The National Law Forum

Financial Crimes Enforcement Network (FinCEN) Proposes Anti-Money Laundering Rules

On July 23, 2014, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking that would amend existing Bank Secrecy Act regulations with respect to customer due diligence (CDD) requirements for certain covered financial institutions, including mutual funds, brokers or dealers in securities and futures commission merchants and introducing brokers in commodities. The proposed rules would formalize certain CDD requirements and also require that covered financial institutions “identify and verify the beneficial owners of legal entity customers.” FinCEN’s proposal includes a standard certification form that covered financial institutions would be required to use for documenting the beneficial ownership of their legal entity customers. An individual may qualify as a “beneficial owner” of a legal entity customer if the individual either (1) owns 25% or more of the equity interests of the entity, or (2) has significant management responsibilities within the entity. As proposed, covered financial institutions would be exempted from identifying the beneficial owners of an intermediary’s underlying clients if the covered financial institution has no customer identification program obligation with respect to those underlying clients.

Comments on the Notice of Proposed Rulemaking are due by October 3, 2014.

ARTICLE BY

Investment Services Group

Vedder Price

The Disintegration of Iraq

The news almost every day contains events which harken the end of Iraq as a nation state. Radical Sunnis take over Mosul for their ISIS state. Kurds tighten their control over oil in the north. Shiites kidnap a top Sunni leader and his security men in Baghdad.

It is not surprising that Iraq should be dismembered. To start with, the country was an artificial creation of British and French diplomats and cartographers who created new nations to control as they divided up the spoils of the Ottoman Empire at the end of the First World War. Through its whole existence, Iraq was nothing more than three warring disparate groups: Shiites, Sunnis, and Kurds, whose animosity exceeded their desire to work together. The country was held together first by a colonial power, then by a monarchy, followed by the Baathists, and finally by the US military.

There was an opportunity during the US occupation to pump life into this moribund entity. However, we did not engage sufficiently in effective nation-building, except when we drew Sunni tribal support during the surge, so that in the longer term, institutions were not in place for disparate Iraqi populations to share power in a democratic arrangement. And perhaps it was impossible. Nevertheless, we handed the keys to the Shiite Prime Minister Maliki and withdrew.

Rather than seeking to find common ground with Sunnis and Kurds, Maliki turned to Iran for help and set out to turn Iraq into another Middle Eastern Shiite nation. We are now witnessing the results of Maliki’s biased rule. When new maps are printed ten years from now, will there even be an entity known as Iraq? It is doubtful.

ARTICLE BY

Allan J. Topol

Martin Gold

Covington & Burling LLP

Employee Codes of Conduct: Really? Requiring Someone To Use Information “Fairly And Lawfully” Can Be Illegal?

Companies have lots of very good reasons for adopting codes of conduct. These reasons include:

Ensuring compliance with applicable exchange listing rules (e.g., NYSE Rule 303A.10 and NASDAQ Rule 5610);
Minimizing the risk of securities law violations (e.g., Regulation FD and Rule 10b-5);
Protecting company assets (trade secrets as well as reputational assets);
Complying with contractual obligations requiring confidentiality; and
Complying with customer and employee privacy laws and regulations.

Thus, I was amazed to see a recent decision by a panel of the National Labor Relations Board finding the following language in a code of conduct to be unlawful:

Keep customer and employee information secure. Information must be used fairly, lawfully and only for the purpose for which it was obtained.

Fresh & Easy Neighborhood Market and United Food & Commercial Works Int’l Union, Cases 31-CA-077074 and 31-CA-080734 (July 31, 2014). The NLRB found that this language violated employees’ rights under Section 7 of the National Labor Relations Act which guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection”. Reversing the administrative law judge, the panel found that employees would reasonably construe the above language “to prohibit discussion and disclosure of information about other employees, such as wages and terms and conditions of employment”. Really? This admonition was included at page 16 of a 20 page booklet primarily dedicated to a variety of ethical matters. In my view, it is arbitrary and capricious, if not just plain bizarre, to interpret this language as conveying any limitation on employees’ Section 7 rights.

