Last Wednesday, Legal 500 unveiled its 2024 rankings, highlighting our firm’s ongoing excellence. Our teams not only maintained but also enhanced their recognitions, garnering additional praise in two new categories.
We warmly thank all team members for their motivation and hard work. We are also grateful to our peers and valued clients for their trust and outstanding feedback. Yes, you made us blush, but loaded with extra motivation.
In two judgements of 28 February 2024 in related cases T-746/22 and T-747/22, the General Court of the EU (GCEU) upheld the validity of two EU trademark registrations containing the geographical name ‘Compton’, which it considers distinctive and not descriptive for fashion items like clothing and bags. These judgments provide a good opportunity to refresh the rules on the registration and protection of geographical names as trademarks in relation to fashion items.
THE COMPTON CASES
In the COMPTON cases, the GCEU had to examine the validity of two EU trademark registrations held by BIW INVEST AG: one word mark composed of the name ‘COMPTON’ registered for clothing, headgear and footwear in class 25 (case T-746/22), and one figurative mark composed of the name ‘COMPTON’ in a stylised font registered for trunks and bags in class 18 and for clothing, headgear and footwear in class 25 (case T-747/22).
German fashion and lifestyle company NEW YORKER filed an application for declaration of invalidity on the grounds that these trademarks are descriptive and lack distinctive character because they may serve to designate the geographical origin of the goods in question.
GENERAL RULES
Article 7, paragraph 1 of EU Regulation 2017/1001 on the European Union trade mark (EUTMR) excludes the registration of trademarks which are devoid of any distinctive character (under b), or which consist exclusively of signs or indications which may serve, in trade, to designate certain characteristics of the goods or services, such as their geographical origin (under c). This provision pursues an aim of public interest to ensure that signs or indications capable of describing certain characteristics the goods or services may be freely used by all. For a sign to be considered descriptive, it must suggest a sufficiently direct and concrete link to the goods or services in question to enable the public concerned immediately, and without further thought, to perceive a description of the category of goods and services in question or of one of their characteristics.
As regards geographical names, it is in the public interest that they remain available because they may, in various ways, influence consumer tastes by, for instance, associating the goods with a place that may give rise to a favourable response. A trademark registration composed of a geographical name may be refused or invalidated when it designates a place which is currently associated in the mind of the relevant public with the category of goods concerned, or when it is reasonable to assume that such an association may be established in the future. However, the mere fact that the relevant public knows a geographical location does not automatically mean that the sign may serve, in trade, to designate their geographical origin. Equally, the mere fact that the relevant goods may be produced or designed in the geographical place in question is not per se sufficient to reasonably assume an association.
Regard must be had to the degree of familiarity amongst the relevant public with that geographical name, with the characteristics of the place designated by the name, and with the category of goods concerned. Geographical names that designate specified geographical locations that are already famous or are known for the category of goods or services concerned, and that are therefore associated with that category in the mind of the relevant class of persons, may not be registered as trademarks. The EUIPO Trade Mark Guidelines explain that ‘Milano’ should be refused for clothing, ‘Frankfurt’ for financial services, ‘Islas Canarias’ for sightseeing, tour guide and excursion services and ‘Switzerland’ for banking services, cosmetic products, chocolate and watches.
NO LINK BETWEEN THE GEOGRAPHICAL NAME ‘COMPTON’ AND FASHION ITEMS LIKE BAGS OR CLOTHING
In the COMPTON cases, the GCEU first considered that, even though the relevant public as a whole is the general public, it is in principle justifiable to take particular account of the perception of that part of the public (in this case the German public since most evidence concerned publications in Germany) that is interested in street fashion and influenced by hip-hop culture and rap music.
While acknowledging that the city of Compton is closely associated with the birth of gangsta rap (as the birthplace of rappers Dr. Dre, Kendrick Lamar, NWA and The Game), the GCEU considered that the city of Compton does not, by definition, play such a central role in hip-hop culture and rap music as a whole. The importance of the city of Compton in the history of gangsta rap is not sufficient, on its own, to establish that all of the German public interested in street fashion and influenced by hip-hop culture and rap music, or at least a large part of that public, is familiar with the city of Compton. Moreover, it was not proven that consumers familiar with the city of Compton represent a significant portion of the general public in Germany. The GCEU concluded that the relevant public will not make a link between the geographical name ‘Compton’ and the products in question (clothing and bags) and on that basis upheld the validity of the two EU trademarks.
ESTABLISHED CASE LAW
This decision follows established case law of the EU Court of justice (CJEU), the GCEU and the European Union Intellectual Property Office (EUIPO), which generally accepts the registration as trademarks of geographical names that have no direct link with the clothing/fashion industry.
For instance, in the NEUSCHWANSTEIN case (C‑488/16), the CJEU held that ‘Neuschwanstein’ (which is the name of a famous castle in Germany) is not descriptive for various goods including bags and clothing.
In the GIORGIO BEVERLY HILLS cases (T-162/01 and T-228/06), the GCEU held that the words ‘Beverly Hills’ are not descriptive for clothing, footwear and headgear.
In the MIAMI case (No R 2528/2017-4), the EUIPO held that the city of Miami will not be associated by the public with tracksuits, or clothing in general. The EUIPO held that: “no reasons are apparent as to why consumers in the EU would associate the city of Miami, of all places, with tracksuits. There is no particular relationship between the geographical or climatic characteristics of the city of Miami or of the US State of Florida (including its beaches) and the nature of tracksuits.” The EUIPO explains that, unlike indications of a country of production, it is unusual to refer to a city as a place of production for clothing. The consumer knows that clothing can be produced in any number of places, including under the same mark, and indeed not necessarily at the place where the trademark proprietor is based, but mostly in low-wage countries. Where production takes place within the EU, it is the country concerned that is normally indicated and not a particular city. This would only be different in the case of cities that the consumer currently associates with fashion, or at least as locations for fashion design, such as Paris. This too would have to be proven, because fashion design is also generally possible anywhere in the world.
In the ALEXANDRAE BARCELONA case (No B 2 186 636), the EUIPO held that ‘Barcelona’ is not descriptive for bags or clothing.
However, ‘AUSTRALIA’ was considered descriptive for a number of goods including clothing, as it indicates that the use or take-up of the goods and services in question contributes to creating a particular attitude to life linked to Australia (EUIPO Board of Appeal 06/04/2018, R 2207/2017-2, AUSTRALIA). In another decision, the EUIPO refused the registration of ‘PARIS’, holding that ‘PARIS’ is likely to be associated with a certain idea of quality, design, stylishness and even of being avant-garde. This results in a positive feeling, an expectation with regard to the quality of the goods sold and the services provided, when ‘PARIS’ is put forward as an indication of geographical origin or destination (EUIPO Board of Appeal 26/10/2015, R 3265/2014-4, Paris).
