TODAY’S GENER AL COUNSEL SPRING 2019
Executive Summaries COMPLIANCE PAGE 22
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DOJ Withdraws Assent to Key IP Policy
Implementing an Effective ForcedLabor Compliance Program
Banks Caught in State/Federal Cannabis Conflict
By Andrew B. Grossman, Kathi Vidal, Susannah P. Torpey and Ian L. Papendick Winston & Strawn LLP
By Richard Mojica, Nathan Lankford and Nicole Gökçebay Miller & Chevalier
By William Bogot and Joshua Horn Fox Rothschild LLP
In a December 2018 speech before the Berkeley-Stanford Advanced Patent Law Institute, Assistant Attorney General Makan Delrahim, head of the DOJ’s Antitrust Division, announced that the DOJ has withdrawn its assent to the 2013 Policy Statement on Remedies for StandardsEssential Patents Subject to Voluntary FRAND Commitments (the Joint DOJ/ USPTO Policy). He elaborated upon the DOJ’s enforcement approach to standard setting organizations (SSOs). AAG Delrahim’s body of public remarks, including his December 2018 speech, should serve as a reminder that antitrust risks are inherent whenever market participants come together and act collectively in organizations. They should remain vigilant to ensure that the rules, procedures and patent policies of the SSOs are tailored to maximize procompetitive goals, and to ensure that their participation, and the conduct of other participants, is in compliance with the rules of the SSO and the antitrust laws. While participants in SSOs should always be mindful of the antitrust risks inherent in any joint enterprise with competitors, the DOJ’s shift in focus should prompt them to ensure that they give appropriate consideration to the adoption of best practices designed to reduce any antitrust risk. Standard setting must be for a legitimate pro-competitive purpose. Patent policies should be well documented, fair, and should involve early disclosure of standards-essential patents and independent determination of the value of these patents. Grant-back requirements should be fair and transparent.
Congress has amended Section 307 of the Tariff Act of 1930 (19 USC §1307) to close a loophole exempting products that were in short supply in the United States from the general prohibition on imports made by forced labor. As amended, the Act prohibits the importation of products made wholly or in part with convict labor, forced labor (including child labor) or indentured labor, with no exceptions. In December 2018, U.S. Customs and Border Protection (CBP) issued a proposal to the Commercial Customs Operations Advisory Committee to implement the forced labor provisions through trade compliance. CBP’s proposal sets out seven elements of an effective forced labor compliance program, as well as the evidence demonstrating implementation that Custom-Trade Partnership Against Terrorism members would be required to provide to CBP. For example, companies are expected to involve stakeholders and partners in methods of understanding the forced labor risks in their supply chains, as well as to establish a code of conduct for the company and the company’s partners. This proposal provides a template for the broader universe of importers to take stock of their current forced labor compliance programs and be better prepared for potential CBP inquiries. In particular, an importer can compare its existing forced labor compliance efforts to the proposal’s elements and note where it is already meeting likely CBP expectations, and where it has further work to do. Companies should use it as guidance to keep pace with CBP’s forced labor compliance expectations.
Lawyers must counsel clients in the nascent industry of state-legalized cannabis that their routine business affairs violate federal law, a situation that new Attorney General William Barr calls “untenable.” It requires lawyers involved in the cannabis space to remain conscious of evolving law. In 2009, Deputy AG David Ogden issued a memorandum to federal prosecutors in states that had passed medical marijuana laws. It said that federal resources should not focus on individuals in compliance with existing state laws providing for the medical use of marijuana. In 2013, Deputy AG James Cole published an update identifying eight enforcement priorities that were important to the federal government and would guide the DOJ’s enforcement of marijuana matters. It identified situations in which banks might run afoul of federal law, including providing services to a marijuanarelated business knowing that it is diverting marijuana to a state where marijuana sales are illegal. Former AG Sessions retracted both Ogden and Cole Memos in favor of a harder line; but nothing much changed because of an amendment to the federal spending bill, first approved in 2014 and every year thereafter, which prevents the DOJ from using federal funds to prosecute state-compliant medical marijuana operators in states that have legal cannabis programs. A 2016 Ninth Circuit interpretation strengthened the prohibition. In light of this amendment, even if the DOJ wants to prosecute state-compliant persons and businesses in the medical cannabis space, it has no funding.
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