Time to Pay Attention to Food Labeling

One of the things we do at SILC is advise restaurants as they make the jump from their home country to the U.S. Whenever a restaurant from abroad decides to open in the U.S., there can be some things that are a surprise. For years, it appeared it was unnecessary for restaurants to include nutritional information when labeling menus items, but this is rapidly changing.

At present, only a handful of cities and states regulate labeling menu items at restaurants with nutritional information. Florida does not. And until recently, restaurants enjoyed exemption under the Food & Drug Administration (FDA) requirements for nutritional information labeling on food items. But the Federal Government in efforts to harmonize different food labeling laws nationwide and in its latest campaign against obesity is finalizing a Federal Food Labeling Menu Law (to be codified at 21 U.S.C. § 343). The law is meant to prevent consumer deception at restaurants (and fight obesity).

Restaurants owners, franchisees, and franchisors need to be informed and prepared. The law will apply to chain restaurants with 20 or more locations which operate under the same name and offer similar menu items. For restaurant owners under 20 units, the law offers an option to comply through voluntary registration. The benefits of complying with the federal law guarantees compliance with any similar local laws because it will restrict state and local nutrition labeling requirements that are not identical to the federal requirements, with exceptions.

The proposed labeling requirements will apply to every menu or menu board from which a customer can make an order selection – including drive-thru menu boards, advertising flyers for delivery restaurants that include a menu (or portion of the menu), take-out menus and online menus. The calorie information would need to appear next to the food item (whether in a menu, on a menu board, on a drive-thru board or otherwise) in type no smaller than the smaller of the name or price of the item and would need to be listed under a column identified as “Calories” or “Cal.” Additional written nutritional information for each menu item (and self-service or food on display item) must be available upon request, and restaurants would need to include the statement, “Additional nutrition information available upon request” on all menu boards, on each menu page, and on a sign in close proximity to self-serve and foods on display (if placing next to each item on display is impractical). The nutritional information required would be calories, total fat, saturated fat, trans fat, cholesterol, sodium, total carbohydrates, dietary fiber, sugars and protein. This information would be required for each menu item, and, where applicable, for each variety or flavor of a menu item and for each component of a combination meal.

Once this law becomes final, restaurant owners, franchisees and franchisors alike will have six month to be in compliance. Failure to comply with the law will be deemed a criminal as well as civil offense with several penalties including a one year maximum jail sentence and fines of $1,000 per day out of compliance.

Your legal counsel can assist you in evaluating the nuances of this law and the standards for compliance.  It is important to begin reviewing standard menu items, consulting with vendors on product quality, and determining which nutritional entity the restaurant will use to provide its nutritional content.

The FDA is welcoming public comments on the proposed regulations until July 2011 visit the FDA’s website for Labeling Law Public Comments. For more information on specific menu labeling requirements visit the Center for Science in the Public Interest.

Get Ready for Miami in 2014

In case there was any doubt, Miami has recently confirmed its status as a leading hub for international arbitration. Last week, the International Council for Commercial Arbitration (ICCA) awarded its 2014 congress to the City of Miami. According to comments from those present, the vote was close between Miami and Mauritius, with Miami prevailing in its first bid for ICCA’s bi-annual congress.

For those who are unfamiliar with the event, the ICCA Congress is one of the largest events in the world of arbitration, typically drawing over 800 people. Last year, the event was in Rio de Janeiro, and next year, the event will be in Singapore. In the meantime, we will be continuing our work to help host the ICCA 2014 Congress in Miami as part of the steering committee. If you have not already (and you should visit Miami), make plans to come in 2014.

Now Is It Time to Think Seriously about Cross-Border Professional Liability?

Most of the topics on our blog tend to take a more open approach, and hopefully they are accessible to both legal and non-legal readers alike. This post, however, falls into the category of our lawyer readers, so be forewarned.

For many years, attorneys have acted as if they operate in different spheres of professional responsiblity rules. For example, a law firm operating in Brazil has a different reality as far as professional responsibility is concerned. It is very uncommon for disgruntled clients to sue their lawyers for professional liability, and in our experience, few firms bother with carrying professional liability insurance. On the other hand, firms in the U.S. rarely operate without having professional liability insurance, and lawsuits by clients against firms are common. But what happens when a law firm from a country like Brazil advises on a transaction or dispute related to the U.S.?