ARTICLE BY

Keith Paul Bishop

Allen Matkins Leck Gamble Mallory & Natsis LLP

Facebook, Inc. v. Rembrandt Social Media, L.P., Granting Request for Rehearing IPR2014-00415

Takeaway: Compliance with Section 42.105(b) regarding service by electronic means or EXPRESS MAIL is not required under Section 42.106(a)(2) in order for a filing date to be accorded to a petition.

In its Decision, the Board granted Patent Owner’s Request for Rehearing, but only to revisit the Board’s earlier statement regarding compliance with the requirements for service of a petition.

In its Decision on Institution, the Board had stated that “mailing via FedEx after the cut-off time on Thursday without electing Saturday delivery failed to comply with 37 C.F.R. § 42.105(b).” Patent Owner contended that the Board “misapprehend[ed] the regulatory nature of an alleged error in service of the Petition in this case,” and that the Board misapprehended “whether a failure to effect service on February 6, 2014, was ‘harmless.’”

The Board found Patent Owner’s arguments not persuasive but granted the Request for Rehearing to address the service of the Petition in this case. The Board determined that service of the Petition in this case complied with 37 C.F.R. § 42.106, which states that a filing date will not be accorded until “service of the petition on the correspondence address of record as provided in [§] 42.105(a).” The Board stated that “Section 42.106(a)(2) does not require compliance with § 42.105(b) for a filing date to be accorded,” and that the Petition was properly accorded a February 6, 2014 filing date in this case.

Facebook, Inc. v. Rembrandt Social Media, L.P., IPR2014-00415
Paper 14: Decision on Request for Rehearing
Dated: July 31, 2014
Patent: 6,415,316
Before: Phillip J. Kauffman, Jennifer S. Bisk, and Matthew R. Clements
Written by: Clements

ARTICLE BY

Intellectual Property Litigation Drinker Biddle

Drinker Biddle & Reath LLP

Difficult Situation Know-How: What To Do If an Employee Seems Suicidal

As people in the world, we face difficult situations all the time. If someone seems sad or depressed, we may want to help but not know how. When it’s your employee who is going through tough times, you may have legal concerns to worry about too. It’s good to be as prepared as possible beforehand. For example, let’s imagine that one of your employees seems depressed and starts making comments around the workplace about hurting him or herself.

A condition causing an employee to become suicidal may be covered under the Americans with Disabilities Act (“ADA”). In that case, it would be an unlawful discriminatory practice to take adverse employment actions based on the employee’s condition, and the employee may be entitled to a reasonable accommodation. If an employee makes a statement or does something that causes you to think that he or she may be suicidal, it is best to initially address the situation under the assumption that the employee has a condition covered under the ADA.

The first thing to do is to have a private conversation with the employee. Do not ask if the employee has a medical condition. Rather, ask the employee if there is anything you or the company can do to help. You can also ask if anything at work is causing or contributing to the employee’s problem and ask if the employee has any ideas for what could change at work to help. If the employee has reasonable requests for accommodation, then accommodate the employee. Later, follow up with the employee to ensure that the accommodation helped the problem. If not, it may be time to seek advice from your attorney to determine whether the employee is suffering from a condition covered by the ADA.

Be sure to document this entire process: keep written documentation of (1) the employee’s complaint(s), (2) that you asked how you could help, (3) that you did not ask whether the employee has any medical conditions, (4) that the employee suggested a certain accommodation, (5) that you provided the accommodation, and (6) that you followed up with the employee to see if the accommodation worked. Keep this documentation confidential.

Although you generally do not want to ask about whether the employee has a medical condition (such as depression), you can listen if the employee brings personal problems up and wishes to talk about them. It’s better not to offer advice, but you can offer hope that the employee will find a solution to his or her problems. You can also let the employee know that counseling is available, for instance, through an Employee Assistance Program, a crisis intervention or suicide prevention resource in your community, or a suicide-prevention hotline. Be careful not to pressure the employee or to imply that counseling is required or in any way a penalty. Again, keep your conversation confidential.

As a final note, the only time it may be alright to ask your employee whether they have a medical condition is when asking is job-related and consistent with business necessity. For example, this may be the case when the employee’s ability to perform essential job functions is impaired because of the condition or when the employee poses a direct threat. However, it is a good idea to consult your attorney before making such an inquiry as it can be fraught with legal perils.

