Tuesday, March 3, 2015

Congress Begins With Renewed Efforts to Repeal Insurer’s Antitrust Exemption

By James M. Burns

Early into the 114th Congress, multiple bills have already been introduced that would repeal the insurance industry’s limited antitrust exemption granted by the McCarran-Ferguson Act (15 USC 1011 et seq.).

On January 6, Representative John Conyers (D-Mich.) introduced the “Health Insurance Industry Antitrust Enforcement Act of 2015,” (H.R. 99). The legislation would amend the McCarran-Ferguson Act, which currently provides the insurance industry with an exemption from the federal antitrust laws for conduct that is “the business of insurance,” is “subject to state regulation,” and does not constitute “an act of boycott, coercion or intimidation,” (15 USC 1013), by removing the exemption for health insurers and medical malpractice insurers. Notably, the bill would not eliminate the exemption with respect to other lines of insurance, and is similar to McCarran repeal bills that Representative Conyers has introduced in prior sessions of Congress. Representative Conyers has previously stated that his bill would “end the mistake Congress made in 1945 when it added an antitrust exemption for insurance companies.”

Subsequently, on January 22, Representative Paul Gosar (R-Ariz.), who was a practicing dentist for many years, introduced similar McCarran repeal legislation, entitled the “Competitive Health Insurance Reform Act of 2015” (H.R. 494). Representative Gosar’s bill would only eliminate the exemption as to health insurers. In introducing his legislation, Representative Gosar stated that “Since the passage of Obamacare, the health insurance market has expanded into one of the least transparent and most anti-competitive industries in the United States,” and that there is “no reason in law, policy or logic for the insurance industry to have a special exemption” from the antitrust laws.

Both H.R. 99 and H.R. 494 have been referred to the House Judiciary Committee for further action. Whether these bills will gain traction this Congress remains to be seen, but the fact that the bill has supporters on both sides of the aisle certainly increases the chances that the legislation will, at a minimum, be considered by the House Judiciary Committee (which failed to take up similar legislation in the 113th Congress).

Tuesday, February 17, 2015

Good News from Washington (for a change): Trademark Filings Just Got Cheaper

By John Blattner

The old joke is that the three least believable sentences in the English language are: “The check is in the mail,” “Of course I’ll respect you in the morning,” and “I’m from the government and I’m here to help you.”

But fair is fair, and I am happy to report that one arm of the government has done something very helpful indeed: the Trademark office has reduced the cost of filing trademark applications and renewals.

Once upon a time, all trademark filings were done on paper and via the U.S. Mail. That option is still available, but it’s expensive: you pay a $375 fee for each classification of goods and services in the application. Several years ago, the office introduced electronic filing. As an inducement to use the new approach, it lowered the fee to $325 for electronic applications. The strategy worked, and the vast majority of trademark applications are now filed electronically.

This month the Trademark Office introduced yet another option: the “RF” (“Reduced Fee”) application, which costs only $275. The catch is that you have to use electronic filing for all subsequent filings pertaining to the application. If at any point you revert to paper filing, you get hit with a $50 charge. But most sophisticated companies and law firms – like ours – typically do all their filing electronically anyway, so it’s not a big issue.

The Trademark Office has also reduced the fee for renewing a registration, from $500 to $400. Registrations are only renewed every ten years, so that’s not a huge saving in absolute terms. But when was the last time the government gave you a 20 percent discount on anything? (That’s what I thought.) I look forward to passing these savings along to clients going forward.

To read more articles from Brandmarking: Thoughts on the Creation, Protection, and Enforcement of Brand Identity, click here.

Tuesday, February 3, 2015

The Fight Against Counterfeit Products in Canada Just Got Easier

By Eric D. Lavers

Canada’s new Combating Counterfeit Products Act officially took effect on January 1, 2015. As part of the ongoing overhaul of Canada’s much neglected intellectual property regime, this new tool for content and brand proprietors in the fight against would-be counterfeiters should be viewed as a positive and welcome development.

At the heart of the new laws is a beefed up effort to control counterfeiting at the border. Going forward, border officials will be authorized (previously they weren’t) to voluntarily seize and detain suspected counterfeit goods without fear of repercussion. Simultaneously, the owners of Canadian copyright and trademark registrations will be able, under a “Request for Assistance” procedure, to direct the efforts of border officials by supplying them with advance information related to suspected counterfeiting of their goods.

