Every now and then I have an application that is subject to a secrecy order by the government that restricts disclosure of the invention and prevents the publishing or granting of a patent. I noticed that a current application being held up really doesn't seem to contain sensitive information but the application may have triggered the order itself by making a reference in the description that one of its many uses could be by the military. It would be analogous to an invention for an improved water bottle that you might describe as being beneficial to the military (a group that often needs bottled water in far away places) but that really is ordinary, everyday technology.

If you don't know, the Invention Secrecy Act of 1951 requires the government to impose secrecy orders on certain patent applications that contain sensitive information, thereby restricting disclosure of the invention and withholding the grant of a patent. This requirement can be imposed even when the application is wholly created and owned by a private individual or company without government sponsorship or support.

There are several types of secrecy orders which range in severity from simple prohibitions on export (but allowing other disclosure for legitimate business purposes) up to classification, requiring secure storage of the application and prohibition of all disclosure. A secrecy order withholds the grant of a patent, orders that the invention be kept in secrecy and restricts filing of foreign patent applications.

It seemed to me that the number of secrecy orders has been on the rise. It turns out, I'm not the only one that thinks the government is keeping more secrets since 9/11. At the end of fiscal year 2006, there were 4942 secrecy orders in effect, some of which have been in effect since the 1930s. Even the NSA had nine of its patent applications blocked in the fiscal year to March 2005 against five in 2004, and none in each of the three years up to 2003.

This week, I received a note from a reader about information on secrecy orders posted by the Federation of American Scientists (FAS), a group formed in 1945 by atomic scientists from the Manhattan Project who felt that scientists, engineers and other innovators had an ethical obligation to bring their knowledge and experience to bear on critical national decisions, especially pertaining to the technology they unleashed, i.e., the Atomic Bomb. Endorsed by 67 Nobel Laureates in chemistry, economics, medicine and physics, FAS addresses a broad spectrum of issues in carrying out its mission to promote humanitarian uses of science and technology.

Secrecy orders provide a security procedure to prevent technical data contained in a patent application from being disclosed in a manner that would be detrimental to the national security. Secrecy orders are imposed by the PTO upon specific recommendation by defense agencies, including the Army, Navy, Air Force, National Security Agency, Department of Energy and National Aeronautics and Space Administration.

The PTO conducts an initial security screening of all patent applications. Government-owned applications are not reviewed by the PTO for technical content. It is the responsibility of the cognizant defense agencies to review their own applications and recommend a secrecy order to the PTO where appropriate.

Applications in which there is no apparent government property interest are made available by the PTO to defense agencies for their inspection when, in the opinion of the Commissioner of Patents, disclosure might be detrimental to the national security. If, upon inspection, a defense agency determines that disclosure "would be detrimental" to the national security, it may recommend that the Commissioner of Patents place a secrecy order on the application.

When the Secrecy Order issues, the law specifies that the subject matter or any material information relevant to the application, including unpublished details of the invention, shall not be published or disclosed to any person not aware of the invention prior to the date of the Order, including any employee of the principals except as permitted by the Secrecy Order. The law also requires that all information material to the subject matter of the application be kept in confidence, unless written permission to disclose is first obtained from the Commissioner of Patents and Trademarks except as provided by the Secrecy Order. Therefore, the subject matter under Secrecy Order is to be safeguarded under adequate protection to prevent access by unauthorized persons.

I suppose we should not get too worked up about this given the lengthy history. Concerns about invention secrecy and national security date back to the First World War. In an effort to address the government’s concerns, Congress passed the act of October 6, 1917. The Invention Secrecy Act of 1951 created 35 U.S.C. sections 181 through 188, entitled Secrecy of Certain Inventions and Filing Application in Foreign Countries. Section 181 deals with the conditions set forth by a secrecy order, namely that the order shall last one year, or in the event of war, for the duration of the hostilities plus one year, on in the time of a national emergency (as declared by the president), for the duration of the emergency plus six months, all orders being renewable.

