Donald Trump’s reelection as president of the United States raises considerations for both U.S. and non-U.S. companies importing goods into the country. Specifically, given Trump’s plan to impose “universal baseline tariffs on most foreign products” to “reward[] domestic production while taxing foreign companies,” what tariffs will be imposed, and what can importers do to protect themselves from the increased financial burden tariffs create? After Trump takes office on Jan. 20, 2025, supply chains most likely will be more expensive, with any additional tariffs likely impacting U.S. retailers, wholesalers, and manufacturers. During the campaign, Trump announced he would impose an additional 10-20% on global products and an additional 60% on products of China. Presidents have broad authority to impose tariffs and there are numerous legal authorities the Trump administration can rely on to impose them. In this GT Alert, we address those statutes and discuss strategies importers should consider to protect themselves from the increased financial burden. Statutory legal authority includes:
International Emergency Economic Powers Act of 1977 (IEEPA) provides the president with the authority to address unusual and extraordinary threats to national security through economic sanctions. According to the IEEPA, “Any authority granted to the President by section 1702 of this title may be exercised to deal with any unusual and extraordinary threat . . . if the President declares a national emergency with respect to such threat.” President Trump may use this act to address U.S. trade deficits.
Section 232 of the Trade Expansion Act of 1962 grants the president the power to impose restrictions on imports that pose a threat to national security, including through the imposition of tariffs. Previous legal challenges to the use of Section 232 have been unsuccessful.
Section 301 of the Trade Act of 1974 allows the president to respond to foreign trade practices that disadvantage the United States, authorizing the executive to (1) impose duties or other import restrictions, (2) withdraw or suspend trade agreement concessions, or (3) enter into binding agreements with foreign governments to eliminate the conduct in question or provide compensation. In his first term, President Trump used Section 301 beginning in July 2018 to impose additional tariffs of 25% or 7.5% on four lists of products from China. To date, the tariffs are still in place.
Section 338 of the Tariff Act of 1930 allows the president to impose additional tariffs of up to 50% on any country that discriminates against U.S. goods.
Section 122 of the Trade Act of 1974 provides the president with a “balance of payments” authority, allowing the imposition of an additional 15% tariff on imports for 150 days “[w]henever fundamental international payments problems require special import measures to restrict imports—(1) to deal with large and serious United States balance-of-payments deficits, (2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets.”
Prior to the implementation of additional tariffs, U.S. companies should consider increasing visibility into their supply chains. Importers may wish to review each imported product and confirm its country of origin. Specifically, if an additional 10% is added to products of the European Union and 60% is added to products of China, and a purchase agreement states the country of origin is the EU, U.S. companies should consider confirming the bill of materials and production steps to ensure that the product is in fact manufactured in the EU and not merely assembled there.
In addition, U.S. importers should consider reviewing incoterms (international commercial terms) on all purchase orders to determine which party is responsible for the tariffs. Note that tariffs are assessed based on the date of entry of goods into the United States and not the purchase order date. If a U.S. importer and non-U.S. supplier are currently negotiating a master purchase agreement that will take effect between now and the implementation of new tariffs under the Trump administration, importers may wish to add language so that the purchase price does not include the additional duties at whatever date the goods enter the United States.
Finally, there are numerous duty-mitigation strategies importers can consider to potentially blunt the impact of increased costs, including the use of “first sale” in a multi-tier transaction. Imported merchandise may have been the subject of more than one sale, with the middleman buyer adding an amount for profit and expenses to the price paid by the U.S. importer at entry. For example, merchandise may be manufactured in China, sold to a middleman in Hong Kong, and then sold to a buyer/importer in the United States. Under certain circumstances, importers can declare the value of the goods on the “first” or earlier sale, rather than on the last one, thereby reducing the declared value of the goods upon which duty payments are based. In addition, importers may consider taking legal deductions from the declared value, such as foreign inland and international freight.
The implementation of tariffs in the Trump administration seems likely, although the specifics have yet to be disclosed. In the meantime, companies should consider increasing transparency into their global supply chains and employing duty-mitigation strategies.
Globally, governments are grappling with the emergence of artificial intelligence (“AI”). AI technologies introduce exciting new opportunities but also bring challenges for regulators and companies across all industries. In the Asia-Pacific (“APAC”) region, there is no exception. APAC governments are adapting to AI and finding ways to encourage and regulate AI development through existing intellectual property (“IP”) regimes and new legal frameworks.
AI technologies aim to simulate human intelligence through developing smart machines capable of performing tasks that require human intelligence. The expanding market for AI ranges from machine learning to generative AI to virtual assistants to robotics, and this list merely scratches the surface.
When it comes to IP and AI, there are several critical questions for governments to consider: Can AI models be protected by existing legal frameworks within IP? Must copyright owners be human? Does a patent inventor have to be an individual? Do AI models’ training programs infringe on others’ copyrights?
To begin to answer these questions, regulators are drawing from existing IP regimes, including patent and copyright law. Some APAC countries have taken a non-binding approach, relying on existing principles to guide AI regulation. Others are drafting more specific AI regulations. The summary chart below provides a brief overview of current patent and copyright laws within APAC focused on AI and IP. Additional commentary concerning updates to AI laws and regulations is provided below the chart.
Country
Patent
Copyright
Korea
A non-human cannot be the inventor under Korea’s Patent Act. There is a requirement for “a person.”
The Copyright Act requires a human creator. Copyright is possible if the creator is a human using generative AI models as software tools and the human input is considered more than simple prompt inputs. For example, in Korea, copyright was granted to a movie produced by generative AI as a “compilation work” in December 29, 2023.
Japan
Under Japan’s Patent Act, a natural person must be the inventor. This is the “requirement of shimei 氏名” (i.e. name of a natural person).
Japan’s Copyright Act defines a copyright-protected work as “a creation expressing human thoughts and Emotions.” However, in February 29, 2024, the Agency for Cultural Affairs committee’s document on “Approach to AI and Copyright” provided that a joint work made up of both human input and AI generated content can be eligible for copyright protection.
Taiwan
Taiwan’s Patent Law does not explicitly preclude a non-human inventor, however, the Patent Examination Guidelines require a natural person to be an inventor. Formalities in Taiwan also require an inventor’s name and nationality.
The Copyright Act requires of “human creative expression.”
China
The inventor needs to be a person under Patent Law and the Guidelines for Examination in China.
Overall, Chinese courts have recognized that when AI-generated works involve human intellectual input, the user of the AI software is the copyright owner.
Hong Kong
The Patents Ordinance in Hong Kong requires a human inventor.
The Copyright Ordinance in Hong Kong attributes authorship to “the person by whom the arrangements necessary for the creation of the work are undertaken.”
Philippines
Patent law in the Philippines requires a natural person to be the inventor.
Generally, copyright law in the Philippines requires the author to be a natural person. The copyright in works that are partially AI-generated protects only those parts that are created by natural persons. The Philippines IP Office relies on the declarations of the creator claiming copyright to provide which part of the work is AI-generated and which part is not.
Vietnam
AI cannot be an IP right owner in Vietnam. The user of AI is the owner, regardless of the degree of work carried out by AI.
In terms of copyright, AI cannot be an IP right owner. Likewise, the user of AI is the owner, regardless of the degree of work carried out by AI.
