LOST IN TRANSLATION

It is important for every fireworks company to examine and proofread all published communications for purposes of completeness and accuracy, particular attention given to the wording and phrasing of all references to company affiliates, agents or others person located within the United States. With alarming frequency, website designers are ignorant to the fact that words can get lost in translation, with unintended consequences of varying magnitude (from harmless to highly expensive and embarrassing), repeating the mistakes of copywriters (regarding product and warning labels and advertising and promotional materials).

The following illustration highlights some the problems and confusion that may occur when one fails to perform proper due diligence on all written communications that your company may release to the general public (e.g., product labeling and promotional materials and websites). On its website, a Chinese manufacturer incorporates a common navigational tool bar that provides a one-word description of the various web pages contained within its website, e.g., ‘Home’, ‘About Us’, ‘Products’, ‘Service’, ‘Contact’. When one clicks on the ‘Contact’ webpage, contact information relating solely to the manufacturer appears, i.e., its business name and address, and phone/fax numbers. When one clicks on the ‘Service’ page, the manufacturer lists itself, in addition to identifying affiliated offices located in Hong Kong and Canada. There are many legitimate reasons why a Chinese manufacturer would identify all other affiliates: for example, (i) to provide the impression of world-wide operations with (ii) multi-lingual customer-service capabilities situated in (iii) convenient time zones.

In the context of the website, what does ‘Service’ mean? Understandably, it can mean different things to different people. More than one lawyer I know of will interpret the word ‘Service’ to mean where service of process can be lawfully effected and, as a result, argue that service of process upon either the Hong Kong or Canadian affiliate constitutes valid service upon the Chinese manufacturer. The conventional wisdom among lawyers is that service of process upon a Chinese corporation is easier said than done; it can be both a time-consuming and expensive process, with little guarantee of ultimate success. Instead, lawyers would prefer to complete service on a party located outside of China (in the above example, upon the Canadian company). Consequently, unless the Hong Kong or Canadian person is careful, it may find itself unwittingly embroiled in costly litigation regarding the actions of the Chinese manufacturer, notwithstanding the fact that no common ownership exists by and between the Chinese manufacturer and the referenced Hong Kong or Canadian companies.

In my illustration, I was able to marshal a set of facts to successfully argue that the Canadian person was not an agent of the Chinese manufacturer for purposes of service of process and, as a result, the court dismissed the lawsuit against the Canadian person. However, I recommend that to avoid the risk of becoming entangled in litigation it is important that all written and Internet communications expressly identify in clear and unambiguous language the business relationship by and between the parties including.

Even in the instance where common ownership exists between the Chinese manufacturer and another company, this factor alone does not establish a business relationship sufficient to confer jurisdiction (over the Chinese manufacturer as a result of service made upon the Canadian company or, as the case may be, the Hong Kong company). In the situation of the Canadian company, other factors to be considered are:

1. What written agreements, if any, exist between the companies?

2. Can customers purchase directly from the Chinese manufacturer, or must they send the order to Canada for forwarding?

3. Is the Canadian company financially dependent upon the Chinese manufacturer?

4. Does the Chinese manufacturer pay any portion of salary or compensation of the Canadian employees?

5. Does the Chinese manufacturer have the power to direct the selection of the Canadian employees?

6. What control, if any, does the China manufacturer have over the marketing and business operations of the Canadian company?

7. Does the net income of the Canadian company appear on the balance sheet of the China manufacturer?

8. Does the China manufacturer advertise and promote the Canadian company as a branch office or company department?

9. Does the China manufacturer mention the name of the Canadian company in any advertising other than on its own website?

10. Does the Canadian company mention the China manufacturer in its own website, if any, or marketing materials, if any? 

This list is not exhaustive; however, it does serve to highlight some of the issues to be aware of when evaluating how the business relationship by and between your company and another company is being presented to the world at large.

In conclusion, it is important that you police all sales and promotional materials and websites to ensure that they do not contain information that may be misleading or confusing; otherwise you may find yourself in the unenviable position of undertaking the time, expense and risks associated with clarifying information found on a website owned and operated by another company.

As a separate matter, although it is too late for a full report, PHMSA recently issued a release granting the APA’s request to reclassify as 1.1G devices (i) 1.3G aerial firework devices greater than 10 inches in diameter, and (ii) salutes exceeding 2.5 ounces of explosives composition (the “Release”), recognizing that fireworks display companies were not able to deplete their inventory prior to the termination date of July 31, 2008. The Release describes the procedure to be followed to begin the transition of the new classification from Fireworks, UN0335, 1.3G to Fireworks UN0333, 1.1G; in sum, all reclassified items will have EX numbers that expire after 5 years.