SPRING 2018 TODAY’S GENER AL COUNSEL
Executive Summaries CYBERSECURIT Y
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Privacy and Cybersecurity Issues in M&A
Prosecutorial Discretion — the Quick ITC Escape
A New Weapon for Creditors in Europe
By Sheryl Falk and Alessandra Swanson Winston & Strawn LLP
By Asha Allam Adduci, Mastriani & Schaumberg LLP
By Jeff Klazen, Andrew Stafford, Rebecca Hume, D. Farrington Yates and James P. Booth Kobre & Kim LLP
Privacy and cybersecurity laws and the accompanying risks involved in M&A are rapidly evolving. While your business team is wrapping its arms around traditional areas of diligence, conduct an initial analysis of the company’s information security infrastructure and business operations to determine the preliminary scope of privacy-focused diligence. Use your initial analysis to create an in-depth roadmap for diligence. Focus on three key issues: (1) what information the target is collecting, (2) what the target is doing with the information and (3) how the target is protecting the information. Merely asking whether the target collects “personal information” will not get the response needed to assess potential risk. Instead, using the knowledge from the initial sweep, ask specific questions about whether the target is collecting certain types of regulated information. There are three key concepts that help create your own diligence framework. First, keep in close contact with your business team to understand its risk tolerance and the potential measures that may be available to mitigate identified risks. Second, incorporate internal privacy counsel into your legal team early in the process — or seek outside counsel if you don’t have a specialist in-house — to assist with initial diligence, and provide insight into any significant areas of risk that need to be communicated to your business team. Third, work with your team to understand how the target collects, uses and secures its information; and use this knowledge to provide a full-risk picture to your business team.
The United States International Trade Commission’s (ITC) third decision in five years not to investigate an alleged violation of Section 337 of the Tariff Act, 19 U.S.C. § 1337, appears to contradict its statutory mandate. The ITC is instructed that it “shall investigate” alleged violations of Section 337, yet it dismissed complaints in 2012, 2014 and 2017. On December 1, 2017, complainants Amarin Pharma, Inc. and Amarin Pharmaceuticals Ireland Ltd. appealed the ITC’s dismissal to the Federal Circuit. Although the outcome of Amarin’s appeal remains unknown, the dismissals demonstrate fleeting opportunities for respondents that have strong arguments to present them and avoid or reduce the expense of ITC litigation. Regardless of the outcome, a respondent only stands to benefit from conducting a substantive evaluation of the allegations against it immediately after a complaint is filed. Every complaint must be drafted with sufficient specificity to enable relief without further briefing or evidence. Complainants must remain vigilant of their claims during pre-institution review, and use the 30-day pre-institution period to monitor their allegations and respond definitively to pleading deficiencies. Maintaining postfiling vigilance increases the likelihood that an investigation will be instituted. The Federal Circuit’s decision in Amarin Pharma, Inc. and Amarin Pharmaceuticals Ireland Ltd.’s appeal of the ITC’s dismissal in Omega-3 Products, will confront its predecessor court’s deference in Syntex Agribusiness, and shed light on what the word “shall” requires the ITC do.
Certain claimants and judgment creditors domiciled in 26 European Union member states enjoy access to a new weapon against evasive debtors. Under Regulation (EU) No 655/2014, they can apply for a European Account Preservation Order (EAPO) to freeze a debtor’s bank accounts across Europe. The regulation simplifies crossborder asset preservation by introducing a standardized application process, backed by automatic recognition across the 26 member states to which the regulation applies. An EAPO prevents dissipation of a specified amount of money from a debtor’s bank accounts, pending the enforcement of an achieved or likely judgment. The nationality and domicile of the debtor does not matter: The EAPO affects the bank account itself. EAPOs can freeze funds in bank accounts in the debtor’s name or — to the extent possible under domestic law — held on the debtor’s behalf. All EAPO member states automatically recognize the EAPO. An applicant may apply once to freeze funds held in accounts across the member states. The EAPO has the potential to save certain creditors time, effort and costs; but it is far from a perfect solution. The measure is likely to prove a blunt instrument for cases involving low account balances or assets concentrated in a small number of jurisdictions. Therefore, creditors should always give careful consideration as to whether the EAPO is the best tool for the job, and seek advice as to whether deployment of domestic measures is more appropriate in their circumstances.