On October 10, 2019, California Attorney General Xavier Becerra announced a long-awaited notice of proposed rulemaking and draft regulations for the California Consumer Privacy Act (CCPA), California’s new consumer privacy law, which we have analyzed here and here.

In this first part of our multi-part series on the CCPA regulations, we will focus on how the draft regulations affect businesses’ notice obligations under the CCPA. As discussed below, the new regulations provide detailed guidance that will have important ramifications for businesses, in particular those that sell or otherwise monetize consumer information.

Click here to continue reading the full version of this article.

The ICO Bares its (Sharp) Teeth: What You Need to Know About GDPR One Year On

We have now seen the ICO bare its teeth with huge proposed fines for GDPR breaches.

In this session, we will be hosting a panel discussion on practical issues around GDPR one year (and a bit) on, what organisations need to be doing to avoid missteps, and the likely consequences if they get it wrong. Retailers & consumer products companies will benefit from learning the latest on GDPR enforcement. This session is taking place on Thursday the 17th of October at Chartered Accountants’ Hall in London. To RSVP or send any questions about this event, please contact Anna Prescott.

Takeaways:

  • Latest developments of GDPR & Brexit effect
  • ICO enforcement and fines – key emerging themes
  • Practical steps organisations can take to avoid problems
  • Operational risks and priorities
  • Lessons learned from prior mistakes
  • Follow on claims and class actions

Our Panel:

Crowell & Moring is pleased to announce that partner Kris Meade will be speaking at the Retail Industry Leaders Association (RILA) 2019 Retail Law Conference.

Kris Meade will be joined by Louise Brock, General Counsel of Bridgestone Americas for a session titled, “Pay Equity Laws and More: Bridging the Gap.” The importance of pay equity is making headlines worldwide, from corporate boardrooms and the U.S. Women’s Soccer team to state legislatures and international law-making bodies. Program attendees will learn best practices surrounding pay equity, discuss the ever-increasing demand for transparency in this arena, and recognize the importance of pay equity as a market differentiator as their companies compete for talent on a global stage.

The 2019 Retail Law Conference is being held at the JW Marriott in Nashville, Tennessee, October 16th through October 18th.

The Miscellaneous Tariff Bill (MTB) process is administered by the U.S. International Trade Commission (ITC). Under the MTB process, U.S. importers may petition for duty-free or reduced-duty treatment of certain imported products by submitting an MTB petition to the ITC. The ITC has indicated that it will open its portal and begin accepting MTB petitions at 8:45am on October 11, 2019.

In general, for an MTB petition to be successful, there must not be any domestic industry opposition and any reduction of duties resulting from the change to the duty rate for the proposed product breakout may not exceed $500,000 per annum. Importers can request an elimination or reduction of duties, depending on the annual duty savings anticipated and the $500,000 threshold.

Additionally, merchandise classification is one of the more complicated, but critically important, aspects of submitting a petition for a duty suspension or reduction under the MTB petition process. The ITC’s website indicates that almost 700 (or 28 percent) of the petitions listed in the Commission’s final 2017 report were not recommended to Congress for inclusion in an MTB.  Many of these due to issues regarding classification and the ability of U.S. Customs and Border Protection (CBP) to administer the claimed provision.

Any successful MTB petition would then need to pass Congress and be signed into law by the president before becoming effective. If signed into law, then the MTB petitions may become effective January 1, 2021, with an expiration date of December 31, 2024.

The ITC’s new petition procedures appear more stringent than those applied during the 2016 round of MTB petitions. They indicate that the petitions should include (to the extent available): (1) CBP rulings issued on the product; and (2) a copy of other CBP documentation indicating where the article is classified in the HTS. Additionally, the petitions should include:

  1. an estimate of both total value and dutiable value for the product for the next five calendar years;
  2. an estimate of the share of total imports represented by the petitioner’s imports of the subject article;
  3. the names of any domestic producers of the article, if available;
  4. a certification of completeness and correctness; and
  5. an acknowledgement of the petitioner’s awareness that the information submitted is subject to ITC audit and verification.

The ITC has also indicated that there will be a clearer way to renew current MTBs. However, that information is not yet available.