Expanded definitions of copyright and trademark infringement will also give owners a wider array of options for enforcing their rights against others. Most significantly, in addition to the unauthorized sale, distribution or advertisement of goods or services protected by a registered trade-mark, it will also now be an infringement to manufacture, possess, import, or export protected goods for the purpose of sale or distribution. The same will hold true in certain circumstances for those activities undertaken with respect to labels and packaging for protected goods (as opposed to the goods themselves).

A final important change introduced by the Combating Counterfeit Products Act is the creation of new criminal offences of copyright and trademark infringement. These new criminal offences will cover acts of copyright and trademark infringement undertaken “knowingly” by a person – in other words, deliberately. The punishment for serious cases of criminal infringement will include a fine of up to $1 million and/or a 5 year jail sentence. Less serious offenses will carry a $25,000 fine and/or up to 6 months in prison.

If utilized effectively by brand and content owners, these new laws are sure to make a difference in the ongoing fight against counterfeiting.

Tuesday, January 27, 2015

AODA in Brief

By Christopher G. Graham

The Accessibility for Ontarians with Disabilities Act, 2005 (“AODA”) which serves as the framework for the Accessibility Standards for Customer Service (the “Customer Service Standard”) and the Integrated Accessibility Standards (such standards, together, the “Standards”), exists to promote accessibility for Ontarians with disabilities with respect to goods, services, facilities, accommodation, employment, buildings, structures and premises. Each of the Standards apply to every organization with at least one employee in Ontario that provides goods or services to members of the public or other third parties. As such, both franchisors and franchisees are caught by the AODA and the Standards. The Customer Service Standard requires that certain policies and practices are prepared and implemented in the provision of goods and services to persons with disabilities, and requires training for employees.

The Integrated Accessibility Standards covers information and communications, employment, transportation and the design of public spaces. This Standard requires, among other things, certain policies to be implemented, training for employees and implements technical standards for websites. Most provisions under this Standard will apply to organizations with at least fifty employees by December 31st, 2014. Compliance with the provisions by organizations with fewer than fifty employees and other elements of the Standard in respect of employers with at least fifty employees will be phased in over the next several years. Amendments to the Ontario Building Code also take effect January 1st, 2015.

Organizations with at least twenty employees were required to file an accessibility compliance report on December 31st, 2012. A second accessibility compliance report is due from employers with at least 20 employees by December 31st, 2014. Thereafter, reports are due every three years.

For more information contact Dickinson Wright’s Franchise & Distribution Practice Group, here.

Tuesday, January 13, 2015

Auto Body Antitrust Action Continues to Expand in Florida

By James M. Burns

On December 12, the Judicial Panel on Multidistrict Litigation issued an order transferring State of Louisiana v. State Farm Fire and Casualty Insurance to the Middle District of Florida, making the case the latest addition to the multidistrict litigation entitled In re Auto Body Shop Antitrust Litigation. With the addition of the Louisiana case, the MDL proceeding now includes actions initially filed in Florida, Indiana, Mississippi, Tennessee, Utah, Alabama, Michigan, California, Washington, Illinois, Virginia, New Jersey, Oregon and Missouri.

The Louisiana case, like each of the previously transferred actions, centers upon a claim that more than thirty five auto insurers conspired to suppress reimbursement rates to repair shops for collision repairs. The first case, A&E Auto Body v. 21st Century Centennial Insurance, et. al, was filed in the Middle District of Florida in February of 2014, and it was to that court, and the Judge before whom that case was originally pending (Judge Gregory Presnell), that all of the subsequently-filed cases have been sent by the MDL Panel.

The Louisiana case, however, was somewhat unique – or at least different from – the other previously transferred cases in several respects. First, the Louisiana case was originally filed in state court, and subsequently transferred to federal court – improperly, in the view of the State. However, the Panel was not concerned by this, noting that jurisdictional issues do not present an impediment to transfer, because the plaintiff can present its arguments about why a case might properly be remanded to the transferee judge. See In re Prudential Insurance Sales Practices Litigation, 170bF.Supp.2d 1346 (J.P.M.L. 2001). In addition, Louisiana’s contention that its case, which it characterized as an “enforcement action,” was materially different in character than the private party actions currently before the transferee court, and thus the Louisiana case should not be transferred for this reason, was also rejected by the Panel. Calling Louisiana’s contention “unconvincing,” the Panel states that it “often has transferred state enforcement actions to MDLs that involved cases brought by private litigants.” See, e.g., In re Countryside Fin. Corp. Mortgage Marketing and Sales Practices Litigation, 582 F.Supp.2d (J.P.M.L. 2008).

