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PAGE CMA Shipping 2011 .........................................................................................................1 Effect of the National Commission’s Recommendations and Final Report on the Deepwater Horizon Incident on the Offshore Industry .....................................................................2 Recovery of Hedging Losses as Consequential Damages in New York Arbitrations...................................................................4 Impact of Changes in Congress on the Maritime Industry .............................................................................................................6 No Speeding—You May Be Subject to a Whale of a Penalty! .............................................................................................8 Protecting Your Good Name—Some Special .............................................9 Considerations for Protecting Maritime Trademarks in the United States Foreign Maritime Workers with B-1 Visas May Now Apply for Transportation Worker Identification Credentials .......................................................................................11 Blank Rome Congratulates Maritime Attorneys Recognized by Who’s Who Legal ..........................................12 CMA Shipping 2011 BY JOHN D. KIMBALL The theme of this year’s Connecti- cut Maritime Association (“CMA”) Shipping 2011 Conference “forward”— is laden with ambiguity. Given the current business climate, that is as it should be. Does “forward” reflect the fact that there was positive movement and profitability in the shipping indus- try in the past year? That certainly was the case for some segments of the industry. Or is “forward” only an aspiration, recognizing there is a long way to go before we will have a business climate which most would agree is good for shipping? Everyone would agree that shipping experienced some major setbacks in the past year. Let me focus on just two major ones—piracy and the consequences of Deepwater Horizon. Piracy is not just an issue for the industry; it has become a true plague that needs unprecedented international cooper- ation to bring it to an end. The IMO’s increased focus on finding workable solutions to this scourge deserves the unqualified support of the shipping industry. I do not wish to be critical of the shipowners who have faced the terrible dilemma of having to pay ransom to free their crews, ships, and cargo. But in formulating its response to piracy, the shipping industry has created much more than a cottage industry to attempt to deal with it. Ransom has become insti- tutionalized, with insurance companies, security companies, law firms, and others having a true financial stake in the matter. The shipping industry must do everything possible to combat the idea that the seizure of their ships by pirates is a normal obstacle to doing business. It is an old adage that every ransom paid merely leads to even greater demands the CONTENTS © 2011, BLANK ROME LLP. Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. The Advisory should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel. Additional information on Blank Rome may be found on our website www.blankrome.com. CALIFORNIA • DELAWARE • FLORIDA • HONG KONG • NEW JERSEY • NEW YORK • OHIO • PENNSYLVANIA • TEXAS • WASHINGTON, DC MAINBRACE MAINBRACE www.BlankRomeMaritime.com March 2011 No. 1 JOHN D. KIMBALL PARTNER [email protected] next time. The motherships and weapons acquired by the pirates in order to continue plying ever farther into the Indian Ocean have only become more sophisticated as piracy becomes even more profitable. If we still are writing about this topic at CMA Shipping 2012, we certainly will not have gone “forward.” The Deepwater Horizon oil spill, which was unfolding at CMA Shipping 2010, will have business and legal conse- quences that are still to be determined. But clearly, it brought to the fore two of the most important themes of our times. First, developing alternative energy sources, including wind, must be among our highest priorities. Second, the safety of seafarers should never be compromised. (continued on page 2)
Transcript of MAINBRACE CMA Shipping 2011 CONTENTS BY JOHN D. …
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CMA Shipping 2011 .........................................................................................................1
Effect of the National Commission’s Recommendationsand Final Report on the Deepwater HorizonIncident on the Offshore Industry .....................................................................2
Recovery of Hedging Losses as ConsequentialDamages in New York Arbitrations ...................................................................4
Impact of Changes in Congress on theMaritime Industry .............................................................................................................6
No Speeding—You May Be Subjectto a Whale of a Penalty! .............................................................................................8
Protecting Your Good Name—Some Special .............................................9Considerations for Protecting MaritimeTrademarks in the United States
Foreign Maritime Workers with B-1 VisasMay Now Apply for Transportation WorkerIdentification Credentials .......................................................................................11
Blank Rome Congratulates MaritimeAttorneys Recognized by Who’s Who Legal ..........................................12
CMA Shipping 2011BY JOHN D. KIMBALL
The theme of this year’s Connecti -cut Maritime Association (“CMA”)Ship ping 2011 Confer ence “forward”—is laden with ambiguity. Given the current business climate, that is as itshould be. Does “forward” reflect thefact that there was positive movementand profitability in the shipping indus-try in the past year? That certainly was
the case for some segments of the industry. Or is “forward”only an aspiration, recognizing there is a long way to go beforewe will have a business climate which most would agree isgood for shipping?
Everyone would agree that shipping experienced somemajor setbacks in the past year. Let me focus on just two majorones—piracy and the consequences of Deepwater Horizon.
Piracy is not just an issue for the industry; it has becomea true plague that needs unprecedented international cooper-ation to bring it to an end. The IMO’s increased focus on finding workable solutions to this scourge deserves theunqualified support of the shipping industry. I do not wish tobe critical of the shipowners who have faced the terribledilemma of having to pay ransom to free their crews, ships,and cargo. But in formulating its response to piracy, the shipping industry has created much more than a cottageindustry to attempt to deal with it. Ransom has become insti-tutionalized, with insurance companies, security companies,law firms, and others having a true financial stake in the matter. The shipping industry must do everything possible tocombat the idea that the seizure of their ships by pirates is anormal obstacle to doing business. It is an old adage thatevery ransom paid merely leads to even greater demands the
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CONTENTS
© 2011, BLANK ROME LLP. Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from varioussources, the accuracy and completeness of which cannot be assured. The Advisory should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel. Additional information on BlankRome may be found on our website www.blankrome.com.
CAL I FORN IA • DELAWARE • F LOR IDA • HONG KONG • NEW JERSEY • NEW YORK • OHIO • PENNSYLVAN IA • TEXAS • WASH INGTON, DC
MAINBRACEMAINBRACE www.BlankRomeMaritime.com
March 2011 No. 1
JOHN D. KIMBALLPARTNER
next time. The motherships and weapons acquired by thepirates in order to continue plying ever farther into the IndianOcean have only become more sophisticated as piracybecomes even more profitable. If we still are writing aboutthis topic at CMA Shipping 2012, we certainly will not havegone “forward.”
The Deepwater Horizon oil spill, which was unfolding atCMA Shipping 2010, will have business and legal conse-quences that are still to be determined. But clearly, it broughtto the fore two of the most important themes of our times.First, developing alternative energy sources, including wind,must be among our highest priorities. Second, the safety ofseafarers should never be compromised.
(continued on page 2)
Richard V. Singleton II,who is “an accom-plished practitionerwho has acted inclaims in excess
of $25 million.”
Jeanne M. Grasso
Jonathan K. Waldron
Nigel S. Binnersly,Blank Rome Solicitors(Hong Kong)
Peter E. Mills,Blank Rome Solicitors (Hong Kong)
Jeremy J.O. Harwood,who is a “litigationand arbitrationexpert” and a “lead-ing light” in the
industry, and is ranked as one ofthe top ten “Most Highly RegardedIndividuals” by Who’s Who Legal.
The International Who’s Who of Shipping & Maritime Lawyers 2010
recognized seven Blank Rome maritime attorneys
for their leadership in the shipping & maritime industry.
Blank Rome Congratulates Maritime AttorneysRecognized by Who’s Who Legal
John D. Kimball,who is “pheno menal”and has “an unsur-passable marineinsurance practice”,
and is ranked as one of the top ten“Most Highly Regarded Individuals”by Who’s Who Legal.
Congratulations to
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Effect of the National Commission’sRecommendations and Final Reporton the Deepwater Horizon Incidenton the Offshore IndustryBY JONATHAN K. WALDRON
As scheduled, the National Com -mission on the BP Deepwater Horizonoil spill submitted its report and rec-ommendations to President Obamaon January 11, 2011. The NationalCommission, co-chaired by formerFlorida Governor and Senator BobGraham and former Administrator ofthe Environmental Protection Agency
William K. Reilly, was tasked with providing recommendationson how we can prevent—and mitigate the impact of—anyfuture spills that result from offshore drilling.
In essence, the final report warns that dramatic steps arerequired to prevent another failure and, if that occurs, thepublic will wonder why Congress, the Administration, and theindustry allowed this to happen again. On the other hand, theoil industry quickly struck out against the report, stating thatcompanies with good safety records should not be subjectedto costly new rules and warned that a major new set of regu-lations would slow production and drive up prices. Objectionswere also raised against the recommendation that the cur rent$75 million cap on liability for accidents be raised by anunspecified amount.
The final 380-page report includes an additional 60 pagesof recommendations. The report lays most of the blame forthe accident on the three companies responsible for drillingthe well and concludes that there are “systemic” problemsacross the industry. Moreover, many commentators havedeclared the report as a scathing indictment of the industry inits failure to prepare adequate plans to respond to a major inci-dent, exacerbated by federal oversight that has been grosslyinadequate.
Listed below is a summary of the key findings.• The explosive loss of the Macondo well could have
been prevented.• The immediate causes of the Macondo well blowout
can be traced to a series of identifiable mistakes madeby BP, Halliburton, and Transocean that reveal suchsyste matic failures in risk management that they placein doubt the safety culture of the entire industry.
• Deepwater energy exploration and production, particu-larly at the frontiers of experience, involve risks forwhich neither industry nor government has been ade-quately prepared.
• Fundamental regulatory and policy reforms are requiredto assure human safety and environmental protection,regulatory oversight of leasing, energy exploration, andproduction.
• The oil and gas industry will also need to take its own,unilateral steps to dramatically increase safety through-out the industry.
• The technology, laws and regulations, and practices forcontaining, responding to, and cleaning up spills lagbehind the real risks associated with deepwater drilling.
• Government must close the existing gap and industrymust support, rather than resist, that effort.
• Scientific understanding of environmental conditionsrelated to deepwater drilling are inadequate.
So what does all this mean? Will the cognizant agenciesimplement new regulations and policies, and will Congressenact laws as a result of these recommendations? Indeed, theWhite House noted in a statement, “In keeping with the seriesof recommendations included in the commission report, ourAdministration has already taken important steps to imple-ment aggressive new reforms for the offshore oil and gasindustry . . . and will take the panel’s additional recommenda-tions into account as it adopts additional changes.” The WhiteHouse went on to say that: “The mistakes and oversights byindustry as well as government must not be repeated.”
To answer these questions, it must be kept in mind thatthe Bureau of Ocean Energy Management (“BOEM”) hasbeen busily moving forward with changes and new require-ments to provide for a safer offshore regime following thisincident. In addition, high levels of the Administration willmost assuredly review and consider implementation of manyof these recommendations. Similarly, the Coast Guard willalso be reviewing this report and its recommendations in con-sideration of future improvements.
