► BAKER BOTTS’ Obtains $24M Verdict for American Calcar, Inc in Vehicle Navigation Systems Patent Infringement Case ► CAREY Y CIA Acts as counsel for General Cable Corporation in Successful Share Offering in Cobre Cerillos SA ► GIDE LOYRETTE NOUEL London Advises GE Capital on €1.5Billion Debt Issue ► HOGAN & HARTSON Advises McCormick & Co. in Acquisition of Lawry's ► LOVELLS Acts on €570M Landmark Energy From Waste Project in London ► RODYK Acts for Malayan Banking Berhad Bank in US$1.5Billion Bid to Secure Controlling Stake in Indonesia’s 6th largest bank ► TOZZINIFREIRE Acts for Banco Sofisa SA in Establishment US$1Billion Note ► WILMERHALE Secures Five Major Wins

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►Baker Botts Scoops LNG Energy Expert ►Davis Wright Adds to Employment & Labor Group ►Fraser Milner Former Chief Justice Tax Court Joins Firm ►Hogan Adds Political Veteran - Broadens Government Relations Practice ►Luce Forward Announces New Management Changes ►Morgan Lewis Elevates 22 Lawyers to Partner ►Tilleke Combines Forces with Pacific Legal Group ►AUSTRALIA CLAYTON UTZ Known Circumstances Decision Provides Important Guidance - What do you know and should you have known it? ►BRAZIL TOZZINIFREIRE New Rules for Maximum Limits for Cession and Retrocession to Occasional Reinsurers ►CHINA KING & WOOD Forum Shopping In China: CIE TAC vs. UNCITRAL ►NETHERLANDS NAUTADUTILH Hague Decision Helps in Fight Against Piracy ►NEW ZEALAND SIMPSON GRIERSON - The Warehouse Decision Court of Appeal - A Return to Basic Principles ►TAIWAN LEE & LI New Legislation Amends Intellectual Property Litigation System ►THAILAND TILLEKE & GIBBINS IP Update - Recordation of Well Known Marks in Thailand ►UNITED STATES HOGAN & HARTSON Export Controls and Customs Update - Laptop Searches at the Border - Why it is Happening and How to Protect Your Company ►UNITED STATES LUCE FORWARD Everett vs. State Farm - Supreme Court Denies Requests to Depublish ►UNITED STATES MORGAN LEWIS New Rules for Non-Compete Provisions and Release in California ►UNITED STATES WILMERHALE Massachusetts Enacts Sweeping Changes in Taxation in Business

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MEMBER NEWS P R A C M E M B E R G A T H E R I N G S

September 02, 2008 - NautaDutilh Hosted Reception & Dinner IFA ‘08 Conference - Brussels PRAC Delegates Click here or visit http://www.prac.org/events.php October 15, 2008 - Allende & Brea Hosted Reception IBA ‘08 Conference - Buenos Aires PRAC Delegates click here or visit http://www.prac.org/events.php November 15-18, 2008 44th International PRAC Conference - Mumbai Hosted by Mulla & Mulla & Craigie Blunt & Caroe http://www.prac.org/events.php Registration Now Open

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August 2008 e-BULLETIN

Kevin Keenan Joins Baker Botts L.L.P. as Global Projects Partner - Adds Strength in LNG, Project Development Sectors

HOUSTON, July 14,2008 -- Kevin Keenan, whose energy practice focuses on liquefied natural gas (LNG), projects and transactions, has joined Baker Botts L.L.P. as a partner in the Global Projects Department. He will be based in Houston.

In addition to his strength in the LNG sector of the energy industry, Keenan has extensive experience in public and private project developments, including petroleum refineries, offshore marine terminals and pipeline construction. He has represented clients in a variety of negotiations for energy resources such as biodiesel, crude oil, crude oil products, natural gas and LNG.

"Kevin's concentration on LNG matters around the world, combined with his experience in the downstream oil and gas sector, adds depth to the Firm's international Global Projects team," said Baker Botts Managing Partner Walt Smith.

Keenan has particular expertise in LNG, from infrastructure development to the various aspects of shipping that are central to the industry, including shipbuilding and charter negotiations. Many of these transactions involved multiple parties across multiple jurisdictions representing clients in 20 countries across the globe.

"The addition of Kevin to our Global Projects team will serve to bolster Baker Botts' position as one of the leading law firms in the world serving the LNG sector of the energy industry," said Stuart Schaffer, chair of Global Projects Firm wide.

Keenan has written and presented extensively on the LNG industry, covering an array of topics from shipping contracts and maritime security to the U.S. regulatory environment and advances in offshore technology.

He is a member of the Houston Bar Association, the State Bar of Texas, the Association of International Petroleum Negotiators (AIPN) and the American Bar Association's Environment, Energy and Resources Section. Prior to joining Baker Botts, Keenan was a partner with Akin Gump Strauss Hauer & Feld in London and Houston. Keenan received his Bachelor of Arts in History and Political Science (magna cum laude) from Idaho State University. He earned his law degree from Georgetown University Law Center. For more information, please visit www.bakerbotts.com

About Baker Botts L.L.P.

Baker Botts L.L.P. founded in 1840, is a leading international law firm with offices in Austin, Beijing, Dallas, Dubai, Hong Kong, Houston, Lon-don, Moscow, New York, Palo Alto (California), Riyadh and Washing-ton. With approximately 800 lawyers, Baker Botts provides a full range

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August 8, 2008 – Davis Wright Tremaine LLP announced that Angela Corridan, an experienced employment lawyer, has joined as an associate in its Employment Law practice.

Corridan joins the firm from Sanford Wittels & Heisler, LLP in Washington, D.C., where she represented clients in complex and multi-jurisdictional employment class action matters, including wage and hour and Title VII disputes.

“Angela is a great addition to our expanding California employment law team,” said Lawton Humphrey, chair of the firm's Employment Law practice group. “We are excited to have her on board.”

Corridan earned her J.D. at Georgetown University Law Center in Washington, D.C. She is licensed to practice in California and the District of Columbia.

About Davis Wright Tremaine LLP Davis Wright Tremaine LLP is a national business and litigation law firm with approximately 500 attorneys in nine offices: Seattle and Bellevue (Wash.), Portland (Ore.), Los Angeles, San Francisco, New York, Washington, D.C., Anchorage (Alaska) and Shanghai, China. For additional information visit www.dwt.com

 

D A V I S W R I G H T T R E M A I N E A D D S T O L A B O R & E M P L O Y M E N T P R A C T I C E

The Honourable Donald G.H. Bowman joins FMC

July 29 2008 Fraser Milner Casgrain LLP, announced today that the Honourable Donald G.H. Bowman, former Chief Justice of the Tax Court of Canada, has joined the firm as Counsel in the National Tax Group. Mr. Bowman will provide advice to lawyers within the group and throughout the firm on projects and litigation matters, and will work to enhance the firm's ability to reach early resolution of tax and related disputes for our clients. Mr. Bowman’s formidable tax expertise and extensive experience resolving tax disputes with all levels of government will help FMC maximize business opportunities for clients throughout North America. He will be based in FMC’s Toronto office, and will work closely with FMC's Tax Group across Canada.

"We are all thrilled to have a jurist as eminent as Donald G.H. Bowman join our National Tax Group," said William I. Innes, Counsel in the FMC Tax Group. "He is extremely accomplished and held in the highest regard by practitioners across the country. In the most recent issue of Lexpert magazine senior tax litigators were effusive in his praise, one going so far as to refer to him as ‘the Lord Denning of the Tax Court’."

Mr. Bowman has spent his entire career as a tax litigator. He was called to the Bar of Ontario in 1962 and soon after joined the Federal Department of Justice, Tax Litigation Section, and was appointed director in 1968. He was appointed Queen’s Counsel in 1974 and has been a member of the New York Bar since 1982. Mr. Bowman was appointed Judge of the Tax Court of Canada in 1991 and Associate Chief Judge in February 2000. He was appointed Associate Chief Justice in July 2003 and Chief Justice in February 2005.

"The privilege and advantage of having Mr. Bowman join Fraser Milner Casgrain is that he will add even greater depth to our National Tax Group and create significant value for current and prospective clients," said Michel Brunet, Chair and CEO of FMC. "His presence will provide us with the opportunity to extend national reach and regional strength through mentoring, consultation on key issues and strategies. His arrival will also enable us to open new fields of potential tax alternative dispute resolution (ADR) to the firm."

Mr. Bowman joins a team of leading tax experts, including William I. Innes, Chia-yi Chua and R. Brendan Bissell, authors of Federal Tax Practice, published by CCH Canada, the leading Canadian authority on practice and procedure in tax litigation. Fraser Milner Casgrain’s Tax Litigation Group is one of the strongest and most respected in Canada and has been responsible for several recent landmark and precedent-setting wins that will have major implications for tax and non-tax litigation in Canada:

McLarty v. R. – FMC successfully represented the taxpayer before the Supreme Court of Canada in a case on exploration expense deductions.

Knights of Columbus v. R. – FMC successfully represented the taxpayer before the Tax Court in a landmark case on the definition of "permanent establishment" under the Canada-U.S. tax treaty.

Prévost Car v. R . – FMC successfully represented the taxpayer before the Tax Court in a ground breaking case on the definition of "beneficial owner" under the Canada-Netherlands tax treaty.

Procter & Gamble Inc. v. Ontario – FMC successfully represented the taxpayer before the Ontario Court of Appeal on the application of retail sales tax to rental pallets.

489599 B.C. Ltd. v. R. – FMC successfully represented the taxpayer before the Tax Court in a case on the definition of "personal services business" under the Income Tax Act (Canada).

For additional information visit www.fmc-law.com

F R A S E R M I L N E R C A S G R A I N F O R M E R C H I E F J U S T I C E T A X C O U R T J O I N S F I R M

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DENVER, July 29, 2008 – Hogan & Hartson LLP announced today that nationally prominent attorney and public affairs leader Ted J. Trimpa has joined the firm’s government relations practice. Trimpa will work out of the firm’s office in Denver, Colorado. Trimpa’s practice will build on his successes for clients throughout the country in the areas of public policy and political strategy. He will also handle legislative matters on behalf of Hogan & Hartson clients before the Colorado General Assembly and legislatures throughout the country. Prior to joining Hogan & Hartson, Trimpa was a partner with Brownstein Hyatt Farber Schreck where he was a member of the gov-ernment relations group. There he was responsible for matters before the Colorado General Assembly and helped orchestrate the successful passage of several public initiatives, including major social policy changes and landmark reforms to state fiscal policy. In addition, Trimpa is a sought-after advocate resulting from his deep understanding of the national and multistate political and nonprofit landscape. He has been recognized in national publications, including The Atlantic Monthly, National Review, The Advocate, and The Weekly Standard for his central role in designing cutting edge public policy strategies. “Joining the Hogan & Hartson team, known around the world for its excellence and innovation on behalf of its clients, is very exciting for me,” Trimpa said. “I’m eager to work closely with our team throughout the country to expand Hogan & Hartson’s Colorado and national roles.” “Ted’s depth of knowledge is second to none in Colorado and the West,” said Cole Finegan, Managing Partner of Hogan & Hart-son’s Denver office. “Ted is widely known in Colorado and nationally as a substantive and energetic contributor to everything he touches. We look forward to adding his talent to our firm.” “Ted Trimpa has been a critical player not only in Colorado but around the country in improving the quality and the substance of public policy,” said Kansas Governor Kathleen Sebelius, most recent past Chair of the Democratic Governors’ Association. “With his creative and incisive mind and his ability to find innovative solutions to tough problems, he has earned the respect of Governors, Attorneys General, state legislators, and other public officials in nearly every corner of the United States.” Trimpa received both his law degree and his B.A. from the University of Denver. In 2006 and 2007, Trimpa was named one of The Best Lawyers in America. About Hogan & Hartson Hogan & Hartson is an international law firm founded in Washington, D.C. with more than 1,100 lawyers in 25 offices worldwide. Hogan & Hartson has offices in Abu Dhabi, Baltimore, Beijing, Berlin, Boulder, Brussels, Caracas, Colorado Springs, Denver, Geneva, Hong Kong, Houston, London, Los Angeles, Miami, Moscow, Munich, New York, Northern Virginia, Paris, Philadelphia, Shanghai, Tokyo, Warsaw, and Washington, D.C. For more information about the firm, visit www.hhlaw.com.