Section 181 also sets out that the applicant may appeal the issuance of a secrecy order to the Secretary of Commerce. Section 182 provides that in the event of an unauthorized disclosure of the contents of a secret patent, the inventor forfeits all rights to a patent to which he might have otherwise been entitled. Section 183 outlines the conditions for an inventor’s right to compensation, which is valid for six years from the date of issue on the patent, and includes compensation for government use, and for damages caused by the secrecy order. Section 184 states that any applicant must not file in a foreign country for six months after filing in the United States, to allow proper review of the invention for its relevance to national security. Section 185 applies the same penalties for foreign filing as for an unauthorized disclosure (as outlined in section 182). Section 186 describes the penalties for any violation of the secrecy order, which are up to $10,000 or two years in prison, or both. Section 187 exempts officers and agents of the United States from these prohibitions. Section 188 lists the persons who may wield secrecy orders, which include the Atomic Energy Commission, Secretary of Defense, Secretary of Commerce, and the heads of any government agencies the President designates.

More on secrecy orders on patents here.

Overview of all types of secrecy orders here.

35 U.S.C. §181. Secrecy of certain inventions and withholding of patent.

I don't know what it is about the recent uptick in conflict issues but now the Washington Post has reported that federal prosecutors have charged a senior scientist at the National Institutes of Health with conflict of interest for taking fees from a drug company that was involved with his government research. Dr. P. Trey Sunderland III is the first official in 14 years to be prosecuted for conflict of interest at the NIH. S underland accepted $285,000 in fees from Pfizer from 1998 to 2003 relating to research to identify chemical warning signs of Alzheimer's disease. (Note to Pfizer: I'm available for consulting.) Prosecutors contend that Sunderland took money from Pfizer without getting the required advance permission from the NIH and did not note the fees and additional expense reimbursements on annual NIH financial reports. Federal law prohibits officials from accepting outside compensation for their government duties.

His services for the company were intimately intertwined with his government duties. Sunderland led efforts for a material transfer agreement on behalf of the NIH, whereby his staff would collect and then pass the spinal-tap samples to Pfizer. As part of the research, Sunderland helped provide Pfizer with hundreds of government-owned tissue samples for analysis. About the same time, in early 1998, "Sunderland initiated negotiations with Pfizer to be paid as a consultant for his work on the same project," according to the criminal filing.

Sunderland's not alone. Congressional investigators found that 44 researchers had off-the-books relationships with drug and biotech companies. Conflicts of interest in the pharmaceuticals area may in the news quite a bit lately but they're not new. I don't think that it indicates any new trend or that the world going to hell in a handbasket. I think if you want to know the root of the issue, you need look no further than the bottom line for drug sales. The global pharmaceutical market is forecast to grow to $842 billion in 2010. Just the top 16 new blockbuster drugs in 2005 generated combined sales of $18.1 billion. These eye-popping numbers can put a lot pressure on the marketplace - some innocent, some not so innocent.

Sunderland, 55, could get up to a year in prison and a $100,000 fine.

I will be attending the American Conference Institute’s 7th Advanced Forum on Biotech Patents: Analysis, Insights and Strategies for New Challenges in Biotech Patent Practices in Boston, MA on November 29 and 30. I will be on a panel discussion moderated by Dennis Crouch, entitled "Roundtable Wrap Up – Reviewing the Year in Patents with an Eye Toward the Future," on Thursday, Nov. 30.

This looks to be a great conference on all the new issues in biotech. Let me know if you are interested in attending, anyone who attends the conference as a referral from us is entitled to $200 off the registration price. Just drop me a line for the keycode. Otherwise, I look forward to meeting in Boston.

Many are asking what will happen if Democrats take control of the House and Senate. While I'm not interested in taking sides, I think that the issue is certainly on everyone's mind at the moment since it could effect how business is done after the elections. In the end, I think that the issues will effect things very much on a an industry-by- industry, and even a company-by-company, basis. Having said that, it's clear that one industry with a particular interest in politics is the pharmaceutical industry.

Pharma companies and the pharmaceuticals industry association, PhRMA, have been among those funneling the most money into political campaigns this year. The pharmaceuticals/health products industry has pumped $14,794,226 into election campaigns so far in 2006. A lot of dough but far off the $29,445,451 spent in 2002 (Note: The Bipartisan Campaign Reform Act, enacted after the 2002 elections, bans the national political parties from raising soft money).

According to an analysis done by the New York Times last week, blue chip corporate action committees funneled 67 per cent of their funding to Republican candidates in the first nine months of this year, and 33 per cent to the Democrats. In the first 18 days of October, though, Democrats were getting 43 per cent of all contributions, the biggest last-minute shift from one party to another since 1994. One of the most significant shifts has been made by Pfizer, which until September was giving 67 per cent of its donations to the Republicans, but in October Democrats were in receipt of 59 per cent.