ARTICLE BY

Kaitlin L. Hillenbrand

Steptoe & Johnson PLLC

Patent Trial and Appeal Board (PTAB) Issues First Precedential Opinion

In its first precedential opinion, the Patent Trial and Appeal Board has denied institution of a covered business method review based on a prior-filed civil suit. Except for provisions specifically excluded, the CMB statute incorporates all the statutory standards and procedures of a post-grant review. These standards include the provision barring review if the petitioner has instituted a civil action before filing its petition for review. 35 USC § 325(a)(1). In Securebuy, LLC v. Cardinal Commerce Corporation, No. CBM 2014-00035, petitioners filed a declaratory judgment action 2 weeks prior to filing for CBM review. Relying on the above-cited provision of the AIA, the Board denied SecureBuy’s petition. Despite the apparent clear language of the statute, several CBM petitions have been filed after institution of civil actions. In each case, petitioners have argued that this section of the AIA does not apply to CBM petitions.

PTO copy of the order: http://www.uspto.gov/ip/boards/bpai/decisions/prec/cbm2014-00035_4-25-2014_325a.pdf

ARTICLE BY

Jennifer E. Hoekel

OF:

Armstrong Teasdale

Generic Top Level Domains – Current Sunrise Periods Open – August 2014 Update

As first reported in our December 2013 newsletter, the first new generic top-level domains (gTLDs, the group of letters after the “dot” in a domain name) have launched their “Sunrise” registration periods. Please see our December 2013 newsletter for information as to what the Sunrise Period is, and how to become eligible to register a domain name under one of the new gTLDs during this period.

As of the date of this newsletter, Sunrise periods are open for the following new gTLDs:

.dental

.surgery

.hiphop

.audio

.yokohama

.juegos

.fund

.cash

.tax

.investments

.bio

.desi

.furniture

.discount

.fitness

.schule

.gratis

.website

.creditcard

.claims

.press

.host

.global

.okinawa

.xn—io0a7i (网络 – Chinese for “network”)

.xn—55qx5d (公司 – Chinese for “company”)

.reise

.bayern

.durban

.joburg

.capetown

.accountants

.digital

.finance

.insure

.ren

.xn—cg4bki (삼성 – Koreanfor “Samsung/Samseong”)

.republican

.guide

.loans

.church

.life

.surf

.beer

.hamburg

.scot

.place

.direct

.saarland

.hiv

.deals

.BLACK

.soy

.city

.attorney

.lawyer

.melbourne

ICANN maintains an up-to-date list of all open Sunrise periods here. This list also provides the closing date of the Sunrise period. We will endeavor to provide information regarding new gTLD launches via this monthly newsletter, but please refer to the list on ICANN’s website for the most up-to-date information – as the list of approved/launched domains can change daily.

Because new gTLD options will be coming on the market over the next year, brand owners should review the list of new gTLDs (a full list can be found here) to identify those that are of interest.

ARTICLE BY

Tracy-Gene G. Durkin

Julie D. Shirk

Monica Riva Talley

OF:

Sterne, Kessler, Goldstein & Fox P.L.L.C

What 2014’s Continued IPO Surge Means for Clean Tech and Renewable Energy Companies

The year 2014 is on track to be the most active IPO marketin the United States since 2000, with the mid-year total number of IPOs topping last year’s mid-year total by more than 60%^.[1] There were 222 US IPOs in 2013, with a total of $55 billion raised, and 2014 has already seen 151 US IPOs, for a total of $32 billion, completed by the mid-year mark. The year 2000 (over 400 IPOs) was the last year of a 10-year boom in US IPOs that reached its peak in 1996 (over 700 IPOs).

What does this mean for emerging energy technology andrenewables companies that might be looking to the capital markets? As of mid-year 2014, there have been six cleantech/renewables IPOs, while there were a total of seven in all of 2013. In both years, these deals have represented a relatively small percentage of total IPOs and still do not match the level of activity in the more traditional energy and oil & gas sector. In 2014, IPOs were completed by a range of innovative companies, including Aspen Aerogels, TCP International and Opower.

