Commercial Law International

By Emma Peart

A number of large fashion companies have been recently flexing their muscles in attempts to fiercely protect their intellectual property rights.

Louis Vuitton has been busy protecting its rights in the case of Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936 (9th Cir. 2011) where it has taken legal action against the owners of a server which has allowed Chinese sites to publicise goods which its states breach various rights it has protected in copyright and patents. In Louis Vuitton Malletier vs Eisenhauer Flea Market Inc. No.11-SA-CA(WD.Tex.) Luis Vuitton pursued an action against the owner and Manager of a flee market claiming that they had been given sufficient notice that some merchants at the market were selling goods that infringed certain trademarks owned by Louis Vuitton. In Louis Vuitton Malletier, S.A. v. Warner Bros. Entertainment Inc. Louis Vuitton brought an action against Warner Brothers in relation to its film “ The Hangover Part II”. It claimed its intellectual property rights were infringed by references to a counterfeit bag and the line “careful-it’s a louis vuitton.”

Gucci has also shown it will not tolerate what it believes to be a breach of its intellectual property rights. In Gucci America, Inc. v. Frontline Processing Corp., No. 09 Civ. 6925 (HB), 2010 WL 2541367 (S.D.N.Y. June 23, 2010), Gucci brought an action against three credit card operators. It claimed that they had assisted website operators on which counterfeit Gucci goods were sold by providing a method of purchase,thus breaching its intellectual property rights.

More controversially, Christian  Louboutin has attempted to state that a company’s use of a colour can be protected. Christian Louboutin was granted a trademark over the colour red used on its heels. However it is currently trying to protect its trademark against what it states is a breach of its trademark by Yves Saint Laurent. The second circuit states refused the claim, suggesting it did not view the use of red as aesthetically functional and therefore cannot be protected. Louboutin appealed the decision.

By: Ainsley Brown

Can Hip-Hop Music Teach Lessons About Business? This is not as ludicrous a question as it might seem at first, just keep reading –by the way the pun was well intended; if you didn’t spot it don’t worry about it.

The answer to the above question is a resounding YES. But you don’t have to take my word for it just listen to a leading Silicon Valley venture capitalist – Ben Horowitz.

Brian Wheeler of the BBC asked: What can rap lyrics teach us about business? And the answer from Horowitz is a lot.

Some of the lessons include:

1.       Work hard and watch your costs: Get your money right, be an international player, don’t be scared to catch those red-eye flights / You better get your money right, ’cause when you out there on the streets, you gotta get it – get it - Get Your Money Right, Dr Dre

2.       Be your own boss: I can’t let life get the best of me, I gotta take, take control of my own destiny / Control what I hold and of course be the boss of myself / No-one else will bring my wealth - A Job Ain’t Nothing But Work, Big Daddy Kane

3.       Founders make better chief executives : You’re just a rent-a-rapper, your rhymes are Minute Maid / I’ll be here when it fade to watch you flip like a renegade - Follow the Leader, Rakim

I wonder if these lessons ring true for my profession as well?

Can hip-hop teach lawyers to be better lawyers? I don’t think I need to answer that as I think you know my stance already.

By Charles Wanguhu

Kenya currently risks being black listed by the OECD Financial Action Task Force (FATF) as a jurisdiction with key deficiencies in the control against money laundering. The other two countries on the list: the People’s Republic of North Korea and Iran.

The Financial Action Task Force (FATF) is an inter-governmental body tasked with the development and promotion of policies, to combat money laundering and terrorist financing.  The FATF develops policies that propose improvements in national legislative, regulatory regimes to combat money laundering and the financing of terrorism. It has established a series of Recommendations commonly referred to as the 40+ Recommendations, they set out the basic framework for anti-money laundering efforts and are intended to be of universal application.