Looming over the horizon, however, is the release of themuch anticipated results of the joint Coast Guard and BOEM
JONATHAN K. WALDRONPARTNER
Above all, however, there has been impressive resilienceand encouraging progress in many segments of the industryas we move out of the economic crisis, which will be recog-nized by the speakers at CMA Shipping 2011. To move forward, it helps if you know where you want to go. The rangeof topics to be discussed and debated at this year’s confer-ence will unquestionably help guide all of us as we attemptto plot our way into the future.
CMA Shipping 2011 (continued from page 1) options would likely allow you a broader description of goodsand services than if you file directly with the USPTO based onuse or intent to use. There are two reasons for this. First, theUSPTO is known for its stringent regulations on the manner inwhich applicants can describe goods and services. Second,you must be using the mark for all the goods and servicescovered by the application prior to registration, and thisrequirement naturally would limit the breadth of goods orservices you can claim.
ConclusionTactical considerations for maritime companies seeking to
register their trademarks and service marks in the UnitedStates will differ depending upon whether or not they are U.S.entities or non-U.S. entities. This article has highlighted someof those considerations. For a U.S. entity, there is no way for-ward but to prove “use in commerce”; for a non-U.S. entity, itmay be wise to select an alternative route to registration.
This article was first published in the February 2011 edition of Maritime Reporter.
* Susan Flohr wrote this article with the assistance of John Paul Oleksiuk, associate inBlank Rome’s intellectual property & technology group, and Tara L. Leiter, associate inBlank Rome’s maritime practice.
Foreign MaritimeWorkers with B-1 VisasMay Now Apply forTransportation WorkerIdentification CredentialsBY JEANNE M. GRASSO
On February 9, 2011, after anintensive 2+ year effort by maritime
industry representatives, the Department of HomelandSecurity (“DHS”) and the Department of State (“DOS”)announced the creation of an annotated version of the B-1visa—issued to a foreign citizen visiting the United States forbusiness purposes—that will allow a foreign maritime workerto apply for a Transportation Worker Identification Credential(“TWIC”). A TWIC is a biometric identification card that a mar-itime worker must obtain in order to gain unescorted accessto secure areas of facilities subject to the MaritimeTransportation Security Act of 2002 (“MTSA”). The announce-ment is an important step in ensuring that foreign maritimeworkers can obtain the necessary credentials to do their jobswhen ships they are responsible for are in U.S. ports. This newprocess was necessary because the Transportation SecurityAdmini stration’s (“TSA”) TWIC final rule, published on January25, 2007, did not include the B-1 visa on its list of TWIC
JEANNE M. GRASSOPARTNER
eligible immigration categories, thus prohibiting B-1 visa holders from applying for a TWIC.
The foreign nationals in the maritime industry that com-monly travel to the United States on a B-1 visa are primarilyemployed by shipowners or managers as port superintend-ents, company security officers responsible for compliancewith the International Ship and Port Facility Security Code,designated persons ashore responsible for compliance withthe International Safety Management Code, and other staffwith crew management and logistics responsibility. Collectively,these shore personnel visit ships in both U.S. and foreignports to oversee cargo operations, inspect ships’ condition,conduct maintenance, audit compliance, handle provisioning,and provide crew training.
The challenges that the omission of the B-1 visa in theTWIC final rule posed became apparent during implementa-tion of the TWIC program during 2008 and 2009 when theseindividuals could not gain access to many of their vessels call-ing on U.S. ports without undue delays or excessive costs.Following input and continual advocacy from maritime industrystakeholders over the next few years, however, DHS and DOSfinally collaborated to create a process allowing maritime personnel that fall within the B-1 visa category to be eligiblefor a TWIC.
Under this new process, a foreign maritime worker desir-ing a TWIC must provide notice to the DOS upon applicationfor a B-1 visa, as well as a letter from his or her employer indi-cating that the individual will be required to access or performservices in secure areas of maritime facilities. DOS has sent acable to all Consulates outlining the process, so there shouldbe no unnecessary delays. Provided the applicant is otherwiseeligible for the B-1 visa, the visa will be annotated with “TWICLetter Received.” Upon receipt of the B-1 visa with the TWICannotation, the individual may then apply for a TWIC. As is thecase for all TWIC applicants, these foreign maritime workerswill get photographed and finger printed, pay the enrollmentfee, and undergo rigorous background checks, includingchecks against the terrorist watch list, criminal history data -bases, and immigrations records.
It is important to note, however, that a TWIC does not enti-tle the holder to unescorted access to MTSA facilities; rather, itqualifies the TWIC holder for unescorted access at the discre-tion of the MTSA facility operator. It is also important to notethat upon expiration of a visa, the TWIC must be surrenderedand returned to TSA. Finally, when a nonimmigrant employeequits or is terminated during the 5-year validity period of theirTWIC, the employer is required to provide notification to TSAwithin five business days.
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investigation, which continues to develop conclusions andrecommendations as they relate to the Deepwater Horizonexplosion and loss of life. As of the publication of this article,the joint investigation’s final hearing to review the results ofthe blowout preventer (“BOP”) stack forensic testing hadbeen delayed until the week of April 4. The deadline for theinvestigation team to submit its final report to Coast GuardHeadquarters and BOEM is now July 27, 2011. Once the finalreport is released to the public, there will be much interestfrom federal agencies, the public, and Congress to comparethe final report and recommendations from the NationalCommission and the joint investigation before determiningfuture agency actions and legislation.
Another factor that could affect future actions will be thedecisions that the Department of Justice (“DOJ”) takes onceit has seen a final draft of the joint investigation report. It isexpected that DOJ will review the report and move forwardwith its grand jury investigation as it will be able to review thefindings in the draft report to confirm that its prosecution theories will not conflict with the investigative findings. Basedon what we know today, we would expect DOJ to start sub-poenaing individuals sometime after they review the draftreport and then move forward with criminal charges againstthe companies it decides to target sometime in the second orthird quarter of 2011.
Meanwhile, the release of the final report has rekindledinterest in Congress. Various Congressional hearings havealready been held and others are being scheduled. A numberof Senators and Representatives have indicated they intend tointroduce legislation incorporating many of the NationalCommission’s recommendations, including raising the ceiling
on damages. Some have indicated that it is time to takeaction on the oil spill legislation that was passed by the Houselast year, H.R. 3534, the Consolidated Land, Energy, andAquatic Resources Act of 2009 (the “CLEAR Act”), or provisions of the consolidated Senate oil spill version thatfailed to pass, S. 3663, the Clean Energy Jobs and Oil SpillAccountability Plan.
Others are taking a more neutral approach and have indi-cated that they would study its report and propose legislationif appropriate. The fact of the matter is that the NationalCommission was under a tight deadline and failed to addressa number of key matters, including why workers on the rigmade the decisions they made before the explosion and whythe BOP failed because of uncompleted tests.
The key to what action Congress may take is the fact thatthe joint investigation report is not completed, and it isunclear exactly what action may be taken by DOJ. As statedduring a hearing of the House Transportation andInfrastructure Subcommittee on February 11, 2011 by theChair of the Subcommittee, Representative Frank LoBiondo(R-NJ) and Representative Don Young (R-AK), the joint reportfrom the Coast Guard and BOEM is likely to offer differingopinions and recommendations than the National Oil SpillCommission report, and they want to be able to take intoconsideration all suggestions before drafting any legislation.
In conclusion, the National Commission Report is impor-tant and it should, and will, be taken into consideration by thecognizant federal agencies and Congress, but it is prematureto make any final conclusions until the joint investigation’sreport is released and action taken by DOJ is assessed.
Tom Belknap [email protected]
Jeanne Grasso [email protected]
Jeremy Harwood [email protected]
John Kimball [email protected]
Greg Linsin [email protected]
Peter Mills [email protected]
Jeff Moller [email protected]
Richard Singleton [email protected]
Duncan Smith [email protected]
Jon Waldron [email protected]
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Because the power of the federal government to registermarks comes from the Commerce Clause of the Constitution,the sales of such goods bearing the mark must be in com-merce lawfully regulated by Congress in order for the applicantto rely on such use to obtain a federal trademark registration.
The term “use in commerce” includes sales of goodseither in commerce between the U.S. and a foreign countryor in interstate commerce among the several states. Sales ofbulk products, bunkers, or oil by either a U.S. entity or a non-U.S. entity to U.S. customers are typically in commerce. Salesof such goods by either entity to foreign customers located inthe United States or within its territorial waters are also typically in commerce. Sales of bulk products, bunkers, or oilby a U.S. entity to a foreign customer in a foreign countrywould not constitute a sale in commerce. But the question ofwhether or not sales of such goods by either a U.S. or non-U.S. entity to foreign cus-tomers at sea constitutes“use in commerce” maydepend upon a variety offactors such as the owner-ship of the vessel and citi-zenship of the purchasers,and the outcome wouldlikely be very fact-specific.As a result, there may besome risk in attempting torely on such sales to estab-lish “use in commerce” for registration purposes. For prospec-tive applicants with other options, such as non-U.S. entitieswith national, regional or international registrations, it may bebest to file on one of those bases instead.
Proving “Use in Commerce” for Maritime ServicesIn contrast to proving use for bulk products, proving use of
a mark for services, such as providing bunkers at sea, is morestraightforward since there is no affixation requirement. Use ofa mark for services is easily established by printed or onlinepromotional materials including screenshots of web pagesshowing use of the mark in association with the sale or adver-tising of the services, provided that the service is being ren-dered in commerce.
“Use in commerce” for services can be established when themark is used or displayed in the sale or advertising of servicesand the services are rendered in commerce. They can also beestablished if the services are rendered in more than one state,or in the United States and a foreign country, and the person
rendering the services is engaged in commerce in connectionwith the services.
Rendering a service in commerce typically requires adver-tising the services across state lines, or having customers whotravel across state lines to obtain the services, or licenseesrendering the services in more than a single state. When serv-ices are rendered at sea, there are analogous uncertainties tothose raised above with regard to whether or not goods soldat sea comprise commerce regulable by Congress. Servicesrendered in U.S. waters can establish use in commerce, butfor services rendered outside of U.S. waters, the satisfactoryestablishment of use in commerce may also depend uponthe extent to which those services are advertised or promotedin the United States in connection with the service mark,whether the customers receiving the services are U.S. citizensor U.S. vessels, whether the services are provided throughU.S. ports, and other similar factors.
