Retail Law Observer

CPSC Proposed Significant Changes and New Obligations for Importers Relating to Certificates of Compliance

Cheryl A. Falvey — Tue, 21 May 2013 14:45:16 -0500

Retailers face new challenges in certification of their products to CPSC regulations. Among other things, the new proposed CPSC rule would place the certification burden on private labelers and require that importers of regulated finished products manufactured outside of the United States file the required certificate electronically with U.S. Customs and Border Protection (CBP) at the time of filing the CBP entry or at the time of filing the entry and entry summary, if both are filed together. In one of the most significant changes, the CPSC proposes to impose a certification requirement on common carriers, freight forwarders, and third party logistics providers that assume the role of "importer of record" for direct to consumer shipments from foreign manufacturers. Click here to read more about the proposed 1110 rule.

Companies May Begin to Protect Their Online Presence Anew: Trademark Clearinghouse Now Available for New gTLDs

Dickerson Downing — Thu, 11 Apr 2013 10:53:43 -0500

As of March 26, 2013, trademark owners may submit their trademarks for inclusion in the "Trademark Clearinghouse," which may be a valuable tool for minimizing the potential for abuse resulting from the imminent expansion in the number of generic Top Level Domains (gTLDs). Inclusion in the Clearinghouse will give the mark owner the opportunity to register the mark in each new gTLD before the general public and will provide other notice benefits as well.

The Internet Corporation for Assigned Names and Numbers (ICANN) is involved in a process that will greatly expand the number of gTLDs. Currently there are around twenty active gTLDs, of which ".com" is the best known. Soon new gTLDs will be implemented and hundreds more may follow. To address some of the concerns regarding the correspondingly expanded potential for trademark abuse, ICANN has authorized the establishment of a Trademark Clearinghouse to allow trademark owners to submit their trademarks into a centralized database for verification.

Inclusion in the Trademark Clearinghouse will convey potential benefits in two ways:

1. Sunrise Registration Benefits – eligible trademark owners will be given the opportunity to register their trademarks as domain names in each new gTLD Registry for a period of no less than 30 days prior to the opening of the Registry to the public, thus preventing cybersquatters from purchasing those marks; and

2. Trademark Claims Period – for the first 90 days of general registration in each new gTLD following the public launch, anyone attempting to register a domain name matching a mark in the Clearinghouse will receive a notification of the owner's rights. This notification must be acknowledged by the applicant before the registration can proceed. If the domain name is registered, the owner then receives a notice of the registration and can take appropriate action.
Four types of marks are eligible for inclusion in the Clearinghouse: 1) nationally or regionally registered word marks; 2) word marks that have been validated through a court of law or other judicial proceeding; 3) word marks protected by statute or treaty; and 4) other marks recorded in the Clearinghouse by arrangement with a registry.

To qualify for verification, a trademark owner must first have validated its trademark: he must submit verifiable information supporting its claim of ownership. In addition, if the trademark owner wishes to take advantage of the Sunrise Registration benefits and register domain names itself, it will be required to submit proof of actual use of the mark, consisting of both a Declaration of Use and a specimen reflecting the use.

The protections provided by the Trademark Clearinghouse are far from perfect from a trademark holder's perspective. The validation and the verification only work for identical matches. However, the Trademark Clearinghouse has the advantage of being mandatory for all new gTLDs and a single validation of a trademark could be used for all new gTLDs. Trademark holders should at least give consideration to submitting their most important trademarks for validation into the Trademark Clearinghouse in order to take advantage of the potential protections it may offer in the new Internet environment.

Content for this post was provided by Crowell & Moring attorneys Flip Petillion, John Murino, and Jonathan Anastasia.

Crowell & Moring to Co-Host Webcast on Conflict Mineral Regulations on April 16

Crowell & Moring — Wed, 03 Apr 2013 17:45:46 -0500

We are now over 3 months into the first compliance year for federal Conflict Minerals regulations, and over 6,000 directly impacted companies and thousands of their suppliers are trying to figure out the best way to build and execute an effective compliance plan. By this time, most of those impacted have a good understanding on the background of the legislation and on the key definitions, applicability considerations, and reporting requirements. They are now asking themselves, how do we go about instituting a sustainable supply-chain analysis that either allows us to achieve compliance in 2013 (year 1) and beyond, or else to make representations to those who must achieve compliance? Additionally, forward-looking companies have asked themselves how they can embrace the conflict minerals rules in the context of the corporate social responsibility and sustainability movement, thereby gaining a competitive edge.

On April16, 2013, Crowell & Moring will co-host (along with international consulting firm Resources Global) a webcast that will address many of the key challenges companies are facing including: lessons learned from early adopters and others who have already started down the path to compliance; and practical and opportunistic considerations to apply to your conflict minerals planning and compliance efforts.

Among the speakers are Crowell & Moring attorneys Morris DeFeo and Danielle Sugarman.

To register, please visit this link.

