Understand Your Rights. Solve Your Legal Problems
Maven Capital Partners has invested £2.5 million in Cardinality, a Surrey-based software and service provider.
Cardinality has developed a data ingestion and analytics platform called Perception that enables its customers to run, manage and derive value from datasets in real time and at massive scale.
Luke Matthews, investment director at Maven, said: “Cardinality offers an excellent opportunity for the Maven VCTs to invest into a scaling business, for which the growth dynamics of the data integration sector provide a positive outlook.
“The company has seen good commercial progress to date and its revenues are backed up by a strong pipeline and growing recurring revenue base.”
An Interview With Confidas People, Adviser on the Deal
In what capacity did your firm advise on the Maven Capital Partners investment?
Confidas People provided Human Capital Planning and Management Due Diligence on the investment, helping the investors get a good understanding of the management team and advising how to best align, engage and support the team through the value creation journey.
Did your team face any challenges? If so, how did you overcome them?
The remote working during COVID was potentially a challenge. However, it has been something we have adapted to very well and our work has become more detailed and clinical as a result. We will of course return to face-to-face meetings to a certain extent, but as remote working is so efficient it will remain an important part of how we operate. It has allowed us to expand our reach, working with more European-based investment houses efficiently and effectively.
What are your first priorities when advising on a deal like this?
In this type of deal the first thing we are focused on is the scalability of the individuals, identifying potential blockages or barriers and advising how to mitigate or manage those and making sure people are in the right roles to allow them to play to their strengths. Then we look at the gaps in the team and how best to support management on the scale-up and growth journey. We do this by getting a good understanding of track record and experience, assessing individual scalability and potential, and analysing how that picture aligns with the business’s goals for growth.
RGE Services, a fire and electrical compliance services provider primarily working with the public sector, has funded its primary buyout by securing an equity investment from YFM Equity Partners (YFM). The deal is the second from the PE house’s £80 million Buyout Fund II which closed just 12 months ago and another example of YFM’s strong regional presence, with this investment based in the South East of England.
The buyout was led by Scott Craig, managing director, who has worked alongside founder Roger Greene for the last 15 years, joining as an electrician engineer and working his way up through the ranks. Scott will be supported by incoming chair Stuart Black and by Matt Aspinall, who joins as finance director. Roger Greene will remain a shareholder and investor in the business, continuing in his current strategic support role.
The vendor was supported by Transworld Corporate Finance (sell-side adviser); with legal advice provided by Pepperells Solicitors and Keystone Law.
Delta-Simons provided specialist health and safety advice on the transaction.
An interview With Alex Houldsworth, Principal Consultant at Delta-Simons
When assessing health and safety in a transaction like this, what do you look out for?
The key focus areas for due diligence will depend on the type of business being assessed and the nature of their operations. For example, a company using and storing large volumes of hazardous materials would require detailed focus on compliance with permits and safe systems of work for chemical handling. For an electrical compliance company such as RGE, the key areas of focus for our assessment were certifications, training, management systems and risk assessment, in order to assess how the business ensures their employees are safe while working on clients’ sites.
The interview or site visit stage of the process usually provides a good initial indication of the proficiency of a company’s health and safety management team and the internal health and safety culture. A company’s ability to provide the relevant documentation in an organised manner, understand and answer questions relating to health and safety, suggests a positive culture exists. Certified management systems such as OHSAS 18001 or ISO 45001 are also an integral part of H&S management.
How vital is due diligence here? What are the consequences if it is not conducted thoroughly?
The purpose of the due diligence process for this deal was to highlight to YFM areas of the business where material liabilities may be incurred as part of the investment, as early as possible in the transaction. The main emphasis of EHS due diligence has typically been focussed predominantly on environmental aspects. However, risks and liabilities associated with health and safety can have significant repercussions and consequences in the context of a transaction.
A business with poor health and safety policies, management or culture is more likely to experience incidents and fatalities and subsequent potential prosecution, fines or even (in the worst cases) custodial sentences for directors. Assessing health and safety issues as part of the transaction process will highlight potential risks as well as opportunities for improvement in order to reduce the potential for significant costs, business disruption or reputational damage further down the line.
Do you face any challenges when conducting due diligence in this area and how do you overcome them?
One of the key challenges in due diligence is being able to identify and separate non-material issues from the more significant potential deal-breakers and communicating the consequences of these to an investor. The aim of health and safety legislation is to reduce the potential for incidents or ill health, therefore even a seemingly minor non-compliance (e.g. poor training record keeping) could have significant repercussions in the event of a serious incident. Therefore it is vital to have regular, open discussions with the client throughout the process to ensure we understand the transaction and that they understand the possible consequences of our findings.
It is also not unusual to experience some degree of hostility from a target business when asking questions about their management of health and safety. However, this can be overcome by ensuring the target company is aware of the reasons for conducting the due diligence. Our aim is not to pick holes in existing policies and procedures, but to identify risks and areas for improvement which will form focus areas for an investor and target business to work on.
What other types of due diligence might be important to consider as part of a transaction?
Alongside health and safety due diligence, a significant core element of Delta-Simons’ work is environmental due diligence (EDD), assessing the environmental compliance of target businesses, as well as contaminated land liabilities associated with current and historical site use. Other aspects we consider for property-based due diligence include flood risk, coal mining and radon.
Environmental, Social and Governance (ESG) is also becoming a crucial aspect of M&A transactions for inevstors, as private equity and investment clients are becoming more aware of the need to address the wider impacts of an investment, including climate change, diversity and equality, ethical issues, social issues and supply chain.
How has the pandemic affected due diligence in the last year?
At the start of the pandemic in early 2020, the volume of transactions slowed as investors adopted a more cautious approach due to uncertainties around COVID. However, confidence soon returned and 2020 was the most successful year to date for our transactions team.
Site visits were limited at the height of lockdown in 2020. However, we quickly adapted to new ways of working including virtual audits and meetings, and ensuring our site visits were COVID-secure.