CONCLUSION
The COMPTON cases confirm the possibility to register geographical names as fashion trademarks, if they are unknown to the relevant public or the relevant public will not currently or reasonably associate them with clothing or fashion in the future. Conversely, where a geographical name is either already famous, or is known for clothing or fashion in general, the trademark registration is likely to be refused or invalidated.
For any questions or assistance, please reach out to our Intellectual Property Team | IP@simontbraun.eu[23]– +32 (0)2 543 70 80
This newsletter is not a legal advice or a legal opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this newsletter.
INSURANCE LAW | New Rules on Time Limits and Penalties
On 14 March 2024, the Belgian Federal Parliament adopted a draft law setting up new rules on time limits and penalties for the payment of insurance covers and benefits (the “Law”).
The Law will enter into force on the first day of the 6th month following its publication in the Official Gazette – which should happen any time soon. It will apply to insurance claims filed on or after its entry into force.
WHERE ARE WE NOW? THE CURRENT TIME LIMITS AND PENALTIES
Under the current regime, time limits for the payment of insurance covers or benefits only exist for certain classes of insurances, namely:
car insurances;
fire insurances;
life insurances; and
complementary pension insurances.
For other classes of insurances, insurers are not subject to any specific deadlines to address the claims filed by their policyholders or beneficiaries. This has been identified as an issue by the Insurance Ombudsman and certain members of the Federal Parliament.
WHAT’S AHEAD? THE UPCOMING REGIME IN A NUTSHELL
Without digging into all the details in this short news, we summarise below the key elements of the reform.
Scope of application
The new rules will apply to categories of insurance that are not yet subject to specific rules on time limits and penalties for the payment of insurance covers or benefits.
This will typically affect (i) liability insurances (e.g. private liability, objective liability for fire and explosion in premises accessible to the public), (ii) property insurances (e.g. theft), as well as (iii) all other insurances (residuary category).
The falling of the residuary category within the scope of application of the Law ensures that the new time limits and penalties will also apply to any new insurance product that would be created in the future. This could prove relevant to insurance products pertaining for instance to A.I., new technologies, cyber…
Time limits
Insurers will have 3 months as from the filing of a claim to dispute their coverage with a motivated answer.
If, after three months, the insurance claimant has not yet received any answer from the insurer and sends a reminder (by registered mail or similar means), the insurer will need to answer the reminder within 11 days.
Finally, insurers will have 30 days to release the insurance cover or benefits once in possession of all elements reasonably necessary to adopt a position on the claim and once all disputes on the claims are settled.
Penalties
If insurers fail to comply with any of the aforementioned timelines, they will have to pay a lump sum compensation of EUR 300 to the insurance claimant. This lump sum amount will be indexed in accordance with the consumer index on an annual basis.
Furthermore, if insurers fail to pay the insurance cover or benefits by the applicable deadline, late payments will automatically bear interest at double the legal interest rate.
Partial payments
In cases where the insurer only disputes the amount of the insurance cover or benefits, the insurer will need to release the undisputed portion of the claim within the aforementioned 30-days period.
Proposals to advance certain costs to the insurance claimant may not be subjected to any (partial) waiver on the claim.
WHAT SHOULD I DO? HOW INSURERS SHOULD PREPARE
There are a few things insurers and intermediaries will need to think about and implement before the entry into force of this new regime, i.e.:
identifying the policies affected: make sure you identify the products concerned by the new rules;
adapting your processes: customer and claim departments might require reinforcement or adaptation;
educating your staff: make sure all your staff and your distribution network (agents, brokers, etc.) are aware and know what to do before the entry into force of these rules.
This article is not a legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this article.
GDPR and Administrative Fines | Important clarifications from the CJEU
On 5 December 2023, the Court of Justice of the European Union handed down two important judgments1[26]which clarify the conditions for imposing an administrative fine on a data-controller for a breach of the General Data Protection Regulation (Regulation 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (OJEU, 4 May 2016, No. L 119, hereinafter the GDPR).
Article 83 of the GDPR and administrative fines
Article 83 of the GDPR enshrines the possibility for the competent personal data protection authorities to impose an administrative fine on a data controller for infringing upon certain provisions of the GDPR, which are listed in the provision. These fines may amount to up to 10,000,000 EUR or in the case of an undertaking, up to 2 % of the total worldwide annual turnover of the preceding financial year, whichever is higher.
Infringement committed by fault
In its judgments of 5 December 2023, the Court of Justice ruled that such an administrative fine may only be imposed where the breach of the GDPR has been committed wrongfully by the controller, i.e. those committed intentionally or negligently. A deliberate or negligent breach is therefore a condition for the imposition of such a fine.
As regards the question whether an infringement has been committed intentionally or negligently and is, therefore, liable to be penalised by an administrative fine, the Court states that a controller can be penalised for conduct falling within the scope of the GDPR “where that controller could not be unaware of the infringing nature of its conduct, whether or not it is aware that it is infringing the provisions of the GDPR”. We understand that while it is not required for the controller to have been aware that its conduct was prohibited, an administrative fine is possible if he could not ignore that he was not protecting, or insufficiently protecting, personal data.
Liability of legal persons
First, the Court pointed out that a legal person responsible for the processing of personal data is liable not only for infringements committed by its representatives, directors or managers, but also by any other person acting in the course of the business of that legal person and on its behalf. A legal person is therefore liable, in its capacity as data-controller, for data processing operations which it carries out itself, but also for those carried out on its behalf by processors.
However, the Court of Justice has stated that that this responsibility and liability does not extend to situations where the processor has processed personal data for its own purposes or where that processor has processed such data in a manner incompatible with the instructions given by the data controller. In such cases, the processor is itself liable for breaches committed as data controller. The responsibility of a data-controller for the actions of its processors is therefore limited to situations where the processor acts in accordance with the instructions given by the controller and in accordance with the purposes of the processing, determined by the data-controller.
Furthermore, in its judgments of 5 December 2023, the Court also stated that an administrative fine may be imposed on a legal person in its capacity as controller even in the absence of any action or knowledge on the part of the management body of that legal person. Thus, the fact that the legal personal claims not to be aware of the infringement is not a valid ground to be exempted from liability, since it is liable for infringements of the GDPR committed by persons acting on its behalf, provided, as stated above, that these operations are attributable to the data-controller.
Finally, with regard to the liability of legal persons in their capacity as data controller, the Court of Justice stated that an administrative fine may be imposed on them on the basis of Article 83 GDPR even if the natural person who committed the unlawful processing operation is not precisely identified, provided that this unlawful processing operation is attributable to the legal person. The data controller cannot therefore be exempted from its liability by claiming that the natural person to whom the breach should be attributed has not been identified.