Allegation of Data Breach Alone Insufficient to Sustain Claims Based on Inadequate Cybersecurity Under California Law

Jennifer Romano — Thu, 21 Mar 2013 18:26:20 -0500

On March 6, 2013, the United States District Court for the Northern District of California held that a putative class of LinkedIn premium users lacked standing to pursue state law unfair competition, breach of contract, and negligence claims resulting from a hacking incident. The court dismissed the complaint, concluding that the plaintiffs failed to establish any legally cognizable injury and any causation between the alleged incident and any alleged economic harm.

LinkedIn, the online community for professional networking, offers both free and premium paid accounts to consumers. The Privacy Policy applicable to both types of accounts provides that user information will be protected with "industry standard protocols and technology," but notes that it provides no guarantee that LinkedIn's security will be able to prevent all security breaches. On June 6, 2012, hackers infiltrated LinkedIn's computer systems and posted 6.5 million user passwords and email addresses. LinkedIn subsequently updated its password encryption method to prevent future breaches.

A putative class of premium LinkedIn users filed an amended complaint alleging unfair competition, breach of contract, and negligence claims. LinkedIn filed a motion to dismiss for lack of standing, which the court granted.

The plaintiffs claimed that they suffered "economic harm" because they were denied the full benefit of their bargain for the paid premium memberships. Specifically, the plaintiffs alleged that they would not have purchased the premium product absent the security guarantees, and that the 2012 hacking incident shows they did not receive the promised security. The court rejected the plaintiffs' "economic harm" argument for several reasons.

First, the plaintiffs failed to show that they paid consideration for LinkedIn's promise to safeguard their information because the same security policies applied equally to the free and paid accounts. Second, unlike situations involving food-labeling misrepresentations, the plaintiffs did not allege that they actually read the alleged misrepresentation—the Privacy Policy—and thus failed to show a causal relationship between the misrepresentation and any injury. Third, the plaintiffs failed to show that the alleged breach of contract (i.e., failing to provide the security promised in the Privacy Policy) caused the economic loss (i.e., not receiving the full benefit of the bargain). Instead, the court concluded that the injury could only have occurred before the hacking incident at the time the parties entered into the contract. This particular aspect of the opinion addressing the timing of the alleged injury is likely to be the subject of debate. It was not, however, the sole basis for rejecting the plaintiffs' economic harm allegations. Indeed, the court also made clear that where plaintiffs allege harm from a defective product, plaintiffs must show "something more" than the economic harm of "overpaying for the defective product." Here, the plaintiffs alleged only that LinkedIn provided defective security, not that LinkedIn provided a product different than what the plaintiffs purchased. Consequently, the court concluded that the plaintiffs would need to allege "something more" resulted from the defective security, such as identity theft, which they did not do.

In addition to rejecting the plaintiffs' "economic harm" arguments, the court also held that the increased risk of future harm did not establish an injury sufficient to confer standing. The court concluded that the plaintiffs failed to state a legally cognizable injury by merely alleging that their passwords were publicly posted as opposed to alleging identity theft.

Based on the pleadings before it, this court concluded that the mere allegation of a security breach does not automatically confer Article III standing or provide the basis for cognizable state common law claims. Rather, the failure here to allege an injury beyond "overpaying" for a service, e.g., identity theft, required dismissal of these claims. The court also rejected the plaintiffs' claimed injury stemming from an increased risk of future identity theft, deeming it speculative and thus insufficient to sustain the claims. This decision bolsters the "lack of standing" defense to claims premised on security breaches brought in federal court. The case is In re LinkedIn User Privacy Litigation, 2013 WL 844291 (N.D. Cal. Mar. 6, 2013).

This post was co-authored by Jeffrey Poston, David Z. Bodenheimer, Robin B. Campbell, and Elliott Golding.

EPA to Consider New RCRA Regulations on Waste Retail Products

Crowell & Moring — Mon, 11 Mar 2013 22:38:38 -0500

The Environmental Protection Agency (“EPA”) has announced that it plans to explore future rulemaking on the management of “waste retail products” under the Resource Conservation and Recovery Act (“RCRA”). Waste retail products include unsold or returned retail products which may at some point become hazardous waste under current RCRA regulations. According to the Unified Agenda, “[b]ecause of the wide range of products that can become waste, retailers find it difficult to comply with the RCRA hazardous waste regulations that were designed for manufacturing and other types of industry wastes.” As a result, EPA has expressed an intent to issue a Notice of Data Availability sometime this month identifying relevant information and data, and soliciting additional information and comments from interested stakeholders and the public. Click here for further information.

This post was authored by Dawn Miller, an associate in Crowell & Moring's Washington, D.C. office. She practices in the firm's Environment, Energy & Resources Group.

Focus On Retailers At ICPHSO 2013

Crowell & Moring — Fri, 08 Mar 2013 13:54:06 -0500

The responsibilities of retailers for safety and health issues that arise in the supply chain became a recurring topic of discussion at the 20th annual International Consumer Product Health and Safety Organization (ICPHSO) meeting and training symposium held on February 26-March 1, 2013, just outside Washington, D.C. Representatives from the U.S. Consumer Product Safety Commission (CPSC or Commission), consumer product retailers, and others spoke about retailers’ past and future involvement with the Commission’s efforts to protect consumers from unsafe products.

