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March 1, 2024
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How funders ensure infrastructure projects are sustainable, and trade marks in elite sport

Matthew Magee

Hello and welcome to the Pinsent Masons podcast my. Name is Matthew Magee and I’ll be bringing you news and analysis from the world of business law every fortnight to help you steer your business through the challenges ahead. We’ll hear the views and thoughts of experts from Pinsent Masons and beyond about the legal and regulatory issues shaping the business world.

Today we’ll find out how infrastructure funders are boosting the sustainability of major projects and we’ll see what lessons companies can learn from a trade mark dispute in the world of elite tennis.

But first, some business law news from around the world.

Standards bodies agree AI operating principles.

Hong Kong and Chinese courts expand mutual enforcement agreement

and YouTube TikTok and X amongst video platforms to face new regulation in Ireland.

International standard setting bodies, ISO and IEC have published the first global standard for AI management systems. Standards are designed to help companies to operate systems prudently, ethically and transparently, while maintaining data privacy and information security. Standards have no legal force, but are commonly adopted in industry so that systems and processes created by different companies and in different countries can work together

Nils Rauer of Pinsent Masons said that courts like to use national and international standards to judge whether certain actions were up to date or done with adequate diligence.

The standard seeks to assist companies in taking an integrated approach to understanding and mitigating the risks of deploying AI systems.

Courts in the Hong Kong Special Administrative Region and mainland China will recognise and enforce a broader range of each other’s judgments under an agreement that comes into force at the end of January. The arrangement, which was signed by the authorities back in January 2019, works to establish a more comprehensive and streamlined mechanism for reciprocal recognition and enforcement of judgments handed down by courts in the two jurisdictions. The agreement widens the scope of the judgments that can be enforced. It also removes the requirement for there to be an exclusive jurisdiction clause and instead replaces it with a test based on a connection with mainland China or the Hong Kong Special Administrative Region.

Pinsent Masons disputes expert Mohammad Talib said that it was a positive move given the volume of commercial and business activity between the Hong Kong Special Administrative Region and mainland China.

And video services provided by some of the world’s biggest technology companies are to be subject to new online safety rules in Ireland under plans unveiled by the country’s media regulator.

The regulator has designated 10 services as video sharing platform services to be governed by a new online safety code. These include YouTube, TikTok, Facebook, X and LinkedIn. The new code is currently under development and a draft is open for public consultation.

A mountain range in Guinea in West Africa will be the subject of intense focus from minerals, experts and the construction industry in the coming years. Iron ore from Semandou is plentiful and unusually pure, which means it’s perfect for new kinds of steel, which can be made with lower environmental impact. This will enable the construction of buildings with lower embedded card.

This, the biggest mining project in the world, will begin later this year after multiple delays and setbacks and the climate for projects like this is markedly different than it was back in 1997, when the first exploration licence was issued. Consumers, regulators and governments now expect projects to operate with much greater sensitivity: to people in an affected area to animal and plant life there and to the climate. Companies then have more pronounced duties than ever in an industry not short of historical examples of the damage that can be caused.

I talked to sustainable project finance expert Hayden Morgan of Pinsent Masons about what kinds of measures a project like this needs to take and about how companies are actually held to account on sustainability and environmental and social requirements. Firstly, I asked him what sustainability requirements do to change how big projects like this one are run.

Hayden Morgan

They do provide that minimum baseline, so they protect, for example, biodiversity, they protect impacts on local communities. They ensure that there is a robust consultation process with local communities that potentially might be affected. If any local communities which are affected need to be, for example, relocated, there’s a mechanism there and a compensation aspect of us of it as well. And any mitigation and compensation measures are included as part of the project. Semandou was quite, quite an integrated, complex project in as much as there’s two areas of mining and then the iron ore gets transported through a corridor, a railroad effectively down to a port, a deep water port which is being developed on the coast. Each of those individual projects are significant infrastructure projects, but when you integrate it all together, it probably is, you know, one of the most complex and long term infrastructure projects we’ve seen for a while, even on global terms. It does mean that the contractors that are bidding for work will need to think about how they can demonstrate alignment with the various performance standards requirements and they will need to have a track record of doing this and they will need to have plans in place to consider how that they can impose the requirements from the environmental and social action plan.

Matthew Magee

A single infrastructure project is a massive, complex undertaking with waves of corporate relationships that can be hard to untangle and projects are taking place all over the world in all kinds of different legal and regulatory regimes. So what chance does anyone have of actually enforcing these obligations all over the globe? Hayden says that a single set of standards has emerged and that every project’s need for financing is what enables consensus over measures to develop and enforcement of those measures to be a realistic goal. The standards are those of the International Finance Corporation, or IFC, which is an investment arm of the World Bank.

