• INSURANCE LAWS

The Supreme Court of UK

Brent London Borough Council and others (Harrow London Borough Council) Vs. Risk Management Partners Limited (Decided on 09.02.2011)

Scope of Teckal exemption-Whether a local authority was entitled to enter into contracts of insurance with a mutual insurer, established in co-operation with other local authorities, without first putting those contracts out to tender in accordance with the Public Contracts Regulations 2006 -London local authorities co-operated and entered arrangements for mutual insurance to reduce the cost of insurance premiums-London Authorities Mutual Limited (LAML) was established in order to provide insurance-Brent became member of LAML and did not conduct a tendering process for the award of the contract of insurance-Respondent claimed damages from Brent-Held, Teckal exemption does apply to the UK Regulations -Appeal allowed

Held, the Teckal exemption applies to the UK Regulations. The Teckal exemption is available in respect of contracts of insurance. It did not matter that insurance was not a service that the local authority could provide for itself. What matters is whether the arrangement satisfies the control test. Both Lord Hope and Lord Rodger reviewed a ECJ case law to consider the purpose and scope of the Teckal exemption. The Directive is not intended to protect the commercial sector by forcing public authorities to obtain the services which they need on the commercial market. Rather, its purpose is to ensure that, if public authorities do decide to obtain the services which they need from outside bodies, proper procedures are followed to ensure that potential providers have an opportunity to compete for the work. The Directive therefore does not apply where a public authority obtains the product or services from its own resources. Nor, in light of Teckal, does it apply where an authority obtains services from a separate body which is so closely connected with it that the authority should still be regarded as, in substance, obtaining the services in house. There is no reason in principle to distinguish between a situation where the body from which services are obtained exists to serve the interests of a single local authority and where it exists to serve the interests of several local authorities. The Teckal 'control' test requires that the public authority exercise a power of decisive influence over both the strategic objectives and significant decisions of the other body and here no private interests were involved. LAML existed only in order to serve the insurance needs of its members. Therefore,2006 Regulations do not apply where a local authority, intends to enter into a contract of insurance with LAML. The appeal should accordingly be allowed.

United States Court of Appeals For the First Circuit

Hartford Fire Ins. Co. Vs. CNA Ins. Co. (Europe) Ltd. (Decided on 27.01.2011)

Equitable contribution from employer's- Whether the accident arise out of business visits requiring the Defendants to contribute to the defense and settlement costs - On death of a worker both Hartford and Federal defended European Colour during the litigation under the terms of two insurance policies- Contribution sought from CNA Europe,an additional insurer for the costs of defending European Colour - District Court allowed summary judgment in favour of Defendants- Hence the appeal- Held,the accident did not "arise out of" business visits- Defendants not liable-Affirmed

Held,for the purpose of insurance coverage, the causation in this case is too complex and attenuated to fit within the "arising out of" and hence the business visits were not a contributing factor to the accident "in a relevant causal sense." The sentence arising out of requires "a strong and close causal connection with some specific conduct on the part of the Director when involved in a business visit," and in this case Hartford and Federal "failed to articulate any colorable causal connection".Even under the Plaintiffs' construction of the phrase "arising out of," the CNA Europe policy did not cover European Colour's liability for the litigation. Hence decision of the District court Affirmed

• INTELLECTUAL PROPERTY LAWS

United States Court of Appeals for The Ninth Circuit

Levi Strauss & Company Vs. Abercrombie & Fitch Trading Company (Decided on 08.02.2011)

Dilution claim-Violation of the Trademark Dilution Revision Act of 2006 (TDRA), 15 U.S.C. Section 1125(c)- Whether District Court applied an incorrect legal standard in evaluating its dilution claim, namely that the junior mark be "identical or nearly identical" to the senior one- Levi Strauss holds a federally registered trademark on a "Arcuate" design - Abercrombie began using a stitching design on the back pockets of its jeans that, according to Levi Strauss, "incorporates the distinctive arcing elements of the Arcuate trademark- District Court entered judgment in favor of Abercrombie- Hence the appeal-Held, reversed and remanded

Held, after evaluating the visual depictions of the designs, the Court concluded that the evidence demonstrates that a significant segment of the target group of customers would not view the marks as essentially the same. The Court then reviewed Dr. Sood's testimony and concluded that there was insufficient evidence that target customers would see the Ruehl design and the Arcuate mark as essentially the same. In summary, the Court stated, that Levi Strauss has not established that Abercrombie is making commercial use of a mark that is identical or nearly identical to the Arcuate mark. Use of the "identical or nearly identical" standard permeated the court's analysis and provided the basis upon which the court evaluated the evidence. This standard also played a pivotal role in the Court's determination that the Ruehl design was not likely to dilute the Arcuate mark. With respect to the similarity of the marks, the Court observed that the two marks must be essentially the same and that, the Court finds that the Ruehl design and the Arcuate mark are not visually similar. In other words, the Court equated similarity with sameness and employed the latter, more stringent definition when entering its findings of fact.