Conclusion
These judgments of the Court of Justice increase the risk of administrative fines being imposed for a breach of the GDPR, by reducing the requirements for the imposition of such fines on legal persons in their capacity as data controllers.
1 [27]CJEU, 5 December 2023, C-683/21; CJEU, 5 December 2023, C-807/21.
For any questions or assistance, please reach out to our Intellectual Property Team|IP@simontbraun.eu[23]– +32 (0)2 543 70 80
This newsletter is not a legal advice or a legal opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this newsletter.
Video Games Series | The Use of Personal Data in the Industry
The video game industry’s increasing reliance on personal data presents a complex legal landscape that game developers must carefully navigate. As the gaming landscape evolves, the role of personal data becomes more pronounced. This article delves into two key aspects: the utilisation of personal data in game analytics and the recurrent theme of data breaches in the sector. In examining these topics, we will explore the legal challenges posed by the General Data Protection Regulation (GDPR).
Game analytics
Throughout the last decades, the importance and use of data have known a spectacular increase in most industries – and certainly in the gaming industry. One example thereof is game analytics.
Data ‘analytics’ refers to the process of discovering and communicating patterns in data, to subsequently inform operational, tactical and strategic business decisions. This requires statistical analysis, data mining and forecasting, mathematics, etc. Applied in the context of game development, these processes are referred to as ‘game analytics’.
Specialised literature differentiates 4 use cases for game analytics: game analytics used as (i) a sense-making tool, allowing understanding player behaviour, (ii) a decision-support system, where data is used to answer strategic business questions, (iii) a communication tool, used to inform investors and publishers, and better justify decision made, and (iv) a ‘hygiene factor’, allowing ‘serious’ and more ‘mature’ companies to continuously improve their products and stand out from the average.1[26]
The challenges that game analytics present from a GDPR perspective are various.
Security of the data – As game analytics involves the storage and analysis of large volumes of data, ensuring the security and protection of those data becomes paramount. Companies failing to implement robust cybersecurity expose themselves to many risks, including legal ones, and especially when their failure to protect the data leads to a data breach (see below the legal implication of data breaches). Regulatory bodies and users are increasingly holding companies accountable for such breaches, and failure to protect personal data can result in severe fines as well as reputational damage.
Legal basis for processing – Any processing of personal data must have a valid legal basis. Given the type of processing involved in game analytics, it generally goes beyond what is necessary for the performance of their contractual obligations, leaving them with only two legal bases, being (i) the gaming company’s legitimate interest and (ii) the clear and informed consent from the data subject. The available legal bases would be even more limited if the data used in the data analytics are considered as biometric data, as those cannot be processed based on the basis of the legitimate interest of the gaming company.
For those data as well as other data for which no legitimate interest to the processing has been identified, gaming companies should capture their user’s consent to the intended processing. When doing so, gaming companies should design user interfaces that effectively communicate the data practices to users and obtain their explicit consent in a compliant way. Additionally, companies need to provide users with the option to opt out of data collection without compromising their gaming experience.
Transparency – Companies must provide transparent information to the data subjects to inform them ‘in a concise, transparent, intelligible and easily accessible form’ on the intended processing. This includes the processing in the context of data analytics, which must be easily understood by the data subject. Legal issues emerge when companies are not transparent about their data practices or when users feel coerced into consenting to certain data processing they may not fully understand.
Impact assessment – When companies identify that certain processing activities are likely to create high risk for the rights and freedoms of individuals, they have the obligation to conduct a more in-depth impact assessment of the processing concerned. This data processing impact assessment should allow for a better understanding of the actual risk of the processing. Depending on the outcome of the assessment, companies may be required to implement additional security measures to reduce risks. In cases where companies are not able to reduce risks below a high risk, prior consultation of the competent data protection authority is required before any processing activity takes place.
Automated processing – Depending on the particular processing, game analytics may lead to automated decision-making. In such a case, GDPR imposes restrictions on such automated processing to protect individuals’ rights. Game developers must ensure that automated decisions are necessary for contracts, authorised by law, or based on explicit consent. They must also provide measures for individuals to intervene, express their views, request human intervention and contest decisions. As always, users should be clearly informed of such practices.
Data breaches in the sector : a recurring theme
One of the most recent data breaches reported in the gaming industry dates back to December 2022, when Activision confirmed that hackers compromised the company’s internal servers. Activision‘s response was quick, asserting that no game code, sensitive employee data, or player details had been accessed. Yet, claims to the contrary soon emerged: security research group vx-underground mentioned the exfiltration of sensitive workplace documents and content release schedules. Not much later, it became apparent that the data leak involved names, email addresses, phone numbers, salaries, and other critical employee details. This incident illustrates a growing concern in the gaming sector: the disparity between company claims and the actual extent of data breaches. Legal implications arise when companies understate, in case of a data breach, the degree of exposure or when they fail to notify affected parties promptly.
Recent events have shown that Activision is not the only victim of attacks. Gaming companies appear to be prime targets due to the large amount of data they process ranging from employees’ data to confidential game content over players’ data, which in turn can be explained by the growing importance of game analytics. Throughout the last years, other major actors of the industry such as Riot Games, Rockstar Games, or Roblox have disclosed data breaches involving theft of source code, confidential development footage and/or sensitive users’ information.
As point out earlier, the first obligation when it comes to data breach is for the data company to take all appropriate security measures to protect personal data. However, even when using best industry practices in terms of security, the risk of a data breach happening cannot be eliminated.
When a data breach occurs, companies are legally obligated to disclose the incident promptly and accurately to their data protection authority. To avoid unjustified delay in this reporting, and thus any potential fine, companies should make sure they have efficient and robust reporting and incident response plans to investigate, address and report the breach promptly. In the gaming industry, where sensitive player information is at stake, the timely and accurate disclosure of data breaches is crucial as it is likely that the breach might result in high risk to the rights and freedoms of data subjects. In such case, companies must also inform data subjects of the breach.
Post-breach, gaming companies must be ready for potential investigations by regulatory authorities. GDPR compliance is therefore essential not only in preventing breaches but also in responding appropriately when they occur. Companies must adhere to legal requirements for reporting, cooperating with investigations, and implementing remedial measures. Failure to comply with these post-breach obligations can result in additional sanctions.
What are the risks of non-compliance ?
Risks related to GDPR non-compliance are multiple ranging from reputational damage to fines. Indeed, failure to comply with any GDPR related obligations may result in heavy fines imposed by the local data protection authority after investigation. Individuals affected by the non-compliance may also take legal action if they perceive that a company has been dishonest or negligent in its reporting.
