Here are two that looked pretty good to me. First is a 90 minute webinar on the FCPA entitled “Foreign Corrupt Practices Act Compliance In Joint Ventures and Consortia”. It’s being presented online Wednesday, April 21, 2010 at 1-2:30pm EDT:

This CLE webinar will provide counsel for companies in international joint ventures or consortia with guidance on effective compliance programs to minimize FCPA risks. The panel will examine the unique FCPA issues in such JVs, offer best practices to mitigate risks, and review strategies for handling investigations.

Most Foreign Corrupt Practices Act (FCPA) compliance risks are due to third party conduct, including joint venture (JV) partners and agents. However, the usual steps taken by companies to minimize FCPA risks don’t work in JVs and consortia.

In international joint ventures, unreliable partners must be identified early—and either avoided or carefully managed. Companies and their counsel must develop and implement tailored compliance programs to reduce the risk of government investigations and penalties.

They even provided a nice outline of the program:

I. FCPA risks and steps to minimize risk for JVs and corsortia
     A. Unique risks
     B. Due diligence
     C. Board/management reviews
     D. Compliance obligations in JV documents
     E. Audits and approvals
     F. Right to terminate
II. JV partners
     A. What can be expected from JV partners
     B. Handling disputes with JV partners
III. Best practices when facing:
     A. Investigation of the JV
     B. Disputes among JV partners

The speakers list consists of:

Judith A. Lee, Partner, Gibson Dunn & Crutcher, Washington, D.C.
Edward L. Rubinoff, Partner, Akin Gump Strauss Hauer & Feld, Washington, D.C.
Edward J. Fishman, Partner, K&L Gates, Washington, D.C.

And if you don’t want to do general FCPA compliance, and instead are looking for something more China specific, then Strafford is also offering “Foreign Corrupt Practices Act in China for 2010: Compliance Strategies Given China’s Unique Cultural and Governmental Intricacies”. Also a webinar, on Thursday, May 20, 2010, at 1-2:30pm.

A little more about the program:

U.S. companies continue to conduct business in and with China at an increasing pace, and China’s unique business culture provides ample opportunity for employees to cross the line and violate the Foreign Corrupt Practices Act.

The SEC and the U.S. DOJ continue to increase scrutiny of U.S. companies’ dealings with overseas officials and to strengthen FCPA anti-corruption enforcement efforts. At least two dozen U.S. companies had FCPA issues involving China in the past several months, with many in ongoing investigations.

Another handy outline:

I. Risk factors of doing business in China
     A. Defining government officials
     B. Defining a bribe
     C. Exposure to third party you may not control
     D. Chinese business culture/practices
     E.Reach of the FCPA in China
II. Intersection of FCPA and local Chinese anti-bribery laws
     A. Congruency of the laws
     B. Enforcement of Chinese anti-bribery laws
     C. FCPA affirmative defense to prohibition of payment that was lawful under rules/regulations of the country
     D. Gift giving
III. Best practices for mitigating risk
     A. Monitoring
     B. Compliance program
     C. Internal controls
     D. Education/training
     E. Due diligence
     F. Steps if misconduct is suspected

Here is your speaker list:

Kyle A. Wombolt, Partner, Goodwin Procter, Hong Kong
Amy L. Sommers, National Partner, Squire Sanders & Dempsey, Shanghai, China

Both look very interesting!

The details after the jump.

The Wall Street Journal reports:

On Sunday, Chongqing police detained a defense lawyer on suspicion of providing false evidence and obstruction of justice, Xinhua reports.

The lawyer, Li Zhuang, of the Beijing Kangda law firm, is one of several high-profile criminal defense lawyers brought in to represent some of the alleged top gangsters in the Chongqing crackdown, which to date has resulted in the arrests of more than 800 people. Li was representing Gong Gangmo, who faces a long list of charges including murder, leading a criminal organization, drug dealing and gun-running.

According to Xinhua, Li and several other unnamed people encouraged Gong to say that he had been tortured by police during his interrogation. Gong said that Li, who was reportedly paid 2.45 million yuan ($360,000) by Gong’s family, had instructed him to say things like, “I was strung up for eight days and nights and tortured to incontinence” during their three face-to-face meetings, according to the report.

Of course, if you read the other accounts, you can tell that the views are skeptical of the lawyering that’s happening here. ESWN (h/t CDT) translated an article, which reads in part:

In Jiangbei District, the police noted that the suspected gang leader Gong Gangmo appeared seriously vexed and taciturn after he met with his defense lawyers including Li Zhuang. On December 4, after his third meeting with Li Zhuang, Gong Gangmo was especially troubled as he sat still all day refusing food and water.

The police spoke to him many times and asked him to face the court hearings with a proper frame of mind.

After much pondering, Gong Gangmo finally could not stand the pressure within himself and pressed the bell to summon the police: “I have something important to say!”