Thailand
Thailan’s Patent law in Thailand requires inventors to be individuals.
Copyright law in Thailand requires an author to be an individual.
Malaysia
Malaysia’s Patent law requires inventors to be individuals.
Copyright law in Malaysia requires an author to be an individual.
Singapore
Patent law requires inventors to be a natural person(s). However, the owner can be a natural person or a legal entity.
In Singapore, it is implicit in provisions of the Copyright Act that the author must be a natural person.
Indonesia
Under Indonesia’s patent law, the inventor may be an individual or legal entity.
Under copyright law in Indonesia, the author of a work may be an individual or legal entity.
India
India’s patent law requires inventors to be a natural person(s).
The copyright law contains a requirement of “originality” – which the courts interpret as “intellectual effort by humans.”
Australia
The Full Federal Court in Australia ruled that an inventor must be a natural person.
Copyright law in Australia requires the author to be a human.
New Zealand
One court in New Zealand has ruled that AI cannot be an inventor under the Patents Act.
A court in New Zealand has ruled that AI cannot be the author under the provisions of the Copyright Act. There is updated legislation clarifying that the ownership of computer-generated works is the person who “made the arrangements necessary” for the creation of the work.
AI Regulation and Infringement
KOREA: Court decisions have ruled that web scraping or pulling information from a competitor’s website or database infringes on competitor’s database rights under the Copyright Act and the UCPA. In Koria, parties must obtain permission for use of copyrighted work for training AI emphasized in guidelines. The Copyright Commission published guidelines on copyright and AI in December 2023. The guidelines noted the growing need for legislation on AI generated works. The English version of the guidelines was released in April 2024.
JAPAN: The January 1, 2019 Copyright Act provides very broad rights to use copyrighted works without permission for training AI, as long as the training is for the purpose of technological development. The committee aims to introduce checks to this freedom, and also to provide more protection for Japan-based content creators and copyright holders. The Japan Agency for Cultural Affairs (ACA) released its draft “Approach to AI and Copyright” for public comment on January 23, 2024. Additional changes have been made to the draft after considering 25,000 comments as of February 29, 2025. Also, the Ministry of Internal Affairs and Communications, Ministry of Economy, Trade and compiled the AI Guidelines for Business Ver1.0 in Japan on April 19, 2024.
TAIWAN: Using copyrighted works to train AI models involves “reproduction”, which constitutes an infringement, unless there is consent or a license to use the work. Taiwan’s IPRO released an interpretation to clarify AI issues in June 2023. Under the IPO interpretation circular of June 2023, the Taiwan cabinet approved draft guidelines for the use of generative AI by the executive branch of the Taiwan government in August 2023. The executive branch of the Taiwan government also confirmed that it is in the process of formulating the government’s version of the Draft AI Law, which is expected to be published this year.
CHINA: Interim Measures for the Management of Generative Artificial Intelligence Services, promulgated in July 2023, require that generative AI services “respect intellectual property rights and commercial ethics” and that “intellectual property rights must not be infringed.” The consultation draft on Basic Security Requirements for Generative Artificial Intelligence Service, which was published in October 2023, provides detailed guidance on how to avoid IP infringement. The requirements, for example, provide specific processes concerning model training data that Chinese AI companies must adopt. Moreover, China’s draft Artificial Intelligence Law, proposed on March 16, 2024, outlines the use of copyrighted material for training purposes, and it serves as a complement to China’s current AI regulations.
HONG KONG: A review of copyright law in Hong Kong is underway. There is currently no overarching legislation regulating the use of AI, and the existing guidelines and principles mainly provide guidance on the use of personal data.
VIETNAM: AI cannot have responsibility for infringement, and there are no provisions under existing laws in Vietnam regarding the extent of responsibility of AI users for infringing acts. The Law on Protection of Consumers’ Rights will take effect on July 1, 2024. This law requires operators of large digital platforms to periodically evaluate the use of AI and fully or partially automated solutions.
THAILAND: Infringement in Thailand requires intent or implied intent, for example, from the prompts made to the AI. Thai law also provides for liability arising out of the helping or encouraging of infringement by another. Importantly, the AI user may also be exposed to liability in that way.
MALAYSIA: An informal comment from February 2024 by the Chairman of the Malaysia IP Office provides that there may be infringement through the training and/or use of AI programs.
SINGAPORE: Singapore has a hybrid regime. The regime provides a general fair use exception, which is likely guided by US jurisprudence, per the Singapore Court of Appeal. The regime also provides exceptions for specific types of permitted uses, for example, the computational data analysis exception. A Landscape Report on Issues at the Intersection of AI and IP issued by IPOS on February 28, 2024 provided a Model AI Governance Framework for Generative AI, which was published May 30, 2024.
INDONESIA: A “circular,” a government issued document similar to a white paper, implies that infringement is possible in Indonesia. The nonbinding Communications and Information Ministry Circular No. 9/2023 on AI was signed in December 2023.
INDIA: Under the Copyright Act of 1957, a Generative AI user has an obligation to obtain permission to use the copyright owner’s works for commercial purposes. In February 2024, the Ministry of Commerce and Industry’s Statement provided that India’s existing IPR regime is “well-equipped to protect AI-generated works” and therefore, it does not require a separate category of rights. MeitY issued a revised advisory on March 15, 2024 providing that platforms and intermediaries should ensure that the use of AI models, large language models, or generative AI software or algorithms by end users does not facilitate any unlawful content stipulated under Rule 3(1)(b) of the IT Rules, in addition to any other laws.
AUSTRALIA: Any action seeking compensation for infringement of a copyright work by an AI system would need to rely on the Copyright Act of 1968. It is an infringement of copyright to reproduce or communicate works digitally without the copyright owner’s permission. Australia does not have a general “fair use” defense to copyright infringement.
NEW ZEALAND: While infringement by AI users has not yet considered by New Zealand courts, New Zealand has more restricted “fair dealing” exceptions. Copyright review is underway in New Zealand.
The investigation, spearheaded by the UK’s National Crime Agency (NCA), began when Gemfields reported their suspicions of corruption. Using covert surveillance, the NCA recorded Andrianarisoa and Tabuteau requesting 250,000 Swiss Francs (approximately £215,000) and a five percent equity stake, potentially worth around £4 million, as payments for their services. Gemfields supported the investigation and prosecution throughout.
During the investigation, six covertly recorded audio clips were released, suggesting Andrianarisoa had significant influence over Madagascar’s leadership and her expectation of substantial financial rewards. The arrests in August 2023 and subsequent trial at Southwark Crown Court culminated in prison sentences of three and a half years for Andrianarisoa and two years and three months for Tabuteau.
Comment
Gemfields has, quite rightly, been praised for reporting this conduct to the NCA and supporting their investigation and prosecution. In doing so, they made a strong ethical decision and went above and beyond their legal obligations: there is no legal requirement on Gemfields to report solicitations of this kind.
Such a decision will also have been difficult. Reporting misconduct and supporting the investigation is likely to have exposed Gemfields to significant risk and costs:
First, in order to meet their obligations as prosecutors, put together the best case, and comply with disclosure requirements, the NCA likely required Gemfields employees to attend interviews and provide documents. These activities require significant legal support and can be very costly both in time and money.
