I just read a terrific post by Mirriam Seddiq, an American defence attorney, titled "The Law, a Love Affair of Sorts" about her love affair with the law and the difference between how law students experience legal practice and what it is like when you are actually at the front lines. It is the sort of post law students should read because law school rarely prepares students for what legal practice is like after they graduate. Seddiq writes from the perspective of a criminal defence attorney but her observations are relevant to virtually all areas of legal practice:

But, here's the part in this post where I tell you what's different about being a real lawyer and what I wish I had known in law school. Because despite the fact that I was playing lawyer in law school, reality still hit like a ton of bricks. Ready for it? Here's what was different:

The people. The responsibility for the people. Your clients. Their families. It is, sometimes, overwhelming. When you sign up for this, you sign up for a fight each and every day of your life, whatever side you are on. People, these people, they look to you. You are their soldier.

My first experience with commercial legal practice as a candidate attorney was very much behind the scenes preparing documents, running around town delivering and picking up documents and attending meetings with my principal. It was quite a learning curve in those first two years and that learning curve hasn't flattened out yet after over a decade out of law school in law firms. What I find now is that I am still learning more about how to practice law, develop better relationships with clients (and sometimes how those relationships can be soured) and how to run a better law firm. Oh, there is also all that law which keeps changing, especially in my area of expertise.

It is a stressful career choice and is not at all what I expected it would be when I was working my way through law school, dreaming about what it would be like to be an attorney out in the world. I probably wouldn't have been quite so arrogant straight out of law school if I had an inkling of what was coming.

Like many lawyers I have often wondered what I did to deserve the stress and angst of this profession and spent many hours in my previous firm looking for a way out of the legal profession. Leaving to start my own firm changed my perspective on legal practice. What I learned as I built up my practice is that although we, as young lawyers, need to be exposed to a broad cross-section of legal work, the ugly and the exciting, we really begin to appreciate why we chose to go to law school when we find an area of work we are passionate about. Like any profession, finding the work you are passionate about makes all the tough stuff worthwhile and your work becomes less of a job and more a part of who you are. It is even possible to look forward to getting back to the office on Monday morning!

It sometimes seems that one of FIFA™'s main pre-occupations during the World Cup™ is brand management and ambush marketing. I thought it might be helpful to explore this concept of "ambush marketing" and how it impacts on the World Cup™ in South Africa.

There are a number of relevant and useful marketing resources which define the term “ambush marketing”. The following examples are particularly helpful in understanding this term:

Wikipedia:

Ambush marketing is a marketing campaign that takes place around an event but does not involve payment of a sponsorship fee to the event.[1] For most events of any significance, one brand will pay to become the exclusive and official sponsor of the event in a particular category or categories, and this exclusivity creates a problem for one or more other brands. Those other brands then find ways to promote themselves in connection with the same event, without paying the sponsorship fee and without breaking any laws.

The UK Government/Intellectual Property Office:

Ambush marketing generally occurs when one brand pays to sponsor a large-scale event (usually a sporting event) and a rival brand attempts to associate itself with the event. A marketing campaign takes place around the event but does not involve payment of a sponsorship fee to the event organiser.

The most notable example of ambush marketing occurred at the 1996 Olympic Games in Atlanta, when a sportswear company avoided paying a multi-million dollar sponsorship fee, but successfully mounted a marketing campaign by plastering the city in billboards, handing out free banners to spectators and erecting an entertainment centre in its own name overlooking the stadium. Though this prompted large sporting organisations such as FIFA and the IOC (International Olympic Committee) to adopt anti-ambushing strategies, ambush marketing has become more and more widespread, possibly because for some companies it is the only way to compete.

To protect official sponsors, event organisations can insist on certain criteria being fulfilled before a city or region are considered or awarded a major event.