The real estate sector saw a huge increase in the number of transactions in the last 12 months, especially in the Industrial and Logistics sector, as a direct result of the demand for online goods during the COVID pandemic. This had a knock-on effect on due diligence in this area and Delta-Simons has been involved in a number of high profile transactions both in the UK and Europe.
The pandemic and talk of a green recovery has also focussed discussions around ESG due diligence, which will form a significant part of our transactional work going forward.
Aluminium and plastics extrusion business BWC Group has completed a management buyout (MBO) in a deal led by Fortus Business Advisors.
BWC Group produces goalframes for small-sided football goals, as well as aluminium profiles for a range of industries. The company has been trading for more than 20 years and the move will allow the phased retirement of founding shareholder Guy Barker.
The MBO was led by finance director Mark Barker and operations director Danny Varley.
Guy Barker said: "I’m pleased everything ran smoothly and am more pleased that Danny and Mark now have a great opportunity ahead of them."
Lead advice was provided by Mark Standish and Patrick Faughnan of Fortus Corporate Business Advisors. Legal advice to the vendor was provided by Mark Archer of Maddox Legal and the management team was advised by Laura Taylor of Freeths.
An Interview With Fortus
How long have you been working with BWC Group, and how did you advise them on this acquisition?
We have been working with BWC Group for nearly four years, helping them with their business strategy as they reorganised their businesses onto a single site in 2019. As part of our strategic work with Guy Barker, we advised him on his succession and retirement options, which led to the MBO transaction.
What sort of factors need to be considered when working on an MBO?
The key factor for making an MBO work is a motivated and ambitious management team who are prepared to take risks to develop the business further. In Mark and Danny, there was the ideal combination. The business also needs to be profitable and with good future potential, so that a deal can be structured.
Did your team face any challenges? If so, how did you overcome them?
There were some structural changes that needed to be dealt with before the transaction could proceed, and this was managed in a logical and tax-efficient manner working closely with Guy.
What are your first priorities when taking on a deal like this?
It’s important to understand that the wishes of the owner are aligned with that of the management team at the outset, and that everyone knows their role. An MBO can easily fail if there is not a full understanding of the opportunity and the risks at the outset.
How do you ensure that there are no pitfalls in the early stages of an acquisition?
Regular meetings, taking time with all parties to clarify full understanding, and making sure that concerns are heard and addressed.
What are your tips for ensuring that an MBO is completed successfully?
Owners should explore the MBO option as part of their succession planning as early as possible. This gives time to build the team and assess the viability alongside any other considerations.
Use experienced corporate finance advisors who will explain the pitfalls and opportunities, and then guide you through the whole process.
Finally, make sure you also use lawyers who are experienced in these types of corporate transactions, so that they can provide expert support and guidance navigating the legalities of the deal.
The most significant aspect of the WIPO report is China’s leadership on filing activity. What does this mean and how will this shape international businesses and inventors?
The filing activity reflects China’s policy of encouraging innovation, assisted in part by the subsidies it provides for such innovations and IP protection. Innovation is widely considered as an essential element for a nation’s growth. This is reflected in the books Why Nations Fail (Acemoglu & Robinson, 2012) and New Asian Hemisphere (Mahbubani, 2008) where innovation and “creative destruction” were deemed essential for a nation’s progress.
Apart from China’s leadership, the WIPO report also mentions that 65% of the 2019 worldwide filings were from Asian countries. Notable of which is the lead of the Republic of Korea in resident patent applications per unit of GDP. While Asian countries have increased IP filings over the years, the WIPO report nonetheless show that the US and other Western countries have maintained their innovation and IP dominance.
All these high numbers reflect a wide appreciation of IP assets across the globe. This should translate to better policies and laws to fully protect and enforce IP rights.
The sector that dominated patent filing activity worldwide was “computer technology”, which is a good reflection of the past year. What should those in the tech industry be keeping an eye on in 2021?
The 4th Industrial Revolution continues, as the tech industry is poised to continue growing in 2021. The WIPO Technology Trends 2021 in fact focused on Assistive Technology, noting the 17% average growth rate in this sector. According to the said report, assistive technology involves information technology, data sciences, materials science and neuroscience, with the products being consumer electronic goods ranging from communication to navigation and gaming.
Other areas of tech industry though will likely continue to grow, such as the commercial use of artificial intelligence in various industries with products in this area continuing to become mainstream.
The 4th Industrial Revolution continues, as the tech industry is poised to continue growing in 2021.
How does the above impact IP in your jurisdiction?
While inbound IP filings were traditionally dominated by Western countries, recent trends show a sustained increase in inbound IP filings from Asian countries. Consistent with the WIPO report, China and the Republic of Korea have greatly increased their inbound filings in the Philippines. IP filings from the US, Europe, Japan and other countries that are traditionally strong in IP filings continue to file a high number of inbound Philippine IP registrations, however.
For patents, the Philippine IP Office has recognised global trends as exemplified by its release of specific rules governing biotech patents and information & communication technology-based patents. Graphic User Interface-based designs have also been allowed by the Philippine IP Office. This reflects the changing IP landscape, where less than ten years ago the standards for registrability of these technologies were uncertain in the Philippines.
Patent applications using the PCT (Patent Cooperation Treaty) system, which allows applicants to seek patent protection simultaneously in different countries, increased by 5.2%; how will this shape businesses IP strategies in the coming future?
Filings based on the PCT system for protecting innovation will continue to grow. The usual 30-month period for national phase entry, coupled with new International Search Agencies that are not too costly (such as the Philippine IP Office), works to the benefit of patent owners.
Every sound business IP strategy should consider the PCT system, as maximising the protection of patent rights depends on the protection obtained in countries. Patent protection in every, if not in key, market countries provides the opportunity for exclusive distributorship and licensing.
Is the above an indication of an ever-growing globalised world in the patent sphere?
Looking at the WIPO report, the increased patent filings through the PCT system is driven by China and other Asian countries. It seems that more and more countries are understanding the benefits of supporting innovation domestically, while also obtaining patent rights for them both locally and abroad.
