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Apple, the Publishing Titans and the DOJ: Keeping Pace with Technology but Not Compliance?

What is an electronic book worth? You may have thought your $9.99 best seller was a good deal, but according to the US Department of Justice (DOJ), you’re paying too much. U.S. Attorney General Eric Holder, speaking at an E-book Press Conference on April 11, 2012, alleged that the price for e-books published by several of the largest publishers has likely been fixed and unduly inflated due to a blatant conspiracy at the highest executive levels between Apple and several publishing titans. While e-books are born of new technology and their pricing paradigm may be dramatically different than their printed cousins from pre-Kindle print publishing world, this DOJ litigation alleges that Apple and the publishing titans were really doing business in a very old fashioned way.

Holder announced that the DOJ will continue to pursue litigation against Apple, Macmillan, and Penguin. Hatchette, HarperCollins and Simon & Schuster agreed to a proposed settlement that would allow retailers the freedom to reduce the consumer price to any value that suits the retailer. Pennies above the price they paid publishers to acquire a book, or even below wholesale as a loss leader? Contrast this with the pricing scheme these publishers enjoyed with Apple. Holder alleges the publishers agreed to fix the price and Apple would guarantee a 30% “commission” on the sale of each book. The “agency model” replaced the standard “wholesale model” where booksellers could set their own price and discounts from list pricing.

The settlement requires the three publishers to grant retailers the freedom to reduce e-book prices; to terminate the “anticompetitive most-favored-nation agreements” with Apple and other e-books retailers; and, to prohibit the publishers from placing constraints on discounts for two years (so, get them while you can now). Also, the publishers will be prohibited from conspiring or sharing “competitively sensitive information with their competitors for 5 years.” They must each implement a strong antitrust compliance program.

The DOJ referred to the “egregiousness” of the alleged antitrust behavior at the executive level. Publishers were concerned about the “wretched $9.99 price point.” The alleged conspiracy was to “force [Amazon] to accept a price level higher than $9.99.” Even Steve Jobs is alleged to have been directly involved in this conspiracy and to have said “the customer pays a little more, but that’s what you [referring to the publishers here] want anyway.”

All of this taking place in the summer of 2009, in the established era of Sarbanes-Oxley corporate governance and compliance legislation, as well as the Federal Sentencing Guidelines introduced in 1987 and recently updated in 2010. How was this possible? Where is the minimum corporate governance we expect of corporate America? Consider that Apple posts its corporate governance and business conduct policy online for investors and consumers to consider in their relationship with the company. As the case evolves, we will have the opportunity to judge whether its CEO complied.

So why did the DOJ settle – wouldn’t this case have been more appropriate to try with all defendants? Perhaps it is simply because the defendants were willing to settle. Perhaps they agreed to provide valuable testimony. Perhaps because it is truly difficult to determine how an e-book should be priced.

Indeed, e-book pricing is mysterious – perhaps more so for publishers than consumers. The digital era has turned book pricing upside down. A digital book basically saves publishers the underlying expense of manufacturing anything tangible. No need to determine the initial print run. Doesn’t matter if the book is leather bound or with gold leaf pages. No shipping costs. Even returns, the bane of publishers, are essentially eliminated. Similar to the era of albums and CDs moving to iTunes, the e-book is written and duplicated with simple keystrokes online. The wholesale or retail price is definitely not based on the actual cost of digitizing the book. Kobo Books offers millions of free e-books, as do many others, including the DOJ’s adversary – Apple.

Pricing is really based on what the market will bear. Smaller presses frequently have far less volume in sales and can’t afford to set a low price. Any publisher wants to ensure reasonable royalties for authors and for pricing to help cover the real risk of investment in any new work or author with, at least, a modest expectation for profit. Here is some comparison pricing on three print books and their e-book versions.

Girl with the Dragon Tattoo, by Stieg Larsson, published by Knopf Doubleday Publishing Group. The Kindle version price is the “wretched $9.99.” The same price for the paperback. New hardcover versions are on sale for $30+. Not sold by iBookstore. Barnes & Noble: $10.98 hardcover, and $9.99 for Nook version.

