OASIS

                        ORGANIZATION OF ADVOCATES SPECIALISING IN INTERNATIONAL SERVICES

AUSTRIA DEVELOPMENTS 2009/2010

 Hans Georg Zeiner, Zeiner & Zeiner

1.   Introduction

 The year 2009 was a relatively calm year. The economic crisis did not trigger any substantial legal amendments, with the few exceptions mentioned below. Instead, the Austrian government focussed on the developments of the financial, i.e. banking sector. The beginning of 2010 indicates deeper problems on the Austrian labour market than previously assumed and will possibly lead to further amendments in tax law.

2.   Introduction of Opposition Proceedings against Trademark Applications in Austria

 On 18 November 2009, the Austrian Parliament adopted an amendment to the Trademark Protection Act 1970 (MSchG), introducing opposition proceedings. Sections 29a to 29c MSchG, which constitute the core provisions of this new procedure, will enter into force on 1 July 2010.

 Within 3 months from publication in the Austrian trade mark bulletin (Markenanzeiger), the owner of any prior registered trade mark may oppose the registration. It is to be noted in this context is that only owners of earlier marks or trade marks applications may file an opposition according to Sec. 29a(1) MSchG, but not owners of other rights (such as, e.g., unregistered and famous trademarks, agents’ marks, company names, personal names, designs etc.). In case of an international registration extended to Austria, the deadline starts on the first day of that month which follows the publication by WIPO.

 The filing of an opposition will trigger a fee of EUR 200. The opposition has to be received by the Patent Office – contrary to most other procedural deadlines in Austria – not later than on the last day of the deadline.

 No restitutio in integrum shall be admissible against the failure to observe the deadline for filing the opposition and for paying the opposition fee. The cause may be found in the fact that even after the expiration of the deadline for the opposition and after the registration, a cancellation action may be filed.

 The owner of the opposed trade mark may file his observations within an adequate and extendable time period set by the opposition division. He may also allege the failure to genuinely use the opposing trade mark, if it is older than 5 years. In this case, the opposition proceedings shall be suspended until the decision on the revocation action against the opposing trade mark will become final and unappealable.

 The procedures in the opposition proceedings are almost identical with those of the cancellation proceedings. By order of the Office or upon the request of one party, an oral hearing may be scheduled. After collection of evidence, that member of the relevant division (that is the national legal division or the international legal division) who handles the case shall render his decision. Each party shall bear its own costs of the opposition proceedings.

 Against the decision in the opposition proceedings, an appeal lies to the Board of Appeal. The decision of the Board of Appeal may be contested before the Supreme Patent and Trade Mark Board. In the course of this legal change, all decisions of the Board of Appeal may now be contested before the Supreme Patent and Trade Mark Board, while in the past it was only possible to file appeal to the Supreme Administrative Court.

3.   Introduction of a New Insolvency Act

 2010 will see changes of the Bankruptcy Act (Konkursordnung). The bill of the law foresees the abolishment of the proceedings for a composition (Ausgleichsverfahren) and instead will introduce so-called restoration proceedings (Sanierungsverfahren). The restoration proceedings will follow the procedural rules of the Bankruptcy Act which will be re-named Insolvency Act (Insolvenzordnung). The entry into force is scheduled for 1 July 2010.

Restoration proceedings require a respective application of the debtor and the preparation of a restoration plan (Sanierungsplan). Other than in bankruptcy proceedings, restoration proceedings may be started in cases of potential inability of payment. At the restoration plan hearing, the restoration plan is to be accepted by two majorities namely the majority of heads of the creditors and that of the amount of claims, otherwise, the undertaking will be subject to bankruptcy.

 In case the restoration plan fulfils the following conditions (i) assures the financing of the undertaking concerned after the start of the proceedings, (ii) is deemed to be reasonably successful, (iii) provides for a quota to the creditors of at least 20 % of the outstanding claims and (iv) these claims will be settled within two years (natural persons may apply for a longer settlement period not exceeding five years), the applicant will be entitled to manage the undertaking himself. The applicant will be supervised by an administrator named by the court.

 In case the restoration plan fails or is withdrawn, the restoration proceedings will continue as “normal” insolvency proceedings (please note that “bankruptcy proceedings” (Konkursverfahren) is the old term valid at the moment and that insolvency proceedings (Insolvenzverfahren) will then be the only term applicable).