Brandchannel.com:

Ambush Marketing Steals the Show Ambush marketing – a term often hissed in industry circles – occurs when one brand pays to become an official sponsor of an event (most often athletic) and another competing brand attempts to cleverly connect itself with the event, without paying the sponsorship fee and, more frustratingly, without breaking any laws. Ambush, or guerilla, marketing is as undeniably effective as it is damaging, attracting consumers at the expense of competitors, all the while undermining an event’s integrity and, most importantly, its ability to attract future sponsors.

The common theme is that an organization attempts to take advantage of the publicity around an event by directly or indirectly associating itself with the event despite not being a paid sponsor of the event concerned. By doing so the organization seeks to secure a similar benefit to that obtained by paid sponsors without incurring the associated costs. Doing so can also negatively impact on the relevant event’s branding and the organizer’s ability to secure paid sponsors for future events. This would almost certainly have a financial impact on events’ feasibility as they are modeled.

Legislation

The primary piece of legislation dealing with ambush marketing appears to be the Merchandise Act. The Merchandise Act’s purpose is:

[t]o make provision concerning the marking of merchandise and of coverings in or with which merchandise is sold and the use of certain words and emblems in connection with business.

The Merchandise Act deals with a number of mark and trade mark uses. The most pertinent section of the Merchandise Act is section 15A, is titled “Abuse of trade mark in relation to event” and provides as follows:

15A. Abuse of trade mark in relation to event

(1)

(a) The Minister may, after investigation and proper consultation and subject to such conditions as may be appropriate in the circumstances, by notice in the Gazette designate an event as a protected event and in that notice stipulate the date-

(i) with effect from which the protection commences; and

(ii) on which the protection ends, which date may not be later than one month after the completion or termination of the event.

(b) The Minister may not designate an event as a protected event unless the staging of the event is in the public interest and the Minister is satisfied that the organisers have created sufficient opportunities for small businesses and in particular those of the previously disadvantaged communities.

(2) For the period during which an event is protected, no person may use a trade mark in relation to such event in a manner which is calculated to achieve publicity for that trade mark and thereby to derive special promotional benefit from the event, without the prior authority of the organiser of such event.

(3) For the purposes of subsection (2), the use of a trade mark includes –

(a) any visual representation of the trade mark upon or in relation to goods or in relation to the rendering of services;

(b) any audible reproduction of the trade mark in relation to goods or the rendering of services; or

(c) the use of the trade mark in promotional activities, which in any way, directly or indirectly, is intended to be brought into association with or to allude to an event.

(4) Any person who contravenes subsection (2) shall be guilty of an offence.

(5) For the purposes of this section 'trade mark' includes a mark.
[S. 15A inserted by s. 2 of Act 61 of 2002.]

The Merchandise Act defines a “trade mark” as a “trade mark as defined in section 2 (1) of the Trade Marks Act, 1993 (Act 194 of 1993), and includes a well-known trade mark contemplated in section 35 of that Act.” The Trade Marks Act, in turn, defines a “trade mark” as follows:

other than a certification trade mark or a collective trade mark, means a mark used or proposed to be used by a person in relation to goods or services for the purpose of distinguishing the goods or services in relation to which the mark is used or proposed to be used from the same kind of goods or services connected in the course of trade with any other person

The Trade Marks Act further defines a “mark” as follows:

any sign capable of being represented graphically, including a device, name, signature, word, letter, numeral, shape, configuration, pattern, ornamentation, colour or container for goods or any combination of the aforementioned

The Minister of Trade and Industry declared the event to be a “protected event” in terms of the Merchandise Act in General Notice 683 of 2006 from the date of the Notice’s publication in the Government Gazette until 6 calendar months after the event’s commencement. The Minister drew specific attention to section 15A and subsections 2, 3, 4 and 5 (quoted above). The purpose for this declaration was stated as follows:

The "protected event" status is conferred on the World Cup on the understanding that the World Cup is in the public interest and that the Local Organising Committee (LOC) has created opportunities for South African businesses, in particular those from the previously disadvantaged communities.

The apparent rationale is to safeguard the event’s anticipated economic benefits for South African businesses.

