Minimum Wage Increase - California & New York

In California, Gov. Jerry Brown will sign into law an increase in the state minimum wage from the current $10 to $15 an hour by  2022. The minimum wage will increase by $1 annually until 2022.  Business with twenty five or fewer employees will have an extra year to comply with the law. Additionally, the law allows for delay in the increases in the event of an economic downturn. Opponents state the increase is "too much too fast" and does not take into account regional economic differences within the state.

In New York, Gov. Andrew Cuomo and state legislative leaders have reached an agreement to raise the minimum wage in New York City to $15 an hour by 2018.  Outside of the city, increases will happen at a slower rate or will fall under an exemption. A Wall Street Journal analysis says the increase could impact other states as previously when New York and California approved minimum wage increases in 2013, fourteen states did the same a year later.

Further information is available here.

American Manufacturing Competitiveness Act of 2016 - Proposed federal legislation

Miscellaneous tariff bills ("MTB") reform legislation from bipartisan members of the House Ways and Means Committee will introduce a new three-step process to get approval for tariff relief for production components made outside of the U.S.  The proposed new procedures allow businesses to receive tariffs through MTB by petitioning the U.S. International Trade Commission (“ITC”) directly, rather than going through Congress first.  Businesses would first petition a request to the ITC, which would in turn issue a public report to Congress with its analysis and recommendations. Finally, the Ways and Means committee would examine the ITC's recommendations and draft a MTB proposal. Historically under the MTB process, which expired at the end of 2012, Congress would put forward specific tariff waivers, which were then vetted by the International Trade Commission. MTBs reduce or suspend duties on certain imported products not available in the United States.  The primary purpose of MTBs is to reduce costs for U.S. businesses and increase the competitiveness of their products. Read the Bill here.

The Senate Finance Committee also introduced a bill to overhaul the process for businesses requesting tariff relief with the proposed measures mirroring the bill introduced in the House. The bill offers bicameral and bipartisan approach for MTBs, one that improves transparency and allows domestic firms to receive appropriate tariff relief. More information is available here.

Defend Trade Secrets Act - Federal legislation

On April 4, 2016, the U.S. Senate unanimously approved the Defend Trade Secrets Act of 2016 ("DTSA").  The DTSA will strengthen legal protections for companies' intellectual property and, for the first time ever, allow them to fight trade-secret theft in federal courts. Previously, of the four kinds of intellectual property rights - copyrights, trademarks, patents, and trade secrets - only trade secrets lacked the protection of taking legal action in federal courts.  The legislation would create a uniform standard for what constitutes trade secret theft.  Currently, if companies want to sue, they are relegated to state courts, where there is a patchwork of state laws. The House version of the bill has more than 120 sponsors, but the House Judiciary Committee has not yet considered it and it was not clear whether it would act in coming months.

The DTSA will be a powerful tool in protecting confidential information including manufacturing processes, formulas, computer algorithms, industrial designs, business strategies, and customer lists.

Read the Act here.

Country of Origin Labeling Requirements - CA legislation

On January 1, 2016, the amendment to California Section 17533.7 of the California Business and Professions Code became effective. The country of origin (COO) labeling requirement restricts the in-state sale of merchandise bearing the words "Made in U.S.A.," "Made in America," "U.S.A." or other similar words that signify that the item has been domestically manufactured.  Under the California amendments, merchandise that is manufactured or produced in the U.S. with foreign made articles, units or parts that bears a domestic COO label can be sold in California, if the foreign parts do not constitute more than either: (1) 5% of the final wholesale  value of the product; or (2) 10% of the final wholesale value of the product if the foreign parts are not available in the U.S. and the manufacturer cannot manufacture the part at issue.

Before these amendments, merchandise sold in California could not bear domestic COO markings on its labeling or packaging if any component part was made outside the US. This standard was more stringent than the standards of every US state and those of the Federal Trade Commission (FTC), which requires that all or virtually all of a products’ parts must be domestically manufactured. Although the new California amendments have provided more certainty on labeling requirements, the FTC has not quantified or provided guidance on the practical application of their "all or virtually all" standard.

Read the Bill here.

Lexmark International, Inc. v. Impression Products, Inc. - Federal Circuit-patent law

On February 12, 2016, in Lexmark International, Inc. v. Impression Products, Inc., the US Court of Appeals for the Federal Circuit ruled in an en banc decision that a patentee's sale of a patented article subject to a lawful and clearly communicated restriction on the article's resale does not give the article's buyer or downstream buyers with knowledge of the restriction authority to resell the article. The court also ruled that a patentee that sells or authorizes the sale of a patented article abroad does not implicitly authorize the article's buyer to import the article for sale and use in the US.

Lexmark International, Inc. v. Impression Products, Inc., 2016 WL 559042 (Fed. Cir. Feb. 12, 2016).

Kyocera Corporation v. Hemlock Semiconductor - Michigan Court of Appeals

This decision concerned force majeure clauses in commercial contracts. Due to the Chinese government providing illegal subsidies to Chinese companies, which negatively affected prices in the global solar panel market, Kyocera Corporation sent notice to Hemlock Semiconductor that it would be exercising its rights under the force majeure clause of their purchase agreement.  The force majeure clause excused failures in performance that arose out of or resulted from causes beyond such party's control, including acts of Government.  However, the contract did not specify the acts or governments to be covered under the agreement. The Michigan Court of Appeals affirmed the trial court's summary judgment against Kyocera and held the company responsible for breaching contracts worth over $2 billion. The courts stated that if Kyocera wanted to protect itself from this type of liability, it should have also negotiated a clause that excused contractual performance resulting from unprofitability due to governmental market manipulation.

While this is a decision affecting Michigan case law, it is an example of why it is important to understand the risks of relying on force majeure clauses.

Kyocera Corporation v. Hemlock Semiconductor LLC, No. 327974, 2015 WL 7779299 (Mich. Ct. App. Dec. 3, 2015). Read the decision here.

Innocent Seller defense - multiple jurisdictions

Parties involved in selling or distributing a product are subject to liability for harm caused by a defect in that product (Restatement (Third) of Torts: Products Liability § 1). This includes all parties in the chain of manufacture and distribution, such as the component manufacturer, assembling manufacturer, wholesaler and retailer. However, some jurisdictions, such as Texas, Missouri, Oklahoma, and North Carolina, have enacted innocent seller statutes, which provide that a seller is not liable in a product liability action, if it: (1) did not manufacture the product; (2) was unaware of the defect; (3) could not have reasonably discovered the defect; or (4) did not change the product but merely passed it on in the chain of commerce.

Retailers/sellers in multiple states now have more defenses at their disposal and plaintiffs may find it easier to go after the manufacturer directly.