Secondly, such disclosures and interviews might identify unrelated matters of interest to the NCA. It is not uncommon in these cases for corporates reporting misconduct to become the subject of unrelated allegations of misconduct and separate investigations themselves.
Furthermore, to the extent that Gemfields supported the covert surveillance aspects of the NCA’s investigation, there may have been significant safety risks to both the employees participating, and unrelated employees in Madagascar. Such risks can be extremely difficult to mitigate.
Finally, the willingness to publicly and voluntarily report Andrianarisoa is likely to have created a chilling effect on Gemfields’ ability to do legitimate business in Madagascar and elsewhere. Potential partners may be dissuaded from working with Gemfields for fear of being dragged into similar investigations whether warranted or not.
Organisations in these situations face difficult decisions. Many will, quite rightly, want to be good corporate citizens, but in doing so, must recognise the potential costs and risks to their business and, ultimately, their obligations to shareholders and owners. In circumstances where there is no obligation to report, the safest option may be to walk away and carefully record the decision to do so. No doubt, Gemfields carefully considered these risks prior to reporting Andrianarisoa’s misconduct.
Businesses facing similar challenges should:
Ensure they understand their legal obligations. Generally, there is no obligation to report a crime. However, particularly for companies and firms operating in the financial services or other regulated sectors, this is not universally the case.
Carefully consider the risks and benefits associated with any decision to report another’s misconduct, including not only financial costs, but time and safety costs too.
Develop a compliance programme that assists and educates teams on how to correctly identify misconduct, escalate appropriately, and decide whether to report.
Cross-cultural differences and the misunderstandings that often arise from them play a powerful role in how businesses build relationships and conduct their commercial and legal affairs. At a time of expansive growth in transnational business, trade, and investment, a lack of knowledge about local culture, values, and customs in business and legal dealings are leading to ever more complex and tense international legal disputes.
As lawyers and arbitrators, it is critical to foster a deeper understanding of how cultural and emotional factors along with behavioral tendencies impact business decisions and the practice of arbitration worldwide. Addressing these issues in the context of business-to-business (B2B) relationships, a recent report by the International Chamber of Commerce, Jus Connect, and McCann Truth Central found that a new set of principles—based on emotional intelligence, cultural awareness, and cultural fluency—is required to create a cross-cultural playbook for arbitration and re-imagining dispute outcomes.
Global leaders surveyed said that arbitration is still the preferred way to resolve cross-border disputes over litigation. If a contract fails, 60% prefer arbitration to legal proceedings in a court. Overall, arbitration has increased significantly over the past decade, reaching an estimated $80 billion in 2022. Some 37,000 new cases were registered between 2018 and 2022, an increase of nearly 30% between 2013 and 2017. While this represents a mere fraction of the $121 trillion in international trade in 2022, arbitration is growing twice as fast as global trade as clients recognize the speed, efficiency, transparency, and flexibility it offers to resolve disputes compared to traditional litigation.
Cultural Miscues
In my travels as President of the ICC International Court of Arbitration, I have heard countless stories about the influence of cross-cultural differences on business and legal affairs, including arbitration. And with good reason: every country has unique and often contrasting attitudes about dispute resolution and misunderstanding them can add layers of difficulty during legal proceedings for both general counsel and arbitration lawyers.
Based on extensive interviews and quantitative data, the ICC report divides cultural attitudes and approaches into four generalized categories and suggests which countries fit into each one. The Innovative Explorer, for example, including France and Saudi Arabia, seeks collaboration and co-creation, looks for emotional chemistry, and tends to stretch goals. For their part, India and Nigeria can be seen as a Strategic Balancer, eager for collaboration and co-creation, along with emotional chemistry, and ready to stretch goals.
Brazil and Mexico are among the countries regarded as a Decisive Custodians, in that they tend to value structure and contracts as part of a more direct, yet discrete approach and in addition, prefer working with senior partners. Finally, as the name indicates, the Pragmatic Realist—including the U.K. and Switzerland—takes a reasoned and practical approach, with an appreciation for clear expectations meeting agendas, and giving parties a second chance.
These attitudes are reflected in the different approaches that countries have toward contracts. Some want a clear scope, set in stone. Others put more focus on outcomes and fluidity in delivery. For instance, while Mexico and Brazil prefer structured approaches in contract agreements, India and Saudi Arabia are open to collaboration and co-creation in a scope of work. France and China prefer to stretch sometimes-unrealistic goals, but India and Nigeria, want realistic and achievable ones.
Chameleon U.S.
Digging deeper into the analysis shows that in some ways, the U.S. has a lot in common with Brazil and China when considering the role of hierarchy and discretion in a business situation. If someone in business makes a mistake, Americans prefer to promptly resolve disputes, even if a party might get offended and are also unlikely to copy their boss on an email.
These categories help explain many business decisions and actions and can guide teams to recognize and overcome cultural differences. But they don’t always tell the whole story: cultural nuances add even more complexity to cross-border business and legal dealings.
The U.S., for example, can be described as a chameleon or shapeshifter that doesn’t always neatly fit any descriptor. In my experience, U.S. business representatives will typically revise their approach depending on what the customer or counterparty needs. This flexibility is likely due to the presence of diverse and multicultural U.S. business teams compared to some other countries. As one senior arbitrator said in the report, “In the U.S., the common denominator is understanding what the customer needs.”
Small Behavior, Big Impact
Mapping the world by culture rather than geographic positioning offers valuable insights that can improve cultural fluency and ensure that geography alone does not influence expectations and approaches. The report showed how small behaviors point to larger cultural priorities. Teams from France and Saudi Arabia don’t necessarily need an agenda to attend a meeting, but those from India and Nigeria would usually prefer a detailed agenda. Acknowledging these cultural differences, however small and seemingly inconsequential, provides a framework for anticipating and resolving friction and helping teams adapt.
One of the most interesting aspects of the study is that business teams and leaders say they want lawyers involved earlier in the B2B process—and more deeply integrated into the journey—with a focus on win-win outcomes. This is consistent with the changing role of in-house counsel, particularly in the U.S., where in house counsel work more closely with business teams to develop strategy and structure the deal. Given the growing complexity of today’s global regulatory environment, business teams can no longer negotiate the deal first and then bring the terms to the in-house team to document.
While the study focused on cultural differences, it also found a commonality across cultures: a growing preference for non-legal dispute resolution. Some 77% favored an amicable, interest-based resolution—through internal or contract review, or direct negotiations between legal teams—compared to 52% favoring a rights-based resolution using arbitration or legal proceedings in a court. Only about one-third chose a so-called power-based resolution, such as a canceled contract, a report to a regulator, a post on social media, or a leak to the press.
Key Truths
Understanding the diverse world of business culture reveals several truths about B2B relationships. One is that emotion and culture have a significant impact on business—perhaps more than many realize—because the B2B journey comprises the human experience. Contrary to the commonly held perceptions that B2B interactions are largely transactional or purely functional, and free of emotions, the report found that they are emotionally charged, from initial engagement with parties and contracts to long-term partnerships.
