As we mark the Manufacturing Law Blog’s 5th anniversary, I am also pleased to announce the launch of our new manufacturing law website. To access it, please click here.
Last week, Megan provided our thoughts and predictions for environmental, health & safety. This week, I am providing our outlook for corporate compliance and litigation.
GDPR (General Data Protection Regulation): Most domestic manufacturers have at least passing familiarity with data breaches, data privacy and/or cybersecurity issues that arise in the United States. Over the last year, there has been a lot of attention paid to the “GDPR,” which is an effort by the European Union to harmonize data privacy laws across Europe. There have been scores of articles advising companies how to prepare for May 2018 – when the GDPR will be enforced for the first time. The GDPR portal contains a lot of important information for manufacturers. While most large publicly traded manufacturers have been preparing for months, even smaller manufacturers should note that the GDPR applies to companies that operate outside of Europe. As noted in the GDPR portal:
The GDPR not only applies to organisations located within the EU but it will also apply to organisations located outside of the EU if they offer goods or services to, or monitor the behaviour of, EU data subjects. It applies to all companies processing and holding the personal data of data subjects residing in the European Union, regardless of the company’s location.
For that reason, we will be working with our clients to ensure compliance and be watching what occurs after May 2018 as the penalties for violations are extremely high.
Joint Ventures: While the large mergers tend to get all of the attention, more and more manufacturers are entering into joint ventures with other manufacturers, including their competitors. Typically, at the outset of a “JV,” the parties agree to work together to develop a new product, technology, process, etc. Getting into a JV is often much easier than exiting from one. The intellectual property issues are legion particularly if the data is intermingled (as it often is). For that reason, we are working with our clients from the outset to spot any potential litigation risks and unfortunately, helping clients get out of deals short of litigation.
Contract Management: Over the past few years, many of our large and small manufacturing clients have shifted to a contract management process whereby contracts are reviewed for risk not solely based upon the value of the contract itself. As many people know, a $15,000 contract can be more problematic than a $1 million contract. We, as a law firm, have updated our practices as well to reflect the changes in the manufacturing industry. Gone are the days where our manufacturing lawyers red-line a contract for hours and try to remove provisions that can never be negotiated out. We also help clients develop contract review templates that can aid our clients in evaluating legal and business risks. We expect this trend to continue in 2018.
California Proposition 65: If you sell products in California, this section applies to you. Significant changes to California Prop 65 are scheduled to take effect on August 30, 2018. These changes alter the “safe harbor” rules for providing Prop 65 warnings. For more information, please visit the government website. Some of the significant changes are that companies now need to identify at least one chemical that prompted the warning and that a triangular warning symbol now needs to be included. Over the years, many manufacturers decided to place the warning on their product regardless of whether they were required to or not under the law. It will be interesting to see if those decisions are changed in light of the fact that such warnings may hinder sales.
Executive Risk: I am sure Matt will address this in his labor/employment post, but many of our manufacturing clients are inquiring about whether sexual harassment claims will rise in light of the Weinstein scandal among other events. We will be monitoring this closely particularly to see if more manufacturers retain counsel to conduct internal investigations when allegations are made.