In Spite of the Dark Silence, by Jorge Volpi, published by independent Swan Isle Press sells in hardcover for $21.28 (discounted off the list price of $28) at Amazon and $20.28 at Barnes and Noble. The Kindle version sells for $9.60 (with a digital list price of $12.00). Not sold by iBookstore or through Barnes and Noble Nook.

Going Solo: The Extraordinary Rise and Surprising Appeal of Living Alone, by Eric Klinenberg, published by The Penguin Press. $14.99 Kindle. $14.99 Apple iBookstore. Hardcover is now discounted from $27.95 to $17.17 at Amazon.

The “wretched $9.99” can just be a good cash cow. Consumers don’t complain about the price. The Girl with the Dragon Tattoo sold more than 1 million e-books by 2010. The word “margin” does not enter this equation in any meaningful way.

With this litigation, the DOJ is telling us that “the antitrust laws are flexible and can keep pace with technology and a rapidly changing industry.” The DOJ’s focus is on “ensuring an open and competitive marketplace [that] allows for innovation, which is good for businesses participating in that marketplace and is good for consumers.” However, this antitrust case really isn’t about whether the publishers are charging too much. The issue is whether the prices were fixed in total disregard of antitrust laws.

U.S. and global antitrust laws are not new. Virtually every global business has been dealing with corporate compliance, conducting training of its board, officers and staff for more the past couple of decades, with increased efforts further since Sarbanes-Oxley and Dodd-Frank. The irony of this litigation is that it would appear that all the involved defendants were able to keep pace with technology, but not the simple evolution of corporate governance and compliance expectations.

#compliance #antitrust.#apple #penguin #governance #publish #publishing #e-books #ebooks #DOJ #e-bookretailers

The CPSC revises position on retrospective textile testing - Reduces redundant testing.

Thanks to the American Apparel & Footwear Association (AAFA), the Consumer Product Safety Commission (CPSC) issued some good news today for manufacturers, importers and private labelers of clothing and other textile children’s products.

The CPSC has revised its previous position on “retrospective” testing. In a December 2, 2010 petition to the CPSC, the AAFA argued for the need to reduce the need for redundant retesting of products that have already been determined to be in compliance with CPSC regulations, including the “Standard for the Flammability of Clothing Textiles” (16 CFR part 1610) under the Flammable Fabrics Act (16 U.S.C 1191 et seq.).

In response, the CPSC has modified its regulation to allow manufacturers and others to rely on the test reports for textiles tested on or after August 18, 2009, by certain accredited “third party conformity assessment bodies” (third party testing and certification companies).

It should be noted that this is subject to the following conditions:

• At the time of product testing, the product was tested by a third party conformity assessment body that was ISO/IEC 17025 accredited by an accreditation body that is a signatory to the ILAC–MRA;

• The third party conformity assessment body’s application for testing using the test methods in 16 CFR part 1610 is accepted by the CPSC on or before November 16, 2010;

• The product was tested under 16 CFR part 1610 on or after August 18, 2009;

• The accreditation scope in effect for the third party conformity assessment body at the time of testing expressly included testing to 16 CFR part 1610;

• The test results show compliance with the applicable current standards and/or regulations; and

• The third party conformity assessment body’s accreditation, including inclusion in its scope of 16 CFR part 1610, remains in effect through the effective date for mandatory third party testing and manufacturer certification for conformity with 16 CFR part 1610.

There can be a significant time lapse between fabric testing and the finished garment. The CPSC acknowledged that without making these revisions, some products would have needed to be retested even though initial textile testing was done by an accredited lab (accredited by other national and/or international accreditation authorities).

