Act
Now On Pending Legislation/Regulations
By Susan
Kohn Ross
Lacey Act Comment Period Reopened
In the October 29,
2010, Federal Register, USDA's
Animal and Plant Health Inspection Service reopened the comment period to
gather further input on how to define the terms "common cultivar"
and "common food crop." The comment deadline, originally set to
expire on October 4, 2010, has been extended until November 29, 2010. For
more details see http://edocket.access.gpo.gov/2010/2010-27425.htm.
The original August 4, 2010, notice proposed the following
definitions: "Common cultivar." A plant (except a tree) that: (a)
Has been developed through selective breeding or other means for specific
morphological or physiological characteristics; and (b) Is a species or
hybrid that is cultivated on a commercial scale; and (c) Is not listed: (1)
In an appendix to the Convention on International Trade in Endangered Species
of Wild Fauna and Flora (27 UST 1087; TIAS 8249); (2) As an endangered or
threatened species under the Endangered Species Act of 1973 (16 U.S.C. 1531
et seq.); or (3) Pursuant to any State law that provides for the conservation
of species that are indigenous to the State and are threatened with
extinction.
"Common food crop." A plant that: (a) Has been
raised, grown, or cultivated for human or animal consumption, and (b) Is a
species or hybrid that is cultivated on a commercial scale; and (c) Is not
listed: (1) In an appendix to the Convention on International Trade in
Endangered Species of Wild Fauna and Flora (27 UST 1087; TIAS 8249); (2) As
an endangered or threatened species under the Endangered Species Act of 1973
(16 U.S.C. 1531 et seq.); or (3) Pursuant to any State law that provides for
the conservation of species that are indigenous to the State and are
threatened with extinction. In addition, we propose to add a definition for
"plant," consistent with the definition in the Act, to read as
follows: "Any wild member of the plant kingdom, including roots, seeds,
parts or products thereof, and including trees from either natural or planted
forest stands."
Are those definitions reasonable and workable? Submit your
comments while you can.
Fashion Design Piracy Bill
In the current
lame-duck session of Congress, it is not yet clear what will happen regarding
a number of pending matters. Of particular interest to the fashion industry
is what has been called a design piracy protection measure (see http://thomas.loc.gov/cgi-bin/query/z?c111:S.3728
for the text). While on its face the bill would seem to make sense, a closer
look prompts serious concerns. Couched as an attempt to protect the designs
of novice artisans, this bill would allow a designer to claim his or her
design is original and therefore entitled to protection under the Act. The
designer may then file suit against anyone claimed to have copied that
design. Notice there is not one word said about obtaining copyright
protection. The supporters of the legislation would have us believe copyright
protection is too expensive and unnecessary. In reality, the cost is
negligible AND gives notice of the originality of the design to the world.
Absent any requirement of an offer of proof of originality,
this bill permits a designer to simply say I have published my design
(somewhere, no matter how obscure), claim the design is "a unique,
distinguishable, non-trivial and non-utilitarian variation over prior designs
for similar types of articles," and seek damages. Limited design rights
exist under U.K. law, but
the scope of that law is narrow, plus the U.K. operates under a loser-pays
system whereby, before bringing litigation, a plaintiff must have some level
of assurance the case will succeed. As such, plaintiffs must be much more
cautious about bringing lawsuits. The system is obviously quite different
under U.S.
law.
In the absence of copyright registration, a retailer or
other provider of private label or other fashion merchandise becomes liable
should some unknown designer claim infringement of his/her design and pursue
litigation. To what extent any fashion design truly is unique is itself under
debate by fashion followers and historians whose knowledge of runways and
racks is far superior to that of judges and juries in whose laps such
decisions would fall according to this bill.
The most serious concerns fall into two categories. First,
what will the impact of such a loosely worded law have on the fashion
industry? Will it cause distributors and sellers to change how they do
business and thereby limit the choices available to the ultimate consumers?
Many companies rely on factors for cash flow. What additional steps might
factors impose before agreeing to finance a company's
inventory? As the California Fashion Association stated in its recent
position paper, "This legislation protects those who design the $2,500
garment, and imperils those who design the $150 garment."
The second category of concern involves the extent to which
lawsuits are filed against "deep pocket" defendants whose resources
become appealing targets for those in pursuit of damage awards. In a
loser-pays situation, those sorts of frivolous lawsuits are not generally
filed. However, since attorneys'
fees are difficult to collect in the U.S., will this bill provide the
plaintiffs' bar with additional
grounds to seek nuisance settlements from distributors and retailers? The
Retail Industry Leaders Association stated it this way: "Our members are
concerned that if enacted, S. 3728 would result in increased, costly
litigation that would cause uncertainty at all levels of the fashion industry
and limit the ability of the vast majority of American families to enjoy
fashionable apparel at affordable prices."
For more details, see http://www.calfashion.org/index.php?option=com_content&task=view&id=42&Itemid=.
The sponsors of the bill include Senators Schumer (NY), Boxer (CA), Cardin
(MD), Feinstein (CA), Gillibrand (NY), Graham (SC), Hatch (UT), Hutchison
(TX), Kohl (WI), Snowe (ME), and Whitehorse (RI). Let them know what you
think.
Which Way Did They Go?
CBP recently issued a
cargo notice reminding importers that, if their addresses are wrong in the
CBP system and mail is returned, their bonds will be rendered insufficient,
i.e., canceled.
Each time mail is returned, CBP works to acquire the
correct address, but if the agency is unsuccessful, it has an easy way to get
the importer's attention. It
simply cancels his bond. If it turns out CBP is wrong, the importer has
recourse; but the really interesting question is how often does CBP first
check its own address database? There is still a myriad of mail being
addressed by CBP to importers at addresses that were vacated long ago and
superseded by updated 5106 filings, but the new addresses are not being used.
