Category: Administrative & Regulatory

Business Groups Applaud Expected Compromise on Comprehensive Immigration Reform

GT Law

The Essential Worker Immigration Coalition (EWIC)*, a coalition of businesses, trade associations, and other industry organizations concerned with the shortage of lesser skilled and unskilled labor, and the TechServe Alliance, an industry group that represents IT & engineering interests before the U.S. Congress and other policymakers, have recently released statements applauding the bipartisan effort to craft a comprehensive immigration reform bill. The Border Security, Economic Opportunity, and Immigration Modernization Act of 2013, which many expect will be formally introduced shortly, was spearheaded by the “Gang of Eight” – namely Senators Rubio, Flake, McCain, Graham, Schumer, Menendez, Bennet and Durbin – and includes proposals for granting legal status to undocumented immigrants, requiring all U.S. employers to use an electronic employment eligibility verification system, creating a new less-skilled worker visa program, and permitting IT staffing firms to retain access to the H-1B visa program.

To view a summary of the provisions included in The Border Security, Economic Opportunity, and Immigration Modernization Act of 2013, please click here. To read EWIC and TechServe Alliance’s statements about the new legislation, respectively, please click here and here.

* Laura Foote Reiff, Co-Chair of Greenberg Traurig’s Business Immigration and Compliance practice, is a co-founder of EWIC.

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Final Rule for Physician Payments Sunshine Act Recently Released

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The long-awaited final regulations for the Physician Payments Sunshine Act (“Sunshine Act” or “Act”) were finally released on February 1, 2013. I previously discussed the Sunshine Act (see Here Comes the Sun, Are you Prepared?,10/18/2012), but with the final rule now implemented, providers should take a second look at it and reconsider its implications.

The Act requires applicable manufacturers of drugs, devices, biological, or medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program (“CHIP”) to report payments or transfers of value provided to physicians or teaching hospitals. Additionally, applicable manufacturers and group purchasing organizations (“GPOs”) must annually report to CMS certain information regarding ownership or investment interests held by physicians (or their immediate family members).

The Act was proposed in December 2011 and CMS had expected to issue the final rule by the end of 2012. However, due to the overwhelming number of remarks received during the comments period from concerned providers, manufacturers, and GPOs, the Act took considerably more time to become final.

The final rule addresses some of the concerns raised through the comments period, but certainly not all. One of the biggest revisions is to exempt speaker fees for accredited and certified CME programs from the reporting requirements. There are several other exemptions from the reporting requirements, including, but not limited to:

  • over-the-counter drugs and class I and II medical devices (such as elastic bandages and suture materials)
  • incidental items worth less than $10 (e.g., pens and note pads) as well as general food and drinks offered to all participants at conferences or large-scale events
  • gifts or payments valued at less than $10 — unless the aggregate amount paid to the physician exceeds $100 annually
  • educational materials and items intended for use by or with patients

Additionally, the final rule makes numerous changes to definitions included in the proposed rule and adds several new terms.

The estimated costs, as stated by CMS, for the manufacturers and GPOs to comply with the Act is $269 million for the first year, with costs thereafter estimated to be $180 million.  CMS estimates physicians will expend $250 during the first year for compliance, but many stakeholders have expressed the opinion that this is grossly underestimated.

The applicable manufacturers and group purchasing organizations are required to start collecting data on August 1, 2013. This data must be formalized in a report to CMS by March 31, 2014. The data is set to appear on a public website by September 30, 2014.

The final rule still creates a great deal of uncertainty. It is highly recommended that providers consider their existing relationships and revisit the Act when creating new ones. They should take time to review internal policies and examine all contacts for conflicts of interest.

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Internal Revenue Service (IRS) Capitalized Legal Fees Incurred by Pharmaceutical Company

 

McDermottLogo_2c_rgbIn a recently released Field Attorney Advice, the Internal Revenue Service (IRS) Office of Chief Counsel concluded that a pharmaceutical company must capitalize legal fees incurred to obtain Food and Drug Administration approval for marketing and selling generic drugs and to prevent the marketing and sale of a competing generic drug.  The IRS Office of Chief Counsel also concluded that it could impose an adjustment on audit to capitalize legal fees that the taxpayer expensed in prior years, including years closed by statute of limitations.

