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Product Liability Alert

Top of Mind, May 2013

29 May 2013

What legal issues are businesses around the globe dealing with this year? What new developments will affect their strategies and bottom lines? Here is a look at big topics that businesses have been thinking about in 2013, and how DLA Piper has been covering those stories this year.

Doing Business Online

business-internetIn an exercise of its broad powers, the FTC has issued new guidance for online and mobile ads and marketing. Businesses using any online or mobile activities to market their products, we noted, should plan with care and may even need to create new techniques and tools to ensure effective disclosures.

The launch this year of new top-level domain names presents both threats and opportunities to brand owners. The Trademark Clearinghouse, developed by the Internet Corporation for Assigned Names and Numbers, aims to reduce the risk of trademark infringement.

On our blog IPT Italy, we looked at the restrictions across the European Union and Italy around mobile payments.

Data Privacy 

data-protectionDLA Piper issued the 2013 edition of its popular Data Protection Laws of the World, a quick overview of those aspects of data protection law with the most practical significance for businesses. This new edition covers 63 jurisdictions and looks at such issues as international data transfer restrictions, security obligations, breach notification requirements, online privacy and enforcement.

We also published our Rights in Data Handbook summarizing the protections available for data and databases in 12 key global jurisdictions, among them the US, China, Japan, Australia and the EU.

And we reported on breaking developments around data privacy in jurisdictions across the world:

With its first ever national standard on personal data privacy protection now in force, China is seriously and swiftly moving to create a more uniform regulated environment, probably very like those already in place in other Asia Pacific countries.

The European Parliament is seeking to broaden the scope of the EU’s draft Data Protection Regulation and strengthen its application.

IPT Italy has closely followed Italy's courts as they react to defamatory comments on social media sites and blogs - even sentencing a blogger and Facebook page manager to prison over comments posted by users.

The Office of the Australian Information Commissioner has released Mobile Privacy: A better practice guide for mobile app developers, calling for privacy-enhancing practices throughout the life cycle of personal information. And, with the new Australian Privacy Principles, Australia's Privacy Commissioner now becomes a more aggressive regulator, keen to exercise new powers over both government agencies and private businesses.

California’s Invasion of Privacy Act was created to ensure the individual's privacy rights in electronic communications. Because a growing number of CIPA class actions are being filed in California, we took a look at 2013’s likely trends in CIPA litigation.

The California Attorney General’s mobile app privacy guidelines, we noted, may affect the entire mobile app ecosystem.

And California is considering several bills to further strengthen California residents’ privacy rights which similarly have the potential to affect the entire information collection ecosystem.

Climate Change and How The World Uses Energy

energy-sectorWe published the results of our collaborative study with Future Ready and Climate Planning on climate change adaptation and its place in the boardroom. While the report focuses on Australian companies, its comments on the global risk posed by climate change are relevant to businesses everywhere.

As the demand for alternative energy sources grows, the solar energy industry’s need for capital is urgent. But to finance new projects and launch a viable solar securitization program, many impediments must be overcome. The devil, we reported, is in the details.

Most people think of energy as a sector enjoying uniform profitability and financial success. But some parts of the industry are foundering. For instance, we covered how the mining sector worldwide is tackling tough economic realities, not least company insolvencies.

We continued covering legal developments regarding the US shale gas industry, which, despite a boom in natural gas production due to technological advances, is facing heightened scrutiny from regulators and legislators.

And South Africa, we observed, is well into the launch of its massive Renewable Energy Independent Power Producer Programme and is now establishing its practical workings, such as a dispute resolution process.

Cybersecurity

cyber-securityAs the media keeps reporting the latest cyberattacks on corporations and governments, cybersecurity has zoomed to the very top of mind for many businesses. In the first quarter of this year, President Barack Obama issued a cybersecurity Executive Order to enhance the security and resilience of critical US infrastructure, while the European Union published its proposal for a European cybersecurity strategy. DLA Piper’s extensive coverage of cybersecurity issues examines many aspects of this rapidly evolving story, including the ways cybersecurity concerns affect corporate governance and the implications of President Obama’s Executive Order for those doing business with the US government.

The Ongoing Economic Crisis  

economic-crisisMany countries are still struggling to recover from the economic crisis that began in 2007. In some parts of the Eurozone, the crisis is expanding.