In recent years, retailers have become involved in an increasing number of recalls of products for which they are not the manufacturer. The Commission typically prefers to work with manufacturers – as compared to retailers or others in the supply chain – to implement recalls for several reasons: (1) manufacturers usually have a superior knowledge about the product and supply chain; (2) they are usually in the best position to offer an appropriate remedy or fix; and (3) it is more efficient to deal with one manufacturer as opposed to multiple retailers. Retailers, however, have become useful allies of the Commission, and the CPSC does not hesitate to approach retailers when necessary. CPSC Commissioner Robert Adler explained that the Commission usually contacts retailers about recalls when a manufacturer has gone out of business or has chosen not to cooperate with the CPSC. Staff spoke about retailers’ unique ability to apply pressure to noncompliant manufacturers as well as to get word out to consumers about unsafe products. CPSC Chairman Inez Tenenbaum thanked retailers for their continued cooperation in conducting voluntary recalls during her keynote address at the annual meeting.

Retailers, manufacturers, and distributors each have an independent duty to report certain product safety issues to the CPSC pursuant to Section 15(b) of the Consumer Product Safety Act (CPSA) and each may be subject to civil and criminal penalties for failing to timely report. A retailer may not have a duty to report where it has actual knowledge that the CPSC is already aware of a possible health or safety risk associated with a consumer product, such as when a report has already been submitted by a manufacturer, though the Commission may still request that a retailer submit a Section 15(b) report. Panelists during a session on best reporting practices along the supply chain stated that some retailers may actually be better positioned than manufacturers to report safety issues to the CPSC because retailers are often able to detect incident trends through call centers, online databases, and product returns.

One interesting discussion involved a recent request of retailers to assist in a Commission educational campaign regarding the ingestion hazards associated with single-load liquid laundry detergent packets by making warning posters available at several conspicuous locations in a retail store. Commission staff acknowledged that it could not move forward with a ban on the single-load detergent packets but remain concerned about the pediatric ingestion risk. Staff asked retailers to “do the right thing” and make the warning posters available at the point of purchase for the next twelve months. Imagine, though, if every warning on product packaging, or even the most important of those warnings, were suddenly to become posters on or near store shelves. How would it look in a future case if a retailer refuses to follow the federal government’s “request”?

Speakers also discussed the role that retailers may play in improving recall effectiveness. Many retailers have implemented mechanisms – such as customer loyalty programs or discount cards – that track consumer purchases and are often used for marketing purposes. Those retailers may be under increased pressure to use that consumer purchasing and contact information to send targeted alerts to particular consumers about product recalls. CPSC staff stated that they are looking for firms to use more creative methods to communicate with consumers about corrective actions.

For additional information about ICPHSO and this year’s meeting, please click here. For additional information about retailers and the CPSC, please click here.

This post was authored by Crowell & Moring partner Cheryl Falvey, partner Bridget Calhoun, and counsel Natalia Medley. Ms. Falvey, Ms. Calhoun and Ms. Medley practice in Crowell & Moring's D.C. office.

Crowell & Moring Presents Advertising and Product Risk Management Seminar on "Staying Afloat When Your Brand Is Under Pressure: How to Avoid, Mitigate, and Manage Product Crises"

Bridget E. Calhoun — Thu, 14 Feb 2013 12:40:58 -0500

On Tuesday, March 18, 2013, Crowell & Moring’s Advertising & Product Risk Management Group will present its second annual seminar on crisis management. The program will take place in Crowell & Moring's Washington, D.C. office (1001 Pennsylvania Avenue, NW). Legal, business and public relations professionals will examine ways to reduce, and in some cases eliminate, the risk of a product crisis throughout the product lifecycle. From concept design through product launch, our panelists will discuss their approaches to minimizing the risk of product defects, port seizures, advertising claims, and class action litigation.

We invite you to participate in an interactive program addressing how innovative design, regulatory compliance and effective advertising can help speed your products to market. For those situations when safety concerns do arise, our panels will offer creative advice on how to react to product crises with rapid response while addressing media and litigation concerns.

Confirmed panelists for the full-day program include speakers from Volkswagen, Exponent, DuPont, Stericycle, Clorox, FTC’s Division of Advertising Practices, CBP, and CPSC, among other organizations.

We also invite you to be our dinner guest on March 18 at The Hamilton, 600 14th Street, NW, Washington, DC. There is no fee for the program or dinner, but space is limited.

Click here to register.