The Financial Action Task Force (FATF) is an inter-governmental body whose purpose is the development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing.  The Task Force is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

In its report of February 2012 the task force mentions Kenya as a jurisdiction with strategic anti money laundering deficiencies and has not made sufficient progress in addressing them as part of its commitment under its Memorandum of Understanding(MOU). Kenya signed an MOU in 2008 under The Eastern and Southern Africa Anti-Money Laundering group (ESAAMLG) committing to adopt and implement the 40 recommendations and other special recommendations of the Financial Action Task Force (FATF). The purpose of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) is to combat money laundering by implementing the FATF Forty Recommendations

The sanctions for non-conformity with FATF include the possibility of non-correspondence by banks in other countries, which includes the telegraphic or electronic transfers of money which facilitates transactions for businesses as foreign banks carry out transactions on behalf of another bank’s customers. The impact on the export industry including the all important horticultural and tourism business cannot be gainsaid. While a lower standard of compliance of the FATF recommendations’ may be accepted prior to the blacklisting, Kenya would have to implement enhanced measures to be removed from the list.

The enactment of the Proceeds of Crime and Anti-Money Laundering Act in 2009 (the POCAMLA) was viewed as government commitment to effect the recommendations of the financial action taskforce. The act imposes anti-money laundering obligations on financial institutions as well as non-financial institutions such as casinos, real estate agencies, dealers of precious stones and metals, and non-governmental organisations.

The Act also provides for the establishment of a Financial Intelligence Unit named the Financial Reporting Centre which will assist in the identification of the proceeds of crime and The principal function of the Centre shall be to disseminate information collected by it pursuant to the provisions of the Act, to investigating authorities and other bodies and to ensure compliance with international standards in anti-money laundering measures. However, the implementation of the act is severely impacted by the failure to establish a financial reporting Centre. It remains a significant hindrance to implementing the act and fulfilling obligations under the FATF recommendations. Additionally the act is yet to be used to prosecute any crimes, and as such it is relatively unproven in its ability to curb money laundering.

As kenya enters an election year and a possibility of laundered funds being diverted to subvert the democratic process the need for a regulatory authority is increased. The lack of enhanced due diligence measures for politically exposed persons as exist in other jurisdictions exercising FATF recommendations may leave the electoral system exposed to illicit funds. In 2010 for example the balance of payment statistics of the central bank of Kenya showed a large foreign currency injection, of approximately $2 billion dollars in hard currency, which was unaccounted for.

Developing countries have increased efforts to curb money laundering including in offshore havens and these efforts have led to a shifting of money laundering activities to emerging markets. The weaker or less effective enforcement the more attractive a financial system will appear to money launderers further compromising their financial system. In some instances laundered money may be used to buy influence in regulators and security apparatus and may inch the country closer towards becoming a criminalized state.

Overall, money laundering has serious social and political costs, if left unchecked it causes economic distortion and instability. Additionally it may have an effect on a country’s competitiveness as the setting up of front businesses can place legitimate businesses at a disadvantage by unrealistic pricing as the primary aim is the laundering of the illicit gains rather than profit taking. Laundered money may target segments of markets like the property markets causing fake booms which may lead to collapse of entire sections of the economy, as rather than being driven by demand and supply forces the aim is the laundering of funds.

To demonstrate seriousness and commitment in prosecuting money laundering, the Kenyan government must prioritise key actions. Prior to the FATF meeting in June the immediate set up of a Financial Reporting Centre would seem a crucial first step in averting the blacklisting of the country.

UPDATE 16/04/2012: The kenya government has now set up a financial reporting centre. More details to follow

By: Ainsley Brown

In my opinion Intellectual property is as much if not more about litigation/dispute resolution as it is about registration.

If you don’t believe me just read: Big Brands and their Intellectual Property Woes: Michael Jordan, Disney, Apple, Target, & and More. It is a listing of 10 well- known brands (with full stories attached if you want to delve deeper) from Disney on the more vintage end to New York Knicks’ new sensation Jeremy Lin on the more contemporary side.

All the stories are not only interesting but provide was very good legal, business and practical lessons.

By: Ainsley Brown

I previously blogged on this when it was announced by the then Jamaica Labour Party administration and I am pleased to see that the current Peoples National Party is continuing to peruse the concept of positioning Jamaica as an international financial service centre (IFSC).

The Jamaica International Financial Service Centre (JIFSC) was created with the passage of the Jamaica International Financial Services Authority Act in February 2011. The JIFSC s’ mandate is to promote and develop Jamaica as a low-tax centre for financial services.  In support of its efforts “at least seven pieces of legislation have already been drafted and are undergoing legislative review ahead of their introduction in Parliament.”