Conclusion
For game developers, the intertwining paths of innovation and legal compliance are complex but unavoidable. Navigating the GDPR maze might seem daunting for gaming companies, especially with such high stakes. Yet, with proper understanding and implementation, it’s a navigable challenge.
1[27] M. Mäntymäki, S. Hyrynsalmi & A. Koskenvoima, « How Do Small and Medium-Sized Game Companies Use Analytics? An Attention-Based View of Game Analytics », Inf Syst Front 2020, 1168-1173.
Got questions or need legal guidance in Belgium or the EU? Whether you are a game developer producer, investor, or streaming platform, Simont Braun is here to assist – Get in touch through gaming@simontbraun.eu[29]
This article is not a legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this article.
GDPR and Right to Compensation | Important clarifications from the CJEU
In December 2023 and January 2024, the Court of Justice of the European Union handed down several judgments1[26]that provide important clarifications regarding the right to compensation for non-material damage suffered as a result of a breach of the GDPR, enshrined in Article 82 of the General Data Protection Regulation (Regulation 2016/679 of the European Parliament and of the Council of 27 April 2016 with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (OJEU, 4 May 2016, No. L 119, hereinafter the GDPR).
Article 82 of the GDPR and the right to compensation
Under Article 82 of the GDPR, any person who has suffered material or non-material damage as a result of an infringement of the GDPR has the right to receive compensation from the controller or processor for the damage suffered.
As the Court points out, this right to compensation requires three cumulative conditions to be met, namely:
The existence of material or non-material damage;
The existence of an infringement of the GDPR; and
A causal link between the damage and the infringement.
No “de minimis threshold” condition
According to the Court of Justice, no other conditions may be imposed in order to benefit from this right to compensation, such as conditions relating to the tangible nature of the damage or the objective nature of the infringement. It follows that Article 82 does not require that the ‘non-material damage’ alleged by the data subject must reach a ‘de minimis threshold’ in order for that damage to be compensated.
Compensation for non-material damage within the meaning of Article 82 of the GDPR cannot therefore be subject to the condition that this damage must have reached a certain degree of gravity for it to be compensated; the most minimal damage is sufficient.
Fear of future misuse of personal data published following a cyber-attack may constitute non-material damage
The Court went even further, ruling that the fear experienced by a data subject with regard to a possible misuse of his or her personal data by third parties as a result of an infringement of that regulation is capable, in itself, of constituting ‘non-material damage’ within the meaning of article 82 GDPR. The national court will have to determine in concreto whether that fear can be deemed to exist.
However, in its judgment of 25 January 2024, the Court of Justice held that if a document containing personal data was provided to an unauthorised third party and it was established that that person did not become aware of those personal data, ‘non-material damage’ does not exist due to the mere fact that the data subject fears that, following that communication having made possible the making of a copy of that document before its recovery, a dissemination, even abuse, of those data may occur in the future. Thus, a purely hypothetical risk of misuse by an unauthorised third party does not, according to the Court, constitute non-material damage within the meaning of Article 82 of the GDPR. This is the case where no third party has become aware of the personal data in question.
Burden of proof for non-material damage
Although a “de minimis threshold” cannot be imposed as a condition for the right to compensation, according to the Court, the mere infringement of the provisions of the GDPR is not sufficient to confer a right to compensation. The data subject must demonstrate that he or she has actually suffered damage, however minimal. According to the Court, the data subject is required to show that the consequences of the infringement which he or she claims to have suffered constitute damage which differs from the mere infringement of the provisions of the GDPR.
Burden of proof of fault
The person who has suffered the damage must therefore demonstrate the breach of the GDPR and the damage suffered as a result of this breach, but does not have to prove the existence of a fault from the data-controller, as this fault is presumed.
The Court ruled that Article 82 of the GDPR establishes a system of liability by fault, but with a reversal of the burden of proof: the burden of proving a fault does not lie with the person who suffered the damage, but with the data controller. To avoid liability, the data controller must therefore prove that he is not in any way responsible for the event giving rise to the damage.
In particular, the controller cannot be exempt from its obligation to pay compensation for the damage suffered by a data subject solely because that damage is a result of unauthorised disclosure of, or access to, personal data by a ‘third party’ (e.g. cyber-criminals), in which case that controller must then prove that it is in no way responsible for the event that gave rise to the damage concerned. To be held liable, the data controller must have made it possible for a third party to commit a breach, by failing to comply with an obligation under the GDPR, such as the obligation to protect data. In addition, in the event of a personal data breach by a third party, the controller may be exempt from liability by proving that there is no causal link between its possible breach of its data protection obligation and the damage suffered by the natural person.
In addition, the burden of proving that the security measures implemented by him are appropriate pursuant to Article 32 of the GDPR lies with the data controller.
Compensatory nature of the right to compensation
Finally, according to the Court, Article 82 of the GDPR does not have a deterrent, or even punitive function, but only a compensatory function that must allow the damage actually suffered, however minimal, to be compensated in full. This implies:
That it is not permitted to impose the payment of punitive damages on the basis of Article 82 of the GDPR;
That Article 82 of the GDPR does not require the degree of gravity of the infringement to be taken into consideration for the purposes of compensation;
That the amount cannot be set at a level that exceeds full compensation for the prejudice.
[1][27] CJEU14 December 2023, C-456/22; CJEU, 14 December 2023, C-340/21; CJEU, 21 December 2023, C-667/21; CJEU, 25 January 2024, C-687/21.
For any questions or assistance, please reach out to our Intellectual Property Team|IP@simontbraun.eu[23]– +32 (0)2 543 70 80
This newsletter is not a legal advice or a legal opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this newsletter.
Video Games Series | Legal Implications Surrounding AI Use
In this second episode, we will focus on two significant uses of artificial intelligence (AI) in video games: driving non-player characters (NPCs) and adapting game worlds. We will examine the legal issues associated with these uses, including copyright infringement, ownership of AI-generated content, image rights, and patentability of AI inventions. We will also briefly touch upon the upcoming EU Artificial Intelligence Act.
Driving Non-Player Characters (NPCs)
The use of AI to drive NPCs brings realism and complexity to video game environments. AI allows NPCs to exhibit lifelike behaviours, decision-making capabilities, and adaptive responses, enhancing player interactions and the overall game environment. From driving vehicles to engaging in combat or providing quest interactions, AI-powered NPCs contribute to the depth and realism of video games, creating captivating and challenging gameplay experiences for players.
However, the use of AI to drive NPCs also poses legal challenges. One such challenge is the risk of image rights infringement. Image rights encompass the right to control and exploit one’s own image, granting individuals the exclusive right to authorise the use of their likeness. When NPCs in video games replicate the appearance of real individuals, for instance celebrities or public figures, there is a potential risk of infringing upon these image rights. Game developers must navigate the complexities of obtaining appropriate licenses or ensuring the NPCs’ appearances do not violate image rights to avoid potential legal claims.