H O G A N & H A R T S O N A D D S P O L I T I C A L V E T E R A N - B R O A D E N S G O V E R N M E N T R E L A T I O N S P R A C T I C E

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Changes to Continue Strategic Growth in California Kurt L. Kicklighter poised to succeed Robert J. Bell as Managing Partner in 2009.

August 5, 2008

Luce Forward recently approved a new, long-term strategic plan that will direct the firm’s growth and focus through 2020. To implement the new plan, the firm has named Kurt L. Kicklighter as successor to Robert J. Bell, the firm’s managing partner.

Kicklighter, who was unanimously elected by the firm’s partners, will assume the position in January 2009, after being prepared by Bell during the coming months. He will serve a five-year term.

“It has been a wonderful experience for me to serve as the managing partner the past five years,” Bell said.

“The firm has experienced record growth throughout California and has expanded its reputation nationwide. Under Kurt’s capable leadership and direction, it will continue to develop and flourish.”

Kicklighter is a leading attorney in Luce Forward’s business practice group who specializes in representing financial institutions, as well as other public and private companies, in mergers and acquisitions, securities and venture financing. Some of his major legal accomplishments include forming the first nationally chartered Community Development Bank, conducting the first Community Development Initial Public Offering, and financing many new banks and other financial services companies.

Since joining Luce Forward as a partner in 2000, Kicklighter has been an integral part of the firm and its infrastructure. He recently served as practice group leader for Luce Forward’s business practice group, and has also been involved in the firm’s technology committee, audit response letter committee, opinion letter committee and strategic planning committee.

Kicklighter received his Juris Doctor from the Columbia University School of Law, his Master of Laws degree in taxation from the University of San Diego, and his bachelor’s degree from the University of California Berkeley.

“I am thrilled to be chosen to direct the implementation of our strategic plan at this critical time when there is so much potential for firm-wide growth,” Kicklighter said. “We’re hoping to attract partners and like groups of attorneys who share our focus and values, and who will be instrumental in fur-ther strengthening our practice groups and cementing Luce Forward as a California law firm with a nationwide reputation.”

As part of the strategic plan, Luce Forward has also added a fifth person to its Executive Committee. The Executive Committee, which currently consists of Bell, Charles A. Danaher, David M. Hymer and John W. Leslie, has the authority and responsibility to manage the business of the firm’s partnership. Luce Forward has chosen Michael A. Isaacs, a partner in the San Francisco office and previous member of the Executive Committee, to fill the open position, effective immediately.

“Mike is an outstanding addition to our Executive Committee and is highly regarded by his colleagues,” Bell said. “His insight, particularly related to our offices in Orange County, Los Angeles and San Francisco, will be beneficial as we move forward.”

In addition to his place on the Executive Committee, Isaacs will continue to lead Luce Forward’s commercial, finance and insolvency practice group. A skilled attorney with more than 25 years of experience, Isaacs represents clients in a broad range of bankruptcy, insolvency and workout situations. He received his Juris Doctor from Santa Clara University and his bachelor’s degree from the University of California Berkeley. For additional information visit www.luce.com

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PHILADELPHIA, PA, July 16, 2008: Effective October 1, 2008 the following Morgan Lewis attorneys will be elevated to partner. The twenty-two attorneys represent seven practice areas and span nine international offices.

Firm chairman Frances Milone said of the new partners, “All of these lawyers have demonstrated excellence, integrity, teamwork, and a commitment to our clients and the Firm. They are a critically important part of our future, and that future is in very good hands. “

The new Morgan Lewis partners are:

About Morgan, Lewis & Bockius LLP Morgan Lewis is a global law firm with more than 1,400 lawyers in 22 offices located in Beijing, Boston, Brussels, Chicago, Dallas, Frankfurt, Harris-burg, Houston, Irvine, London, Los Angeles, Miami, Minneapolis, New York, Palo Alto, Paris, Philadelphia, Pittsburgh, Princeton, San Francisco, Tokyo, and Washington, D.C. For more information about Morgan Lewis, please visit www.morganlewis.com.

Meredith S. Auten Litigation Philadelphia

David G. Bowman Morgan Lewis Resources Philadelphia

Kenneth J. Davis Intellectual Property Philadelphia

Joseph Duffy Litigation Los Angeles

Paul C. Evans Labor and Employment Philadelphia

Jonathan C. Fritts Labor and Employment Washington, D.C.

Carrie A. Gonell Labor and Employment Irvine

Paul A. Gordon Business and Finance Philadelphia

Kristofor T. Henning Litigation Philadelphia

Michael S. Kraut Litigation New York

Alan B. Leeds Business and Finance Princeton

Steven A. Luxton Litigation Washington, D.C.

Paul C. McCoy Business and Finance San Francisco

Barbara J. Miller Labor and Employment Irvine

Tony K. Mou Business and Finance Palo Alto

Finnbarr D. Murphy Business and Finance New York

Karen Noël Business and Finance Paris

Alex S. Polonsky Energy Washington, D.C

Michael J. Puma Labor and Employment Philadelphia

Amanda D. Smith Pro Bono Administration New York

Lisa Tenorio-Kutzkey Litigation San Francisco

Judith A. Walkoff Business and Finance New York

M O R G A N L E W I S E L E V A T E S 2 2 L A W Y E R S T O P A R T N E R

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TILEKE & GIBBINS AND PACIFIC LEGAL GROUP COMBINE FORCES Effective August 1, 2008, Tilleke & Gibbins International Ltd. (T&G) and Pacific Legal Group (Thailand) Ltd. (PLG) will merge their practices and operate under the name of Tilleke & Gibbins International Ltd.

This combination will allow T&G to expand its services to include those provided by PLG, the largest and most experienced group of Food and Drug Administration (FDA) and Ministry of Agriculture (MOA) registration and regulatory compliance specialists in Thai-land. PLG has provided a comprehensive range of services since 1992 relating to Thai FDA and MOA registration and regulatory compliance matters.

With the addition of Pacific Legal Group’s pharmacists, agricultural consultants and supporting regulatory specialists to the T&G staff, our respective clients will benefit from our ability to deliver the highest quality and the most experienced FDA and MOA regis-tration and regulatory compliance services in Thailand.

For additional information visit www.tillekeandgibbins.com

T I L L E K E & G I B B I N S C O M B I N E S F O R C E S W I T H P A C I F I C L E G A L G R O U P

Carey y Cia. acted as counsel for General Cable Corporation, in its successful tender offer for 99.4% of the shares in Cobre Cerrillos S.A., as part of the worldwide acquisition by General Cable of the cable business run by US firm Freeport-McMoRan Copper & Gold, a part of the Phelps Dodge group, for app. US$735m. For additional information visit www.carey.cl

TozziniFreire acted for Banco Sofisa S.A. (the “Issuer”) establishing its U.S.$. 1,000,000,000 Global Medium-Term Note Programme (the “Programme”) and the first series under the Programme of U.S.$. 125,000,000 7.25% Notes due 2011 (“Notes”).

The Notes were offered and sold outside the United States to non-U.S. persons pursuant to Regulation S under the U.S. Securities Act of 1933 (the “Securities Act”).

The Notes have been rated Ba1 by Moody’s and will bear interest from the Issue Date at the rate of 7.25% per annum, payable semi-annually, commencing on January 7, 2009.

The Issuer has listed the Notes on the Alternative Securities Market of the Irish Stock Exchange Ltd. TozziniFreire laywers acting in the transaction: Ana Carolina de Salles Freire Rutigliano – Partner; Antonio Felix de Araujo Cintra - Partner; and Paulo Roberto de Toledo Leme – Associate. For additional information visit www.tozzinifreire.com.br

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July 17, 2008

On Thursday, July 17, following a 10 day trial and eight days of deliberations, a jury in the U.S. District Court for the Southern District of California returned a verdict in favor of Baker Botts' client American Calcar, Inc. ("ACI") and against American Honda Motor Co., Inc. and Honda of America Mfg., Inc. (collectively, "Honda"), in a complex and vigorously-contested patent infringement lawsuit involving a number of ACI's pioneering patents in the field of vehicle navigation systems.

ACI's '759 and '961 Patents claim systems for providing information to a driver regarding notable conditions in a vehicle, while ACI's '465 Patent claims a system for effectively searching for information in a vehicle.

The jury found the '759 and '465 Patents valid and enforceable and awarded ACI $24 million in damages for Honda's infringing 2005-2007 model year vehicles. Further proceedings will take place in the future with respect to ACI's '961 Patent (already found infringed on ACI's earlier and successful summary judgment motion) and on the issue of whether Honda's infringement was willful (which could lead to trebling of the damages award under the patent statute). Baker Botts will continue to pursue these claims vigorously on behalf of ACI.

### About Baker Botts Baker Botts L.L.P., dating from 1840, is a leading international law firm with offices in Austin, Beijing, Dallas, Dubai, Hong Kong, Houston, London, Moscow, New York, Palo Alto, Riyadh and Washington. With approximately 800 lawyers, Baker Botts provides a full range of legal services to international, national and regional clients. For more information, please visit www.bakerbotts.com

 

T O Z Z I N I F R E I R E A C T S F O R B A N C O S O F I S A S A I N E S T A B L I S H I N G U S $ 1 B I L L I O N N O T E A N D S H A R E I S S U A N C E

B A K E R B O T T S O B T A I N S $ 2 4 M V E R D I C T O R A M E R I C A N C A L C A R , I N C . I N V E H I C L E N A V I G A T I O N S Y S T E M S P A T E N T I N -F R I N G E M E N T C A S E

C A R E Y Y C I A A C T S A S C O U N S E L F O R G E N E R A L C A B L E C O R P O R A -T I O N I N S U C C E S S F U L S H A R E O F F E R I N G I N C O B R E

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Rodyk acted for Malayan Banking Berhad bank in its US$1.5 billion bid to secure a controlling stake in Indonesia’s 6th biggest bank - PT Bank Internasional Indonesia Tbk (BII) - held by Singapore state investment company Temasek Holdings and Kookmin Bank. Partner Gerald Singham led this transaction assisted by senior associate Terence Yeo and associates Sarah Choong, Ray Chiang and Seow Jia Xian. For more information visit www.rodyk.com

R O D Y K & D A V I D S O N A C T S F O R M A L A Y A N B A N K I N G B E R H A D B A N K I N U S $ 1 . 5 B I L L I O N T O S E C U R E C O N T R O L L I N G S T A K E I N I N D O N E S I A ’ S 6 T H L A R G E S T B A N K

23 July 2008 In one of the largest debt transactions of the year, Gide Loyrette Nouel London advised General Electric Capital Corporation on a €1.5 billion pan-European EMTN (Euro Medium Term Notes) issue. The Notes were listed on the London Stock Exchange and were publicly offered in six European jurisdictions: Spain, The Netherlands, Ireland, Belgium, Luxembourg and Germany. The Notes were rated AAA / Aaa and mature in September 2011. The Notes are governed by New York law. Gide’s London office acted as both United States and English law counsel. London-based partner Scott Cameron led the team representing General Electric Capital Corporation. He was assisted by associates Phung Pham and Will Oliver. Gide’s debt lawyers in London and Paris have been amongst the most active in working with the regulators to develop the practical aspects of passporting prospectuses under the EU Prospectus Directive, especially in the UK, France, Ireland and Luxembourg. Passporting enables simultaneous public offering or listing of securities in multiple EU jurisdictions, making it easier to complete large capital markets transactions, such as the GE Capital notes. Barclays Bank PLC, Credit Suisse Securities (Europe) Limited, HSBC Bank PLC and UBS Limited were lead managers. Scott Cameron, head of Gide London’s debt capital markets team, said: “We were very happy to be able to assist GE Capital with one of the largest debt transactions in Europe in 2008, especially given the pan-European nature of the offering and its use of the passporting process established by the EU Prospectus Directive. The transaction demonstrates once again that the European debt capital markets are still very much open for business for top rated issuers such as GE Capital." For additional information visit www.gide.com

G I D E L O Y R E T T E N O U E L L O N D O N A D V I S E S G E C A P I T A L O N € 1 . 5 B I L L I O N D E B T I S S U E

WASHINGTON, D.C., August 4, 2008 - Hogan & Hartson has advised McCormick & Company, Inc. in obtaining antitrust clearance for its acquisition of the Lawry’s marinade and seasoning business from Conopco, Inc., an indirect subsidiary of Unilever N.V., for $604 million in cash. The acquisition includes the rights to the brands, Lawry’s and Adolph’s, as well as related inventory and a small number of dedicated production lines. The Federal Trade Commission (FTC) granted conditional approval for the transaction on July 29, 2008. McCormick sold its Season-All business to Morton International’s Salt Group for $15 million in cash as a part of the FTC approval. The Hogan & Hartson team that advised McCormick through the FTC process was led by Washington, D.C. antitrust partners Philip Larson and Janet McDavid, with assistance from Washington, D.C. associates Andrew Graziani and Logan Breed, and Brussels coun-sel Mariabruna Fimognari. McCormick is a global manufacturer, marketer, seller, and distributor of spices, seasonings, and flavors.