Gong Gangmo told the case investigators about the secret that has been tormenting him for days: His wife had just hired the lawyers Li Zhuang and Ma Xiaojun from the Kangda Law Firm in Beijing. During three meetings between Gong and the lawyers, Li Zhuang taught him five tricks to “overturn the case”: The first trick was to corroborate the false testimony of his wife so that he turned from “gang boss” to “victim” and “charitable citizen.” The second trick was to claim falsely to the court that his confession had been extracted by torture and therefore he was recanting his previous statements. The third trick was to provide false testimony to the court so that his case can be reversed. The fourth trick was for the lawyers to read to him the statements made by his co-defendants so that he would know what to say. The fifth trick was to disrupt the court proceedings by insisting on a medical examination of his injuries so that the trial had to be postponed until a later date.

So basically, we have a gang boss saying that he can’t override his conscience because of the wicked and terrible things that his lawyers are trying to do. I call BS on this. This is garbage propaganda that will make defense lawyers unable to do their jobs effectively if you ask me. Why? Because these are standard things.

The first “trick” of trying to pain the defendant as a charitable citizen instead of a crime boss? Standard fare. You always do this. It’s not a matter of lying–it’s a matter of humanizing someone who is viewed upon with suspicion. And if you ask me, there’s nothing wrong with it. So you call the wife to the stand and have her say good things about her husband. What’s wrong with that? Nothing. A competent judge or jury will be able to weigh the credibility of such testimony. Usually it doesn’t work since people aren’t stupid, but you know what? If you’re a defense lawyer and you are not trying to gain sympathy for your client, you aren’t doing your job.

The second “trick” of trying to call any confession something that was given under duress/torture/whatever you want to call this process of abuse of power? Also fairly standard fare. At least it is in America… because if you’re the police, you aren’t supposed to try to pull this sort of abuse. And if you are in China and the police, I’m dead sure you’re pulling these tricks on a regular basis. The article implicitly paints the police in a positive light… and the writer of the article would probably say that the police gained a confession without any coercion and didn’t abuse anyone. Yeah right. So what’s a good defense lawyer to do? Call a confession one that was obtained under duress. And if you didn’t, again, you aren’t doing your job.

The third “trick”? Okay, this is going a bit far… and yet, I wonder what the nature of this “false” evidence is. Is it really false evidence? Or is it evidence that’s meant to counter certain claims or paint the same facts in a different light? Not really a big deal if you ask me. I’m not advocating the falsification of evidence. But I am saying that any defense lawyer worth his salt is going to (1) go after the evidence like a shark and (2) try to introduce evidence that appears to go the other way in favor of the defendant.

The fourth “trick” is not all that out of the norm either. Know what your co-defendants are going to say so you know what to say? Standard. Any good lawyer will try to work with co-defendants to make a case as air tight as possible. At least, collaborate in a way that you aren’t selling your own client down the river.

And the last “trick” of trying to delay trial? Everyone does this. Not just criminal attorneys. Even in civil litigation, everyone is trying to buy more time and avoid trial. Any good attorney should be doing this to some degree to buy more time and wear out the other side. Or you aren’t doing your job.

So of these five “tricks”, only one is truly questionable. The rest? It’s anti-lawyer propaganda meant to discourage real lawyering. Who is the judge and jury? It’s not the public. It’s the judge and jury. Simple. So while everyone acts like this stuff is such a big deal, let me just say that it isn’t. That’s the point of an adversarial trial process.

The American Lawyer ran an article today entitled “ Asian Fusion: NY Leader Launches Arbitration/Litigation Practice With London Transfers, Raids“ (free subscription required).  The article reads:

Skadden, Arps, Slate, Meagher & Flom has launched an Asia-based international arbitration and litigation practice with senior lawyers who will relocate from London to Hong Kong.

The practice will be led by Paul Mitchard, a veteran arbitration specialist who has represented numerous multinational corporations in international commercial matters, particularly in the energy and financial services industries.

Counsel Mark Mangan and associate Calvin Chan will also be joining the new international arbitration and litigation group. Additionally, Skadden has recruited associate Alan Tsang to join the practice from the Hong Kong office of Pinsent Masons.

Mr. Mitchard, who in 2008 became one of only a handful of U.K. solicitors to win queen’s counsel status (typically granted to barristers), has been a key figure in Skadden’s arbitration practice in Europe. He joined Skadden as a partner in 2001 from Wilmer Cutler & Pickering. Mr. Mitchard also was a onetime head of the international arbitration practice at U.K. firm Simmons & Simmons.

This is a really interesting poach here.   Not that this isn’t unheard of, but to build up a litigation and arbitration practice for international purposes.  These attorneys aren’t going to practice in PRC Courts.  But to actually have enough business to feed four lawyers for an Asian arbitration practice?  Pretty cool really.  (Yes, I am a litigator at heart!)

I’d been hearing rumblings from my attorney friends for years saying that international litigation is going to take off in Asia and China.  And to some extent it has.  But it hasn’t been the boon that many predicted.  I’d heard that folks in Beijing and Shanghai were at least beefing up their firms with foreign litigators to teach their Chinese litigators how to…  litigate.  Unfortunately, this isn’t a well taught skill in Chinese law programs, which emphasize memorizing codes.  And so there was a demand for foreign litigators, but for “training.”  

The economic downturn has drawn greater attention to Asian disputes practices, with international law firms looking to tackle matters touching on insolvency and financial regulation in the region.

Skadden is making a push in the foreign arbitration market; earlier this year the firm’s London office brought on David Kavanagh from O’Melveny & Myers.

