McDonald’s Big Loss in Big Mac Case

On January 15, the European Union Intellectual Property Office (EUIPO) revoked McDonald’s registered trademark, “Big Mac.”   The name “Big Mac” had been protected in the EU for more than 20 years under international classes 29, 30, and 42 for foods, sandwiches, and services of franchise restaurants, respectively.  Trademarks, which provide legal protections for names, among other things, can be extremely valuable assets for businesses and protect consumers in their purchasing decisions.  The January 15 decision will likely create some concern, if not confusion, for international businesses in how they might protect their brands in major markets.  McDonald’s quickly announced that it plans to appeal the decision, which is set against a backdrop of US-EU trade negotiations and a recent increased focus on intellectual property in trade negotiations.

In its decision, EUIPO found that the evidence McDonald’s provided to prove the genuine use of the name “Big Mac” in the EU, including websites, posters, packing, and affidavits from company representatives in Germany, France, and the UK, was not sufficient.   EUIPO said about the websites, “it could not be concluded whether, or how, a purchase could be made or an order could be placed.”  In addition, the regulating body took issue with brochures because there had been no evidence provided as to whom the brochures were given or how they were dispersed.  The administrative decision also discussed that although some evidence was provided of use, McDonald’s did not prove the extent of use of its mark.

The case to cancel the international fast food giant’s protection was brought by an Irish fast food chain, Supermac’s.  Patrick McDonagh, the managing director of Supermac’s, stated that the intention of the case was to “shine a light on the use of trademark bullying.”  Continue Reading

Jan. 16, 2019 Update on Government shutdown’s impact on federal court system

On January 16th, the Administrative Office of the U.S. Courts announced that it “now estimates that federal courts can sustain paid operations through Jan. 25, 2019” (extending its previous estimate by one week).  See https://www.uscourts.gov/judiciary-news

See also Jan. 11, 2019 Trade and Manufacturing’s Blog entitled:  “Government shutdown closes in on the federal court system (including the trade courts)” available at:

https://www.ustrademonitor.com/2019/01/government-shutdown-closes-in-on-the-federal-court-system-including-the-trade-courts/

Government shutdown closes in on the federal court system (including the trade courts)

Despite the partial government shutdown since December 22nd, the Supreme Court and lower federal courts have remained open by drawing on non-appropriated funds and court fees.

Federal courts will be able to continue operating with their limited funds during the shutdown until January 18th, as reported on January 7th by the Administrative Office of the U.S. Courts (“Administrative Office”).  See https://www.uscourts.gov/judiciary-news.  This deadline is one week longer than its previous estimate.  To meet this goal, courts have been asked to delay or defer “non-mission critical expenses,” such as new hires and non-case related travel.  According to the Administrative Office, judiciary employees are reporting to work and currently are in full-pay status.  If new appropriation funds do not become available, “essential work” will continue to be allowed under the Anti-Deficiency Act.  Id.  This “essential work” would include “activities to support the exercise of the courts’ constitutional powers under Article III, specifically the resolution of cases and related services.”  Id.  Individual courts and judges will then decide how to fulfill those critical functions according to David Sellers, a spokesman for the Administrative Office.  See http://fortune.com/2019/01/05/government-shutdown-federal-courts/.  “In the past, some courts have suspended civil cases, some have conducted business as usual,” Sellers said.  “It’s really a judge-by-judge, court-by-court determination.”  Id.

Below is an update on how the shutdown is impacting the trade courts and the Supreme Court Continue Reading

United States Seeks Trade Consultations with Peru

On Friday, January 4, 2019, the Office of the U.S. Trade Representative (USTR) announced that the United States has requested consultations with Peru under the auspices of the U.S.-Peru Trade Promotion Agreement (PTPA) to address an alleged violation by Peru of the environmental chapter of the agreement.  According to USTR, Peru’s recent decision to move its previously-independent Agency for the Supervision of Forest Resources and Wildlife (OSINFOR) to a subordinate position within the country’s Ministry of the Environment conflicts with the express commitment under the PTPA that the agency remain independent.

The PTPA entered into force in February 2009, and total trade between the two countries has nearly doubled since that time to $15.9 billion in 2017.  The PTPA was the first U.S. trade agreement – followed by agreements with Panama, Colombia, and Korea – to incorporate the more stringent and enforceable labor and environmental standards established in the May 10, 2007 Bipartisan Agreement on Trade Policy, known as the “May 10th Agreement.”

