Monthly Archives: July 2012

HYDRAULIC FRACTURING IN NIGERIA: PROS AND CONS

 

HYDRAULIC FRACTURING IN NIGERIA: PROS AND CONS

It has been reported in the news that out of the 388 acreages in the country, 173 had been allocated to 85 companies that are involved in the upstream business, while 215 were yet to be allocated to investors. It was also disclosed that 70 per cent of the 315 oil fields in these 173 acreages are producing oil and gas, while about 30 per cent of the fields are still going through exploration and appraisal stages.

Concerns about Hydraulic Fracturing Hydraulic fracturing is highly variable and unpredictable, and because drinking water supplies are extremely precious resources, numerous concerns have been raised.

Possible Legal Regime regulating Hydraulic fracturing…

Economic Pressure: Natural Gas Development

In Nigeria natural gas has become an important and extremely valuable fuel, Nigeria has approximately 184 trillion cubic feet (tcf) of gas reserves. Fracturing and the Environment Allegations of water quality impacts associated with hydraulic fracturing date back to at least the early 1990s, but hard evidence has gradually began to surface.

Regulating Hydraulic Fracturing… In this writer’s opinion, both Federal and State Environmental Protection Agencies should carry out comprehensive research in conjunction with civil society groups to ascertain and obtain credible evidence of environmental risks and possible economic benefits obtainable from fracking.  

Air Quality Protection

Concerns also have been raised over potential air impacts. Generally, natural gas contains significantly lower levels of greenhouse gases than coal and other fossil fuels, and therefore increased energy production with natural gas has the potential to significantly reduce GHG emissions. Air controls would be used to address the greenhouse gas (GHG) impacts of natural gas produced by fracking.

Hydraulic Fracturing Best Practices

It is common to use diesel in hydraulic fracturing fluids. This should be avoided, since diesel contains the carcinogen benzene, as well as other harmful chemicals such as naphthalene, toluene, ethyl benzene and xylene. It is technologically feasible to replace diesel with non-toxic additives such as plain water.

Possibility of Bans and Moratoriums

Despite movement toward reasonable regulation to address concerns related to hydraulic fracturing, there is still a strong movement, especially in the mid-Atlantic, toward banning all hydraulic fracturing. New York is the only U.S. state that has actually instituted any sort of ban or moratorium on fracking. Bulgaria and France have banned Hydraulic fracturing while in South Africa there is a moratorium on same.

Conclusion

The debate over hydraulic fracturing should commence sometime soon and should not be silenced, but it should remain based on fact, it should be focused on the protection that is already in place and what actually is being done to increase that protection or it will have failed to serve the public interest. In this writer’s opinion shedding light on the current status of facts should assist in that endeavour.

  Olufola Wusu Esq. © 2012

Counsel with Megathos Law Practice

Olufola Wusu is a Contract Review Specialist and Intellectual Property consultant

He can be reached at folawusu@yahoo.com for legal advice and more.

Legal Disclaimer by Olufola Wusu Esq

(1) No advice This note contains general information about [law and legal practice]. The information is not advice, and should not be treated as such. (2) No warranties The legal information on this article is provided without any representations or warranties, express or implied. We make no representations or warranties in relation to the legal information on this website. Without prejudice to the generality of the foregoing paragraph, we do not warrant that: (a) the legal information on this article will be constantly available, or available at all; or (b) the legal information on this article is complete, true, accurate, up-to-date, or non-misleading. (3) Professional assistance You must not rely on the information on this website as an alternative to legal advice from your lawyer or other professional legal services provider. If you have any specific questions about any legal matter you should consult your lawyer or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

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Oil and Gas Industry:Innovation/Intellectual Property based or a Commodity Market?

Introduction

The Occupy Nigeria demonstrations of the 1st of January 2012, the oil subsidy probe and the ensuing “entrapment gone awry” gives credence to the fact that the oil and gas industry is risky, political and very expensive. Furthermore, the industry is constantly being scrutinised by governments, numerous regulatory bodies, investors and ordinary citizens.