In a recently published Internal Revenue Service (IRS) Field Attorney Advice (FAA 20131001F, March 8, 2013), the IRS Office of Chief Counsel concluded that a pharmaceutical company must capitalize legal fees incurred to obtain U.S. Food and Drug Administration (FDA) approval for marketing and selling new generic drugs and to prevent the marketing and sale of a competing generic drug.  The IRS also concluded that the Commissioner could change the taxpayer’s method of accounting for the legal fees and impose an adjustment on audit to capitalize legal fees that the taxpayer expensed in prior years, including years closed by the statute of limitations.

NDA and ANDA

In order to market or sell a new drug in the United States, a New Drug Application (NDA) must be submitted to and approved by the FDA.  An NDA consists of clinical and nonclinical data on the drug’s safety and effectiveness, as well as a full description of the methods, facilities and quality controls employed during manufacturing and packaging.  An NDA also must disclose all the patents that cover the drug.

To market or sell a generic version of an existing FDA-approved drug, the maker of the generic drug must submit an Abbreviated New Drug Application (ANDA) for FDA approval.  An ANDA generally is not required to include preclinical and clinical trial data to establish safety and effectiveness.  Instead, an ANDA applicant must show that its generic drug is bioequivalent to an existing drug.  In addition, an ANDA applicant is required to provide certification that the ANDA will not infringe on the patent rights of a third party.  Specifically, if an applicant seeks approval prior to the expiration of patents listed by the NDA holder, then a “paragraph IV certification” must be submitted by the applicant to certify that it believes its product or the use of its product does not infringe on the third party’s patents, or that such patents are not valid or enforceable.  The first generic drug applicant that files an ANDA containing a paragraph IV certification is granted, upon approval, 180 days of marketing exclusivity.

For an ANDA with a paragraph IV certification, the applicant must send notices to the NDA holder for the referenced drug and to all patentees of record for the listed patents within 20 days of FDA notification that the ANDA is accepted for filing.  If neither the NDA holder nor the patent holders bring an infringement lawsuit against the ANDA applicant within 45 days, the FDA may approve the ANDA.  If the NDA holder or the patent holders file a patent infringement lawsuit against the ANDA applicant within 45 days, a stay prevents the FDA from approving the ANDA for up to 30 months.  If, however, the patent infringement litigation is still ongoing after the 30 months, the FDA may approve the ANDA.

The Facts

The taxpayer is a pharmaceutical company engaged in developing, manufacturing, marketing, selling and distributing generic and brand name drugs.  In the process of filing ANDAs with a paragraph IV certification, the taxpayer incurred legal fees in lawsuits filed by patent and NDA holders for patent infringement.  In addition, the taxpayer as an NDA holder incurred legal fees in a lawsuit it filed against an ANDA applicant with a paragraph IV certification to protect its right to sell its branded drug until all patents expired.  The taxpayer sought to deduct its legal fees as ordinary and necessary business expenses.

The IRS Analysis

Legal Fees Incurred in the Process of Obtaining FDA Approval of ANDAs

The IRS concluded that the legal fees incurred by the taxpayer as an ANDA applicant to defend actions for patent infringement in the process of filing the ANDA with paragraph IV certification must be capitalized under Treas. Reg. § 1.263(a)-4.  The IRS characterized the fees as incurred to facilitate the taxpayer obtaining the FDA-approved ANDAs with paragraph IV certification, which granted the applicant the right to market and sell a generic drug before the expiration of the patents covering the branded drugs, and by filing early, potentially with a 180-day exclusivity period.  As such, the IRS concluded, the fees are required to be capitalized as amounts paid to create or facilitate the creation of an intangible under Treas. Reg. § 1.263(a)-4(d)(5).  In so concluding, the IRS rejected the taxpayer’s argument that its fees did not facilitate obtaining FDA-approved ANDAs because it could have commercialized its generic drugs after the 30-month stay expired regardless of the outcome of the lawsuits.  The IRS reasoned that the filing of the ANDAs with paragraph IV certification and the defense of the patent infringement lawsuit were a part of a series of steps undertaken in pursuit of a single plan to create an intangible.