Retailers in many regions are fighting to survive. In the UK, we noted, an average of 20 shops have closed every day over the past year, and the rate actually has been accelerating. For UK retailers facing insolvency, we provided a checklist of steps to consider that may help their businesses survive.

Our blog Insurance Flashlight noted that the ratings agency Standard & Poor is facing yet another class action in Australian Federal Court over toxic debt allegations, this one brought by a group of councils, churches and charities.

We also reported when the UK put in place major changes to the London Inter Bank Offered Rate, popularly called LIBOR – subjecting it to statutory regulation for the first time. LIBOR, which underpins trillions of dollars of financial products, is one of the markets’ most crucial interest rates.

In Italy, we found, the recent reform of bankruptcy laws has encouraged more M&A activity, giving rise to a type of deal new to Italy, the distressed acquisition.

The Cyprus crisis resulted in restructuring of its banking system plus an assistance package that would impose drastic measures on the country’s finances. Multinationals with Cypriot affiliates, we advised, should carefully review their tax planning.

And we reported that another serious implication of the Eurozone crisis for companies that do business across borders is the problem of international tax and transfer pricing. If the Eurozone breaks up, and your company’s contracts are euro-denominated, what tax and transfer pricing risks may you face?

Food Safety

food-safetyIn the global economy, we are all connected. This quarter, DLA Piper reported on a US development that affects that most everyday thing: food. Two years after President Barack Obama signed the Food Safety Modernization Act into law, the FDA released proposed regulations that aim to prevent the spread of foodborne illnesses. The proposed rules will lay the cornerstone of a prevention-based, modern food safety system and will have wide-ranging effects on every link in the global food supply chain.

Doing Business Across Borders

business-across-bordersBusiness law is never static in any jurisdiction. DLA Piper reported on the changing approaches many governments are taking toward companies operating within their borders.

Manufacturers with operations in China must take care about imposing pricing restrictions on wholesalers and retailers lest they fall afoul of China’s Anti-Monopoly Law. The AML was enacted in 2008 as part of China’s transition from a planned to a market-based economy. Chinese regulators are now wielding the AML to stop vertical agreements among manufacturers and wholesalers or retailers that fix certain prices.

Companies with cross-border business operations encounter particular problems when seeking to enforce judgments in China around insolvencies. Hong Kong and China have now agreed to the so-called REJA, which allows restructuring decisions from Hong Kong courts to be enforced inside China – a significant step forward for global business.

What happens when foreign investors want to purchase US distressed assets that have national security implications? In our exploration of this issue, we asked: at what point in the process is it most appropriate to submit a transaction for CFIUS review, and who should handle that task?

Is the Tax Man Calling?

tax-manDoing business across borders also means complying with an array of tax rules and laws. A country’s tax policy can slow investment or foster it, and compliance with ever-shifting rules is critical to every multinational. Moreover, as multinationals produce or acquire goods in one jurisdiction and move them to others, many national governments have raised concerns around transfer pricing and taxation. Multinationals’ tax strategies are in the crosshairs.

Australia, for instance, is tightening its rules around transfer pricing with new rules that toughen the Australian Taxation Office's powers to pursue transfer pricing audits and litigation.

Russia, too, is overhauling its transfer pricing and VAT rules.

China is signaling that it intends to diverge from international transfer pricing guidelines and explore its own transfer pricing theory and practice.

India, we noted, is showing its determination to remain a key investment destination by modifying rules that had been introduced to check tax avoidance by foreign investors.

And already this year, the US has signed a new tax protocol with Spain and another with Japan as well as a revised tax treaty with Poland – exemplifying the US government’s more open attitude toward developing its relationships with global trading partners.

To assist companies with multinational companies, we also published an overview of the international tax and gtransfer pricing issues they need to consider when offering their employees equity-based compensation.

A trend that continues to grow is the aggressive hunt by many jurisdictions to identify money laundering and tax evasion. In “Time to ‘get right’ with the Internal Revenue Service” we report on the heightened IRS and US DOJ activity against offshore tax evaders and those that assist them, including Swiss and Israeli banks. “Sitting it out at this point is extremely dangerous,” the DOJ has stated.