This has really been a practical sequencing puzzle as it wasn’t until August 18, 2010 that the CPSC published its criteria and process for Commission acceptance of accreditation of labs for textile testing, which had the effect of lifting a previous stay of enforcement with regard to testing and certification of children’s products, resulting in the need for certain products manufactured after November 16, 2010 to be tested by a third party and to have a certificate of compliance issued based on that testing. Yet, many third party labs have been testing textiles with the very same test methods later regulated by the CPSC and CPSIA. So, the AAFA properly asked, “why make the industry pay for the same tests all over again, from the same labs, and to the same criteria?” This would only benefit the testing and certification organizations. Evidently, the CPSC saw the light and worked out a practical compromise solution.

However, the CPSC declined the other AAFA request and refused to extend the testing and certification date by an additional 60 days. Still the AAFA and the CPSC are to be congratulated for this overall positive result.

#cpsc #third party testing #cpsia #textile testing #children's products textile

Do Consumers Really Care About SaferProducts.gov?

SaferProducts.gov went live on March 11, 2011, on time and on budget according to CPSC Chairman Inez Tenenbaum. The Consumer Product Safety Commission (CPSC), manufacturers, lawyers, legislators, and consumer organizations have been the primary actors with regard to this database, and there has been a substantial amount of disagreement among them. Ironically, it would seem that the only people who have not taken a strong interest in SaferProducts.gov or the CPSC, for that matter, are the consumers.

The database was mandated by Congress, as part of the Consumer Product Safety Improvement Act of 2008 (CPSIA). Since the outset, many manufacturers and trade organizations have been strongly opposed to it. They envision their competitors filing spurious complaints to gain market share, and plaintiffs’ lawyers salivating at access to (unsubstantiated) product complaints. As recently as a few days before the database went live, the National Association of Manufacturers filed a petition urging the CPSC to continue the “soft launch” phase (i.e., the non-public launch) of SaferProduct.gov until the CPSC can ensure that the reported information is accurate. (Do NAM members really prefer to face product liability claims with a better database in which the CPSC places its imprimatur on the accuracy of the complaints? An interesting question for litigators.)

The SaferProducts.gov database has become a divisive partisan issue, in spite of the fact that the CPSIA was supported almost unanimously by both the Republican and Democratic parties from the outset. The Subcommittee on Commerce, Manufacturing and Trade held a hearing on February 17, 2011 on “A Review of CPSIA and CPSC Resources” and on the following day, in an about face, Republicans approved legislation in the House to block the CPSC from spending any funds to operate the database.

Consumer advocates remain strongly supportive of the CPSC database believing it to be an important consumer tool that “will end the secrecy that currently prevents critical product safety information from reaching consumers” according to Rachel Weintraub, director of product safety and senior counsel at the Consumer Federation of America. Are the advocates responding to specific consumer constituent requests for the database or does their position reflect an opinion they consider best for consumers but for which there is no demand?

According to the CPSC’s Scott Wolfson, less than 330,000 consumers are currently signed up to receive “push” e-mails from the CPSC to gain instant access to product recalls issued by the CPSC. It is possible that a fair percentage of that number is comprised by manufacturers, retailers and lawyers who like to stay up to date with the CPSC. Further, according to the CPSC, only 8,000 people follow the CPSC on Twitter. The CPSC has the ability to notify many millions of people about recalls through e-mails and news releases and it has also undertaken major initiatives in the past few years to make good use of the social media to get the safety word out to consumers. Yet, after all this time, not many consumers are actively engaged directly with the CPSC. So why does the CPSC believe that SaferProducts.gov will be a “powerful source of information for consumers” when it appears consumers are not even interested in receiving recall notices directly from the Commission?

SaferProducts.gov will have to compete with more accessible, if not equally effective, online consumer use and safety data. Consumers with product complaints are far more likely to report a complaint directly online at the retailer’s website. Online retailers tend to keep a list of all customer reviews in perpetuity and quantify them for the consumers. Yes, it would appear that most of these sites don’t automatically notify the manufacturers to provide them with an opportunity to rebut the claim as the CPSC database does. Nor do they filter spurious claims or ask for all contact information to ensure there is a person behind the complaint as opposed to the product’s competitor. Check out the number of very serious product complaints concerning rashes at this website: Johnson’s Baby Gel Oil with Aloe & Vitamin E at Amazon. Do consumers order the product after they read the reviews? Most likely some do, some don’t. Is it possible consumers are more inured to product safety claims than the legislature, CPSC, retailers, manufacturers or even consumer advocates realize?