And now to see this happen in an economic downturn that has defied many expectations because litigation hasn’t picked up all that much as so many thought it would?  (same with practices like antitrust)  Quite a poach.  I really does hope it pays off as I’d love Asian international arbitration practices to grow.

Unlike many of the conferences I post but cannot go to, I actually plan on attending this one.  More information after the jump.

The introductory email says:

US companies operating in China need counsel that is current with China’s Antimonopoly Law (AML) and intellectual property (IP) laws, and the manner in which they are being enforced.

As part of its series of seminars for counsel on the application of economic analysis to emerging issues in the areas of antitrust and IP rights, NERA is pleased to present this panel addressing the development of antitrust and IP laws and litigation in the People’s Republic of China. NERA experts Dr. Alan Cox, Dr. Fei Deng, and Dr. Gregory Leonard, who will lead the seminar, are actively involved with these issues in China and the US.

This seminar will present an overview of the unique aspects of the Chinese economy that are relevant for understanding the antitrust and IP situations in China, followed by an analysis of recent developments in China’s AML, with a focus on the recent InBev/Anheuser-Busch merger. We will also discuss trends in IP litigation and damages in China, including findings in a new paper by Dr.Cox entitled Intellectual Property Rights Protection in China: Trends in Litigation and Economic Damages.

Personally, I’m most interested in the IPR Protection in China segment.  (though the InBev merger topic should be fascinating as well)  I’d like to see what Alan Cox has to say about trends in economic damages because it is damages that will end up defining the realm of litigation in China.  No damages, not many lawsuits because no incentives.  Greater damages, get ready for a larger number of suits.   Common sense, but I’d like to see if Dr. Cox has any additional insights.

And this is a completely free event.   Registration is as simple as it gets too.  Just email: RSVPUS@nera.com.   Hope to see some of you there!

CNN reports:

Officials are looking into claims that Chinese-made drywall installed in some Florida homes is emitting smelly, corrosive gases and ruining household systems such as air conditioners, the Consumer Product Safety Commission says.

The Florida Health Department, which is investigating whether the drywall poses any health risks, said it has received more than 140 homeowner complaints. And class-action lawsuits allege defective drywall has caused problems in at least three states — Florida, Louisiana and Alabama — while some attorneys involved claim such drywall may have been used in tens of thousands of U.S. homes.

And of course, as is standard in all products suits, homeowners are claiming injury…  all in the name of damages:

Homeowners’ lawsuits contend the drywall has caused them to suffer health problems such as headaches and sore throats and face huge repair expenses.

The drywall is alleged to have high levels of sulfur and, according to homeowners’ complaints, the sulfur-based gases smell of rotten eggs and corrode piping and wiring, causing electronics and appliances to fail.

And of course, this is where the article caught my eye…  because it names the “culprit”:

Michael Foreman, head of construction consulting firm Foreman & Associates in Sarasota, Florida, said he’s been investigating drywall complaints in that state since last year and is sharing information with at least one group of lawyers preparing lawsuits on the matter. Based on shipping records, Foreman estimates the United States in 2006 and the first two months of 2007 imported enough drywall from Chinese manufacturers named in lawsuits to produce at least 50,000 homes at a size of 2,000 square feet each.

Two Florida attorneys involved in separate class-action lawsuits, Gonzalez and Jordan Chaikin, said they, too, believe shipping records indicate tens of thousands of residences in the United States, with a good chunk of them in Florida, may have drywall from the manufacturers.

In Miami, Gonzalez filed his class-action lawsuit for homeowners this month. The suit names as defendants three China-based drywall manufacturers that the plaintiffs say are affiliates of Germany-based manufacturer Knauf Gips KG. Knauf Gips KG was also named, along with three Florida developers and two distributors.

Joerg Schanow, a member of Knauf Gips’ board, said in a telephone interview with CNN that the Chinese manufacturers named in the suit are part of Knauf Group, but not controlled by Knauf Gips KG.

“We here in Germany do not manufacture Chinese drywall. [Knauf Gips KG has] never asked companies to manufacture Chinese drywall for us or on our behalf. And there is no relationship at all,” Schanow said. “I’m confident we will rebut this.”

Chinese sourcing strikes again.  Ultimately the biggest loser is going to be Knauf Gips: (1) they have a PR mess on their hands, (2) they have alleged ties to Chinese drywall manufacturers, and so, are labeled as a company that does some of its sourcing in China, (3) and people are going to accuse them of not doing enough due diligence, whether they did or not.  Talk about a lose-lose situation.  Even if they win the lawsuits, it simply makes them look bad.

It also makes me wonder how much this may open up the gates for more class actions.  Ironically, even with the economy being what it is, I’m surprised I haven’t heard more news about class action lawsuits.  I may not be actively litigating anymore, but it’s simply a lot less information flowing my way about such products suits that I didn’t anticipate.  Even if plaintiffs win, the “bad guys” in China will still get away and the deep pocket German parent is going to get stuck with a painful bill.  So while I feel that this system keeps America safe, it still does very little to discourage bad behavior by Chinese manufacturers.