We noted that Brazil has finally approved and put into effect a tax information exchange agreement with the United States to allow both governments to swap data in pursuit of money launderers and tax evaders. The agreement may also be a prelude to a tax treaty between the two countries.

The UK is also looking closely at two British Crown Protectorates that serve as tax havens. Previously undeclared UK tax liability for accounts on the Isle of Man may now be disclosed to Her Majesty’s Revenue & Customs through a new disclosure facility. And financial institutions on Jersey, one of the Channel Islands, are being consulted on the potential impact should the States of Jersey enter into a FATCA-type agreement with the UK government.

Indeed, 17 EU nations are developing a single global standard for automatic exchange of tax information covering a wide scope of income and entities.

And this year, the whole world watched as the US Congress began to tackled tax reform. Early in 2013, we reported extensively on ATRA - the American Taxpayer Relief Act - noting that ATRA enacted a number of compromises at the lip of the so-called fiscal cliff. The Act preserves two key international tax provisions that would have otherwise expired, and it brings a host of changes around trusts and estates planning.

But ATRA on its own is a set of modest compromises; more turmoil is to come. DLA Piper will be watching as the US Congress continues battling over tax matters throughout 2013 and as tax issues develop in jurisdictions worldwide.

The Workforce

employmentAround the world, the relationship between employers and their workforces continues to evolve.

Australia is aiming to consolidate its patchwork of anti-discrimination laws into a single federal act, a reform that makes the Commonwealth more attractive for claimants and requires employers to positively exercise due diligence in order to avoid liability.

China has amended its Employment Contract Law, a change that may affect companies whose PRC operations employ workers through staffing agencies. When these new rules take effect this summer, the typical use of labor dispatch staff as we see it today will become illegal. These changes also have significant tax implications for employers.

The UK takes another step toward broader family leave regulations, publishing a legislative framework that keeps 52 weeks of maternity leave as the default, introduces a system of shared parental and adoption leave, and creates new adoption, surrogacy, antenatal and flexible leave rights.

When may an employer monitor an employee’s use of the Internet? On our blog Technology’s Legal Edge, we report the latest answer to this worldwide question: Belgium’s limits on the cybersurveillance a company may carry out of its employees.

In the US, courts are raising the bar for class certification in wage and hour cases, as shown in the Ninth Circuit’s China Daily News decision, an opinion singularly favorable to employers facing wage and hour class action litigation in federal court. And growing whistleblower activity in the US, we noted, calls for close employer attention to retaliation issues.

On our blog The Labor Dish, we explored the question of National Labor Relations Board neutrality.

And, we asked, in the event a US company enters chapter 11 bankruptcy, what becomes of employees’ wage claims and their pensions? We noted that while the Bankruptcy Code regards employee claims as unsecured, they are still treated as priority claims, and we reported on a federal bill that would assist thousands of US coal miners whose pensions are at risk of being wiped out by mine bankruptcies.

The Courts Decide

gavelThe UK’s Supreme Court has ruled that the legal advice privilege (called the attorney-client privilege in the US) only applies to lawyers – meaning client conversations with accountants and other professionals are not privileged.

The US Supreme Court opined that in enforcement actions by the SEC seeking to impose or enforce a civil penalty, the five-year statute of limitations begins to run when the alleged fraud is complete, not when it is discovered. The Court’s ruling will affect numerous federal agencies with authority to pursue enforcement actions.

In Australia, the Federal Court handed down its long-awaited decision in Cancer Voices Australia v Myriad Genetics Inc – the first case of its kind in Australia, asking whether a valid patent may be granted for a claim that covers naturally occurring genetic material that has been “isolated” to create a product.

One of the greatest fears for international companies doing business in China is a legal dispute over a commercial contract. The problem of enforcement is arguably the greatest challenge facing China’s civil system. Now a fairly new litigation tool provides a legal basis for Chinese courts to enforce judgments from Hong Kong - an extremely significant step.

And we reported on the new protocol between the Dubai International Financial Centre and the Commercial Court of England and Wales, providing a dispute resolution enforcement mechanism for UK-based parties who have counterparties with significant assets in Dubai and, potentially, the wider GCC region.

Latin America

latin-americaMexico is moving to overhaul its telecommunications sector, with dramatic reforms that are seen as the acid test of the Pacto por Mexico.