It’s also important because it energises every other industry in the world.

I guess you are thinking, there is enough money to go around in Oil and Gas Industry, so why bother with “innovation” i.e. Intellectual Property?

For starters, Oil and gas companies are expected to comply with the mantra, “cheaper, better and faster” i.e. more productivity, less cost to consumers, but it must still manage international politics and not mess up our environment.

Safety…

Innovation Management

Paradoxically the oil and gas industry probably has the best tools and capabilities covering operational efficiency and decision making.

 

Exploiting innovation

Innovative Contract Review and Environmental Protection

There is a possibility that contract review and negotiation can help stem the tide of pollution and environmental degradation…

The laws enumerated below make up the legal regime for the protection of Intellectual Property Rights in Nigeria.

Copy Right Act, Cap. C 28 Laws of the Federation of Nigeria 2004

Patents and Designs Act, Cap P2, Laws of the Federation of Nigeria 2004; and

Trade Marks Act, Cap. T13 laws of the Federation of Nigeria 2004

 

Oily Intellectual Property;

Patents

A patent is a document issued, upon application by a government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent

Why Oil and Gas companies are yet to fall in love with Patents …

Is Innovation necessary?

How important is our competition?

What does IP have to do with Oil and Gas?

Trade secrets

A “trade secret” is defined as any product, operating formula, pattern, device or other compilation of information which is used in a business, which gets its economic value from being kept secret, and gives the business a competitive advantage.

 

Contractual Protection for Trade Secrets

Trade secrets are more appropriately protected by contract.

Commercialisation of Patents and Trade Secret

Patents are public documents which disclose information about the invention (technology) in exchange for state protection.

Copyrights

A copyright gives the holder of such copyright the exclusive right to control exploitation, production and adaptation of such a work for a certain period of time.

TRADEMARKS

The first barrel in any great oil and gas company is a good name. It should be registered as a trademark.

 

Oily IP Transactions

Formal accounting procedures for IP assets are fast evolving, but they are generally not on the balance sheet of the average companies that own them, and they are sometimes ignored by financial analysts.

            Conclusion

The upstream oil and gas industry has been described as a “knowledge industry” because of new technologies such as three-dimensional acoustical sounding, horizontal drilling, and deep offshore drilling.

Perhaps the National assembly should do well by including provisions on Intellectual Property and Hydraulic Fracturing in the long awaited Petroleum Industry Bill, which should help nudge the Industry in the right direction IP wise.

Olufola Wusu Esq. © 2012

Counsel with Megathos Law Practice

Olufola Wusu is a Contract Review Specialist and Intellectual Property consultant

He can be reached at folawusu@yahoo.com

Legal Disclaimer

by Olufola Wusu Esq

(1) No advice

This note contains general information about [law and legal practice]. The information is not advice, and should not be treated as such.

(2) No warranties

The legal information on this article is provided without any representations or warranties, express or implied. We make no representations or warranties in relation to the legal information on this website.

Without prejudice to the generality of the foregoing paragraph, we do not warrant that:

(a) the legal information on this article will be constantly available, or available at all; or

(b) the legal information on this article is complete, true, accurate, up-to-date, or non-misleading.

(3) Professional assistance

You must not rely on the information on this website as an alternative to legal advice from your lawyer or other professional legal services provider. If you have any specific questions about any legal matter you should consult your lawyer or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

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http://www.punchng.com/business/energy/saraki-seeks-amendment-to-nosdra-act/

Saraki seeks amendment to NOSDRA Act

 

Saraki seeks amendment to NOSDRA Act

MAY 17, 2012 BY SUCCESS NWOGU, ILORIN
The Chairman, Senate Committee on Ecology and Environment, Dr. Bukola Saraki, has said that there is the need to amend the National Oil Spill Detection and Response Agency (Establishment) Act 2006.

According to a statement on Wednesday from Saraki’s Special Assistant, Advocacy and Media, Mr. Bamikole Omishore, the Senator is seeking re-designation of the agency as ‘National Oil Pollution Management Agency.’