The patentability of AI inventions used in NPCs is another legal consideration. Innovative AI algorithms and technologies used in video games may be eligible for patent protection but only when they produce a technical effect that goes beyond the “normal” physical interactions between the program (software) and the computer (hardware) on which it is run. Mathematical methods, schemes, rules and methods for playing games, and programs for computers are not patentable as such. However, if they are applied to address a technical problem within a specific field of technology, patent protection may be pursued. An example is the patent for the ‘Nemesis System’ owned by Warner Bros, which enables NPCs to remember past encounters with players and to adapt their behaviour, appearance and abilities based on these encounters.
Adapting Game Worlds for Engaging Experiences
AI’s ability to adapt game worlds to create more immersive and challenging environments enhances the player experience. Through procedural content generation (PCG), AI algorithms analyse player behaviour, preferences, and performance data to dynamically adjust the game environment, making it more challenging, diverse, and tailored to each individual player. PCG enables the generation of vast and unique game worlds, filled with procedurally generated landscapes, quests, and other content. This allows for endless exploration and discovery, as no two playthroughs are the same.
However, this content generation can also raise legal concerns. For instance, developers must be mindful of copyright infringement when generating AI created content, such as artworks, music, characters or level design. A first possible issue is the use of copyrighted works as input to train AI models, without the authorisation of the copyright owner. A second conceivable problem is the possible copyright infringement by the output generated by AI models. The assessment of a supposed infringement is likely to be fact dependent, but developers must avoid that AI-generated content replicates copyrighted works without proper authorisation or licensing.
Another legal concern is the ownership of AI-generated content. Generally speaking, copyright law attributes ownership to the human creator who exercises creative control and makes autonomous decisions in the content creation process. However, when it comes to AI-generated content, the question of authorship and ownership becomes more intricate. EU copyright laws currently do not explicitly address the authorship or ownership of content created solely by AI systems. At present only human beings can legally qualify as “author”. It can therefore be argued that since AI is a tool used by human creators, the human input and involvement in the AI training or programming process should determine ownership. On the other hand, tracing a sufficiently
direct human involvement in these complex computational processes can be challenging. For this reason, some authors propose that AI systems themselves should be considered as “authors” with certain rights. In addition to the question of who can qualify as author, the output must also fulfill the originality requirement imposed by copyright law in order to enjoy protection.
Given these copyright related issues, integrating generative AI outputs directly into a video game should be approached with caution. When it is uncertain who owns the IP rights in such content, and whether third party IP rights might be infringed, licensing that content to third parties such as publishers and end users will entail certain risks.
EU Artificial Intelligence Act
The EU legislator has recently reached an agreement on a regulation laying down harmonised rules for the development, marketing and use of artificial intelligence (Artificial Intelligence Act or “AI Act”). The AI Act contains key definitions and introduces a risk-based approach that classifies high-risk AI systems, prohibits certain AI systems (such as biometric identification systems), and exempts AI systems that present no significant risk. The AI Act also contains a separate section dedicated to General-Purpose AI Models, like ChatGPT. AI systems will be subject to certain requirements focusing on inter alia transparency, accountability and human-centricity. For instance, users will have to be informed that they are interacting with an AI system and content used to train AI-systems must be disclosed. When enacted, the EU AI Act will influence the regulatory landscape for AI implementation in video games, ensuring that ethical and safety considerations are taken into account while fostering innovation in the gaming industry.
Conclusion
As AI technology continues to advance, its integration into video games brings tremendous possibilities, but also multiple legal complexities. AI-powered NPCs and adapting game worlds offer immersive and engaging experiences but require careful consideration of legal issues such as copyright infringement, AI-generated content ownership, image rights, and patentability. Collaboration between game developers, legal experts, and policymakers is vital to establish clear legal frameworks that foster innovation while protecting the rights of all parties involved.
Stay tuned for our next episode, where we will dive into the thrilling wold of data in video games.
Got questions or need legal guidance in Belgium or the EU? Whether you are a game developer producer, investor, or streaming platform, Simont Braun is here to assist – Get in touch through gaming@simontbraun.eu[29]
This article is not a legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this article.
CJEU allows strict liability when enforcing provisional measures for IP infringement
In a judgment of 11 January 2024 in Mylan v Gilead (C-473/22), the Court of Justice of the European Union (CJEU) has accepted that a party enforcing a provisional measure can be held liable to compensate the defendant for any damages and costs caused by the enforcement, when the intellectual property right on the basis of which that measure was granted is subsequently found to be invalid, or if it ultimately transpires that there has been no infringement.
This judgment adds an important clarification to the CJEU’s previous judgment handed down in 2019 in the Bayer case (Bayer Pharma, C-688/17). In that case, the CJEU had upheld the validity of national legislation denying automatic compensation for damages caused by the enforcement of provisional measures on the basis of a patent that was later found to be invalid. The CJEU seemed to require a liability based on fault and specified that compensation could be due when the applicant had committed an abuse (of rights or process) when applying for the measures. Some inferred from this judgment that the CJEU had ruled out a system of strict (or no fault) liability resulting in automatic compensation, and even that compensation would only be possible if the applicant had committed an abuse, which sets a very high bar for defendants to obtain compensation for injury suffered from provisional measures that are subsequently reversed.
The facts
In September 2017, pharmaceutical company Gilead sought a preliminary injunction before the Finnish Market Court against generic manufacturer Mylan for infringement of a supplementary protection certificate (SPC) for an antiretroviral medicine for the treatment of people with HIV. Mylan filed a claim to invalidate the SPC.
In December 2017, the Market court upheld Gilead’s claim and imposed a preliminary injunction prohibiting Mylan from importing, manufacturing, possessing, offering, placing on the market and using the generic medicine during the period of validity of the SPC, on pain of a fine of EUR 500,000.
These preliminary measures were subsequently revoked after the SPC was found to be invalid. Mylan claimed damages for the injury caused by Gilead enforcing provisional measures on the basis of an invalid SPC. Finnish law applies a system of strict liability according to which the enforcer of a provisional measure is liable to pay compensation if the underlying IP right is subsequently found to be invalid. The Market court turned to the CJEU to have its view on whether the system of strict liability under Finnish law is compatible with Article 9(7) of the IP Enforcement Directive (2004/48).
The CJEU’s judgment
The CJEU first recalls that three conditions must be met in order to grant a defendant appropriate compensation for any injury caused by provisional measures on the basis of Article 9(7) of the IP Enforcement Directive:
the provisional measures have been revoked or have lapsed due to any act or omission by the applicant, or there has been no infringement or threat of infringement of that applicant’s intellectual property right;
there must be an injury;
there must be a causal link between that injury and those measures.