The Advantages of Filing Based on a ForeignRegistration or ApplicationAvoiding the Requirement to Prove Use
If you are a non-U.S. company, you have otheroptions that do not require proving use of the mark incommerce. If you own an application or registration inyour home country, or a regional one such as a CTM,you can file a U.S. application based on your foreignfiling. Alternatively, you can file for an InternationalRegistration through the WIPO and designate theUnited States under the Madrid Protocol. Each of
these options has a number of advantages over filing in theU.S. based on use or intent-to-use. Most importantly, theseoptions remove the requirement of establishing “use in com-merce” prior to issuance of the registration.
In order to avoid losing your trademark rights in the U.S.,you will need to be able to prove use eventually, at leastbetween the fifth and sixth year after registration when thestatutory use declaration is due, and then later for renewal atthe ten year anniversary. Nevertheless, this approach gives thecompany five years to work with counsel to develop accept-able specimens prior to the deadline for filing. Note, however,that the U.S. registration is reliant on the non-U.S. registrationthat may be vulnerable to cancellation.
Securing a Broader Description of Goods and Services
Another advantage of filing based on a foreign nationalregistration, CTM regional registration, or an InternationalRegistration through the Madrid Protocol is that any of these
Protecting Your Good Name (continued from page 9)
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Recovery of Hedging Losses as ConsequentialDamages in New York ArbitrationBY THOMAS H. BELKNAP, JR.
The scenario is common enough:an owner voyage-charters its bulkcargo vessel to a charterer to load acargo of, say, wheat, for carriage fromPoint A to Point B. En route, the vesselsuffers serious mechanical problemsresulting in a long delay in the deliveryof the cargo. The cargo is undamaged,but indexed market values for wheat
drop substantially between the time the cargo was expectedto be delivered and the date it was actually delivered. To com-plicate matters, the charterer, a sophisticated internationalgrain trading company, claims that it entered certain futurescontracts at the time it purchased the cargo in order to fullyhedge against the risk of such market fluctuation; however, asa result of the delay, it suffered a further loss on the hedgepositions because they matured before the cargo arrived. Thecharterer also claims to have suffered losses on certain cur-rency futures positions it had taken to hedge against fluctuat-ing exchange rates between the time of purchase of the cargoand the time of anticipated sale. Can the charterer recoverthese losses against the owner?
All of these losses fall under the category of consequen-tial damages. Apart from where the contract may provideother wise, the rule in New York of when consequential dam-ages may be recoverable derives from the well-known andoft-quoted decision in Hadley v. Baxendale, 9 Exch. 341(Ct. of Exchequer 1854). Simply stated, only those damagesthat are reasonably foreseeable—at the time the contract isentered—as being a likely and probable consequence of aparty’s breach may be recovered. Importantly, the inquiry isnot whether the breaching party should have foreseen theexact manner in which the loss came about; but rather, theloss must only be shown to have been foreseeable as a natural and probable consequence of the breach. NumerousNew York arbitration awards and court decisions have reaf-firmed these basic principles.
So where do hedging losses fall in this analysis? Perhapssurprisingly, this question has received very little treatment byNew York arbitrators. Indeed, it appears that the only reportedNew York award to address this issue in any great depth isThe M/T BONI, SMA No. 3053 (1994). That case involvedclaims under a chain of ASBATANKVOY charters and bills oflading for various losses resulting from a fire on board the
vessel that caused the voyage to be terminated. The vesselwas towed back to Singapore, where part of the cargo wassold and part of the cargo was transshipped to Puerto Rico.The subcharterer/cargo owner asserted various claims up thecharter chain, including a claim for approximately $2.3 millionin losses based on a comparison of the hedge positions itplaced for the date the vessel was scheduled to arrive and thedate that the cargo actually did arrive.
In analyzing this element of the claim, the panel first considered whether hedging losses could be said to be fore-seeable in the context of this charter relationship. Answeringthis question in the affirmative, the panel observed as follows:
It is generally recognized that the hedging of petro-leum products and other commodities is a desirableand essential method of minimizing price fluctuationsand exposure to loss. All of the experts before thispanel testified on this point and there was no dis-agreement. Indeed, one may logically conclude that itis foolhardy and speculative not to do so. [Owners]knew that [Charterer] operated a refinery in PuertoRico and that it was also a sometime trader in the spotmarkets. [Owner’s] principal business is in the tankerlighterage market and as such has close contactwith a variety of petroleum operating companies.[Headowner] operates tankers and is presumed tohave some understanding of the basic elements of thepetroleum trade. After all, the very political and eco-nomic pressures impacting oil prices also affect tankerrates. We accept in this day and age that most com-panies are aware of the need and advantage ofhedging products to assure price stability and alow risk profile. [Emphasis added]Having concluded that it was reasonably foreseeable that
this charterer would suffer hedging losses caused by a sub-stantial delay in delivery of the cargo, the panel then turnedto analyze the actual hedging losses that were claimed.Ultimately, the panel denied the claim on the basis that theactual transactions were not truly “hedges” within the chart -erer’s own stated hedging procedures and were not placed inaccordance with accepted industry standards. As the panelnoted, ”[h]edges are never an absolute protection againstthe risks of market fluctuations, but if placed properly…theyoffer a large measure of price protection. They were not soplaced here.”
One can extrapolate some basic principles from thisaward. First, in considering whether hedging losses are rea-sonably foreseeable, a panel must look at the trade involvedand at the parties’ knowledge and experience in that trade. In
THOMAS H. BELKNAP, JR.PARTNER
Protecting Your Good Name—Some SpecialConsiderations for Protecting MaritimeTrademarks in the United StatesBY SUSAN B. FLOHR*
Whether you are a cruise line,drilling company, vessel owner, cargoowner, shipbuilding and repair com-pany, watercraft rental company oremployment company crewing ves-sels, protecting your name and trade-marks around the world is vital toyour business. The unique challengesfacing maritime companies arise out
of the nature of the goods and services provided by thesecompanies and the locations in which they do business.
Strategies for protecting names and commercial identitymay differ from one country to the next. This is because trade-marks are territorial and thus creatures of the laws of eachsovereign state, with the exception of a few regional autho -rities such as the European Union. Strategies for those seek-ing to register their trademarks and service marks in theUnited States will vary depending in part upon whether appli-cants: are U.S. entities or non-U.S. entities; sell goods or pro-vide services; can show the requisite “use in commerce”; andpossess a non-U.S. registration or application.
In the United States, there are several paths to registration: • U.S. companies can file applications based on either
“use in commerce” or a bona fide intent-to-use themark (Sections 1(a) and 1(b) of the Trademark Act, 15U.S.C. §§ 1(a) and 1(b) respectively).
• Non-U.S. companies have these options as well, andadditionally can file applications based on their ownnational applications or registrations in their home coun-tries or a regional registration such as a CommunityTrademark Registration (“CTM”) issued in any memberstate of the EU (if they have such registrations) eitherunder certain provisions of the Trademark Act (§§44(d)and 44(e); 15 U.S.C. §§ 1126(d) and (e)) or basedon an International Registration filed under the MadridProtocol System.
There are pros and cons to each approach, and while thisarticle cannot cover them in depth, it will touch on the mostforeseeable issues and point out some tactical options.
SUSAN B. FLOHRPARTNER
Challenges of Registering Maritime Trademarks in the U.S.
Proving “Use in Commerce” for Maritime ProductsFor a U.S. application based on “use in commerce” or a
bona fide intent-to-use, the applicant eventually must assertuse of the mark in commerce, and prove such use before aregistration will issue.
In the case of products, to satisfy the “use in commerce”requirement, the mark must be placed in any manner on thegoods, their containers, the displays associated therewith, oron the tags or labels affixed thereto; if the nature of the goodsmakes such placement impracticable, then the mark must beplaced on documents associated with the goods or their sale,and the goods must be sold or transported in commerce.
The requirement of proof of use on products is more chal-lenging to comply with if your products are bulk productssuch as oil, coal, or other bulk products shipped without anylabeling or packaging. Where fuel is transported by tankertruck on land, the company brand may appear on the tankerand satisfy the affixation requirement. But what about wherethe fuel or other bulk products are transported by vessel? Thelikelihood is high that the vessel will be chartered, and thusthe name of the company selling the bulk products and itsbrand will not likely appear on the vessel. How are such companies to prove the requisite use of the mark on thegoods in commerce?
In such cases, Section 45 of the Trademark Act permitsshipping invoices, bills of lading or other shipping documentsshowing the mark associated with the goods, or webpagescreenshots depicting the products associated with the markto satisfy the requirement for “use in commerce” where thenature of the goods makes normal affixation impractical.However, a mere assertion of impracticability will not suffice;the record must establish that the goods are of such a naturethat traditional trademark use is impracticable.
Trademark examiners at the United States Patent andTrademark Office (“USPTO”) may not initially accept alterna-tive specimens unless the impracticability of complying withthe affixation requirement is fully supported. Where the appli-cant’s goods are not sold in gallon drums or at gasolinepumping stations, but rather are sold in bulk, stored in tanksand delivered through pipelines, tanker trucks, barges andother methods of bulk transportation, there should be no difficulty as such a scenario is analogous to the natural gas,grains, and chemicals sold in bulk or transported via tanker cars,all of which are examples specified in the TMEP as prototypicalof impracticability for affixation of the mark to the goods.
(continued on page 10)
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the M/T BONI, the panel found significant not only the factthat the owner and disponent owner were generally awarethat the charterer operated a refinery and traded petroleum inthe spot market, but also the fact that they were themselvesin the petroleum business—one in lighterage and the other intanker operations—and surely had derived some understand-ing of the petroleum markets from that business. Indeed, tothe extent it was true in 1994 that “most companies areaware of the need and advantage of hedging products toassure price stability,” it can only be more so in 2011. Thesame is probably true about other kinds of hedges, such ascurrency contracts, forward freight agreements, and othersimilar kinds of derivatives.
But the second part of the analysis is as important as thefirst, and in any given case it will probably be the more difficult
part of the proof: is the hedge actually a hedge or is it a market play? It is easy to see why this distinction is critical, forno contracting party should be liable for the other’s own poordecisions in trying to speculate on the futures markets. At bottom it is a question of causation, i.e., did the breach causethe loss or was the loss caused by trading strategies that werenot properly designed to hedge a specific price risk?
