“Even if you own, or have the legal rights to use, all IP that you need to produce your own products or to deliver your services, you still could face serious legal and business consequences if any supplier in your supply chain uses ‘unauthorized IP’ (patents, copyrights, utility models, software, trade secrets, etc. that have not been authorized by the lawful owner and for which royalties have not been paid in accordance with relevant laws) at any point in its processes. […]

If any supplier in your supply chain, particularly one linked to Asia, is found to use unauthorized IP, then regulators, customers, competitors and others may perceive that your company is ‘benefitting’ from that use—and try to have your company held responsible.

In the United States, the Federal Trade Commission (FTC) has the authority to seek injunctive relief and civil penalties. The FTC has not taken significant enforcement action to date, but it is under pressure to address unauthorized IP use and is considering enforcement options. In addition, if a product violates Section 337 of the US Tariff Act of 1930, even inadvertently (by using unauthorized IP in the design, production, marketing or sales processes or integrating unauthorized IP into any component of the product), then the International Trade Commission (ITC) can issue an ‘exclusion order’ directing US Customs and Border Protection to block the product from importation into the United States—thus cutting off your access to all US markets.”

“It’s a busy time for US government officials charged with imposing sanctions against Iran. What’s new?

1. Sanctions on financial institutions that trade in Iran’s currency:

‘On June 3, the Obama Administration announced a new Executive Order authorizing sanctions that directly target trade in Iran’s currency, the rial. The order authorizes the Treasury Secretary to take action against foreign financial institutions that knowingly conduct or facilitate significant transactions for the purchase or sale of the rial, or that maintain significant accounts outside of Iran denominated in the rial.’ (BuckleySandler)…”

“The United States has added three airlines from Europe and Asia, as well as two individual airline executives and 13 aircraft, to the list of Specially Designated Nationals (SDNs) due to the airlines’ support for Iran Air and Mahan Air of Tehran. The sanctions designations were based on U.S. Executive Orders with extraterritorial jurisdiction over parties who support certain sanctioned persons like Iran Air/Mahan Air – the newly sanctioned companies and executives were not U.S. nationals, no activity took place in the United States, and jurisdiction was not based on U.S. content in the aircraft. This highlights an additional risk area for aircraft operators, manufacturers and lessors of all nationalities.”

One FCPA compliance topic we are often asked about by clients is how government investigations start. The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have developed a number of mechanisms largely within their control (including whistleblowers and cross-industry investigations) to learn about bribery allegations.  There are also mechanisms outside of government control, such as investigative journalism, that can identify bribery allegations and effectively force the government’s hand into investigating them.  Recent events surrounding FCPA allegations against International Business Machines Corporation (IBM) suggest a new actor that can force the broadening or deepening of existing FCPA investigations: the U.S. courts. […]

The emergence of the court inquiry into IBM complicates how many companies have begun to orient their compliance practices.   As this blog reported here, in November 2012 the DOJ and SEC published the Resource Guide to the U.S. Foreign Corrupt Practices Act (the Guide), which provides general guidelines for establishing a compliance policy and provides information about specific features of compliance policies.  The delayed IBM settlement, followed by a DOJ investigation that extends to global tracking of internal reporting, indicates not only that the DOJ and SEC are not the final authority on matters of FCPA compliance, but that courts may be more active in policing compliance.”

“The UK Government has announced a review of the Bribery Act 2010 and its intent to reduce the cost of compliance for small and medium-sized businesses. The main focus will apparently be on facilitation payments. These are small payments given to officials to permit or speed up a service, and that are illegal under the UK Bribery Act but narrowly permissible under the U.S. Foreign Corrupt Practices Act (FCPA). The current legislation has been challenged by businesses that operate in jurisdictions where such payments are a common and arguably necessary occurrence and also by those companies that are subject to both the Bribery Act and the FCPA. At the same time, the facilitation payments exception under the FCPA itself appears to be under review and perhaps on the way out.

While many laud the UK Government’s expressed intention to reduce red tape for small and medium-sized businesses generally, these proposals are in contrast to repeated promises to clamp down on bribery, as well as contrary to the Serious Fraud Office (SFO) guidance statements that facilitation payments are regarded as bribes. It will be interesting to see whether any meaningful proposals actually come out of the review.”

“President Obama has issued a new Executive Order that goes into effect July 1, 2013. The Executive Order targets new areas of the Iranian economy for sanctions, including exchange transactions involving Iranian Rials and Iran’s automotive industry.  

Further, OFAC has issued long-awaited guidance on the sweeping sanctions against the energy, shipping and shipbuilding sectors of Iran, as well as Iranian port operators, under the Iran Freedom and Counter-Proliferation Act of 2012, which also comes into effect July 1, 2013.”

“The EU has renewed its sanctions against Syria until 1 June 2014, with the exception of the arms embargo. For Belarus, the Council has decided to delist three parties from the asset freeze list. For Libya, the Council has implemented recent EU sanctions amendments with respect to arms embargo exemptions and release of certain frozen funds.”

“Much of the coverage of the recent Foreign Corrupt Practices Act case against Ralph Lauren Corp. (RLC) focused on the fact that both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) awarded it a Non-Prosecution Agreement (NPA) due to its prompt voluntary disclosure and subsequent cooperation. The facts of the case, however, point to the steady entrenchment of a more ominous prosecution theory: an approach that appears to approximate strict criminal and civil liability of parent corporations for their subsidiaries’ corrupt acts. Although this disregard of corporate structures has been hinted at in previous SEC matters—and the theoretical underpinnings discussed in last year’s DOJ/SEC Resource Guide—the RLC case puts both agencies firmly in the camp of this aggressive and unprecedented expansion of corporate liability.”

“Late last month, the Securities and Exchange Commission published a set of Frequently Asked Questions on the agency’s conflict mineral and resource extraction disclosure requirements.

From lawyers and law firms on JD Supra, here’s what you need to know:

SEC Issues FAQs On Conflict Minerals Rules (Leonard, Street and Deinard):

‘The SEC has issued twelve frequently asked questions, or FAQs, on the conflict minerals rules. Although few in number, you could almost hear the cheers at law firms throughout the world as the staff offered mostly common sense advice on some often-debated questions…’” 

“The United States recently joined ongoing False Claims Act (‘FCA’) litigation that shows the potential for significant liability in government supply contracts. These contracts require the use of products made in the United States or in other designated countries, which notably do not include China or India… 

In this case, a private qui tam relator named Louis Scutellaro filed a complaint based on contracts that required vendors to comply and certify compliance with country of origin requirements under the Trade Agreements Act (‘TAA’), the Buy American Act (‘BAA’), and the American Recovery and Reinvestment Act (‘ARRA’), as applicable. The case alleged that defendant Capitol Supply, Inc. sold and presented claims to the Government Services Administration (‘GSA’) regarding non-compliant products, including paper shredders, light bulbs, light fixtures, televisions, batteries, and vacuum cleaners…

The United States sought ‘three times the amount of damages the United States Government has sustained because of Defendant’s actions,’ which is commonly referred to as treble damages, along with a civil penalty of $5,000 to $10,000 for each violation. Because the conduct at issue spans several years, the scope of civil penalties is substantial.”