News Archives - Page 5 of 10 - Epstein Rosenblum Maoz (ERM)

Itamar Lev Eldar has been promoted to the partnership in ERM’s Corporate & M&A, and Banking & Finance practices.
Itamar is experienced in acting for clients on the full spectrum of international and domestic financing transactions as well as on a broad range of corporate law matters, including mergers and acquisitions, venture capital, and private equity transactions.

Golan Laihtman has been promoted to the partnership in ERM’s Real Estate and Urban Renewal department.
Golan advises real estate businesses in complex residential transactions. Golan specializes in residential, project financing and accompaniment of entrepreneurs and land owners in urban renewal projects.

Especially in this period, we believe it is important to promote excellent lawyers to the partnership.

We are excited to start the new year by welcoming Itamar and Golan as partners at the firm – good luck!

For the full article in Walla Finance click here

The challenging market conditions dramatically affect the ability of tech companies to raise funds and means that some companies are forced to raise at a lower valuation than previous rounds.

When faced with the possibility of a down-round, it is advisable to first explore all other available alternatives but undertaking a down-round is not the end of the road if properly prepared for.

Simon Marks, Partner and Head of the High-Tech practice and Adv. Adi Rafaeli, discuss certain points to consider when undergoing a down round.

For the full article

At the Eilat-Ilot Conference on Renewable Energy, Attorney Amnon Epstein called on regulators to provide protections to banks so that they can finance the transition to purchasing electricity from private producers. Yossi Dayan, Director General of the Ministry of Energy, also commented on the pursuit of purchasing generators: “It is not right to invest in generators and it is not an order the hour”.

Attorney Amnon Epstein, partner and head of the energy, infrastructure and climate department at Epstein Rosenblum Maoz (ERM) called on the regulator to facilitate the financing process for solar projects. 2025, the time has come for the Israeli companies to join the Electricity 100 project, which is designed to lead the Israeli economy to an economy of 100% electricity from renewable energy by the year 2048. For this to happen, the Israeli regulator needs to show involvement and provide protections to the banks so that they can finance the transition from electricity sales agreements with the electric company to agreements with private producers with a non-fixed electricity price. Similar to the concessions given in 2010 with the blossoming of the solar market in Israel, today the regulator is also required to facilitate the financing of the projects and promote bilateral agreements for the sale of electricity”.

For the full article in Hebrew: https://bit.ly/4awrQM4

In a television interview for Bizportal, our partner, Adv. Rotem Perelman-Farhi, head of the Technology and Data Protection Department, reviews the legislation in Europe and the USA, and discusses what is expected in Israel and the potential impact on Israeli and international companies.

For the full interview (in Hebrew),

The Duns 100 forum for senior legal professionals in the field of urban renewal convened to discuss the burning issues in the field. “If high-tech falters, the real estate industry will suffer the consequences.” All the updates from the conference.

Attorney Aharon Shimon, partner, Epstein Rosenblum Maoz (ERM): “In many neighborhoods that are designated for construction eviction, such as the Ramot Polin neighborhood in Jerusalem, there has not been sufficient municipal enforcement, and due to the housing crisis since it involves families with many children, and the lack of awareness of municipal laws, they have been carried out in apartments Extensions, additions and construction violations. Today, when these neighborhoods enter the procedures of urban renewal, the authorities have to take into account that these are large families and an addition of 25 square meters to the original apartment is no longer relevant. Unfortunately, we see projects that are stalled due to the rigid conduct of the authorities and as a result all parties lose. In my opinion, the policy of institutions The planning is one that should take into account all the parameters and find creative solutions.”

For the full article in Hebrew: https://bit.ly/UrbanRenewalDuns100

Rotem Perelman-Farhi, Partner and Head of the Technology & Data Protection department at Epstein, Rosenblum, Maoz (ERM) came to Bizportal for a video interview regarding the new AI legislation: “The artificial intelligence revolution is a much bigger bang compared to what the Internet was 20-30 years ago. And it’s also progressing at a very fast pace.” She talks about the legislation taking shape in Europe in the field of AI and the problematic legislation that may pass in the Knesset.

In addition, Rotem explains the expected legislation in Europe, what exists in the US and what is expected to happen in Israel. What is the expected impact on companies? How can the legislation deal with the threats of artificial intelligence? And, what emergency laws were introduced in Israel following the war and the amendment of the Shin Bet law that may introduce permanent regulations?

For the full article in Hebrew, click here: https://bit.ly/4cOywHb

The AI Act is coming – Why Israeli businesses should care and start preparing for it

Lengthy and fierce discussions about the European Act on Artificial Intelligence (AI Act) look like they have come to an end – the Council of the European Union recently approved the AI Act, it has passed the European Parliament’s Committee on the Internal Market and Consumer Protection and is expected to be approved by the European Parliament in April 2024. The AI Act is the worldwide first comprehensive AI regulation, which sets out harmonised rules for the placing on the market, putting into service and use of artificial intelligence systems (AI Systems) in the EU.

Why is the AI Act relevant for Israeli businesses?