Obtaining patent rights in various countries as an end goal can be viewed primarily as maximising the benefits provided by patent protection. In this view, the innovation is not only protected, but viewed as having the potential to generate income through commercialisation by the patent owner themselves or through licensing.
It seems that more and more countries are understanding the benefits of supporting innovation domestically, while also obtaining patent rights for them both locally and abroad.
Another view, though secondary, that can be taken in obtaining patent rights in various countries as an end goal is ensuring that research and development focus on substantial and worthwhile innovations. Having in mind that the patent application will be scrutinised by each country where patent protection is sought should guarantee in some way that the innovation is truly new and inventive and thus could withstand the rigorous patent standards of different countries. This can weed out minor innovations that may not pass the standards of various countries and thus not be commercially viable in the end.
The increased PCT system filings seem to point more towards the recognition that innovation is essential in progress and economic development rather than a globalised world.
What should businesses and inventors be taking from the report released late last year?
The tech industry will still lead in terms of innovation. Businesses should thus always be on top of developments in this area and be ready to adopt to the changing landscape.
One may look at the introduction of ride-hailing apps which disrupted the public transportation business; sharing economy schemes for room rentals disrupting the hotel industry; and online marketplaces disrupting the business of shopping malls and the vertical relationship between manufacturer, distributor and retailer. These disrupted businesses should adapt and adjust to the competition posed by the entry of these new tech-based industries. Those that have failed to adapt and adjust have resulted into business reverses and even closure.
Businesses should thus already have plans for the 4th Industrial Revolution, but they should also have an eye out for what has been described as the 5th Industrial Revolution where machine and mind will meet.
For inventors, they should be encouraged to innovate towards inventions that are truly novel and inventive and can thus be registered in various countries. This will truly maximise the benefits provided by patent laws, with their innovation possibly being the next innovation that can become an industry standard or even part of Standard Essential Patents.
What do you think will be on the horizon in the upcoming year, in the Philippines and globally?
The global COVID-19 pandemic has affected many businesses and likely the progress of many research and development projects. Nonetheless, it has also pushed innovation toward solutions to problems caused by the pandemic, whether it be medical issues or off-site work issues.
In relation to the tech industry, online commerce has practically become mainstream. With brick-and-mortar stores and malls closed and physical movement restricted, many have gone to online marketplaces, with specialised marketplaces springing about such as those dealing in second-hand items or those conducted through social media (so called “social commerce”).
While this development in online commerce provides many opportunities, IP owners should also be more vigilant in protecting their IPs. The current system of online commerce makes counterfeit items more accessible, and at the same time makes the identification of the real identity of infringers more difficult. Constant monitoring for infringing products on online marketplaces should thus be considered by IP owners.
Jose Eduardo T Genilo, Partner
Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW)
Address: 22nd Floor, ACCRA Law Tower, 2nd Avenue, corner 30th Street, Crescent Park West, Bonifacio Global City, Taguig, 1634 Metro Manila, Philippines
Tel: (632) 8-830-8000
Email: jetgenilo@accralaw.com
ACCRALAW is among the largest full-service law firms in the Philippines. Since its inception in 1972 it has grown to comprise around 170 lawyers and 170 non-legal personnel, with offices in Bonifacio Global City, Metro Manila, Cebu City and Davao City.
Jose Eduardo T Genilo specialises in Intellectual Property and Technology Law. He is involved in the prosecution of IP applications, enforcement and litigation. In 2021, he was named as an IP Expert by Asia IP, and in 2019 he was named as a Next Generation Lawyer by the Legal 500 Asia in the field of cybercrime, privacy, fraud and information technology.
From 1 January 2021, the rules of jurisdiction set out in the Brussels I Regulation ceased to be applicable. What were the most imposing changes that needed to be prepared for?
I believe this will mean furthering collaboration with specialists in other jurisdictions as we will have lost an acquired certainty for an inevitable uncertainty. The UK has become a third state for the purposes of Brussels I Regulation and as such, we cannot assume the same fluidity and recognition regarding enforcement.
Enforcement out of the jurisdiction will depend on a variety of factors which will need to be considered on a case-by-case basis. The situation will hopefully become clearer through legislation and development as issues arise.
A short-term effect is that practitioners involved in cross-border disputes with a UK/EU element will need to rely on the relevant provisions, treaties and domestic legislation and on the timing of the legal proceedings in question. It will be imperative to add clear jurisdictional clauses, especially in this initial phase and until clear precedents are set. Finally, we need to hope that the Ayala court understanding will be echoed by the EU courts. Early signs to that effect are mixed.
What needs to be shown in order to obtain permission to serve out of the jurisdiction?
The 10,000 feet rule is that documents must be served within the jurisdiction, i.e. England and Wales. There is no absolute right to serve a claim form out of the jurisdiction without the permission of the Court. Again, a clear service clause in an agreement could be of great assistance to avoid costly debates and cost of service.
The ability to serve a claim outside England is based on the fact that the court has jurisdiction to determine the dispute between the parties. Consideration needs to be given to the possible jurisdictional challenges, a good practice in any event. It will not sit well with the client to be turned down at this stage of the proceedings.
In determining the application, the court will need to be satisfied that three requirements have been met: whether there is a serious issue to be tried, whether there is a good arguable case and whether the court is the appropriate forum.
What role does the Hague Convention on Choice of Court Agreements 2005 play here?
A great role indeed! The position of the UK is that the application of the Convention vis-a-vis the UK will continue without interruption. It should be noted that the EU Commission has recently taken a different approach from the UK as to whether the Convention applies to exclusive jurisdiction clauses in favour of the courts of England and Wales that were entered into prior to 31 December 2020.
The Private International Law (Implementation of Agreements) Act 2020 received royal assent on 14 December 2020 and achieves the domestic implementation of the Hague Conventions. Therefore, service using this mechanism is available as it was before Brexit took place, and is of greater importance now as other avenues may no longer be available.
Post-Brexit, enforcing English judgments throughout the EU may be marginally more difficult than it currently is under Brussels Recast. What difficulties may be presented here?