The IRS further concluded that the cost recovery of the capitalized legal fees incurred to obtain the FDA-approved ANDAs must be suspended until the FDA approves the ANDAs, and the capitalized fees must be amortized on a straight-line basis over 15 years as section 197 intangibles.

Legal Fees Incurred to Protect Its Right Against Other ANDA Applicants with Paragraph IV Certification

With respect to the legal fees incurred by the taxpayer as an NDA holder in the litigation against another ANDA applicant, the IRS characterized the fees incurred to defend the validity of the patents owned by the taxpayer as amounts paid to defend or perfect title to intangible property that are required to be capitalized under Treas. Reg. § 1.263(a)-4(d)(9).  In contrast, the fees incurred by the taxpayer in the litigation relating to determining whether valid patents have been infringed are not required to be capitalized under Treas. Reg. § 1.263(a)-4(d)(9).

The IRS further concluded that the capitalized fees incurred to protect the patents and the FDA-approved NDA must be added to the basis of the patents to be depreciated under section 167.  The cost recovery begins in the months in which the legal fees were incurred and is allocated over the remaining useful lives of the patents.

In characterizing the legal fees incurred by the taxpayer in defending the validity of its patents as costs of defending or perfecting title to intangible property, the IRS distinguished the legal fees at issue from the litigation expenses incurred by the taxpayers in defending a claim that their patents were invalid in Urquhart v. Comm’r, 215 F.2d 17 (3rd Cir. 1954).  In Urquhart, the taxpayers were participants in a joint venture that was engaged in the business of inventing and licensing patents.  The taxpayers obtained two patents involving fire-fighting equipment and, after threatening litigation against Pyrene Manufacturing Company, brought an infringement suit against a customer of Pyrene, seeking an injunction and recovery of profits and damages.  The case was dismissed, and Pyrene subsequently commenced an action against the taxpayers seeking a judgment that the taxpayers’ patents were invalid and that its own apparatus and methods did not infringe the patents.  A counterclaim was filed for an injunction against infringement, and an accounting for profits and damages.  Pyrene did not raise any questions as to title to, or ownership of, the patents and was successful in the lawsuit.  The patents held by the taxpayers were found to be invalid.  In holding that the legal fees incurred by the taxpayer were deductible as ordinary and necessary business expenses, the U.S. Court of Appeals for the Third Circuit rejected the IRS’s contention that the litigation was for the defense or protection of title.

Distinguishing the FAA from Urquhart, the IRS focused on the fact that the taxpayers in Urquhart were professional inventors engaged in the business of exploiting and licensing patents, and that Urquhart involved the taxpayers’ claims for recovering lost profits.  By emphasizing that Pyrene did not raise any issue as to title to the patents in Urquhart, the IRS seemed to ignore the fact that, like the taxpayer in the FAA, Pyrene sought a judgment on the validity of the taxpayers’ patents and that the outcome of the litigation in Urquhart also focused on the validity of the patents.

Change of Accounting Method for Legal Fees Incurred by the Taxpayer 

The IRS also concluded that the taxpayer’s treatment of its legal fess associated with each ANDA or patent as either deductible or capitalizable is a method of accounting that the Commissioner can change on an ANDA-by-ANDA or patent-by-patent basis.  The consequence of this conclusion, if valid, is that the IRS can impose on audit an adjustment to capitalize legal fees that the taxpayer deducted in prior years, including years closed by the statute of limitations.  For example, the IRS can include in the taxpayer’s gross income for the earliest year under examination an adjustment equal to the amount of the legal fees the taxpayer previously deducted, less the amount of amortization that the taxpayer properly could have taken had the taxpayer capitalized the legal fees.

A taxpayer that voluntarily changes its method of accounting, however, receives more favorable terms and conditions than a taxpayer that has its method of accounting changed by the IRS on examination.  For example, a taxpayer that changes its method of accounting voluntarily can spread the adjustment resulting from the change over four taxable years, and the first year of the adjustment is the current taxable year as opposed to the earliest open taxable year.