Politics and principles aside, will the availability of the database make a big difference? Will it drive consumers to the CPSC and benefit product safety? Will it subject manufacturers to new litigation or loss of market share? The reality is that is seems hardly worthy of the partisan politics and trade association efforts to discard it. Mostly because it would appear that consumers haven’t asked for it in the first place which means they are not so likely to use it. Time will tell.

#CPSIA #consumer #consumer products safety commission #consumersafety #cpsc #product safety #saferproducts.gov #nationalmanufacturersassociation #nam.org

100th Anniversary of the Triangle Shirtwaist Factory Fire

Today we commemorate the 100th anniversary of the Triangle Shirtwaist Factory Fire. The fire claimed the lives of 146 workers in New York, mostly young female immigrants from Europe working long hours for low wages, who died because of inadequate safety precautions and lack of fire escapes. This sad event helped to galvanize a movement for social justice, immigrant rights, industry safety and fair labor practices.

Fire safety, in the home and workplace, remains vital. I've been proud to work for a safer world during most of my career along with leading standards development organizations like the National Fire Protection Association and Underwriters Laboratories Inc. Both of these organizations were founded in the mid-1890's and learned from this fire. Working to develop and evolve voluntary standards with entire safety community, including manufacturers, trade associations and the local, federal and state governments, we can thank them for the very high standard of safety we enjoy in the workplace and for continuing to evolve the standards.

Those who died tragically in the Triangle Shirtwaist Factory Fire did not die in vain.

#triangle shirtwaist factory fire #fire safety #nfpa #underwriters laboratories #standards development #standards

How much lead is in the doggie in the window?

Came across an interesting consumer product issue. Here's a news report about a grandmother complaining that a product she wanted to purchase had the following warning on its: "Warning: Contains lead. May be harmful if eaten or chewed. May generate dust containing lead."

Why did the manufacturer place that warning on a label? Most likely, it was a decision made to ensure that the product would meet the varying lead level and labeling requirements among our 50 states. For instance, Illinois has its own Lead Poisoning Prevention Act. Here is it is, in part, and look for the very familiar warning at the bottom:

Children's products. Effective January 1, 2010, no person, firm, or corporation shall sell, have, offer for sale, or transfer the items listed in this Section that contain a total lead content in any component part of the item that is more than 0.004% (40 parts per million) but less than 0.06% (600 parts per million) by total weight or a lower standard for lead content as may be established by federal or State law or regulation unless that item bears a warning statement that indicates that at least one component part of the item contains lead. The warning statement for items covered under this subsection (b) shall contain at least the following: "WARNING: CONTAINS LEAD. MAY BE HARMFUL IF EATEN OR CHEWED. MAY GENERATE DUST CONTAINING LEAD."

So, it would appear the the manufacturer was attempting to navigate the straits between the federal and state testing and labeling requirements for lead in children's toys. The news station took the offending plush dog toy to the Consumer Product Safety Commission (CPSC) where it took samples from its ears, arms, feet and belly. The little doggie passed all the federal tests...indeed, "if the dog's fur contains lead, our test found it's so minuscule it's below reportable levels." And, for all of this, the news report has the retailer apologizing for selling the plush toy, and for selling others where the warning was covered up with adhesive label to correct the "mislabeling." Of course, the final word goes to the grandmother. "Things should be lead-free, period." And, they can be in her home, if she'd like. The next time she picks up a toy that says "contains lead" and that meets federal but not state requirements, she can leave the little doggie on the shelf. After all, warnings should help us make decisions, not news.

#toysafety #toys #lead #cpsc #product safety #childrens products

Corporate Compliance & Ethics Institute 2011 - PLI - I’ll be there, will you?