And we reported on two developments in Brazil: the country has finally approved and put into effect a tax information exchange agreement with the United States to allow both governments to swap data in pursuit of money launderers and tax evaders - an agreement that may be a prelude to a tax treaty between the two countries - and it has lowered the requirements to obtain a 90-day temporary visa for workers entering the country to provide technical assistance and to transfer technology.

Runnning Your Business

business-life-cycleAre you considering bidding for a public company? Has your public company received an acquisition bid? What should you do? US public/public mergers are highly choreographed affairs within confined boundaries that, notably, are dictated by Delaware judicial decisions. This entry-level primer about public company M&A reviews some of the events most often encountered in the public company bidding process.

Franchise law is continuously evolving. In the US, we looked at the top franchise cases of 2012 and their impact on franchising going forward. We also updated a story we have been following for some time – the problematic new franchising regulations in populous Indonesia.

Complying with the Regulators 

This year, DLA Piper has been able to offer a rare glimpse into the thinking of key US regulators.

In The Antitrust Division speaks, we looked at comments by Bill Baer, Assistant Attorney General for the DOJ Antitrust Division, and we discussed a significant Division policy change and recapped major developments in criminal enforcement – a signpost for the year ahead.

We also opened a window onto the US Department of Justice decision-making process around prosecution of Foreign Corrupt Practices Act violations, quoting a DOJ official’s comments on the benefits of an in-house FCPA compliance program. Prosecutors may even forgo bringing charges against a company that is facing a violation of the statute if the company has a robust program already in place.

We reported the comments of a prominent SEC official on the top enforcement actions that hedge funds may expect during 2013 and noted that the SEC is positioning itself as an extraterritorial regulator.

On our blog Technology’s Legal Edge, we interviewed Edith Ramirez, the new FTC chair, about her vision of FTC actions on privacy.

Our blog Education Industry Reporter, we provided guidance for educational institutions on responding to a Department of Education program review, as well as for educational institutions and their contractors, consultants and other outsourced service providers on ensuring that their contracts are FERPA-compliant.

And on our blog Re:marks, we covered recent comments by the Commissioner for Trademarks of the USPTO and the Chief Administrative Trademark Judge of the US Trademark Trial and Appeal Board.

We are also watching the regulators worldwide as they oversee the business world.

The first minutes and hours after the government executes a search warrant, serves a subpoena or otherwise lets you know you’re under investigation can be critical in determining the investigation’s eventual outcome. DLA Piper’s handbook Investigative crises: surviving until help arrives outlines the key do’s and don’ts for use during the initial period before counsel arrives.

In Australia, we observed, the Australian Competition and Consumer Commission spent 2012 enforcing the Australian Consumer Code, and it is likely that throughout 2013 these activities will grow – most notably in the area of competition – and the push for higher penalties, particularly against large corporations and repeat offenders, is likely to continue.

On our blog Sports, Media and Entertainment Online, we reported that Fran├žois Hollande, president of France, is not abandoning his goal of an income supertax – most recently seeking to have employers pay an additional tax of 75 percent of the salary of their employees who receive more than € 1 million a year.

And on our blog Health Care Enforcement and Compliance Matters, we examined a final US rule that seeks to reduce health care costs and increase flexibilities under federal privacy regulations.

Protecting Your IP

patentsIn March, the US patent system underwent a fundamental change from a “first to invent” to a “first to file” system – a change that is critical in an age when patents are an increasingly important part of the assets of startups.

We are tracking the rapid developments around the issue of trade dress – protecting a product’s appearance. Bitter battles over the tint of a shoe sole or the shape of a bottle are only part of the picture.

On IPT Italy, we reported the latest in the four-year legal battle between Guess and Gucci over trademark coutterfeit and unfair competition issues.

Our quarterly newsletter Intellectual Property and Technology News reports on worldwide legal developments. One of the magazine's newest features offers a quick look at important IPT cases before the United States Supreme Court.

On our blog Sports Media and Entertainment Online, we are closely following a patent dispute between basketball great Michael Jordan and a Chinese sportswear company, over the rights to pinyin versions of his name.

And we are keeping a weather eye on the attempts by broadcasters to shut down Aereo, an Internet service that retransmits TV programs to individual subscribers online without paying copyright fees.

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This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.

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