From 1 January 2021 onwards, parties with an English judgment wishing to enforce within the EU will no longer be able to rely on direct recognition and enforcement, which was previously afforded to them under the Recast Brussels Regulation. Therefore, added difficulties arise in determining under which mechanism enforcement will be recognised. Options to be considered include the Hague Convention, bilateral treaties and local laws of the specific EU Member State.
In a nutshell: we will need to have local specialist knowledge in each jurisdiction in which we are attempting enforcement. This may affect times and costs for the clients and will likely also add an element of uncertainty increasing perceived resolution of the matter. Last month we had a valid order to execute in France and the French court requested additional documents to be translated, at great cost to the client, to rule that they needed more time to consider. In the meantime, the French entity we attempted to enforce upon entered administration, putting us in a queue of creditors as the French Court had not yet validated the UK order. Luckily with some persuasion, reason prevailed for the client, but it is certainly a sign of things to come.
In a nutshell: we will need to have local specialist knowledge in each jurisdiction in which we are attempting enforcement.
What factors may ameliorate these difficulties?
Being strategic from the start of the matter and ideally from the contractual phase. Having a good team of Strategic Alliance Partners in the local jurisdiction will certainly be advantageous, saving costs and time for the client. We have focused the development of ASV Law to that effect and early signs that it was the accurate move are already showing. A deeper understanding of the client’s real goal will help in defining where to start proceedings, as sometimes it may be worth bypassing the UK Courts altogether to secure execution if we identify a risk factor, such as administration or weak economic position of the defendant. Winning a case and not being able to execute the order is great for the lawyers (a win is a win) but often pointless to the clients!
Simon Vumbaca
ASV Law
Address: 1 Knightsbridge Green, London, SW1X 7QA
Tel: (+44) 020 7993 5450
Email: info@asvlaw.com
Website: www.asvlaw.com
ASV Law was established by Simon Vumbaca in 2011 and is an international law firm based in Knightsbridge, London. It delivers corporate, commercial and litigation advice to global clients, bringing parties together to facilitate settlements and mediation.
Simon Vumbaca is an award-winning lawyer with over 25 years of international experience and a reputation for delivering substantial corporate and commercial sector success. Qualified in multiple jurisdictions, Simon offers international clients strategy-led complex cross-border litigation and arbitration advice with great success.
Could you give a basic overview of the oil and gas sector in Libya and the role of the National Oil Corporation of Libya?
The major oil discoveries in Libya were made under the Petroleum Law No. 25 of 1955 which introduced two contractual models: The Preliminary Reconnaissance Permit (which is merely a seismic option) and the Deed of Concession. The Law authorised the Minister of Petroleum to issue Petroleum Regulations implementing the provisions of the Petroleum Law and detailing its various aspects. Nine regulations were issued. The only ones still in force today are Regulation 1 dividing the country into four petroleum zones, Regulation 8 on Conservation of Petroleum Resources and Regulation 9 on Financial, Administrative and Technical Control for the Preservation of Oil Wealth. Other forms of contracts such as the joint Venture Agreements and the Exploration and Production Agreements were introduced by Law 24 of 1970 establishing the National Oil Corporation and decree 10/1979 Re-organising the National Oil Corporation.
Oil and gas is the biggest sector of the Libyan economy, accounting for 60% of its GDP. What legal issues often arise in bidding for contracts in this area?
Since Libya abandoned the direct negotiations for awarding petroleum licenses in 2005 in favor of public bidding rounds, the legal issues were reduced to compliance with the pre-qualification requirements, including the form of the bidding bond and the formation of consortium among the bidders. The applicability of Libyan law, including Petroleum Law, as the governing law of the agreement was also of concern to new participants.
What advice do you often give to companies bidding for Exploration and Production Sharing Agreements (EPSAs)?
The advice we often give to companies bidding for EPSAs is to be transparent in dealing with NOC and avoid any irregular ways and means throughout the process, in particular in collecting technical data on the blocks offered in the relevant bidding round.
Your firm has been advising exploration and production companies for three decades. How has the legal landscape of the oil and gas sector changed during that time?
One major change since 1990 was the abandonment of the direct negotiations in awarding exploration and production licenses and adoption of public bidding instead. This change introduced a high degree of transparency to the process and heightened the competition among the international oil companies, including the medium-sized ones.
The advice we often give to companies bidding for EPSAs is to be transparent in dealing with NOC and avoid any irregular ways and means throughout the process.
What do foreign companies often fail to understand about negotiating contracts in Libya’s oil and gas sector?
Since the introduction of the bidding rounds there are no negotiations of the contractual terms, as the model contract is attached to the bidding documents with no possibility to change its provisions. NOC conducts clarification rounds to answer questions on technical, financial and legal issues. From our experience, we can say that among the common legal issues that companies request clarification on is the following:
What provisions of the Petroleum Law and the Petroleum Regulation would apply to the EPSA? This question arises because the Petroleum Law deals mainly with the deed of concession. However, a few provisions continue to apply to the EPSA. Among them: a) Article 12 regulating the use of excess capacity in pipeline and terminal facilities; b) Article 16 on the exemption from certain import and export duties and c) Article 22 imposing certain penalties on violation of the law, especially in the events causing loss or dissipation of hydrocarbons or causing damages to petroleum reservoir as a result of failure to observe the provision of this Law and regulations issued thereunder. Most of the clauses of Regulation 8 are applicable to the EPSA. Some clauses of Regulation 9 also apply, such as the Clause introducing the formula of the pipeline and terminal tariff for use of surplus capacity and the Clause defining the operating and administrative expenses.