Please consider joining me at the Practising Law Institute’s Corporate and Ethics Institute 2011 in Chicago on May 12-13, 2011. The schedule includes:

Hot Topics and Global Trends in Compliance and Ethics

Standards and Procedures: The First Element of an Effective Program

Effective Communications and Training

Board Oversight and Program Structure: Responding to the Guidelines’ Revisions

Social Media (what does it mean for compliance and ethics?)

How to Perform an Effective Audit/Measuring the Effectiveness of Your Compliance Program

Compliance Risk Assessments

Helplines, Investigations and Responding to Misconduct

International Compliance Issues and Dealing with Third Parties

Additionally there will be plenty of opportunity to network with other compliance professionals and, frankly, that can be the best part of such programs. There is so much to be learned from your peers!

As the PLI notes, no matter how large or small your company (or client), paying careful attention to corporate compliance and ethics is not optional.

The regulatory environment has grown riskier and more complex for every organization, and smaller companies are not exempt.

Economic conditions are creating a host of challenges for compliance and ethics programs. In many companies, compliance programs are facing budget and staff cuts, and are expected to do more with less.

As “best practices” continue to develop, the expectations of government regulators have correspondingly been raised.

The public and the press will accept no excuses for corporate failures to follow legal requirements and conduct business with integrity.

Yes, I am on the faculty again this year, addressing the board oversight issues. Hope to see you there!

#Practicing Law Institute #PLI #Corporate Ethics #Corporate Compliance #Corporate Governance #Board Oversight

Corporate Compliance & Ethics Institute 2011 - PLI - I'll be there, will you?

Please consider joining me at the Practising Law Institute's Corporate and Ethics Institute 2011 in Chicago on May 12-13, 2011. The schedule includes:

Hot Topics and Global Trends in Compliance and Ethics

Standards and Procedures: The First Element of an Effective Program

Effective Communications and Training

Board Oversight and Program Structure: Responding to the Guidelines’ Revisions

Social Media (what does it mean for compliance and ethics?)

How to Perform an Effective Audit/Measuring the Effectiveness of Your Compliance Program

Compliance Risk Assessments

Helplines, Investigations and Responding to Misconduct

International Compliance Issues and Dealing with Third Parties

As the PLI notes, no matter how large or small your company or client, paying careful attention to corporate compliance and ethics is not optional.

The regulatory environment has grown riskier and more complex for every organization, and smaller companies are not exempt.

As “best practices” continue to develop, the expectations of government regulators have correspondingly been raised.

The public and the press will accept no excuses for corporate failures to follow legal requirements and conduct business with integrity.

Yes, I am on the faculty again this year, addressing the board oversight issues. Hope to see you there!

Your compliance program and human trafficking...

Now is the time for the compliance professionals at large retailers and manufacturers to start planning ahead for the January 1, 2012, effective date of the California Transparency in Supply Chains Act of 2010 (the Act). This Act relates to human trafficking in the supply chain and requires every retail seller and manufacturer doing business in California to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains for goods they offer for sale. The Act does not apply to smaller retailers and manufacturers having less than $100 million in annual worldwide gross receipts (but is something, nevertheless, for them to consider).

The US Department of Labor released a report in September 2009 that named 122 goods from 58 countries that were believe to have been produced through forced labor or child labor in violation of international standards. The Act recognizes that consumers and businesses are inadvertently promoting and sanctioning these crimes through the purchase of goods and products in the supply chain. So, the Act endeavors to ensure transparency between large retailers and manufacturers with consumers by providing detailed information regarding efforts to eradicate slavery and human trafficking from their supply chains, and to educate consumers on how to purchase goods from companies that responsibly manage their supply chains to prevent slavery and human trafficking. Implicit in this is that California residents and corporations will choose to buy only from companies that comply with the Act.

Large manufacturers and retailers will be required to post on their homepage Internet Websites a "conspicuous and easily understood link" to the necessary disclosures. In general, and at a minimum, large retail sellers and manufacturers will need to:

evaluate and verify risks in their product supply chains to exposure to trafficking and slavery, and whether this verification was conducted by a third party;

audit suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains, and whether the audits are conducted by an independent, unannounced auditor;

require direct suppliers to certify that the materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business;

maintain internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking; and,

provide training, on mitigating risks within the supply chain to human trafficking and slavery, to company employees and management who have direct responsibility for supply chain management.

