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REWIND: International Business News #14

Posted on March 9th, 2012 | Author: Oren M. Chaplin

  • It may soon become easier for U.S. authorities to discover the identity of U.S. taxpayers holding undeclared assets in Swiss bank accounts.  This week the Swiss Parliament approved an amendment to the country’s tax treaty with the United States which opens the door for the two countries to agree to different terms under a new tax treaty.  That new treaty could permit U.S. authorities to request that Swiss authorities disclose the names of U.S. taxpayers whose activities are indicative of tax evasion.  This development is part of a greater focus by U.S. authorities on offshore unreported income.
  • On March 7, 2012, Facebook, Inc., filed an amended S-1 Registration Statement with the United States Securities and Exchange Commission.  In that Registration Statement, the company reflected that it estimates that approximately 5-6% of all monthly active users of Facebook.com are false or duplicate accounts. This reflects a recognition by the company that inaccuracies in the company’s metrics may harm its reputation and negatively affect its business.  Amended S-1 available through SEC website: www.sec.gov.
  • In other news relating to the company, there are reports out of Germany that a German regional court recently found that the Company’s Friend Finder application runs afoul of Germany privacy laws and data protection laws. The application uploads all of the contacts in a user’s address book to the company’s website, which Facebook opponents claimed was done without full disclosure. Although the German court has yet to finalize its verdict, the court expressed concern over this lack of transparency and directed Facebook to revise the information they provide to users of the Friend Finder application.
  • Pharmaceutical companies operating in Europe will likely face heightened scrutiny by the European Medicines Agency (EMA). The EMA oversees the scientific evaluation of medicines developed for use in the European Union. The EMA’s new Executive Director, Professor Guido Rasi, has publicly expressed his willingness to reconsider whether current data reflects that previously approved medicines remain safe for public use. This comes in the wake of safety concerns linked to medicine use from regulators across the EU, as well as in the United States.  (More information about the EMA can be found here).
  • Foreign companies investing in Indonesian mines may need to reconsider those investments if they are part of a longer term investment strategy. The Indonesian government recently implemented a law that requires foreign holders of permits to mine in Indonesia to divest part of their stakes to Indonesian entities. The stated rationale of the law is to give “greater opportunity for Indonesian entities to participate in the mineral and coal-mining business”. Even if the stated rationale is realized locally, some industry commentators indicate that any such benefits would be diluted by the overall view that Indonesia has become a less attractive target for investors who are focusing on the mining sector. (See also this, subscription).
  • The Indian Supreme Court will hear final arguments later this month in a patent infringement case involving the Novartis drug Gleevec.  The case arose out of the Indian government’s denial of a patent for Gleevec, which some have claimed is further evidence of that government’s penchant for siding with generic-brand drug manufacturers.
  • The Chinese parliament is considering legislation that could bolster the state’s police powers to hold in detention people suspected of subversive and other state security activities. Such defendants could be held in “residential surveillance” or government detention centers. Authorities would be required to notify the defendant’s family of the detention within 24 hours, which is a deviation from the original draft of the law. As first proposed, the law did not require any such family notification. A Chinese parliament official denied that China permitted secret detention and declared that the recent changes to the detention rules reflects the view that the government is concerned about ensuring the rights of its citizens. These revisions are part of a greater amendment to Chinese criminal procedure that have been welcomed by some lawyers who expressed that they could improve access to suspects and defendants.
  • Wi-Lan Inc.’s lawsuit against LG Electronics Inc. alleging patent infringement was recently dismissed by U.S. District Judge Lewis Kaplan. Wi-Lan claimed that LG infringed a patent for V-chip technology. The V-chip permits a user to block television content, and has been marketed to parents who want to restrict their children from accessing certain television shows. In dismissing the case, the court expressed the view that no reasonable jury could find infringement on a claim construction issue. This was the second recent case between the two companies to have reached resolution. The two companies had previously settled a separate patent litigation in Texas in 2010.  (See also this).
  • In late February, the United States Securities and Exchange Commission and the Commodity Futures Trading Commission issued a joint proposed rule release that concerns identity theft red flags. The proposed rule would require certain financial institutions and creditors to develop and implement a written identity theft prevention program. The program must be designed to detect, prevent, and mitigate identity theft in existing accounts or new accounts. The proposed rule also imposes a requirement for issuers of credit and debit cards to “assess the validity of notifications of changes of address under certain circumstances.” These rules would likely cover certain banking institutions, brokers and dealers registered under the Securities Exchange Act of 1934, investment companies registered under the Investment Company Act of 1940, and investment advisers registered under the Investment Advisers Act of 1940. Any program adopted by those covered entities would need to include provisions that: address how and which factors the entity considers to be red flags; focus on detecting those red flags, and appropriately responding in the event that any red flags are ultimately detected. Domestic and international financial institutions should continue to monitor developments with the proposed rule release.  Proposed rule.