The publication of this FAA likely will bring the attention of examining agents to this issue.  Therefore, if a taxpayer believes it is using an improper method of accounting for legal fees (or any other item), it should carefully consider whether to voluntarily change its method of accounting before the IRS proposes to change the taxpayer’s method of accounting on examination.

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SEC Staff Meets with IRS to Discuss Tax Implications of a Floating Net Asset Value (NAV)

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SEC staff recently met with staff members of the IRS to discuss the tax implications of adopting a floating net asset value (NAV) for money market funds. The discussion centered on the tax treatment of small gains and losses for investors in money market funds, and the IRS reportedly told the SEC there is limited flexibility in interpreting current tax law. A floating NAV could require individual and institutional investors to regard every money market fund transaction as a potentially taxable event.

Investors would have to determine how to match purchases and redemptions for purposes of calculating gains, losses and share cost basis. The SEC reached out to the IRS as it continues to consider measures, including a floating NAV, to enable money market funds to better withstand severe market disruptions.

For additional discussion of money market reform, please see “SEC Debates on Money Market Reforms Continue” in our January 2013 and October 2012 updates.

Sources: John D. Hawke, Jr., Economic Consequences of Proposals to Require Money Market Funds to ‘Float’ Their NAV, SEC Comment Letter File No. 4-619, November 2, 2012; Christopher Condon and Dave Michaels, SEC Said to Discuss Floating NAV for Money Funds with IRS, Bloomberg, March 7, 2013; Joe Morris, SEC Sounding Out IRS on Floating NAV, Ignites, March 7, 2013.

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U.S. Commodity Futures Trading Commission (CFTC) Grants No-Action Relief for End Users from Swap Reporting Requirements

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On April 9, 2013, the Division of Market Oversight of the U.S. Commodity Futures Trading Commission (CFTC) issued a no-action letter delaying the swap reporting compliance deadlines for end users and other swap counterparties that are not swap dealers or major swap participants (non-SD/MSP counterparties).  The relief provided to market participants is effective immediately.

The CFTC had issued regulations setting forth various reporting requirements for swap transactions (Part 43 — real-time reporting for swap transactions, Part 45 — transactional data reporting to a registered swap data repository, and Part 46 — historical swap data reporting) of the CFTC’s regulations. The rules had established a deadline of April 10, 2013 for swap counterparties that are not swap dealers or major swap participants (non SD/MSP counterparties). Citing implementation concerns involving technological and operational capabilities, a number of market participants requested that the Division of Market Oversight provide a six-month extension of the compliance deadline.  The CFTC’s April 9 no-action  letter does not grant the full six-month extension requested, but provides certain time-limited no action relief to nonSD/MSP swap counterparties as described below.

1.          No-Action Relief for Reporting of Interest Rate and Credit Swaps

The letter extends no-action relief for end users’ interest and credit swaps reporting untilJuly 1, 2013.  However, non SD/MSP swap counterparties that are “financial entities,” as defined in Section 2(h)(7)(C), must comply with reporting requirements under Part 43 and 45 on April 10, 2013.

2.         No-Action Relief for Reporting of Equity, Foreign Exchange and other Commodity Swaps

The no-action relief for end users who engage in swaps in other asset classes (e.g., equity, foreign exchange, and other commodities) is extended until August 19, 2013.  For non-SD/MSP swap counterparties that are “financial entities,” as defined in Section 2(h)(7)(C), the no-action relief extends until May 29, 2013.

3.         No-Action Relief for Historical Swap Data Reporting Under Part 46

The letter also extends no-action relief to end users’ Part 46 historical swap data reporting for all swap asset classes until October 31, 2013.  For non SD/MSP swap counterparties that are “financial entities,” as defined in Section 2(h)(7)(C), the Part 46 no-action relief extends until September 30, 2013.  Any pre-enactment or transition swap entered into prior to 12:01 a.m. on April 10, 2013 is reportable as a historical swap.

4.         Compliance Date for Recordkeeping Obligations has not been Extended

The letter also confirms that the no-action relief provided for reporting requirements doesnot impact any Dodd-Frank-related recordkeeping obligations applicable to SDs, MSPs or end users.  Thus, for historical swaps, end users must maintain records under the Part 46 rules for any such swaps entered into prior to April 10, 2013.   With respect to swaps entered into on or after April 10, end users must maintain records under the Part 43 and 45 rules, and obtain a CFTC Interim Compliant Identifier for this purpose by April 10, 2013.