Saraki said the bill, which he was sponsoring in the Senate, sought to create a more proactive oil spill management and regulation system. He added that it also sought to punish severely irresponsible environmental degradation caused by oil and gas exploitation.

According to Saraki, the bill, if passed, will set out a firm penalty and elaborate compensation regime to compensate people, whose livelihoods and lives are adversely impacted by these spills.

He said, “When this amendment passes through and becomes law, it will equip the agency to hold polluters to internationally acceptable standards.”

Part of the bill reads, “There is established an agency to be known as the National Oil Pollution Management Agency (in this Act referred to as the agency)” with the responsibility to prevent, detect, minimise and respond to all oil spillages and pollution as well as gas flaring and leakages and other hazardous and obnoxious substances in the petroleum sector, coordinate private sector participation in oil pollution management, have access to the ‘Oil Spillage Liability Trust Fund’ as set up by law.”

 

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New technology companies need an intellectual property strategy – Oil & Gas Financial Journal

New technology companies need an intellectual property strategy – Oil & Gas Financial Journal.

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CONTRACT REVIEW OF OIL AND GAS JOINT VENTURE AGREEMENTS-THE INNOVATION/INTELLECTUAL PROPERTY DIMENSION

Chronicles of Innovation II.

Oil and Gas Contract Review…

The Federal Government on the 2nd of July 2012 signed an agreement with an American and Nigerian joint venture group, Vulcan Petroleum Resources Limited and Petroleum Refining and Strategic Reserve Limited, for the construction of six modular refineries. The six refineries are estimated to gulp $4.5bn.

Joint ventures in the oil and gas sector in Nigeria are an easy way for businesses to put together their expertise and assets to carry out common projects.

A key area that is often ignored by joint venture participants is intellectual property in Joint Ventures, such as patents, trade secrets, research, software (the subject of copyright), and trade-marks.

The laws enumerated below make up the legal regime for the protection of Intellectual Property Rights in Nigeria.

Copy Right Act, Cap. C 28 Laws of the Federation of Nigeria 2004

Patents and Designs Act, Cap P2, Laws of the Federation of Nigeria 2004; and

Trade Marks Act, Cap. T13 laws of the Federation of Nigeria 2004

 

Intellectual Property in Oil and Gas Joint Ventures/Operating Agreementss;

The basic types of Intellectual property prevalent in the oil and gas sector are the following; Patents, Trademarks, Copyrights, Trade Secrets and Others like brands, Know-How, Know – Who and Professional Credentials & Credibility.

 

What is a Joint Venture/Operating Agreement?

A joint venture is an association of corporations or other legal entities who agree by contract to engage in a common undertaking for joint profit. Typically in Nigeria the Joint Venture is usually between Nigeria and the Oil Majors. The NNPC represents the interest of the government in the joint ventures.

 

Intellectual Property in Joint Ventures in Nigeria

When reviewing Joint Venture Agreements in Nigeria, Intellectual Property issues are given scant attention or swept under the carpet.

Pitfalls unique to Joint Ventures

Employees acting on behalf of the joint venture/one of the venturers:

 

The Nigerian Experience…

Indigenous companies have been awarded oil blocs and some entered into joint ventures with established oil majors, but found themselves holding the short end of the stick after being schemed out of the equation.

 

Protect Trade secrets/other Intellectual property…

Intellectual Property Theft

Network Breach

A Possible Paradigm Shift

Include Intellectual Property Terms in the Joint Venture Agreement

Innovation Savvy contract counsel

Envisage Possible Improvements…

Clearer Employee Roles…

The way forward…

This writer sees a future where research and innovation will play an increasingly important role in the Nigerian energy industry with more joint ventures being formed to capitalize on/commercialise new innovations or to pool resources to create new solutions as distinct from developing oil acreage or building refineries.

            Conclusion

A willingness to work with the locals and the middle men by enlisting their support to combat the more horrific types of illegal refiners down the line will be a useful tool in stamping out crude oil bunkering in Nigeria. Let brute force be the last card…

Olufola Wusu Esq.