Abdudayem Elgharabli, Partner
MKE Lawyers
Address: Mukhtar, Kelbash & Elgharabli Attorneys-at-Law, Magta Alhajar Street, Dahra / PO Box 1093, Tripoli, Libya
Tel: (+218) 21 333 2665
Fax: (+218) 21 333 1650
Email: info@mkelawyers.com
Website: www.mkelawyers.com
The Tripoli-based Libyan law firm Mukhtar, Kelbash, Elgharabli & Abdulaziz ("MKE") was established in the early 1990s by Mahmud Mukhtar and Bahloul Kelbash following the liberalisation of private legal practice in Libya. The firm's partnership was further widened with the addition of Abdudayem Elgharabli in 1992 and Ahmed Abdulaziz in 2014. MKE provides legal support to Libyan and foreign clients in the areas of oil and gas, corporate, litigations and international commercial transactions involving Libyan interests, Labour Law, Civil Law, Commercial Law and Administrative Law.
Abdudayem Elgharabli is a Partner at MKE Lawyers and carries a wealth of experience in Petroleum Law. Between 1978 and 1992 he served as Senior Advisor and later General Counsel to the National Oil Corporation of Libya. He has also provided legal support to major international investors as well as oil and construction companies looking to begin projects in Libya.
Witnesses are usually outside of their element when being questioned by an attorney. What is different for them in this scenario?
I always tell my clients that testimony – whether it is deposition or trial – is a game with its own unique set of rules. These rules are unlike anything they have ever come across. No matter how much they may agree or disagree with them, they have to learn the rules and play by them if they want to prevail.
Their “job” is to testify confidently in this tightly constrained arena. One of the biggest challenges is the restrictive nature of testimony. Businesspeople especially are used to having some degree of control. But, at trial, they never play offence. Their job is only to answer questions. It can feel like they are continually at the mercy of someone else’s agenda and timetable. In deposition, it is much more restrictive because the goal is to tell as little as possible.
Additionally, witnesses need be on their best behaviour throughout. This can be especially hard in cases where your witness is angry, frustrated or feels justice is not on their side.
How can an attorney ensure their witness is prepared for these elements?
In my experience, the biggest challenge for attorneys is in diagnosing their witnesses’ weaknesses. What is keeping them from delivering case-winning testimony? Is the client scared, worried, talking too much, defensive, abrasive, having a hard time remembering important details, inarticulate, using problematic body language? In my decades of experience, these are only symptoms of deeper problems. Telling the witness to stop talking, to stop being afraid, work harder at remembering, or sit up straight and make better eye contact – does not work! You must dig deeper and diagnose where the surface symptoms come from. Then and only then can you resolve these problems.
I always tell my clients that testimony – whether it is deposition or trial – is a game with its own unique set of rules.
Here is an analogy: a patient shows up at the doctor’s office with tingling or numbness in their fingers. To diagnose the problem, the doctor has to look beyond the fingers for the genesis of the problem. Generally, they look for nerve damage in the elbow or neck. The same theory is true with witnesses.
Yes, that takes time and finesse. So, I developed a “diagnosis sheet” I use with new clients. It is divided into three sections: 1) what is going on in their thinking, 2) what is showing up in their actions or behaviour, and 3) what emotions are affecting their behaviour or communication. There are five or six key symptoms in each area. Email me and I will be happy to send you a copy. Early and proper diagnosis is the only way I know to solve the underlying problem and keep it from rearing its ugly head under the duress of deposition or trial.
How important is confidence here? How can a witness work on their confidence before trial?
Confidence is the single biggest – and most elusive – challenge for witnesses. So often my clients are searching for the “right answer,” the right thing to say. As though, if they knew what opposing counsel was going to ask, then everything would be ok. However, it is not about knowing the right answer. It is about feeling confident that no matter what question is asked they can provide a thoughtful answer that supports their case.
Luckily, confidence is a skill that can be built. It is done by learning a new skill, practicing, evaluating progress, refining, trying again. That is what the best athletes, musicians and actors do. The world-class pole vaulter runs the approach, plants the pole and vaults. Over and over. Each time evaluating what worked, what did not, refining their technique. Each time building confidence. Guitarists learn notes, then chords, playing them over and over. Practicing the nuances of the instrument, becoming more confident in achieving the sound they want.
The same holds true with witnesses. They can learn new skills and practice them to build confidence. For example, here is how I work with clients to learn how to answer briefly, not lecturing. I would ask: “Tell me about your last vacation.” One client went on for eight minutes (really)! My reply: “Make it shorter.” He cut it down to 3 minutes. My reply: “Make it shorter.” Again and again. Until he finally said: “We went to Hawaii.” We worked on simple questions for an hour until no matter what the question was, he could pause, think, and confidently answer in a very short sentence. Now we applied his new-found skill and greatly enhanced confidence to the tough questions for trial. He aced his testimony. I use this drill-the-skill technique to help witnesses learn to listen to questions, learn to pause and think, and learn to breathe and control emotions.
This kind of diligent practice builds confidence that shows up in dramatically improved body language, attitude, and overall impact of testimony.
Confidence is the single biggest – and most elusive – challenge for witnesses.
What are hijacking tactics and why should witnesses be aware of them?
The principle of hijacking is based on the witness’s brain’s fundamental need to protect them. When their brain senses any threat (from opposing counsel), it instantly jumps into survival mode. It shuts down all their higher-level logical thinking and brain power is focused on fight-flight-freeze defensive responses. Their body is flooded with hormones that narrow vision, decrease hearing and force blood flow to body systems in order to defend themselves. It can take from 20 minutes to two hours to regain logical thinking, which is devastating to a witness on the stand.
The four key triggers to watch for from opposing counsel are 1) aggression, 2) humiliation, 3) confusion and 4) negative facial expression. Sometimes it is a constant assault during cross exam. But with a tender witness I have seen it as simple as: “Mrs Howard. Really! Are you sure it was Tuesday the 15th when you signed the agreement, not Monday or Tuesday the 22nd? Wasn’t that important enough that you would have remembered?” while counsel shakes his head, huffs and rolls his eyes. I have seen artful counsel hijack sophisticated and articulate medical experts and turn them into defensive, blabbering fools.
Countering hijacking is tough. It is not passive. It takes active training. Training your witness to recognize the triggers, then develop their own active internal dialogue to neutralise the effect of the triggers. Yes, it can be time-consuming. But it will save your case.