There are a few reasons why the AI Act may be relevant for businesses in Israel:

Compliance with the AI Act may be required for companies that either operate an AI system in the EU or that provide AI systems to customers in the EU. The law further applies to providers or deployers of AI systems outside the EU where the output produced by the AI system is used within the EU – a provision which broadens the possible scope of the AI Act significantly, but which is expressly intended to prevent circumvention of the law.
In addition, the AI Act may influence the development of AI regulations in other jurisdictions. Other lawmakers may look to the EU’s regulatory approach as a model for their own AI regulations, or might align their regulations with the EU’s standards in order to enable cross-border trade and cooperation.

Striking a Balance Between Risk and Innovation

The AI Act follows a risk-based approach and classifies AI systems into different categories:

Prohibited AI: Guarding against Manipulation and Privacy Invasion

The legislation takes a firm stance against malicious practices by prohibiting AI systems such as purposefully manipulative or deceptive techniques, biometric categorisation systems that individually categorise a person based on sensitive information, social scoring, or real-time remote biometric identification systems in the public for law enforcement purposes.

High-Risk AI Systems: Balancing Power and Responsibility

A large part of the AI Act is dedicated to strict and extensive regulations for high-risk AI systems. Companies involved in AI must identify if their AI system is “high-risk” to comply with the law. The AI Act recognizes two types of high-risk AI systems:

1) AI as a product covered by specific EU legislation in industries such as civil aviation, vehicle security, and personal protective equipment, and

2) AI listed in Annex III, which includes remote biometric identification, AI used in education, employment, law enforcement, migration, and more.

General-Purpose AI Models: Illuminating the Algorithms

General-purpose AI (GPAI) models, being the building blocks of AI systems, play a pivotal role in shaping our technological future. They are defined as AI models that display “significant generality” and are “capable to competently perform a wide range of distinct tasks regardless of the way the model is placed on the market and that can be integrated into a variety of downstream systems or applications.” Recognizing their significance, the AI Act sets out specific requirements for the development and deployment of such AI systems, ensuring that users understand their underlying algorithms and functionality.

Requirements for High-risk AI Systems:

Providers of high-risk AI systems must meet strict requirements to ensure that their AI systems are trustworthy, transparent and accountable. This includes, among other things, conducting risk assessments, using reliable data, documenting technical and ethical choices, maintaining performance records, informing users about the nature and purpose of their systems, enabling human oversight, ensuring accuracy and resilience, addressing cybersecurity concerns, testing for compliance, and registering systems in a publicly accessible EU database.

In addition, the AI Act imposes strict obligations across the value chain of a high-risk AI system. Not only on the ‘provider’ of a high-risk AI system needs to be compliant, but also on the ‘importer’, ‘distributor’ and ‘deployer’ of such systems. Broadly speaking, the importer needs to verify the system’s conformity by reviewing various documentation, whereas the distributor is required to verify the CE (conformité européenne) conformity.

The deployer (in previous drafts also called the user of the AI system), also has various obligations when it utilizes a high-risk AI system, one being the obligation to use the high-risk AI system in accordance with the provider’s instructions of use. This will be important in any potential liability discussion with the provider.

Transparency Obligations for AI Systems and GPAIs

The AI Act puts transparency in the foreground. If a person interacts with an AI system, they need to be informed that they are interacting with an AI system instead of with another person. Exceptions apply if the AI interaction is obvious or if the AI system is used for criminal prosecution.

Similarly, outputs of generative AI systems, including General Purpose AI models (e.g. audio, image, video or text content) need to be marked as artificially generated or manipulated.

In case of AI systems used for emotion recognition or biometric categorization, the people exposed to such system have to be informed of the operation.

In case of deep fakes, the content must be labelled as having been artificially created or manipulated.

Sanctions

The penalties under the AI Act can be very high. Engaging in a prohibited AI practice can lead to a penalty of up to EUR 35 million or 7% of the total worldwide annual turnover for companies, depending on the severity of the infringement. For high-risk AI systems, the penalty may be as high as EUR 15 million or 3%, whichever is higher.

Next steps

We expect that the AI Act will be published in its final form in mid-2024. The AI Act will enter into force 20 days after publication in the Official Journal of the EU. Most of its provisions will apply after 24 months. The rules on prohibited AI systems will apply after 6 months, provisions for GPAI models after 12 months, and the provisions regulating high-risk AI systems after 36 months.

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The review was written by Rotem Perelman – Farhi, Partner and Heads of the firm’s Technology, IP & Data Department and Dr. Laura Jelinek, Associate in the the firm’s Technology, IP & Data Department.

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* This newsletter is provided for informational purposes only, is general in nature, does not constitute a legal opinion or legal advice and should not be relied on as such. If you are seeking legal advice, it is essential to review the specific facts of each case in detail with a qualified lawyer.

On the occasion of the unveiling of the ranking of the leading law firms in Israel, senior jurists gathered for a special discussion as part of the Duns 100 forum. The seniors warned of the consequences of fighting, Moody’s downgrading and the reform of the legal system that is still ahead of us.