Moral of the story…  choose only those folks in China you really trust.  And then vet them again.  And then do more due diligence.  And then vet them again.  Yes, its painful.  But at least that’s the only way you’ll win a PR campaign, even if you win or lose the lawsuit.

Litigation activity in China is growing at a rapid pace, according to a report issued Tuesday by the nation’s top judge.

Wang Shengjun, , described the increase in court cases in a speech to the National People’s Congress. Highlights of Wang’s remarks were provided beforehand to the official Xinhua news agency.

The actual statistics after the jump.

Chinese courts handled 10.71 million cases of various types in 2008, up 11 percent from the year before. Of these, 768,130 were criminal cases; 159,020 individuals received sentences of more than five years, life imprisonment or death.

There were 1.14 million cases involving various financial disputes, a 15 percent increase from 2007. Fraud cases, statistics for which include both embezzlement and the production of substandard food and drugs, were up 13 percent from last year.

Not that I am terribly surprised at the increase of lawsuits.  Especially with the food and drug issues that China has been facing.  (think Sanlu)  It’s even gotten to the point where the Courts are saying that they will accept melamine cases.  Of course, like Prof. Clarke, I have strong doubts that this will actually happen.  Its already been nearly six months and nothing has happened.  (see my prior post on this)

But on the whole, this is very encouraging news that there has been an uptake of litigation at 15%.  Hopefully that means that courts are getting better at deciding cases and the people will feel more empowered to use the law.  (The cynic in me also points out: when the economy is sour, expect more lawsuits.  But I’ll have to wait until 2009 numbers to see if that really happened or not.)  I am all for the rule of law and increased of the use of the judicial system as a means of control.  I hope its happening.

Even greater increases were seen in labor disputes, which jumped 94 percent to 286,221 cases, and disputes involving health care, housing and consumer rights, which were up 45 percent to 576,013 cases. Intellectual property cases were up 33 percent, with Chinese courts concluding 27,876 of them.

In some cases, the increase in activity is likely tied to changes in the law. For instance, China introduced a new labor law last year. The tainted-milk scandal also called public attention to the courts, though suits filed against the offending dairies were not accepted by the courts until last week.

And again, a down economy, I expect more labor disputes.  94% labor dispute increase however–that’s pretty unprecedented.  I do agree that the labor law affects a lot, but can it simply be that much?  Or is it (1) the employees are using the courts to clamp down on a lot of terrible employment practices, or (2) that China is quite happy to use the court system against foreign companies doing business in China?  I prefer my options, particularly the latter…  and perhaps a combination is the most appropriate: maybe the people don’t mind using the courts against foreigners.  I don’t have the numbers, that would be a very interesting study indeed.

I am slightly disappointed about the 33% increase in IPR enforcement cases.  We all know IP is an issue here.  And the fact that it grew that little tells me that there is still much before Chinese people and China get serious about intellectual property.  It may be happening at a small scale now, but I was looking for more.

China still has a ways to go before catching up to the level of litigiousness in the United States. According to figures cited by Massachusetts Supreme Judicial Court Chief Justice Margaret Marshall in a speech last month before the American Bar Association House of Delegates, some 47.3 million cases were filed in U.S. state courts last year, not including traffic offenses, with another 384,000 hitting the federal docket.

Of course, who wants China to be as litigious as the U.S.?  I was a litigator and I don’t even want to see that happen.  I think litigation is a very good force for social change, but too much can be annoying.  I have friends who can’t even post an honest food review on Yelp without getting lawsuit threats…  so the U.S. is slightly overboard.  But if China can find a happy medium where the courts increase public safety and compliance, without being a hindrance to development, then they found the sweet spot indeed.

From PLI:

You will gain the tools you need to master the international arbitration process. Our distinguished faculty will discuss:

* When should you choose to resolve disputes by international arbitration?
* How do you become an international arbitrator?
* How arbitration compares to litigation and mediation
* The best venue for arbitration

And new this year:

* The pharmaceutical industry and arbitration
* India: special regional focus on doing business in India
* Investment Treaty Arbitration

Should be pretty interesting, especially the pharmaceutical products one.  (And for you China lawyers, this should prove very interesting if China continues to market itself as a place for pharmaceutical companies to come and invest for R&D, manufactuing, and testing)  The clincher for me personally would be this line:

Two federal judges will share their expertise in a mock session

Gotta love judge time. Registration for NY program is here, and webcast is here.

Chinese dairy companies that sold melamine-tainted milk are ready to pay compensation to the families of the nearly 300,000 children who became ill or died from drinking contaminated infant formula, a state news agency reported Saturday.

Twenty-two dairy producers will make a one-time cash payment to the victims’ families, China’s Dairy Industry Association announced, although it did not disclose an amount, the official Xinhua News agency said.

“The money for compensation is in place now and will soon be handed to the people who have custody of the sickened children through various channels,” the association said. The group did not specify a date.

The issue of compensation for the young victims has been a highly sensitive one, with Chinese courts so far not accepting any lawsuits filed by the families.

It’s interesting to consider that the courts refuse to accept lawsuits, and that payment up until this point has been handled only by the government.  (in an attempt to tide public unrest and excessive use of the legal system)  Now it looks like the companies are ready to turn in a compensation package…  but more than that, I wonder if this is more or less the formal apology to the people.