The United States’ decision to raise this issue in formal consultations with Peru is notable in two contexts.  First, the specific provision of the PTPA’s environmental chapter that guarantees OSINFOR’s independence is found in the Annex on Forest Sector Governance – a unique set of commitments designed to address the environmental and economic consequences of trade associated with illegal logging and illegal trade in wildlife.  Illegal logging in particular was a priority concern for the United States in negotiating the PTPA, and OSINFOR is the Peruvian agency, established in 2008, primarily responsible for detecting and combatting illegal logging.  Thus, ensuring the agency’s ongoing independence and ability to enforce Peru’s forestry commitments is an important policy concern for the United States in the context of the U.S.-Peru trade relationship.

Second, the Trump Administration is in the process of seeking Congressional support for the U.S.-Mexico-Canada Agreement (USMCA), designed to replace NAFTA.  As we previously noted, the USMCA’s labor and environmental provisions are likely to be a sticking point for House Democrats, even though USTR has stated that the USMCA comports with the May 10th Agreement.  USTR’s action to enforce this particularly critical issue arising under the PTPA may be seen as a move to demonstrate the Administration’s commitment to the USMCA’s environmental terms and thereby garner Democratic support for the deal.

With the United States’ request for consultations, the parties have 60 days to resolve the dispute before the United States can request separate consultations or a meeting of the PTPA Commission under the dispute settlement provisions of the agreement.  In a statement, USTR explained that it “will continue to confer with Members of Congress, interested agencies, and stakeholders on the results of these consultations before considering any further actions.”

Trade Agencies Closed for Business with Government Shutdown

As a result of the partial government shutdown which began on December 22, 2018, about 800,000 federal employees are currently on furlough or working without pay.  Nine federal departments have been shutdown:  Department of Commerce; Department of Treasury; Department of Agriculture; Homeland Security Department; Department of the Interior; Deparment of Justice; Department of State; Department of Housing and Urban Development; and the Department of Transportation.

Most of the U.S. government’s trade-oriented agencies have either shut down or had their operations severly restricted. Below is a status report.

First the good news: If you stop by your local post office, you can still mail those holiday returns because the USPS is not a government agency.  In addition:

Court of Appeals for the Federal Circuit (“CAFC”):  The CAFC announced that it will remain “open for business and will be fully staffed,” including holding the arguments scheduled during the January 2019 court sitting; see http://www.cafc.uscourts.gov/announcements

Court of International Trade (“CIT”):  The CIT website has not posted a notice that its operations will be affected by the shutdown.

United States Trade Representative (“USTR”):  According to a December 28th news release, USTR personnel “continue to conduct all operations, including trade negotiations and enforcement.”

And now the bad news:

U.S. Department of Commerce (“International Trade Administration” and “Bureau of Industry and Security”):  As summarized above, the Department of Commerce was shuttered as part of the government shutdown.  CNBC reports that furloughs will affect vast swathes of Department of Commerce staff, approximately 40,000 people or 86 percent. Both the ITA and BIS’ websites are “not being updated.”

International Trade Commission (“ITC”):  The ITC has ceased regular operations; noting the “disruption” of “significant activties” including:         Investigative activities, including proceedings under sections 332, 337, and 201, and Title VII of the Tariff Act of 1930, maintenance of the Harmonized Tariff Schedule of the U.S., technical assistance to the U.S. Trade Representative and Congress, as well as all other government functions other than those directly supporting active litigation to which the USITC or the United States is a party.  See https://www.usitc.gov/sites/default/files/documents/usitc_fy_2018_shutdown_plan_final.pdf

For security reasons, EDIS has been brought offline. The HTS Search Tool and Dataweb will continue to be available, but no staff assistance will be provided for these applications.

Customs and Border Protection (“CBP”):  Homeland Security, the department that oversees CBP, Immigration and Customs Enforcement, the TSA, Coast Guard and the Secret Service is affected.  But since most employees are considered “essential,” they are working without pay until a funding bill is passed.  It’s reported that as many as 54,000 CBP employees are working without paychecks.  On a conference call with interested parties, CBP indicated that the ports will be “staffed as normal” to ensure that the “flow of trade {is} as close to normal as possible.”  Due to the lapse in federal funding, however, the CBP website will not be actively managed, transactions submitted through the website might not be processed, and CBP will not respond to inquiries until after the shutdown.