While applauding the efforts of Jamaica to position itself as an IFSC the one thing I would add is that I hope the government is looking at niche areas that Jamaica already as a strong competitive advantage and can be easily be transferred into an IFSC. Two major examples come to mind: sports and music.

Jamaica needs to create an innovative vehicle or vehicles to capitalize on its prowess in the field of sports and music. The JIFSC and the Jamaican government, in my humble opinion, should give some serious consideration to following Guernsey in creating an image rights or the right to publicity registry.

Image rights generally speaking are intellectual property rights that are intended to protect the use of a person’s name, personality, distinctiveness, likeness and even gestures.  Guernsey’s law, set to become active just in time for the London Olympics, will allow sports stars and other individual that derive a considerable part of their income from the exploitation of their image to better – from a tax and asset management perspective – manage the income from their image. For example the law would allow an “image individual” to separate the income they earn directly from doing their jobs and those gained from the use of their image.

For more on image rights, stay tuned.

By: Ainsley Brown

‘O, Canada.’

As a proud Canadian it always warms the heart to see our often non-headline grabbing country grabbing the headlines, especially south of the border.

Given our low key nature Canadians often complain – with some justification – that we don’t get enough credit for our position in the world. However, what the Forbes raking shows is that Canada is not only good, it is the best – as far as a place to do business is concerned. Canada was “the only country that ranks in the top 20 in 10 metrics that we considered to determine the Best Countries for Business.” Forbes actually uses 11 factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.

Canada with its $1.6 trillion economy ranks the 9^th largest in the world in fact moved up from its 4^th place showing to grab the number one spot – no mean feat given the economic climate and the stiff competition out there. One factor that helped Canada move up was the ability of its major banks and financial system to weather the global financial meltdown.  The stability of the Canadian financial system comes as no accident but is the result of some very prudent and stringent regulations making the financial houses in Canada conservative by nature.

Say it with me now: ‘O, Canada.’

However, all of this was last year, how will Canada *fear this year? At this point the only answer that can be confidently given is: we just have to wait and see.

To see the Forbes story click here

By Emma Peart

Louis Vuitton have taken action for breach of copyright and trademark rights owners of servers which it stated failed to stop users of the servers breaching copyright and trademark laws in its usage of the servers.

Louis Vuitton claimed it had knowledge of Chinese websites selling goods that it believed infringed its copyrights and trademarks. The websites did not sell merchandise directly but listed an email address that interested parties could use to initiate a transaction. Upon further investigation Louis Vuitton discovered that the websites were using IP addresses assigned to the companies MSG(Managed Solutions Group, Inc ) and Akanoc Solutions. An action was brought by Louis Vuitton against MSG, Akanoc Solutions and Steven Chen (the owner of both companies).

In 2006-2007 letters were sent to all defendants highlighting the potential infringement through official notices of infringement but no official response was given from the defendants. The websites continued to operate using servers and IP addresses owned by Defendants.

Initially, all three defendants were found liable and statutory damages were awarded. Later, the decision against MSG was then dismissed because it was viewed that MSG merely owned and leased the hardware operated by Akanoc and Steven Chen.

The appeal court raised a number of issues it felt important in the issue of liability:

• Servers could be a means of infringement as the means to which websites became available.
• proof that defendants had actual or constructive knowledge that the users of their services were engaging in infringements or knowingly failed to prevent infringing actions is sufficient to determine liability
• In relation to contributory copyright infringement, it stated that providing direct infringers with server space constitutes a material contribution to direct infringement because this “substantially assists” direct infringement.

Statutory damages were awarded against all defendants, albeit at a lower amount than the initial decision because a plaintiff can only recover one set of statutory damages where two defendants are jointly and severally liable.

The decision highlights the responsibility of server providers to regulate their usage and make sure that any usage which breaches copyright or trademark rights must be dealt with or they can be held liable for any breach of copyright or trademark law. Owners of servers must be extremely vigilant of the activities of the users of its servers.