People who understand the U.S. legal system understand that often these sort of tort cases go on because plaintiffs want an apology.  And they proceed to trial because of “principle”.  Settlement is sometimes the goal of plaintiffs, but often, more so the goal of the lawyers involved.  (and yes, I’ve done plaintiff’s work)  I think that many of the plaintiffs I’ve represented would have gladly taken less if the company was crazy enough to just admit liability and issue an apology.  (that never happens for PR, liability, and a whole host of other reasons)  But what if they did?

And so I am left wondering if Sanlu and other dairies are making this event into a pay-off or an apology…  the former would place them in good company with American corporations.  The latter would place them into foreign territory…  and yet, everyone already knows the companies sold tainted goods.  The court of public opinion is already against them.  And what better way to stave off lawsuits than to just give the darn apology?  Is it that hard?  It is in America.  Perhaps this isn’t the case in China…  I’m curious as to how the companies are going to maneuver the PR around this case.  I hope its an apology…  its about time someone finally stepped up to the plate and owned up to their mistakes.

Yes, Chinese dairies, I hope your performance shames American companies.  That would be a sight to see!

The Ninth Circuit held that it is axiomatic that activity outside the United States, “not constituting an infringement cognizable under the Copyright Act, cannot serve as the basis for holding liable under the Copyright Act one who is merely related to that activity within the United States.”  Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1093 (9th Cir. 1994) (en banc).  A party cannot be held liable for contributory infringement unless the authorized or encouraged activity itself amounted to copyright infringement.  Id. at 1092.

The Subafilms court held that a movie studio that “licensed” infringing DVD’s to international markets could not be held liable under U.S. Copyright Act.  Why?  Because the violation occurred abroad…  and not in the United States.  So even if a U.S. based defendant contributed to what would amount to infringment in China, Japan, Russia, etc., that is not sufficient to be held liable in the U.S.  The only way to get a third party on the hook is in a situation where the infringement took place in America.

Practically speaking, if there is infringement that happens abroad, Subafilms knocks out liability against the primary infringer and any contributing third parties or additional defendants.

Bottom line: unless a plaintiff can demonstrate that authorized activity fell under the Copyright Act in America, then parties may not be held liable for contributory infringement… because there is simply no copyright infringement.

For plaintiffs: You have to demonstrate that copyright infringement happened in the United States if you want to use the Federal Copyright Act.  Otherwise, you need to take the case to international courts or U.S. state courts.  The former may not yield you much because damages are low…  but then again, so are damages in the latter without statutory damages under the FCA.  Your best bet is an injunction in international court.

So if you can’t show infringement in the U.S., its a business decision: do you want to spend that much money for that little in damages?

For defendants: This is your lucky day if this happens to match your facts.  You can argue that the court has no subject matter jurisdiction over federal copyright claims, and thus, likely knock this case into international courts or U.S. state courts.  And in the state courts, plaintiffs don’t get ridiculously high statutory damage, so its a win for you.

For those of you who missed parts 1 and 2, they are here:

• part 1 (general overview of Subafilms)
• part 2 (why you cannot vest jurisdiction by EULA or shrinkwrap license)

What happens now when there is some sort of contract or written agreement that would vest jurisdiction (and of course, venue) in the United States in such a situation?  I can imagine a number of scenarios for this.  (1) You have a shrinkwrap license that somehow makes its way overseas.  (2) You have an exclusive distribution agreement for your music in particular countries.  (3) You have an end user license agreement (“EULA”) each time you install software.  (4) Any other scenario which involves a written license or agreement…  use your imagination.

And then you have as part of that license or agreement that subject matter jurisdiction is vested in some court located in the United States.  Not just venue, but jurisdiction.  And you include in your agreement that the parties agree that U.S. copyright law should apply to any and all disputes.  Okay…  so that should make things fullproof?  That you can write your way around Subafilms and get a U.S. court to apply the federal Copyright Act?  You might think so, and it seems intuitive to some of the corporate types.   And if you’re the plaintiff, you might even argue so to the court.

My response?  You’re still out of luck.  There is a general axiom in civil procedure that a contract can’t hand jurisdiction to the courts.  Where a court lacks subject matter jurisdiction, the parties cannot simply vest it by agreement.  Kolbe v. Trudei, 945 F. Supp. 1268, 1270 (D. Ariz. 1996).  In Kolbe, the court specifically rejected an argument that a licensing agreement that contained a forum selection clause granted jurisdiction to the District of Arizona over infringing French translations.  The court held that “parties cannot agree to invest this Court with subject matter jurisdiction.  Either subject matter jurisdiction exists or it does not exist, a matter independent of the parties’ agreement.”  Id.

So, the hard work that your corporate lawyer did to ensure that jurisdiction and venue were established in the United States may still be worth something if the copyright infringement took place in America.  But if you’re overseas, then that hard work is worth nothing.  Period.

If you represent plaintiffs, don’t think that your EULA or other agreement will save you.  It won’t.  You need to get another way to connecting things to the U.S., or else, it just won’t fly in federal court.  (at least, it won’t in the 9th Circuit)

If you represent defendants, then just argue Kolbe and the general axiom.  It’s quite obvious.