The Washington Times reports that the most visible confrontation between the parties is forming around the Democrats' push to require the government to use its negotiating power to lower prescription-drug costs for Medicare patients. The 2003 Medicare law prohibits the government from negotiating with companies to lower the price of drugs for beneficiaries. Democrats hope to set up a single drug plan under Medicare that allows the government to negotiate prices. Democrats would then use the savings from lowered prices to close the coverage gap in the drug benefit. Sometimes referred to as the doughnut hole, annual coverage stops once drug costs reach $2,250. Coverage resumes when costs hit $5,100.

Republicans argue that prescription-drug plans are competing with each other to serve Medicare beneficiaries and thereby are lowering drug costs. Many say that price negotiations will not solve Medicare's financial problems. A Washington Post editorial points out that while the federal health program for veterans uses its purchasing power to secure drugs at prices lower than the average obtained by the private insurers that administer the Medicare benefit, it is not a fair comparison. The veterans' program keeps prices down partly by delivering three-quarters of its prescriptions by mail. In addition, having the government set drug prices could lead to yet more pharmaceutical lobbyists and campaign spending making the problem of campaign influence worse, not better. Finally, under the current Medicare plan, retirees can choose to pay more for branded medicines or premium services or they choose to save money through lower benefits. Many argue that the current plan hasn't had enough time to shake out.

Is gridlock the answer?

In the end, no party is going to end up with any strong majority so don't look for big changes. Besides, many point out that what Wall Street really wants is gridlock. What Wall Street wants is stability and stability and gridlock are synonymous right now. A congress that is constained from acting may be good for everyone.

There is now a website that pays doctors to post medical observations, including reports on side effects and off label uses. Needless to say, this has raised some eyebrows. Sermo Inc. runs a website, sermo.com, as a password-protected private forum where raw postings by doctors can be viewed, for a fee, by Wall Street investment firms. I have to admit, a site where doctors are paid to post thoughts about drugs and side effects makes me a little squeamish. Even the tag line ("Who Else Knows?") seems a little Orwellian.

Founder Daniel Palestrant says the site will serve as an early-warning system about potentially dangerous drug reactions. The site will also be a forum for doctors to share information about off-label uses of drugs. Off-label use of an approved drug refers to a use that is not included in the approved label. Off-label use does not imply an improper use. The practitioner who prescribes a drug is responsible for deciding which drug and dosing regimen the patient will receive and for what purposes. This decision is made on the basis of the information contained in the drug’s label or other data available to the prescriber. The off-label use of a drug should be based on sound scientific evidence, expert medical judgment, or published literature.

Admittedly, the FDA, which is charged with monitoring drug safety, can't be on the front lines every day and has come under criticism for failing to respond to reports of drug side effects. Still, some may not feel comfortable about the ability of someone, even if that someone is a doctor, being able to make anonymous postings about perceived side effects.

Sermo pays doctors $30 to $50 to post observations and says it already has "several hundred" credentialed contributors. Once doctors are credentialed and accepted to the Sermo site, their medical observations are ranked for noteworthiness and credibility by other doctors, who also get paid for their observations. The site lists the amount paid to date as $132,145.00.

Public Citizen, a Washington nonprofit consumer advocacy group, said companies should not attempt to supplant the FDA's watchdog role. The FDA already gathers specific side-effect information that doctors and companies submit in a government-mandated format. Sermo is an open bulletin board where doctors post about anything anonymously and seems to be designed to help investors more than patient.

Sermo charges subscription fees to its largest subscribers but doesn't disclose the size of the fees. The company said big subscribers are Wall Street investment companies looking for preliminary information that might help them anticipate swings in a drug company's stock.

An admitted key factor is how to separate the wheat from the chaff. Sermo uses a set of credibility-ranking systems where peers support (or not) any observations. It's designed to prevent any exaggerated or inflated claims from spiraling out of control, there's no way to really prevent any over-reactions from going nuclear.

Also, there doesn't seem to be any mechanism to prevent stock fraud by pumping up (or sounding the alarm on) a certain drug and then trading ahead of the crowd. I don't know how Sermo could prevent collusion among several doctors who agree to make a drug look particularly valuable or dangerous knowing that the information is being fed straight to big investing firms. And even if it all is legit, it still feels unnerving that Wall Street houses will get an early, inside look ahead of common investors.