I have experienced this firsthand when representing a multinational company in a very complex arbitration involving the calculation of damages. I needed to prepare the CEO for cross-examination. Yet his analysis was not entirely data-driven decision-making: emotions were also a big part of his thinking. When describing his approach and his meeting with his CEO counterpart, he just kept telling me, “This is so emotional.”
Another truth is that by effectively navigating cultural differences and overcoming communication barriers, we can improve business relationships. In this context, business attitudes toward particulars such as contracts and meeting styles reflect cultural priorities and offer relevant cultural cues. At first, these may appear to be minor details but unveil deeper cultural attitudes concerning hierarchy, orderliness, adaptability, and creativity.
When I was in China earlier this year, I was surprised by the number of back-channel conversations that took place to determine how many people we could bring to a meeting and the level of seniority so that the Chinese delegation would have the same. There were also discussions about attire—including whether men should wear a tie—so that nobody would feel out of place.
Cross-Cultural Playbook
With these truths in mind, a new cross-cultural playbook for global arbitration should include the following actions. First, integrate legal teams as early as possible into the process and keep them engaged via partnerships with business teams. Train teams to understand emotional intelligence and be more culturally aware so they can become more adept at relationship building and managing shifting emotions during the B2B journey. Ensure teams can interpret subtle behavioral and cultural cues to make informed decisions and improve communications. Equally important, prioritize direct negotiation channels for dispute resolution, reserving legal action for failed negotiations.
More than ever, we must emphasize the role of emotion and human interaction in business and how important it is in building trust: the report noted that half of all B2B disputes are likely caused by the breakdown of human interaction rather than solely by contractual issues. With heightened sensitivity to cultural differences, we can better understand the complexities of the B2B journey, minimize business and legal disputes, and successfully apply these truths to resolving conflicts through arbitration.
WEBINAR – Registration Is Open For “Harmonizing TSCA Consent Orders with OSHA HCS 2012”: Register now to join The Acta Group (Acta®) and Bergeson & Campbell, P.C. (B&C®) for “Harmonizing TSCA Consent Orders with OSHA HCS 2012,” a complimentary webinar covering case studies and practical applications of merging the requirements for consent order language on the Safety Data Sheet (SDS). In this webinar, Karin F. Baron, MSPH, Director of Hazard Communication and International Registration Strategy, Acta, will explore two hypothetical examples and provide guidance on practical approaches to compliance. An industry perspective will be presented by Sara Glazier Frojen, Senior Product Steward, Hexion Inc., who will discuss the realities of managing this process day-to-day.
SAVE THE DATE – “TSCA Reform — 8 Years Later” On June 26, 2024: Save the date to join Acta affiliate B&C, the Environmental Law Institute (ELI), and the George Washington University Milken Institute School of Public Health for a day-long conference reflecting on the challenges and accomplishments since the implementation of the 2016 Lautenberg Amendments and where the Toxic Substances Control Act (TSCA) stands today. This year, the conference will be held in person at the George Washington University Milken Institute School of Public Health (and will be livestreamed via YouTube). Continuing legal education (CLE) credit will be offered in select states for in-person attendees only. Please check ELI’s event page in the coming weeks for more information, including an agenda, CLE information, registration, and more. If you have questions in the meantime, please contact Madison Calhoun (calhoun@eli.org).
AUSTRALIA
Changes To Categorization, Reporting, And Recordkeeping Requirements For Industrial Chemicals Will Take Effect April 24, 2024: The Australian Industrial Chemicals Introduction Scheme (AICIS) announced regulatory changes to categorization, reporting, and recordkeeping requirements will start April 24, 2024. For the changes to take effect, the Industrial Chemicals (General) Rules 2019 (Rules) and Industrial Chemicals Categorisation Guidelines will be amended. According to AICIS, key changes to the Rules include:
Written undertakings replaced with records that will make compliance easier;
Greater acceptance of International Nomenclature of Cosmetic Ingredients (INCI) names for reporting and recordkeeping;
Changes to the categorization criteria to benefit:
Local soap makers;
Introducers of chemicals in flavor and fragrance blends; and
Introducers of hazardous chemicals where introduction and use are controlled; and
Strengthening criteria and/or reporting requirements for health and environmental protection.
AICIS announced final changes to the Industrial Chemicals Categorisation Guidelines that will take effect April 24, 2024. According to AICIS, the changes include:
Refinement of the requirement to check for hazardous esters and salts of chemicals on the “List of chemicals with high hazards for categorisation” (the List);
Provision to include highly hazardous chemicals to the List based on an AICIS assessment or evaluation;
Expanded options for introducers to demonstrate the absence of skin irritation and skin sensitization; and
More models for in silico predictions and an added test guideline for ready biodegradability.
AICIS states that it will publish a second update to the Guidelines in September 2024 due to industry stakeholders’ feedback that they need more time to prepare for some of the changes. It will include:
For the List: add chemicals based on current sources and add the European Commission (EC) Endocrine Disruptor List (List I) as a source; and
Refined requirements for introducers to show the absence of specific target organ toxicity after repeated exposure and bioaccumulation potential.
CANADA
Canada Provides Updates On Its Implementation Of The Modernized CEPA: As reported in our June 23, 2023, memorandum, Bill S-5, Strengthening Environmental Protection for a Healthier Canada Act, received Royal Assent on June 13, 2023. Canada is working to implement the bill through initiatives that include the development of various instruments, policies, strategies, regulations, and processes. In April 2024, Canada updated its list of public consultation opportunities:
Discussion document on the implementation framework for a right to a healthy environment under the Canadian Environmental Protection Act, 1999 (CEPA) (winter 2024);
Proposed Watch List approach (spring/summer 2024);
Proposed plan of chemicals management priorities (summer 2024);
Draft strategy to replace, reduce or refine vertebrate animal testing (summer/fall 2024);
Draft implementation framework for a right to a healthy environment under CEPA (summer/fall 2024);
Discussion document for toxic substances of highest risk regulations (winter 2025); and
Discussion document on the restriction and authorization of certain toxic substances regulations (winter/spring 2025).
EUROPEAN UNION (EU)
ECHA Checks More Than 20 Percent Of REACH Registration Dossiers For Compliance: The European Chemicals Agency (ECHA) announced on February 27, 2024, that between 2009 and 2023, it performed compliance checks of approximately 15,000 Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) registrations, representing 21 percent of full registrations. ECHA states that it met its legal target for dossier evaluation, which increased from five percent to 20 percent in 2019. ECHA notes that for substances registered at quantities of 100 metric tons or more per year, it has checked compliance for around 30 percent of the dossiers.
According to ECHA, in 2023, it conducted 301 compliance checks, covering more than 1,750 registrations and addressing 274 individual substances. ECHA “focused on registration dossiers that may have data gaps and aim to enhance the safety data of these substances.” ECHA sent 251 adopted decisions to companies, “requesting additional data to clarify long-term effects of chemicals on human health or the environment.” ECHA states that during the follow-up evaluation process, it will assess the incoming information for compliance. ECHA will share the outcome of the incoming data with the EU member states and the EC to enable prioritization of substances. ECHA will work closely with the member states for enforcement of non-compliant dossiers. Compliance of registration dossiers will remain a priority for ECHA. In 2024, ECHA will review the impact of the Joint Evaluation Action Plan, aimed at improving REACH registration compliance, and, together with stakeholders, develop new priority areas on which to focus. More information is available in our March 29, 2024, blog item.