For additional information visit www.hhlaw.com

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H O G A N & H A R T S O N L L P A D V I S E S M C C O R M I C K & C O I N A C Q U I S I T I O N O F L A W R Y ’ S

44th International PRAC Conference Hosted by Mulla & Mulla & Craigie Blunt & Caroe

Open to all PRAC Member Firms Formal Registration Now Available

online at www.prac.org

04 August 2008

Lovells has advised Bank of Ireland and Barclays Capital, the mandated lead arrangers for the banks providing finance for the River-side Energy from Waste (EfW) project. The plant, which will make a significant contribution to renewable energy, will be the first river-served EfW project in London. The deal completed on 31 July 2008. The funding was provided to Cory Environmental's waste management company Riverside Resource Recovery Limited, enabling the construction phase of the project to begin. The plant will process an average of 585,000 tonnes of waste a year, generating 72 MW of electricity - enough to supply 66,000 homes. This is a landmark deal which has been in the planning for some seventeen years. The deal is valued at over £570 million, with an initial construction cost of £350 million. The Lovells team comprised of Scott Tindall (Projects and Infrastructure), Andrew Welbourn* and Emma Clarke (Banking and Finance). Assistance was provided by Jeremy Brittenden*, Alex Harrison, Ajoy Bose-Mallick, Rosemary Miller and Jennifer Paynter. Further support was provided by the Lovells real estate team, led by partner Gill McGreevy* with assistance from Stella Bliss, Judith Reynolds and Claire Fallows. Speaking today, Scott Tindall said: "We are delighted to have been involved in this important transaction, which has taken over 15 years and a huge amount of effort to come to fruition. The unusual financing structure used for the deal and the complexity of the contracts required to deliver the project meant that concluding a deal was challenging for all parties concerned. However, these challenges made working on the transaction all the more rewarding. We are very much looking forward to working with Bank of Ireland, Barclays Capital and Cory again in the future." Partner Andrew Welbourn added: "This deal represents another example of the high quality work that we are undertaking for clients in this strategically important sec-tor. It follows on from the Lancashire County Council Waste PFI project and the Shropshire County Council waste PFI project, both of which closed last year and which serve to highlight the excellent credentials that Lovells has in this sector. It also demonstrates the strength and depth that we have in this important part of our practice. I'm extremely proud of the Lovells team involved in this deal and am delighted with the job done in bringing this ground-breaking trans-action to a successful conclusion." Notes for editor

About Lovells With over 3,000 people operating from 26 offices in Asia, Europe and the United States, Lovells is one of the world's leading international law firms. We advise many of the world's largest corporations, financial institutions and governmental organisations. We regularly act on complex, multi jurisdictional transactions as well as some of the most high profile commercial disputes. Lovells (the "firm") is an international legal practice comprising Lovells LLP and its affiliated businesses. Lovells LLP is a limited liability partnership registered in England and Wales with registered number OC323639. Registered office and principal place of business: Atlantic House, Holborn Viaduct, London EC1A 2FG. The word "partner" is used to refer to a member of Lovells LLP, or an employee or consultant with equivalent standing and qualifications, and to a partner, member, em-ployee or consultant in any of its affiliated businesses who has equivalent standing.

For additional information visit www.lovells.com

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L O V E L L S A C T S O N € 5 7 0 M L A N D M A R K E N E R G Y F R O M W A S T E P R O J E C T I N L O N D O N

July 25, 2008

WILMERHALE SECURES STRING OF SUPREME COURT WINS

“Litigating a Supreme Court case is all-consuming,” said WilmerHale partner Christopher Meade, a partner in the New York office, to The American Lawyer. “You think about it before you go to bed, you think about it when you first wake up in the morning, you think about it on the way to work, you think about it going home from work.” It’s that intense focus and commitment that propelled Meade—along with WilmerHale’s appellate and Supreme Court litigation prac-tice—to rarefied heights this year. In a span of less than three weeks in June, the firm’s top-notch Appellate and Supreme Court Litiga-tion Group secured a string of eye-catching wins that have left an indelible mark on the Supreme Court’s most recent Term. Causing the biggest stir was the long-fought, landmark case Boumediene v. Bush, in which the Court ruled that foreign suspects held at Guantanamo Bay have rights under the Constitution to challenge their detention in US civilian courts. “We understood back in 2004 that this was about as important as anything we could take on,” said Stephen Oleskey, a Boston-based partner who has helped lead a team to challenge the US government for holding the detainees indefinitely without trial, to the Boston Globe. “This was clearly a legitimate effort to solicit lawyers to help out with a significant constitutional issue.” The administration opened the detention facility at Guantanamo Bay in the months following the September 11 terrorist attacks, to hold people they deemed “enemy combatants,” who were suspected of ties to al-Qaida or the Taliban. Roughly 270 men remain at the island prison. The man who gave the Boumediene case its name, Lakhdar Boumediene, is one of six Algerians who immigrated to Bosnia in the 1990s and lived there as legal residents before being arrested by Bosnian police weeks after the September 11 attacks, at the request of US authorities, on suspicion of plotting to bomb the US embassy in Sarajevo. The group was released three months later for lack of evidence. They were then turned over to the US military, which sent them to Guantanamo. Over a four-year span, a large team of WilmerHale lawyers—including, in addition to Oleskey, partners Seth Waxman, Robert Kirsch, Paul Wolfson and Mark Fleming—dedicated more than 35,000 hours to challenging the group’s indefinite detention without trial, mak-ing it the largest pro bono effort in the firm’s 90-year history. Waxman, a former Solicitor General in the Clinton administration, made an oral argument to the Court on December 5, 2007. A week after the Boumediene win, Meade learned he won a 5-4 victory in Dada v. Mukasey, in which a Nigerian immigrant married to an American woman was granted a request to leave the US voluntarily after overstaying his visa. Before leaving the country, Dada decided to try to reopen his case, though doing so meant incurring more penalties. On June 19, the Court decided Dada could intro-duce motions to reopen the case without being penalized. WilmerHale attorneys spent more than 5,000 hours on the case. “It was a tough case,” Meade says. “We ran into a number of dead ends along the way, and we had to think our way around the wall.” And the day the Court’s decision came down was a hectic one for Meade on another front. Within hours of the big win, Meade learned that he would argue another case before the Supreme Court in December, meaning that he will have argued before the Court in three consecutive terms. In the new case, the Supreme Court granted the Solicitor General’s petition for certiorari in Peake v. Simmons. Peake is a veteran’s rights dispute asking whether the Department of Veterans Affairs (or the veteran) should carry the burden of proving prejudice when the Department fails to give a veteran statutorily required notice.

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W I L M E R H A L E S E C U R E S F I V E M A J O R W I N S

Then came the third Supreme Court success in June, Rothgery v. Gillespie County, Texas, a case raising a significant issue regarding the scope of the Sixth Amendment right to counsel in criminal proceedings. The firm’s client, Walter Allen Rothgery, was erroneously arrested for being a felon in possession of a firearm; he was brought before a magistrate, who informed him of the charges against him and set bail. Rothgery’s repeated requests for a lawyer were ignored. Six months later, he was indicted, rearrested, and had his bond increased to an amount he could not afford. In the end, he served nearly three weeks in jail on the false charges before his be-latedly appointed lawyer secured his release. The Fifth Circuit held that, because no prosecutor was involved in his arrest or appear-ance before the magistrate, no “criminal prosecution” within the meaning of the Sixth Amendment had begun, and Rothgery had no right to counsel, until his indictment. After the Fifth Circuit’s ruling, the Texas Fair Defense Project—which had been representing Rothgery—contacted Danielle Spinelli, a Washington-based lawyer in the firm’s Appellate and Supreme Court Litigation Group, for help in seeking Supreme Court review of the decision. Spinelli assembled a team and prepared a petition for certiorari, which was granted in December 2007. In January 2008, Spinelli became a partner at the firm. On March 17, 2008, in only her third month as a partner, she argued before the Supreme Court on Rothgery’s behalf, contending that the Fifth Circuit had erred and that a criminal prosecution had begun, and his Sixth Amendment right to counsel attached, at his appearance before the magistrate. On June 23, the Court agreed, issuing an 8-1 decision holding that a criminal suspect’s right to counsel attaches at the first appear-ance before a judicial officer who informs him of the charges against him. “It’s a wonderful experience, particularly for a first-year part-ner,” Spinelli says. “The case presented a very interesting and important set of issues. And the team supporting me was great.” In all, WilmerHale lawyers spent more than 2,600 hours on the case. For additional information visit www.wilmerhale.com

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W I L M E R H A L E S E C U R E S F I V E M A J O R W I N S C O N T ’ D

SEOUL 2007

October 20-24

PRAC Conference Materials

Available online at www.prac.org

PRAC e-Bulletin is published monthly.

Member Firms are encouraged to contribute articles for

future consideration. Send to editor@prac.org.

Deadline is 10th of each month.

alert 30 July 2008

Prospective insureds under professional indemnity pol icies are often asked about "known circumstances" when applying for cover - but what is a "known circumstance"? This can be a crucial quest ion when insurers attempt to rely upon exclusion clauses. The High Court today gave important guidance - and found in favour of the insurer - in i ts decision in CGU Insurance Limited v Porthouse [2008] HCA 30 (30 July 2008).

The unhappy client and the barrister with professional indemnity cover

Mr Porthouse was a barr ister who was sued for negligence. He had not ascertained the effect of legislat ive amendments upon a cl ient 's claim; the cl ient won at tr ial , but the other side appealed.

Between the success at tr ial and the appeal which found against his cl ient, Mr Porthouse f i l led in a proposal form with CGU for professional indemnity cover.

Quest ion 4 on the proposal form asked: "Are you aware of any circumstances, which could result in any Claim or Discipl inary Proceedings being made against you?", to which he answered "No". The form also pointed out his duty of disclosure under sect ion 21 of the Insurance Contracts Act. CGU issued a claims made policy.

At the t ime of f i l l ing in the proposal form, Mr Porthouse knew that the other side had an arguable appeal point based on the legislat ive amendments. He did not know the result of the appeal. He did not think that his cl ient might sue him for negl igence. When his cl ient did precisely that, he turned to his insurer, who pointed to the exclusion clause.

The exclusion clause, the reasonable person, and the insured

The claims made pol icy under which Mr Porthouse was insured did not cover "known claims" or claims arising from "known circumstances", def ined as:

"Any fact, si tuat ion or circumstance which:

(a) an Insured knew before this Policy began; or

(b) a reasonable person in the Insured’s professional posit ion would have thought before this Policy began,

might result in someone making an al legat ion against an Insured in respect of a l iabi l i ty, that might be covered by this Pol icy."