The company closed on $3 million in capital from Longworth Venture Partners and looks to raise another $8 million to $10 million.

Conflicts of interest in the pharmaceuticals area have been in the news quite a bit lately. I don't think that it indicates any new trend or that the world going to hell in a handbasket. I think if you want to know the root of the issue, you need look no further than the bottom line for drug sales. The global pharmaceutical market is forecast to grow to $842 billion in 2010. Just the top 16 new blockbuster drugs in 2005 generated combined sales of $18.1 billion. These eye popping numbers can put a lot pressure on the marketplace - some innocent, some not so innocent.

The Regulations

Federal doctors now say drug maker Eli Lilly & Co. subtly influenced the development of medical guidelines for treatment of sepsis (an often fatal blood infection). Guidelines are meant to reflect independent medical opinion but too much corporate influence could lead to corporations trying to guide health care in ways that benefit them directly.

Doctors at the National Institutes of Health claim in the New England Journal of Medicine that Lilly worked through medical societies to influence standards for treating sepsis where its drug, Xigris, was incorporated into the guidelines. The sepsis guidelines urge that very ill patients at risk of dying get the novel anti-clotting drug Xigris, the only medicine approved for the disease. A $6,800 treatment can help protect organs destroyed by the bacterial infection, once called blood poisoning. About 750,000 cases occur in the United States each year, and nearly one-third prove fatal. The U.S. Food and Drug Administration approved Xigris in 2001, despite an evenly split vote by its advisory committee.

Lilly acknowledged hiring a marketing firm and paying doctors and ethicists to launch a campaign about choosing which patients to treat in the intensive care unit. But the company said its efforts were educational and had the goal of making sure only the appropriate patients were treated with Xigris. Experts disagree as to whether Lilly's role was improper in this case since the money was given in an arms-length transaction and the doctors were free to reach their own conclusions.

The Regulators

But, money always has a way of finding its own conclusions. Ex-FDA Commissioner Lester Crawford pleaded guilty on Tuesday to two charges resulting from his ownership of stock in companies the agency regulated. Crawford, who resigned from the FDA last year, admitted to making false statements on financial disclosure forms and violating conflict-of-interest laws. Each count carries a maximum fine of $100,000 and up to one year in prison.

According to DOJ prosecutors, government ethics officials told Crawford in 2002 that he and his wife needed to sell shares in 12 companies that were regulated by FDA. The couple sold shares in nine of the companies -- which included Johnson & Johnson, Merck, Boston Scientific, Pfizer, Medtronic and others -- but kept shares in three companies: food and beverage maker PepsiCo; food distributor Sysco; and Kimberly-Clark, which makes some consumer health care products, DOJ said. In addition, Crawford's wife held shares in Wal-Mart, which also is regulated by FDA, but Crawford did not include those holdings in his 2002 financial disclosure, DOJ said. Crawford also failed to disclose that he held options to buy 41,500 shares in Embrex, an FDA-regulated poultry biotechnology company on whose board he once served.

From August 2003 through June 2004, Crawford and his wife owned 1,400 shares of PepsiCo stock worth at least $62,000 and 2,500 shares of Sysco worth at least $78,000, according to court documents. It doesn't help that that the Crawfords continued to hold the PepsiCo, Sysco and Kimberly-Clark shares despite being told by ethics officials at the Department of Health and Human Services (HHS) that they had to be sold. In 2004, an HHS ethics official inquired about Crawford's ownership of Sysco and Kimberly-Clark stock. Crawford's wife also retained shares in Wal-Mart Stores Inc., also regulated by the FDA, prosecutors said

The Regulated

According to a study of doctors published in the Journal of Medical Ethics, one in three doctors believe that their decisions on which drugs to prescribe have been affected by receiving drug samples from pharmaceutical sales representatives. Nearly all of the doctors, 94 percent, distributed samples to patients based on financial need. Sixty-three percent of the time they said effectiveness in treating patients was the reason. In 2003, the pharmaceutical industry spent $25.3 billion on drug promotion, including distributing $16 billion in free drug samples to doctors, the study said.

Noteworthy was that 92 percent of doctors felt that it was more acceptable to take drug samples than any other "incentive item," such as a free lunch or a position as a paid consultant. Almost 60 percent of doctors distributed samples to "build a good relationship with the patient," and almost 90 percent said they distributed the samples because they were available.