FIFA™’s trade marks

A document titled “2010 FIFA World Cup South Africa™ - FIFA™ Public Information Sheet (a guide to FIFAʼs Official Marks)” (“the guidelines”) list a number of FIFA™’s “Official Marks” or trade marks which it has registered in relation to the event. These trade marks include a number of graphical and textual trade marks. The textual trade marks include the following:

• 2010 FIFA World Cup South Africa;
• 2010 FIFA World Cup;
• FIFA World Cup;
• World Cup;
• 2010 South Africa
• South Africa 2010 or SA 2010 or ZA 2010.

The guidelines note that the trade marks listed do not constitute a “full list of FIFA™’s trademarks in relation to the 2010 FIFA World Cup™” and that a full list of FIFA’s trade marks may be obtained through an appropriate trade mark search.

The guidelines also set out a number of examples of so-called “Unauthorised Association” with a FIFA™ trade mark. In the context of “informational editorial use” (the appropriate category given the report’s nature), the guidelines state that “any legitimate editorial use does NOT create an Unauthorised Association” with FIFA™’s trade marks. In contrast, the guidelines further state the following:

“Infomercial/advertorial”: there is no legitimate justification for the commercial use or presentation of editorial content (“Infomercial” or “Advertorial”) by third parties using an Official Mark (such as emblems, words, slogans, event titles, etc.) as this creates an Unauthorised Association.

Putting it all together

So when it comes to ambush marketing in the context of the World Cup™ the central question is whether the brand being promoted is sanctioned by the event organiser, in this case FIFA™. If the brand being promoted is not sanctioned by the organiser, well that promotion is most likely a form of ambush marketing.

This issue came up recently when Bavaria arranged for some ambush marketing of its own at the Netherlands vs Denmark game. According to The Daily Maverick:

The two women were arrested on Wednesday for their part in Dutch brewer Bavaria’s ambush marketing stunt on Monday last week. At the Netherlands vs Denmark game, 36 women, initially dressed in Danish supporter gear, stripped down to orange minidresses, which featured a (miniscule) Bavaria logo.

Nieuwpoort and Castelein were charged in terms of the SA Merchandise Marks Act. As Bavaria is not an official World Cup sponsor, it is not allowed to promote its brand in connection with the tournament.

While the purpose of these measures is largely to discourage ambush marketing may be to protect significant investments in event-related marketing and branding, preventative measures like FIFA™'s heavy handed approaches have a Streisand Effect and only give the offending brand even more publicity.

In the Bavaria case the Bavaria logo is barely noticeable from the photo in The Daily Maverick's article and while the extent of the unauthorised marketing shouldn't be an issue, per se, event organisers should carefully weigh their options when responding. Arresting some of the women involved in the Bavaria campaign highlighted the Bavaria brand and brought a disproportionate amount of attention to the case, as is evidenced by the 50 members of the press who were waiting at the Johannesburg Magistrates Court to cover the event. This was almost certainly not FIFA™'s intention.

As The Daily Maverick's Kevin Bloom and Theresa Mallinson pointed out -

Of course, the real winner in this scenario is Bavaria. The brewer has gained more marketing mileage from its initial ambush concept than it could’ve dreamed of – all due to Fifa’s inept handling of the incident. Talk about scoring an own goal.

Update: Also be sure to read Chris Moerdyk's article on BizCommunity titled Kulula is outwitting FIFA at every turn for a perspective on Kulula's controversial campaign.

Image credits:

• Ambush Marketing at Netherlands v Denmark by Tim Salmon - used with Tim's kind permission (the photo is © Tim Salmon, all rights reserved)
• Ambush-protected vehicle by The U.S. Army licensed under a Creative Commons Attribution 2.0 license

A case, TEKsystems, Inc. v Hammernick et al, filed in the United States District Court for the District of Minnesota could signify a new trend in unlawful competition litigation in South Africa. The case involves a former TEKsystems, Inc. employee who was bound by non-solicitation provisions in her employment agreement with TEKsystems and who then contacted a number of people she was prohibited from contacting after her employment with TEKsystems came to an end. The interesting aspect of this case is that she contacted these individuals through LinkedIn, a very popular business networking and, increasingly, recruitment tool.