For a party seeking to avoid this kind of liability, the solutionis simple: make it explicit in the contract that consequentialdamages (or, more specifically, losses resulting from hedgingor derivative positions) will in no event be recoverable underthe contract. For a party wishing to be able to recover thesekinds of losses, on the other hand, a specific clause in the
contract allowing such recovery would at least answer thequestion of whether this kind of loss was foreseeable. At aminimum, however, such a party should communicate to itscounterparty in the pre-contract communications somedetails about its hedging program and intentions in order tosupport an argument down the road that the hedging losseswere a foreseeable consequence of the counterparty’s breach.
But in addition, the party seeking recovery for hedginglosses probably will need to be able to show that its hedgingpractices were in fact hedges relating to the specific cargo atissue and not merely part of a larger market position strategy.This will often be difficult to do because hedging positions arenot usually so directly linked to specific cargos. It is difficult tospeculate based on the M/T BONI award exactly how close alink must be proven, but at the least it seems clear that some
causal connection must bedemonstrated between thebreach and the hedging lossin order to meet the foresee-ability test for recovery of con-sequential damages.
A further issue, notreached by the M/T BONIaward, is whether the partyseeking recovery for hedginglosses acted reasonably in try-ing to mitigate its damages by,for instance, covering openpositions or, perhaps, eventaking new positions. Anotherissue is how these kinds ofliabilities might travel up ordown a charter chain, wheredifferent parties may have dif-ferent degrees of understand-
ing or knowledge about the business of the party ultimatelyclaiming the loss.
It is perhaps somewhat surprising that there have notbeen more cases seeking recovery for hedging losses result-ing from breach of a charter, particularly given the increasedprevalence of the various kinds of hedging instruments thatare now commonly used in connection with the transportationof cargo by sea. The table is set for such claims, however, andowners, charterers, and cargo interests alike should be awareof this issue so they can protect their interests accordingly.
This article first appeared in Lloyd’s List, “Beware Rise in Claims for Cargo HedgingLosses,” on February 15, 2011.
No Speeding—You May Be Subjectto a Whale of a Penalty! BY JEANNE M. GRASSO
Over the past few months, theNational Oceanic and AtmosphericAdministration (“NOAA”) has issuedseveral Notices of Violation andAssessment (“NOVAs”) to commercialvessels for violating the U.S. East Coastseasonal 10-knot speed limit estab-lished to protect the endangeredNorth Atlantic right whale, which is
protected under the Endangered Species Act and the MarineMammal Protection Act. Penalties in the nine reportedenforcement actions, all from NOAA’s Southeast Region,range from about $15,000 to $50,000. NOAA identified theviolations by using the Automatic Identification System(“AIS”), which allows NOAA to calculate and chart the vessel’sspeed over its entire route.
By way of background, NOAA’s Right Whale Ship StrikeReduction Rule (the “Final Rule”), which is intended to reducethe mortality of the North Atlantic right whale, went into effecton December 9, 2008. The right whale is the world’s mostcritically endangered large whale species. North Atlantic rightwhales, which have been known to live up to 70 years, rangefrom 45 to 60 feet in length and weigh between 30 and 80tons. Approximately one-third of all right whale deaths report-edly result from ship strikes and entanglement in fishing gear.According to NOAA’s data, most of the vessel strikes resultingin right whale fatalities occurred from collisions with largecommercial vessels.
The Final Rule generally restricts vessels of 65 feet orgreater in length to speeds of 10 knots or less in three “sea-sonal management areas” along the U.S. East Coast. The seasonal management area for the Northeast runs fromJanuary 1 to May 15; the Mid-Atlantic from November 1 toApril 30; and the Southeast from November 15 to April 15.During the time the seasonal management areas are in effect,the speed limit may only be exceeded if necessary to main-tain safe maneuvering, as confirmed by the master or pilot, inwhich case the speed exceedance and the reasons for thedeviation must be logged in the vessel’s logbook. The masterof the vessel must also attest to the accuracy of the logbookentry by signing and dating it. See the Final Rule athttp://www.nmfs.noaa.gov/pr/pdfs/fr/fr73-60173.pdf.
NOAA spent the first season (generally December 2008to May 2009) endeavoring to increase the awareness of
JEANNE M. GRASSOPARTNER
mariners of the speed restrictions and warned, rather thanfined, some alleged violators. Some companies subject to therecent enforcement actions, however, did not receive warn-ings during the first season. After the first year’s grace period,NOAA has begun to enforce the Final Rule by issuing NOVAsfor violations having occurred during the Rule’s second season(generally November 2009 to May 2010). The NOVAs citedmultiple violations and sometimes were issued almost a yearafter the first alleged violation occurred.
Should a vessel receive a NOVA and a penalty beassessed, shipowners have 30 days either to seek modifica-tion of the penalty, request a hearing before an administrativelaw judge, or pay the penalty. While NOAA has sometimesbeen willing to mitigate the penalties if certain conditions aremet, the penalty mitigation has been nominal.
Owners/operators of commercial vessels are now fore-warned to heed the speeding restrictions in the Final Rule andto factor these restrictions into their voyage planning. As a result,owners/operators should, at minimum, ensure that their ves-sels are aware of the speed restrictions, transmit to their vessels NOAA’s Compliance Guide for Right Whale Ship StrikeReduction Rule, and train their crews accordingly.
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Impact of Changes in Congress on the Maritime IndustryBY JOAN M. BONDAREFF AND DUNCAN C. SMITH
On January 5,2011, the Mem -bers of the 112thCon gress weresworn in. The Re -publi cans gainedcontrol of theHouse and all itsCommit tees; the
Senate continued in Democratic control, but with a smallermajority. While the practical effect of these changes remainsto be seen, some policy ones are evident: the new emphasison shrinking the Federal deficit and the number of newCommittee Chairs in the House are likely to change the land-scape and the outlook for maritime legislation and budgets.
We begin with a review of the new House Committeeleadership, starting with the Transportation and InfrastructureCommittee, where Congressman Jim Oberstar (D-MN) losthis seat, and Congressman John Mica (R-FL) takes over asCommittee Chair. The full Committee Ranking Member isRep. Nick Rahall (D-WV). The key Subcommittee on CoastGuard and Maritime Transportation is chaired by Rep. FrankLoBiondo (R-NJ) and Rep. Rick Larsen (D-WA) is the RankingMember. Chairman LoBiondo, a strong supporter of the mar-itime industry, just announced his goals for the 112th Congress.
They include:• enacting legislation to provide the necessary authorities
and resources for the Coast Guard to carry out its broadresponsibilities;
• the development of a national strategic transportationplan that includes a strong maritime transportation com-ponent and greater use of coastwise trade, including theencouragement of short-sea shipping; and
• ensuring that future deepwater drilling permits are notrubberstamped and that adequate technologies, morethorough inspections, and better oversight and planningare required for future exploration and drilling activities.
The 111th Congress just enacted a comprehensive CoastGuard Modernization Act (P.L. 111-281) while leaving on thetable several items of unfinished business. Therefore, the pos-sibility of taking up another Coast Guard bill provides newopportunities for the maritime industry.
Other changes affecting the maritime industry in theHouse are in the Armed Services Committee, which is now
chaired by Congressman Howard P. (“Buck”) McKeon (R-CA).The Ranking Member is Rep. Adam Smith (D-WA). TheSeapower and Projection Forces Subcommittee is chaired byRep. Todd Akin (R-MO), and the Ranking Member is Rep.Mike McIntyre (D-NC). This Subcommittee has jurisdictionover the Maritime Security Program (“MSP”). The Committeeis beginning to examine the President’s proposals to reducethe Defense budget and has held its first hearing on this subject. Republicans are also divided over the question ofreducing the Defense budget. To date, we have not seen anyproposed changes in the MSP budget.
There are fewer changes on the Senate side. Senator JohnD. (“Jay”) Rockefeller (D-WV) continues to lead the SenateCommittee on Commerce, Science, and Transportation, andSenator Kay Bailey Hutchison (R-TX) remains the RankingMember. Chairman Rockefeller has announced his legislativeagenda, which includes:
• bolstering our infrastructure through improving transporta-tion in the highway, rail, pipeline, and maritime sectors;
• promoting exports; • protecting coastal economies and jobs through contin-
ued oversight of the Gulf spill recovery efforts and longterm restoration;
• improving cargo security and securing our ports and thetransportation of chemicals; and
• increasing the Coast Guard’s response capabilities. Senator Rockefeller has already introduced legislation, the
“Deepwater Horizon Survivors’ Fairness Act” (S.183). The billamends the Shipowners’ Liability Act of 1851, the Death onthe High Seas Act, and the Jones Act to provide the samelevel of compensation to victims’ families of the Gulf oil spillas that available to families of those killed or maimed on land.
A critical question facing the 112th Congress is what to dowith the budget. No final appropriations have been enactedeven for last year, FY 2011, and it looks increasingly likely thatthe Continuing Resolution (“CR”), which expires on March 18,2011, will simply be extended for the rest of the year. Thequestion is: what level of funding will be provided in a year-long CR—will it be at 2010 levels or go back further to 2008levels? In either event, agencies will be limited in their spend-ing to prior year levels with the possible exception of theDepartment of Defense. Unless Congress carves out excep-tions in a year-long CR, new starts or new programs are injeopardy. For agencies such as the Maritime Administration,this is likely to mean no new small shipyard grant programand a barely functioning Title XI loan guarantee program.Unless the Department of Homeland Security gets morefunds, agencies such as the Coast Guard will face even
JOAN M. BONDAREFFOF COUNSEL
DUNCAN C. SMITHPARTNER
[email protected] [email protected]
further delays in replacing its aging maritime and air fleet. As of this writing, the President has just sent Congress his
FY 2012 budget calling for his own priorities for cutting pro-grams. The President’s State of the Union Address called forinvestment in renewable energy, education, and infrastructurewhile proposing a 5-year freeze on domestic discretionaryspending. The President also set a policy goal to have 80% ofour electricity come from renewable energy sources by 2035,including from solar, wind, natural gas, and nuclear power,paid for by eliminating tax credits paid to the oil and gasindustry. The proposed spending freeze was met by a distinctlack of enthusiasm from Democrats and cries fromRepublicans that it didn’t go far enough to addressthe looming deficit. We expect this conflict amonggoals and priorities for the future to continue forthe rest of this year and probably set the stagefor the 2012 presidential election. Of key impor-tance will be who will bear the mantle of fiscalresponsibility.