On Sept. 13, Ann Marie Buerkle, the outgoing acting chairman of the U.S. Consumer Product Safety Commission and a staunch Republican, sided with Democratic commissioners Robert Adler and Elliot Kaye to elect Adler as the incoming vice-chairman of the commission. In this week’s Law360 publication, Matt Cohen provided his insights into the implications of this development.

Click here to read the full article.

The Federal Trade Commission (FTC) is soliciting comments on its 1997 Enforcement Policy Statement on U.S. Origin Claims and its ongoing enforcement of that policy. On September 26, 2019, the FTC held a workshop with key stakeholders to discuss how consumers perceive “Made in USA” claims, how advertisers and marketers comply with the standard, and whether the FTC’s current enforcement strategy is effective.

At the outset of the Workshop, the FTC raised the possibility of engaging in formal rulemaking, noting that 15 USC §45a gives it limited authority to promulgate rules for “Made in USA” claims that is less cumbersome than the typical rulemaking procedure, including the appropriate percentage of important components that would still be consistent with such a claim. However, the FTC’s primary focus throughout the workshop was to understand how consumers perceive Made in USA claims—both what it means for a product to be “Made in USA” and what messages a “Made in USA” claim communicates to consumers. The FTC was particularly interested in understanding whether consumers’ perceptions regarding the accuracy of a “Made in USA” claim might differ depending on the unavailability of materials in the United States, the specific product at issue, the sales platform, the identity of the competitors, and whether the competitors are using more or less foreign content or are bringing or removing jobs from the United States. In addition the FTC was interested in learning why stakeholders were generally reluctant to use qualifications (e.g. “Made in USA with fabric imported from Mexico.”)

The Current “Made in USA” Policy: How Well Does it Work?

Under the current FTC policy, to make an unqualified Made in USA claim, the product must be “all or virtually all” made in the United States. This includes both labor and raw materials. In enforcing this policy, the FTC has not articulated any particular percentage of content that is sufficient to satisfy the “all or virtually all” standard. Instead, the FTC has given guidance primarily through public closing letters as well as informal counseling. The FTC noted that it has issued 154 closing letters from 2010 to date. While there have been 27 court actions in the last two decades, enforcement activity is reserved for the worst offenders.

Stakeholders participating in the workshop expressed frustration with the vagueness of the FTC’s standards as well as the difficulty in complying with that standard. They advocated for bright line rules that they can easily apply to determine whether they can make an unqualified Made in USA claim.

In addition, the stakeholders also expressed frustration with conflicting frameworks within the United States such as the Made in USA standard in California, the Buy America Act and the implementation of that Act by federal agencies, and U.S. Customs laws. As one workshop participant pointed out, for some products, a product is considered to be made in the United States for Customs purposes, requiring the company to pay all applicable VAT and duties when exporting because the last substantial transformation occurred in the United States. However, that same product cannot be marked as “Made in USA” in the United States because the FTC’s standard is so strict. In the case of the jewelry industry, for example, it is often impossible to identify the original source of the raw materials.

How Can the FTC Improve its “Made in USA” Policy?

The FTC made clear that any rules it adopts must comport with consumer expectations as to what “Made in USA” means and how consumers interpret those claims. The FTC was skeptical of the feasibility of implementing a bright line rule that would apply across the board, noting that a claim can be false or misleading if a substantial minority of consumers are misled (which the FTC identified as low as approximately 10.5% net of control). Citing consumer research, the FTC found that there are two distinct views among consumers as to when a product can be considered made in the United States: (1) nearly all of the costs or parts must be from the United States for the product to qualify as made in the United States and (2) a high percentage of costs or parts must be made in the United States. The second group constitutes the majority of consumers, but the first group still constitutes a substantial minority.

The FTC also queried whether perceptions of Made in USA claims have changed in the past several years. The FTC noted that the impact of globalization and current political sentiments is unclear and requested that stakeholders submit recent consumer survey evidence in their written comments.

The FTC raised the possibility that different standards may apply to different products. The FTC noted that this was possible even under the current framework. For example, if a product is designed and produced in the United States but where the raw materials are sourced abroad, the FTC recommended that the stakeholder submit a survey showing that an unqualified “Made in USA” claim was consistent with consumer expectations. However, in developing updated Rules, the FTC was interested in learning whether factors such as the unavailability of resources in the United States and efforts to repatriate jobs to the United States may impact how consumers perceive a “Made in USA” claim for a particular product or in a particular category.