In recent months, several academic medical centers, including Yale University and the University of Pennsylvania, have barred drug-company sales reps from bringing free lunches to staff physicians. And on Sept. 12, Stanford University announced that its physicians will no longer be able to accept gifts of any size from any type of vendor, including biotech companies and medical-device makers.

Patents Drive the Economy

A Special Report in the Toledo Blade newspaper points out that Ohio's economy is closely tied to innovation. Manufacturing job loss doesn’t explain why the economy is lagging in certain states, like Ohio. A study by the Cleveland Federal Reserve Bank concluded that patents per-capita were the source of Ohio's wealth. They cite a decrease in patents as the cause of the real cause of the state's economic slump.

In looking at key statistics in several areas, including tax rates, government spending, education levels, and climate over 75 years, they found that tax levels and highway spending did not affect state income growth significantly. Also, a state’s concentration of industry, such as Ohio’s reliance on manufacturing, mattered only a little. What mattered most was a states’ patents per-capita. Ohio ranked sixth in the nation in per-capita patent generation in 1954. It fell to 11th in 1988. By 2001, Ohio fell to 20th, passed by new tech hubs such as Wisconsin, Utah, and Idaho. The reason given is that patents improve existing products and generate new ones that attract investors, profits and (ultimately) jobs.

What's the World's Fastest Supercomputer Used For?

Blawg Review Editor tipped us off about the newest $9 million supercomputer. RIKEN's MDGrape-3 is the first machine to break the petaflop barrier -- that's 1 quadrillion calculations (floating-point operations, to be specific) per second -- and it's three times faster than the currently ranked fastest computer in the world, IBM's BlueGene/L. MDGrape-3 isn't officially the world's fastest supercomputer - it can't run the software that the official rankings demand. MDGrape-3 is designed for one thing, pharmaceutical research. More specifically, molecular dynamics simulation used in developing drugs. It can analyze tens of thousands of chemical compounds to find out how they'll affect the protein-bonding structures in the human body. This is a good example of how biotech is driving computing. Experts believe that all the demand from biotech is going to boost our supercomputing power the same way the space race helped spur the development of the mainframe computers that were revolutionary for their time.

Biotech Deals Perk Up

The Boston Globe reported that after a quiet year for biotechnology, a sudden wave of mergers and buyouts has sparked interest in biotech. Gilead Sciences said it would buy drug developer Myogen Inc. of Colorado for $2.5 billion. Millennium Pharmaceuticals is in a half-billion-dollar bidding war against Genzyme over Canadian cancer-drug maker AnorMed Inc . And, Merck KGaA announced a $13 billion takeover of Serono SA , a Swiss biotech firm. The action is critical given that most biotechnology companies never turn a profit. Most new biotech companies depend on mergers and acquisitions to cash out.

About Biotech Guide Steps Down

After seven and a half years of running About Biotech, Yali Friedman, Ph.D. has decided to move on to concentrate on his full-time job with New Economy Strategies and to have more time to devote to his book, Building Biotechnology, and generally enjoying life in Washington DC. We will miss Yali for all he's done, including bringing us Building Biotech, Biotech Blog, BioEconomy, DrugPatentWatch, Think Biotech and even the Send a DNA-o-Gram where you can send your message encoded as DNA sequencing.

While biotechnology accounts for only 1 percent of the overall healthcare costs, the overall cost of biotechnology is growing faster than the economy along an unsustainable trajectory. Biotech drug sales are expected to top $60 billion by 2010. Still, the cost of biotechnology has to be compared with the cost of the disease in terms of the normal hospitalization and treatment required.

Unfortunately, it still leaves a lot of money for patients to pick up. The Centers for Medicare & Medicaid Services (CMS) recently placed new biotech drugs and therapies in a specialty coverage tier where most drugs are $2,000 to $3,000 a month, with 25 percent paid out-of-pocket by the patient.

Patient pain equates with voter pressure and legislators are looking for some answers. Some of the legislation that is being batted about Washington includes: a faster path to generic versions of the biotech treatments, price negotiation between the government and biotech companies, the creation of a federal agency to assess drug values, and shorter, cheaper, more effective clinical trials to reduce development costs, according to published reports. Some form of these will mostly likely emerge once the issues of safety and off-label use are addressed. Not to mention how to pay for the $20.8 billion in biotechnological research and development spent in the U.S. last year. However, unlimited prices may not be the result even without legislative action.