The relevant part is (b), since Mr Porthouse didn't have the actual knowledge of a claim by his cl ient, as his cl ient hadn't actual ly sued him yet. Did Mr Porthouse have knowledge in this sense?

To answer that quest ion, the High Court pul led apart the exclusion clause:

"Any fact, situation or circumstance" : this is a reference to object ive matters, not to a state of mind or bel ief.

What do you know - and should you have known it? Exclusion clauses and PI insurance

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"A reasonable person in the Insured’s professional position" : this is an object ive test, and means a hypothetical reasonable person with the insured's experience and knowledge, and the reasonable person's capacity to draw a conclusion (whether i t is plain and obvious or not) as to the possibi l i ty of someone making an al legation against the insured.

"Would have thought… might result in someone making an allegation" : this asks whether the hypothetical person would have concluded that there was a real (not a fanciful or remote) possibi l i ty (not a certainty) of an al legat ion being made.

"Before this Policy began" : this question is not l imited to the period immediately before the Pol icy, but any t ime before i t began.

So putt ing this al l together, Mr Porthouse's subjective bel ief as to whether he was about to be sued is only relevant as evidence of what a reasonable person in the insured's professional posit ion "would have thought" - and that can be rebutted by other evidence of what the reasonable barrister would think.

Implications

For insurers, this decision is an important one. As the High Court noted, this sort of exclusion clause mirrors the test of disclosure in section 21 of the Insurance Contracts Act, and is intended to protect the insurer from claims where disclosure is inadequate because the insured is unreasonable, id iosyncratic or obtuse. Of course, every exclusion clause turns on i ts wording, so i t 's advisable to review your pol ic ies and proposals in the l ight of this decision to ensure that you are asking the r ight question.

For insureds, this decision is an important reminder about their duty of disclosure, both under the Act and under the pol icy. I t 's crucial that they think outside the square when answering questions on proposals. As the High Court pointed out, the question is not whether you think you wil l be successful ly sued, or whether any al legat ion is reasonable - i t ’s what a reasonable person in your professional posit ion would conclude. Fai lure to answer this question properly could be an expensive error.

Disclaimer Clayton Utz News Alert is intended to prov ide commentary and general informat ion. I t should not be re l ied upon as legal advice. Formal legal advice should be sought in part icu lar t ransact ions or on mat ters of interest ar is ing f rom this bul let in . Persons l is ted may not be admit ted in a l l states.

For more information please contact:

Name: Peter Mann - Partner SydneyTel: +61 2 9353 4154Fax: +61 2 8220 6700Email: pmann@claytonutz.com

Name: Jocelyn Kellam - Partner SydneyTel: +61 2 9353 4139Fax: +61 2 8220 6700Email: jkel lam@claytonutz.com

Name: Nancy Milne - Consultant SydneyTel: +61 2 9353 4111Fax: +61 2 8220 6700Email: nmilne@claytonutz.com

Name: Henry Herron - Special Counsel Sydney

Tel: +61 2 9353 5736 Fax: +61 2 8220 6700Email: hherron@claytonutz.com

Page 2 of 3

Name: Fred Hawke - Partner MelbourneTel: +61 3 9286 6356Fax: +61 3 9629 8488Email: fhawke@claytonutz.com

Name: Sally Sheppard - Partner MelbourneTel: +61 3 9286 6206Fax: +61 3 9629 8488Email: ssheppard@claytonutz.com

Name: Mark Sammut - Partner BrisbaneTel: +61 7 3292 7102Fax: +61 7 3221 9669Email: msammut@claytonutz.com

Name: Mark Waller - Partner BrisbaneTel: +61 7 3292 7005Fax: +61 7 3221 9669Email: mwaller@claytonutz.com

Name: Doug Galbraith - Special Counsel Canberra

Tel: +61 2 6279 4005Fax: +61 2 6279 4099Email: dgalbraith@claytonutz.com

Name: Mark van Brakel - Partner PerthTel: +61 8 9426 8585Fax: +61 8 9381 4095Email: mvanbrakel@claytonutz.com

Name: Mark Spain - Partner in Charge Darwin

Tel: +61 8 8943 2512Fax: +61 8 8943 2500Email: mspain@claytonutz.com

Page 3 of 3

July 14, 2008 - No 11/2008 www.tozzinifreire.com.br

LATEST ISSUES

Brazil: Information on Capital Held Abroad - 2007

Brazil: The Need for a New Tool and a New Posture for the Reduction of Intellectual Property Piracy

Brazil: Important Decision on Recognition of Foreign Arbitration Awards

Brazil: The Use of Federal Waters for Aquiculture Activities

Insurance and Reinsurance

BRAZIL: NEW RULES CONCERNING MAXIMUM LIMITS FOR CESSION AND RETROCESSION TO OCCASIONAL REINSURERS

New Brazilian regulations established the maximum limits for cession and retrocession to foreign reinsurers with no representative office in Brazil, enrolled with the Superintendence of Private Insurance (SUSEP) to operate in reinsurance and retrocession (the so-called “Occasional Reinsurers”).

According to the new rules, the ceding companies may only cede to Occasional Reinsurers up to 10% of the total value of premiums ceded in reinsurance, taking into account their global operations in each fiscal year. The Brazilian Insurance Authorities are authorized to create exceptions and increase the 10% limit, through a specific and justified act, for certain types of insurance.

In addition, local reinsurance companies may cede to Occasional Reinsurers up to 50% of the total value of premiums related to the risks they have underwritten, also considering the totality of their operations in each fiscal year.

Marcio Mello Silva Baptista Partner - New York

mbaptista@tozzinifreire.com.br

Marta Viegas Partner - São Paulo

mviegas@tozzinifreire.com.br

WWW.TOZZINIFREIRE.COM.BR T 55 11 5086-5000 F 55 11 5086-5555

April 2008

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Forum Shopping in China: CIETAC vs. UNCITRAL

By Huang Tao* and Dai Yue**

Lacking knowledge of and exposure to China’s judicial and arbitrational system, foreign companies usually worry about dispute resolution clauses more than any other clause in a contract. Deciding which arbitration tribunal and what arbitration rules to specify becomes a sensitive and important aspect of contract negotiations for wholly foreign owned entities (“WOFE”) and cooperative joint ventures (“CJV”).

I. Choice of Arbitration Tribunal

Contracts in which one party is a foreign entity will contain foreign elements, allowing the parties to choose their jurisdiction without restriction under PRC law. The parties to such a contract may decide at their discretion whether to choose an arbitration tribunal within China or in another country, or resort to ad hoc arbitration to resolve disputes. A WOFE or CJV established or to be established by a foreign company in China is generally regarded as a Chinese company under PRC law. Therefore, under PRC law, the contracts for the transactions carried out by a WOFE or CJV do not involve any foreign elements. If the contracting parties in a transaction between PRC entities choose a foreign arbitration tribunal, Chinese courts may hold the arbitration clauses in the contract void on the basis that the parties intend to elude PRC law. Therefore, it is recommended that a WOFE or CJV shall appoint a Chinese arbitration tribunal in contracts which do not contain a foreign element.

II. Choice of Arbitration Rules

In most cases, a WOFE or CJV actually appoint a PRC arbitration tribunal (often China International Economic and Trade Arbitration Commission, “CIETAC”) for dispute resolution to comply with PRC law’s and courts’ preference for domestic arbitration tribunals for domestic companies. However, since WOFEs and CJVs may not be familiar with China’s arbitration system, they will often include in the dispute resolution clause of contracts a qualification requiring application of non-Chinese arbitration rules, e.g. United Nations Commission on International Trade Law rules (“UNCITRAL Rules”), under the CIETAC arbitration procedures. A. Feasibility and Risks of UNCITRAL Rules Although the arbitration rules of CIETAC (“CIETAC Rules”) empower the parties to choose other arbitration rules for application in CIETAC arbitration proceedings1, cases that actually apply UNCITRAL Rules to CIETAC procedures are rare. Irreconcilable discrepancies exist between the procedural administration systems of UNCITRAL and that of CIETAC, such as in the requirements for appointing an authority to appoint the arbitrators. Often, the parties are required to renegotiate and switch to CIETAC Rules during arbitration proceedings due to the conflict of the UNCITRAL Rules and the CIETAC procedural administration systems. Switching rules mid-arbitration exposes the parties to the risks of delayed or suspended proceedings because of the potential for respondent’s failure to cooperate. Also, after the arbitration proceedings are completed, the respondent may petition the court to revoke the arbitration award on the basis that the arbitration proceedings are questionable.

B. A Comparison of UNCITRAL Rules and CIETAC Rules 1 Article 4 Paragraph 2 of the CIETAC Rules provides that “...the parties may execute such agreement where the parties agree to adopt other arbitration rules or change the corresponding clauses of this Rules, unless such agreement cannot be executed or is in conflict with mandatory regulations of the place of arbitration.”

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Beyond the risks associated with mid-arbitration re-negotiations for applicable rules, a foreign company or its WOFE or CJV, as the claimant, is generally disadvantaged under the UNCITRAL Rules for other reasons, also.

a. Procedure Efficiency

Time Limit The claimant’s best interests lie in an efficient and speedy conclusion of the arbitration proceedings. However, UNCITRAL Rules are relatively lenient with the time limits for procedures and provide no time limit on the rendering of an award, including the final or supplementary award or corrections to an award. CIETAC Rules expressly set forth that an award shall be rendered within six months (four months for domestic arbitration proceedings) from the date of the formation of the arbitration tribunal. Documents Submission Under UNCITRAL Rules, an arbitration proceeding starts once the claimant submits and delivers the arbitration notice to the respondent. The authorized arbitration tribunal may decide at its discretion on the time limit of submission of the Application for Arbitration, defense and counterclaim. However, UNCITRAL Rules are silent on the time limit for the submission of counterclaims by the defense. Under CIETAC Rules, the time limit to submit an Application for Arbitration, defense and counterclaim is 45 days and for submitting counterclaims by the defense is 30 days. For a domestic arbitration proceeding, both time limits are 20 days. Constitution of Arbitration Tribunal The procedures of appointing arbitrators provided by UNCITRAL are quite complicated. In general, with UNCITRAL Rules, the appointment process for a sole arbitrator requires approximately three months and for three arbitrators requires approximately five months. This appointment process does not include the time required to determine the appointing authority. The complexity and uncertainty associated with UNCITRAL Rules are likely to result in delays of the arbitration proceedings. Under CIETAC Rules, the appointment process for a sole arbitrator requires approximately 15 days and for three arbitrators requires approximately 30 days (excluding the process of arbitrator appointment by the Chairman of CIETAC). Duration of the Complete Arbitration Proceedings Under UNCITRAL Rules summary procedures are not an option. But under the CIETAC Rules an award can be rendered within three months through summary procedures. Through the above analysis, it is obvious that the application of UNCITRAL Rules does not favor the claimant’s desire to accelerate the arbitration process. In fact, UNCITRAL Rules are likely to provide the respondent opportunities to delay the procedures since UNCITRAL’s procedures are complex and allow for extended time limits.

b. Responsibilities of the Parties

Since UNCITRAL Rules were not intended for a specific arbitration tribunal and can also be applied to other entities2, they lack an administrative mechanism. This lack creates an administrative gap when UCITRAL Rules are applied to CIETAC, which must be filled by the parties. For example, the parties are responsible for compliance with various statute of limits and procedural matters (including but not limited to appointing representatives and personnel for assistance, raising objection to the arbitrator, requesting for the witness to appear at court, requiring the arbitration tribunal to make explanations or corrections to an awards rendered) and must ensure the documents (including but not limited to the arbitration notice, application for arbitration and

2 The UNCITRAL Rules also apply to ad hoc arbitration.

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defense) are delivered to the counterparty. If the parties are not experts in administering arbitration proceedings, they risk some fault that may be used by the counterparty as a ground for refusal of the enforcement the award. For this reason, the parties should be very careful about such risks.

c. Flexibility Under UNCITRAL Rules, the parties have less discretion and less flexibility than under CIETAC Rules. For instance, with CIETAC Rules the president of the arbitration tribunal is appointed through negotiation among the parties. However, under UNCITRAL Rules, the president of the arbitration tribunal shall be appointed by two arbitrators or the appointing authority. Another example is CIETAC Rules protection of the compromise process during the conciliation proceedings from reference in the hearing proceedings, a protection that is not available in UNCITRAL Rules. Also, CIETAC Rules allow the parties to prepare document translations independently, while UNCITRAL Rules require document translations to be arranged exclusively through the arbitration tribunal.

d. Coordination with PRC Law Some of UNCITRAL Rules are in conflict with PRC law. Therefore, rulings rendered based upon such rules may not be feasible legally in China. For example, UNCITRAL Rules empower the arbitrational tribunal to take interim measures of protection on the subject matter of the dispute. But, in China, such power is exclusively exercised by the Chinese courts.