According to an article about the case by Renee M. Jackson at Nixon Peabody:

Brelyn Hammernick worked as a recruiter for TEKsystems, and signed a non-competition, non-solicitation, and non-disclosure agreement with TEKsystems. Hammernick’s employment agreement provided that, for a period of eighteen months following termination of her employment, she was prohibited from directly or indirectly approaching, contacting, soliciting, or inducing any person who had been a “Contract Employee” during the two-year period prior to the date of her termination and about whom she knew of by reason of her employment with TEKsystems, to: cease working for TEKsystems at clients or customers of TEKsystems, refrain from beginning work for TEKsystems at clients or customers of TEKsystems, or provide services to any individual, corporation, or entity whose business is competitive with TEKsystems. Importantly, these restrictive covenants in Hammernick’s employment agreement did not reference competition, solicitation, or disclosure via social media specifically.

The definition of “Contract Employee” in the employment agreement covers those IT professionals that Hammernick recruited and then placed on a contract basis with TEKsystems’ clients and customers, but who remain employed by TEKsystems.

When Hammernick’s employment with TEKsystems ended, she went to work for Horizontal Integration, Inc., also an IT staffing firm. The complaint alleges that, after her employment with TEKsystems ended, Hammernick unlawfully communicated, on behalf of Horizontal Integration, with at least twenty “Contract Employees” via LinkedIn, the premiere social networking website used for business and professional purposes.

The cause of action in this case is not new to South African law. South African employees are frequently bound by non-solicitation provisions contained in their employment agreements. Typically former employees fall foul of these provisions when they leave employment and attempt to solicit current employees to leave their employment and join those former employees at a competitor.

What is novel about the TEKsystems case and future, similar cases in South Africa is that the former employee, in this case Hammernick, allegedly solicited TEKsystems employees using LinkedIn. While the act of soliciting employees by sending a message over LinkedIn isn't, in itself, novel (it could just as well as been direct email, sms or instant messaging), the fact that it was over LinkedIn adds a dimension to the case. LinkedIn's purpose is to connect people for business purposes. Regardless of the content of the message Hammernick allegedly sent to TEKsystem's Contract Employees, using LinkedIn to send the messages seems to be a pretty compelling indication of her intent to enter into a business relationship with them while at her new employer and TEKsystems competitor.

Sending a message to employees may be a pretty clear breach of non-solicitation provisions but the case also raises an even more interesting and, potentially, troubling question: does the mere fact that you are connected to a person on a site like LinkedIn imply solicitation? Put another way: given LinkedIn's purpose as a business connector, would a former employee immediately be in breach of his or her non-solicitation undertakings if he/she remained connected to employees at the former employer on LinkedIn? This seems to me to be going too far but it remains to be seen how a court would interpret a connection on LinkedIn in this context? Finding that these connections create a presumption of a breach could mean that former employees would be required to terminate their connections to their former colleagues when they leave their employer. Such a finding would also have some disturbing privacy implications because a court would be interfering in personal relationships which may also be professional without any real evidence of improper conduct.

What is clear from this case is that local employers should consider the implications of connections across social networks when they frame their employees' contracts and their restraint and non-solicitation provisions in particular. These provisions should cater for these sorts of connections as well as privacy and similar sensitivities.

The recent controversy about Facebook's privacy settings and the (once again) updated privacy controls highlighted both misconceptions about what privacy is and what it isn't in the context of the social Web. The new controls are aimed primarily at making managing Facebook privacy settings a little easier to manage. This is about being able to control -

• what personal information is published;
• how much personal information is published;
• where your personal information is published;
• who can see which personal information; and
• how long that personal information is made available.