With the addition of the newly-transferred actions, In re Auto Body Shop Antitrust Litigation begins the new year with even greater significance. Judge Presnell has granted the newly-added parties until January to appear in the MDL proceeding, and will likely begin issuing rulings in the matter shortly thereafter. Given the issues in the cases and the large number of insurers now involved in the proceeding, the matter is unquestionably “one to watch” for 2015. Stay tuned.

Tuesday, January 6, 2015

Several Large Insurance Industry Mergers Announced as 2014 Comes to a Close

By James M. Burns

As 2014 came to a close, several significant insurance industry transactions were announced that, if completed, will likely reshape several segments of the insurance industry in 2015. Each of them, of course, will require antitrust approval before they can be consummated.

The first, and largest, of these transactions was the late November announcement by RenaissanceRe Holdings that it had reached an agreement to acquire fellow Bermuda-based reinsurer Platinum Underwriters. The deal is valued at $1.9 billion. Analysts commenting on the transaction have stated that RenaissanceRe is interested in enlarging its casualty insurance reinsurance business, and that casualty reinsurance represents over half of Platinum Underwriters book of business.

Subsequently, in mid-December, Progressive Insurance announced its intention to acquire a controlling position in ARX Holding Corp., the parent company of American Strategic Insurance. American Strategic currently offers homeowners and property-casualty insurance to consumers in approximately 25 states. In announcing the transaction, Progressive stated that the transaction would support its strategy to service more customers who seek bundled homeowners/auto policies. The deal is valued at $875 million.

Finally, on December 18, ACE Limited announced that it was acquiring Fireman’s Fund’s high net worth personal lines insurance business from Allianz Group. The deal is valued at $365 million, and would supplement ACE’s current high net worth personal lines business conducted through ACE Private Risk Services. The acquisition by ACE, coupled with Alianz’s planned integration of the remainder of Fireman’s Fund’s commercial insurance business into Allianz Global Corporate & Specialty Insurance, will mean the end for the Fireman’s Fund brand name, which has been in existence for over 150 years.

Notably, despite the insurance industry’s antitrust exemption – the McCarran-Ferguson Act – the parties to these proposed transactions must obtain regulatory antitrust approval from the FTC/DOJ Antitrust Division before the transactions can be completed. This was made clear by the Supreme Court in SEC v. National Securities, Inc., 393 U.S. 453 (1969), in which the Court expressly held that insurance industry mergers are not “the business of insurance” for McCarran purposes (and thus are not exempt). See also In re American General Insurance Co., 81 F.T.C. 1052 (1972) (insurance company mergers are not the “business of insurance”). In addition, most states also regulate insurance industry mergers under their versions of the NAIC Insurance Company Holding Act, which typically require notice and approval of any “change in control.” Accordingly, while none of the announced transactions appear to present any significant antitrust issues, and thus approval is not unlikely, the transactions are not expected to close until the first quarter of 2015, or later.

Friday, December 19, 2014

IRA “Charitable Rollover” Retroactively Extended Through 2014

By Eric Gregory

Background

As a part of the so-called “Cromnibus” bill, Congress has extended dozens of expired “temporary” tax breaks for 2014. Included in that group is a rule that allows for tax-free treatment of certain “qualified charitable distributions” from IRAs where the distributions are donated to charity. The bill only extends this tax break until December 31, 2014.

“Qualified Charitable Distribution”

Specifically, a taxpayer may exclude from gross income the aggregate amount of his or her “qualified charitable distributions” that do not exceed $100,000 in a tax year. A “qualified charitable distribution” is any otherwise taxable distribution from an IRA that is:

1. Made directly by the IRA trustee to a public charity (not a private foundation or donor advised fund at a public charity); and

2. Made on or after the date on which the IRA owner has attained age 70 1/2.

An IRA owner who makes an IRA qualified charitable distribution in an amount equal to his or her required minimum distributions (“RMDs”) is considered to have satisfied his or her minimum distribution requirement for that year, even though a charitable entity (and not the IRA owner) receives the distribution.

The rule may be applied to IRA distributions made after December 31, 2013 and until December 31, 2014.

Short Window of Opportunity

Taxpayers must contact IRA administrators as soon as possible if they intend to take advantage of the tax-free distribution by year-end. IRA administrators may require several weeks to process rollovers.

It is currently unclear whether Congress will extend this provision to 2015 or beyond. If recent history is a reliable indicator, however, it is likely that a decision on that may not come until well into the next year.