C. Custom Tailored Exceptions to CIETAC Rules For all of the reasons stated, it is unnecessary for a WOFE or CJV to replace CIETAC Rules with other rules. Choosing CIETAC Rules are helpful to manage the uncertainty associated with other rules and to lower the risks of revocation of the final award. In addition, a WOFE or CJV may alter the arbitration rules under the arbitration clauses or make special clauses to the extent that CIETAC Rules permit to better protect the parties’ legitimate rights and interests. The parties may include the following alternative clauses in their contract:

a. English is the language to be used in the proceedings; b. The parties may appoint a non-CIETAC arbitrator onto the Panel of Arbitrators3; c. The grounds on which an arbitrator shall withdraw from a hearing shall include inability or failure of

arbitrator to perform responsibilities; d. The arbitration tribunal shall hear the case through inquiry or argument and make arrangements for a

record of hearing; and e. The expert that the arbitration tribunal consults within China or the expert witness that the arbitration

tribunal appoints shall not be an interested party to the case. However, the special arrangements for or tailored clauses providing exceptions to CIETAC Rules are not accepted where such arrangements or clauses cannot be implemented or are in conflict with the laws of the jurisdiction of arbitration. Although the parties are allowed to tailor CIETAC Rules to cater for their specific transaction, most of the rules do not need to be altered and, in practice, no additional arrangements need to be made. To minimize a delay in the arbitration process arising from the conflict in arbitration rules and arbitration procedures administration systems and the uncertainty in the result of arbitration, it is recommended that a WOFE or CJV should appoint a PRC arbitration tribunal in the dispute resolution clauses in a contract without foreign elements. Also, a WOFE or CJV may also make changes or additional arrangements to the existing applicable

3 The parties may appoint any person they trust or with certain industry background or professional knowledge as arbitrator.

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arbitration rules to better utilize the administration procedure function and procedural guidance by arbitration tribunals and better protect their legal rights and interests as the respondent.

(This article was originally written in Chinese, the English version is a translation.) *Huang Tao is a partner of King & Wood’s Litigation & Arbitration Group in Beijing. **Dai Yue is an associate of King & Wood’s Litigation & Arbitration Group in Beijing.

A step forward in the fight against piracy 8 August 2008This newsletter is sent from our Amsterdam office

By a judgment dated 18 July 2008, the District Court of The Hague has decided - in interlocutoryproceedings between Sosecal Industria E Comercio Ltda ("Sosecal") and Societa Italiana LoSviluppo Dell' Elettronica ("Sisvel") - that, with respect to patent infringements, the concept of"fictive manufacturing" still applies under the new Anti-Piracy Regulation ("APR"), in spite of theECJ's judgment in Montex/Diesel.

This means that, a patent owner at any rate, still has the means to tackle counterfeit goods in theNetherlands originating from outside the EU when they are blocked by the customs authorities,even if the goods are in transit. It thus seems that the door to the unbridled transit trade ofcounterfeit goods has been closed a little more.

History of the fiction of manufacturing

The concept of "fictive manufacturing" was contained in the old APR - specifically in Art. 6(2)(b) inconjunction with Art. 1, and in connection with Art. 2. Under this concept, goods that are blocked,while in transit, by the customs authorities of a country at an IP right holder's request arepresumed to have been manufactured in that country. Subsequently, it can be assessed whetherthe goods infringe the relevant party's IP rights under the laws of that country.

The new APR no longer provides for the concept in so many words. However, in inter alia twocases before the District Court of The Hague (Philips/Princo et al. in 2005 and BenQEurope/Sisvel and the State of the Netherlands in 2006) as well as a case before an Italian court inBari, it was held that the concept also applies under the new APR (based on Art.10 in conjunctionwith Arts.1 and 2, and in connection with recital 8 of the preamble).

Subsequently, however, the ECJ issued its judgment in the Montex/Diesel case (ECJ C-281/05), inwhich it answered several questions posed by the German Bundesgerichthof regarding certainissues of trade mark law. In its judgment, the ECJ held that none of the provisions in the old APRintroduced a new criterion for verifying whether there is trade mark infringement or for establishingwhether the use of a trade mark constitutes a form of use which can be prohibited by reason ofsuch an infringement. Given the ECJ's judgment, did this mean that the concept of fictivemanufacturing no longer applied in the event that the APR was invoked for the purpose of dealingwith counterfeit goods? This question has, for now, been answered in Sosecal v. Sisvel.

Sosecal vs. Sisvel

In January 2008, Sisvel (a sub-licensor of several MP3 patents with authority to act on behalf ofPhilips et al. had asked the Dutch customs authorities to block 6000 MP4 players, owned bySosecal, which were being transported by KLM from China to South America, i.e. non-EU goods.After first having seized the MP4 players, Sisvel obtained a court order to have the playersdestroyed. Sosecal, however, had in the meantime started interlocutory proceedings to have theseizure lifted, for which reason Sisvel suspended the destruction of the players.

The parties' views

Logically, Sosecal was of the opinion that as the goods were in transit and destined for SouthAmerica, they could not be seized and, in addition, that no question of patent infringement couldarise. According to Sosecal, this was because the concept of fictive manufacturing (in this case inthe Netherlands) no longer applied, in light of the ECJ's findings in, inter alia, Montex/Diesel.

Sisvel, on the other hand, was of the opinion that the concept should still apply - also after theMontex/Diesel judgment - given that the latter only related to questions of trade mark law and thatthe APR was not even invoked in the relevant case. According to Sisvel, the ECJ's ruling that theAPR did not expand the criteria for trade mark infringement did not mean that a party wasprecluded from opposing counterfeit goods based on the APR where this would not be possiblebased on trade mark law.

The District Court's answer

In its preliminary ruling, the District Court of The Hague agreed with Sisvel. Specifically, it statedthat, as argued by Sisvel, the relevant part of the ECJ's judgment in Montex/Diesel pertained onlyto trade mark law and should not be interpreted more broadly. Furthermore, it could not beconcluded that the ECJ had made a ruling on the issue of the transhipment of goods in externaltransit in general; nor had the ECJ given any indication that it intended to render a judgment thatwas inconsistent with those previously rendered in the Rolex and Polo/Lauren cases (in which itwas held that the old APR could be invoked to deal with counterfeit goods).

Therefore, the court did not see any reason to depart from a steady line in case law. In otherwords, for the time being there was insufficient evidence to be found in Montex/Diesel in support ofa break with that trend, which would cause the court adjudicating the merits of the case to decidethat the concept of fictive manufacturing can no longer be applied.

Since the patent infringement itself had not been sufficiently contested by Sosecal in a seriousway, the court dismissed the request to have the seizure lifted and ordered Sosecal to pay thecosts of the proceedings.

Contact

For more information, please contact Charles Gielen (tel. + 31 20 71 71 903) or Marlous Schrijvers(tel. + 31 20 71 71 902).

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This publication is intended to highlight certain issues. It does not intend to be comprehensive or toprovide legal advice. If you would like to unsubscribe please use the unsubscribe option on thenewsletter website. You can also send an e-mail to unsubscribe@newsletter-nautadutilh.com.Please make sure that you put the word 'unsubscribe' in the subject field of your e-mail.

NEW IPR LITIGATION SYSTEM◎Daisy Wang/Roger Chang

In order to improve the quality and effectiveness of the adjudication of intellectual-property-related litigation in Taiwan, in 2007 the Legislative Yuan passed the Intellectual Property Court Organization Act and the Intellectual Property Case Adjudication Act, both of which took effect on 1 July 2008. Under the new legislation, an Intellectual Property Court has now been established in Taiwan, and all IPR litigation should be heard in accordance with the IP Case Adjudication Act. After several years of preparation, on 1 July 2008 the Intellectual Property Court formally started its operation, which is initially staffed by eight judges (in two divisions), and around nine technical examination officers. The eight judges all have previous experience of handling IPR cases, and the technical examination officers are all senior patent examiners transferred from the Intellectual Property Office (IPO). The operations of the IP Court and the new system for hearing IPR cases are outlined below: I. Organization and jurisdiction of the IP Court Litigation in Taiwan can be divided into the three categories: administrative litigation, criminal litigation, and civil litigation. Because judges generally do not have any technical background, when faced with IP-related technical issues, they would generally commission infringement assessment institutions to assist them in deciding such technical issues. However, the new IP Court has the following features: ‧The IP Court is specifically responsible for hearing IPR-related civil, criminal, and administrative litigation. The IP Court has priority of jurisdiction, but no absolute exclusive jurisdiction. Thus parties still have the right to choose to bring actions in the ordinary courts. ‧ The staff of the IP Court includes technical examination officers, who can directly assist the judges in handling technological points of dispute. This is expected to enhance both the effectiveness and the quality of the adjudication of cases. ‧ In civil cases involving disputes over intellectual property, the first-instance trial will be conducted by one judge of the IP Court. Second-instance proceedings will be heard by a panel of three judges of the IP Court, and third-instance proceedings will be heard by the existing Supreme Court. For IPR-related criminal cases, jurisdiction at the investigation stage and for first-instance trial proceedings remains with the local district court prosecutor's offices and the district courts. Jurisdiction in second-instance proceedings lies with the IP Court, and the court of third instance remains the existing Supreme Court. In administrative litigation, first-instance jurisdiction lies with the IP Court (trial by a panel of three judges), while the court of second instance is the existing Supreme Administrative Court. ‧ Specialist training for judges in intellectual property matters comprises both pre-service training and in-service training. The Judicial Yuan will also separately arrange for specialist courses or collaboration with foreign universities, and will select judges to go abroad for academic research and study, in order to bring their professional competence in IPR matters up to international standards. II. Major features of procedure under the new system The salient features of procedure under the IP Case Adjudication Act are as follows: ‧ Court to determine validity of IP rights Previously, disputes over the acquisition or validity of intellectual property rights, or other private-law rights (such as infringement disputes) may simultaneously be the subject of proceedings with different agencies or courts. For example, in the case of a patent infringement dispute, on being accused of infringement the defendant would typically file a cancellation action with the IPO against the patent concerned, and on this basis the civil court would order the suspension of the infringement litigation. Proceedings on the infringement issue were then not resumed until an irrevocable decision was reached regarding the validity of the patent, which could take three to six years. This has left much to be desired in terms of the protection of the rights of both patentees and counterparties. Under the new system, when the IP Court or an ordinary court hears IP litigation, the court itself should make a determination regarding a challenge to the validity of an IP right involved in the case, and may no longer suspend infringement proceedings on the grounds that a validity dispute has not been resolved. However, following the new legislation's entry into force, the IPO still has jurisdiction over disputes as to the validity of IP rights such as patent and

Page 1 of 3

TAIWAN

• Uncertainty as to competitive outcomes is not automatically "resolved" in favour of an applicant.

• Clearance should only be granted where the Court or the

Commission is satisfied that there is no real chance of substantial anti-competitive effect.

• There was nothing in evidence as to the current state of

competition which showed that any additional constraint by a new entrant would necessarily be irrelevant.

• Despite the evidence provided by the supermarkets and by

The Warehouse, there is a real and substantial prospect that the Extra concept will succeed but most relevantly the supermarkets had not established the contrary.