Make sure that your address is current and accurate in the CBP system by
checking with your customs broker. If it is not, you should immediately file
a CBP From 5106 and update the data.
Lawyers Are Treated Differently, Or Are They?
Most international
traders and service providers are right to think that government officials
should be more pleasant in dealing with them. Those same individuals
recognize that often lawyers are dealt with differently by the agency
representatives simply because lawyers know well the procedures that should
apply and will not agree to deviations based on the whim of a government
individual. This is sometimes known as the "I get paid to be the bad
guy" approach by members of the bar.
Now comes word that in-house attorney Lauren Stevens, who
worked for Glaxo Smith Kline, has been indicted in the context of
representing her client. The underlying facts involve an investigation by the
FDA of GSK's marketing of
Wellbutrin SR, which was approved by the FDA for the treatment of depression.
The FDA claims to have learned that doctors were marketing the drug for
weight-loss purposes and allegedly doing so with GSK's
encouragement and even authorization. GSK was asked to provide documentation
on this topic to the FDA, and, according to the FDA, certain materials
supposedly incriminating to GSK's
case were purportedly withheld by Ms. Stevens.
The indictment can be found at http://westlawnews.thomson.com/uploadedFiles/National_Litigation/News/2010/11_-_November/Stevens%20Indictment.pdf.
It details the allegations, including that GSK paid doctors to lecture about
the drug, during which lectures off-brand uses were widely touted. The former
GSK attorney is alleged to have agreed to provide a wide range of
documentation from those lectures and other events. It is further alleged
that Ms. Stevens sanitized the documentation before presenting those edited
and incomplete materials to the FDA. According to the FDA, she thereby
withheld materials she and the company had agreed to turn over. The
indictment, handed down in Maryland,
where the FDA is headquartered, references repeated instances of her
withholding information and misrepresenting the facts.
As such, the lawyer was charged with obstruction of
justice, falsification/concealment of documentation, aiding and abetting, and
false statements. However, we are already hearing claims that what Ms.
Stevens did was done on advice of counsel, and counsel has been described as
an outside law firm well-versed in FDA law. So, is this case smoke or is it
fire? Is this ChemNutra all over again? Is a government agency trying to make
more out of a set of facts than is warranted in an attempt to make a point?
We are following this case and will let you know.
Employers Beware Re Arbitration Clauses
In a case certified
for publication only late last month, the California Court of Appeal struck a
mandatory arbitration clause that was contained in an employment contract.
See Trivedi v. Curexo Technology Corporation, 189 Cal. App. 4th 387 (2010), which is the
latest in a long line of cases providing guidance as to what provisions may
lead to an unenforceable arbitration agreement. Trivedi was not your typical dispute over
employment arbitration, where the court is seeking to protect a possibly powerless
and/or unsophisticated employee from unwittingly waiving the right to a jury
trial. Rather, the Trivedi plaintiff was the President and CEO of the company,
a fact that, somewhat surprisingly, appears to have played no role in the
Court's analysis.
As a preliminary matter, the Court found several points to
be quite troubling. For example, the arbitration provision was presented on a
"take it or leave it" basis and so allowed for no negotiations.
Second, the agreement referred to arbitration before the American Arbitration
Association, but the company failed to provide a copy of the AAA rules to the
executive. Finally, while not a point on which the Court in the end relied,
it did nonetheless note the arbitration provision was in the same type face
and no more conspicuous than any other contract provision.
The Court concluded the at-issue arbitration provision was
substantively unconscionable on two separate grounds. First, by providing
that the "prevailing party" was entitled to recover attorneys' fees and costs incurred in the arbitration, the
agreement forced the employee to waive an important public policy protection
of the Fair Employment and Housing Act (FEHA), which limits an employer's right to recover attorneys' fees in instances where the employee's claims are found to be frivolous, unreasonable,
without foundation, or brought in bad faith. In other words, the employee
faced a much greater risk by bringing an FEHA claim to arbitration than if he
retained the right to a jury trial. Second, by allowing the parties access to
the courts for injunctive relief but no other claims or remedies, the
agreement was unconscionably one-sided in the employer's
favor for the simple reason that employers are more likely to seek injunctive
relief. The Court lastly held that the lower court had not abused its
discretion by refusing to sever these two offending clauses as they
reasonably caused the agreement to be "permeated by
unconscionability."
Employers beware and make sure your employment agreements
are fair.
Major Drug Routes
In a Presidential
Proclamation dated October 29, 2010, President Obama indentified the
following countries as major drug transit or illicit drug-producing
countries: Afghanistan, the Bahamas, Bolivia, Burma, Colombia, Costa Rica,
Dominican Republic, Ecuador, Guatemala, Haiti, Honduras, India, Jamaica,
Laos, Mexico, Nicaragua, Pakistan, Panama, Peru, and Venezuela. For more
details, see http://edocket.access.gpo.gov/2010/pdf/2010-27676.pdf.
For C-TPAT and other cargo security reasons, U.S. Customs and Border
Protection (CBP) should follow up with a list of the countries it considers
high-risk as that list is much longer.
A Rose By Any Other Name
Over the years, we
have come to expect that in each Congress there will be at least one
Miscellaneous Tariff Bill that will provide for special tariff provisions
yielding duty refunds to interested parties. In this session of Congress, it
was called the Manufacturing Enhancement Act of 2010 (see Pub. L. 111-227).
See http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_public_laws&docid=f:publ227.111.pdf
for details about which goods are affected and how long you have to file your
refund claim, even if your entries are already liquidated.