Privacy has become more about informational self-determination - each person's ability to decide what becomes of their personal information. Facebook has been a bit of a cowboy with users' personal information for some time now and the primary concern, as I see it, is that Facebook has decided, from time to time, to expose more of users' profile information to the public Web and make that level of disclosure a new default. It has also progressively changed its privacy policy to allow for greater transparency. What it has done is severely limit users' choices to the point where their choice has become whether to include information on their profiles or not, bearing in mind that any of their personal information could suddenly be made public.

A number of the Web's more prominent pundits seemed to focus on the "privacy as secrecy" issue and missed what I believe is the more important point: privacy on the social Web is about choice, not secrecy. I talked about what I called the "privacy myth" in a post I published last year where I explored this idea in some detail. Its worth repeating a point I made in that post here:

In this context, privacy online becomes an exercise of identity management rather than a question of total control. When it comes to identity management the emphasis shifts from controlling whether and how much personal information is published to asserting a claim over personal information about you in an effort to create a more cohesive and accurate identity online. One of the reasons to do this is to reduce the risk of identity theft by providing a readily ascertainable body of information that represents you and which you have asserted is about you. A good example of a service that helps people do this is ClaimID which gives users an opportunity to state which websites, services and published information is linked to them and how.

When it comes to "privacy as secrecy", users' choices become pretty binary: either publish information or don't. Facebook has taught us that even the biggest social services can be untrustworthy and any personal information you publish can be exposed when the company changes its policy. Of course that personal information could also be exposed through glitches, caching services, profiling efforts and aggregation services and functions. The point is that anything published online can be made more public than you may have wished or intended so a wiser approach is to decide, in advance, which personal information absolutely can't become public and that personal information must never be published online. This sort of personal information may (and arguably should) include the following:

• your home address;
• your childern's school;
• your identity number (although disclosing full birthdays erodes this); and
• credit card and other sensitive banking information.

Beyond that personal information which you hold most dear, you should assume that everything else could be made public without your specific consent and without you being made aware of it. That isn't to say you shouldn't still take advantage of your preferred social service's privacy settings - you should.

Make a point of investigating these privacy controls. Ideally they should be intelligible, subject to clear privacy policies and guidelines. Facebook has failed here too with an overly complex privacy policy and privacy framework. It is trying to remedy this with its new Privacy Guide but I wonder if it isn't adding more layers of complexity. Facebook, and perhaps other social services, has a vested interest in exposing as much personal information as they can. It increases the value of the service to other users. Imagine how appealing Facebook would be if you couldn't find your friends because their basic personal information was restricted from public view. These interests can often be at odds with users' preferences so it becomes really important to make sure you understand the relevant privacy controls and adjust them to suit your preferences.

The time may come when users' choice is whether to remain on a social network or not. A number of people publicly terminated their Facebook profiles recently after the controversy following the F8 conference. I was tempted to delete my profile too but the problem with that is that doing so would remove you from one of the biggest social ecosystems online today. Facebook reportedly has around 500 million active users. That is a powerful network to be part of and removing yourself from it altogether is a pretty drastic step. That said, Facebook still has a long way to go to regain users' trust (mine included) so the prudent course of action is to be more guarded about what you publish and how public you make that information.

Fortunately the new privacy controls do seem to give users more control over their personal information. That level of control extends to personal information Facebook previously deemed to be public by default as well as applications which can access users' profile information. It was an important turning point for Facebook and a healthy reminder that Mark Zuckerberg doesn't know best. Users are the best arbiters of how their personal information should be handled and what should be done with it. Services like Facebook shouldn't interfere with users' right to choose. Doing so makes profound inroads into users' privacy.

Image credit: "Is this how the web looks to Facebook?" by Robert Scoble, released under a Creative Commons Attribution 2.0 license

This is part 7 of a series of posts about the new Companies Act. You can read the first three parts and other posts about South African corporate law right here.