What part does body language play here?
The spotlight is on your witness. Every movement, every nuance, from the top of their head to the tip of their toes is being judged – whether that is by opposing counsel, the jury, or the judge. In just the first few seconds, people make a hundred unconscious nondecisions about your witness – are they smart, honest, trustworthy, approachable, open or closed, guilty or innocent?
Body language, together with tone of voice, makes up their nonverbal communication, which is about 90% of what is communicated. It is the yardstick by which their words are judged. Which means that if there is any incongruency between body language and words, the listener (jury) always defaults to body language. A scared or worried witness can be interpreted as lying. I have seen a jury ignore tentative or meek testimony from an expert. In another case, a jury took a dislike to a curmudgeonly-behaving plaintiff, ruling in favour of the much weaker case of the defendant.
Do you think all witnesses should be trained?
When there are millions of dollars on the line or the fate of a business or child custody or a reputation, why would you not do everything you can to ensure the best possible outcome? I have never met a witness who could not benefit from some polishing. Even sophisticated businesspeople and experienced expert witnesses can always get better. That is why athletes, musicians and actors have a coach – to show them where and how they can fine-tune their performance.
How can you train witnesses to build new habits in order to be ready for trial questioning?
Habits are all about repetition, building new neural pathways in their brain. The more they do something, the more ingrained it is. And the easier it is to depend on it in a stressful situation. Start early – three to four weeks before testimony. Practice diligently until it is second nature.
Deborah Johnson, MC
President of High-Stakes Communication, LLC
High-Stakes Communication, LLC
Address: 1634 E Echo Lane, Phoenix, AZ 85020-3922
Email: deborah@high-stakescommunication.com
Telephone: +1 602 216 0049
About Deborah Johnson
It’s straight-forward. My passion is helping your witnesses communicate with influence and impact. I’m a six-time EMMY Award-winning television producer with a Masters degree in cognitive psychology. I’ve developed strategies and proven practices to help your witnesses think clearly and answer articulately. To help resolve emotional and behavioral issues. To give them new skills to testify with confidence.
Autonomous vehicles in particular may require great changes in the approach to IP. What changes do you foresee on the horizon?
Indeed, the automotive industries are currently facing enormous, far-reaching changes. Digitalisation will lead to completely new concepts of automotive production and transportation not only regarding the technical details but also regarding future customers and customer behaviour; the individual customer will be replaced by groups of customers. These groups of customers will necessarily have to organise themselves, for instance, in sharing systems. This can lead to entirely new strategies of patenting. Under certain circumstances, the patenting strategy could then be aimed not only at producers of automotive systems but also be developed with regard to hiring companies that may be organised in completely new ways.
Regarding the technical details of automotive, however, the patenting strategy will remain the same. Intellectual Property, and patents most prominently, will still be the dominant tool to secure leadership within this specific market for a limited period.
However, patenting strategies of technical details of autonomous driving will be similar to the patenting strategies of IT and telecommunication companies, so that internal decision-making processes and the evaluation of innovation and know-how will get closer to the strategies known by the IT and telecommunication companies.
Autonomy requires innovations in artificial intelligence, mapping, sensors and connectivity. Is the law up to speed in respects to the fast-paced nature of AI?
As I have pointed out in a recent article in a publication by the “Innovation commission” consulting the German Government, I am convinced that artificial intelligence will lead to a boost of diversity in innovation, comparable perhaps with the start of computation and the technical revolution triggered by it after the Second World War. With the growth of artificial intelligence, two areas of law will move more and more into the focus of jurisdiction. On the one hand, there is innovative success, until now and in all current law systems worldwide judged on the basis of the individual performance of the average craftsman, hence the performance of a human being. Will the judgement be the same if the invention was produced by an artificial intelligence? Will the height of an unprecedented invention still be a valid criterion for the exclusive (although not eternal) rights of a patent?
Another point in need of clarification will be the question of who will be the owner of the intellectual property behind an innovation that might have been created to a far extent, or even entirely, by an artificial intelligence. Today, human beings are the creators of inventions either by hard work or by sudden insight. Hence, currently, most legal systems worldwide ascribe the intellectual property of an invention to the person behind it or, in the case of an invention made in the context of dependent work, their respective employers. How about inventions made by processors? Will the invention generated belong to the owner of the processor or the developer of the software behind the artificial intelligence? Or, indeed, to the person who came up with the task that made the processor develop the invention? These are just some of the highly relevant questions that will come up as soon as artificial intelligence becomes more dominant in the field of innovation.
Today, human beings are the creators of inventions either by hard work or by sudden insight.
Much of the current investment is in areas that IP protects poorly or patchily from jurisdiction to jurisdiction: computer programs, computer generated technology, data and business models. Do you think this will cause more emphasis to be placed on trade secrets and confidentiality?
Secrecy is a central tool for the protection of competitive advantages. Over the last few years, legislation has done a lot to guarantee the protection of secrecy within the European Union. On the one hand, the protection of know-how has been officially acknowledged. On the other hand, the abuse of secrecy has been tackled as far as a certain degree of documentation has become obligatory, so that participants in the market will not be withheld unduly from developing their own ideas. New insights from information that is not under secrecy will simply not be protected.
How ‘peaceful’ is the automotive sector in terms of IP disputes and litigation?
In my experience, patent infringement litigations fought out openly, i.e. publicly, are rare and random. Companies simply know that conclusive patent infringement claims can never entirely overcome disadvantages in the market. However, the market put before the actual automotive production, i.e. the market of automotive suppliers, is fought over fiercely. This market is under pressure not only by more and more restrictive price policies within the automotive industries but also by the density of innovation in this section. As such, in the field of automotive, intellectual property is one of the most essential elements of creating a safe space for company-owned know-how and innovation while at the same time fighting off imitators and competitors as well as potential take-overs.
Do you see this changing with the rise of innovation, especially for autonomous cars?