Hayden Morgan

The IFC, they’ve got a set of performance standards as part of their sustainability framework and they cover a whole bunch of minimum expectations really for projects that the IFC themselves support or invest in. But they have become a bit of an industry wide proxy for use as minimum baseline standards, and typically in emerging markets where there isn’t so much sort of robust either legislation or application or regulation of environmental and social standards for big infrastructure projects. And the way they work is they categorise projects based on their environmental and social impact and then more of a risk mitigation framework is about doing less harm in a way they’re adopted by not only the IFC, where it is mandatory, but pretty much across the industry now. So any international financing required for, for example, a major infrastructure project or a mining project will use the IFC performance standards and the way it’s typically sort of worked through is there’s that expectation right from the outset around the project financiers and it’s it’s pretty much built into contracts right from the outset.

Matthew Magee

The decisions and priorities of these funders and investors shape the whole project, even through complicated networks and layers of subcontracting, but only when those networks are well run.

Hayden Morgan

The key element of this is it then gets passed down. So the special purpose vehicle may retain legal responsibility for affecting the the action plan, but that will get passed down to tier one contractors which then we need to pass it down to tier two contractors through the supply chain. And this is where there’s potential gaps in implementation and that’s why it’s absolutely crucial for budgets, finances, developers and contractors to understand what the obligations of the action plan, who specifically holds a certain action when they need to do it, and what monitoring. And evidence is required in order to demonstrate fulfilment of those specific actions through the supply. High chain so you can see it’s quite a complex sort of mosaic of of different obligations there.

Matthew Magee

And what what happens if it’s not done? What are the sanctions, what’s what happens to you if you just ignore these?

Hayden Morgan

Typically the project financiers are the ones that can pull the strings here and they they can basically withdraw or or in a way ultimately I guess call a contractor out and say you’re not meeting your obligations and and breach of contract etcetera and so replace the contractor – it does happen, although it’s relatively rare for a sort of main contractor to be to be excluded from a project, but there is always that sort of I guess that that outcome potential.

Matthew Magee

If the mechanics of finance have served to push environmental protection and sustainability to the heart of infrastructure project operations, Hayden and others are hoping to systematise this by creating a kind of investment or asset class that guarantees certain standards. By doing this, they hope to attract capital to that idea, ensuring that more funding goes to more sustainable projects.

Hayden Morgan

An initiative I’ve been involved with for four years or so, it’s called the Finance to Accelerate the Sustainable Transition, FAST, infrastructure label. And what this is is a label to not only capture all the IFC performance standards, but demonstrate evidence based demonstration of sustainable outcomes and a project can only obtain the label if it not only mitigates its environmental and social risk, but demonstrates a significant contribution to one of those positive outcomes. And the idea here is to create a new global asset class of sustainable infrastructure.

If those projects meet the requirements for the label there’s a number of benefits. It helps with due diligence, it helps orientate investment towards more sustainable infrastructure and outcomes, but it also then helps with for example in the secondaries market you can start to get project securitisation of portfolios, you can get indices tracking various assets and and debt and the the aim of the fast initiative is to get a global a liquid asset class of sustainable assets.

Matthew Magee

The world of tennis might allow its attention to flicker briefly away from the Australian Open this week towards the EU’s General Court, which tomorrow will issue a ruling that could have a big impact on the future earnings of those players slugging it out in the Melbourne sun. The case concerns former tennis star Yannick Noah and is about trade marks and who gets to keep control of them. It’s a vital issue for elite sports stars, who have to earn a living long after the flood lights have gone out on their playing career, and there might be some important lessons for other businesses in there, too. Sports brand protection expert Désirée Fields of Pinsent Masons told me what the case is about.

Désirée Fields

So basically, Yannick Noah, former grand slam champion, had registered his name and logo a while ago in relation to a broad range of goods and services. However, there is a clothing company in New York that also has an interest in the ‘Noah’ name, and because it seemed that that mark wasn’t in use for a while, they actually applied to invalidate it and were successful at lower level and invalidating the mark in relation to a broad number of goods and services like toys, for example, so that the mark was only maintained in relation to a very limited amount of goods. Namely, I think sweaters and polo shirts.

Matthew Magee

The clothes company is able to challenge Yannick Noah’s trade mark rights because there’s a ‘use it or lose it’ element to trade mark law.