How is the FTC’s Current Enforcement Strategy Working?

Finally, the FTC asked the participants whether they felt that the FTC’s current approach to enforcing the Made in USA policy was effective. While the stakeholders felt that the Policy was difficult to apply, the stakeholders also almost universally stated that the FTC’s current enforcement efforts sent mixed messages to bad actors. The panelists felt that harsher penalties should be imposed on bad actors, citing the Patriot Puck case as an example of a “slap on the wrist” that does little to deter bad behavior.

While the FTC praised the low recidivism rate of companies that have received closing letters, some of the panelists disagreed with this assessment, observing that some recipients of closing letters have continued to make mistakes years later. In addition, some panelists expressed frustration with well-known companies that claim that their products are “Made in USA” when it is well known that the products contain a high percentage of foreign sources.

Closing Thoughts

“Made in USA” claims are popular among marketers. American consumers want products made in America for a wide variety of reasons, transcending political divides. For many consumers, buying “Made in USA” products signifies attributes such as higher quality, no human rights abuses, no child labor, responsible sourcing, as well as protecting US jobs. Given the importance of these claims, the FTC has been under increased pressure to increase enforcement of deceptive “Made in USA” claims. However, marketers struggle to interpret the FTC’s abstract “all or virtually all” standard while also reconciling it with competing standards that paradoxically render a product of US origin when exported, but not within the United States. The time is ripe for the FTC to take another look at its “Made in USA” policy.

Marketers making “Made in USA” claims should consider submitting comments before October 11, 2019. The FTC’s list of questions is available here.

On September 12, the Court of Justice of the European Union (CJEU) handed down yet another ruling on the interpretation of EU copyright law. With its Cofemel-decision (C-683/17), the CJEU harmonized the requirements for utilitarian objects, which might also be protected by a (registered or unregistered) design right, to benefit from copyright protection. Provided that the conditions explained hereunder are met, the Cofemel-decision confirms that lighting equipment, clothing items, furniture, motor vehicles, etc. enjoy copyright protection in all the EU Member States.

Going back several years, the implementation of the InfoSoc Directive (2001/29/EC) into national law marked the start of a harmonized EU copyright law. Several rulings of the CJEU later, it is now established case law that any work fulfilling the following two conditions will enjoy copyright protection. First, the work has to constitute the author’s own intellectual creation (Infopaq, C-5/08). The author must express his creative abilities in the production of the work by making free and creative choices so that the worked is stamped with his “personal touch” (Painer, C-145/10). Second, the work must be an expression of such a creation in the sense that the object can be accurately and objectively identified (Levola Hengelo, C-310/17).

With regard to the specific relationship between copyright and design rights, the CJEU established in 2011 in its Flos-ruling (C-168/09) that any work, whether or not it is, or has been subject to (registered or unregistered) design right protection, can enjoy copyright protection. According to the CJEU, basically reiterating Article 17 of Directive 98/71/EC on the protection of designs, it was up to the Member States “to determine the extent to which, and the conditions under which, such a protection is conferred, including the level of originality conferred.” As a consequence, differing national approaches had been developed throughout the EU. Hence, the question arose whether, in such circumstances, the level of copyright protection would not be harmonized and could thus differ from the standards imposed by the CJEU in its earlier case law.

In the dispute between G-Star and Cofemel concerning a jeans, sweater, and T-shirt model, the Portuguese Supreme Court asked the CJEU whether the national standard for copyright protection for utilitarian works could be upheld. In essence, Portuguese copyright law required utilitarian works (i.e. works of applied art, industrial designs and works of design) to invoke an individual, aesthetically remarkable, visual effect.

