Archive for January, 2011
Schar USA, a division of Italy-based Dr. Schär Srl, Europe’s leading producer of gluten-free products, “broke ground” on its first U.S. manufacturing facility in Logan Township, New Jersey last week. That is to say, they put blueprints for new facility in a time capsule to be built into the building. I don’t blame them. Right now, the best use for a shovel would be to clear snow.
- Commissioner of China’s State Intellectual Property Office Tian Lipu says “China Is Serious About Intellectual Property,” despite negative stories in the media to the contrary. Intellectual property (IP) laws are a relatively new concept to the Chinese. Pre-1980, little to no knowledge of intellectual property rights even existed. Since then, formal IP laws and protective measures have been gradually introduced. As a result, IP infringement in China continues to effect western countries and multinational corporations more each year. Within the last decade, the Chinese government has begun to curtail the problem and acknowledge U.S. concerns. The problem which originated between the two superpowers has now undeniably become a global issue seeking reform.
- This month, the Chinese Minister for Commerce Chem Deming invited foreign executives from companies such as Microsoft, Motorola and Nokia to attend an intellectual property forum to address and discuss the contentious IP issues. Slight improvements have been acknowledged by foreign experts stimulated by China’s acceptance of its continued IP abuse and the damaging effects this abuse has caused to its reputation abroad. Moreover, Chinese companies have begun lobbying the government to increase IP protection following the backlash to their own businesses.
- Over the last three months, 4,000 people have been arrested in violation of intellectual property rights in China, as part of a six-month campaign implemented by the Chinese government to crackdown on copyright infringement, piracy and counterfeit goods. Notably, the number and financial cost of IP infringement cases has tripled in the last year. The International Intellectual Property Alliance (IIPA) estimated U.S. trade losses to be up to $3.5 billion a year. China accounts for 80% of counterfeit merchandise collected at U.S. borders.
- Even Chinese government agencies have been criticized for downloading illegal software updates for programs they purchased illegally. The discrepancy between Chinese hardware and software sales is indicative of the ongoing illegality. Protectionist barriers created by the government have also prompted tension with the West. Beijing has gone as far as to implement a trade barrier formally known as “indigenous innovation” which effectively insists that products sold in China must be conceived and designed there.
- Recent trade discussions held in Washington D.C. between U.S. lawmakers and the Chinese President Hu Jintao included discussion of U.S. concerns for China to restrain North Korea’s aggressive policies, which are mounting pressure on economic trade. Future development between the U.S. and China is largely dependant on the two collaborating and adhering to IP laws. Furthermore, the European Union (particularly Germany) and Japan have voiced concern about IP infringement and trade, urging China to strengthen enforcement and boost protective measures.
Compiled and summarized by Muireann O’Keeffe.
- The Chinese President Hu Jintao met with the U.S. President Barack Obama and U.S. business executives this week to discuss trade between the countries among other things. Meanwhile, YUM! Brands, Inc. (Louisville, Kentucky) has already set a high benchmark for U.S. businesses expanding in China with tremendous growth and success. YUM! Brands, owner of KFC, Pizza Hut, and Taco Bell, has experienced unprecedented growth in China, boasting figures 20 percent (%) higher than previous years. The glocalization concept, thinking globally and acting locally, has been crucial in its global strategy. The corporation has adapted its worldwide chains to meet the preferences and tastes of local customers. By focusing on customer needs, YUM! has avoided barriers faced by its competitors politically, culturally and geographically.
- Tension is high among employers in New Jersey as they await the seminal decision of the Appellate Division of the Supreme Court in Newark, New Jersey, this week. The case in question, White v. Starbucks may have widespread effects for employers under the New Jersey, Conscientious Employer Protection Act (CEPA / The Whistleblowers Act). Previously, the case was dismissed on the grounds the plaintiff’s claim was within her sphere of work and therefore not protected under CEPA. As feared, the upcoming decision could open the floodgates for civil action arising out of trivial employee complaints brought under the CEPA.
- Wal-Mart Stores, Inc. (Bentonville, Arkansas) recent take-over of Mass-Mart Holdings, Ltd. (Johannesburg, S. Africa) has spurred tension among local unions, who are hugely influential in the country. The take-over has erupted S. Africa’s labor federation, COSATU, which is currently threatening a boycott against the American corporation. To keep the parties at peace, Wal-Mart has indicated it will make an effort to keep the S. African management in their existing positions.
- The National Retail Federation and audit firm at KMPG, LLP (headquartered in Amstelveen, Netherlands) has announced retail store owners are confident this year will see an improvement in business growth. With retailers looking to expand and improve in 2011, the widespread lackluster growth of the past two years may finally see an end. Focus areas include; mobile e-commerce, consumer research gathering data, customer service and cost contamination. In addition, the use of the Twitter network for advertising has substantially increased.
- One of the world’s largest music companies Warner Music Group (New York) has hired Goldman Sachs Group, Inc. (New York) to oversee the buyout of the group, looking to media companies and financial investors. However, it has been rumored the Music Group may end up only selling part of the company at this particular time. Simultaneously, a separate division of Sachs is responsible for Warner’s potential buyout of music company Electric & Musical Industries, Ltd (EMI Group) (London).
- Lastly, the nouveaux riches in India are lavishly enjoying their new found wealth. In 2009, it was reported individuals falling into the upper class bracket had increased twofold. Interestingly, this boom is in large part due to the growing demand in the alcohol market. India is one of the world’s fastest growing markets for spirits, and remains Asia’s largest producer of alcohol.
Compiled and summarized by Muireann O’Keeffe.