The CJEU explains that Article 9(7) of the IP Enforcement Directive lays down a minimum standard, leaving the Member States leeway to opt, as the case may be, for a system of strict liability or a fault-based liability. The fact that the defendant does not have to demonstrate a fault committed by the applicant is a counterweight to the fact that the applicant was able to obtain such measures without having to adduce definitive evidence of any infringement.
The CJEU also clarifies that its previous judgment in Bayer dealt with a specific scenario and that it cannot be inferred from this judgment that Article 9(7) only allows a liability based on the applicant’s fault. However, this does not mean that national courts should automatically and in any event order the applicant to provide compensation since they must still take into account all the circumstances of the case, including the conduct of the parties. They may also reduce the amount of compensation according to national caselaw where the defendant enabled the injury to occur or failed to take reasonable measures to avoid or mitigate it.
With this judgment, the CJEU confirms the validity of a mechanism for compensation for injury caused by a provisional measure based on a system of strict liability of the applicant, thereby deviating from the Advocate-General’s opinion who had found that a strict liability standard does not comply with Article 9 (7) of the IP Enforcement Directive.
The Belgian liability regime
Under Belgian law, the provisional enforcement of a judgment is carried out only at the risk of the enforcer (and without any bond or similar guarantee if the judge has not ordered it).
It is generally accepted that when a summary order (provisional in nature) is subsequently overturned on appeal (i.e. within the same lawsuit = scenario 1), the applicant who enforced the provisional measure must compensate the defendant for the damage suffered, even if the applicant has not committed a fault (strict liability).
In contrast, if the provisional measure is ended following a judgment on the merits that invalidates the underlying IP right or dismisses the infringement claim (i.e. in another lawsuit = scenario 2), the tendency is to consider that the applicant would only have to compensate the defendant if he had committed a fault. In a judgment of 28 February 2018 in the Snowfall case, the Brussels Court of Appeal held that no liability arises from the mere execution of a provisional measure (such as an ex parte counterfeit seizure), even if it is later found that there was no infringement of the IP right invoked, thereby rejecting the idea of strict liability as this could otherwise discourage IP holders from applying for such measures, which would be contrary to the IP Enforcement Directive. In another judgment of 11 October 2022 in Mylan v Novartis, the Brussels Court of Appeal applied the CJEU’s decision in Bayer and once again confirmed the principle of fault-based liability (appeal pending before the Belgian Supreme Court).
Comment
In the Mylan v Gilead judgment, the CJEU gives some discretion to the national courts to apply a strict or fault-based liability according to national law and to adjust the amount of damages by taking into account the circumstances of the case.
It will be interesting to see how Belgian courts will apply this judgment going forward in intellectual property disputes similar to scenario 2, and whether the Brussels Court of Appeal’s current case law of denying strict liability for being contrary to the IP Enforcement Directive can be maintained.
If you want to know more about this case or about IP protection/ enforcement in general, please contact our Intellectual Property team viaip@simontbraun.eu[35].
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This newsletter is not a legal advice or a legal opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this newsletter.
Simont Braun assists Eurofins with the acquisition of Ecca
Simont Braun successfully assisted Eurofins, a world leader in laboratory testing services, with its acquisition of the large Belgian-based laboratory Ecca.
Eurofins[36] is a multinational world leader in laboratory testing services in the food, environment, pharma products & agroscience CRO sectors.
ECCA[37] is one of the largest Belgian-based laboratories in the country, active in laboratory testing in the food, feed, environmental and pharmaceutical sectors, and advisory services in the same fields.
Simont Braun assisted Eurofins in the legal due diligence and the drafting and negotiation of the transaction documentation, and is thrilled to have contributed to the successful expansion of Eurofins (FR[38] – NL[39]).
For any questions or assistance, please contactTom Swinnen[18].
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This article is not a legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this article.
The practice of gambling is an age-old phenomenon, with there being no shortage of various rules and stakes that are thrown into the balance. One of the latest examples is using items in video games known as ‘skins’ to bet on the outcome of gaming competitions. Despite originating from within the video games sphere, the consequences of such ‘skin betting’ are often very real. In this newsletter, we explore some of the core concepts and the legal issues that may arise as a result of skin betting.
What are skins?
Roughly ten years ago, the introduction by game developer Valve of skins in the popular games Team Fortress 2 and Counter Strike: Global Offensive is seen as a pivotal moment in the commercialisation of skins.
These virtual items primarily serve a cosmetic purpose, allowing their owners to customise in-game items or characters by equipping said skins. For example, players can use these skins to change the outfit that their in-game character wears or may customise the colour of their weapons. While initially the idea was to incentivise active community members by rewarding them with such skins, some of these skins have become much sought-after trade items on online marketplaces, particularly when these can no longer be earned through gameplay or bought at their initial price. Nowadays, nearly all of the new gaming titles contain some form of skins and customisation of the player experience, although not all of these are tradable on secondary markets.
What is skin betting?
As the potential value of skins was made evident, the phenomenon of skin betting started taking root in various competitive gaming circles. The activity involves the use of skins in place of more conventional currency to place bets on the outcome of competitions (in games such as Counter-Strike, NBA 2K, League of Legends etc.), by analogy with betting on horse racing. The value of the stake is tied to the value of the skin, which based on its rarity and availability on the market can range up to several thousands of euros.
If a bet is successful, the prize may consist of any form of currency or even other skins. If the opposite is true, the staked skin is forfeited in its entirety. At its core, the practice thus shows high similarities to any other type of online betting.
Legality of skin betting
An important difference in the legal approach on skin betting will depend on whether the bet is executed as a direct deal between two or more individuals or whether it is organised through a platform which automatically settles the outstanding debts once the conditions of a bet are triggered.
In the first case, the bet essentially forms an agreement between 2 individuals, which in principle is an unregulated activity. In the second case, an entity is potentially facilitating or providing gambling activities, depending on the applicable laws of its jurisdiction. In that case, the legality will a.o. things depend on what local gambling laws permit, whether the entity requires licensing and whether citizens of certain jurisdictions are targeted by these platforms through advertising or other means.
The Belgian approach
The Belgian legal framework does not contain any specific rules on skin betting. As a result, an assessment in light of the general definition of gambling is the only way to determine whether (an activity resembling) skin betting qualifies as gambling.
This general definition of gambling includes 4 elements, being that the practice must consist of: (i) any game, (ii) where there is a stake of any kind, (iii) in which chance is a factor and (iv) where the loss of the stake or gain of any kind is the result of playing the game.