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Employee’s Deactivation Of Facebook Account Leads To Sanctions

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The latest Facebook case highlights how courts now intend to hold parties accountable when it comes to preserving their personal social media accounts during litigation.  Recently, a federal court ruled that a plaintiff’s deletion of his Facebook account during discovery constituted spoliation of evidence and warranted an “adverse inference” instruction against him at trial.  Gatto v. United Airlines and Allied Aviation Servs., et al. , No. 10-CV-1090 (D.N.J. March 25, 2013).

The plaintiff, a ground operations supervisor at JFK Airport, allegedly suffered permanent disabling injuries from an accident at work which he claimed limited his physical and social activities.  Defendants sought discovery related to Plaintiff’s damages, including documents related to his social media accounts.

Although Plaintiff provided Defendants with the signed authorization for release of information from certain social networking sites and other online services such as eBay, he failed to provide an authorization for his Facebook account.  The magistrate judge ultimately ordered Plaintiff to execute the Facebook authorization, and Plaintiff agreed to change his Facebook password and to disclose the password to defense counsel for the purpose of accessing documents and information from Facebook.  Defense counsel briefly accessed the account and printed some portion of the Facebook home page.  Facebook then notified Plaintiff that an unfamiliar IP address had accessed his account.   Shortly thereafter, Plaintiff “deactivated” his account, causing Facebook to permanently delete the account 14 days later in accordance with its policy.

Defendants moved for spoliation of evidence sanctions, claiming that the lost Facebook postings contradicted Plaintiff’s claims about his restricted social activities.  In response, Plaintiff argued that he had acted reasonably in deactivating his account because he did know it was defense counsel accessing his page.  Moreover, the permanent deletion was the result of Facebook’s “automatically” deleting it.  The court, however, found that the Facebook account was within Plaintiff’s control, and that “[e]ven if Plaintiff did not intend to deprive the defendants of the information associated with his Facebook account, there is no dispute that plaintiff intentionally deactivated the account,” which resulted in the permanent loss of  relevant evidence.  Thus, the court granted Defendants’ request for an “adverse inference” instruction (but declined to award legal fees as a further sanction).

The Gatto decision not only affirms that social media is discoverable by employers, but also teaches that plaintiffs who fail to preserve relevant social media data will face harsh penalties.  Employers are reminded to specifically seek relevant social media (Facebook, Twitter, blogs, LinkedIn accounts) in their discovery requests since such sources may provide employers with sufficient evidence to rebut an employee’s claims.  This case also serves as a reminder and a warning to employers that the principles of evidence preservation apply to social media, and employers should take steps very early in the litigation to preserve its own social media content as it pertains to the matter.

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Second Circuit Bars Criminal Defendant from Accessing Assets Frozen by Regulators

Katten Muchin

The US Court of Appeals for the Second Circuit recently upheld a district court’s refusal to release nearly $4 million in assets frozen by the Securities and Exchange Commission and the Commodity Futures Trading Commission to help a defendant fund his criminal defense.

Stephen Walsh, a defendant in a criminal fraud case, had requested the release of $3.7 million in assets stemming from the sale of a house that had been seized by regulators in a parallel civil enforcement action. In denying Walsh’s motion to access the frozen funds, the US District Court for the Southern District of New York found that the government had shown probable cause that the proceeds had been tainted by defendant’s fraud, and were therefore subject to forfeiture. Though Walsh and his wife had purchased the home in question using funds unrelated to the fraud, Walsh ultimately acquired title to the home pursuant to a divorce settlement in exchange for a $12.5 million distributive award paid to his wife, at least $6 million of which, according to the court, was traceable to the fraud.

Agreeing with the District Court, the Second Circuit found that although the house itself was not a fungible asset, it was “an asset purchased with” the tainted funds from the marital estate by operation of the divorce agreement and affirmed the denial of defendant’s request. Further, since Walsh’s assets did not exceed $6 million at the time of his arrest, under the Second Circuit’s “drugs-in, first-out” approach, all of his assets became traceable to the fraud.