The American Enterprise Institute for Public Policy Research published an article on "The Emerging Market Dynamics of Targeted Therapeutics" detailing the issues around the price of targeted biotech drugs. Targeted drugs tend not to compete with each other even when treating closely related diseases, which makes them resistant to price controls. However, the same properties that generate premium prices also facilitate inventing around successful drugs, eventually leading to vigorous competition despite the lack of generic alternatives.

AEI reviews the market dynamics of targeted therapeutics and offers a review of some of the market forces that should come to bear in regulating biotech prices in the future:

QALYs: The supply of expensive new biotech drugs to should continue unabated even if payers systematically limit reimbursement to consensus recommendations for how much to pay per quality-adjusted life year (QALY) saved. As long as advanced societies are willing to pay on the order of $50,000 or more per QALY, creative biotechnology firms will find solutions that meet such standards and will price them accordingly.

Post approval research: Research on traditional drugs normally ceases as patent expirations approach but without the prospect of generic entry, research investment on a pioneer biotech drug does not face a natural endpoint.

Pricing conundrums: There seems to be no easy way for manufacturers to avoid the price conundrums (and public outcry) generated when new uses or dosages appear on the market at different price points. Research incentives arise from the full range of a drug’s potential uses including those explored after approval. The inability to practice price discrimination among uses could greatly undermine incentives for both initial development and post-approval research.

Competition through faster inventing-around: Targeted biotech drugs can facilitate competition through classic inventing-around a patented therapeutic the same as with traditional drug categories. New drugs can exploit a proven target in a way that avoids patent infringement while retaining a reasonable prospect of success in clinical trials.

Competition through new uses: A second route to competition through targeting is through post-approval research on how a drug’s activity against a specific target may extend to other therapeutic areas, generating new uses for the drug. Expanded uses for multiple drugs can easily overlap, creating new competitive forces such as occurred with Avastin

Drugs that are just better: Research can aim simply at improving existing therapies through follow-on research. Some next-generation biotech companies are expanding upon existing monoclonal antibody technology by developing longer-lasting and more potent antibodies that are cheaper to manufacture for targets that have been well validated by science and the market.

The report indicates that we can expect the rapid accretion of drugs that provide large benefits, especially for previously poorly treated conditions, but at high prices and, often, significant total expenditures.

See the entire report here.

Ariad Denied Declaratory Judgment

Ariad Pharmaceuticals announced that the United States District Court for the District of Delaware denied their motion to dismiss the lawsuit filed by Amgen relating to their products Enbrel(R) and Kineret(R). In the lawsuit, Amgen is seeking a declaratory judgment that these products do not infringe U.S. Patent No. 6,410,516, covering methods of treating human disease by regulating NF-κβ cell-signaling activity, and that the patent is invalid and that Amgen has not infringed any of the claims of the ‘516 Patent based on activities related to Amgen’s products, Enbrel® and Kineret®. As we've said earlier, this is far for over.

Stanford to Ban Drug Makers’ Gifts to Doctor

Stanford University Medical Center announced Tuesday it is joining a small group of academic medical centers in banning its physicians from accepting industry gifts of any size, including drug samples, free meals, free tickets to sporting events, free pens or any of the other freebies showered on doctors by drug companies. This is a start but only a drop in the bucket for an industry that spends $21 billion per year on marketing.

Anti-Patent Attorney Dan Ravicher Campaigns Against Over-Broad Software Patents

Dan Ravicher, of the Public Patent Foundation, is interviewed in MIT's Technology Review.

TR: How are these patents on standards abused? Can a patent holder, regardless of the legal outcome, inflict damage on a developer?

DR: In a lot of software patent cases we've seen, the patent holder ends up losing -- but only in court. But that doesn't mean the developer didn't lose a substantial amount of time and money and distraction. Simply because many software developers are resource-deprived, they're denied a fair day in court to prove their innocence.

FTC Keeps Up Fight Against Generic Settlements

After losing lost a court challenge in 2005 and the Supreme Court declined to hear its appeal, the Federal Trade Commission is continuing its fight against settlements by drug companies to delay generic entry to the market. FTC Chairman Deborah Platt Majoras said "There is no question we've taken some hits on this," But "we are not walking away."