 The same prohibition applies to lease contracts, which may only be ended by the contract partner of the insolvent undertaking where personal interests are deemed more important. Similar rules apply to labour contracts. Employees must not suddenly terminate the labour contracts for based on the non-payment of their salaries if the application for the opening of insolvency proceedings was applied for prior to 14 days of the declaration of such an intended sudden termination (vorzeitiger Austritt). This is due to the fact that salaries not paid prior to the insolvency are covered by public fund. In case the undertaking is continued according to a decision by the court, employees must not suddenly terminate the labour contract, not withstanding in cases where the liquidator intends to terminate the labour contract anyway.

4.   Amendment of the Turnover Tax Law (Added Value Tax Law)

 The implementation of the Directive 2008/8/EC of 12 February 2008 led to amendments of the Act on Turnover Tax. Beginning with 1 January 2010, the place of taxation is differently determined for certain sectors. For application of these new provisions, undertakings in the meaning of the Turnover Tax Law are always deemed to act as undertakings, regardless of their activities. Legal persons in possession of a Turnover Tax ID are deemed to act as undertakings as well.

 In case of services to undertakings not having their office in Austria, the duty to pay turnover tax lies with the receiving undertaking and not the undertaking providing the services. In B2C relations, the tax duty remains with the undertaking. Special provisions apply for certain kinds of services such as transport services, real estate services or restaurant services.

 The provision of services to undertakings or public legal persons has to be included in the summary report (zusammenfassende Meldung) which is to be submitted each month. Certain exceptions apply to small businesses (below EUR 30.000 turnover/year). The reverse charge system is now universal for undertakings.

 The provisions of reimbursement of Turnover Tax in case of trans-national services remain unchanged. Such applications for reimbursement are, with effect of 1 January 2010, to be filed electronically only.

 With effect of 1 January 2010, the Commercial Code (UGB) was amended as follows. The turnover benchmark for the compulsory application of the provisions relating to financial statements is changed from EUR 400.000 to EUR 700.000 as average turnover of two subsequent years. This same new benchmark applies to the accounting for purposes of income tax from income from trade and business. In case an undertaking surpasses the annual benchmark by EUR 300.000 (formerly EUR 200.000), the provisions relating to financial statements apply immediately, i.e. in the following year.

 Costs for the starting and expansion of a business site could be activated in the financial statements, which meant their depreciation of at least a fifth. They could not be distributed.

With effect of 1 January, this possibility of activation of the starting/expansion dispenses must not be activated any more. This means that also the provision relating to the depreciation and prohibition of distribution were abolished. Existing activation posts have to be continued according to the legal situation prior to 1 January 2010.

 Until now, a firm or business value stemming from the purchase of an undertaking could be activated in the financial statements. The firm or business value is the difference between the price paid by the purchaser and the assets and debts of the purchased undertaking. With effect of 1 January 2010, the firm or business value must be activated in the financial statements. The firm or business value has to be depreciated according to its expected duration of use. The value and method of depreciation have to be explained in the annex to the financial statements.

 With relation to Directive 2009/49/EC, the new Section 249 para 2 of the Commerical Code now clarifies that a group financial statement and group status report does not have to include subsidiaries if the subsidiaries are, considered each and in sum, of minor importance for the resulting report.

6.   Criticising website under a domain name containing prior company name found admissible

 The Supreme Court decided on 24 February 2009 in case 17 Ob 2/09g that the use of a company name in a domain name containing a website criticises the respective company and its products is admissible. The plaintiff was an undertaking owning a domain name called “aquapol.at”. The defendant owned a domain name called “aquapol-unzufriedene.at”, which translates into “aquapol-discontented.at”. The Supreme Court based its decision on the freedom of speech and on the fact that without the use of the company name in the criticising domain name, the criticism would not be heard at all. The Supreme Court follows the position of the German Federal Court (Bundesgerichtshof) in this matter.

7.   ECJ rules that Austrian Law on Sales Agents contradicts Community Law

 On 26 March 2009, the ECJ ruled that Section 24 para 1 (2) Law on Sales Agents collides with Directive 86/653/EEC. The national law foresees that the claim to and amount of compensation (Ausgleichsanspruch) is dependent on several criteria. The mentioned provisions allow for the compensation claim if the entrepreneur or its legal successor has advantages from the business relations created by the sales agent.

 The ECJ made clear that a provision concerning the compensation claim which refers to advantages to third persons is in contradiction with Art 17 para 2 (a) of the Directive 86/653/EEC. This includes legal successors as well as affiliated undertakings. The ECJ says that the Directive only takes account of the relationship between the concrete undertaking and the sales agent, which means that any advantages to third persons must be disregarded when assessing the compensation claim of the sale agents.

 The Austrian Law on Sales Agent has hitherto not been changed in this respect.

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