Federal Maritime Commission (“FMC”):  The Federal Maritime Commission is closed as part of the partial federal government shutdown due to a lapse in appropriations.  The Commission will resume normal operations when appropriations legislation is enacted and the federal government reopens, according to a recent annoucement.

U.S. Department of State – Directorate of Defense Trade Controls (DDTC):  Per its website, operations at DDTC are “significantly curtailed, including requests for licenses, advisory opinions, and retransfers, except for those that provide direct support to the military, humanitarian aid, or other similar emergencies. All D-Trade electronic submissions will be rejected by the system and returned to the applicant. Requests that are currently in process at the DDTC as of December 21, 2018, will remain in that status. Further review actions, however, will be delayed until after restoration of funding.”  Industry applicants believing they have a case (either “In-Review” or new submission required) involving direct support to the military, humanitarian aid, or other similar emergencies, should email the DDTC Response Team (DDTCResponseTeam@state.gov). The email subject line MUST read “Request for Emergency License,” and the message must include the license number (if already pending with DDTC), the applicant’s name and registration code, the end-use/end-user, justification for needing an emergency license, and a point of contact. The Directorate will contact the requestor with guidance on how to proceed if the request will be honored.

U.S. Government Accountability Office Agrees to Review 232 Tariff Exclusion Process

In response to Congressional concerns, the U.S. Government Accountability Office (“GAO”) has agreed to review the process by which the U.S. Department of Commerce (“Commerce”) has been processing steel and aluminum tariff exclusion requests.  On March 8, 2018, President Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962, which authorizes import restrictions for national security purposes. Shortly thereafter, Commerce established procedures by which companies could request exemptions for certain steel or aluminum products from the tariffs.  Nearly 50,000 exclusion requests have been filed, but many view the rules and the process too slow and complicated, despite a modification to the process in August.

On November 26, 2018, a bipartisan group of U.S. Senators sent a letter to the GAO requesting the agency to conduct a formal review of Commerce’s exclusion request process.  Specifically, they noted that “Members of Congress and U.S. businesses have repeatedly raised concerns about the pace, transparency, and fairness of the section 232 steel and aluminum exclusion process.”  The letter, which was signed by Senators Tom Carper (D-Del.), Doug Jones (D-Ala.), and Pat Toomey (R-Pa.), urged the GAO to examine several questions, including how Commerce has incorporated feedback from petitioners, members of Congress, and other stakeholders to develop and improve the process; what criteria is used to approve or deny an exclusion request; what steps have been taken to timely process exclusion requests; how it trains staff to evaluate exclusion requests; the average amount of time Commerce takes to issue a decision on a request; whether it ensures transparency and adequate communication with petitioners; and what degree of technical support is provided to assist petitioners, especially small businesses. A copy of the letter is available here. The GAO is set to begin its review of the exclusion process by March 2019.

On another note, the President’s authority to impose tariffs under Section 232 is currently on appeal before the U.S. Court of International Trade.  The case, which is led by the American Institute for International Steel (“AIIS”), claims that Section 232 of the Trade Expansion Act of 1962 violates the U.S. Constitution because it wrongly transfers authority over trade policy from Congress to the executive branch.  Oral argument was held earlier this week and at least one judge of the three-judge panel appeared to be sympathetic to the AIIS’s claims.  As published by Law360, Judge Claire Kelly was quoted as stating “{m}y concern is that at some point, is there any limit on what kind of power you can give away?” “Without judicial review, it seems Congress has given away a whole lot, and maybe you shouldn’t be allowed to do that?”

South Korea Approves Updated Trade Agreement

On Friday, December 7, 2018, the South Korean parliament approved a modified version of the U.S.-Korea Trade Agreement, otherwise known as KORUS.  With passage of the renegotiated agreement, Korea is now ready to implement the new terms on January 1, 2019.

KORUS first went into effect in 2012, but many in the U.S. business community had concerns about Korea’s implementation of key market access provisions.  In April 2017, the United States and Korea began renegotiating the terms of KORUS, and the parties signed a revised version of the agreement in September 2018.  In seeking an updated deal, President Trump expressed disappointment in the U.S. goods trade deficit with Korea, measuring $23.1 billion in 2017, notwithstanding the United States’ growing surplus in services trade with that country.