Pfizer Wins in Challenge to Norvasc Patent

Pfizer said a federal District Court upheld Pfizer's patent covering amlodipine besylate, the active ingredient in Norvasc, a medicine for treating hypertension. The generic manufacturer, Synthon Pharmaceuticals, had challenged the patent. The court ruled that the patent (U.S. Patent No. 4,879,303) covering amlodipine besylate is valid and infringed by the generic manufacturer's product and can keep Synthon from launching a generic version until September 2007.

Materials, Medicine, and Nanotechnology Summit

The Materials, Medicine, and Nanotechnology Summit will be hosted by Cleveland Clinic, ASM International, and the Nano-Network as the anchor event of Nano-Week™ 2006, a five-day exploration of how nanotechnology is changing our world. The Summit is comprised of the biennial Cleveland Clinic NanoMedicine Summit and ASM's Materials & Processes for Medical Devices (MPMD) Conference and Exposition.

I will be attending the BIO Mid-America VentureForum on September 26-27 in Cleveland, OH. The VentureForum, co-hosted by Omeris, is the Midwest’s largest annual event for bioscience and medical device product and platform companies from across the country. Approximately 75 companies seeking seed, early-and late-stage funding will make presentations.

If you will be attending the VentureForum and would like to meet, just drop me a line. I'd love to have the opportunity to chat over coffee with anyone.

E-Mail Me:

Speakers at the conference include:

Ohio Governor Bob Taft
Mark Collar, President Global Pharmaceuticals & Personal Health, The Procter & Gamble Company
John Huston, Founding Member, Ohio Tech Angel Fund
Peter Kleinhenz, Managing Director, CID Capital
Gil Van Bokkelen, Ph.D., Chairman & CEO, Athersys
John Rice Ph.D., Managing Partner, Triathlon Medical Ventures
Lynn Allen, President, Capital Innovations, Inc.
Alfred Brown Ph.D., President, BCM Technologies
Thomas Bradshaw, President and CEO, Ricerca Biosciences
Joseph Hahn, M.D., Chief of Staff, The Cleveland Clinic Foundation
Donald Harrison, M.D., Managing Director, Charter Life Sciences
Fred Rothstein, M. D., President and CEO, University Hospitals
Patrick McBrayer, President and CEO, AxioMed Spine Corporation
Walter Plosila, Ph.D., VP, Technology Partnership, Battelle Memorial Institute

Tech entrepreneurs in Cleveland should check out FastTrac Tech, a two-phase, multi-session, hands-on program where you will use your business as a case study, giving you the opportunity to put proven business practices to work.

The Boston Globe ran an article about Ohio Governor Bob Taft traveling to Boston looking to attract a few more companies -- or at least their new or expanded facilities -- for Ohio. On the heels of the recent acquisitions by Cincinnati's Procter & Gamble Co. and Federated Department Stores of Boston's Gillette Co. and Filene's respectively, Taft is paying a visit to biotechnology firms Genzyme Corp. and Alkermes Inc., as well as CME Energy. Massachusetts is the fourth state to which Taft has made recruiting trips in the last year.

There is fierce competition for jobs and many states covet high-tech industries with their higher paying salaries (read: more tax dollars for the state). Ohio is still down 180,000 jobs from its prerecession peak, a 3 percent decline, so efforts are being put into grabbing action from outside the state. Ohio's not alone, though. Ohio is now putting out a nationwide marketing effort to promote a recent tax overhaul that reduces corporate taxes and the state is spending nearly $500,000 to advertise its business-friendly policies in the Wall Street Journal.

Meanwhile, Taft and lieutenant governor Bruce Johnson have visited about a half dozen states to conduct what they call "domestic trade missions." Like many states, Ohio wants to expand its biotechnology and medical sciences sector but they’re up against a lot of competition. According to a 2004 report from the Biotechnology Industry Organization (BIO), 40 states have specifically targeted the biosciences in their economic-development efforts, hoping to bring more high-paying jobs to their communities. All this adds up to a lot of states spending like a drunken sailor on incentives to attract jobs. The average size of incentive packages is estimated at $10,000 per employee although, in 1993, Alabama paid Mercedes Benz an eye-popping $150,000 per job created.

Even though some question if this $50 billion a year subsidy game is worthwhile, it hasn't slowed the action. See some efforts:

Wisconsin

Georgia

Washington

Tennessee

Texas

I don't know what it is about wikis but there seems to be a wikification of the patent world. After the U.S. Patent and Trademark Office put out a draft Five Year Strategic Plan outlining their intention to develop a "peer review mechanism" that would enlist volunteers from the public to weigh in on applications, there seems to be a lot of response from the community at large. I've been sent info on three new sites in just the past week.