Another key question for the 112th Congressis what type of legislation, if any, to enact follow-ing the Deepwater Horizon (“DWH”) oil spill. ThePresidential Com mis sion on the DWH oil spill,chaired by former Florida Senator Bob Grahamand former EPA Administrator William Reilly,issued its report in January, and hearings havebegun in the respective House and Senate com-mittees. The Commission called for an extensivereorganization of the Department of the Interior(“DOI”) with a focus on a new independentSafety Agency, new user fees on offshore oil andgas lessees, lifting the $75 million liability cap onoil spills (but not recommending to whatamount), and increased compensation for DOIinspectors, among other recommendations. Therecommendations were met with very differentresponses. Chairman Doc Hastings (R-WA) of theHouse Natural Resources Committee has taken a wait-and-see approach, but Chairman Jeff Bingaman (D-NM) of theSenate Energy and Natural Resources Committee hasapplauded the work of the Commission and announced plansto introduce new oil spill response legislation this Congress. Itremains to be seen whether he gets the support of the newRepublicans on his Committee. House Democratic Members,led by Congress man Ed Markey (D-MA), introduced new leg-islation entitled “Implementing the Recommendations of theBP Oil Spill Commission Act of 2011” (H.R. 501), which pret-
ty much does what the title states—it implements the recom-mendations of the Presidential Commis sion. So far, there hasbeen little enthusiasm for the bill from their Republican col-leagues. And, a number of bills have been introduced for thepurpose of lifting the liability cap including a bill fromCongressman Holt (D-NJ) and Senator Menendez (D-NJ).
Last year, the House passed a comprehensive energy bill,called the CLEAR Act, but the Senate did not take it up. We aremore likely to see a much more modest energy bill this year.
Finally, we are keeping a close eye on transportation spend-ing and whether the focus will be on a new Infrastructure
Bank (to include maritime projects), as the President has pro-posed, or new public-private partnerships as Chairman Micahas proposed. Either way, maritime com panies should makesure that maritime has a seat at the table and whether it’sdredging or port expansion or shipbuilding, maritime interestsare well-represented.
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Impact of Changes in Congress on the Maritime IndustryBY JOAN M. BONDAREFF AND DUNCAN C. SMITH
On January 5,2011, the Mem -bers of the 112thCon gress weresworn in. The Re -publi cans gainedcontrol of theHouse and all itsCommit tees; the
Senate continued in Democratic control, but with a smallermajority. While the practical effect of these changes remainsto be seen, some policy ones are evident: the new emphasison shrinking the Federal deficit and the number of newCommittee Chairs in the House are likely to change the land-scape and the outlook for maritime legislation and budgets.
We begin with a review of the new House Committeeleadership, starting with the Transportation and InfrastructureCommittee, where Congressman Jim Oberstar (D-MN) losthis seat, and Congressman John Mica (R-FL) takes over asCommittee Chair. The full Committee Ranking Member isRep. Nick Rahall (D-WV). The key Subcommittee on CoastGuard and Maritime Transportation is chaired by Rep. FrankLoBiondo (R-NJ) and Rep. Rick Larsen (D-WA) is the RankingMember. Chairman LoBiondo, a strong supporter of the mar-itime industry, just announced his goals for the 112th Congress.
They include:• enacting legislation to provide the necessary authorities
and resources for the Coast Guard to carry out its broadresponsibilities;
• the development of a national strategic transportationplan that includes a strong maritime transportation com-ponent and greater use of coastwise trade, including theencouragement of short-sea shipping; and
• ensuring that future deepwater drilling permits are notrubberstamped and that adequate technologies, morethorough inspections, and better oversight and planningare required for future exploration and drilling activities.
The 111th Congress just enacted a comprehensive CoastGuard Modernization Act (P.L. 111-281) while leaving on thetable several items of unfinished business. Therefore, the pos-sibility of taking up another Coast Guard bill provides newopportunities for the maritime industry.
Other changes affecting the maritime industry in theHouse are in the Armed Services Committee, which is now
chaired by Congressman Howard P. (“Buck”) McKeon (R-CA).The Ranking Member is Rep. Adam Smith (D-WA). TheSeapower and Projection Forces Subcommittee is chaired byRep. Todd Akin (R-MO), and the Ranking Member is Rep.Mike McIntyre (D-NC). This Subcommittee has jurisdictionover the Maritime Security Program (“MSP”). The Committeeis beginning to examine the President’s proposals to reducethe Defense budget and has held its first hearing on this subject. Republicans are also divided over the question ofreducing the Defense budget. To date, we have not seen anyproposed changes in the MSP budget.
There are fewer changes on the Senate side. Senator JohnD. (“Jay”) Rockefeller (D-WV) continues to lead the SenateCommittee on Commerce, Science, and Transportation, andSenator Kay Bailey Hutchison (R-TX) remains the RankingMember. Chairman Rockefeller has announced his legislativeagenda, which includes:
• bolstering our infrastructure through improving transporta-tion in the highway, rail, pipeline, and maritime sectors;
• promoting exports; • protecting coastal economies and jobs through contin-
ued oversight of the Gulf spill recovery efforts and longterm restoration;
• improving cargo security and securing our ports and thetransportation of chemicals; and
• increasing the Coast Guard’s response capabilities. Senator Rockefeller has already introduced legislation, the
“Deepwater Horizon Survivors’ Fairness Act” (S.183). The billamends the Shipowners’ Liability Act of 1851, the Death onthe High Seas Act, and the Jones Act to provide the samelevel of compensation to victims’ families of the Gulf oil spillas that available to families of those killed or maimed on land.
A critical question facing the 112th Congress is what to dowith the budget. No final appropriations have been enactedeven for last year, FY 2011, and it looks increasingly likely thatthe Continuing Resolution (“CR”), which expires on March 18,2011, will simply be extended for the rest of the year. Thequestion is: what level of funding will be provided in a year-long CR—will it be at 2010 levels or go back further to 2008levels? In either event, agencies will be limited in their spend-ing to prior year levels with the possible exception of theDepartment of Defense. Unless Congress carves out excep-tions in a year-long CR, new starts or new programs are injeopardy. For agencies such as the Maritime Administration,this is likely to mean no new small shipyard grant programand a barely functioning Title XI loan guarantee program.Unless the Department of Homeland Security gets morefunds, agencies such as the Coast Guard will face even
JOAN M. BONDAREFFOF COUNSEL
DUNCAN C. SMITHPARTNER
[email protected] [email protected]
further delays in replacing its aging maritime and air fleet. As of this writing, the President has just sent Congress his
FY 2012 budget calling for his own priorities for cutting pro-grams. The President’s State of the Union Address called forinvestment in renewable energy, education, and infrastructurewhile proposing a 5-year freeze on domestic discretionaryspending. The President also set a policy goal to have 80% ofour electricity come from renewable energy sources by 2035,including from solar, wind, natural gas, and nuclear power,paid for by eliminating tax credits paid to the oil and gasindustry. The proposed spending freeze was met by a distinctlack of enthusiasm from Democrats and cries fromRepublicans that it didn’t go far enough to addressthe looming deficit. We expect this conflict amonggoals and priorities for the future to continue forthe rest of this year and probably set the stagefor the 2012 presidential election. Of key impor-tance will be who will bear the mantle of fiscalresponsibility.
Another key question for the 112th Congressis what type of legislation, if any, to enact follow-ing the Deepwater Horizon (“DWH”) oil spill. ThePresidential Com mis sion on the DWH oil spill,chaired by former Florida Senator Bob Grahamand former EPA Administrator William Reilly,issued its report in January, and hearings havebegun in the respective House and Senate com-mittees. The Commission called for an extensivereorganization of the Department of the Interior(“DOI”) with a focus on a new independentSafety Agency, new user fees on offshore oil andgas lessees, lifting the $75 million liability cap onoil spills (but not recommending to whatamount), and increased compensation for DOIinspectors, among other recommendations. Therecommendations were met with very differentresponses. Chairman Doc Hastings (R-WA) of theHouse Natural Resources Committee has taken a wait-and-see approach, but Chairman Jeff Bingaman (D-NM) of theSenate Energy and Natural Resources Committee hasapplauded the work of the Commission and announced plansto introduce new oil spill response legislation this Congress. Itremains to be seen whether he gets the support of the newRepublicans on his Committee. House Democratic Members,led by Congress man Ed Markey (D-MA), introduced new leg-islation entitled “Implementing the Recommendations of theBP Oil Spill Commission Act of 2011” (H.R. 501), which pret-
ty much does what the title states—it implements the recom-mendations of the Presidential Commis sion. So far, there hasbeen little enthusiasm for the bill from their Republican col-leagues. And, a number of bills have been introduced for thepurpose of lifting the liability cap including a bill fromCongressman Holt (D-NJ) and Senator Menendez (D-NJ).
Last year, the House passed a comprehensive energy bill,called the CLEAR Act, but the Senate did not take it up. We aremore likely to see a much more modest energy bill this year.
Finally, we are keeping a close eye on transportation spend-ing and whether the focus will be on a new Infrastructure
Bank (to include maritime projects), as the President has pro-posed, or new public-private partnerships as Chairman Micahas proposed. Either way, maritime com panies should makesure that maritime has a seat at the table and whether it’sdredging or port expansion or shipbuilding, maritime interestsare well-represented.
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MAI N B R ACE
the M/T BONI, the panel found significant not only the factthat the owner and disponent owner were generally awarethat the charterer operated a refinery and traded petroleum inthe spot market, but also the fact that they were themselvesin the petroleum business—one in lighterage and the other intanker operations—and surely had derived some understand-ing of the petroleum markets from that business. Indeed, tothe extent it was true in 1994 that “most companies areaware of the need and advantage of hedging products toassure price stability,” it can only be more so in 2011. Thesame is probably true about other kinds of hedges, such ascurrency contracts, forward freight agreements, and othersimilar kinds of derivatives.
But the second part of the analysis is as important as thefirst, and in any given case it will probably be the more difficult
part of the proof: is the hedge actually a hedge or is it a market play? It is easy to see why this distinction is critical, forno contracting party should be liable for the other’s own poordecisions in trying to speculate on the futures markets. At bottom it is a question of causation, i.e., did the breach causethe loss or was the loss caused by trading strategies that werenot properly designed to hedge a specific price risk?
For a party seeking to avoid this kind of liability, the solutionis simple: make it explicit in the contract that consequentialdamages (or, more specifically, losses resulting from hedgingor derivative positions) will in no event be recoverable underthe contract. For a party wishing to be able to recover thesekinds of losses, on the other hand, a specific clause in the
contract allowing such recovery would at least answer thequestion of whether this kind of loss was foreseeable. At aminimum, however, such a party should communicate to itscounterparty in the pre-contract communications somedetails about its hedging program and intentions in order tosupport an argument down the road that the hedging losseswere a foreseeable consequence of the counterparty’s breach.