Third installment coming soon!

That being said, one thing that often happens in representing international companies in lawsuits is that you will inevitably sue or be sued for international copyright violations.  (think of your clients’ employees downloading pirated mp3s, pirated software, or whatever else)  Now there are plenty of methods to seek redress. If those happen in the United States, of course, you can use federal copyright law.  But what if the copyright violation ultimately happens in China or Japan?  (or whatever country you can pick)  Even if the plaintiff is a U.S. based company, and the method of copyright violation occurs by broadcast signal or internet coming from the U.S., my personal take is that the plaintiff is out of luck… at least, it is in the 9th Circuit.

Violations of the Copyright Act must occur within the United States.  In general, “United States copyright laws do not have extraterritorial effect, and therefore, infringing actions that take place entirely outside the United States are not actionable.”  Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1091 (9th Cir. 1994) (en banc); Peter Starr Prod. Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442-1443 (9th Cir. 1986).  The en banc panel reiterated that the Copyright Act’s extraterritorial limitations are an “undisputed axiom”.  Id. at 1095.  “At least one alleged infringement must be completed entirely within the United States.”  Allarcom Pay Television, Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995); see also Danjac, LLC v. Sony Corp., 1998 U.S. Dist. LEXIS 22231, at *22 (C.D. Cal. 1998) (scope of injunction limited to domestic activities).  A plain reading of Subafilms ends up being fatal to would-be plaintiffs.

Further, my take is that Allarcom is pretty instructive too.  There, the plaintiff was authorized by the Canadian government to be the exclusive provider of English subscription television, which included exclusive rights to movie producers such as Paramount and Touchstone.  Allarcom, 69 F.3d at 383.  Defendant Showtime had the right to exhibit many of the same movies in the United States.  Id. at 384.  Defendant General Instrument manufactured a device that descrambled satellite television signals, which allowed unauthorized users to receive protected content, including Showtime.  Users in Canada purchased General Instrument’s device and used it to unscramble Showtime content.  Allarcom filed a complaint in federal district court against defendants for copyright infringement.  The court held that the Copyright Act did not apply to infringement in Canada.  Id. at 387.  Because the signal that was transmitted by Showtime from the United States was received and decoded in Canada, the Ninth Circuit held that “the potential infringement was only completed in Canada once the signal was received and viewed.”  Id.

Bottom line: the alleged infringment must take place in America, on American soil.  At least, that’s how I read the law to be.

So, what does this all mean for you?  For plaintiff’s counsel: do your homework.  And if you have a client who is going ballistic, wanting to sue in the U.S. in federal court even if the violation wasn’t here, then you need to tell them firmly that it won’t fly in court.  See if you can somehow tie the activities to the U.S., because you will have to do that later.

For defense counsel: It means if your client is being threatened with a federal copyright case, do your investigation.  Make sure that you know where the violation happened.  If it’s a broadcast or download situation, you may need an expert to discuss why the violation wasn’t U.S. based.  But don’t sweat it too much unless plaintiff’s attorneys are just patently unreasonable.

2 more parts coming on this shortly!

HONG KONG, China (AP) — Excessive levels of the industrial chemical melamine in Chinese eggs might be traced to fertilizer fed to chickens, the Hong Kong government said.

In a statement late Saturday, the government said it found 4.7 parts per million of melamine in the eggs produced by a division of China’s Dalian Hanwei Enterprise Group based in the northeastern port city Dalian.

The legal limit of melamine in Hong Kong is 2.5 ppm.

Hong Kong Secretary for Food and Health York Chow said the melamine may have come from fertilizer fed to chickens that laid the eggs. “The preliminary opinion experts have given us is that there is a problem with the fertilizer,” Chow told reporters.

Chow said Hong Kong officials will step up checks of eggs imported from China.

This really has got to stop.  But unfortunately, without severe legal and/or regulatory penalties, the only way that this sort of stuff will ever stop is when the bottom line gets hurt…  badly.  (like I am betting Sanlu will probably never recover its profitability)

That being said, it sure doesn’t help the perceptions of China here in the U.S.  I had some acquaintances I know decide to stop buying Chinese produce because of some rather suspect tasting stuff in some pears recently.  It didn’t seem to matter that no one got sick.  The normal reaction is that this stuff must be no good because its from China.  I don’t necessarily agree with the reasoning, but I do note this: the public perception around these parts is getting worse…  and this is the SF Bay Area.  No wonder Obama and Biden get so much support when they bad mouth China (or Japan/Korea for that matter) in the rest of this country…

The other thing I wanted to highlight was something that Stan Abrams caught.  (Dan Harris also posted on it, and I commented on both)  I am not going to comment at length right now, but depending on how interesting the complaint is, I just might have to chime in…  in a more in-depth manner than just commenting. From Radio Free Asia:

Parents of Chinese children who died or became ill after drinking infant milk formula contaminated with melamine say they will sue a subsidiary of a Chinese milk powder manufacturer based in the U.S. state of Maryland.
A member of one of the affected families surnamed Liu said Qingdao Shengyuan Milk Co. Ltd., a dairy products manufacturer based in the eastern China city of Qingdao, had a Delaware-registered investment subsidiary with offices in Maryland, rendering it subject to U.S. law.