Two unambiguously positive developments for clean energy in 2013 and the first half of 2014 have been the strong market for follow-on offerings and YieldCo IPOs. As was the case in 2013, several larger energy tech companies that are already public completed follow-on offerings to bolster cash for growth in 2014. Following in the footsteps of Tesla, SunEdison, First Solar, and other companies who completed secondary offerings in 2013, Jinko Solar (January 2014), Pattern NRG (May 2014), Plug Power (January and April 2014), Trina Solar (June 2014), and several other public companies capitalized on the continued receptiveness of clean-tech capital markets.

Following on successful YieldCo IPOs in 2013 (NRG Yield, Pattern Energy), there have already been three YieldCo IPOs in 2014: Abengoa Yield, NextEra Energy Partners, and, most recently, Terraform Power. The continued growth of YieldCo deals as well as the growing dollar amount of such offerings is an extremely encouraging sign for the energy and clean-tech sector as a whole, signaling a longer-term market acceptance of the ongoing changes in domestic and global energy consumption. The successful public market financings of these companies – whose strategy typically involves the purchase and operation of existing clean, energy-generating assets – should result in increased access to capital for renewable energy generation assets, as well as related technologies and services across the sector.

If the first half of this year is any indication, 2014 should prove to be a strong year for clean-tech and renewable energy companies opting to pursue the IPO path. The IPOs, follow-on offerings, and YieldCo successes that we’ve seen so far should improve the prospects for forthcoming clean-energy IPOs in the second half of 2014 and beyond. I expect to see more renewable/clean energy companies follow the IPO route and make the most of the market’s continued receptiveness.

_{[1] Please note that there will be some variance in the statistics for IPOs generally. This is because most data sets exclude extremely small initial public offerings and uniquely structured offerings that don’t match up with the more commonly understood public offering for operating companies. The data above is based on information from http://bear.warrington.ufl.edu/ritter/IPOs2012Statistics.pdf and Renaissance Capital www.renaissancecapital.com.}

ARTICLE BY:

Sahir Surmeli

OF:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C

How to Get Amazing Attention for Your Firm on Social Media

Human beings are wired for loving the spotlight. When you post something on social media and no one comments or likes, it feels almost like a personal rejection. And when you’re posting to get attention for your business and no one cares what you’re writing, you are wasting your time.

One of the most important ways to get noticed on social media — especially on Twitter — is to make sure your post has a great headline. There are actually very good psychological reasons for using certain words that makes it almost irresistible for people to click. Here are 8 proven formulas to craft your headlines around:

Surprise — using words that surprise or startle captures attention because we love novelty. Words that break the pattern stand out.
Questions — using questions works because a question mark stimulates the human brain to seek an answer.
Curiosity — using incomplete information in your headline to pique curiosity. A famous example of this is the 1926 ad with the headline, “They laughed when I sat down at the piano…but when I started to play…!”
Negatives — using negative superlatives like “worst” or “stop” intrigues us because we want to know if there is something we shouldn’t be doing.
How to — we all want to get better, so using “how to” in your headline makes a promise of improving the reader’s knowledge.
Numbers — because humans dislike uncertainty, we respond well to numbers in headlines.
Reader referencing — using phrases like, “For those who don’t know what to do after a car accident” or just the word “you” are powerful drivers.
Specifics — quantifiable facts and figures that elicit an image in our head are incredibly intriguing.

Here are more than 180 power words to use in your headlines, courtesy of CoSchedule.com:

ARTICLE BY:

Stephen Fairley

OF:

The Rainmaker Institute

DOT Proposes Rules for Rail Transport of Flammable Materials: New Standards for Classification, Tank Cars, Emergency Preparedness

Following recent events highlighting the potential devastating effects of accidents involving rail transportation of flammable liquids, the Pipeline and Hazardous Materials Safety Administration (PHMSA) of the U.S. Department of Transportation (DOT) released a pre-publication copy of a Notice of Proposed Rulemaking (NPRM) on July 23 designed to improve the safety of transporting such materials. The proposed regulations come more than a year after the derailment and explosion of a train carrying 72 tank cars, each filled with 30,000 gallons of Bakken crude oil in Lac-Mégantic, Quebec, that killed 47 people. PHMSA will accept comments 60 days from the date of publication (not yet available) in the Federal Register. Given the extensive comments received on the Advanced Notice of Proposed Rule Making (ANPRM), the agency has indicated it does not intend to extend the comment period.