But in addition, the party seeking recovery for hedginglosses probably will need to be able to show that its hedgingpractices were in fact hedges relating to the specific cargo atissue and not merely part of a larger market position strategy.This will often be difficult to do because hedging positions arenot usually so directly linked to specific cargos. It is difficult tospeculate based on the M/T BONI award exactly how close alink must be proven, but at the least it seems clear that some
causal connection must bedemonstrated between thebreach and the hedging lossin order to meet the foresee-ability test for recovery of con-sequential damages.
A further issue, notreached by the M/T BONIaward, is whether the partyseeking recovery for hedginglosses acted reasonably in try-ing to mitigate its damages by,for instance, covering openpositions or, perhaps, eventaking new positions. Anotherissue is how these kinds ofliabilities might travel up ordown a charter chain, wheredifferent parties may have dif-ferent degrees of understand-
ing or knowledge about the business of the party ultimatelyclaiming the loss.
It is perhaps somewhat surprising that there have notbeen more cases seeking recovery for hedging losses result-ing from breach of a charter, particularly given the increasedprevalence of the various kinds of hedging instruments thatare now commonly used in connection with the transportationof cargo by sea. The table is set for such claims, however, andowners, charterers, and cargo interests alike should be awareof this issue so they can protect their interests accordingly.
This article first appeared in Lloyd’s List, “Beware Rise in Claims for Cargo HedgingLosses,” on February 15, 2011.
No Speeding—You May Be Subjectto a Whale of a Penalty! BY JEANNE M. GRASSO
Over the past few months, theNational Oceanic and AtmosphericAdministration (“NOAA”) has issuedseveral Notices of Violation andAssessment (“NOVAs”) to commercialvessels for violating the U.S. East Coastseasonal 10-knot speed limit estab-lished to protect the endangeredNorth Atlantic right whale, which is
protected under the Endangered Species Act and the MarineMammal Protection Act. Penalties in the nine reportedenforcement actions, all from NOAA’s Southeast Region,range from about $15,000 to $50,000. NOAA identified theviolations by using the Automatic Identification System(“AIS”), which allows NOAA to calculate and chart the vessel’sspeed over its entire route.
By way of background, NOAA’s Right Whale Ship StrikeReduction Rule (the “Final Rule”), which is intended to reducethe mortality of the North Atlantic right whale, went into effecton December 9, 2008. The right whale is the world’s mostcritically endangered large whale species. North Atlantic rightwhales, which have been known to live up to 70 years, rangefrom 45 to 60 feet in length and weigh between 30 and 80tons. Approximately one-third of all right whale deaths report-edly result from ship strikes and entanglement in fishing gear.According to NOAA’s data, most of the vessel strikes resultingin right whale fatalities occurred from collisions with largecommercial vessels.
The Final Rule generally restricts vessels of 65 feet orgreater in length to speeds of 10 knots or less in three “sea-sonal management areas” along the U.S. East Coast. The seasonal management area for the Northeast runs fromJanuary 1 to May 15; the Mid-Atlantic from November 1 toApril 30; and the Southeast from November 15 to April 15.During the time the seasonal management areas are in effect,the speed limit may only be exceeded if necessary to main-tain safe maneuvering, as confirmed by the master or pilot, inwhich case the speed exceedance and the reasons for thedeviation must be logged in the vessel’s logbook. The masterof the vessel must also attest to the accuracy of the logbookentry by signing and dating it. See the Final Rule athttp://www.nmfs.noaa.gov/pr/pdfs/fr/fr73-60173.pdf.
NOAA spent the first season (generally December 2008to May 2009) endeavoring to increase the awareness of
JEANNE M. GRASSOPARTNER
mariners of the speed restrictions and warned, rather thanfined, some alleged violators. Some companies subject to therecent enforcement actions, however, did not receive warn-ings during the first season. After the first year’s grace period,NOAA has begun to enforce the Final Rule by issuing NOVAsfor violations having occurred during the Rule’s second season(generally November 2009 to May 2010). The NOVAs citedmultiple violations and sometimes were issued almost a yearafter the first alleged violation occurred.
Should a vessel receive a NOVA and a penalty beassessed, shipowners have 30 days either to seek modifica-tion of the penalty, request a hearing before an administrativelaw judge, or pay the penalty. While NOAA has sometimesbeen willing to mitigate the penalties if certain conditions aremet, the penalty mitigation has been nominal.
Owners/operators of commercial vessels are now fore-warned to heed the speeding restrictions in the Final Rule andto factor these restrictions into their voyage planning. As a result,owners/operators should, at minimum, ensure that their ves-sels are aware of the speed restrictions, transmit to their vessels NOAA’s Compliance Guide for Right Whale Ship StrikeReduction Rule, and train their crews accordingly.
MAI N B R ACE
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Recovery of Hedging Losses as ConsequentialDamages in New York ArbitrationBY THOMAS H. BELKNAP, JR.
The scenario is common enough:an owner voyage-charters its bulkcargo vessel to a charterer to load acargo of, say, wheat, for carriage fromPoint A to Point B. En route, the vesselsuffers serious mechanical problemsresulting in a long delay in the deliveryof the cargo. The cargo is undamaged,but indexed market values for wheat
drop substantially between the time the cargo was expectedto be delivered and the date it was actually delivered. To com-plicate matters, the charterer, a sophisticated internationalgrain trading company, claims that it entered certain futurescontracts at the time it purchased the cargo in order to fullyhedge against the risk of such market fluctuation; however, asa result of the delay, it suffered a further loss on the hedgepositions because they matured before the cargo arrived. Thecharterer also claims to have suffered losses on certain cur-rency futures positions it had taken to hedge against fluctuat-ing exchange rates between the time of purchase of the cargoand the time of anticipated sale. Can the charterer recoverthese losses against the owner?
All of these losses fall under the category of consequen-tial damages. Apart from where the contract may provideother wise, the rule in New York of when consequential dam-ages may be recoverable derives from the well-known andoft-quoted decision in Hadley v. Baxendale, 9 Exch. 341(Ct. of Exchequer 1854). Simply stated, only those damagesthat are reasonably foreseeable—at the time the contract isentered—as being a likely and probable consequence of aparty’s breach may be recovered. Importantly, the inquiry isnot whether the breaching party should have foreseen theexact manner in which the loss came about; but rather, theloss must only be shown to have been foreseeable as a natural and probable consequence of the breach. NumerousNew York arbitration awards and court decisions have reaf-firmed these basic principles.
So where do hedging losses fall in this analysis? Perhapssurprisingly, this question has received very little treatment byNew York arbitrators. Indeed, it appears that the only reportedNew York award to address this issue in any great depth isThe M/T BONI, SMA No. 3053 (1994). That case involvedclaims under a chain of ASBATANKVOY charters and bills oflading for various losses resulting from a fire on board the
vessel that caused the voyage to be terminated. The vesselwas towed back to Singapore, where part of the cargo wassold and part of the cargo was transshipped to Puerto Rico.The subcharterer/cargo owner asserted various claims up thecharter chain, including a claim for approximately $2.3 millionin losses based on a comparison of the hedge positions itplaced for the date the vessel was scheduled to arrive and thedate that the cargo actually did arrive.
In analyzing this element of the claim, the panel first considered whether hedging losses could be said to be fore-seeable in the context of this charter relationship. Answeringthis question in the affirmative, the panel observed as follows:
It is generally recognized that the hedging of petro-leum products and other commodities is a desirableand essential method of minimizing price fluctuationsand exposure to loss. All of the experts before thispanel testified on this point and there was no dis-agreement. Indeed, one may logically conclude that itis foolhardy and speculative not to do so. [Owners]knew that [Charterer] operated a refinery in PuertoRico and that it was also a sometime trader in the spotmarkets. [Owner’s] principal business is in the tankerlighterage market and as such has close contactwith a variety of petroleum operating companies.[Headowner] operates tankers and is presumed tohave some understanding of the basic elements of thepetroleum trade. After all, the very political and eco-nomic pressures impacting oil prices also affect tankerrates. We accept in this day and age that most com-panies are aware of the need and advantage ofhedging products to assure price stability and alow risk profile. [Emphasis added]Having concluded that it was reasonably foreseeable that
this charterer would suffer hedging losses caused by a sub-stantial delay in delivery of the cargo, the panel then turnedto analyze the actual hedging losses that were claimed.Ultimately, the panel denied the claim on the basis that theactual transactions were not truly “hedges” within the chart -erer’s own stated hedging procedures and were not placed inaccordance with accepted industry standards. As the panelnoted, ”[h]edges are never an absolute protection againstthe risks of market fluctuations, but if placed properly…theyoffer a large measure of price protection. They were not soplaced here.”
One can extrapolate some basic principles from thisaward. First, in considering whether hedging losses are rea-sonably foreseeable, a panel must look at the trade involvedand at the parties’ knowledge and experience in that trade. In
THOMAS H. BELKNAP, JR.PARTNER
Protecting Your Good Name—Some SpecialConsiderations for Protecting MaritimeTrademarks in the United StatesBY SUSAN B. FLOHR*
Whether you are a cruise line,drilling company, vessel owner, cargoowner, shipbuilding and repair com-pany, watercraft rental company oremployment company crewing ves-sels, protecting your name and trade-marks around the world is vital toyour business. The unique challengesfacing maritime companies arise out
of the nature of the goods and services provided by thesecompanies and the locations in which they do business.
Strategies for protecting names and commercial identitymay differ from one country to the next. This is because trade-marks are territorial and thus creatures of the laws of eachsovereign state, with the exception of a few regional autho -rities such as the European Union. Strategies for those seek-ing to register their trademarks and service marks in theUnited States will vary depending in part upon whether appli-cants: are U.S. entities or non-U.S. entities; sell goods or pro-vide services; can show the requisite “use in commerce”; andpossess a non-U.S. registration or application.
In the United States, there are several paths to registration: • U.S. companies can file applications based on either
“use in commerce” or a bona fide intent-to-use themark (Sections 1(a) and 1(b) of the Trademark Act, 15U.S.C. §§ 1(a) and 1(b) respectively).
• Non-U.S. companies have these options as well, andadditionally can file applications based on their ownnational applications or registrations in their home coun-tries or a regional registration such as a CommunityTrademark Registration (“CTM”) issued in any memberstate of the EU (if they have such registrations) eitherunder certain provisions of the Trademark Act (§§44(d)and 44(e); 15 U.S.C. §§ 1126(d) and (e)) or basedon an International Registration filed under the MadridProtocol System.
There are pros and cons to each approach, and while thisarticle cannot cover them in depth, it will touch on the mostforeseeable issues and point out some tactical options.