The renegotiated KORUS increases Korean market access for a number of American exports.  Perhaps the most significant provisions of the new agreement relate to new rules for American automobile exports to Korea, including a doubling of the cap on the number of automobile exports and acceptance of U.S. emissions standards.  Other key changes address Korea’s burdensome customs verification procedures and its pharmaceutical pricing and reimbursement policy.  The revamped automobile trade terms, however, were expected to present the biggest political hurdle to passage of the updated agreement in the Korean parliament given the importance of that country’s domestic automobile industry.  With that challenge now overcome, and with no congressional approval requirement in the United States, the revised agreement will go into effect in both countries.

U.S., Canada, and Mexico Sign New NAFTA

This morning, on the sidelines of the G-20 summit in Argentina, the United States, Canada, and Mexico signed the U.S.-Mexico-Canada Agreement (USMCA).  The new trade deal is slated to replace the 24-year old North American Free Trade Agreement (NAFTA).  Today’s signature date was a critical deadline for the parties because it is Mexican President Enrique Peña Nieto’s last day in office before his successor, Andrés Manuel López Obrador, takes office tomorrow.

The three parties have spent the last 15 months negotiating the final text of the USMCA, with a deal reached first between the U.S. and Mexico at the end of August, and Canada signing onto the agreement with additional tweaks a month later.  We have covered the USMCA in previous blog posts (here, here, here, here, and here).

Each country’s legislature must now approve the agreement for it to take effect.  In the United States, the USMCA was negotiated under Trade Promotion Authority, or “fast track” legislation, meaning that the agreement is subject to an up-or-down vote and Congress cannot modify or amend the agreement itself.  Instead, the hurdles involve the implementing legislation that will be required to give effect to the deal under U.S. law.  The Administration has 60 days to submit to Congress a list of changes to U.S. law that will be required to implement the USMCA, and then must prepare a draft implementing bill and “statement of administrative action” at least 30 days before the bill is actually introduced in the House and Senate.  The House must vote first before the bill moves to the Senate for consideration and a vote.       Continue Reading

CBP Updates “Guidance for Reimbursement Certificates”

Today Customs and Border Protection (CBP) published an updated version of its “Guidance for Reimbursement Certificates”; see https://www.cbp.gov/document/guidance/guidance-reimbursement-certificates.

In the memorandum, CBP reminds the public that regulations by the Department of Commerce (“DOC”) require that importers must file a certificate advising whether the importer has entered into an agreement, or otherwise has received reimbursement of AD duties, prior to liquidation of the entry.

Failure to file reimbursement certificates (stating that importer was not reimbursed) may double importer’s antidumping duties upon liquidation.  CBP’s memorandum offers specifics on how to file the certificates and includes an example of a blanket reimbursement form.

The memo also outlines procedures for filing in ACE and ACS.  Although CBP will accept paper reimbursement certificates, it is encouraging importers to file electronically.

CBP addresses other guidelines for filing reimbursement certificates, including the following: Continue Reading

UK Cabinet Approves Brexit Agreement

On 14 November 2018, the UK Cabinet approved an agreement permitting the orderly exit of the UK from the European Union (EU), commonly known as Brexit.  Without such Withdrawal Agreement, the UK would crash out of the EU on 30 March 2019, effectively paralyzing trade between the UK and the Bloc.  As of this date, the UK will be a third country vis-à-vis the EU, but the Withdrawal Agreement will grant the UK a transition period until 31 December 2020 and a temporary solution to prevent a hard border between Ireland and Northern Ireland.   During the transition, the UK will benefit from limited EU membership benefits whilst complying with the vast majority of current and future EU laws.  According to the agreement, the transition period may be extended once.

The Withdrawal Agreement has been subject to various modifications since its first publication in February 2018.  During the negotiations, the EU and the UK jointly released several versions of the Agreement to illustrate the developments, namely the parts where unanimity was reached.  Consequently, the novelty of this recent agreement stems from the consensus on the Irish border, which risks keeping the UK in the customs union indefinitely, and clearer drafting to prevent potential regulatory issues, such as the UK’s status vis-à-vis the EU in relation to the transfer of personal data.  In other words, the UK will be treated as a Member State of the EU under the General Data Protection Regulation.  As a matter of fact, the UK will be treated as a Member State for most EU laws, except for its participation in the EU institutions, bodies, offices and agencies.

Furthermore the text is accompanied by a political declaration on the future relationship between the divorcing parties.  This document holds no legal value, and the full text has not been published yet.

The agreement still needs to be approved by the EU Council, and the UK and EU Parliaments.  There currently is sufficient time for this process to take place before Brexit day.

LexBlog