Council Of The EU And EP Reach Provisional Agreement On Proposed Regulation On Packaging And Packaging Waste: The Council of the EU announced on March 4, 2024, that its presidency and the European Parliament’s (EP) representatives reached a provisional political agreement on a proposal for a regulation on packaging and packaging waste. The press release states that the proposal considers the full life-cycle of packaging and establishes requirements to ensure that packaging is safe and sustainable by requiring that all packaging is recyclable and that the presence of substances of concern is minimized. It also includes labeling harmonization requirements to improve consumer information. In line with the waste hierarchy, the proposal aims to reduce significantly the generation of packaging waste by setting binding re-use targets, restricting certain types of single-use packaging, and requiring economic operators to minimize the packaging used. The proposal would introduce a restriction on the placing on the market of food contact packaging containing per- and polyfluoroalkyl substances (PFAS) above certain thresholds. The press release notes that to avoid any overlap with other pieces of legislation, the co-legislators tasked the EC to assess the need to amend that restriction within four years of the date of application of the regulation.
EP Adopts Position On Establishing System To Verify And Pre-Approve Environmental Marketing Claims: The EP announced on March 12, 2024, that it adopted its first reading position on establishing a verification and pre-approval system for environmental marketing claims to protect citizens from misleading ads. According to the EP’s press release, the green claims directive would require companies to submit evidence about their environmental marketing claims before advertising products as “biodegradable,” “less polluting,” “water saving,” or having “biobased content.” Micro enterprises would be exempt from the new rules, and small and medium-sized enterprises (SME) would have an extra year to comply compared to larger businesses. The press release notes that the EP also decided that green claims about products containing hazardous substances should remain possible for now, but that the EC “should assess in the near future whether they should be banned entirely.” The new EP will follow up on the file after the European elections that will take place in June 2024.
On April 3, 2024, a coalition of industry associations issued a “Joint statement in reference to ‘the ban of green claims for products containing hazardous substances’ in the Green Claims Substantiation Directive (GCD).” The associations “fully support the principle that consumers should not be misled by false or unsubstantiated environmental claims and share the EU’s objective to establish a clear, robust and credible framework to enable consumers to make an informed choice.” The associations express concern that the proposed prohibition of environmental claims for products containing certain hazardous substances “will run contrary to the objective of the Directive to enable consumers to make sustainable purchase decisions and ensure proper substantiation of claims.” According to the associations, for a number of consumer products, “the reference to ‘products containing’ would encompass substances that would have intrinsic hazardous properties,” implying that there would be a ban of making any environmental claim(s), “even if such trace amounts of unavoidable and unintentional impurities and contaminants are present in these products.” The signatories include the International Association for Soaps, Detergents and Maintenance Products; the European Brands Association; APPLiA; the Association of Manufacturers and Formulators of Enzyme Products; CosmeticsEurope; the European Power Tool Association; the Federation of the European Sporting Goods Industry; the International Fragrance Association; LightingEurope; the International Natural and Organic Cosmetics Association; Toy Industries of Europe; Verband der Elektro- und Digitalindustrie; and the World Federation of Advertisers.
ECHA Clarifies Next Steps For PFAS Restriction Proposal: ECHA issued a press release on March 13, 2024, to outline how the Scientific Committees for Risk Assessment (RAC) and for Socio-Economic Analysis (SEAC) will progress in evaluating the proposal to restrict PFAS in Europe. As reported in our February 13, 2023, memorandum, the national authorities of Denmark, Germany, the Netherlands, Norway, and Sweden submitted a proposal to restrict more than 10,000 PFAS under REACH. The proposal suggests two restriction options — a full ban and a ban with use-specific derogations — to address the identified risks. Following the screening of thousands of comments received during the consultation, ECHA states that it is clarifying the next steps for the proposal. According to ECHA, RAC and SEAC will evaluate the proposed restriction together with the comments from the consultation in batches, focusing on the different sectors that may be affected.
In tandem, the five national authorities who prepared the proposal are updating their initial report to address the consultation comments. This updated report will be assessed by the committees and will serve as the foundation for their opinions. The sectors and elements that will be discussed in the next three committee meetings are:
March 2024 Meetings
Consumer mixtures, cosmetics, and ski wax;
Hazards of PFAS (only by RAC); and
General approach (only by SEAC).
June 2024 Meetings
Metal plating and manufacture of metal products; and
More information is available in our March 18, 2024, blog item.
ECHA Adopts And Publishes CoRAP For 2024-2026: On March 19, 2024, ECHA adopted and published the Community rolling action plan (CoRAP) for 2024-2026. The CoRAP lists 28 substances suspected of posing a risk to human health or the environment for evaluation by 11 Member State Competent Authorities. The CoRAP includes 11 newly allocated substances and 17 substances already included in the previous CoRAP 2023-2025 update, published on March 21, 2023. For 11 out of these 17 substances, ECHA notes that the evaluation year has been postponed, mainly to await submission of new information requested under dossier evaluation. Of the 28 substances to be evaluated, ten are to be evaluated in 2024, 13 in 2025, and five in 2026. The remaining substance of the 24 substances listed in the previous CoRAP was withdrawn as its evaluation is currently considered to be a low priority. According to ECHA, for this substance, a compliance check is needed first. ECHA states that the substance can be placed in the CoRAP list again, if after the conclusion of the dossier evaluation process, concerns remain beyond what can be clarified through dossier evaluation. ECHA has posted a guide for registrants that need to update their dossiers with new relevant information such as hazard, tonnages, use, and exposure.
Comments On Proposals To Identify New SVHCs Due April 15, 2025: A public consultation on proposals to identify two new substances of very high concern (SVHC) will close on April 15, 2024. The substances and examples of their uses are:
Bis(α,α-dimethylbenzyl) peroxide: This substance is used in products such as pH-regulators, flocculants, precipitants, and neutralization agents; and
Triphenyl phosphate: This substance is used as a flame retardant and plasticizer in polymer formulations, adhesives, and sealants.