Copyright © 2012

Counsel with Megathos Law Practice

Okay let’s get started…

Your thoughts anyone?

Legal Disclaimer

by Olufola Wusu Esq

(1) No advice

This note contains general information about [law and legal practice]. The information is not advice, and should not be treated as such.

(2) No warranties

The legal information on this article is provided without any representations or warranties, express or implied. We make no representations or warranties in relation to the legal information on this website.

Without prejudice to the generality of the foregoing paragraph, we do not warrant that:

(a) the legal information on this article will be constantly available, or available at all; or

(b) the legal information on this article is complete, true, accurate, up-to-date, or non-misleading.

(3) Professional assistance

You must not rely on the information on this website as an alternative to legal advice from your lawyer or other professional legal services provider. If you have any specific questions about any legal matter you should consult your lawyer or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

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NNPC’S $60 Billion Crude lifting Contracts: What the Local Companies Should Know (As it appeared in THISDAY NEWSPAPER’S THISDAY LAWYER 10/7/2012 at page 11. )

Chronicles of Innovation II.

How Intellectual Property Rights “Fathered” the Oil Field Service Industry.

Introduction

It is commendable that the Federal Government through the Nigerian National Petroleum Corporation decided to award nearly half of the 2012/2013 crude oil lifting contracts worth approximately $60 billion (sixty billion Dollars) to Nigerian companies.

This writer congratulates the successful Nigerian Companies and hopes that the increased cash flow will give these companies the needed leverage to grow and evolve into full-fledged International Oil Companies.

During exploration, extraction and even transportation of same, value is added to the unrefined oil and gas by technology, and other business practices that help process the extracts into useful and valuable consumer products.

Innovation, technology and business processes (Intellectual Property Assets) become valuable assets to a business organization, when they are registered and competitors prevented from accessing and using proprietary innovation for free.

Owners of such Intellectual Property Assets may actively commercialise their assets by licensing them to companies willing to use these Intellectual Property Assets in exchange for a license fee. Such businesses often enjoy competitive advantages over their competitors, by virtue of increased revenue flow.

Please find below the legal regime for the protection of Intellectual Property Rights in Nigeria.

Copy Right Act, Cap. C 28 Laws of the Federation of Nigeria 2004

Patents and Designs Act, Cap P2, Laws of the Federation of Nigeria 2004; and

Trade Marks Act, Cap. T13 laws of the Federation of Nigeria 2004

The need for Innovation/Intellectual Property Commercialization

At the very minimum however these Nigerian companies need to pay a little more attention to research, development and the resulting innovation that increases profitability which should be protected by Intellectual Property possibly Patents, Trade Secrets etc.

Mechanisms for Protecting Oil & Gas Technologies

Patent protection is the traditional choice but sometimes such technologies or business models can be kept confidential, then Trade secret protection becomes an option.

The Way Forward…

What is the nature of the company controlling the technology? Can access to the technology be controlled? Will our company benefit or be harmed by the disclosure of information when a patent application is filed? Does our company believe that the invention is sufficiently novel and non-obvious? Does our company have the funds to maintain a patent portfolio? Can the invention in question be reverse engineered?

Oil and Gas Patents

A patent is a document issued, upon application by a government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent.

Patents cover cutting-edge equipment and technologies used in exploration, production, refinement and manufacturing. It covers robotic oil well fire fighting cranes, drilling bits, oil rigs, oil pipeline cleaning scraper pigs; heavy lift ships carrying oil platforms, hydraulic fracturing fluids etc. 

Patent Protection “fathered” the Oil Field Service Industry.

The logistics required to locate, extract, process and transfer crude oil or gas can possibly make some companies think twice about even venturing into oil and gas production in the first place.

Oil Field Service Companies offer products and services geared at lowering costs, reducing risk or improving productivity during exploration activities thereby improving the operating environment for operating companies.

So kudos to companies like Schlumberger Limited, Halliburton, Saipem, Transocean Ltd, Baker Hughes, Fluor, Weatherford International, BJ Services Company, Petrofac, China Oilfield Services Ltd and IBM.