AGENDA

8:30 -- 9:00 Registration and Networking Breakfast

9:00 -- 9:05 Welcome

9:05 -- 10:05 Innovation Done Well: Designing Away Risk

10:05 -- 11:05 How Internal Policies & Practices Can Prevent—or Fuel—a Crisis: Concurrent Panels

· Handling a Mass Tort Litigation Claims Process

· Analyzing Agency Reporting of Cross-Border Product Incidents

· Managing a Product Recall Crisis

11:05 -- 11:20 Break

11:20 -- 12:20 It’s A Competitive Jungle Out There: How to Advertise Effectively And Within The Lines—and Defend Your Product Against Rivals

12:20 -- 1:20 Lunch

1:20 -- 2:20 Border Control Limbo: Minimizing Delays and Managing the Mechanics

2:20 -- 3:20 Front Page Problems: Defending Your Product and Brand in the Press & Public Policy Arenas

3:20 -- 3:35 Break

3:35 -- 4:35 You Just Got Served—Now What? Navigating High-Profile Litigation and Enforcement

4:35 -- 4:45 Closing Remarks

4:45 -- 6:00 Networking Reception

Click here to register.

Crowell & Moring Attorneys to Present "Consumer Protection and Manufacturers, Distributors and Retailers: What Obama's Second Term Will Mean for Your Business" in San Francisco and Palo Alto

Crowell & Moring — Tue, 29 Jan 2013 14:03:52 -0500

Crowell & Moring is pleased to announce two upcoming presentations regarding consumer protection regulation and enforcement and what President Obama's second turn will mean for retailers (as well as manufacturers and distributors). With the re-election of President Obama, we can expect the government to continue to add to the existing federal regulations. The discussion panel, which includes former agency officials at the FDA and CPSC and lawyers practicing before other key agencies like the FTC, will discuss the new rules, regulations, and enforcement priorities facing retailers, manufacturers and distributors during President Obama's second term. Ranging from food and consumer product safety issues, privacy initiatives, advertising and consumer protection priorities, these new and anticipated changes affect your bottom line.

These lunch presentations are hosted by the Association of Corporate Counsel San Francisco Bay Chapter. One session will take place in Palo Alto on February 12, 2013 at 11:30 a.m. The second will take place in San Francisco on February 13, 2013 at 11:30 a.m.

Please join us to learn how your business can thrive in light of recent developments as well as forthcoming regulations. Crowell & Moring’s Washington, D.C.-based Advertising and Product Risk Management attorneys will comment on key areas of regulatory activity in the area of consumer protection, including

the publication of the Federal Trade Commission’s (FTC’s) Green Guides on substantiation of environmental claims;
the FTC’s 2012 Privacy Report, “Protecting Consumer Privacy in an Era of Rapid Change: Recommendations For Businesses and Policymakers,” which outlines the FTC’s views on best practices for consumer data collection;
the Food and Drug Administration’s (FDA’s) sweeping new regulations under the 2011 Food Safety Modernization Act (FSMA);
the Consumer Product Safety Commission’s (CPSC’s) public database and requirements for testing and certification of consumer products which become effective in February 2013;
the new rules on the Children’s Online Privacy Protection Act (COPPA); and
the FTC in 2013 and what enforcement will mean for your business.

For additional information or to register for the Palo Alto session, please click here.

For additonal information or to register for the San Francisco session, please click here.

EPA Reverses Course and Promises to Withdraw TSCA Section 8(d) Cadmium Rule

Crowell & Moring — Mon, 17 Dec 2012 14:33:09 -0500

By email dated December 14, 2012, the Environmental Protection Agency (EPA) withdrew its controversial direct final rule requiring the reporting of existing and unpublished health and safety data for cadmium and cadmium compounds used in consumer products pursuant to section 8(d) of the Toxic Substances Control Act (TSCA). In its email, EPA admitted that "there is significant confusion and uncertainty within certain industrial sectors concerning the rule." EPA went on to indicate that it "will withdraw the immediate final rule and will sign a Federal Register notice announcing this decision no later than the January 2, 2013, effective date of the immediate final." EPA will be considering the questions and concerns raised in response to the immediate final rule and next steps with regard to this rule.

Several concerns that have been expressed about the rule involve its scope. The rule was aimed at manufacturers and importers of articles which, by itself is unusual under TSCA; it encompassed articles well beyond those that might present an exposure risk during normal and foreseeable use; it would have applied to applied to any consumer product for use in a home or school, not just children's products and metal jewelry; and it would have applied to a broad range of industries that are not typically covered under Section 8(d), including manufacturers, importers and retailers of consumer electronics, home furnishings, apparel and more. Moreover, the economic analysis EPA prepared in support of the rule failed to address the economic costs to importers of the articles (i.e., consumer products) covered by the rule; it only examined costs to manufacturers and importers of basic chemicals. The withdrawal is a significant change in course and particularly important given the precedent setting nature of the rule's impact on consumer product regulation.

EPA stated in its announcement today that it "will also continue to work with the Consumer Product Safety Commission (CPSC) to reduce exposure to cadmium in consumer products generally, and especially those consumer products used by or around children, such as children's metal jewelry." The CPSC has been particularly diligent in avoiding the application of its chemical regulations to inaccessible parts of consumer products and focusing its attention based on the risk of exposure such as the risk of harm presented by ingestible components of children's toys and metal jewelry.

Content for this post was provided by Cheryl Falvey (partner), Warren Lehrenbaum (partner), and Monica Welt (counsel) in Crowell & Moring's Washington, D.C. office.