UNITED KINGDOM (UK)
HSE Publishes UK REACH Work Programme For 2023/24: In February 2024, the Health and Safety Executive (HSE) published its UK REACH Work Programme 2023/24. The Work Programme sets out how HSE, with the support of the Environment Agency, will deliver its regulatory activities to meet the objectives and timescales set out in UK REACH. Alongside these activities, HSE and the Environment Agency will engage with stakeholders. The Work Programme includes the following deliverables and target deadlines:
Topic
Deliverable
Target
Substance evaluation
Evaluate substances in the Rolling Action Plan (RAP)
Evaluate one
Authorization
Complete the processing of received applications within the statutory deadline (this includes comments from public consultation and REACH Independent Scientific Expert Pool (RISEP) input)
100 percent
SVHC identification
Undertake an initial assessment of substances submitted for SVHC identification under EU REACH during 2022/23 and consider if they are appropriate for SVHC identification under UK REACH
Assess up to five
Regulatory management options analysis (RMOA)
Complete RMOAs initiated in 22/23
Initiate RMOAs for substances identified as priorities
Up to ten
Up to five
Restriction
Complete ongoing restriction opinions
Begin Annex 15 restriction dossiers
Initiate scoping work for restrictions
Two
One
Two
HSE Opens Call For Evidence On PFAS In FFFs: HSE is working with the Environment Agency to prepare a restriction dossier that will assess the risks of PFAS in firefighting foams (FFF). HSE will propose restrictions, if necessary, to manage any significant risks identified. To help compile the dossier, HSE opened a call for evidence. HSE states that it would like stakeholders to identify themselves as willing to engage in further dialogue throughout the restrictions process. In particular, it would like to hear from stakeholders with relevant information on PFAS (or alternatives) in FFFs, especially information specific to Great Britain (GB). Regarding relevant information, HSE is interested in all aspects of FFFs, including:
Manufacture of FFFs: Substances used, process, quantities;
Import of FFF products of all types: Quantities, suppliers;
Use: Quantities, sector of use, frequency, storage on site, products used;
Alternatives to PFAS in FFF: Availability, cost, performance in comparison to PFAS-containing foams, barriers to switching;
Hazardous properties: SDSs, new studies on intrinsic properties and exposure, recommended risk management measures;
Environmental fate: What happens to the FFF after it is used, where does it go;
Waste: Disposal requirements, recycling opportunities, remediation; and
Standards: Including product-specific legislation, performance, certification.
HSE states that the call for evidence targets companies (manufacturers, importers, distributors, and retailers) and professional users of FFFs, trade associations, environmental organizations, consumer organizations, and any other organizations and members of the public holding relevant information. HSE intends to publish the final dossier, including any restriction proposals, on its website in March 2025. Interested parties will also then be able to submit comments on any proposed restriction.
New GB BPR Data Requirements Will Apply To Applications Submitted In October 2025:The Biocidal Products (Health and Safety) (Amendment and Transitional Provision etc.) Regulations 2024, which update the data requirements in Annexes II and III of the GB Biocidal Products Regulation (BPR), were laid in Parliament on March 13, 2024, and came into force on April 6, 2024. The legislation updates some of the data requirements to reflect developments in science and technology. These include the use of alternative testing approaches to determine some hazardous properties that previously relied on animal testing. HSE held a public consultation on the proposed changes in 2023 and has posted a report on the outcome of the consultation. The new data requirements will apply to applications received 18 months after the legislation came into force (October 6, 2025) and do not apply to existing applications. HSE will provide further guidance on the changes in the future.
Adding to the momentum generated by other EU green initiatives, this directive could be the catalyst that also spurs the U.S. to approve stronger regulatory enforcement mechanisms to crackdown on greenwashing
This proposed directive overlaps the FTC’s request for comments on its Green Guides, including whether the agency should initiate a rulemaking to establish enforceable requirements related to unfair and deceptive environmental claims. The deadline for comments has been extended to April 24, 2023
The European Commission (EC) proposed the Green Claims Directive (GCD) on March 22, 2023, to crack down on greenwashing and prevent businesses from misleading customers about the environmental characteristics of their products and services. This action was in response, at least in part, to a 2020 commission study that found more than 50 percent of green labels made environmental claims that were “vague, misleading or unfounded,” and 40 percent of these claims were “unsubstantiated.”
This definitive action by the European Union (EU) comes at a time when the U.S. is also considering options to curb greenwashing and could inspire the U.S. to implement stronger regulatory enforcement mechanisms, including promulgation of new enforceable rules by the Federal Trade Commission (FTC) defining and prohibiting unfair and deceptive environmental claims.
According to the EC, under this proposal, consumers “will have more clarity, stronger reassurance that when something is sold as green, it actually is green, and better quality information to choose environment-friendly products and services.”
Scope of the Green Claims Directive
The EC’s objectives in the proposed GCD are to:
Make green claims reliable, comparable and verifiable across the EU
Protect consumers from greenwashing
Contribute to creating a circular and green EU economy by enabling consumers to make informed purchasing decisions
Help establish a level playing field when it comes to environmental performance of products
“any message or representation, which is not mandatory under Union law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication, which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time.”
The GCD provides minimum requirements for valid, comparable and verifiable information about the environmental impacts of products that make green claims. The proposal sets clear criteria for companies to prove their environmental claims: “As part of the scientific analysis, companies will identify the environmental impacts that are actually relevant to their product, as well as identifying any possible trade-offs to give a full and accurate picture.” Businesses will be required to provide consumers information on the green claim, either with the product or online. The new rule will require verification by independent auditors before claims can be made and put on the market.
The GCD will also regulate environmental labels. The GCD is proposing to establish standard criteria for the more than 230 voluntary sustainability labels used across the EU, which are currently “subject to different levels of robustness, supervision and transparency.” The GCD will require environmental labels to be reliable, transparent, independently verified and regularly reviewed. Under the new proposal, adding an environmental label on products is still voluntary. The EU’s official EU Ecolabel is exempt from the new rules since it already adheres to a third-party verification standard.
Companies based outside the EU that make green claims or utilize environmental labels that target the consumers of the 27 member states also would be required to comply with the GCD. It will be up to member states to set up the substantiation process for products and labels’ green claims using independent and accredited auditors. The GCD has established the following process criteria:
Claims must be substantiated with scientific evidence that is widely recognised, identifying the relevant environmental impacts and any trade-offs between them
If products or organisations are compared with other products and organisations, these comparisons must be fair and based on equivalent information and data
Claims or labels that use aggregate scoring of the product’s overall environmental impact on, for example, biodiversity, climate, water consumption, soil, etc., shall not be permitted, unless set in EU rules
Environmental labelling schemes should be solid and reliable, and their proliferation must be controlled. EU level schemes should be encouraged, new public schemes, unless developed at EU level, will not be allowed, and new private schemes are only allowed if they can show higher environmental ambition than existing ones and get a pre-approval
Environmental labels must be transparent, verified by a third party, and regularly reviewed
Enforcement of the GCD will take place at the member state level, subject to the proviso in the GCD that “penalties must be ‘effective, proportionate and dissuasive.’” Penalties for violation range from fines to confiscation of revenues and temporary exclusion from public procurement processes and public funding. The directive requires that consumers should be able to bring an action as well.
The EC’s intent is for the GCD to work with the Directive on Empowering the Consumers for the Green Transition, which encourages sustainable consumption by providing understandable information about the environmental impact of products, and identifying the types of claims that are deemed unfair commercial practices. Together these new rules are intended to provide a clear regime for environmental claims and labels. According to the EC, the adoption of this proposed legislation will not only protect consumers and the environment but also give a competitive edge to companies committed to increasing their environmental sustainability.
ECOS lamented that “After months of intense lobbying, what could have been legislation contributing to providing reliable environmental information to consumers was substantially watered down,” and added that “In order for claims to be robust and comparable, harmonised methodologies at the EU level will be crucial.” Carbon Market Watch was disappointed that “The draft directive fails to outlaw vague and disingenuous terms like ‘carbon neutrality’, which are a favoured marketing strategy for companies seeking to give their image a green makeover while continuing to pollute with impunity.”
The EC’s proposal will now go to the European Parliament and Council for consideration. This process usually takes about 18 months, during which there will be a public consultation process that will solicit comments, and amendments may be introduced. If the GCD is approved, each of the 27 member states will have 18 months after entry of the GCD to adopt national laws, and those laws will become effective six months after that. As a result, there is a reasonably good prospect that there will be variants in the final laws enacted.