Classification and Characterization Requirements of Mined Liquids and Gases

Under the proposed regulations, all offerors and shippers would be required to implement a sampling and testing program for mined gases and liquids extracted from the earth (e.g., crude oil) to ensure their hazards are understood and accounted for in packaging and emergency preparedness. Offerors would be required to maintain documentation of the sampling and testing program, review their program annually, and make program documentation available to DOT upon request. The program would include:

Frequency of sampling to understand material variability;
Sampling of different points along the supply chain to understand changes during transportation;
Sampling methods that ensure samples representative of entire mixtures, as packaged;
Testing methods to ensure better analysis, classification, and characterization of materials;
Statistical justifications for sample frequencies;
Duplicate samples for quality assurance; and
Criteria for modifying sampling and testing programs.

Additional Operational Requirements for High-Hazard Flammable Trains

The proposed regulations would impose additional requirements for high-hazard flammable trains (HHFTs), defined by the NPRM as trains carrying 20 or more tank carloads of a Class 3 flammable liquid. Specifically, all HHFT units constructed after October 1, 2015 must comply with DOT-117 tank car design requirements for tank cars, such as inclusion of thermal protection systems and tank car plate thickness requirements. The rule would phase out DOT-111 tank cars, the oldest tank cars in use, on the following schedule:

HHFT Class 3 Flammable Liquid Packing Group	DOT-111 Not Authorized After
I	October 1, 2017
II	October 1, 2018
III	October 1, 2020

Along with changes to tank car design specifications, operators of HHFTs would have to implement the following requirements:

Use of Risk Assessment in Route Selection: The proposed rule would apply rail routing requirements currently required of trains carrying certain volumes of Toxic-by-Inhalation (TIH) Chemicals, and other highly hazardous materials to HHFTs. Carriers would be required to apply 27 safety and security factors, including population density along routes, emergency response capability along the route, among others, in selecting a route for HHFTs.
Notification to SERCs: The rule would make permanent a May 2014 DOT emergency order requiring HHFTs carrying more than one million gallons of Bakken crude oil to notify State Emergency Response Commissions (SERCs) and other appropriate state officials about the operation of such trains through their states. Carriers would be required to report such information within 30 days of the effective date of the rule and to maintain documentation of notifications that could be made available to the Federal Railroad Administration (FRA) upon request.
Speed Limits and Enhanced Braking Requirements: HHFTs would be limited to 50 mph in all areas. PHMSA seeks comments on whether HHFTs that do not meet design specifications should be subject to 40 mph speed limit options in certain areas. The proposed regulations also would require HHFTs to be equipped with alternative brake propagation systems as an added safety precaution.

Other DOT Actions

Along with the NPRM, DOT issued a companion ANPRM seeking comment on the application of oil spill response planning to the shipment of flammable liquids as well as an Operation Safe Delivery Update report containing data collected from its staff and the FRA from August 2013 to May 2014. This report concludes that Bakken crude oil is more volatile and flammable compared to other crude oils. In a press release, DOT claims that it will continue to monitor the data through the fall of 2014.

ARTICLE BY

Elizabeth M. Richardson

Fred R. Wagner

Gayatri M. Patel

Of:

Beveridge & Diamond PC

The National Law Forum

Financial Crimes Enforcement Network (FinCEN) Proposes Anti-Money Laundering Rules

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The Disintegration of Iraq

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Employee Codes of Conduct: Really? Requiring Someone To Use Information “Fairly And Lawfully” Can Be Illegal?

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Difficult Situation Know-How: What To Do If an Employee Seems Suicidal

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Patent Trial and Appeal Board (PTAB) Issues First Precedential Opinion

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Generic Top Level Domains – Current Sunrise Periods Open – August 2014 Update

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What 2014’s Continued IPO Surge Means for Clean Tech and Renewable Energy Companies

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DOT Proposes Rules for Rail Transport of Flammable Materials: New Standards for Classification, Tank Cars, Emergency Preparedness

Classification and Characterization Requirements of Mined Liquids and Gases

Additional Operational Requirements for High-Hazard Flammable Trains

Other DOT Actions

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Classification and Characterization Requirements of Mined Liquids and Gases

Additional Operational Requirements for High-Hazard Flammable Trains

Other DOT Actions

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