It is perfectly possible that universities can gain essential power in the field of intellectual property, especially as soon as the automotive industry will increasingly have to adapt to the digital economy. The digital economy is profoundly characterised by infringement litigation – perhaps due to the much more rapid push of innovations and by far shorter product life cycles.
Nils T F Schmid
Boehmert & Boehmert
Address: Pettenkoferstrasse 22, 80336 Munich, Germany
Tel: +49 (89) 55 96 80
Fax: +49 (89) 55 96 85 090
Email: n.schmid@boehmert.de
Nils T F Schmid specialises in traditional mechanical engineering, defence, and artificial intelligence. For his clients, especially medium-sized companies in Germany/Europe as well as Asian and American corporations, he identifies the best possible protection of their innovations. He drafts, develops and defends European and global patent strategies and sees to their implementation with regard to the building up and management of successful patent and design portfolios.
As one of the largest and most renowned law firms for Intellectual Property in Europe, BOEHMERT & BOEHMERT offer their clients "everything in IP" from a single source. From advising on patents for technical inventions to protecting designs and trademarks to copyright, antitrust and competition law. In all classical scientific and engineering disciplines, in traditional and young industries, across national borders.
How does mental health impact family law cases?
Mental health concerns may be particularly impactful in family law because this is the area of law that guides married couples through their divorce and unmarried parents through child custody and child support battles when they separate. Ending a marriage or a relationship may cause any person, even if they do not suffer from a diagnosed mental disorder, to become distressed, depressed, or abnormally anxious for a significant period of time. If you add this stressor onto someone’s plate when they already suffer from a mental illness, they may react in a range of ways, some of which will negatively impact their case either temporarily or permanently. For instance, a clinically depressed party, without proper treatment, may start to self-medicate with drugs or alcohol, causing the other parent to point out their sudden shift in behaviour, using their consumption as justification to limit that parent’s time with his or her children. This result may further exacerbate and prolong a problem that was situational and temporary. In family law cases, it is commonplace for people to be at their lowest just as the stakes are highest.
Have you seen a shift in how family law attorneys and judges approach the topic of mental health and if so, how has this impacted the family law cases you work on?
There has been some progress in how our industry approaches this topic, but it is not as discerning or consistent as it could ideally be. Some attorneys are better equipped to handle clients with mental illness than are others, and the same goes for judges. Some attorneys understand that their clients may be suffering from a mental disorder even though clients will not voluntarily confirm it, or even know they are likely suffering from a diagnosable and treatable condition. Overall, I believe that societal efforts to lessen the stigma around mental illness have enabled clients to be more willing to participate in individual therapy, co-parenting counselling and reunification therapy, or seek other professional behavioural help for themselves or their children when they agree that would benefit them or their children. There also seems to be more widespread openness amongst family law attorneys to encourage their clients to seek professional assistance, tempered sometimes by worries about how receiving help may make clients “look”.
Some attorneys are better equipped to handle clients with mental illness than are others, and the same goes for judges.
Have you noticed any instances when mental health considerations are used as a tool to impact the trajectory of a family law case? What impact can this have on clients?
Definitely. Many litigants are quick to throw around terms like “psychopath”, “unstable”, “crazy”, or “bipolar”, even when there is little in that person’s history or behavioural patterns to support such a description. People are understandably emotional and upset once they get to a family law attorney, but these labels are frequently used without medical merit. When litigants use these descriptions of their exes in written pleadings, they are usually incorporated with the intent to paint the exes as abusers, unfit parents, or both. Ironically, in cases where one or both parties have actually been diagnosed with a mental health disorder, those parties rarely reference it in their pleadings and judges will rarely come to know that mental illness is a factor in the case. Oftentimes litigants seek that their ex undergo a mental health evaluation just so they can plant a seed of concern about their opponent’s ability to parent in the judge’s mind. This can trigger unnecessary animosity between parties, prolong cases, and deflect from the most important issues in a case.
Is the legal industry equipped to determine when mental illness plays a part in family law cases?
Not as much as it could be. I think parties would benefit more in the long term if the law differentiated between people with and without mental health disorders, particularly when it comes to certain remedies offered by Domestic Violence Restraining Orders. If a party seeks a Domestic Violence Restraining Order against someone they live with, the court can order the non-applicant to move out immediately. This happens frequently. It is undeniable that this remedy is appropriate and necessary in many situations to help prevent against real and serious harm. I do not wish to downplay their importance or usefulness - Domestic Violence Restraining Orders save lives. However, currently, the law does not treat a true abuser differently from someone experiencing a psychotic break or someone experiencing a temporary mental breakdown.
Many litigants are quick to throw around terms like “psychopath”, “unstable”, “crazy”, or “bipolar”, even when there is little in that person’s history or behavioural patterns to support such a description.
Imagine a couple of limited means – Jane and Joe - have lived together for years, maybe even decades. Joe begins experiencing symptoms of mental illness, and these symptoms eventually become more pronounced. In response to Joe’s foreign behaviour, Jane seeks a Domestic Violence Restraining Order against Joe and requests a move out order. Because the burden of proof is low and because the Domestic Violence Protection Act defines “abuse” very broadly, it is likely that the court will grant Jane’s request and order Joe to move out immediately. To comply with the court’s order, Joe needs to move out immediately, or, if he is served while outside his home, he is forbidden from returning to the home at all, pending the hearing.
For someone experiencing a mental hardship, this remedy is particularly harsh, and will likely worsen their condition. Without a home to return to and without a support system, people with serious mental disorders who have been expelled from their homes may end up homeless, turn to substance abuse, and may suffer worsening symptoms. It would be great if our laws could differentiate between those with and without mental illness so that laws designed to protect people do not end up hurting others.
The United States Congress passed legislation to designate 988 as a national mental health crisis hotline. What impact do you think this will have?