Désirée Fields

Trade mark protection is actually the strongest IP right there is because it has potential to last indefinitely. That’s provided you pay the renewal fees, which are usually due every 10 years depending on the country. And the second point to note, of course, is that you have to keep using the mark now in most countries, for example the UK and the EU, the mark could potentially stay under register forever. When you pay the renewal fees, but if you face a third party challenge that is when it could be rolled over to non-use. The idea there is to keep the register free for other people. If something is just cluttering the register because it’s no longer in use that is not really of the general interest to the public. And so trade mark owners really have to look at what they’re doing, where their rights are fit for purpose and keep using the mark if it’s something they wish to commercialise.

So basically it’s a really good illustration of what can happen when a new brand starts out. Obviously they register in relation to a, you know, broad range of goods and services, but over time commercial intentions can change and where it really illustrates quite nicely is the need to always look at your trade mark portfolio to keep it under active review to look that you’re still using in relation to the broad range of goods and services that you may have registered for or in some cases, if you’re expanding use, you may want to expand that as well the protection. So it is very, very important for brands to sporadically monitor that their trade mark rights are still fit for purpose.

Matthew Magee

Image name and likeness rights are incredibly important for elite sports people. The most famous in the world are closely associated with huge brands – think about Tiger Woods and Nike, a long relationship that’s only just ended – and that association can only happen if you own the rights to elements of your identity. This can be hard, though. Success in sport can be sudden and extreme.

Désirée Fields

In principle, it is really important to athletes because that’s what they can commercialise and derive a lot of revenue streams from. However, what you actually find in speaking to lots of athletes depending on their stage of their career is that they don’t pay too much attention to it. And that’s quite surprising because a lot of athletes feel that it’s, for example, their name and nobody could take it away from them anyway. And so it’s really just at the top end that athletes do consider protecting it.

It is quite understandable because if you’re an athlete at the beginning of your career or just, you know, slowly rising to the top, you might not want to invest into something when you don’t know what your future holds. However, delaying brand protection can actually be risky and a really good example of that is Emma Raducanu, who won the US Open in 2021, and she became a global superstar overnight and a household name. Everybody knew who she was. And then immediately after that, there were a number of unrelated individuals who decided to register her name or elements of her name as trade marks ,as domain names. And while ultimately she did gain control over these rights again in the end, if she had taken that step earlier in her career to protect her name, and invest in her brand, and that may have been a lot easier and probably also more cost effective in the long run.

Matthew Magee

We can’t all be Emma Raducanu, but this case contains lessons for the wider business world.

Désirée Fields

There are a lot of common pitfalls that we see across all businesses in in the world that come up more surprisingly over and over again. And the main things that we really see that businesses don’t look at is for example, they look at trade mark protection and they identify a few branding elements that they may wish to protect, but they don’t review that sporadically. And actually the nature of the brand evolves and then not all elements of the brand may be protected.

Sometimes businesses as well they are in the middle of, you know, doing all the great commercial things that they’re wanting to do. They start expanding their business beyond their borders, they may add other territories, but they don’t think about expanding into those territory in terms of protection as well. So again, there might be then gaps there might be vulnerabilities in terms of other parties and other countries acquiring rights before them.

When adopting a brand, we do often find, even though very sophisticated, that they don’t carry out the necessary due diligence at the right time. So very early when you are in the conception stage of a brand, it’s really, really important to make sure you do all the necessary client searches to see that there is no other third parties that have rights in the brand. But often we find with businesses that that might come at the very last moment, just before launch or even after launch, and at that point it’s actually too late because if a problem comes up, it becomes very costly to resolve that, or maybe having to go for a rebranding process.

And then I think the other things that we often see is of course that you think that once you have a trade mark registration, that’s all that you need. But actually it’s all up to the trade mark owner to ensure that they actually take the necessary enforcement action. So sometimes you do get notifications from registries in which you, you know are informed of certain third party marks, but what you do need is a comprehensive watching service. And you need to either review that in house or appoint a lawyer to do that for you to identify any things that you might want to take action against.

Matthew Magee

Well, thanks for joining me here on the Pinsent Masons podcast. I hope you found it useful. Don’t forget to subscribe wherever you get your podcasts.

And remember that our Out-Law team of dedicated reporters are covering developments all over the world in business law every day. So to find out more and to make sure you get the news as it happens, sign up for updates at Pinsentmasons.com/newsletter.

Thanks for listening, see you next time

The Pinsent Masons podcast has produced and presented by Matthew Magee for international professional services firm Pinsent Masons.

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