Will the GCD Influence the U.S.’s Approach to Regulation of Greenwashing?
The timing and scope of the GCD is of no small interest in the U.S., where regulation of greenwashing has been ramping up as well. In May 2022, the Securities and Exchange Commission (SEC) issued the proposed Names Rule and ESG Disclosure Rule targeting greenwashing in the naming and purpose of claimed ESG funds. The SEC is expected to take final action on the Names Rule in April 2023.
Additionally, as part of a review process that occurs every 10 years, the FTC is receiving comments on its Green Guides for the Use of Environmental Claims, which also target greenwashing. However, the Green Guides are just that – guides that do not currently have the force of law that are used to help interpret what is “unfair and deceptive.”
It is particularly noteworthy that the FTC has asked the public to comment, for the first time, on whether the agency should initiate a rulemaking under the FTC Act to establish independently enforceable requirements related to unfair and deceptive environmental claims. If the FTC promulgates such a rule, it will have new enforcement authority to impose substantial penalties.
The deadline for comments on the Green Guides was recently extended to April 24, 2023. It is anticipated that there will be a substantial number of comments and it will take some time for the FTC to digest them. It will be interesting to watch the process unfold as the GCD moves toward finalization and the FTC decides whether to commence rulemaking in connection with its Green Guide updates. Once again there is a reasonable prospect that the European initiatives and momentum on green matters, including the GCD, could be a catalyst for the US to step up as well – in this case to implement stronger regulatory enforcement mechanisms to crackdown on greenwashing.
On December 1, 2022, Mexican President Andrés Manuel Lopez Obrador announced that, unanimously, the business and labor sectors, as well as the government, had agreed to increase the minimum wage by 20 percent for 2023, which will be applicable in the Free Zone of the Northern Border (Zona Libre de la Frontera Norte or ZLFN), as well as the wage applicable in the rest of the country. The increase will become official when it is published in the Official Gazette of the Federation (Diario Oficial de la Federación).
Before the increase was determined, the Mexican National Commission on Minimum Wages (Comisión Nacional de los Salarios Mínimos, or CONASAMI) applied an independent recovery amount (Monto Independiente de Recuperación or MIR) in accordance with the following:
MIR for the ZLFN: MXN $23.68
MIR for the rest of the country: MXN $15.72
On top of the MIR, the CONASAMI approved a 10 percent increase from the 2022 rate to the daily minimum wage applicable to the ZLFN and the rest of the country, resulting in MXN $312.41 (approximately USD $16.11) for the ZLFN and MXN $207.44 (approximately USD $10.69) for the rest of the country. The new rates would be effective as of January 1, 2023.
The MIR and the 10 percent increase—combined—would represent a 20 percent increase in the daily minimum wage rate which translates to more than MXN $30 per day.
Finally, Secretary of Labor Luisa Maria Alcalde stated that the above increases would directly benefit 6.4 million workers in Mexico.
Hackers caused a massive traffic jam in Moscow by exploiting the ride-sharing app Yandex Taxi and using it to summon dozens of taxis to a single location. While Yandex has not confirmed the attacker’s identity, the hacktivist group Anonymous claimed responsibility on Twitter. The group has been actively taking aim at Russian targets in response to the Russian Federation’s ongoing invasion of Ukraine.
Yandex claims that it has implemented new algorithms to detect this type of attack in the future and will compensate the affected drivers.
This traffic jam is a new application of an old hacktivist tactic: flood the system to make it unusable. Other techniques in this vein include blackouts (which target fax machines) and distributed denial of service (which targets websites and networks). No word yet on whether this new rideshare jam exploit will merit a snappy title.
Blair Robinson contributed to this article.
For more Global Law news, click here to visit the National Law Review.
On August 28, 2022, 知识产权那点事 published the first patent linkage decision from the Supreme People’s Court (SPC). The SPC upheld the Beijing IP Court ruling that Wenzhou Haihe Pharmaceutical Co., Ltd.’s application for marketing authorization for a generic form of “Aidecalcidol Soft Capsule” did not fall within scope of protection of the relevant patent. China’s patent linkage system prevents marketing authorization for a generic prior to the expiration of the patent term on the branded equivalent unless the Beijing IP Court or the China National Intellectual Property Administration (CNIPA) rules that the generic does not fall within the scope of the relevant patent rights or is invalid.
On November 10, 2021, the Beijing IP Court announced that the plaintiff of the case, Chugai Pharmaceutical Co., Ltd., a subsidiary of Roche, claimed that it was the patentee as well as the holder of the marketing license for the patented drug “Aidecalcidol Soft Capsule”, and the patent involved in the drug was CN 2005800098777.6 entitled “ED-71 preparation.” The plaintiff discovered that the defendant Wenzhou Haihe Pharmaceutical Co., Ltd. had applied to the National Medical Products Administration (NMPA) for a generic drug marketing license application named “Aidecalcidol Soft Capsule”. The public information on the Chinese listed drug patent information registration platform showed that the defendant had made a 4.2 category statement regarding the generic drug (the generic drugs do not fall into the scope of protection of the related patents). Therefore, the plaintiff filed a drug patent linkage lawsuit with the Beijing Intellectual Property Court in accordance with the provisions of Article 76 of the Amended Patent Law, requesting the court to confirm that the generic drug “Aidecalcidol Soft Capsule” that the defendant applied for registration fell into the scope the rights of Patent No. 2005800098777.6 enjoyed by the plaintiff.
The Beijing IP Court held:
The technical solution used by the generic drug involved is neither the same nor equivalent to the technical solution of claim 1 of the involved patent, so the technical solution does not fall within the protection scope of claim 1 of the involved patent. Since claims 2-6 are dependent claims of claim 1, if the technical solution of the generic drug involved does not fall within the protection scope of claim 1, it also does not fall within the protection scope of claims 2-6. Accordingly, the plaintiff’s claim that the involved generic drug falls within the protection scope of claims 1-6 of the involved patent cannot be established, and the court will not support it.
In the decision, the Supreme People’s Court stated there were two key points:
1. In the process of drug marketing review and approval, disputes arising from the patent rights related to the drug to be registered between the drug marketing license applicant and the relevant patentee or interested parties are only one type of the related patent rights between the two parties – often referred to as drug patent link disputes. For chemical generic drugs, the drug regulatory department of the State Council conducts drug marketing review and approval based on the application materials of the generic drug applicant, and decides whether to suspend the approval of the relevant drugs according to the effective judgment made by the people’s court [or the China National Intellectual Property Administration] on such disputes within the prescribed time limit. Therefore, when judging whether the technical solution of a generic drug falls within the scope of patent protection, in principle, it should be compared and judged on the basis of the application materials of the generic drug applicant. If the technical solution actually implemented by the generic drug applicant is inconsistent with the declared technical solution, it shall bear legal responsibility in accordance with the relevant laws and regulations on drug supervision and administration; if the patentee or interested party believes that the technical solution actually implemented by the generic drug applicant constitutes infringement, a separate lawsuit for patent infringement may also be filed. Therefore, whether the technical solution actually implemented by a generic drug applicant is the same as the application materials is generally not within the scope of examination to confirm that the dispute falls within the scope of patent protection.