It goes without saying that companies in the oil field service industry, would probably not have been formed and would not continue to exist today without protection of its Intellectual Property!

Commodity Sellers vs. Proprietary Industry…

If the products of Oil Field Service companies were not protected by patents, they would have been priced as a “commodity”.

If their products had been priced as a “commodity”, they may not have been developed and made available to the industry.

The thing is that Intellectual Property Rights are enforceable against the whole world while Contractual Rights are enforceable against only the parties that enter into contract with you!

Trade secrets

A “trade secret” is defined as any product, operating formula, pattern, device or other compilation of information which is used in a business, which gets its economic value from being kept secret, and gives the business a competitive advantage.

The upstream oil and gas industry depends heavily on trade secret protection. Large amounts of exploration data, design data and some production data are confidential and protected as trade secrets.

Trade Secrets arise without engaging any administrative process, they operate by denying competitors information that is necessary to access and use the technology.

Duration of Trade Secret protection

The duration of trade secret protection is in a way potentially, perpetual, as the protection continues as long as you can keep your trade secret, secret.

Paradigms of Trade secrets protection

Shades of Trade Secret protection

A school of thought states that ideas are ten naira a dozen; so they share their innovations by just executing better and getting to the market place in lightning speed, the second school treat their innovation as proprietary, and use available legal means to protect it: e.g., nondisclosure agreement; and generally limit access to information.

The right approach will be a mix of two of the options outlined above in conjunction with patent protection.

 

Threats to Trade Secret Protection

Regulatory Approval

For regulatory approval to be given for an Oil and Gas project there must be some form of disclosure which possibly erases the efficacy of trade secret protection.

In reality compliance with such regulations are sometimes illusory, companies spend millions of dollars to create new innovations and are very reluctant to disclose them even to regulatory bodies, this is particularly evident in our technology transfer experience, as seen in the inefficacy of Nigeria’s technology transfer clauses.

Employee Mobility

Where employee mobility is on the high side trade secret protection is no longer a viable option for the protection of intellectual property for the oil company.

Publication

Once the trade secret information becomes public, the trade secret, and its inherent value, becomes to a large extent permanently extinguished.

 

Patent protection cannot remedy Trade Secret disclosures…

Where trade secret protection is lost, it is permanent, and patent protection cannot remedy such a loss as the innovation would already be in public domain.

 

 

Oil Field Service Companies- Patents

Oilfield service companies’ deal with numerous customers which increases the risk of information about their technology being leaked into the public domain regardless of control mechanisms like confidentiality or non-disclosure agreements binding employees and even contractors! Technologies developed by oilfield service companies, are usually protected by patents.

Operating companies- Patents and Trade Secret Protection

Minor processes and innovations developed in-house at operating companies usually use trade secret protection, possibly because customers are not exposed to underlying technology used to produce a finished product.

Valuable innovations that have broader application beyond a singular operation may be better protected by patents

Commercialisation of Patents and Trade Secret

Patents are public documents which disclose information about the invention (technology) in exchange for state protection, which is the exact opposite of trade secret protection. However, commercialisation of patents and trade secret is a desirable option, thus trade secrets are licensed along with patent rights, in what is called a “hybrid” license.

 

Conclusion

Thus for our Oil and Gas companies to grow, they are going to have to take their innovation and resulting Intellectual Property like patents and trade secrets seriously, because that is what gave birth to the Oil Field Service Industry in the first place and that is what keeps them in business, the right to exclude others from exploiting their products (by sale, manufacture, use and importation) without their authorization (the owner of the patent) and this is usually granted in exchange for hefty license fees and other charges!

Olufola Wusu Esq.

Copyright © 2012

Counsel with Megathos Law Practice

Okay that was a mouthful…

So let’s get started…Does Oil and Gas really need Intellectual Property?

Your thoughts anyone?

Legal Disclaimer

by Olufola Wusu Esq

(1) No advice

This note contains general information about [law and legal practice]. The information is not advice, and should not be treated as such.

(2) No warranties

The legal information on this article is provided without any representations or warranties, express or implied. We make no representations or warranties in relation to the legal information on this website.