Finally, on reviewing the District Court's balancing of the relevant factors the Court was convinced that application of the incorrect standard affected its dilution determination. According to the District Court, degree of similarity was only one of three factors that weighed in Abercrombie's favor. The District Court assumed, without deciding, that Levi Strauss also had two factors-acquired distinctiveness and degree of recognition-that weighed in its favor. Thus, application of the correct, less-demanding standard could have tipped the balance in favor of Levi Strauss. The degree of similarity between the Ruehl and Arcuate marks may be insufficient to support a likelihood of dilution, but that conclusion can come only after consideration of the degree of similarity in light of all other relevant factors and cannot be determined conclusively by application of an "essentially the same" threshold. Therefore given the relative balance of the parties' positions, it could not be said with any confidence, that the District Court have reached the same result absent the legal error. Hence, the District Court's judgment is reversed with respect to Levi Strauss's claim under the TDRA.

United States Court of Appeals For The Ninth Circuit

David Lahoti Vs. Vericheck, INC. (Decided on 16.02.2011)

Entitlement of protection-Violation of Lanham Act, the Anticybersquatting Consumer Protection Act (ACPA), the Washington Consumer Protection Act (WCPA), and Washington common law-Whether the District Court followed this Court's instructions on remand in finding that Respondent Vericheck Inc.'s VERICHECK mark is suggestive, and thus entitled to trademark protection- Held, District Court did follow the remand instructions and that its resulting findings were not erroneous

Held, a suggestive mark is inherently distinctive, but a descriptive mark that lacks secondary meaning is not distinctive and is not entitled to trademark protection. Therefore analysing the case anew on remand, the District Court indisputably recited the relevant legal principles that were set out by this Court. The District Court found that, when viewed in the context of Vericheck's services, whether in whole or in part, including Vericheck's check verification services, the VERICHECK mark does not immediately convey information about the nature of Vericheck's services. This holding that was reached is not erroneous because if consumer response requires any sort of 'multistage reasoning process' to identify the characteristic of the product which the mark suggests, then the mark should not be regarded as 'merely descriptive. For example, consumers must separate "veri" from "check" and reason that "veri" is short for "verification services". Thus, the Court affirmed the district court's order, and denied Vericheck's request for appellate fees.

United States Court of Appeals for the Second Circuit

Shirley Y. Kwan Vs. Alan M. Schlein, Business Resource Bureau Inc. (Decided on 25.01. 2011)

Copyright infringement- Whether the claim made by the Appellant was time-barred- 17 U.S.C. Section 507(b)- Held,"Infringement" claims are time-barred as a matter of law where the underlying ownership claim is time-barred- Judgment of District Court affirmed

Held, Civil actions under the Copyright Act must be brought "within three years after the claim has accrued." 17 U.S.C. Section 507(b). An ownership claim accrues only once, when "a reasonably diligent Plaintiff would have been put on inquiry as to the existence of a right." Here, BRB and Schlein rejected Kwan's express assertion of authorship in December 1998, and then published the first edition of FIOL, which did not list Kwan as an author, in January 1999. On the facts of this case, there is no question that Kwan was aware of the dispute regarding her rights to FIOL by January 1999, when the first edition was published, and therefore, her ownership claim accrued at that time. But Kwan did not file suit until December 2004, more than three years after the publication of the first edition-and indeed, more than three years after publication of the second edition-any ownership claim relating to FIOL is untimely. To maintain an action for infringement, a plaintiff must establish "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." The dispute over FIOL does not involve the nature, extent or scope, of copying, and therefore, ownership forms the backbone of the "infringement" claim at issue here. That is, the dispute involves who wrote FIOL in the first place-whether Kwan's editorial contributions to FIOL were significant enough to qualify her as the author and therefore owner of the copyright in FIOL. Indeed, because coauthors cannot sue one another for copyright infringement Kwan cannot recover unless she was the sole author of FIOL. In such cases the District Court have held that "infringement" claims like Kwan's are time-barred as a matter of law where the underlying ownership claim is time-barred. Thus the Court affirmed the decision of the District Court.