By: Ainsley Brown

Which Budweiser will you have? Will it be from the US based Anheuser-Busch InBev or will it be one from from its smaller Czech Republic rival Budvar?

Well, if you live in the UK  you can enjoy both. In a ruling late last year  in the long protracted global trademark war, the European Court of Justice (ECJ) ruled that both companies may continue to use  the name Budweiser to sell their products in the UK. The Court has in essence preserved the status quo and acknowledged the commercial reality; that both brands have co-existed on UK shelves  for decades. In the ECJ’s estimation there was little or no risk of brand confusion amongst UK consumers.

So what is this trademark battle all about?

The long and short of it is that this latest ruling is just the latest chapter in a multi-volume epic battle. It is a story about a 100 year war, a cross border beer war, over a name. Yes, that’s what I said a name.

From a business perspective it’s all about fiercely defending the brand and marketing of beer and beer related products under that brand. From a legal perspective it is a global trademark war. As for the beer lover – who cares  as long as I can have get a great tasting beer at a good price.

For further insight into this trademark war check out my previous post on the matter

Call it an occupational hazard of being a lawyer or just a natural thrust for knowledge, call it what you will, I read a lot.

While on business in Jamaica I was perusing a local daily newspaper, The Daily Observer, and I came across a piece about Sir Richard Branson that I just had to share with the readers of Commercial Law International. The piece references two books, Sir Richard’s new book “Screw Business as Usual” – a title, which I don’t know about you pulled me in instantly –  and an older book “Business Stripped Bare”  which outlines his general philosophy and business approach.

Four major points I took away from the Observer piece was Sir Richard’s belief:

1. Business is a gut feeling; so trust your emotion and instincts as they are there  to help you

2. The first law of entrepreneurship is that there is no reverse gear; you are either moving forward or you are dead

3. When starting out learn all areas of your business as it will make you better manager  as get better and have to delegate matters

4. Stay close to the trenches of your business as it grow; it bodes well for business success to know what both you customers and employees want.

To read the full Observer post click here.

By: Ainsley Brown

Owls, Mountains and Trade Secret

I was watching CNN’s Anderson Cooper 360 last night and something thing caught my eye, which at first I believed to be a joke: Hooters was suing another restaurant called Twin Peaks – yes I said Twin Peaks.

In what has been deemed by some commentators as the battle of the breastaurants, for all the obvious reasons, the suit is actually between Hooters and one of its former executives whom it accuses of taking its trade secrets before his departure. Double entendres aside trade secrets and the alleged taking of them are no joke. Trade secrets are the life blood of a company as they represent a major if not the sum total of a business’s competitive advantage.

Trade secrets are defined under US Federal law as: (1) Information; (2) reasonable measures taken to protect the information; and (3) which derives independent economic value from not being publicly known. This definition while not a universal one gives you basic idea – trade secrets are just that secret. They unlike other intellectual property (trade marks, patents, copyrights) which face outward and are by their nature public, trade secrets on the other hand are internal. Given this internal/ secret nature it is therefore critical that employees of business sign non-disclosure and non-compete agreements as part of their employment contracts.

Now back to the story.

The former Hooter’s executive in question, Joseph Hummel, is alleged in the suit filed in Georgia federal court of emailing a substantial volume of sensitive business information to his private account only weeks before his departure to the Twin Peaks development partner La Cima Restaurants. According to Hooters, Mr. Hummel walked off with many of its documents but specifically information relating to management, recruitment, distribution and sales.

Additionally, the suit accuses Twin Peeks which bands itself as “Eats, Drinks, Scenic Views” as coping in effect Hooters style branded as “delightfully tacky yet unrefined.” Specifically, Hooters claims that the iconic white tank top and orange shorts Hooters Girls are the cornerstone of the Hooters concept. As far as Hooters is concerned “Twin Peaks directly competes with [Hooters] in the market of casual dining restaurants with an all female waitstaff.” For it own part has differentiates itself by having its lumberjanes – a word I heard on Anderson Cooper – by having them wear a mountain-themed ensemble of flannel bikini-like tops paired with tan hiker shorts.

I will end by saying that I don’t know what all the fuss is about don’t people just go to these restaurants for their wings? Isn’t that their trade secret?