• The Court was entitled to be sceptical about evidence as

to conduct at a time when the two incumbent supermarkets were both trying to take over The Warehouse.

• The High Court was unduly focussed on the empirical

evidence associated with the course of trading of the Extra stores and the responses of the supermarkets (ie, upon what happened following entry and what can be inferred from that) with particular reference to price impacts alone.

• It cannot reliably be predicted that existing competition

between the supermarkets (to the extent it exists) will continue in the future absent Extra.

• The absence of impact by Extra on competition in the

period until October 2007 did not establish that such impact was not likely.

In December 2007 we published an FYI headed "The Warehouse Decision – Why the Commission Must Appeal the High Court Decision". The Commerce Commission did lodge an appeal and on 1 August the Court of Appeal set aside the clearances granted by the High Court permitting Woolworths and Foodstuffs to acquire The Warehouse. Simpson Grierson was neither pleased nor displeased with the result. We never took sides. We were however pleased that the Court of Appeal has reaffirmed the principles of merger law that we at least had always thought were established. There is in fact, nothing particularly earth-shattering in the Court of Appeal decision; it simply reaffirms old values. But, given the way others had greeted the High Court decision, those old values did appear to need reaffirmation. (We are not so naïve as to say that the Court of Appeal decision cannot be successfully appealed but we very much doubt that the Supreme Court would revert to the High Court's approach in any material respect.) The Court of Appeal's decision indicates: • Appeals against Commerce Commission decisions are by

way of rehearing as distinct from de novo hearing, with further evidence to be adduced only with leave of the Court, which may be granted if there are "special reasons".

• The case in the High Court had effectively been run as a full

de novo case. (The Commission accepted this in the circumstances as a fait accompli.)

• There is a likely substantial lessening of competition if

there is a real chance of such a lessening.

The Warehouse Decision in the Court of AppealThe Warehouse Decision in the Court of AppealThe Warehouse Decision in the Court of AppealThe Warehouse Decision in the Court of Appeal A Return to Basic PrinciplesA Return to Basic PrinciplesA Return to Basic PrinciplesA Return to Basic Principles

Competition Law

SIMPSON GRIERSON AUGUST 2008

• Updating evidence before the Court of Appeal indicates that enhanced performance by Extra has begun to emerge. (We do not believe that this updating evidence was in any sense determinative in context, but we expect some may disagree.)

• The Commission acted correctly in giving weight to

theoretical concerns raised by a 3:2 merger in markets characterised by high barriers to entry, especially where the structural features of the market do not drive the incumbents to compete vigorously.

• Co-ordinated effects were a plausible possibility. • Extra's business case may not have been to be a price

leader but this did not rule out the possibility of Extra having substantial competitive relevance.

We are pleased that the Court of Appeal has approached the issues as it did. There are no major questions unaddressed and no obvious leaps of faith. We are also pleased to have been part of the debate and it is comforting to know that our views were not quite as fanciful as some had indicated.

Office Locations

FYI Competition Law is produced by Simpson Grierson. It is intended to provided general information in summary form. The contents do not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters.

© Simpson Grierson 2008

Contact Information Peter Hinton Partner DDI: +64 9 977 5056 Mobile: +64 21 446 866 Fax: +64 9 977 5067 peter.hinton@simpsongrierson.com

Anne Callinan Partner DDI: +64 9 977 5031 Mobile: +64 21 403 592 Fax: +64 9 977 5046

Elisabeth Welson Partner DDI: +64 4 924 3400 Mobile: +64 29 924 3400 Fax: +64 4 472 6986 elisabeth.welson@simpsongrierson.com

James Craig Senior Associate DDI: +64 9 977 5125 Mobile: +64 21 497 713 Fax: +64 9 977 5046

Shelley Cave Partner DDI: +64 9 977 5260 Mobile: +64 21 660 090 Fax: +64 9 977 5067 shelley.cave@simpsongrierson.com

Auckland Office 88 Shortland Street,

Private Bag 92518, Auckland, New Zealand Tel +64 9 358 2222 Fax +64 9 307 0331

DX CX 10092.

Wellington Office HSBC Tower, 195 Lambton Quay,

PO Box 2402, Wellington, New Zealand Tel +64 4 499 4599 Fax +64 4 472 6986

DX SX 11174. E-mail: info@simpsongrierson.com Website: www.simpsongrierson.com

Christchurch Office PO Box 874, Christchurch 8140,

New Zealand Tel +64-3-365 9914 Fax +64-3-379 5023

trademark rights, so that parties may still choose to file dispute procedures such as patent cancellation or trademark invalidation actions with the IPO. Parties may present arguments to the court contesting the validity of an IP right only in litigation that is already before the same court over alleged infringement of the contested right. In other words, a party may not file litigation with the court if the validity of an IP right is the only point at issue. Unlike the outcome of a patent cancellation or trademark invalidation action examined by the IPO, the court's decision on a challenge to an intellectual property right has only relative force, i.e., it is binding only on the parties to the underlying litigation, and does not have absolute force against all the world. With the entry into force of the new Adjudication Act, from 1 July 2008 proceedings will be resumed in all litigation that was previously suspended due to a challenge to the validity of an IP right. ‧ IPO participation in litigation Because IPR disputes usually involve technological issues, and very few judges have a background in science and technology, when hearing IPR litigation the courts must rely to a high degree on technological experts with specialist knowledge and expertise. Nevertheless, the participation of such experts or infringement assessment institutions, and the opinions they provide, may not fully meet the court's need for various types of technological support when considering cases. This has been one of the major difficulties in the adjudication of IPR-related litigation. Now that the new legislation has given the court both the authority and the duty to make a determination in disputes over validity, in future there will be two routes available for contesting the validity of an intellectual property right. That is to say, a party that challenges the validity of a patent or trademark may opt to only file a cancellation or invalidation action with the IPO; or, in the course of litigation involving the right concerned, it may dispute the right's validity before the court. Alternatively, a party may simultaneously pursue challenges to the validity of an IP right with both the IPO and the court. In order to effectively integrate the opinions of the IPO and the court as to the validity of the same IP right, the court, in addition to having its own technical examination officers, may order the IPO to participate in infringement litigation and express its opinion on a challenge to the validity of an allegedly infringed IP right. This is an innovation in Taiwan's litigation procedure. ‧ Compulsory enforcement of evidence preservation In IPR infringement disputes, the burden of proof lies with the rights holder. Previously, when rights holders petitioned the court for evidence preservation, because the Code of Civil Procedure does not provide for compulsory enforcement of evidence preservation orders, in practice infringers have often refused to cooperate, so that evidence preservation procedures have failed to achieve their intended substantive purpose. The new Adjudication Act addresses this situation by providing for compulsory enforcement of evidence preservation. From 1 July 2008, a counterparty that is the subject of an evidence preservation order may no longer refuse to cooperate. ‧ Confidentiality preservation orders Taiwan's legal system has long provided protection for trade secrets under the Trade Secrets Act, the Civil Code, and the Penal Code. In the course of IPR litigation, the courts have been able to make rulings to restrict access to case files or to close proceedings to the public, etc., in order to protect the lawful rights and interests of the owners of trade secrets. However, the above confidentiality measures may prevent a party to litigation from having access to related evidence and being able take it into consideration, so that the party would be unable to put forward a defense. Such measures are also open to abuse as a means to maliciously obstruct an opposing party in the lawful pursuit of litigation. In view of the fact that the parties to IPR litigation are typically competitors in related markets, and the documents or physical evidence that they submit to the court or disclose during proceedings may relate to their own or third parties' technical or commercial secrets, the Adjudication Act introduces a specific mechanism to protect trade secrets: the confidentiality preservation order. Following the Act's entry into force, a party to litigation, or any third party, may during litigation or prior to litigation being filed, petition the court under the Act to issue a confidentiality preservation order. If the court approves the petition, its ruling will expressly enumerate the matters to be kept confidential and the parties bound by the order. Any person who deliberately and unlawfully reveals a trade secret in violation of a confidentiality preservation order will be subject to criminal penalties (up to three years' imprisonment). ‧ Changed statutory criteria for injunctive relief Under the Code of Civil Procedure, in order to avert major loss or imminent danger, an intellectual property rights holder could, on providing preliminary evidence to the court, petition the court for an injunction to prohibit a counterparty from

Page 2 of 3

manufacturing or selling specific products on the basis of rights-infringing actions. If a rights holder was unable to provide appropriate preliminary evidence in a timely manner, it could still obtain the protection of an injunction on depositing a bond with the court in lieu of such evidence. Under the new Adjudication Act, a rights holder may obtain injunctive protection only if it is able to provide appropriate preliminary evidence to the court. It may not deposit a bond in place of providing such evidence. When considering whether to issue an injunction, the court should take into account such factors as the likelihood of successful litigation for infringement, whether approval or rejection of the petition will cause irreparable harm to either party, and any impact on the public interest. Thus in the future the barriers to obtaining injunctive relief are likely to be higher than before. The system established under the new legislation will surely enhance the quality and execution of IPR litigation in Taiwan. The reforms will not only make it easier for rights holders to upholding their rights, but will also help Taiwan's IPR dispute resolution system to come into closer line with international standards. We will continue to follow the implementation of the new system in practice, and keep readers updated.

Lee and Li Bulletin_July 2008 Issue

Page 3 of 3

Thailand: IP Developments A Publication of Tilleke & Gibbins' Intellectual Property Department

June 2008

  

RECORDATION OF WELL‐KNOWN MARKS IN THAILAND  

 by Darani Vachanavuttivong 

 The following are examples of well‐known marks, both Thai and foreign, that have 

been successfully recorded with the Department of Intellectual Property (DIP). 

      

      

  

  

     

 accepted among customers in Thailand. Use of the mark either by the owner of the mark or by its or authorized representatives or licensees, either in Thailand or abroad, is accepted. 

As of April 2008, more than 180 appli‐cations have been filed for well‐known mark recordation. Among these, 52% of the applications were for Thai marks and 48% were for foreign marks. The success rate of these applications is approximately 35%, which emphasizes the strict criteria used in evaluating the well‐known status of a mark.Affidavit 

In response to these rather stringent requirements for recordation, Tilleke & Gibbins has prepared a form of affidavit to facilitate the owner of the well‐known mark to formulate the information and evidence required by the DIP. 

The affidavit will cover the following: • History, background, and popular‐

ity of the owner of the mark. • History and background of the 

mark. • Worldwide distribution of products 

bearing the mark. • Distribution of products bearing 

the mark in Thailand. • Worldwide advertisement and 

promotion of products bearing the mark. • Advertisement and promotion of 

products bearing the mark in Thailand. • Consumer recognition of the mark.• Value of the mark. • Maintenance of quality of the 

goods bearing the mark. • Achievement in right protection 

or enforcement of the mark and actions against infringement of the mark.   

Continued on page 3 

The current Thai Trademark Act 2000 provides protection of well‐known marks under Section 8 (10). This section pro‐scribes the registration of a mark that is confusingly similar to a well‐known mark, regardless of whether or not that well‐known mark has been registered in Thailand. The application of this section, however, is limited to the registration process. When a similar mark has already been registered, the owner of a well‐known mark must rely on Section 61 of the Act, which allows a petition to be filed with the Board of Trademarks to cancel the registration of a similar mark. 

Based on precedent cases, if the owner of a well‐known mark does not record the mark’s well‐known status in Thailand, it is quite difficult to cancel a registered mark which is similar to such well‐known mark. This is because the owner of the (unregistered) well‐known mark is required to submit substantial evidence of use to prove to the Board that 

its mark is well known. If the owner of the well‐known mark fails to prove the well‐known status of the mark to the Board, or if the Board considers that the evidence submitted to prove the well‐known status of the mark is not sufficient, the Board will not cancel the registered mark. Recordation of Well‐Known Marks 

On July 19, 2005, the Department of Intellectual Property (DIP) issued a regula‐tion governing recordation of well‐known marks, and from August 1, 2005 it started accepting applications for recordation of well‐known marks. 

