the licensor shall be required to

transfer to the licensee all the

technical know-how as necessary to

exploit the invention that is available

to him at the time of concluding the

contract. (active licence)

Where a licensed patent is

transferred, the license contract shall

be binding on the successor in title.

Exhaustion of rights

The rights conferred by a patent shall

not extend to acts concerning a

product embodying the invention or

manufactured by means of the

invention, consisting in particular of

its offering for sale or putting on the

market, if that product has lawfully

been put on the market on the

territory of the Republic of Poland or

EEA by the patent holder or with his

consent.

Abuse of right

The patent holder or the licensee may

not abuse his rights, in particular

by preventing the invention from

being exploited by a third party,

if such exploitation is necessary for

the purpose of meeting home market

demands and is particularly dictated

by public interest considerations, and

consumers are supplied with the

product in insufficient quantity or of

inadequate quality, or at excessively

high prices.

Utility model

Any new and useful solution of a

technical nature affecting shape,

construction or durable assembly of

an object shall constitute a utility

model.

A utility model shall be considered a

useful solution if by means of that

solution a practical effect is attainable,

expedient in the process of

manufacturing or exploitation of the

product.

Industrial designs

and trademarks protection

Marek Salamonowicz

Industrial design definition

appearance of a product, which is:

1) new, 2) individual character, which

manifests itself in particular in the

shape, the features of the outside

surface, colours, lines or

ornamentation

shall not constitute indust. design –

an appearance of a product dictated

solely by its technical function

new - if, before the date of

application,

1) it has not been made available to

the public in such a way as to enable

its reproduction,

2) neither there isn’t any design

enjoying the earlier priority.

Individual character - if the overall

impression it produces on the

informed user differs from the overall

impression produced on such a user

by any design which has been made

available to the public

Rights in registration

of industrial design

The right in registration shall confer

the exclusive right to exploit the

industrial design for profit or for

professional purposes throughout

particular territory.

Termination - 25 years counted from

the date of filing of an application.

Specialization - Limited to the kind of

products that are subject matter of an

application.

The scope - determined jointly by the

drawing of the design and its essential

features specified in the description.

Trade marks ®

Any sign represented or capable of

being represented graphically may be

considered as trademark, provided

that such sign is capable of

distinguishing the goods of the same

kind of one undertaking from those of

other undertakings.

Types: words, designs, ornaments,

combinations of colours, the three-

dimensional shape of goods or of their

packaging, as well as melodies or

other acoustic signals. trademarks

shall also mean service marks,

Functions: 1 distinguishing, 2

advertising 3 guarantee

Rights of protection shall not be

granted for signs which:

1) cannot constitute a trademark,

2) are devoid of sufficient distinctive

character

(i) signs which are not capable of

distinguishing, in trade, the goods for

which they have been applied,

(ii) signs which consist exclusively or

mainly of elements which may serve,

in trade, to designate the kind, origin,

quality, quantity, value, intended

purpose, manufacturing process,

composition, function or usefulness of

the goods,

(iii) signs which have become

customary in the current language

and are used in fair and established

business practices.

Other obstacles

(i) infringes third parties’ personal or

economic rights, or

(ii) is contrary to law, public order or

morality, or

(iii) may mislead the public, in

particular as to the nature, quality,

properties of the goods or, as to the

origin thereof.

(iv) it has been applied for protection

with the Patent Office in bad faith,

Other obstacles

(v) it incorporates official names and

symbols and other officially

recognized signs accepted for the use

in trade, such, in particular, as: safety

marks, quality marks, hallmarks of

legalisation – to the extent to which it

could mislead the public as to the

nature of such signs, unless the

applicant is able to prove his right to

use them,

(vi) religious, patriotic or cultural

nature – to the extent to which it

could hurt religious feelings, sense of

patriotism or national tradition,

(vii) it constitutes a form or another

feature of the goods or their

packaging, which is dictated

exclusively by their nature, is

necessary to achieve a technical result

or it gives substantial value to the

goods.

Relation to other trade marks

(i) is identical to a trademark

registered or applied for registration

with an earlier priority date on behalf

of another party for identical goods,

(ii) is identical or similar to a

trademark registered or applied for

registration with an earlier priority

date on behalf of another party for

identical or similar goods, if the use of

that mark is likely to mislead part of

the public in particular by evoking

associations between the marks

concerned,

Renown trademark

(iii) is identical or similar to a renown

trademark registered or applied for

registration with an earlier priority on

behalf of another party for any kind of

goods, if it without due cause would

bring unfair advantage to the

applicant or be detrimental to the

distinctive character or the repute of

the earlier trademark.

apply to well-known trademarks

accordingly.

The right of protection

confer the exclusive right to use the

trademark for profit or for

professional purposes throughout the

particular territory.

Duration - 10 years counted from the

date of filing of a trademark

application with the Patent Office.

(i) affixing the trademark to the goods

covered by the registration or to the

packaging thereof and putting the

goods on the market,

(ii) using the trademark on business

documents handled in putting the

goods on the market or in rendering

services,

(iii) using the trademark in advertising.

Exhaustion of right

The right of protection for a

trademark shall not entitle the right

holder to prevent the goods bearing

that trademark from being offered or

marketed, where the goods have

earlier been put lawfully on the

market on the EEA territory by the

right holder or with his consent.

Right holder can’t prevent

third parties from using

(i) their names,

(ii) indications concerning, the

features and characteristics of goods,

the kind, quantity, quality, intended

purpose, origin, the time of

production or of expiration of usability

period,

(iii) a registered mark or a similar

mark, if it is necessary to indicate the

intended purpose of the product, in

particular as far as offered spare parts,

accessories or services are concerned,

Legal remedies

Any person whose right of protection

for a trademark has been infringed or

any person enjoying the same status,

may demand:

1) the cessation of the infringement,

2) the redress of its consequences,

3) the surrender of the unlawfully

obtained profits

4) the compensation of damages in

accordance with the general principles

of law.

Capital Companies and Partnerships

Documents