The Startup Open competition is underway, and the field has narrowed to seven finalists. Selected from nearly 100 entrants, the finalists will compete in the national final on September 22, 2014, in Jerusalem. Adv. Micky Barnea, our managing partner, said, “As part of our longstanding relationship with Israel’s entrepreneurial community, Barnea is proud to participate in the Startup Open competition. During the semi-final, we identified several promising and innovative ventures, and I look forward to selecting the winning start-up at the final. The wide range of business ideas and industries represented by the finalists reflects the talent and creativity of Israel’s start-up and high-tech sector.”

Barnea’s litigation team represented a client before the Supreme Court in a landmark appeal concerning fundamental obligations under Israeli securities and tort law. The Supreme Court overturned the District Court’s rulings and accepted the firm’s position that no duty of care exists between shareholders found jointly liable for violations of securities law.

At the International Labor and Employment Law Committee’s Midyear Meeting in Tel Aviv, a panel of leading attorneys, including Marie Tsion, discussed the challenges women face in global legal practice.

Barnea, together with the Enterprise Forum and Israel Advanced Technology Industries, is pleased to sponsor the 2014 Startup Open competition, to be held on September 22 in Jerusalem. Startup Open is a competition featured during Global Entrepreneurship Week. Launched in 2010 as part of the Kauffman Foundation’s Global Entrepreneurship Week, it promotes and supports aspiring entrepreneurs. It is one of the world’s largest competitions for start-ups, attracting participants from 37 countries. The competition focuses on companies that have made significant progress between November 25, 2013 (Global Entrepreneurship Week 2013), and November 16, 2014 (Global Entrepreneurship Week 2014). For further information, please contact Gil Shourka, National Coordinator for GEW Israel, at [email protected].

Following the successful launch of its MarginProbe System, which received premarket approval (PMA) from the FDA early last year, Dune Medical Devices Ltd. has completed the first stage of a two-stage USD 21 million equity financing. The initial closing raised USD 14 million, with a second tranche of USD 7 million expected to close by October 2014. Dune Medical Devices develops surgical devices and techniques that help surgeons optimize tissue excision in real time during oncology procedures. The company has offices in the United States and Israel.

In 2010, the Committee for Compensation and Royalties issued a groundbreaking ruling on employees’ assignment to their employers of rights to “service inventions,” meaning inventions created in the course of employment. The Committee held that assigning an invention does not, by itself, constitute a waiver of the employee’s right to compensation under section 134 of the Patents Law, 1967. An employer could therefore own the rights to an employee’s invention yet still be required to pay the employee royalties for contributing to the company’s technology. The ruling sent shockwaves through Israel’s high-tech industry. Companies, prospective acquirers, and investors faced uncertainty over whether current and former employees might seek compensation for inventions developed during their employment. A subsequent decision appears to have clarified the position. On May 4, 2014, the Committee rejected a former employee’s claim for royalties, holding that the right to compensation for service inventions is not absolute and may be waived. It also found that a general waiver signed by the employee upon termination was sufficient to release the employer from the obligation to pay royalties, even though the waiver did not specifically refer to inventions or section 134 of the Patents Law. The decision indicates that an assignment of rights to service inventions, combined with a general release upon termination, may be sufficient to bar a subsequent claim for compensation. Nevertheless, employers would be prudent to include an express waiver of the right to compensation for service inventions in their employment agreements.

About a month ago, the Israeli High Court of Justice considered a petition seeking to compel the Minister of Finance and the Director of the Israel Tax Authority to impose value-added tax (VAT) on multinational companies such as Google and Facebook. The petitioner argued that these companies provide services and sell goods in Israel over the internet without being required to pay VAT, giving them an unfair advantage over Israeli competitors. The petitioner maintained that these multinational companies conduct extensive business activities in Israel, including marketing and communicating with Israeli customers in Hebrew and accepting payments in Israeli currency. The petitioner also challenged the Israel Tax Authority’s use of server location as a criterion for determining whether an online transaction takes place in Israel. The court dismissed the petition as premature because the VAT authorities were preparing a circular on the subject, which was expected to be published shortly. The dismissal did not resolve the question of VAT liability, which is likely to be addressed in future legal proceedings. Tax liability, however, is only one of the legal issues arising from online activity. Others include defamation, consumer protection, gambling, foreign exchange trading, pharmaceuticals, privacy, and copyright. Each raises a fundamental question: which jurisdiction’s laws govern the activity and determine whether it is lawful? These challenges are not unique to Israel. Various countries have made significant progress in addressing them, including through judicial rulings.

Adv. Micky Barnea was interviewed by Globes, an online newspaper, about the firm’s recent activities and achievements.

Barnea's MA and Kibbutz Sector Departments recently represented Polycad Industries (1989) Ltd., a plastics company based in Shefayim, in the sale of its stake in Bram Industries Ltd., a publicly traded company in the plastics industry. Polycad held approximately 30% of Bram Industries’ shares, acquired three years earlier, and formed part of the company’s controlling shareholder group alongside the Bramley family. Polycad sold its entire stake to companies controlled by the Bramley family for a total of ILS 20 million, ending its involvement in Bram Industries.

The ongoing struggle to preserve net neutrality will determine how internet service providers treat online content. In the meantime, Netflix remains dissatisfied.

The ongoing battle over net neutrality in the United States centers on balancing the right to fair competition with the need to prevent network congestion. The head of our Internet Department examines the debate between supporters of net neutrality and those who oppose its implementation without any limitations.

Adv. Zohar Lande, a senior partner and head of the Litigation Department, was interviewed by Channel 10 News about the Cadbury antitrust litigation.

Barnea was ranked in 8 practice areas in the 2014 edition of BDI, a leading Israeli legal directory. The firm is ranked 'Tier 1' in Mergers Acquisitions and in  International Commercial Law. The firm is ranked  'Tier 2' in Infrastructure and project finance and in High tech and  'Tier 3' in Litigation, Capital Markets, Real Estate and Tax.

Publisher Israel Mizrahi is suing his former business partner, Lior Sharf, for approximately ILS 11 million, alleging that Sharf misled him by withholding and concealing financial information relating to their former joint venture, Agam Publishing. Mizrahi is represented by Adv. Zohar Lande and Adv. Daphne Klein of Barnea.

In this special edition, Adv. Simon Jaffa discusses the structure of the Israeli economy and the anticipated breakup of monopolies and oligopolies, which are prevalent in Israel.

Yesterday, the Tel Aviv District Court dismissed an ILS 67 million claim brought by Canadian businessman David Geller against LR Group and the startup IN SPI AIR. Adv. Zohar Lande and Adv. Gal Livshits represents IN SPI AIR

Israeli companies have rediscovered London’s AIM market. At today’s “Time for London IPO” conference on the London Stock Exchange, participants expressed differing views on the benefits of an AIM listing. Adv. Micky Barnea, managing partner at Barnea and a specialist in London IPOs, explained: “Unlike in Israel, where shareholders have the final say, in London that authority rests with the board of directors. This difference in the balance of power may make the market less suitable for companies with a single controlling shareholder, who would have less scope to intervene in decision-making and less influence over the board’s composition.”

Israeli Finance Minister Yair Lapid recently proposed exempting couples with at least one child from VAT when purchasing their first apartment from a developer. Ariel Nadler, head of Barnea’s Real Estate Department, believes the proposal would help young couples buy a home but would not, on its own, be enough to address the challenges facing Israel’s housing market. Calcalist, March 19, 2014.