Eligibility for recordation as a well‐known mark is extended to trademarks, service marks, certification marks, and collective marks, regardless of whether or not registration for the mark has already been obtained in Thailand. The mark must have been used, distributed, and advertised for a long continuous period of time up to the date the application is filed, to the extent that it has become highly  

©2008 Tilleke & Gibbins International Ltd.

Darani Vachanavuttivong, Managing Director Intellectual Property Department 

August 2008 | 1

EXPORT CONTROLS & CUSTOMS UPDATE

Laptop Searches at the Border Why It Is Happening and How To Protect Your Company

Overview

U.S. Customs and Border Protection (CBP) has long been authorized to conduct searches of

persons and property at all border crossings. Recently, however, CBP’s searches have become

more invasive, searching, and in some cases, seizing laptops, cell phones, BlackBerrys, PDAs, and

other electronic devices of international travelers both entering and exiting the United States. CBP

has occasionally requested that travelers input passwords so that CBP can review protected or

encrypted files. The agency claims that terrorism, IP rights violations, child pornography, and

enforcement of U.S. trade laws support this increase in searches and seizures of electronic devices

at U.S. borders and international airports.

Professionals are rightfully alarmed by the increasing intensity of these searches. In addition to an

increase in the number of searches, new search technology can allow CBP to decrypt passwords,

analyze a computer’s Internet activity, copy stored data, and gather information from cellular

devices such SMS messages, contacts, call logs, and multimedia messages. Customs officers and

agents could potentially gain access to proprietary data, confidential information, privileged

documents, trade secrets, Internet searches, and passwords during routine customs inspections.

CBP issued a Policy Statement on July 16, 2008, regarding its searches and, in certain instances,

seizures of electronic data and devices in which CBP reiterated its authority concerning such

searches and laid out certain guidelines for their conduct. Among other issues, the statement

details the manner in which the searching officials are to treat business and commercial

information, as well as attorney-client privileged information, that may be uncovered during the

course of such searches. This statement is available here:

Current State of the Law According to federal regulations, persons traveling to the United States from abroad are subject to

inspection by a CBP officer upon entry into the country, as is their property and merchandise. The

Supreme Court has established certain limitations on the permissible acts of CBP agents. The

Court has ruled that border agents have the authority to conduct routine searches without suspicion

or a warrant, but that intrusive bodily searches require a certain level of suspicion due to dignitary

Hogan & Hartson LLP

August 2008 | 2

and privacy interests. However, the Court has not ruled on the limitations placed on CBP officers to

search and seize electronic devices being carried across U.S. borders by international travelers.

Recently, the 9th Circuit upheld the right of CBP agents to search the electronic devices of

international travelers both entering and exiting the United States without suspicion. In that case,

U.S v. Arnold, 523 F.3d 941 (9th Cir., 2008), Michael Arnold was charged with knowingly

possessing and transporting child pornography when CBP agents found child pornography on his

computer after his return from vacation in the Philippines. The 9th Circuit ruled that privacy rights of

individuals are diminished at the border due to the government’s interest in preventing harm to the

Nation, and that searches of property such as laptops do not raise the same dignity and privacy

concerns as intrusive bodily searches. Therefore, such searches are considered routine and do not

require a level of suspicion. The court did not reach the issue of whether travelers chosen for

screening can be compelled to provide their passwords to CBP officials. However, in In re Boucher,

a district court in Vermont determined that forcing a person to furnish his password is a violation of

the 5th Amendment right against self-incrimination. 2007 WL 4246473 (D.Vt.2007). Both U.S. v.

Arnold and In re Boucher are currently on appeal, and the procedures for searching electronic

information and password protected data at the border will continue to evolve as the courts

establish a legal framework for such warrantless searches.

Practical Implications Regarding Searches and Seizures of Electronic Devices

The procedures that the Department of Homeland Security and CBP employ to determine which

electronic devices will be searched or confiscated remain unclear. However, refusing to allow CBP

officers to search electronic devices or declining to provide a password could lead to delayed entry

into the U.S., denial of entry, or seizure of the electronic device in question. To protect their

employees and proprietary and sensitive business information, companies are implementing

various strategies to maintain the integrity of sensitive information stored on electronic devices

while traveling internationally. For example:

• Use of laptops with blank hard drives

• Encryption of sensitive data

• Deletion of sensitive materials

• Remote access of information over encrypted channels

• Transmission of sensitive data via e-mail

• Clear identification of privileged files

Finally, U.S. citizens traveling abroad should also be aware of border procedures in their

destination countries. Border agents in foreign countries may also be authorized to seize electronic

devices. Border authorities in certain foreign countries may be authorized to copy data including

sensitive or export controlled information from electronic devices while others may limit a traveler’s

ability to import or use encryption on electronic devices. If you have any questions or would like a

more detailed analysis of these issues, please let us know.

By Beth Peters, Teresa Polino, and Anthony Capobianco

August 2008 | 3

About this update Hogan & Hartson periodically publishes Customs Updates to notify clients of substantial regulatory and legal changes that could affect global companies. Please contact a member of our Customs group for more information.

LEWIS E. LEIBOWITZ leleibowitz@hhlaw.com 202.637.5638 Washington, D.C.

CHANDRI NAVARRO-BOWMAN cnavarro-bowman@hhlaw.com 202.637.5640 Washington, D.C.

GABRIELA CARIAS-GREEN gcarias@hhlaw.com 202.637.2870 Washington, D.C.

CRAIG A. LEWIS calewis@hhlaw.com 202.637.8613 Washington, D.C.

TERESA M. POLINO tmpolino@hhlaw.com 202.637.5616 Washington, D.C.

JULIA PADIERNA-PERALTA jpadierna@hhlaw.com 202.637.6442 Washington, D.C.

A special thanks to Charles Moskowitz and Lauren Chamblee for their contributions.

This Update is for informational purposes only and is not intended as basis for decisions in specific situations. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

Copyright © 2008 Hogan & Hartson LLP. All rights reserved. Hogan & Hartson LLP is a District of Columbia limited liability partnership with offices across the United States and around the world. Some of the offices outside of the United States are operated through affiliated partnerships, all of which are referred to herein collectively as Hogan & Hartson or the firm.

www.hhlaw.com

July 31, 2008 www.luce.com

Update on Everett v. State Farm

Peter H. Klee Partner pklee@luce.com 619.699.2412

Joseph E. Foss Partner jfoss@luce.com 619.533.7376

In Everett v. State Farm, 162 Cal.App.4th 649 (Cal. Ct. App. April 29, 2008), the Court of Appeal held that insureds cannot pursue contract or tort remedies where (1) the policy language clearly limits coverage to the stated limits and the insurance company paid all that was owed, (2) the policy unambiguously states that it is the insured’s responsibility to maintain adequate insurance, and (3) there is no evidence that the agent who sold the policy made any misrepresentations. Unhappy with the decision, plaintiffs’ attorneys, consumer groups, and even the Department of Insurance flooded the California Supreme Court with depublication requests. The insurance industry and other organizations fired back, opposing the depublication requests.

On July 30, 2008, the California Supreme Court denied the requests to depublish.

Luce Forward's E-Updates are published as a free service to our clients and friends. The material contained herein is provided for informational purposes only and is not intended to constitute advertising, a solicitation or legal advice. If you wish to receive additional or more specific information about any subject covered in an E-Update, please contact one of the attorneys at Luce Forward. Visit Luce Forward's "Subscription Preferences" page on www.luce.com, where you can subscribe or unsubscribe to Luce Forward's E-Updates in this area and/or other practice areas or industries.

Copyright © 2008 Luce, Forward, Hamilton & Scripps LLP. All rights reserved.

New Rules for Noncompete Provisions and Releases in California

August 8, 2008 In Edwards v. Arthur Andersen LLP, the California Supreme Court has confirmed that even limited noncompetition agreements are not enforceable in California. The Supreme Court also held that release agreements are valid even though they do not exclude nonwaivable statutory claims. On August 7, the California Supreme Court issued its long-awaited opinion in Edwards v. Arthur Andersen LLP. The Supreme Court held that section 16600 of the Business and Professions Code means what it states—that noncompete agreements are void under California law unless they fall within the limited exceptions expressly set forth in sections 16601, 16602, and 16602.5 involving the sale of a business or a partnership or limited liability company interest. The court also held that a release of “any and all claims” is enforceable even when it does not contain an express exclusion of statutory claims that cannot be waived. The Facts In connection with his employment as a manager at Arthur Andersen, Raymond Edwards II had signed an agreement under which he promised to comply with two post-employment restrictive covenants. Edwards agreed that for 18 months following his departure from the firm, he would not perform for any Andersen client the same type of work he had done for that same client while he had been employed by Andersen. Edwards also agreed that for 12 months following his departure from the firm, he would not solicit business (defined as the same type of services he had provided while employed by Andersen) from any person or entity that had been a client of his particular Andersen office during the 18 months prior to his departure from the firm. After Andersen ceased operations in the United States and proceeded to sell its various lines of business, HSBC agreed to buy the Andersen group in which Edwards was employed. Edwards was offered employment with HSBC. As a condition of the offer, Andersen would release Edwards from his noncompete agreement if, in turn, Edwards would release Andersen from any and all claims he might have against the firm. Edwards refused to sign the release agreement because of concerns about releasing his right to seek indemnification against Andersen. As a result, HSBC refused to employ Edwards. Edwards sued Andersen, HSBC, and a subsidiary, for intentional interference with prospective business advantage. He alleged that the restrictive covenants were void under Business and Professions Code section 16600. In addition, he alleged that it was unlawful to require him to sign a release under which he would be waiving his right, under Labor Code section 2802, to seek indemnification from Andersen.

Results Before the Lower Courts The trial court ruled against Edwards and in favor of Andersen on the grounds that the restrictive covenants were narrowly tailored and did not deprive Edwards of his right to practice his “profession,” and that the release could not result in a waiver of Edwards’s indemnification rights. Edwards appealed. The court of appeal reversed, concluding that the noncompete agreement was void and unenforceable. It also concluded that the release violated California public policy because it implicitly sought a waiver of Edwards’s statutory indemnification rights. The court held that requiring Edwards to sign the invalid noncompetition agreement and the invalid release were “wrongful acts” for purposes of the tort of interference with prospective economic advantage. The Supreme Court’s Opinion Noncompete agreements The California Supreme Court reaffirmed longstanding appellate court opinions that had strictly construed Business and Professions Code section 16600 to prohibit all noncompete agreements, even those that sought only to partially restrain an individual in his or her trade or profession. The court expressly rejected case law, developed by federal courts in the Ninth Circuit, that interpreted section 16600 to permit limited noncompete agreements if they did not totally prohibit an individual from engaging in his or her trade or profession. The Court noted that prior to adoption of section 16600, California law permitted reasonable restraints on competition. By adopting section 16600, however, the California Legislature established a public policy prohibiting any restraint on competition, other than those specifically set forth in the statute and trade secrets law. Release agreement The state Supreme Court held that a release of “any and all claims” did not cover nonwaivable statutory claims. Accordingly the release was valid, and was not a “wrongful act” for purposes of Edwards’s interference with prospective economic advantage claim. In dissent, Justice Kennard noted that the language of the release did include Edwards’s indemnification claim and was therefore invalid. Practical Implications The implications of this decision for businesses with employees in California make it important for business to do the following:

1. Check employment agreements and confidential information, nondisclosure, and inventions agreements and revise them, if necessary, to ensure that they do not contain any post-termination restrictions that are in the nature of an invalid covenant not to compete. Be sure that your agreements contain only these provisions that are expressly lawful under California law:

a. A prohibition against competitive employment or business activities during employment with

the company b. A prohibition against using or disclosing the company’s confidential, proprietary, and trade

secret information c. A prohibition against soliciting employees and contractors of the company to reduce or

terminate their relationship with the company

d. A prohibition against soliciting customers, if the customer information is a trade secret, to reduce or terminate their relationship with the company

2. Check your stock, stock option, compensation, and other benefit plans and revise them as

necessary to ensure that they do not impose an invalid penalty, forfeiture or “clawback” of any otherwise vested entitlement if the employee goes to work for a competitor.