SUSAN B. FLOHRPARTNER
Challenges of Registering Maritime Trademarks in the U.S.
Proving “Use in Commerce” for Maritime ProductsFor a U.S. application based on “use in commerce” or a
bona fide intent-to-use, the applicant eventually must assertuse of the mark in commerce, and prove such use before aregistration will issue.
In the case of products, to satisfy the “use in commerce”requirement, the mark must be placed in any manner on thegoods, their containers, the displays associated therewith, oron the tags or labels affixed thereto; if the nature of the goodsmakes such placement impracticable, then the mark must beplaced on documents associated with the goods or their sale,and the goods must be sold or transported in commerce.
The requirement of proof of use on products is more chal-lenging to comply with if your products are bulk productssuch as oil, coal, or other bulk products shipped without anylabeling or packaging. Where fuel is transported by tankertruck on land, the company brand may appear on the tankerand satisfy the affixation requirement. But what about wherethe fuel or other bulk products are transported by vessel? Thelikelihood is high that the vessel will be chartered, and thusthe name of the company selling the bulk products and itsbrand will not likely appear on the vessel. How are such companies to prove the requisite use of the mark on thegoods in commerce?
In such cases, Section 45 of the Trademark Act permitsshipping invoices, bills of lading or other shipping documentsshowing the mark associated with the goods, or webpagescreenshots depicting the products associated with the markto satisfy the requirement for “use in commerce” where thenature of the goods makes normal affixation impractical.However, a mere assertion of impracticability will not suffice;the record must establish that the goods are of such a naturethat traditional trademark use is impracticable.
Trademark examiners at the United States Patent andTrademark Office (“USPTO”) may not initially accept alterna-tive specimens unless the impracticability of complying withthe affixation requirement is fully supported. Where the appli-cant’s goods are not sold in gallon drums or at gasolinepumping stations, but rather are sold in bulk, stored in tanksand delivered through pipelines, tanker trucks, barges andother methods of bulk transportation, there should be no difficulty as such a scenario is analogous to the natural gas,grains, and chemicals sold in bulk or transported via tanker cars,all of which are examples specified in the TMEP as prototypicalof impracticability for affixation of the mark to the goods.
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investigation, which continues to develop conclusions andrecommendations as they relate to the Deepwater Horizonexplosion and loss of life. As of the publication of this article,the joint investigation’s final hearing to review the results ofthe blowout preventer (“BOP”) stack forensic testing hadbeen delayed until the week of April 4. The deadline for theinvestigation team to submit its final report to Coast GuardHeadquarters and BOEM is now July 27, 2011. Once the finalreport is released to the public, there will be much interestfrom federal agencies, the public, and Congress to comparethe final report and recommendations from the NationalCommission and the joint investigation before determiningfuture agency actions and legislation.
Another factor that could affect future actions will be thedecisions that the Department of Justice (“DOJ”) takes onceit has seen a final draft of the joint investigation report. It isexpected that DOJ will review the report and move forwardwith its grand jury investigation as it will be able to review thefindings in the draft report to confirm that its prosecution theories will not conflict with the investigative findings. Basedon what we know today, we would expect DOJ to start sub-poenaing individuals sometime after they review the draftreport and then move forward with criminal charges againstthe companies it decides to target sometime in the second orthird quarter of 2011.
Meanwhile, the release of the final report has rekindledinterest in Congress. Various Congressional hearings havealready been held and others are being scheduled. A numberof Senators and Representatives have indicated they intend tointroduce legislation incorporating many of the NationalCommission’s recommendations, including raising the ceiling
on damages. Some have indicated that it is time to takeaction on the oil spill legislation that was passed by the Houselast year, H.R. 3534, the Consolidated Land, Energy, andAquatic Resources Act of 2009 (the “CLEAR Act”), or provisions of the consolidated Senate oil spill version thatfailed to pass, S. 3663, the Clean Energy Jobs and Oil SpillAccountability Plan.
Others are taking a more neutral approach and have indi-cated that they would study its report and propose legislationif appropriate. The fact of the matter is that the NationalCommission was under a tight deadline and failed to addressa number of key matters, including why workers on the rigmade the decisions they made before the explosion and whythe BOP failed because of uncompleted tests.
The key to what action Congress may take is the fact thatthe joint investigation report is not completed, and it isunclear exactly what action may be taken by DOJ. As statedduring a hearing of the House Transportation andInfrastructure Subcommittee on February 11, 2011 by theChair of the Subcommittee, Representative Frank LoBiondo(R-NJ) and Representative Don Young (R-AK), the joint reportfrom the Coast Guard and BOEM is likely to offer differingopinions and recommendations than the National Oil SpillCommission report, and they want to be able to take intoconsideration all suggestions before drafting any legislation.
In conclusion, the National Commission Report is impor-tant and it should, and will, be taken into consideration by thecognizant federal agencies and Congress, but it is prematureto make any final conclusions until the joint investigation’sreport is released and action taken by DOJ is assessed.
Tom Belknap [email protected]
Jeanne Grasso [email protected]
Jeremy Harwood [email protected]
John Kimball [email protected]
Greg Linsin [email protected]
Peter Mills [email protected]
Jeff Moller [email protected]
Richard Singleton [email protected]
Duncan Smith [email protected]
Jon Waldron [email protected]
Alan Weigel [email protected]
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In the event of an incident, please contact any member of our team:
Because the power of the federal government to registermarks comes from the Commerce Clause of the Constitution,the sales of such goods bearing the mark must be in com-merce lawfully regulated by Congress in order for the applicantto rely on such use to obtain a federal trademark registration.
The term “use in commerce” includes sales of goodseither in commerce between the U.S. and a foreign countryor in interstate commerce among the several states. Sales ofbulk products, bunkers, or oil by either a U.S. entity or a non-U.S. entity to U.S. customers are typically in commerce. Salesof such goods by either entity to foreign customers located inthe United States or within its territorial waters are also typically in commerce. Sales of bulk products, bunkers, or oilby a U.S. entity to a foreign customer in a foreign countrywould not constitute a sale in commerce. But the question ofwhether or not sales of such goods by either a U.S. or non-U.S. entity to foreign cus-tomers at sea constitutes“use in commerce” maydepend upon a variety offactors such as the owner-ship of the vessel and citi-zenship of the purchasers,and the outcome wouldlikely be very fact-specific.As a result, there may besome risk in attempting torely on such sales to estab-lish “use in commerce” for registration purposes. For prospec-tive applicants with other options, such as non-U.S. entitieswith national, regional or international registrations, it may bebest to file on one of those bases instead.
Proving “Use in Commerce” for Maritime ServicesIn contrast to proving use for bulk products, proving use of
a mark for services, such as providing bunkers at sea, is morestraightforward since there is no affixation requirement. Use ofa mark for services is easily established by printed or onlinepromotional materials including screenshots of web pagesshowing use of the mark in association with the sale or adver-tising of the services, provided that the service is being ren-dered in commerce.
“Use in commerce” for services can be established when themark is used or displayed in the sale or advertising of servicesand the services are rendered in commerce. They can also beestablished if the services are rendered in more than one state,or in the United States and a foreign country, and the person
rendering the services is engaged in commerce in connectionwith the services.
Rendering a service in commerce typically requires adver-tising the services across state lines, or having customers whotravel across state lines to obtain the services, or licenseesrendering the services in more than a single state. When serv-ices are rendered at sea, there are analogous uncertainties tothose raised above with regard to whether or not goods soldat sea comprise commerce regulable by Congress. Servicesrendered in U.S. waters can establish use in commerce, butfor services rendered outside of U.S. waters, the satisfactoryestablishment of use in commerce may also depend uponthe extent to which those services are advertised or promotedin the United States in connection with the service mark,whether the customers receiving the services are U.S. citizensor U.S. vessels, whether the services are provided throughU.S. ports, and other similar factors.
The Advantages of Filing Based on a ForeignRegistration or ApplicationAvoiding the Requirement to Prove Use
If you are a non-U.S. company, you have otheroptions that do not require proving use of the mark incommerce. If you own an application or registration inyour home country, or a regional one such as a CTM,you can file a U.S. application based on your foreignfiling. Alternatively, you can file for an InternationalRegistration through the WIPO and designate theUnited States under the Madrid Protocol. Each of
these options has a number of advantages over filing in theU.S. based on use or intent-to-use. Most importantly, theseoptions remove the requirement of establishing “use in com-merce” prior to issuance of the registration.
In order to avoid losing your trademark rights in the U.S.,you will need to be able to prove use eventually, at leastbetween the fifth and sixth year after registration when thestatutory use declaration is due, and then later for renewal atthe ten year anniversary. Nevertheless, this approach gives thecompany five years to work with counsel to develop accept-able specimens prior to the deadline for filing. Note, however,that the U.S. registration is reliant on the non-U.S. registrationthat may be vulnerable to cancellation.
Securing a Broader Description of Goods and Services
Another advantage of filing based on a foreign nationalregistration, CTM regional registration, or an InternationalRegistration through the Madrid Protocol is that any of these
Protecting Your Good Name (continued from page 9)
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Effect of the National Commission’sRecommendations and Final Reporton the Deepwater Horizon Incidenton the Offshore IndustryBY JONATHAN K. WALDRON
As scheduled, the National Com -mission on the BP Deepwater Horizonoil spill submitted its report and rec-ommendations to President Obamaon January 11, 2011. The NationalCommission, co-chaired by formerFlorida Governor and Senator BobGraham and former Administrator ofthe Environmental Protection Agency
William K. Reilly, was tasked with providing recommendationson how we can prevent—and mitigate the impact of—anyfuture spills that result from offshore drilling.
In essence, the final report warns that dramatic steps arerequired to prevent another failure and, if that occurs, thepublic will wonder why Congress, the Administration, and theindustry allowed this to happen again. On the other hand, theoil industry quickly struck out against the report, stating thatcompanies with good safety records should not be subjectedto costly new rules and warned that a major new set of regu-lations would slow production and drive up prices. Objectionswere also raised against the recommendation that the cur rent$75 million cap on liability for accidents be raised by anunspecified amount.
The final 380-page report includes an additional 60 pagesof recommendations. The report lays most of the blame forthe accident on the three companies responsible for drillingthe well and concludes that there are “systemic” problemsacross the industry. Moreover, many commentators havedeclared the report as a scathing indictment of the industry inits failure to prepare adequate plans to respond to a major inci-dent, exacerbated by federal oversight that has been grosslyinadequate.