The Act emphasizes that consumers need to access this information in their buying decisions. The Act does not currently have a fine or other penalty associated with it, but does provide for enforcement through the Attorney General for unspecified injunctive relief -- so there is a big bat out there.

In nine months, many large corporations will need to ensure compliance with this California law. What should you consider doing now if you're not already prepared? Here are a few thoughts -- certainly not an exhaustive list nor in any particular order:

If you don't have a written policy concerning slavery and human trafficking in the supply chain, now is the time to write one. Consider this policy for its applicable internal and external uses (including use with suppliers as well as dissemination to consumers, investors, etc.);

Determine whether any corporate supply contracts need to be revised to reflect new policy compliance;

Analyze your corporate exposure -- what do you really know about the supply chain, how far do you drill down to get the real picture, and how much further do you need to drill?;

Develop a training program;

Consider whether your corporation will need third parties (such as certification organizations, accounting and auditing firms) to assist developing compliance programs or in enforcement or auditing; and

Ensure your corporate board is apprised of compliance to this new law.

Some corporations have already built their corporate social responsibility policies looking toward compliance with the international SA 8000 standard and, in particular its requirements concerning child labor, forced and compulsory labor, and human trafficking. This standard is published by Social Accountability International (SAI), a global standard-setting non-governmental human rights organization. For those looking toward certification to SA 8000, Social Accountability Accreditation Services (SAAS), a spin-off of SAI, provides this. SAAS provides a complete list of "Accredited Certification Bodies" (namely third party organizations) who can perform the auditing work to achieve certification. Of course,most of these organizations can also perform work to your company's own specification outside the SAI/SAAS certification process.

So, don't forget, the California Transparency in Supply Chains Act of 2010 will be effective on January 1, 2012 -- use the time wisely!

The Consumer Product Safety Commission posted a nifty chart online today with regard to enforcement of the CPSIA. By Rule, Standard or Ban, and by product category, you can determine the whether a non-children's product requires a General Conformity Certificate, or if a Children's Product Certificate is required based on Third Party Testing. A useful tool from the CPSC.

CPSC issues decision to extend an existing "stay of enforcement" on total lead content in children's products.

The CPSC announced its decision to extend the existing stay of enforcement on testing and certifications of the total lead content in children's products (except for metal components of children's metal jewelry) until September 14, 2011, at which time the stay of enforcement will expire. The action taken today also pertains to lead content in Youth Motorized Recreational Vehicles and Bicycles and Related Products.

This is in addition to the current stay of enforcement on testing and certification for children's products by third party conformity assessment bodies (known in plain English as laboratories) that also includes testing of children's toys and child care articles for banned phthalates , and testing of children's toys for compliance with mandatory toy safety standards (ASTM F-963). These stays do not terminate on September 14, 2011 and will continue until the CPSC publishes the notices of requirements for laboratory accreditation.

Finally, please note we're talking here about a "stay of enforcement." The Lead Content limit (Section 101 of the CPSIA) will be required to go down to 100 ppm on August 14, 2011, unless the CPSC determines that it is not technologically feasible to have this lower limit. It just won't be enforced. How's that for a nice safe harbor?

And, for those who enjoy controversy, the CPSC published today the Public Comments concerning the technological feasibility of 100 ppm for Lead Content. Some people say "can do." Some say "can't do." Some say "must do." And some say "that the 100 ppm standard is entirely arbitrary and will save no lives and will preserve no IQ points." (That would be Richard Woldenberg, Chairman Learning Resources, Inc.)

The future? There will most likely be some exclusions to the 100ppm limit but not as many as manufacturers believe are necessary or appropriate.

SaferProducts.gov has a soft launch. There's still time to prepare.