Study Raises Question About Health Effects from Common Antimicrobial Ingredient Triclosan

Crowell & Moring — Fri, 14 Sep 2012 22:43:02 -0500

Although not approved by the FDA, triclosan is a common antibacterial agent in a number of household cleaning and personal hygiene products sold in the United States, including soaps, deodorants, hand-sanitizers, toothpastes, and mouth wash. In recent years, manufacturers have also expanded the use of triclosan as an antimicrobial in cosmetics, socks, workout clothes, and toys.

On August 14, 2012, researchers from the University of California, Davis, and the University of Colorado published findings suggesting that the antibacterial ingredient triclosan causes muscle weakness. The researchers observed that after exposure to triclosan, heart muscles in mice showed a diminished ability to contract, and that fish exposed to the ingredient showed reduced swimming activity. Triclosan has been previously scrutinized for its disruptive effects on the body's endocrine system and whether its use promotes the creation of bacteria that are resistant to antibiotics.

Some companies have already responded to increased public concerns about triclosan by taking steps to remove it from their product lines. Last year, for example, a major manufacturer of oral care, personal care, and home care products announced it was removing triclosan from most of its home-care products, and more recently a multi-national manufacturer of personal hygiene and other products followed suit announcing that it is phasing triclosan out of its beauty and baby care products.

Companies that have incorporated triclosan into their products should develop risk mitigation strategies to prepare for the inevitable class action lawsuits aimed at deep corporate pockets. At a minimum, manufacturers and users of triclosan products should closely monitor new research, FDA and EPA comments, and developing governmental actions impacting the continued use of triclosan.

For more information, see the full alert at the link below.

http://www.crowell.com/NewsEvents/AlertsNewsletters/all/New-Study-Raises-More-Questions-About-Triclosan-Health-Effects

Content for this post was provided by the following product risk management attorneys in Crowell & Moring's Washington, DC office: Monica M. Welt (counsel) and John Fuson (partner).

California's Proposed "Green Chemistry" Regulations Will Impact Consumer Product Manufacturers, Importers and Retailers

Crowell & Moring — Tue, 07 Aug 2012 16:21:11 -0500

On July 27, 2012, California released a revised draft of its Safer Consumer Products Regulations—commonly known as the "Green Chemistry Initiative." The proposed regulations establish a process for California's Department of Toxic Substances Control (DTSC) and product manufacturers to assess whether consumer products containing certain "chemicals of concern" can be made with safer ingredients. Once implemented, the regulations will empower DTSC to order companies to use substitute chemicals when manufacturing certain consumer products or face a ban on the sale of those products in California. Moreover, manufacturers that currently sell products only outside of California will have to be increasingly vigilant about whether their products end up being sold in California, and subject to these regulations.

Manufacturers, importers and retailers of consumer goods—defined as "responsible entities"—should be aware of that:

All consumer products will be impacted: Regardless of whether the product is named a “priority product” by DTSC or contains one of the 1,200 “chemicals of concern,” responsible entities will be required to provide information on the source, ingredients, and toxicity characteristics of each of their consumer products sold in California. Responsible entities with a "priority product" in the stream of commerce will have a heightened obligation to produce detailed reports—known as "alternatives assessments"—to DTSC, which DTSC will use to determine whether manufacturers will need to reformulate certain products to continue sales in California. Companies that do not comply will be named on a publicly accessible "failure to comply" list on DTSC's website.
All entities in the distribution chain should remain vigilant: While the obligations for responsible entities under the regulations are tiered, no level of commerce is exempt. Primary reporting and compliance responsibility will lie with the manufacturer. The importer will have responsibility if the manufacturer fails to comply, and retailers will be required to comply only if the manufacturer and importer (if any) fail to comply. Retailers will be responsible for tracking information posted on a "Failure to Comply" list on DTSC's website, and ensuring compliance for listed products.

The proposed regulations are presently undergoing a 45-day public comment period. DTSC intends to issue final regulations by the end of this year or early 2013. DTSC will hold a hearing on the proposed regulations on September 10, 2012, and written comments are due by September 11 at 5 PM PST.

For more information and to read the full client alert, please click on this link.

Content for this post was provided by the following product risk management attorneys: Kevin C. Mayer (partner in Crowell & Moring's Los Angeles office), Monica M. Welt (counsel in Crowell & Moring's DC office), and Lynn R. Levitan (counsel in Crowell & Moring's Los Angeles office).

ICANN Reveals List of Potential New Top-Level Domain Names: What Every Retailer Needs to Know

Terry Ross — Thu, 14 Jun 2012 16:44:40 -0500

On June 13, 2012, the Internet Corporation for Assigned Names and Numbers (“ICANN”) – the nonprofit corporation that is responsible for managing critical parts of the Internet infrastructure – publicly released a listing of approximately 1,900 new generic top-level domain names (“gTLDs”) that may be approved for use as early as March 2013. Every retailer that utilizes the Internet should review this listing and consider whether it must take action to protect itself from this dramatic expansion of gTLDs.