“We have signed a contract with a Maryland-based lawyer who will represent us in this collective compensation suit,” Liu said.

“There are milk victim parents who are willing to pay for the legal fees and expenses and who want to pursue justice in the United States,” he said.

Very very interesting.  Will post more if and when more developments happen with this.

Of course, what was reported was nothing new to the readers of this blog:

The parents filed a lawsuit Monday in the arid northwest province of Gansu where the family lives, to try to wrest more than $152,000 in compensation from Sanlu Group, the maker of the baby formula that Kaixuan had been drinking.

It seemed like a clear-cut liability case – since last month, Sanlu has been at the center of China’s biggest contaminated food crisis in years. But as in two other courts now dealing with such lawsuits, the judge has so far declined to hear the case.

Chinese officials routinely favor producers over consumers and rarely hold companies or their shareholders to account even in major cases of malfeasance. Product liability lawsuits remain difficult to file and harder still to win, especially if the company involved has state ownership or close connections to officials who also oversee the courts.

But Yi and his wife are among only a handful of Chinese who have filed a lawsuit against a dairy company. The plaintiffs are all individual families and lawyers say there is almost zero chance that any judge would consider a class-action lawsuit since those are highly discouraged in China.

“This is a product liability case that in a Western country would turn into a class-action lawsuit,” Zhang continued. “But I think social stability is the government’s main concern. They don’t want to see so many people getting involved in one lawsuit – this might threaten social stability.”

So, that’s 3 lawsuits against Sanlu that have been reported.  And 3 lawsuits where the judge has declined to hear the case.  How convenient.  I am still not sure how a judge can elect to not hear a case like this for what is obviously political reasons.  I am not saying that American judges don’t get political.  (some very much do)  But on the whole, at least they don’t look like puppets for the government or government-based policies…  That being said, I thought once was normal, twice okay… but 3 dismissals already.  Either that Chinese judge is really scared of the government or just plain unwilling to go with Chinese public sentiment. I’d say the former.

Government officials have told parents and lawyers in the milk cases that their complaints can be resolved through out-of-court compensation payments.

Local governments in Sichuan Province employed the same strategy with grieving parents whose children died in school collapses during the May 12 earthquake. Over the summer, the governments gave compensation to the parents if they signed papers agreeing to drop demands for investigations into shoddy school construction. Most of the parents accepted the money.

As with the school collapses, the milk scandal involves a web of complicity tying company executives to government officials, which means any lawsuit is politically sensitive. To prevent a public airing of grievances, the government will pressure complainants to sign individual compensation agreements, said Teng Biao, a lawyer in Beijing who is collecting material for a possible class-action lawsuit.

“Traditionally in China, politics is always higher than the law,” he said.

Sad indeed.  I look forward to the day when the rule of law takes over.  I don’t want to reiterate my point that I think the government’s handling of the crisis ends up encouraging bad behavior, so I will just quote from my prior post:

I don’t think the Chinese government’s method of compensation is all that fair in terms of pain and suffering (and time and nuisance value) by just paying all treatment fees.  But it is great in terms of promoting social stability and trying to quell the unrest.  What’s the downside?  Ultimately, such an action likely will encourage would-be offenders to continue to market garbage products.  And of course, true justice isn’t really served.  The government ends up shielding the companies at the cost of damaged parties.

Maybe the fourth time will be the charm…

The first lawsuit was reported by Bloomberg today ( h/t to CDT, which always does a good job scooping me):

The parents of a one-year-old boy sickened by tainted milk powder filed a lawsuit against Sanlu Group Co., seeking 150,000 yuan ($21,913) in compensation, the Beijing Youth Daily reported.

The boy was found to have kidney stones after he drank more than 100 bags of Sanlu’s milk powder since he was born in July 2007 in Henan province, the state-run newspaper said over the weekend, court documents.

Sanlu officials were unavailable for comment today and haven’t returned calls over the past two weeks. The company, in a letter of apology on its Web site, has said it “is heart stricken by the damage that we’ve caused.” Government and business offices are closed in China for a week-long holiday.

This should be interesting since I didn’t think that pain and suffering could be recoverable.  Since I don’t have a pleading in hand, I cannot comment on what causes of action are being used as the grounds for the case…  and of course, what the grounds for the damages are.  But this should prove to be an interesting test case.  If the family makes out well, then the floodgates may open wide for litigation.  Just imagine how much a wrongful death case could potentially be worth as it strikes the heart of Chinese values in family.

However, the problem?  Local government pressure.  And also the Chinese aversion to litigation to solve problems unless push really does come to shove.  I don’t know how much of a chilling effect these two things will have on the likelihood of lawsuits.  Should prove interesting.  (almost makes me wish I could do a sociological study about this instead of talking about law)

Stay tuned.  I know I will.

UPDATE: China Law Prof Blog picked up the Chinese version from Beijing Youth Daily.

But I find the article interesting:

Li Fangping, a prominent human rights lawyer, is busy organizing victims of the poisoned infant formula scandal rocking China and offering pro bono help. But he is not planning to sue Sanlu, the formula manufacturer – not yet.