In a recent case before the District Court in the District of Columbia (the federal first instance court in Washington D.C.), the court held a Swedish plaintiff could sue a Swedish firm for damages arising from alleged professional malpractice related to a lawsuit in the United States. The Swedish firm had tried to dismiss the case, arguing the case would be better heard in Sweden and a lack of connections to the United States to allow for jurisdiction in the District of Columbia. The court rejected these claims in a lengthy opinion. The Blog of the Legal Times described it like this:

“In a 120-page opinion (PDF) released yesterday afternoon, a Washington federal judge affirmed that a foreign-based law firm with few physical ties to Washington and limited involvement in an underlying case could still be the target of a legal malpractice suit in Washington based on its communications and visits over the years.”

Without having read the entire opinion, it looks like this kind of case should cause international firms to take notice when advising their clients in relation to a dispute in a different country. Despite not having an office or physical presence in that country, the jurisdiction of the United States courts may still provide grounds for a lawsuit.

The Outline of Venture Capital in Brazil

While the United States has a strong foundation and tradition of venture capital investment, it is still something that is growing in Latin America. In Brazil, venture capital investment is growing, and there is a new chapter recently published on some of the key features for investors and target companies to know and understand.

Some key pieces of information from the article include the sectors where venture capital is investing. According to the respected Fundação Getúlio Vargas (FGV), based on the number of investments, the most popular sectors are the following: IT and electronics (15%); Energy and oil (15%); Pharmaceutical/medical (11%); and Agribusiness (8%).

In many ways, types of funding like angel investments, venture capital funds, and private-equity funds make sense in Brazil. Because of the very high interest rates charged by banks, entrepreneurs need to consider other sources of financing. As Brazil’s economy grows, it will be worth watching to see if it also develops a more robust environment for venture capital funds.

Internet Privacy Laws: A Bigger Deal for Foreign Companies

A hot topic recently in the U.S. Congress is the potential for new laws regulating the collection of personal data by websites. But foreign companies should already be careful to comply with existing law. Recently, the Federal Trade Commission (FTC) announced a settlement with a website that catered to children:

“If your site is subject to COPPA, what messages should you take from the FTC’s action?  First, it’s not enough that privacy policies and COPPA statements talk the talk.  They have to walk the walk.  Make sure your real-world practices live up to the law and the protective promises you make on your website.  Second, as the complaint outlines in detail, the Playdom story was played out against a background of mergers, dissolutions, acquisitions, and subsidiaries.  Never let compliance obligations take a back seat, especially during times of corporate restructuring.”

The term COPPA refers to the Children’s Online Privacy Protection Act, which is a statute regulating the gathering and use of information from children younger than 13. The statute applies when a company operates a website gathering information from consumers in the U.S., even if the website is located outside the U.S. As e-commerce grows, especially in this era of tech startups both in the U.S. and outside of it, companies should take care to follow COPPA with active privacy policies and internal enforcement of those polices.

The Value of Cooperation

One of the things that I’m privileged to do is teach a week-long seminar called “Introduction to U.S. Law” at different law schools in Latin America. One of the things we always discuss is the role of administrative agencies in the U.S. government’s structure and their increasing importance for international companies, especially companies in Latin America who are expanding into the U.S. Here’s a great example of one of the things we frequently discuss, the need for cooperation:

“The U.S. Securities and Exchange Commission today entered into its first-ever deferred prosecution agreement, signaling a new willingness to facilitate and reward cooperation in agency investigations.

The SEC’s agreement with Tenaris S.A. stems from allegations that the steel pipe maker bribed Uzbekistan government officials when bidding for a contract to supply oil and natural gas pipelines. The company made about $5 million in profits on the deal, and will pay $5.4 million in disgorgement. Tenaris also agreed to pay a $3.5 million criminal penalty in a non-prosecution agreement announced today by the Justice Department.”

While it’s never pleasant to learn of internal fraud (or disgorge millions of dollars in profits), this article touches on an important point: the need for foreign companies to understand the potential for investigations in the U.S. of foreign operations and react accordingly. With the stated intention of the U.S. Department of Justice to step up investigations and enforcement, the article above illustrates what may become a growing trend.