One of the more novel introductions to the New Companies Act is the introduction of a chapter (chapter 5) devoted to specific types of transactions – the fundamental ones. The Old Companies Act required companies to play hide and seek with certain provisions relating to the disposal of all or the greater part of the undertaking or assets of a company (the infamous section 228), schemes of arrangement (section 311), court sanctioned amalgamations (section 313) and takeovers (section 440K read in conjunction with the Securities Regulation Panel rules). While the Old Companies Act did contain something that looked vaguely like a merger (by means of the absorption of one company into another by means of a scheme of arrangement, the concept of a merger without court sanction was conspicuously absent.

The term “Fundamental Transaction” is utilised in the New Companies Act to designate any of the following transactions:

• mergers amongst two or more companies;
• disposals of all or the greater part of an undertaking or assets; and
• schemes of arrangement.

In addition to these transactions the New Companies Act (in chapter 5) refers to “affected transactions” which will be dealt with later in this segment.

A merger is a fairly self-explanatory concept (set out in section 113 of the New Companies Act) – two or more companies combine their assets and liabilities, into one of the merging parties (with the remaining parties ceasing to exist) or into a new company with all of the merging parties ceasing to exist.

The requirements for giving effect to a merger transaction (excluding any competition considerations) is that the board of each company party to the transaction must be satisfied that the solvency and liquidity test will still be passed upon implementation of the merger. This means that the assets of the company, fairly valued, equal or exceed the value of its liabilities and the company is able to pay its debts as and when such debts fall due for payment. If so, the merger (together with the details thereof) must be submitted to the shareholders and a special resolution approving the merger passed. Where a shareholder does not vote in favour of the resolution, he will have his appraisal rights, which means that the shareholder may demand that the company pay him the fair value for all shares held by him/it in the company, where such the shares held by a particular class of shareholder (of which the particular shareholder is a member) is materially prejudicial to that class.

The disposal of all or greater part of the assets or undertaking of a company means more than 50% of the assets or undertaking must be disposed in the transaction. In order to give effect to such a transaction the following steps must be taken:

• the specific disposal must be approved by a special resolution of the shareholders prior to the transaction being entered into (or the transaction will not be binding);
• the notice of the meeting must specify the terms of the transaction and the steps involved in bringing the transaction to fuition; and
• the assets to be disposed of must in terms of the financial reporting standards, must be given their fair market value.

Section 114 deals with schemes of arrangement. A scheme of arrangement is in essence an agreement between the company and its shareholders. Such a scheme may come about in a number of ways. The company may re-arrange its share capital by, for example:

• repurchasing its shares; and/or
• exchanging shares in issue for a different class of share; and/or
• dividing its share capital into different classed or consolidating them.

Due to the complexity of such schemes, it is necessary that the nature and purpose of the scheme be dealt with by an independent professional (with the independence criterion being largely based on the King Codes) and accordingly do not intend delving further into the matter.

The court’s involvement is now restricted to the following instances:

• where at least 15% of the voting rights exercised on that matter were against the resolution and the majority still wish to proceed;
• a review application is launched by any shareholder who voted against the resolution where such resolution was patently unfair to any class of shareholder and/or the vote fell foul of the conflict of interest provisions or some other material procedural irregularity has been committed.

It should further be noted that none of section 112-115 may be utilised in circumstances where a contracting company is in financial distress.

An affected transaction is one over which the Takeover Regulation Panel (previously the Securities Regulation Panel) has jurisdiction. Affected transactions relate primarily to regulated companies (notably publicly companies, state owned enterprises (unless the specific enterprise has received an exemption) and under specific conditions only a private company). The primary difference is that the Takeover Regulation Panel rules now have force of law, but the mandate of the Takeover Regulation Panel remains essentially unchanged.

The most common types of affected transactions are: mandatory offers, compulsory offers and squeeze out. As the nature of these transactions fall outside of the ambit of this discussion, further information may be obtained on request.

Image credit: 1 Wall Street and Empire Building by epicharmus licensed under a CC BY 2.0 license