• TAX LAWS

United States Federal Circuit

Saha Thai Steel Pipe (Public) Company Ltd. Vs. Unite States (Decided on 14.02.2011)

Anti-dumping-Whether a duty drawback adjustment is warranted -19 U.S.C. Section 1677a(c)(1)(B)- Commerce applies a two-pronged test-A duty drawback adjustment shall be granted when, but for the exportation of the subject merchandise to the United States, the manufacturer would have shouldered the cost of an import duty-Interpretation of the Statute as applying to duty exemptions is reasonable -No error in granting Saha a duty drawback adjustment and raising its export price (EP) to account for import duties -Affirmed

Anti-dumping-Whether including the imputed cost of the exempted import duties in Saha's cost of manufacture when calculating cost of production (COP) and constructed value(CV) is justifiable-19 U.S.C. Section 1677b(b)(3), (e)(1) and 19 U.S.C. Section 1677b(f)(1)(A) - Held, Commerce reasonably interpreted these subsections as any increase to EP pursuant to a duty drawback adjustment should be accompanied by a corresponding increase to COP and CV-Hence Affirmed

In relation to drawback adjustment it is held that the Commerce applies two pronged test under which the Respondent is required to demonstrate: (1) that the rebate and import duties are dependent upon one another, or in the context of an exemption from import duties, that the exemption is linked to the exportation of the subject merchandise, and (2) that there are sufficient imports of the raw material to account for the duty drawback on the exports of the subject merchandise. Here, Commerce found that Saha met both requirements for its two-pronged test. A duty drawback adjustment shall be granted when, but for the exportation of the subject merchandise to the United States, the manufacturer would have shouldered the cost of an import duty. Commerce's long standing interpretation of the statute as applying to duty exemptions is a reasonable one. Accordingly, it has been found that Commerce did not err in granting Saha a duty drawback adjustment and raising its EP to account for import duties that were exempted due to the exportation of the subject merchandise to the United States.

With regard to inclusion of the exempted import duties in Saha's cost of manufacture it is held and affirmed that adding exempted import duties to EP without also including the exempted duties in COP and CV could have unfairly distorted the dumping margin in Saha's favor. In Commerce's view, it should follow the "matching principle" in making such calculations, which is the basic accounting practice whereby expenses are matched with benefits derived from them. Moreover because of its policy of calculating a single COP both for exported and domestically sold products, and because there were no duty exemptions for the inputs of carbon steel pipe sold in Thailand, Commerce reasoned that the cost of the exempted duties should be included in Saha's cost of manufacture . Thus, it is clear that Commerce only added imputed import duty costs to COP in an amount appropriate to offset Saha's actual import duty exemptions under the bonded warehouse program. This did not result in double counting because Commerce merely added the cost of import duties that Saha would have paid on the inputs in category C if Saha had sold the subject merchandise in Thailand rather than exporting it to the United States. Commerce thus calculated an appropriate average COP for the comparison to the home market prices which is reflected in the costs of the import duties.

United States Court of Appeals for the Fourth Circuit

Home Concrete Supply LLC Vs. United States (Decided on 07.02.2011)

Tax assessment-Whether an overstatement of basis constitutes an omission from gross income for purposes of the Tax Code, 26 U.S.C. SEction 6501(e)(1)(A), which extends the tax assessment period from three to six years-Held, Supreme Court's holding in Colony applies to Section 6501(e)(1)- Accordingly, Home Concrete's overstated basis in the short sale proceeds did not trigger the six-year statute of limitations-District Court's judgment reversed.

Held, the case involved an overstatement of basis, involving short sale proceeds yielding more than 25 percent of the tax liability and the Service relied heavily on Treas. Reg. 301.6501(e)-1(a)(1)(iii) (2010), the backdrop of which was formed by the preamble to Treasury Decision 9511 (I.R.S. 2010) that suggests that the six-year period remains open for "all taxable years . . . that are the subject of any case pending before any court of competent jurisdiction..."The Court held that this reliance was misplaced: Even if the six-year statute of limitations applied, the District Court had ruled that the "period for assessing tax"had long since expired. Because this case was not finally resolved as of September 24, 2009, the IRS argued that Section 6501(e)(1)'s six-year period for assessing tax remains open and Treasury Regulation Section 301.6501(e)-1(e) applies. This is declined by the Court. The intention of Congress in IRC Section 6501was to close the period for assessing tax within six years after a return is filed, except in cases of fraud. Therefore the Court was not persuaded by the IRS's argument that the regulation should apply retroactively to this case as a clarification of law established in Colony and other cases. Because Colony was established law when the taxpayers filed their returns in April 2000, the Court refused to apply Treasury Regulation Section 301.6501(e)-1(e), which purports to establish a rule contrary to Colony subjecting the taxpayers to the extended limitations period ten years later. In sum the Court concluded that the Supreme Court's holding in Colony applies to Section 6501(e)(1)(A) and an overstated basis in property is not an omission from gross income that extends the limitations period in Section 6501(e)(1)(A). Accordingly, Home Concrete's overstated basis in the short sale proceeds did not trigger the six-year statute of limitations. Moreover, Treasury Regulation Section 301.6501(e)-1(e), by the plain terms of its applicability clause, does not apply to the tax year at issue in this case and is furthermore not entitled to deference. The general three-year statute of limitations in Section 6501(a) applies, making the Final Partnership Administrative Adjustment (FPAA ) here untimely thereby reversing the District Court's judgment.