U.S. v. Stephen Walsh, No. 12-2383-cr (2d Cir. Apr. 2, 2013).

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U.S. Supreme Court to Consider Application of ADEA (Age Discrimination in Employment Act) to State and Local Workers

The National Law Review recently published an article, U.S. Supreme Court to Consider Application of ADEA (Age Discrimination in Employment Act) to State and Local Workers, written by Jennifer Cerven of Barnes & Thornburg LLP:

Barnes & Thornburg

 

The U.S. Supreme Court has agreed to hear an appeal from Illinois Attorney General Lisa Madigan on the issue of whether state and local government employees can bypass the Age Discrimination in Employment Act and sue for age discrimination under an equal protection theory. The case is Madigan v. Levin, Docket Number 12-872.

Appellate courts are split on whether the ADEA is the exclusive route for state and local government employees to bring a claim for age discrimination, or whether an equal protection claim via Section 1983 is available. The Seventh Circuit Court of Appeals decided that the Plaintiff, a former Assistant Attorney General, could go forward with a Section 1983 age discrimination claim against certain defendants (including Madigan) in their individual capacity.  The Seventh Circuit decided that the ADEA does not preclude a Section 1983 claim, but acknowledged that its decision was contrary to rulings in other circuits holding that the ADEA is the exclusive remedy for age discrimination claims.

The question presented to the Supreme Court is whether the Seventh Circuit erred in holding that state and local government employees may avoid the ADEA’s remedial regime by bringing age discrimination claims under the Constitution’s Equal Protection Clause and 42 U.S.C. 1`983.

In the petitioner’s brief asking the Supreme Court to grant certiorari, Madigan noted the circuit split and argued that if the Seventh Circuit’s ruling were to stand, there would be about one million state and local workers in Illinois, Indiana, and Wisconsin who would be able to bypass the ADEA’s administrative dispute resolution process at the EEOC and go straight to court.  Madigan argued that this would undercut the ADEA and would deprive state and local governments of prompt notice of claims.

The outcome of the case will be important not only for state and municipal employers, but also for individual employees.  As a practical matter, the plaintiff could end up with no further opportunity for an age discrimination claim if the Supreme Court decides that the ADEA forecloses age claims under Section 1983.  That is because the lower court decided that the employee fell under the ADEA exclusion of policy-making level employees, 29 U.S.C. §630(f).  Moreover, sovereign immunity applies to protect states from individual suits for monetary damages under the ADEA, under Supreme Court precedent in Kimel v. Florida Board of Regents, 528 U.S.  62.

The case is likely to proceed to briefing during the current term and may be scheduled for argument in the fall term.

© 2013 BARNES & THORNBURG LLP

New generic Top Level Domain (gTLD) – ICANN Trademark Clearinghouse Goes Live

Lewis and Roca LLP eading business law firm in the Southwest U.S.

Trademark Clearinghouse Launch

Complaints regarding inadequate protection for trademark owners will apparently not stop the Internet Corporation for Assigned Names and Numbers (“ICANN“) from launching its new unlimited gTLD (generic Top Level Domain) program as quickly as possible in 2013. The new web environment will include hundreds of different words appearing to the right of the dot in domain names, in sharp contrast to the existing limited number of authorized strings such as .com, .biz, .net, and .info. Initial evaluations of over 1900 applications for new Top Level Domains have begun to be published by ICANN and will continue through August. Strings containing non-Latin script, known as Internationalized Domain Names (“IDNs”), of which there are over 100 in Chinese, Arabic and other alphabets, will launch first in May or June.