Listed below is a summary of the key findings.• The explosive loss of the Macondo well could have
been prevented.• The immediate causes of the Macondo well blowout
can be traced to a series of identifiable mistakes madeby BP, Halliburton, and Transocean that reveal suchsyste matic failures in risk management that they placein doubt the safety culture of the entire industry.
• Deepwater energy exploration and production, particu-larly at the frontiers of experience, involve risks forwhich neither industry nor government has been ade-quately prepared.
• Fundamental regulatory and policy reforms are requiredto assure human safety and environmental protection,regulatory oversight of leasing, energy exploration, andproduction.
• The oil and gas industry will also need to take its own,unilateral steps to dramatically increase safety through-out the industry.
• The technology, laws and regulations, and practices forcontaining, responding to, and cleaning up spills lagbehind the real risks associated with deepwater drilling.
• Government must close the existing gap and industrymust support, rather than resist, that effort.
• Scientific understanding of environmental conditionsrelated to deepwater drilling are inadequate.
So what does all this mean? Will the cognizant agenciesimplement new regulations and policies, and will Congressenact laws as a result of these recommendations? Indeed, theWhite House noted in a statement, “In keeping with the seriesof recommendations included in the commission report, ourAdministration has already taken important steps to imple-ment aggressive new reforms for the offshore oil and gasindustry . . . and will take the panel’s additional recommenda-tions into account as it adopts additional changes.” The WhiteHouse went on to say that: “The mistakes and oversights byindustry as well as government must not be repeated.”
To answer these questions, it must be kept in mind thatthe Bureau of Ocean Energy Management (“BOEM”) hasbeen busily moving forward with changes and new require-ments to provide for a safer offshore regime following thisincident. In addition, high levels of the Administration willmost assuredly review and consider implementation of manyof these recommendations. Similarly, the Coast Guard willalso be reviewing this report and its recommendations in con-sideration of future improvements.
Looming over the horizon, however, is the release of themuch anticipated results of the joint Coast Guard and BOEM
JONATHAN K. WALDRONPARTNER
Above all, however, there has been impressive resilienceand encouraging progress in many segments of the industryas we move out of the economic crisis, which will be recog-nized by the speakers at CMA Shipping 2011. To move forward, it helps if you know where you want to go. The rangeof topics to be discussed and debated at this year’s confer-ence will unquestionably help guide all of us as we attemptto plot our way into the future.
CMA Shipping 2011 (continued from page 1) options would likely allow you a broader description of goodsand services than if you file directly with the USPTO based onuse or intent to use. There are two reasons for this. First, theUSPTO is known for its stringent regulations on the manner inwhich applicants can describe goods and services. Second,you must be using the mark for all the goods and servicescovered by the application prior to registration, and thisrequirement naturally would limit the breadth of goods orservices you can claim.
ConclusionTactical considerations for maritime companies seeking to
register their trademarks and service marks in the UnitedStates will differ depending upon whether or not they are U.S.entities or non-U.S. entities. This article has highlighted someof those considerations. For a U.S. entity, there is no way for-ward but to prove “use in commerce”; for a non-U.S. entity, itmay be wise to select an alternative route to registration.
This article was first published in the February 2011 edition of Maritime Reporter.
* Susan Flohr wrote this article with the assistance of John Paul Oleksiuk, associate inBlank Rome’s intellectual property & technology group, and Tara L. Leiter, associate inBlank Rome’s maritime practice.
Foreign MaritimeWorkers with B-1 VisasMay Now Apply forTransportation WorkerIdentification CredentialsBY JEANNE M. GRASSO
On February 9, 2011, after anintensive 2+ year effort by maritime
industry representatives, the Department of HomelandSecurity (“DHS”) and the Department of State (“DOS”)announced the creation of an annotated version of the B-1visa—issued to a foreign citizen visiting the United States forbusiness purposes—that will allow a foreign maritime workerto apply for a Transportation Worker Identification Credential(“TWIC”). A TWIC is a biometric identification card that a mar-itime worker must obtain in order to gain unescorted accessto secure areas of facilities subject to the MaritimeTransportation Security Act of 2002 (“MTSA”). The announce-ment is an important step in ensuring that foreign maritimeworkers can obtain the necessary credentials to do their jobswhen ships they are responsible for are in U.S. ports. This newprocess was necessary because the Transportation SecurityAdmini stration’s (“TSA”) TWIC final rule, published on January25, 2007, did not include the B-1 visa on its list of TWIC
JEANNE M. GRASSOPARTNER
eligible immigration categories, thus prohibiting B-1 visa holders from applying for a TWIC.
The foreign nationals in the maritime industry that com-monly travel to the United States on a B-1 visa are primarilyemployed by shipowners or managers as port superintend-ents, company security officers responsible for compliancewith the International Ship and Port Facility Security Code,designated persons ashore responsible for compliance withthe International Safety Management Code, and other staffwith crew management and logistics responsibility. Collectively,these shore personnel visit ships in both U.S. and foreignports to oversee cargo operations, inspect ships’ condition,conduct maintenance, audit compliance, handle provisioning,and provide crew training.
The challenges that the omission of the B-1 visa in theTWIC final rule posed became apparent during implementa-tion of the TWIC program during 2008 and 2009 when theseindividuals could not gain access to many of their vessels call-ing on U.S. ports without undue delays or excessive costs.Following input and continual advocacy from maritime industrystakeholders over the next few years, however, DHS and DOSfinally collaborated to create a process allowing maritime personnel that fall within the B-1 visa category to be eligiblefor a TWIC.
Under this new process, a foreign maritime worker desir-ing a TWIC must provide notice to the DOS upon applicationfor a B-1 visa, as well as a letter from his or her employer indi-cating that the individual will be required to access or performservices in secure areas of maritime facilities. DOS has sent acable to all Consulates outlining the process, so there shouldbe no unnecessary delays. Provided the applicant is otherwiseeligible for the B-1 visa, the visa will be annotated with “TWICLetter Received.” Upon receipt of the B-1 visa with the TWICannotation, the individual may then apply for a TWIC. As is thecase for all TWIC applicants, these foreign maritime workerswill get photographed and finger printed, pay the enrollmentfee, and undergo rigorous background checks, includingchecks against the terrorist watch list, criminal history data -bases, and immigrations records.
It is important to note, however, that a TWIC does not enti-tle the holder to unescorted access to MTSA facilities; rather, itqualifies the TWIC holder for unescorted access at the discre-tion of the MTSA facility operator. It is also important to notethat upon expiration of a visa, the TWIC must be surrenderedand returned to TSA. Finally, when a nonimmigrant employeequits or is terminated during the 5-year validity period of theirTWIC, the employer is required to provide notification to TSAwithin five business days.
PAGE
CMA Shipping 2011 .........................................................................................................1
Effect of the National Commission’s Recommendationsand Final Report on the Deepwater HorizonIncident on the Offshore Industry .....................................................................2
Recovery of Hedging Losses as ConsequentialDamages in New York Arbitrations ...................................................................4
Impact of Changes in Congress on theMaritime Industry .............................................................................................................6
No Speeding—You May Be Subjectto a Whale of a Penalty! .............................................................................................8
Protecting Your Good Name—Some Special .............................................9Considerations for Protecting MaritimeTrademarks in the United States
Foreign Maritime Workers with B-1 VisasMay Now Apply for Transportation WorkerIdentification Credentials .......................................................................................11
Blank Rome Congratulates MaritimeAttorneys Recognized by Who’s Who Legal ..........................................12
CMA Shipping 2011BY JOHN D. KIMBALL
The theme of this year’s Connecti -cut Maritime Association (“CMA”)Ship ping 2011 Confer ence “forward”—is laden with ambiguity. Given the current business climate, that is as itshould be. Does “forward” reflect thefact that there was positive movementand profitability in the shipping indus-try in the past year? That certainly was
the case for some segments of the industry. Or is “forward”only an aspiration, recognizing there is a long way to go beforewe will have a business climate which most would agree isgood for shipping?
Everyone would agree that shipping experienced somemajor setbacks in the past year. Let me focus on just two majorones—piracy and the consequences of Deepwater Horizon.
Piracy is not just an issue for the industry; it has becomea true plague that needs unprecedented international cooper-ation to bring it to an end. The IMO’s increased focus on finding workable solutions to this scourge deserves theunqualified support of the shipping industry. I do not wish tobe critical of the shipowners who have faced the terribledilemma of having to pay ransom to free their crews, ships,and cargo. But in formulating its response to piracy, the shipping industry has created much more than a cottageindustry to attempt to deal with it. Ransom has become insti-tutionalized, with insurance companies, security companies,law firms, and others having a true financial stake in the matter. The shipping industry must do everything possible tocombat the idea that the seizure of their ships by pirates is anormal obstacle to doing business. It is an old adage thatevery ransom paid merely leads to even greater demands the
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CONTENTS
© 2011, BLANK ROME LLP. Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from varioussources, the accuracy and completeness of which cannot be assured. The Advisory should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel. Additional information on BlankRome may be found on our website www.blankrome.com.
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March 2011 No. 2
JOHN D. KIMBALLPARTNER
next time. The motherships and weapons acquired by thepirates in order to continue plying ever farther into the IndianOcean have only become more sophisticated as piracybecomes even more profitable. If we still are writing aboutthis topic at CMA Shipping 2012, we certainly will not havegone “forward.”
The Deepwater Horizon oil spill, which was unfolding atCMA Shipping 2010, will have business and legal conse-quences that are still to be determined. But clearly, it broughtto the fore two of the most important themes of our times.First, developing alternative energy sources, including wind,must be among our highest priorities. Second, the safety ofseafarers should never be compromised.
(continued on page 2)
Richard V. Singleton II,who is “an accom-plished practitionerwho has acted inclaims in excess
of $25 million.”
Jeanne M. Grasso
Jonathan K. Waldron
Nigel S. Binnersly,Blank Rome Solicitors(Hong Kong)
Peter E. Mills,Blank Rome Solicitors (Hong Kong)
Jeremy J.O. Harwood,who is a “litigationand arbitrationexpert” and a “lead-ing light” in the
industry, and is ranked as one ofthe top ten “Most Highly RegardedIndividuals” by Who’s Who Legal.
The International Who’s Who of Shipping & Maritime Lawyers 2010
recognized seven Blank Rome maritime attorneys
for their leadership in the shipping & maritime industry.
Blank Rome Congratulates Maritime AttorneysRecognized by Who’s Who Legal
John D. Kimball,who is “pheno menal”and has “an unsur-passable marineinsurance practice”,
and is ranked as one of the top ten“Most Highly Regarded Individuals”by Who’s Who Legal.
Congratulations to
