Induced Infringement: What standard should the Supreme Court adopt in Global-Tech Appliances v. SEB S.A.?

On October 12, the Supreme Court granted certiorari to Global-Tech Appliances, Inc. and Pentalpha Enterprises, Ltd. (Docket No. 10-6; July 29, 2010) to consider what state of mind must be shown by a patentee, under 35 U.S.C. §271(b), to establish that a defendant induced infringement of a patent. That section simply states: “Whoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. §271(b). 

The Supreme Court’s answer may have significant economic consequences, especially for foreign companies importing goods into the United States, because the statutory provision addresses indirect, rather than direct liability. Actions taken exclusively abroad could create liability for such companies, who must now contemplate the costs of complying with the to-be-announced Supreme Court standard. The standard will also affect whether officers and directors of a corporation would be held personally liable for indirect infringement. Such additional costs will undoubtedly be passed on to … Read the rest

Transfer Fee Covenants and Homeowner’s Associations

 

 

In August 2010, the Federal Housing Finance Agency (FHFA) proposed “Guidance on Private Transfer Fee Covenants” (No. 2010-N-11) that would prohibit Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from purchasing mortgages with private transfer fee covenants.  A private transfer fee is charged each time a property subject to such a covenant is sold.  The fee is typically calculated as a percentage of the property’s sales price.  These covenants are commonly used by homeowner associations.

FHFA’s stated reason for this decision was that these covenants “appear adverse to liquidity, affordability and stability in the housing finance market and to financially safe and sound investments.”  FHFA was further concerned with the private income streams created by these covenants and whether all of the money collected was used for the stated purpose of the fees.  Another concern was with disclosure of the fees since they can be hidden

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ASX-SGX Merger: What Should Matter?

 

Currently, the Australian government is considering the merits of a proposed takeover by the Singapore Exchange Limited (SGX) of the Australian Stock Exchange (ASX). The over-$8 billion deal has the goal of creating a dominant force in the Asian-Pacific region and a globally-salient exchange. In fact, the merged exchange would “create the world’s fifth-largest market operator by share value.”  The discussion should be focused on the viability of the merger, especially the potential impact on investors, the region, and the world. Debates about the pros and cons would seemingly be productive to decide whether or not the deal would be the right path to take in regards to the ASX, an exchange that some say would become “irrelevant” without merging with SGX. The talks since the merger was proposed have devolved however to the levels of political infighting. In the current scrum of the Australian Parliament, a few themes … Read the rest

Is the SEC blind?

 

How does the SEC determine where to deploy its resources? What criteria does the SEC use to decide which companies to monitor and which to ignore?

Answers to these questions and more were recently presented to the Illinois Corporate Colloquium by Cindy Alexander, an economist at the SEC. In her working paper, “Regulating Monitoring Under the Sarbanes-Oxley Act”, Ms. Alexander and her coauthor Kathleen Hanley examine the usefulness of two factors used by the SEC in determining which companies to monitor: firm size and stock price volatility. Their findings suggest the answer to my title question is, decidedly, no.

Section 408 of the Sarbanes-Oxley Act of 2002 identifies company size and stock price volatility as two factors, among others, that the SEC should use as indicators of potential problems with a company’s financial reporting. Section 404 of Sarbanes-Oxley requires companies to publicly disclose “material weaknesses” in their … Read the rest

Undervalued Renminbi: Illegal or Inefficient?

The Chinese exchange rate has been the subject of recent complaints, but these are not new complaints. Early in 2000, Nicholas R. Lardy, the senior fellow of the Peterson Institute for International Economics, alleged that the Renminbi (Chinese currency) was undervalued by about 40% based on China’s GDP.  From 2005 to 2008, as China’s GDP increased, the value of the Renminbi increased in relation to the dollar by about 20%, from about 8.27 Renminbi to the dollar to about 6.83 Renminbi to the dollar.  However, the Chinese exchange rate has recently been a pretty hot issue again worldwide, and China is facing huge pressure, especially from the U.S to take action so that the Renminbi is properly valued.  On September, 29 2010 President Barack Obama said that “China’s currency is undervalued, resulting in a trade advantage for Chinese goods over American goods that contributes to the U.S. trade deficit.” Read the rest