The Domain Name System helps Internet users to navigate the Internet. Every domain name ends with a gTLD, such as “.com” or “.org.” There currently are only twenty-two such gTLDs. But this limited universe of gTLDs is set for dramatic expansion.

ICANN has instituted a new and controversial policy that liberalizes the gTLD approval process and will result in a significant expansion of the number of gTLDs in use. Under this new program, entrepreneurs, businesses, governments, and communities around the world were offered the opportunity to apply to establish a new gTLD of their own choosing. Thus, the community of stamp collectors could obtain approval for “.stampcollecting.” Or, the Widget Corporation could obtain approval for a new gTLD, “.widget.” By the May 30, 2012 deadline, ICANN had received applications for more than 1,900 new gTLDs.

Whether or not a retailer applied for a new gTLD, it must pay close attention to the newly released listing of applied-for gTLDs for two reasons. First, an applied-for gTLD may be identical to or confusingly similar to its own trade name or one of its trade marks. Second, an applied-for gTLD that reflects a generic term, such as “.shoes,” may pose a competitive threat to its business. If a retailer is concerned about an applied-for gTLD, there are avenues available to obtain relief. These applications for new gTLDs will not automatically be approved by ICANN. They will be subject to a rigorous review process that will afford concerned retailers opportunities to stop an application, but they must act expeditiously. Advice from experienced counsel will help retailers navigate these issues. At the link is an analysis I prepared of the issues and steps retailers can take to protect their interests. You can also find the list of gTLDs and other information at the ICANN website.

An Interactive Discussion and Luncheon with Commissioner Anne M. Northup of the U.S. Consumer Product Safety Commission on April 30, 2012 - Washington, DC

Crowell & Moring — Thu, 05 Apr 2012 16:17:23 -0500

Crowell & Moring’s Product Risk Management Group is pleased to invite readers of the blog to a luncheon featuring remarks by Commissioner Anne M. Northup of the U.S. Consumer Product Safety Commission on the effects of regulation on U.S. businesses. Retailers of consumer products (along with manufacturers, importers and distributors) are dealing with increased U.S. regulation as a result of the Consumer Product Safety Improvement Act of 2008. Commissioner Northup will share her views on the regulatory activities she sees on a daily basis at the CPSC and welcomes a lively dialogue with attendees regarding the impact these actions are having on businesses.

Commissioner Northup is focused on issues that create a better environment for competition, growth, and worldwide commerce. As a former Member of Congress and current CPSC Commissioner, she has a unique perspective on the costs and implementation challenges that regulation can present to both businesses and the economy. The Commissioner will address a number of topics, including:

How the CPSC can more effectively and efficiently advance its safety mission;
Upcoming regulatory issues on the CPSC's agenda;
The impact on businesses of various CPSC actions, including the new third-party testing rule and the continuing evolution of the Saferproducts.gov portal.

The luncheon will be held at Crowell & Moring’s Washington D.C. office (located at 1001 Pennsylvania Avenue) from 12:00 p.m. to 1:30 p.m. For more information and to register, please click on the link.

White House Issues Consumer Data Privacy Framework

Bridget E. Calhoun — Mon, 12 Mar 2012 17:16:07 -0500

Late last month, the White House issued its consumer data privacy framework entitled, “Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy.” The Administration’s privacy framework was announced as an attempt to provide a clear set of basic privacy principles to address consumer data privacy issues that arise with technology advancements in a commercial setting. As privacy legislation is debated in Congress, the White House outlines its views on privacy rights that every American consumer should enjoy and urges Congress to pass legislation that incorporates the” Consumer Privacy Bill of Rights” included in the framework. This framework provides clarity and certainty regarding the consumer data privacy protections required of businesses. Further, the Administration calls for all relevant stakeholders—companies, privacy and consumer advocates, State AGs, law enforcement, academics, and international partners—to develop enforceable codes of conduct implementing the Consumer Bill of Rights.

• Scope: The Administration seeks legislation that would apply the Consumer Privacy Bill of Rights requirements on all sectors not currently subject to existing privacy laws.

• Consumer Privacy Bill of Rights: The proposed Consumer Privacy Bill of Rights provides individual rights and corresponding business obligations to protect consumers’ personal data based on globally recognized Fair Information Practice Principles, including: (1) individual control over collection of data, (2) transparency regarding companies’ privacy policies and practices, (3) an expectation that companies will collect, use, and disclose personal data consistent with the context in which consumers provide their data, (4) secure handling of consumers’ data, (5) the ability access and correct personal data, (6) reasonable limits on data collected, and (7) measure to ensure accountability to follow Consumer Privacy Bill of Rights.

• Privacy Legislation: The Administration urges Congress to pass consumer data privacy legislation that would: (1) codify the Consumer Privacy Bill of Rights, (2) grant the FTC direct enforcement authority, (3) provide legal certainty through a safe harbor from enforcement to companies that have adopted and follow an FTC-approved code of conduct, (4) preempt state laws that are inconsistent with the Consumer Privacy Bill of Rights, (5) preserve existing sector-specific federal privacy laws to avoid creating duplicative regulatory burdens, and (6) create a national standard for security breach notification to consumers when unauthorized disclosures of certain personal data have occurred.