In this discussion around skin betting, the main focal points are (a) whether the skin is a stake of any kind and (b) whether there is an element of chance in the game.
a. Skins must be a stake of any kind
For something to be considered as a stake of any kind, this implies that the staked item has “real world value”, which means that it can be exchanged for some form of legal tender down the line. This means that for example skins that are exchangeable for cryptocurrency, but not directly for fiat currency, may still meet the criterion of forming a stake, since most cryptocurrencies are in turn exchangeable for fiat money. Skins that have sentimental or symbolic value, or that are only exchangeable for in-game currency, will likely not meet this criterion. An added layer of complexity presents itself when the skins are earned for free, yet can still be sold for fiat currency at a later stage.
b. The element of chance
Another point of discussion is whether the underlying games on which the players bet contain an element of chance. This is subject to debate when it comes to first-person shooter gamers like Counter-Strike, where a high degree of skill is required to compete in top-level competitions. While an argument can be made that chance plays a role (due to e.g. external factors), this will not be that evident in all circumstances. For games like EA Sports FC (formerly known as ‘FIFA’) or card games however, where there are so-called ‘hit chances’ (i.e. percentages to hit a target), the chance element becomes clearer.
Another consideration is what exactly a player decides to bet on. The assessment may change based on whether the bet is solely placed on the outcome of the match as a whole or whether it also encompasses other more random elements, like the time needed to complete a match, the elimination of specific players or the methods used to achieve the objective. These additional layers of chance-induced elements may indeed alter the total assessment of the element of chance.
Conclusion
In summary, the assessment of whether the use of skins for gambling-like purposes constitutes a regulated activity will highly depend on the particular case, where no clear-cut answer exists right out of the gate.
More often than not, skin betting platforms will operate in a grey zone, where these platforms are either unregulated or operating from jurisdictions with different views on the regulatory status of skin betting.
Stay tuned for our next episode, where we will dive into the legal implications of AI in video games.
Got questions or need legal guidance in Belgium or the EU? Whether you are a game developer producer, investor, or streaming platform, Simont Braun is here to assist – Get in touch through gaming@simontbraun.eu[29]
This article is not a legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this article.
INSOLVENCY Series | Episode 5: Cross-border Insolvency and International Aspects
In today’s globalised economy, businesses commonly operate in multiple States and engage with international creditors. Consequently, financial difficulties faced by a business often transcend national borders. Hence, insolvency proceedings opened in a State will frequently have cross-border implications.
Several questions arise when a debtor’s insolvency has or may have cross-border implications, namely:
Jurisdiction: which courts will have jurisdiction to open and administer the insolvency proceedings?
Applicable law: Which law governs the insolvency proceedings?
Creditors’ rights: How can the rights of creditors established in other States be preserved?
Asset treatment: What happens to assets located abroad?
The European Union has proactively addressed these questions through its Insolvency Regulation1[26]. This Regulation applies to insolvency proceedings (reorganisation and liquidation procedures specified in Annex A of the Regulation) opened in a Member State that may have effects in at least one other Member State.
When the insolvency proceedings are opened in a third-party State or when they are opened in a Member State and have effects in at least one third-party State, the private international law of the concerned States will apply.
In this fifth and last episode, we will briefly outline the rules applicable to insolvency proceedings with cross-border implications within the EU and outside the EU, considering both creditors’ and debtors’ perspectives.
CROSS-BORDER INSOLVENCY PROCEEDINGS WITHIN THE EU
The Insolvency Regulation lays down common principles to address the main issues stemming from a situation of insolvency with cross-border implications within the EU. The Insolvency Regulation’s principles are summarised below.
Opening of the insolvency proceedings (jurisdiction)
a. Main insolvency proceedings
The Member State where the debtor’s center of main interest (“COMI”) is located has jurisdiction for opening the main insolvency proceedings relating to this debtor. A debtor’s COMI is the place where it conducts the administration of its interests on a regular basis and which is ascertainable by third parties. The debtor’s COMI is presumed to be the place of its registered office (for legal entities) or its principal place of business (for natural persons).
The main insolvency proceedings opened in one Member State receive automatic recognition across all EU Member States. Accordingly, the insolvency practitioner appointed in that Member State will in principle be empowered to exercise his powers throughout the EU, without the need for an enforcement procedure.
b. Secondary insolvency proceedings
If the debtor has one or several establishments in Member States other than where its COMI is located, secondary insolvency proceedings may, under certain conditions, be initiated in each Member State of establishment. The effects of such secondary proceedings only impact assets located within the territory of the Member State where they are opened.
Once such secondary proceedings are opened, the practitioner appointed in the main proceedings no longer has authority over the assets located in that Member State.
The local creditors’ right to petition for the opening of secondary insolvency proceedings in their own Member State depends on the insolvency law of that Member State.
Creditors’ information and rights
The automatic recognition of insolvency proceedings opened in a EU Member State implies that foreign creditors located within the EU are directly impacted by insolvency proceedings opened in another Member State.
Upon opening of the (main or secondary) insolvency proceedings, the court or the appointed insolvency practitioner must inform all known foreign creditors. Foreign creditors are entitled to assert their rights, namely by lodging claims in accordance with the law of the State in which the proceedings are opened, without having to be represented by a professional. The Insolvency Regulation also establishes a standard form for lodging of claims.
It is relevant to note, in this regard, that under Belgian law, foreign creditors not represented by a lawyer are not compelled to lodge their claims through the Central Solvency Register (“RegSol”). They may either use RegSol or send their declaration of claim by registered mail to the insolvency practitioner. The declaration may be drafted in English.
Applicable law
The applicable insolvency law is that of the Member State where the main insolvency proceedings are opened (lex fori concursus). This law governs the conditions for the opening of the insolvency proceedings, its conduct, and its closure.
For instance, it namely determines:
Whether and to what extent the insolvent debtor is divested of its powers;
Which of the debtor’s assets are affected by the insolvency proceedings;
The effects of the insolvency proceedings on ongoing contracts;
The rules governing the lodging, verification and admission of claims and the distribution of proceeds from the realisation of assets;
The ranking of claims and the creditors’ claims and rights;
The rules relating to the unenforceability of acts detrimental to the creditors.
In principle, the lex fori concursus also governs actions directly arising from the insolvency proceedings.
However, the Insolvency Regulation provides for several exceptions to these principles, in order to protect foreign creditors’ and third parties’ rights.