Attorney Nimrod Rosenblum – managing partner at Epstein, Rosenblum, Maoz (ERM): “As a firm built on international work, we felt the upheaval that hit the Israeli economy in 2023. There are several reasons for this that we all know. At the same time, it is important to note that we are starting to see a return of investors, buyers, lenders, etc. At first there were those who know Israel and little by little we also see new interested people who understand that it is precisely at a time like this that opportunities emerge. I believe that in the near future more will join them. Unlike the government, the economy is dynamic and full of opportunities in the fields of high-tech, industry and services, the legal system is strong and provides adequate protections for investors, and the entrepreneurial spirit and the famous Israeli fortitude are known to all.”

For the full article in Hebrew: https://bit.ly/Duns100forum

Starting February 17, 2024, the Digital Services Act (“DSA”) will apply to providers of digital intermediary services that have a substantial connection to the EU (see in more detail here).

This bulletin focuses on the providers of hosting services, which will have a large array of new obligations. “Hosting services” under the DSA include all services that store content, regardless of whether that content is disseminated to the public or to individual third parties. This is the case when any information provided by users is stored on their behalf.

The following is a brief compliance checklist outlining key tasks that hosting service providers may need to implement:

Updating the contact section on the website with the designated single points of contact for authorities and recipients of the service;
Reviewing and, where necessary, revising terms and conditions: These should explain how the organisation controls illegal content and content that is incompatible with their terms and conditions. They should also explain what content is prohibited or unwanted in the service, and how prohibited or unwanted content will be dealt with (blocking, deletion, suspension of accounts etc.);
Annual publication of transparency reports on “any content moderation that they engaged in during the relevant period” on their website;
Putting mechanisms in place to allow any person or entity to notify the hosting service provider of illegal content in an easily accessible and user-friendly manner, exclusively by electronic means;
Establishing a process that permits proactive notifications of crimes that involve a threat to the life or safety of a person or persons;
Establishing a “Statement of Reasons” process, for example by creating templates which enable the provider to provide clear and specific reasons for any restrictions imposed on service recipients or suspensions or terminations of a user account due to illegal content or violation of the terms and conditions.

It should be noted that the specific obligations for each hosting service provider can vary slightly depending on the circumstances.

For more information and assistance related to compliance with the Digital Services Act, please reach out to us at ERM.

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The EU Digital Services Act (“DSA”) brings some of the most important changes to the regulatory framework for offering online content, services and products to consumers in the European Union. It will start applying from February 17, 2024 to a diverse range of intermediary services offered in the EU, including online marketplaces, web-hosting services, cloud services, search engines, and social media platforms.

What is new?

The DSA addresses a wide range of issues related to online platforms, including illegal content, hate speech, counterfeit products, and unfair competition. Its key points are:

Enhanced Accountability: The DSA introduces new obligations for online platforms, making them more accountable for the content shared on their platforms. Platforms must provide predefined notice-and-action mechanisms for reporting alleged illegal content and follow up on such notices, including taking the necessary measures. Whether or not content qualifies as illegal is not determined by the DSA itself, but by the applicable law of the affected EU Member State.
Transparency and Fairness: The DSA aims to promote transparency in online platforms’ policies and algorithms that influence the visibility and ranking of content. There will also be stricter rules for online advertising, for example a ban on targeted advertisements to minors on online platforms.
Safeguarding User Rights: The DSA prioritizes user rights and empowerment. It requires online platforms to provide effective means for users to exercise their rights and introduces measures to tackle harassment and abusive behavior online.
Strengthened Market Oversight: The DSA grants new powers to regulators to monitor and enforce compliance with the regulations. It establishes a single point of contact for cross-border issues, facilitates cooperation between EU member states, and enhances coordination with law enforcement authorities.

Who is affected?

The DSA applies to both B2B and B2C providers of digital intermediary services (intermediaries), who provide recipients with access to goods, services and content via the internet. This includes providers of:

mere conduit services (e.g. internet exchange points or wireless access points)
caching services (e.g. content delivery networks)
hosting services (e.g. cloud computing and web hosting)
online platforms (e.g. social networks and online marketplaces)
online search engines

The DSA applies to intermediary services that have a substantial connection to the EU, regardless whether the intermediary service in question has an establishment in the EU. Such substantial connection can exist where an intermediary service provides its services to a significant number of recipients or targets its activities towards one or more EU Member States.

It should be noted that providers of intermediary services that do not have an establishment in the EU but fall under the scope of the DSA must appoint a legal representative in one of the affected EU Member States, a principle familiar from the EU GDPR. The legal representative must have sufficient power of representation and resources, and has to act as a contact for authorities and service recipients, among other responsibilities.

Penalties for Non-Compliance

Organisations that fail to comply with the requirements of the DSA may face a fine of up to 6% of the worldwide annual turnover, or periodic penalties of up to 5% of the average daily worldwide turnover for each day of delay in complying with certain remedies, interim measures or commitments. As a last resort, the EU Commission can request the temporary suspension of the service.

For more information and assistance related to compliance with the Digital Services Act, please reach out to us at ERM.

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