Trademark owners concerned about cybersquatting and counterfeit goods or services that could be sold at websites created at second level (before the dot) urls via domain name registrations obtained in the new gTLDs should consider filing registered trademarks with ICANN’s Trademark Clearinghouse (TMCH) which goes live this week. For example, a manufacturer of food products may consider recording its registered brand names with the TMCH to help protect against use of the brand name by an infringer who might purchase the name to the left of the dot in the new (dot)food domain. As long as the registration was applied for before the particular TLD application was published and was also registered before that TLD contract is awarded, entry of a trademark registration record into the TMCH will provide two benefits: (1) eligibility for Sunrise registrations before the general launch of any particular new TLD if a specimen of use is filed at the time the registration record is entered into the TMCH and (2) notification to the owner if a third party proceeds to register the owner’s trademark at the second level after being notified by the TMCH of the owner’s claim. Common law marks and state registrations are not eligible for entry into the TMCH, but marks validated through judicial process or by statute will qualify

There are caveats associated with these benefits because eligibility for Sunrise does not guarantee the trademark owner will get the Sunrise registration if other parties also own the same registered mark (perhaps for different goods or services). It’s easy to see how this might become a problem in proposed TLDs such as (dot)store. For example, Apple Records may want to sell downloadable music at apple.store, but Apple Inc. may also want to sell consumer electronics at apple.store. Registries will have a method in place for resolving Sunrise registration disputes and this may not be first come, first served. It could ultimately involve a bidding or auction process. Further, the notification described above will only be in place for the first 90 days after general launch of a new TLD so the holder may need to employ a watch service to track registrations purchased by third parties after that 90 day period.

Unlike the recent launch of the XXX domain, there is no “blocking” mechanism available to trademark holders in connection with the new TLDs. This puts a premium on obtaining a preventive Sunrise registration or being willing to follow up with cybersquatters on an “after-the-fact” basis once they have already obtained a registration.

In a decision issued at the end of last week, ICANN confirmed requested improvements for (a) 30 days prior notice of the launch of Sunrise, (b) extending IP claims notification from 60 days to 90 days out from general launch and (c) allowing previously “abused names” (such as those established as “abused” by way of prior UDRP proceedings) to be entered into the TMCH alongside the registered trademark even if not identical to the registered trademark. Presumably these previously abused names would then give rise to IP Claims notifications, but the implications are unclear since the TMCH has yet to issue its final Submission Guidelines based on these latest changes to the system. Entry of TMCH records will involve legal decisions, including, but not limited to (1) whether to enter a registration into the TMCH or not, (2) whether to seek Sunrise registration or not, (3) how best to provide proof of use if a Sunrise registration is desired in any new TLD, (4) which period of protection to select (1, 3, or 5 years), and (5) which domain names and previously “abused names” will qualify for TMCH protection.

©2013 All Rights Reserved. Lewis and Roca LLP

Congress Renews Violence Against Women Act, Expands Tribal Court Jurisdiction

The National Law Review recently featured an article by Brian L. Pierson with Godfrey & Kahn S.C., regarding Recent Congressional Actions:

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On February 28, 2013 the House of Representatives approved Senate Bill 47, which reauthorizes and amends the Violence Against Women Act of 1994 (VAWA). The Bill, already approved in the Senate, became law when the President signed it on March 7th.

The VAWA is a major legislative achievement for Indian country. The Supreme Court held in 1978 that tribes lack inherent power to exercise criminal jurisdiction over non-Indians. For the first time since that decision, Congress has authorized tribes to exercise such jurisdiction. Title IX of the VAWA amends the Indian Civil Rights Act (ICRA) to permit tribes to exercise “special domestic violence criminal jurisdiction” over non-Indians who are charged with domestic violence, dating violence, and violations of protective orders that occur on their lands. Features of special domestic violence criminal jurisdiction include:

  • either the perpetrator or victim must be Indian
  • the tribe must prove that the defendant has ties to the tribal community
  • tribal jurisdiction is concurrent with state and federal jurisdiction
  • the defendant has the right to a trial by an impartial jury that is drawn from sources that –
    • reflect a fair cross section of the community; and
    • do not systematically exclude any distinctive group in the community, including non-Indians
  • In the event that a sentence of imprisonment “may” be imposed, the tribe must guarantee the defendant the enhanced procedural rights added to the ICRA by the Tribal Law and Order Act of 2010, including:
    • effective assistance of counsel, paid for by the tribe if the defendant is indigent
    • a legally trained judge licensed to practice law
    • published laws and rules of criminal procedure
    • recorded proceedings

Copyright © 2013 Godfrey & Kahn S.C.