The CJEU explained the different ratios and objectives pursued by copyright and design right protection. As long as these objectives are pursued, nothing prevents both intellectual property rights to protect one and the same subject cumulatively. Moreover, any such cumulative application does not affect nor alter the conditions under which protection is awarded. Said differently, the CJEU explicitly confirmed that the harmonized (two) conditions of EU copyright law still apply and that no other national requirements can be relied upon. With regard to the specific Portuguese standard, the CJEU thus ruled that whereas the existence of aesthetic considerations is part of the creative activity, this alone does not suffice to establish whether the work constitutes the author’s intellectual creation, reflecting the freedom of choice and the personality of the author and thus fulfilling the originality requirement of EU copyright law.

With the CJEU’s Cofemel-ruling, the requirements for utilitarian works to benefit from copyright protection are now harmonized across the EU. As a consequence, certain national standards for copyright protection for designs will have to be adapted. It remains to be seen how harmonised the views of the national courts of the Member States will be when determining if a design expresses the author’s individual creation and personal touch and therefore should enjoy copyright protection.

It has long been said that politics makes strange bedfellows. In this case, Ann Marie Buerkle, the Acting Chairman of the United States Consumer Product Safety Commission, a Republican, sided with Democratic Commissioners Robert Adler and Elliot Kaye to elect Commissioner Adler as the incoming Vice-Chair of the Commission. That means Commissioner Adler will assume the Acting Chairmanship of the agency when Ms. Buerkle steps down as Chairman on September 30, 2019—a little less than one year after the Republicans gained the majority on the Commission for the first time in twelve years.

In today’s hyper-partisan politics, such a vote is noteworthy and surprising to many. Currently, the Commission is made up of five commissioners—Republicans Buerkle, Dana Baiocco, and Peter Feldman, and Democrats Robert Adler and Elliot Kaye. Traditional, partisan thinking presumes that the majority of the Commission (i.e., the three Republicans) would have elected a Republican to replace Ms. Buerkle as Acting Chair of the agency. But that is not the case here.

In a statement issued on Friday, Ms. Buerkle stated that “consumer protection is not political” and that she believed the incoming Acting Chairman should be “the most experienced, most senior commissioner who has previously served in this role.” A commissioner since 2009, Mr. Adler served as the Acting Chairman of the Commission in late 2013 and early 2014 upon the departure of then-Chairman Inez Tenenbaum. Although Ms. Buerkle and Mr. Adler, admittedly, have diverging political and regulatory philosophies, they are known within the product safety community to have a cordial working relationship grounded in mutual respect.

So what does this mean for the regulated community and other product safety stakeholders? In the short term, upon Acting Chairman Buerkle’s departure from the agency altogether on October 27, 2019 (about one month after she relinquishes the chair to Adler), the Commission will return to a 2-2 split along party lines and presumably some partisan gridlock, although the Commission will continue to operate according to its current fiscal year’s operating plan. As to longer term implications, presumably, Friday’s vote will incentivize the White House to nominate, and the Republican-controlled Senate to confirm, a third Republican commissioner to restore the Republican majority upon Ms. Buerkle’s departure from the agency in late October.

In the meantime, we congratulate Commissioner Adler on this development, and look forward to continue working with him and his staff.

Protecting creative endeavors and designs is a core activity of just about all fashion companies. Fashion items (clothing, accessories, handbags, shoes, etc.) can indeed be protected by copyright and design rights within the European Union.

Lesser known is the ‘unregistered community design’ (or: ‘UCD’) established by the European legislator in 2002 for the protection of products with a short lifespan. As the fashion industry is driven by rapid innovation, based on seasonal collections with new designs each time, this specific, unregistered and therefore inexpensive intellectual property right provides the ideal protection for many fashion companies. As fashion is a wide spread phenomenon and knows no boundaries, this intellectual property right could turn out to be the excellent fit not only for European fashion companies, but also for US fashion companies operating within the EU.

In this post, we will take a closer look at the how, what and why of this unregistered design right.

The object of protection in design law

The design right, be it the registered or unregistered variant, essentially protects the appearance of a product, which is determined by its characteristic features. These are in particular the lines, contours, colors, shape, texture, decorations, logos, photos, illustrations, materials, etc. For example, new designs of clothing or accessories, as well as decorative prints qualify for design protection.

The requirements for protection

To claim design protection, the design must meet two requirements: the design must be new and have an individual character.

The design will be considered new if no identical design has been made available to the public. Designs are considered to be identical if their characteristics differ only in unimportant details.