Are you ready for SaferProducts.gov? This website is in the Soft Launch phase and accepting reports starting today. The website will contain the “Publicly Available Consumer Product Safety Information Database (Database)” collected by the U.S. Consumer Product Safety Commission (CPSC). The good news is that the CPSC will be testing the Database functionality first before it makes Reports available to the public for search and review.

This is but a brief reprieve for manufacturers and retailers as the Database will be disclosed when SaferProducts.gov is officially launched in March, 2011. SaferProducts.gov was developed by the CPSC to fulfill Section 6A of the Consumer Product Safety Act (CPSA), as amended by the Consumer Product Safety Improvement Act of 2008 (CPSIA). Through this website consumers and other Database users will be able to submit "reports of harm" (Reports, with a capital R!) describing a (perceived) harm or risk of harm related to the use of a consumer product. Other users will be able to search and review these reports, or add their own Report, if they’d like.

Manufacturers, importers, and private labelers will have an opportunity to comment on the Reports that identify them and their products, and may choose to comment in the Database in response.

There is a lot of controversy associated with the Database that can be explored further. Yet, for now, businesses need to know that the CPSC is encouraging you to register an account on the new Business Portal. By registering, you will be able to receive electronic notice of Reports and you can work with the online commenting feature. More importantly, you can test your internal procedures now.

The Business Portal also allows for online submission of a claim that the Report contains materially inaccurate and/or confidential information. Signing up for an account during the Soft Launch may be the best good time to experiment with the site and determine how it works. At the least, you’ll want to consider how the Database will affect your company and identify the appropriate internal and/or external resources to monitor Reports involving your products and who should be authorized to respond to them.

Not to be cynical, but...competitors who wish to log complaints against other manufacturers and products, or lawyers representing plaintiffs in products liability claims, are best off waiting until the official launch because the CPSC has confirmed that it will not disclose the information entered into the Database (from consumers or businesses) before the official launch.

It's Davos week - the World Economic Forum Annual Meeting 2011. So, what's on the docket this year? According to interviews reported by the Financial Times, there will a focus on a "two-speed world economy" - a growing economy dominated by emerging markets (China, India, Brazil and Russia) with less in the advanced economies. Optimism, tinged with risks -- the eurozone, inflation and commodities.

Of the 2,500 official delegates this year, it is reported that 1,400 are CEOs and other senior business executives. Gillian Tett, writing for the FT, wrote an interesting article today about "Lonely CEOs flee hostile world for self-help group." That's a nice headline and she does write of CEOs as a lonely group needing support and hedging their social network. Yet, her article touches on much meatier subjects, such as "social inequality" being the issue delegates most want to debate, "CEOs are ineasily aware that hostility towards elites is rising." "The future of the euro, for the Chinese-US relationship, Iran, Korea and commodity prices will all be hot topics." Looking forward to watching Davos 2011 develop.

Something NFP board members need to know about insolvency...

It's not unusual for not for profit board members to fail to scrutinize the financials. This isn't good. There are likely several reasons why this routinely happen. After all, many NFP directors:

are not compensated for their work;

see their primary responsibility on the board as attracting new members, helping to seek more contributions and making a contribution for an annual event/dinner;

look to the president, executive director, treasurer and/or management of the NFP to ensure that all is going well; and

sit on a large board which tends to diffuse a sense of personal responsibility.

Unfortunately, for a variety of reasons (not the least of which is this challenging economy), NFPs do become insolvent, even when the NFP directors are scrutinizing the financials. Janet Kleinfelter's posting in The Watchdog yesterday raised the interesting issue of whether anyone cares about the bankrupt NFP. Ms. Kleinfelter works in the Tennessee attorney general's charity unit and she tells the story of a NFP where all the board members "washed their hands" of the organization once it was no longer financially viable.

Ms. Kleinfelter reminds all that "legally the board is required to dissolve the nonprofit, but when it fails to do so, that responsibility falls to the regulators and that courts." And when that happens, she reminds us, directors may incur personal liability. Read her fine article for more details.

And, if you serve on the board, just remember, the best thing you can do for a NFP organization is to keep your eyes on the finances.

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