The Latin America-China Link

As is becoming increasingly noted, China is making a big play in Latin America. According to an article in the Global Post, China’s rise in Latin America is going strong:

“China is now the region’s third largest trading partner, behind the United States and the European Union, and will soon overtake the latter.

Just how big is the Chinese presence? It’s big and growing, says a report out this week from the U.N. Economic Commission for Latin America and the Caribbean.

Chinese direct investment in Latin America in 2011 totalled $15 billion. That’s more than double the amount invested between 1990 and 2009.”

This has the potential really change the dynamic of trade in Latin America. Not only does it give Latin American countries a viable alternative to the U.S. and Europe, but it helps support an export market that has been lagging due to the strong Real and weak Dollar/Euro. This news also adds further context to the debate over Miami’s role in our post from yesterday. Based on China’s strengthening role, professionals in Miami will need to continue to push to make the city relevant and grow along with the region–something Miami is definitely well suited to do.

Where Does Miami Fit In?

For many of us Miami attorneys, we see ourselves as sitting in the gateway to Latin America, and a natural resource for all things related to the region. But as Brazil grows, intra-Latin American deals rise, and Asia increasingly looks to link with Latin America, what is Miami’s role? Latin Lawyer addressed this question at a recent gathering of local attorneys, including a number of friends of the firm:

“Astigarraga put a particularly interesting question to the table: To what degree will US law continue to be the ’lingua franca’ for Latin American deals? “So much US investment predominated in Latin America during the 1990s; Spanish too. Today there is so much intra-Latin American work – for example a Brazilian company buying in Chile, with no US component. Or a China deal. A growing slice of the pie is getting further and further away from the US. What impact will that have on US deal lawyers?” he asks . . .”

The article goes on to cite DLA Piper’s recent decision to open in Miami and Miami’s growth as a viable alternative to New York. Of course, at SILC we’re a bit partial to Miami, but Miami’s role in international legal services is worth watching.

Domain Name Dispute Resolution: Acting First and Acting Fast

For individuals, companies, organizations, and social groups, the trademark-based domain name is the first impression of the brand. They are business identifiers. Because there can be only one registered owner of a domain name, the first of such businesses to register the domain will be the owner or holder of the name. Latecomers must choose a different domain name. And, since consumers use a company’s name to find a particular business, being late can have economic and legal consequences. The most common consequence occurs between conflicting business identifiers, some existing before others. Disputes can arise between cybersquatters and legitimate businesses. “Cybersquatting” refers to the practice involving third parties preemptively registering a trademark as a domain name. Registering first is exploitative of the first-come, first-serve system. This is apparently most common for businesses and famous celebrities. And, since cybersquatting is easy to do, a domain name and its multiple variations can be taken up before the bonafide user ever decides to register.

When a company finds that the domain name corresponding to their corporate name or product trademark is owned by someone else, the company can either choose a different name or fight to get the domain name back from its current owners. This is where domain name dispute resolution takes on a meaning of its own. The UDRP is the Uniform Dispute Resolution Policy, which was adopted by the Internet Corporation for Assigned Names and Numbers (ICANN) on August 26, 1999. If a trademark holder thinks that a domain name registration infringes on its trademark, the holder may initiate a proceeding under the UDRP. The trademark holder can file a lawsuit or make a claim for arbitration. And only after the parties have settled, litigated or arbitrated the dispute can a trademark-based domain name be canceled, suspended or transferred to its bonafide owner.

Under the standard dispute clause of the Terms and Conditions for the registration of most domain names, the registrant must submit to such proceedings. UDRP works with the World Intellectual Property Organization (WIPO) when a claim is made. WIPO’s role in the dispute process is administrative. It assists in appointing experts or panelists to review the dispute and issues decisions. The panelist can only decide to transfer or cancel the domain name(s), or deny the complaint. There is no award for monetary damages.

Practical Pointer: When you are creating a name to match the concept of your business, register and trademark your name first and then design your website and other business concepts afterwards. If you are the bonafide holder of your trademark and you find the domain name improperly seized, consider retaining experienced counsel to assist you in arbitrating for your trademark-based domain name. In addition, many companies now work with their legal counsel prior to obtaining domain names for websites that may not describe the company’s core name. For example, many companies may have promotional campaigns, new joint ventures, or expanding partnerships. Each of these may require a domain name, and the selection of that domain name should include both the company’s marketing team and their legal counsel.