• Enforceable Codes of Conduct: The Administration calls for a multi-stakeholder process to develop enforceable codes of conduct adopting the Consumer Privacy Bill of Rights. Incentives to businesses to participate include building consumer trust and consideration of a company’s adherence to a code will be treated favorably by the FTC in any privacy enforcement action.

• FTC Enforcement: Companies that affirmatively adopt enforceable codes of conduct would be subject to FTC jurisdiction and responsible for acting consistent with publicly stated privacy policies. The FTC would continue to enforce consumer data privacy rights through its authority under Section 5 of the FTC Act to prohibit unfair or deceptive acts of practices, pending enactment of federal consumer privacy legislation.

• Global Interoperability: The framework encourages engagement between the U.S. government and international partners to pursue mutual recognition of consumer data privacy frameworks, international participation in Codes of Conduct development, and enforcement cooperation in an effort to achieve global interoperability between privacy regimes.

Administration's "Framework for Business Tax Reform" Could Benefit Retailers

Howard M. Weinman — Fri, 02 Mar 2012 14:45:14 -0500

The Obama Administration has released its Framework for Business Tax Reform, a broad-brush look at where it would want to take business taxes. The Framework would eliminate a number of targeted tax benefits and would tighten the rules relating to taxation of foreign operations, with the goal of using the revenue produced to reduce the overall corporate tax rate. The proposal would not be a tax cut but would raise revenue. However, there would be winners and losers. On balance, the proposal could be favorable to many retailers.

The current Federal corporate tax rate is 35%. The Framework notes that, because of various special tax incentives, the average effective corporate rate is actually only 26%. However, for wholesale and retail trade, the effective rate is 31%, because retailers benefit from few of the special tax incentives. The Framework would replace the current 35% rate with a 28% rate. This reduction should provide retailers with a significant tax benefit.

Retailers would not escape unscathed from the Framework’s elimination of targeted tax benefits. One provision that would be terminated is LIFO (last-in, first-out) inventory, used by many retailers, which in an inflationary economy has the effect of increasing the cost of goods sold and thus reducing gross income subject to tax. In addition, retailers with substantial international operations would be subject to higher taxes on income earned abroad. Also, the proposal would reduce the deductibility of interest paid on corporate indebtedness.

Small retailers might benefit from proposals allowing increased expensing of investments and increased use of the cash method of accounting for tax purposes.

Each retailer would need to evaluate whether, based on its particular facts, it comes out ahead under the Framework (though the substantial rate reduction provides a good head start). Much more detail from the Administration will be needed to make this analysis.

Given the current political climate, it is highly doubtful that the proposal will be enacted soon or as proposed. Much of the cost of the rate reduction would be paid for by increased taxes on the oil and gas, insurance, and hedge fund industries as well as companies with overseas operations, which can be expected to vigorously oppose those parts of the Framework. Nevertheless, there is an emerging consensus that corporate tax reform is needed, so release of the Framework is an interesting step in the process.

The Framework is available at http://www.treasury.gov/resource-center/tax-policy/Documents/The-Presidents-Framework-for-Business-Tax-Reform-02-22-2012.pdf.

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IRS Circular 230 Disclosure: To comply with certain U.S. Treasury regulations, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this communication, including attachments, was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding any penalties that may be imposed on such taxpayer by the Internal Revenue Service. In addition, if any such tax advice is used or referred to by other parties in promoting, marketing or recommending any partnership or other entity, investment plan or arrangement, then (i) the advice should be construed as written in connection with the promotion or marketing by others of the transaction(s) or matter(s) addressed in this communication and (ii) the taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. To the extent that a state taxing authority has adopted rules similar to the relevant provisions of Circular 230, use of any state tax advice contained herein is similarly limited.

Federal Court Rules Printing Only a Credit Card's Expiration Month on a Receipt Violates Federal Law

Jennifer Romano — Mon, 30 Jan 2012 12:28:12 -0500

On January 24, 2012, the United States Court of Appeal for the Third Circuit ruled that printing just the month of a credit card’s expiration date on a customer receipt violates the federal Fair And Accurate Credit Transactions Act (FACTA). This is the first federal appeals court to address this issue and confirms that retailers may face significant exposure if they include any credit card expiration information (no matter how small) on a customer receipt.

The Court’s decision was in Long v. Tommy Hilfiger U.S.A., Inc., a nationwide class action filed against Tommy Hilfiger USA Inc. in Pennsylvania. The plaintiff sought statutory damages, punitive damages and attorneys’ fees based on the allegation that Tommy Hilfiger included a credit card expiration month (but not the year) on customer receipts. FACTA provides for statutory damages of up to $1000 for “willful” violation of the Act. Punitive damages and attorneys’ fees are also available for a “willful” violation regardless whether the consumer suffered any damages.