- Reacting to the current growth in the securities market, the Chinese government is imposing restrictions to ensure reporters and editors have worked a specific number of years before entering the field. Latest figures indicate that China boasts the largest I.P.O market in the world, with Shanghai and Shenzhen grossing $72 billion in 2010 alone. The General Administration of Press and Publication has setout the guidelines for the new restrictions, which will go in effect on Feb 1, 2011. The principal concern is protecting the interests of stakeholders, including investors and the public.
- A significant reform to The United Kingdom’s (UK) libel laws is planned in the coming months. Over the past few years, the British freedom of expression laws, have fallen under severe scrutiny and will likely be replaced following the announcement of a draft proposal bill. The contentious laws have incited many foreigners to take advantage of the stringent U.K. system. As a result, the United States (U.S.) has ruled foreign libel laws unenforceable in U.S. courts. The proposed bill will impose statutory defenses for speaking out in the public interest and pinpoints the defenses, qualified privilege and fair comment, as other key areas for reform. Nonetheless, critics of the overhaul remain concerned for those with legitimate reputations to protect in British courts.
- In trademark news, Cuba has brought an unusual infringement case against a Michigan cigar lounge in Federal District Court in Detroit. Cuba is relying on the likelihood of confusion between the Michigan lounge “La Case De La Habana” and their famous internationally known store “La Casa del Habano.” Notwithstanding the fifty year trade embargo to U.S. shores, international agreements permit government owned businesses in Cuba to register trademarks in the U.S. However, with Cuba having no current use of the mark in the U.S., it is anticipated that this issue will be fundamental in the dispute between the parties.
- The United States Trade Representatives (USTR) has voiced its concerns following China’s continued reluctance to eliminate restraints on the export of rare earth materials. Evidently, the lack of cooperation has spurred anxiety between its trading partners. For the most part, the problems have been pinpointed to China’s persistence to protect its domestic market and government owned enterprises. Furthermore, the U.S. has indicated it will pursue further action in the form of World Trade Organisation (WTO) dispute settlement, if the countries cannot collaborate.
- A modern and realistic take on the future of the entertainment industry can be found here: Digital Explosion Changes Landscape for Entertainment Lawyers.
Compiled and summarized by Muireann O’Keeffe.
On January 14th, 2011, the White House announced that President Obama has ordered significant changes to policies regarding Cuba and has directed Secretaries of State, Treasury and Homeland Security to take certain steps towards changing regulations and policies governing:
- purposeful travel;
- non-family remittances; and
- U.S. airports supporting licensed charter flights to and from Cuba.
What Every Foreign Manufacturer Doing Business in the U.S. & NJ Should Know, Part I: New Jersey’s Consumer Fraud Act
“Together with the District of Columbia, every state now has codified some form of consumer protection.”1 New Jersey and California have some of the toughest consumer protection laws. As an example, we will focus on the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (the “CFA”).
The CFA is a powerful tool that consumers can use against sellers of consumer products. Consumers can recover for reasonably ascertainable economic losses that result from 1) a seller’s misrepresentations in an affirmative statement, 2) a seller’s intentional omissions of material fact, or 3) a seller’s violation of applicable regulations. In addition to the broad powers that the CFA gives to the Attorney General to penalize such conduct, consumers can recover treble damages and attorney’s fees in a direct civil lawsuit. These heavy damages and the way in which some New Jersey trial courts apply the CFA, combine to make treading in New Jersey somewhat tricky.
- Finance officials in India are currently examining whether Kraft Foods (United States) avoided tax obligations during its takeover of Cadbury (United Kingdom) for $19 billion last year. The world’s largest food and confectionary corporation allegedly evaded taxes related to the sale of shares, which reportedly had an extensive affect on the Indian economy. Last year, a public interest lawsuit was filed in Delhi under income tax laws, which treat brands, goodwill, market share and franchise as capital assets and are therefore, taxable. In addition, Vodafone (United Kingdom) is appealing a two billion dollar judgment from an Indian court that alleged the British company’s multibillion dollar takeover of India’s largest cellphone company evaded capital gain taxes
- The New Year certainly appears positive for Facebook (headquartered in Palo Alto, California), as Goldman Sachs Group Inc. (New York) and Digital Sky Technologies (Russia) invested $450 million and $50 million respectively in the social network. The substantial investment will allow the social network to increase its employee base, enhance services and improve worldwide competitiveness. Moreover, the new deal caused the company’s valuation to soar to $50 billion.
- Following four years of negotiations, the European Union and India are one step closer to signing an extensive free trade deal. Principally, the deal looks to simplify the flow of commerce and reduce taxes on products by up to 90 percent (%). India is now seen as a leader in the emerging markets arena, in addition to boasting high annual growth rates. Notably, last year, $52 billion was recorded in trade and investment between the EU and India.
- Another bleak result was reported for the European Union (EU) in the mergers and acquisitions (M&A) market, as it measured a mere 29 percent on the global mergers scale. Indicative of the current state of the European Union and weakening EU currency, it has been over a decade since the EU represented such a small portion of M&A worldwide market. Interestingly, Britain, who is not a party to the EU’s single currency arrangement, contributed to one quarter of the EU’s total M&A figure alone.
- In an effort to improve traffic congestion in Beijing, China, the government has implemented a new quota system restricting the number of licenses to be issued each year. Since 1986, Shanghai has capped the number of automobiles on its roads by restricting the number of new car licenses. Automobile stocks fell in Hong Kong as tax subsidies on small cars were increased and rural subsidies were eliminated. In 2009, the Chinese auto market exceeded the United States (U.S.) market, however, it is predicted the current measures may see China fall behind again.
- Lastly, an interesting article, Private Equity Looks Abroad, But May Be Blind to the Risks, comparing the risks facing private equity firms in the United States and abroad, highlighting key differences in profits, taxes, regulations, laws, restrictions on ownership and currency.
Compiled and summarized by Muireann O’Keeffe.