For instance:
Creditors’ right to invoke set-off of their claims against the claims of a debtor” is not affected by the opening of insolvency proceedings, when such set-off is permitted by the law applicable to the insolvent debtor’s claim (even if it is not permitted by the lex fori concursus);
The opening of insolvency proceedings does not affect creditors’ or third parties’ rights in rem in respect to the debtor’s assets located within the territory of another Member State. These rights in rem are governed by the law of the State where the assets concerned are located;
The effects of the insolvency proceedings on employment contracts are governed by the law applicable to these contracts;
The effects of insolvency proceedings on contracts conferring the right to acquire or use immovable property are governed by the law of the Member State where this property is located.
Summary
Cross-border effects of insolvency proceedings (within the EU)
Debtor’s point of view
Foreign creditors’ point of view
Opening of the proceedings
Opening of the main insolvency proceedings in the Member State where the debtor has its COMI.
Foreign creditors should be informed upon opening of the proceedings.
Foreign creditors may assert their rights – namely by lodging their claims – in the Member State of the proceedings.
Under certain circumstances: opening of secondary insolvency proceedings in a Member State where the debtor has an establishment.
Creditors may petition for the opening of secondary insolvency proceedingsif allowed by the law of the Member State concerned.
Example: Creditors may petition for the opening of secondary bankruptcy, dissolution or transfer proceedings in Belgium, but not for the opening of secondary reorganisation proceedings.
Law governing the proceedings
In principle the opening, the conduct and the closure of (main or secondary) insolvency proceedings are governed by the law of the Member State where they were opened.
Several exceptions apply to protect the foreign creditors’ and third parties’ rights.
Example: exceptions exist regarding the creditors’ right to invoke set-off; their rights in rem; employment contracts; rights to acquire or use immovable property,…
INSOLVENCY PROCEEDINGS OUTSIDE THE EU
Cross-border insolvency proceedings falling outside the Insolvency Regulation’s scope are subject to the private international law of the States concerned.
Following the Brexit, the Insolvency Regulation in particular no longer applies to the United Kingdom. Consequently, the rules of the Belgian Code of Private International Law may apply, especially to insolvency scenarios affecting both Belgium and the United Kingdom.
Opening of the insolvency proceedings (jurisdiction)
a. Main insolvency proceedings
In cross-border situations outside the Insolvency Regulation’s scope, Belgian courts have jurisdiction to open insolvency proceedings when the debtor’s main establishment or registered office (for legal entities), or its domicile (for natural persons) is located in Belgium.
Insolvency proceedings initiated in third-party States are not automatically recognisedand enforceable in Belgium. If recognised, their effects in Belgium will be determined by the lex fori concursus, i.e. the law of the State where these proceedings were opened.
b. Secondary insolvency proceedings
When the Belgian courts lack jurisdiction to open main insolvency proceedings, they may still open secondary insolvency proceedings if the debtor has an establishment in Belgium.
Creditors’ information and rights
The effects of foreign insolvency proceedings on creditors located in Belgium may be dependent on whether these insolvency proceedings are recognised in Belgium. The same applies to the effects of insolvency proceedings opened in Belgium on creditors located abroad.
Foreign creditors are, of course, entitled to lodge their claims in insolvency proceedings opened in Belgium. As mentioned above, under Belgian law, foreign creditors not represented by a lawyer are not compelled to lodge their claims through RegSol. They may either use RegSol or send their declaration of claim by registered mail to the insolvency practitioner. The declaration may be drafted in English.
Belgian law also includes some measures protecting the body of creditors in cross-border insolvency proceedings by preventing individual creditors from receiving payments detrimental to the body of creditors:
When insolvency proceedings are initiated in a third-party Stateand recognised in Belgium, creditors receiving, after the opening of these proceedings, (partial) indemnification through assets located in Belgium must return the payment they received to the foreign insolvency practitioner, in order for the latter to be able to apply the distribution rules of that State;
When two concurrent insolvency proceedings are opened, one in Belgium and the other in a third-party State, creditors obtaining (partial) payment of their claim in the foreign insolvency proceedings may only obtain payment in the proceedings opened in Belgium when creditors of the same rank or category have obtained an equivalent payment in the other proceedings.
Applicable law
Belgian law generally applies to insolvency proceedings opened in Belgium and governs the conditions for their opening, their conduct and their closure. The applicable law principles closely resemble those established by the Insolvency Regulation.
Summary
Cross-border effects of insolvency proceedings (outside the EU)
Debtor’s point of view (located in Belgium)
Foreign creditors’ point of view
Opening of the proceedings
Opening of the main insolvency proceedings in Belgium if the debtor has its main establishment/registered office (legal entities), or its domicile (natural persons) in Belgium
Foreign creditors may assert their rights – namely by lodging their claims – in the Belgian proceedings.
Protective measures are provided by Belgian law to avoid prejudice to the body of creditors in concurrent insolvency proceedings opened in a third-party State.
Opening of secondary insolvency proceedings in third-party State depending on the law applicable to the State concerned.
Law governing the proceedings
In principle the opening, the conduct and the closure of (main or secondary) insolvency proceedings opened in Belgium are governed by Belgian law.
Several exceptions apply to protect the foreign creditors’ and third parties’ rights.
Example: exceptions exist regarding the creditors’ right to invoke set-off; their rights in rem; employment contracts; rights to acquire or use immovable property,…
Debtor’s point of view (located outside the EU)
Belgian creditors’ point of view
Opening of the proceedings
Jurisdiction for the opening of the main insolvency proceedings depends on the private international law of the State concerned.
The effects of foreign insolvency proceedings on creditors located in Belgium depends on the recognition of these proceedings in Belgium.
The rights of those creditors in foreign insolvency proceedings depend on the private international law of the State concerned.
Protective measures are provided by Belgian law to avoid prejudice to the body of creditors in proceedings opened in a third-party State.
Belgian courts may open secondary insolvency proceedings if the debtor has an establishment in Belgium.
Creditors located in Belgium may petition for the opening of secondary bankruptcy, dissolution or transfer proceedingsin Belgium.
Law governing the proceedings
The law governing the opening, the conduct and the closure of (main or secondary) insolvency proceedings depends on the private international law of the State concerned.
1[27] Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast).
For any questions or assistance, please contactFanny Laune[5].
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This article is not a legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this article.
Last year, our Video Game series explored the complex legal landscape covering everything from trademarks and adaptation rights to consumer protection.
But hold onto your controllers, because Season 2 is about to drop. Our upcoming episodes are plunging even deeper into the gaming universe, tackling topics like skin betting, the thrilling world of data, and diving headfirst into the AI-driven future of gaming.
Stay in the game with Season 2 – we are just getting started.
Missed out on Season 1? No worries, catch up here:
Got questions or need legal guidance in Belgium or the EU? Whether you are a game developer producer, investor, or streaming platform, Simont Braun is here to assist – Get in touch through gaming@simontbraun.eu[29]
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This newsletter is not a legal advice or a legal opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this newsletter.