Although the Court of Appeals held that the inclusion of the expiration month on a receipt violated federal law, the Court nevertheless dismissed the plaintiff’s case after concluding that Tommy Hilfiger’s conduct was not “willful” and thus did not give rise to any relief sought by the plaintiff. The Court held that Tommy Hilfiger’s belief that FACTA did not prohibit printing the expiration month was objectively reasonable because FACTA does not explicitly prohibit the conduct, and even the lower court had interpreted the statute as permitting such conduct.

Tommy Hilfiger’s ultimate win should nevertheless serve as a caution to other retailers. The Court’s decision will likely be relied upon in the future for its broad interpretation of prohibited conduct under FACTA as well as its notice to retailers of this interpretation.

General Growth Properties Completes Spin-off of 30 Malls to Rouse Properties

Crowell & Moring — Thu, 19 Jan 2012 15:13:43 -0500

General Growth Properties has completed the spin-off of 30 shopping malls into a publicly traded real estate investment trust called Rouse Properties, the Chicago-based company announced.

The properties in question are scattered across 19 states and are located in either small U.S. cities or in what are viewed as second-tier centers in larger cities, according to Bloomberg. The transaction, which was approved by General Growth's board in December, allows the company to focus on managing properties with higher rents and tenant sales as it continues to pay down debt, Bloomberg reports.

In 2009, General Growth filed restructuring plans for itself and most of its subsidiaries to exit bankruptcy. The company filed for Chapter 11 protection in April of that year with almost $27 billion in debt. It exited bankruptcy in November 2010.

It was General Growth's 2004 purchase of Columbia, Maryland–based Rouse Company for $7.2 billion that helped fuel its financial problems. General Growth took on debt to pay for that acquisition, then was unable to refinance that debt once the recession hit, according to the Baltimore Business Journal. General Growth is the second-largest U.S. mall operator behind Simon Property Group.

Content for this post was provided by Daniel A. Sasse, partner in the Orange County office of Crowell & Moring.

Crowell & Moring Attorneys to Present Webinar on Emerging Trends and the Future of Chemical Regulation in California

Bridget E. Calhoun — Thu, 05 Jan 2012 17:58:04 -0500

Readers of the Retail Law Observer are invited to join us on Tuesday, January 24, 2012 at 2:00 p.m. EDT for a complementary webinar entitled “Is California a Canary in the Coalmine? Emerging Trends and the Future of Chemical Regulation in California.” I will moderate the panel, which will include Crowell & Moring partners Warren Lehrenbaum and Kevin Mayer.

The webinar will be of particular interest to retailers doing business in California. During the last decade, the chemical industry has experienced unprecedented changes in the regulatory and litigation environment. The traditional regulatory paradigm relating to human health and environmental protection is being supplanted by more precautionary and public policy-based approaches. This shift has increased costs not only for chemical and product manufacturers, but also for retailers that sell those products.

Our panel will explore the political, scientific and legal aspects of this paradigm shift and focus on specific burdens imposed on product manufacturers by California’s Proposition 65 and Green Chemistry initiatives. Specific guidance will also be provided. Please click on the link to register.

Consumers' Data : The European Commission Warns US Companies

Crowell & Moring — Fri, 11 Nov 2011 12:42:35 -0500

The European Union is set to present a proposal for renewed EU legislation on data privacy at the end of January 2012. Vivian Reding, the EU commissioner on fundamental rights, has left no doubt about its content.

In a public speech, on November 7, 2011, the Commissioner has warned US corporations that if they want to do business in the EU, they will have to strictly adhere to the EU's privacy rules. According to the Commissioner, consumers should always be in control of their data, giving them the right to deny consent to use of their data or to delete such data at any time. This applies to all data regarding EU customers -- even data in the cloud or on social networks -- regardless of the country in which the corporation aiming its products and services to EU customers is located.

This statement comes at a time when US officials are also reviewing US data protection legislation, and focusing on its interoperability with foreign legislation.

If US retail corporations want to keep access to EU markets, they will be wise to monitor these developments, both in the US and the EU, which will ultimately affect the way in which they do business.

Emmanuel Gybels is the partner in charge of the Brussels office for Crowell & Moring. He regularly advises US corporations on the regulatory environment of doing business in the EU.

Crowell & Moring to Host Web Seminar on Regulatory Trends Facing Retailers in the Areas of Consumer Products, Tax, and Consumer Privacy

Tracy Reichmuth — Fri, 23 Sep 2011 15:56:29 -0500

Crowell & Moring is pleased to sponsor "Regulatory Trends Facing Retailers in the Areas of Consumer Products, Tax and Consumer Privacy," the second one-hour web seminar in a 3-part series with the Association of Corporate Counsel. The webinar will take place on Wednesday, September 28th, at 2pm ET/11 pm PT.

The panel includes Crowell & Moring attorneys Greg Call, Bridget Calhoun, Howard Weinman, and Josh Tzuker, as well as Gina Brickley Beredo, Litigation Counsel & Director of Product Compliance at American Greetings Corp. They will examine important regulatory developments affecting retailers in three legal areas: federal consumer product safety laws, taxation, and consumer privacy. The speakers will discuss the substantive developments in these areas, as well as trends they are seeing in the current political landscape.

For more information or to register, please visit this link.