3. Develop strategies to lessen the hardship on California employers caused by California’s

prohibition of noncompete agreements, including term agreements, retention agreements, and Employee Retirement Income Security Act (ERISA) plans. California employers are often at a competitive disadvantage because of their inability to hire competitors’ employees in other states who have signed noncompete agreements, but whose own California employees are free to work for competitors because they cannot be required to sign noncompetition agreements.

4. Tailor employment agreements on a state-by-state basis to comply with and take advantage of

local law. California employment law is different from the employment laws of other states in many respects besides the enforceability of noncompetes.

5. Review the forms of waivers and release agreements used with California employees and revise

them as necessary to ensure that they do not expressly waive nonwaivable statutory rights. Morgan Lewis has a nationwide team of attorneys who specialize in designing and implementing noncompete and trade secret programs that protect some of the most valuable assets of any business. These attorneys regularly seek injunctions in state and federal court to prevent disclosure and misuse of trade secrets and other confidential information, and to challenge contractual and fiduciary breaches by departing executives. For more information about the issues discussed in this LawFlash, please contact any of the following Morgan Lewis attorneys: Dallas Ronald E. Manthey 214.466.4111 ron.manthey@morganlewis.com Paulo B. McKeeby 214.466.4126 paulo.mckeeby@morganlewis.com Palo Alto Carol Freeman 650.843.7520 cfreeman@morganlewis.com Melinda S. Riechert 650.843.7530 mriechert@morganlewis.com Philadelphia Michael A. Curley 215.963.5523 mcurley@morganlewis.com About Morgan Lewis’s Labor and Employment Practice Morgan Lewis’s Labor and Employment Practice includes more than 280 lawyers and legal professionals and is listed in the highest tier for National Labor and Employment Practice in Chambers USA 2008. We represent clients nationwide in a full spectrum of workplace issues, including drafting employment policies and providing guidance with respect to employment-related issues, complex employment litigation, ERISA litigation, wage and hour litigation and compliance, whistleblower claims, labor-management relations, immigration, occupational safety and health matters, and workforce change issues.

About Morgan, Lewis & Bockius LLP Morgan Lewis is a global law firm with more than 1,400 lawyers in 22 offices located in Beijing, Boston, Brussels, Chicago, Dallas, Frankfurt, Harrisburg, Houston, Irvine, London, Los Angeles, Miami, Minneapolis, New York, Palo Alto, Paris, Philadelphia, Pittsburgh, Princeton, San Francisco, Tokyo, and Washington, D.C. For more information about Morgan Lewis or its practices, please visit us online at www.morganlewis.com. This LawFlash is provided as a general informational service to clients and friends of Morgan, Lewis & Bockius LLP. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. These materials may be considered Attorney Advertising in some states.

Please note that the prior results discussed in the material do not guarantee similar outcomes.

© 2008 Morgan, Lewis & Bockius LLP. All Rights Reserved.

Email Alerts MASSACHUSETTS ENACTS SWEEPING CHANGES IN TAXATION OF BUSINESSES July 24, 2008 By Richard W. Giuliani, Julie Hogan Rodgers, Amelia E. Bormann Legislation signed into law by Governor Deval Patrick on July 3, 2008, made the following major changes in the Massachusetts taxation of business entities:

Adoption of Combined Reporting. Effective for tax years beginning on or after January 1, 2009, Massachusetts adopts a combined reporting method and abandons the separate reporting method. Under current law, a corporation doing business in Massachusetts is permitted to file a separate return, and the determination of the corporation's income subject to Massachusetts taxation takes into account only its income and its apportionment factors and does not include the income and apportionment factors of any affiliates, whether or not the affiliates are doing business in the Commonwealth.

Corporations doing business in Massachusetts now will be required to file tax returns using the income and apportionment factors of all members of a combined group, consisting of all affiliates engaged in a unitary business, whether or not the affiliates are doing business in the Commonwealth. Corporations that are subject to combined group reporting include financial institutions, business corporations, S corporations and utility corporations, as well as certain insurance companies that are not taxed as insurance companies for federal tax purposes.

The combined taxable income of all members of a unitary group of businesses is used for purposes of apportionment to Massachusetts and is defined as the income derived from the unitary business.

A "unitary business" is defined to mean the activities of a group of two or more corporations under common ownership that are sufficiently interdependent, integrated or interrelated through their activities so as to provide mutual benefit and produce a significant sharing or exchange of value among them or a significant flow of value between the separate parts. The term is to be construed to the broadest extent permitted under the United States Constitution.

Taxpayers may elect, without the consent of the Commissioner, to have their Massachusetts combined group consist of the members of their affiliated group. For this purpose, "affiliated group" generally has the same meaning as "federal affiliated group," as defined in Section 1504 of the Internal Revenue Code, except that if members of the group own more than 50 percent voting control of a corporation, such corporation will be included in the group, and certain other commonly owned corporations will also be included in the group. Therefore, the affiliated group, for Massachusetts tax purposes, may include more members than the federal affiliated group, which has an 80 percent vote and value test.

Taxpayers may also elect to determine their apportioned share of income pursuant to a worldwide election under which each member, wherever located, takes into account the income and apportionment factors of all members includible in the combined group. In the absence of such an election, the combined group shall determine its share of the taxable income on a water's edge basis, in which case the

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group generally includes foreign corporations only to the extent the average of the foreign corporation's property, payroll, and sales factors within the United States is 20 percent or more. Both this election and the affiliated group election are binding and applicable for 10 taxable years.

Adoption of Federal Rules for Entity Classification. Massachusetts will follow the federal rules for tax classification of an entity. Accordingly, an entity classified as a corporation, partnership or disregarded entity for federal tax purposes will be so classified for Massachusetts tax purposes. For years, Massachusetts has taxed business entities according to its own classification criteria. For example, corporate trusts (including entities also known as "business trusts") that were taxed as corporations federally were taxed under the individual income tax provisions of Massachusetts law at a rate lower than the corporate rate and were not subject to the property tax measure of the corporate excise. Moreover, after the Internal Revenue Service adopted the so-called "check-the-box rules" for federal income tax classification purposes, Massachusetts continued to use its own classification system, resulting in a different Massachusetts tax classification for even more entities. Some entities that were classified as corporations for federal tax purposes could be classified for Massachusetts tax purposes as corporate trusts or partnerships depending on certain criteria established under Massachusetts statutory and case law. This provision, like most of the other provisions in the bill, is effective January 1, 2009. The Department of Revenue has been charged with the responsibility of preparing transition rules for entities whose classification will be changed as a result of the legislation.

Massachusetts will follow the federal rules for tax classification of an entity. Accordingly, an entity classified as a corporation, partnership or disregarded entity for federal tax purposes will be so classified for Massachusetts tax purposes. For years, Massachusetts has taxed business entities according to its own classification criteria. For example, corporate trusts (including entities also known as "business trusts") that were taxed as corporations federally were taxed under the individual income tax provisions of Massachusetts law at a rate lower than the corporate rate and were not subject to the property tax measure of the corporate excise. Moreover, after the Internal Revenue Service adopted the so-called "check-the-box rules" for federal income tax classification purposes, Massachusetts continued to use its own classification system, resulting in a different Massachusetts tax classification for even more entities. Some entities that were classified as corporations for federal tax purposes could be classified for Massachusetts tax purposes as corporate trusts or partnerships depending on certain criteria established under Massachusetts statutory and case law. This provision, like most of the other provisions in the bill, is effective January 1, 2009. The Department of Revenue has been charged with the responsibility of preparing transition rules for entities whose classification will be changed as a result of the legislation.

With the changes in classification of entities and the adoption of the federal classification rules, Massachusetts will no longer treat qualified Subchapter S subsidiaries as separate entities. The change will eliminate a number of complex questions involving qualified Subchapter S subsidiaries that are owned by a corporate trust that has elected to be taxed as an S corporation for federal purposes but taxed under the personal income tax provisions of the prior tax law.

The statute includes provisions intended to preserve the tax treatment of distributions of tax-free and previously taxed earnings and profits of corporate trusts as of December 31, 2008.

Reduction in Corporate Tax Rates:

The income tax rate on business corporations is scheduled to be reduced from the

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present rate of 9.5% to 8.75% in 2010, 8.25% in 2011, and 8% in 2012 and thereafter. The income tax rate on financial institutions is scheduled to be reduced from the current rate of 10.5% to 10% in 2010, 9.5% in 2011, and 9% in 2012 and thereafter. These rate reductions are intended to relieve the burden of some of the estimated $400 million tax increase anticipated as a result of the change to a combined reporting method. No change is made to the tax rate on the property measure of the corporate excise.

While the decrease in corporate rates was intended to soften the impact of an increase in taxation as a result of the law, a number of minority members of the Legislature expressed doubt that the Legislature would allow the lower rates to go into effect, particularly if the Commonwealth continued to face deficits in subsequent years.

The statute retains the imposition of a tax on large S corporations but revises the applicable rates to reflect any future changes in the difference between corporate and individual income tax rates. For S corporations with total receipts in excess of $9 million, the applicable tax rate is the difference between the applicable corporate rate and the applicable individual income tax rate. For S corporations with total receipts between $6 million and $9 million, the rate is two-thirds of the rate described in the preceding sentence. As a result, for a large S corporation with total receipts in excess of $9 million, the total income tax, consisting of the individual income tax on stockholders on their distributive shares of corporate income and the additional tax on the corporation, will equal the tax that would have been imposed on the corporation if it had been a C corporation.

Reporting Relief. As another concession to businesses, the legislation includes provisions intended to alleviate the financial reporting impact under FAS 109 as a result of the enactment of combined reporting requirements for unitary businesses. Under these provisions a combined group is entitled to claim an annual deduction for the seven-year period beginning with the combined group's taxable year beginning in 2012 for an amount equal to 1/7 of the lesser of (i) the difference between the book and tax bases of certain assets held by members of the combined group not subject to Massachusetts taxation, and (ii) the amount necessary to offset the increase in the net deferred tax liability that would result from the imposition of combined reporting. To claim the deduction, a taxpayer must file a statement with the Commissioner of Revenue on or before July 1, 2009, specifying the total amount of the deduction claimed by the taxpayer. Only publicly traded companies, including affiliated corporations participating in the filing of the publicly traded company's financial statements, are eligible for the deduction.

As another concession to businesses, the legislation includes provisions intended to alleviate the financial reporting impact under FAS 109 as a result of the enactment of combined reporting requirements for unitary businesses. Under these provisions a combined group is entitled to claim an annual deduction for the seven-year period beginning with the combined group's taxable year beginning in 2012 for an amount equal to 1/7 of the lesser of (i) the difference between the book and tax bases of certain assets held by members of the combined group not subject to Massachusetts taxation, and (ii) the amount necessary to offset the increase in the net deferred tax liability that would result from the imposition of combined reporting. To claim the deduction, a taxpayer must file a statement with the Commissioner of Revenue on or before July 1, 2009, specifying the total amount of the deduction claimed by the taxpayer. Only publicly traded companies, including affiliated corporations participating in the filing of the publicly traded company's financial statements, are eligible for the deduction.

Department of Revenue Discretion. Although, as a concession to business taxpayers, the final legislation does not include some of the proposed revisions

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granting the Commissioner of Revenue broad discretion in certain areas, it retains a number of provisions permitting the Commissioner to adopt regulations that deal with a number of important areas, such as transition rules for entities reclassified by the legislation, the elimination of inter-company transactions, including the payment of dividends between or among group members, sharing credits among the combined group, the application of any carry-forwards and the sharing of net operating loss or tax credit carry-forwards and the relationship of the new unitary provisions to the so-called "add-back" provisions under which a taxpayer is required to add-back to income deductions for payments of interest or the use of certain intangibles if such payments are made to an affiliate operating outside of the Commonwealth. With the adoption of the unitary approach, one might have thought that the add-back provisions would be repealed. However, the legislation allows the Commissioner, through regulation, to utilize these Sections to the extent the Department deems necessary.

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