The design will have an individual character if the general impression it has on the informed user (the attentive consumer, shopper, fashionista or fashion blogger) differs from the general impression that the user has in comparison with older, existing designs. In other words, no déjà-vu feeling may arise.

In order to be able to claim an unregistered community design, it is also important that the designer properly notes, maintains and documents who created which designs, when, and when they were first disclosed to the public. Conversely, to avoid wrongful allegations of infringement, it is important to properly document and date the entire design process. Only in this way it can be demonstrated that the design was independently developed. Sketches, inspiration boards and brainstorming sessions are therefore best kept in a structured and chronological manner.

The choice between the registered and the unregistered community design

As soon as the design meets the above requirements, the designer has two options in the field of design law:

1) The designer chooses to register the design for a fee at a national or international design agency (for example the European Office, the EUIPO, or the Benelux Office, the BOIP). The protection lasts for a term of 5 years, after which it can be extended up to 5 times against payment up to a maximum protection term of 25 years;

2) or the designer opts for the unregistered design, which is created automatically (read: free and without registration obligation) for a one-time term of protection of 3 years from the date the design is made available to the public within the European Union for the first time. The designer must therefore disclose his creation to the public instead of undergoing the whole registration process. Public disclosure or making the design available to the public means: publishing, exhibiting, placing on the market or otherwise making publicly available in such a way that, in normal practice, the specialized circles operating within the European Union can reasonably be aware of the design. In other words, a design that has remained on the drawing board will not be deemed to have been made public.

The scope of protection of the registered and unregistered community design

However, the scope of protection of a registered and unregistered design will be different. As such, the holder of an unregistered design can only take action against counterfeiting in the literal sense of the word. It will thus be necessary to prove that the copycat-design was created by copying the older design.

On the other hand, a registered design has a broader scope of protection: its holder may exclusively exploit this design and has the right to oppose the use or subsequent registration by third parties of products with the same appearance or with an appearance that does not create a different overall impression.

Tips and tricks for the unregistered design

Although an unregistered community design offers less scope for protection, it remains a hugely interesting intellectual property right in the fashion sector. It is free, flexible, requires no administrative hassle, and offers a relatively short but clear scope of protection against counterfeiters. A well-documented and chronologically structured creation process, on the other hand, is indispensable in order to be able to claim this protection (or, to defend against possibly unjustified claims of design holders).

This article was originally published in Fashion United here.

Under a new rule that became effective August 3, 2019, the United States Patent and Trademark Office (“USPTO”) requires all foreign-domiciled trademark applicants, registrants, and parties to a trademark proceeding to be represented by an attorney who is licensed to practice law in the United States. This requirement applies to any entity with a principal place of business outside of the United States and its territories and any individual with a permanent legal residence outside of the United States and its territories.

This new rule is one of the USPTO’s responses to an increasing number of inaccurate, overbroad, and in some instances, possibly fraudulent trademark submissions, some of which originate abroad. The goal of this rule (and other USPTO efforts not focused solely on foreign trademark owners) is to help improve the accuracy of the U.S. trademark register and increase compliance with U.S. trademark law.

According to the USPTO, “increasing numbers of foreign applicants are likely receiving inaccurate or no information about the legal requirements for trademark registration in the U.S., such as the standards for use of a mark in commerce, who can properly aver to matters and sign for the mark owner, or even who the true owner of the mark is under U.S. law.” As further explained by Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, “Businesses rely on the U.S. trademark register to make important legal decisions about their brands. In order to maintain the accuracy and integrity of the register, for the benefit of all its users, the USPTO must have the appropriate tools to enforce compliance by all applicants and registrants. This rule is a significant step in combatting fraudulent submissions.”

Applications and submissions that were filed prior to August 3, 2019 by someone other than a U.S. – licensed attorney will be considered by the USPTO as-is. However, applicants and registrants may not respond to USPTO office actions without first appointing U.S. counsel. Further, for ongoing TTAB proceedings where a foreign-domiciled party is not currently represented by a U.S.-licensed attorney, the TTAB will suspend the proceeding and require appointment of a U.S. -licensed attorney.

Further guidance can be found here.