Without prejudice to the generality of the foregoing paragraph, we do not warrant that:

(a) the legal information on this article will be constantly available, or available at all; or

(b) the legal information on this article is complete, true, accurate, up-to-date, or non-misleading.

(3) Professional assistance

You must not rely on the information on this website as an alternative to legal advice from your lawyer or other professional legal services provider. If you have any specific questions about any legal matter you should consult your lawyer or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

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Nigerian Oil and Gas companies win big with Intellectual Property and crude oil lifting contracts…

Introduction

It is commendable that the Federal government through the Nigerian National Petroleum Corporation has decided to award nearly half of the 2012/2013 crude oil lifting contracts worth $60 billion to Nigerian companies, thus downsizing the contracts awarded to international oil traders.

I therefore congratulate the successful Nigerian Companies and I hope it will give Nigerian companies the needed leverage to grow and evolve into full fledged International Oil Companies.

The need for Innovation/Intellectual Property Commercialization

At the very minimum however these Nigerian companies need to pay a little more attention to research, development and the resulting innovation which should be protected by Intellectual Property possibly patents.

Oil and Gas Patents

Basically a patent is a document issued, upon application by a government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent

Patents in Nigeria are of limited duration, typically providing protection for a period of 20 years from the filing of the application for patent grant.

Patents cover things like cutting-edge technologies used in instrumentation, production data capture, horizontal drilling and multilateral wells.

 

The reality is that Patent Protection “fathered” the Oil Field Service Industry.

Besides, the logistics required to locate, extract, process and transfer crude oil or gas would probably make most companies think twice about even entering the business in the first place. So kudos to companies like Schlumberger Limited, Halliburton, Saipem, Transocean Ltd, Baker Hughes, Fluor, Weatherford International, BJ Services Company, Petrofac, China Oilfield Services Ltd and IBM.

It goes without saying that companies in the oil field service industry, would probably not have been formed and would not continue to exist today without protection of its Intellectual Property!

Commodity Sellers vs. Proprietary Industry…

If the products of Oil Field Service companies were not protected by patents, they would have been priced as a “commodity”.

If their products had been priced as a “commodity”, they may not have been developed and made available to the industry.

The thing is that Intellectual Property Rights are enforceable against the whole world while Contractual Rights are enforceable against only the parties that enter into contract with you!

Commercialisation of Patents and Trade Secret

Patents are public documents which disclose information about the invention (technology) in exchange for state protection, which is the exact opposite of trade secret protection. However commercialisation of patents and trade secret is always a desirable option. Sometimes trade secrets are licensed along with patent rights, in what is called a“hybrid” license.

Conclusion

Thus for our Oil and Gas companies to grow, they are going to have to take their innovation and resulting Intellectual Property like patents and trade secrets seriously, because that is what gave birth to the Oil Field Service Industry in the first place and that is what keeps them in business, the right to exclude others from selling or even using proprietary equipment without permission and hefty license fees!

Intellectual Property becomes a valuable asset to the oil and gas company, when it is registered and steps are taken to prevent competitors from accessing and using it for free.

Olufola Wusu Esq.

Copyright © 2012

Counsel with Megathos Law Practice

Okay that was a mouthful…

So let’s get started…Does Oil and Gas really need Intellectual Property?

Your thoughts anyone?

Legal Disclaimer

by Olufola Wusu Esq

(1) No advice

This note contains general information about [law and legal practice]. The information is not advice, and should not be treated as such.

(2) No warranties

The legal information on this article is provided without any representations or warranties, express or implied. We make no representations or warranties in relation to the legal information on this website.

Without prejudice to the generality of the foregoing paragraph, we do not warrant that:

(a) the legal information on this article will be constantly available, or available at all; or

(b) the legal information on this article is complete, true, accurate, up-to-date, or non-misleading.

(3) Professional assistance

You must not rely on the information on this website as an alternative to legal advice from your lawyer or other professional legal services provider. If you have any specific questions about any legal matter you should consult your lawyer or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

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