I think this will have a tremendous effect on getting people – family law litigants or not – more appropriate help, which will hopefully improve how parents take care of themselves, each other, and their children in the course of their family law case and beyond. As it stands, people call 911 for any and all emergencies, and sometimes for no emergency at all. Slated to go into effect near the end of 2022, people experiencing suicidality, or any range of mental health or substance abuse crises will be able to call 988 to receive a more nuanced crisis response. From those experiencing a mental break to others experiencing situational depression or anxiety, this new resource will be designed to connect them to appropriate care, giving people the opening to receive treatment and get better, if they are open to it.
Though it is hard to predict how exactly this will impact the practice of family law in the future, I believe it will change how litigants act, how lawyers advise their clients, and how courts view a case with a 988 history. I hope that introducing this nationwide resource will help the public better understand the severity of mental illness, its pervasiveness, and that it will make litigants think twice before they involve law enforcement and crisis response teams as a way to create a paper trail against their opponent in their family law case.
How should family lawyers be approaching these changes in order better serve their clients?
Family law attorneys should try to follow major changes like this one and inform their clients of their options, once these options become available. Unlike other areas of law, family law litigants may be particularly in need of other professional help, and it makes sense for family law attorneys to inform their clients of the range of options and help that exist.
What more needs to be done or changed to help family law cases progress in the most appropriate manner for clients?
The shortcomings of family law practice and litigation in preserving the interests of those with mental health disorders seems to stem, at least partially, from a lack of understanding of the nature of chronic mental illness, the ways such illnesses can manifest, and what can aggravate their symptoms. One in five people in the United States suffers from a mental illness. This means that many litigants, attorneys, and judges that preside over these cases have experienced, or know someone who has experienced mental illness. Taking the initiative to educate ourselves about mental illness will go a long way towards understanding how to better counsel clients in crisis and will allow us to better discern when litigants are using someone’s plight to further their strategic interests.
Monica Nemec, Senior Associate
Hoover Krepelka LLP
Address: 1520 The Alameda Suite 200, San Jose, CA 95126, United States
Tel: +1 408 947 7600
Fax: +1 408 947 7603
Email: Monica@hooverkrepelka.com
Hoover Krepelka is a service-oriented family law firm based in San Jose, California. The largest law firm in Silicon Valley that tackles family law exclusively, their lawyers share a combined 130+ years of experience and strive to deliver excellence in client service.
Monica Nemec: I am a Senior Associate at Hoover Krepelka, LLP. I am a first generation American, born to two Czech parents, and a native Californian. I am a native Czech speaker, but also speak French fluently as a result of attending bilingual schools through the end of high school. I have always been interested in people’s personal lives and interpersonal dynamics, so, very early on in law school, I knew that family law was the natural choice for me. I practiced family law for two years after graduating before returning to school to complete my master’s degree in Public Policy. I wanted to understand how the laws that lawyers are required to interpret and apply, were made. My interest in behavioural health led me to become the Director of National Policy for one of the nation’s leading behavioural health providers for a couple of years in Washington, DC. Deciding to return to the practice of family law, I now have a heightened interest in how mental health plays a role in family law litigation.
What are the major differences between the EPO and USPTO approach to patenting and how can you develop global portfolios despite them?
The US is actually becoming more like the EPO in its approach, but differences still exist, particularly in software, AI and medical devices. Leaving aside minor differences in claim form, the key point is to make sure there is a story that can be told which will work in each jurisdiction, and that each specification has enough of the right “hooks” to let it be told without unhelpful components. We often work with US attorneys to reshape and remove red flags for Europe before they file their international applications. Going the other way, it is important to know what you can try that you cannot in Europe or the UK and be bold.
How long can the patent application process take? Does it vary significantly between the US and EU?
The process can take 3-4 years but there are ways to accelerate it, particularly in Europe and the UK, and at a cost in the US if you set out to do so. There is variation between technologies. However, because we are all experienced practitioners, we are happy to pick up the phone to examiners – many of whom we have got to know over the years – and this can cut times and costs compared to the traditional approach of having associates crank out serial form responses.
What are the common pitfalls that patent applicants encounter?
Often there is not a realistic appreciation and communication of what might be granted of commercial value. Searching is never easy or cost-effective and a lot of advisors are reluctant to speculate what might be out there if a client does not tell them, often leading to unrealistic claims that set off on the wrong path or run out of fallback positions. It is important for the patent attorney not to take an academic approach but a commercial one.
How has the patent application process changed during the pandemic?
An obvious change is the move to hearings by videoconference, which has had some pushback in contentious matters which some may have been following, and IK-IP has filed an amicus brief at the EPO Enlarged Board of Appeal which has attracted support. Other than that, it is largely business as usual and there are happily not the significant delays there might have been. Offices have generally responded well and pragmatically to the challenge.
It is important for the patent attorney not to take an academic approach but a commercial one.
You have a great deal of EPO opposition experience – can you tell us what value they have for clients?
An EPO Opposition is a great way to keep your competitors’ IP in trim and stop it encroaching on your territory. Patents in particular can be filed anonymously and there is little downside as opponent, importantly with no link to infringement. The cost is a fraction of that of litigation, perhaps as little as £5-10k to file one. Conversely as a patentee faced with an opposition, it is really important to be strategic, particularly with changes in appeal procedure, and not treat it simplistically as errors or omissions may be hard or impossible to recover on appeal.
Ilya Kazi
IK-IP Limited
Address: 201 Borough High Street, London SE1 1JA
Tel: (+44) 020 3805 7765
Email: ilya@ik-ip.com
Website: ik-ip.com
IK-IP was founded in 2020 to offer what observation suggests works best in IP. They benefit greatly from an experienced strategist to foresee latent problems and appreciate the business relevance and value of IP assets even for apparently routine matters. IK-IP’s ethos is to work collaboratively and is happy to dovetail with other law firms, whether in the UK or overseas, to bring specialist expertise to bear to complement existing capabilities.
Ilya Kazi has been practicing as a UK and European Patent attorney for nearly 30 years and he is a qualified litigator. After a brief spell in a Silicon Valley firm, he oversaw the growth of a small UK firm to approximately 200 people, winning numerous awards and being personally involved in over 4,000 patent applications as well as numerous oppositions, appeals, and litigation.