2. The court of second instance held that both the donation [to the public] rule and the estoppel rule can constitute a restriction on the application of the principle of equivalence, both of which aim to achieve a reasonable balance between equitably protecting the interests of the patentee and safeguarding the interests of the public. If the conditions for limiting the application of the principle of equivalence are met, there is usually no need to judge whether the two features constitute similar means, functions, and effects, and whether those skilled in the art can conceptualize them without creative work. In this case, since Haihe Company claimed the application of the estoppel rule by virtue of the amendment of the claims by Chugai Pharmaceutical Co., Ltd., and claimed the application of the donation rule by the patent text as the result of the amendment, the court of second instance first rendered a judgment on whether the rules on estoppel should be applied on the basis of the amendment of the claims by the patentee.
The case numbers are:
北京知识产权法院（2021）京73民初1438号民事判决书
最高人民法院（2022）最高法知民终905号民事判决书
The full text of the decision courtesy of 知识产权那点事 is available here (Chinese only).
Yes, we shall live, Uncle Vanya. Could Anton Chekhov ever have imagined that his literary work would be used to sell hamburgers? In March, a controversial application for an “Uncle Vanya” mark in connection with “snack bars, cafes, cafeterias, restaurants, bar services, canteens, cooking and home delivery services,” incorporated the red-and-yellow golden arches logo of McDonald’s. It was just one in a series of recent applications in Russia that have caused serious pearl-clutching among intellectual property lawyers.
In response, Russia has adopted an aggressive posture in the intellectual property realm where it once sought to peacefully engage with the world, an effort that began well before the collapse of the Union of Soviet Socialist Republics. When the USSR joined the Paris Convention in 1965, it eagerly sought to develop Soviet intellectual property. Yet in March, Russia issued Decree No. 299, which effectively nullifies the enforcement value of Russian patents owned by entities and individuals in “unfriendly” countries including the United States, European Union member states, the United Kingdom, Ukraine, Japan, South Korea, Australia and New Zealand.
Russian Prime Minister Mikhail Mishustin also greenlighted the importation of branded products without the brands’ permission, creating gray market headaches. As Boris Edidin, deputy chairman of the Commission for Legal Support of the Digital Economy of the Moscow Branch of the Russian Bar Association, clarified in a recent legal commentary published by Moscow-based RBC Group: “entrepreneurs have the opportunity to import goods of well-known brands, regardless of the presence or absence of an official representative on the Russian market.”
Russia, like the EU, had traditionally adopted a tougher stance than the United States on parallel imports. Now, however, “both by ‘anti-crisis’ measures and by cloak-and-dagger methods” Russia is sure to do all it can to keep its planes flying and its factories running, said Peter B. Maggs, research professor of law at the University of Illinois at Urbana-Champaign and noted expert on Russian and Soviet law and intellectual property.’
The increase in parallel imports makes trademark prosecution and maintenance more important than ever in Russia, but it’s not the only cause for concern. In March, as political tensions reached a crescendo, a Russian court declined to enforce the trademark rights for Peppa Pig, the famous British cartoon character, due to “unfriendly actions of the United States of America and affiliated foreign countries.” (See case No. A28- 11930/2021 in the Arbitration Court of the Kirov Region; an appeals court later overturned this holding, in a win for the porcine star.) RBC Group reported in March that it had tracked more than 50 trademark applications by Russian entrepreneurs and businesses for the marks of famous foreign brands, many in the fashion and tech sector. While most trademark applications were explicit copies of existing brands, in other cases applicants were content to imitate well-known trademarks and trade dress.
For example, a Russian entrepreneur from a design studio called Luxorta applied to register an IDEA brand that mimics the style and yellow-and-blue color schemes of famous Swedish brand IKEA. He told RBC that his business had suffered after IKEA suspended its Russian operations, and that he aspired to develop his own line of furniture and work with IKEA’s former suppliers. Other applicants RBC interviewed indicated they hoped to sell the marks back to foreign companies once those companies return.
On April 1, Rospatent published a press statement clarifying that “in case an identical or similar trademark has already been registered in the Russian Federation, it would be the ground for refusal in such registration.” More recently, the head of Rospatent, Yury Zubov, has responded with frustration to news coverage of trademark woes in Russia, noting that intellectual property legislation is unchanged and the “Uncle Vanya” hamburger mark had been withdrawn.
Prof. Maggs agreed that those trying to register or use close copies of foreign marks in Russia will likely fail. He cited a June 2 decision by the Court of Intellectual Property Rights to uphold lower court findings that the mark “FANT” for a carbonated orange soft drink violated unfair competition laws, because it was confusingly similar to the “FANTA” brand owned and licensed to third parties by Coca-Cola HBC Limited Liability Company. Russia’s consumer protection agency had originally brought the case.
The Court reasoned that “confusion in relation to two products can lead not only to a reduction in sales of the FANTA drink and a redistribution of consumer demand, but can also harm the business reputation of a third party, since the consumer, having been misled by the confusion between the two products, in the end receives a different product with different quality, taste and other characteristics.”
In addition, Prof. Maggs said, “the Putin Regime is and will be promoting Russian products as ‘just as good’ as foreign products. An example, obviously approved at high levels is the adoption of a totally different trademark for the sold McDonald’s chain,” he said, referring to the June 12 reopening of former McDonald’s restaurants in Moscow under the name “Vkusno & tochka” (“Tasty and that’s it”).
Brands should be wary of inadvertently jeopardizing their Russian marks by suspending local operations; a trademark may be cancelled in Russia after three years of uninterrupted non-use. While Article 1486 of the Russian Civil Code states that “evidence presented by the rightholder of the fact that the trademark was not used due to circumstances beyond his control [emphasis added] may be taken into account,” brands claiming infringement still risk being ineligible for damages or injunctive relief, because technically they are not losing sales while pausing business in Russia.
Moreover, if a company has suspended sales in Russia to show solidarity with Ukraine but seeks to stop sales in Russia by others, it may be accused of violating the good faith requirement of Article 10 of the Russian Civil Code, which states that exercising “rights for the purpose of limiting competition and also abuse of a dominant position in a market are not allowed.”
The question looming on the horizon is whether, if the current crisis escalates, the Russian government would outright cancel trademarks from hostile countries. It would not be the first time a state denied intellectual property rights during political conflicts. In the aftermath of the First World War, for example, the US government advocated for the “expropriation” of property, including intellectual property, of German nationals, perceived as responsible for the militarism of their government1. And in the 1930s, the German patent office removed Jewish patent-holders from its roster as part of its notorious “Aryanization” process. However, because Russia is not officially at war with the countries it has deemed “unfriendly,” these precedents are not directly on point.
Brands that have suspended business operations in Russia should monitor their trademark portfolios closely for infringement and consider how they can prove use of each mark during a prolonged absence from the Russian market. In other words: keep your eyes on Uncle Vanya.
FOOTNOTES
1 Caglioti DL. Property Rights in Time of War: Sequestration and Liquidation of Enemy Aliens’ Assets in Western Europe during the First World War. Journal of Modern European History. 2014;12(4):523-545. doi:10.17104/1611-8944_2014_4_523.