A case that in the United States would attract swarms of lawyers eyeing the prospect of millions of dollars in damages is primarily a political, not legal, issue in China.

For reasons to do with China’s still-developing law and its authoritarian political system, lawyers are treading carefully around the Sanlu incident, in which four babies have died and nearly 53,000 suffered kidney problems after drinking adulterated powdered milk.

Well, I am sure that part of it also has to do with the fact that lawyers who get on the bad side of the government don’t end up doing too well.  Imprisonment and harassment by the government come to mind.  In America, you may get death threats, but very rarely will anyone actually act on it.  And of course, you even more rarely have the U.S. government breathing down your neck.

That being said, I have to admire Mr. Li for organizing people and then offering to help them out without cost.  Pro bono work is an admirable thing, and for him and other lawyers to offer it in China is truly a good and decent thing to do.

The government is seeking to forestall legal repercussions by pledging free medical care for all babies affected by the tainted milk. Mr. Li is holding his fire until he sees how fully that pledge is kept.

“We are still waiting to see how the government’s compensation policy works,” he says. “If consumers accept it there will be no need for a lawsuit” against Sanlu.

Instead, Li and more than 70 other lawyers offering their help gratis are concentrating on cases where hospitals are not abiding by the Health Ministry’s public promise that treatment will be free. They are advising the parents of victims about the practicalities of claiming compensation from the government for the expenses they incur in treating their babies.

This is a very interesting thought here.  Why have lawsuits when you can have the government step in and make sure that plaintiffs are made whole?  (okay, it’s arguable that the plaintiffs aren’t made whole because they aren’t compensated for pain and suffering, but I don’t want to go there in this part of my post)

People in America have been clamoring for “tort reform” for years.  I get these obnoxious emails from David Lovett about the need to cap medical malpractice awards and “protect” physicians.  That’s such a crock.  (licensed physicians who are repeat offenders just shouldn’t be allowed to practice without supervision or other restrictions…  and if someone is dumb enough to insure them, then they have to pay.  Period.)  But is capping damages the most just thing to do?  I don’t think so.  So here’s a thought for President Bush (and I don’t agree with his assessment): if you want to have true tort reform, then perhaps the government should foot the bill wherever possible.  Interesting thought in my mind.

I don’t think the Chinese government’s method of compensation is all that fair in terms of pain and suffering (and time and nuisance value) by just paying all treatment fees.  But it is great in terms of promoting social stability and trying to quell the unrest.  What’s the downside?  Ultimately, such an action likely will encourage would-be offenders to continue to market garbage products.  And of course, true justice isn’t really served.  The government ends up shielding the companies at the cost of damaged parties.

The central government has promised to pay all the medical costs arising from the scandal, the extent of which is still being discovered: On Sunday a Hong Kong hospital reported the first case outside mainland China of a child found with kidney stones after drinking tainted milk.

“If their children recover, and the government has paid for their healthcare, how can they sue Sanlu?” asks Liu Renwen, a legal scholar at the China Academy of Social Sciences. “I don’t think many will try.”

I think its quite easy actually.  But until lawyers are willing to do it, it won’t happen.  Perhaps thats why the Chinese government knows that lawyers can be agents of reform/change if they don’t work with them…

The 1986 principles of Chinese tort law do not allow citizens to claim damages for moral or spiritual suffering – what US lawyers call “pain and suffering” – only material damages to compensate for medical bills, for example.

That is changing, however, and Chinese courts are increasingly granting moral damages. Four years ago two families from the province of Anhui won damages from another infant formula manufacturer whose substandard milk powder was blamed for their babies’ malnutrition.

“Damages are so low in China that companies can get away with it,” says Dan Harris, partner in the Seattle law firm HarrisMoure, which specializes in Chinese business law. “Why bother to recall if only 20 people are going to sue you and win $20,000 each?”

I agree with Dan here, and I continue to believe that Chinese courts need to start allowing greater damages.  It is more just.  And it will encourage the use of the legal system.  The downside to that?  It allows for less social “harmony” if you open up the courts for everyone to use freely.  (and yes, there will also be freeloaders, that’s always a downside)  I’ve talked about damages before and don’t think I need to elaborate too much… it’s pretty intuitive.

Li, as he contemplates the possibility of a lawsuit against Sanlu, says that because “this case has become politicized, it is unclear whether it can be resolved through a legal process.

“The government is trying to ensure social stability, and they do not want to see all the victims’ parents to gather together, so they probably will not allow a class action suit,” he expects.

“Individuals should be able to sue companies,” Li argues, but in the interest of social stability “the government just takes money out of the national budget” to compensate victims of scandals such as the Sanlu incident.

That’s exactly the problem.  Lawsuits are supposed to be the arena to address disputes without being political.  (At least, they are in America, though there is room for debate when an issue is extremely political)  China’s courts aren’t capable of doing that it seems.  But that’s the goal China should shoot for: unbiased courts where things are done by the rule of law, and not rule of party.

Another consideration is this: what is the cost of social stability?  I argue that it’s going to be the health and safety of your constituents because Sanlu isn’t an isolated incident.  It will happen again.  And again the government will step in to remedy the situation.  To me, that’s not ideal.

But, I must admit, it does seem like a working solution in the short run…