An early adopter is WikiPatents.com. Anyone can join the WikiPatents Community for free and voice concerns, praise, comments, and opinions on any issued patent. The WikiPatents Community was established to allow the community to give feedback on patents (and eventually applications) to ostensibly improve patent quality. By adding and voting on overlooked prior art and submitting public comments on the merits of issued patents, the WikiPatents Community will (theoretically) provides a resource to patent Examiners reviewing related pending applications.

[*Note: As reported by Greg Aharonian's Internet Patent News Service, Business Week’s Lorraine Woellert has reported that the PTO told its examiners that they could no longer use the controversial online encyclopedia as an accepted source of information.]

Just as eager as the USPTO is to develop a "peer review mechanism" that would enlist volunteers from the public and ease the burden on its own staff, the public is anxious to serve. I have received notice of several other services. One service, Patent Debate, is offered by IP.com.

Patent Debate is described as "a powerful intellectual property tool to pioneer the battle against overly broad patents." The idea being that anyone who is interested in the outcome of a particular patent application can publicly voice their objection since Patent Debate allows users to freely search, view, and post commentary on any pending U.S. patent application. IP.com already maintains a Prior Art Database for use by companies to publish their technical disclosures (defensive publications) in a searchable database.

Besides at least one other beta project we know of, there is also Patent Quality Index, which seems blank right now, and the Community Patent Project, which is a New York Law School venture backed by IBM, Red Hat, Microsoft and Hewlett-Packard. That project, scheduled for a pilot rollout in January 2007, will allow the public to comment on patent applications and rank one anothers' comments for quality. The Community Patent Project tries to provide an online system for peer review of patents by a network of experts, which can advise the Patent Office on prior art as well as to assist with patentability determinations.

It claims that by using social software, such as social reputation, collaborative filtering and information visualization tools, we can apply the "wisdom of the crowd" – or, more accurately the wisdom of the experts – to complex social and scientific problems. Apparently, though, they don't like to be called a wiki declaring that "the technology we will use -- and which we are in the process of designing and building with public input -- is not a wiki. It is not wikipedia for patents. It is a peer review system that is specially designed with a knowledge and understanding of patent law and practice." Uhhmm...whatever.

How all of these patent review/comment sites will figure into the patent examination process remains foggy at best. Right now, patent law gives those involved in the patent process a "duty of candor" to share information about prior art, but only if they know about it. Although there's no obligation to affirmatively go out and search for prior art now, there is concern about such proposals by the USPTO like the one limiting submissions to 20 references and, for additional references, making the applicants point out what part of the document makes it important, to identify specific claims to which a document applies, to clarify how a document adds new information not already considered by the examiner, or explain why the claims are patentable in light of the information provided.

In case you just can't get enough wiki, these sites allow for easy collaboration: Jot, Wetpaint, PBwiki, Wikispaces, Wiki.com and Wikia.

We think the best idea lately is IP Law in Poetry. Yehuda has rendered both the USC Copyright and USC Patent codes into poetic form for easier (if slightly less accurate) reading.

Kevin Heller, the Tech Law Advisor and commissioner of the Legal Bloggers Fantasy Football League, is heading up Blawger Bowl III. The league is made up of draft teams managed by 12 law blawgers. Patent Baristas is participating - although how we got talked into this I'm not so sure.

Current Roster:

Anonymous Lawyer
Bizz Bang Buzz
Invent Blog
IPTablog
Knowtime
Loosely Coupled
Patent Baristas
paulfrankenstein.org
Tech Law Advisor
TortsProf Blog
Unbillable Hours

Wish us luck. Our quarterback is Ben Roethlisberger.

If you're familiar with the drug industry, it should come as no great shock that the Generic Pharmaceutical Association (GPhA) disagrees with a report put out by the Pharmaceutical Research and Manufacturers of America (PhRMA).

According to a recent report commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA), wholesale price discounts off brand prices on average were 15.8% greater in markets with authorized generics than in those without them.

The GPhA released its own analysis of authorized generics that concluded that the practice of introducing authorized generics (AGs) "significantly reduce incentives for independent generic firms to challenge invalid brand name patents and to develop non-infringing processes." This analysis also raised questions about the validity of the PhRMA study. The study concluded that, despite PhRMA's claims to the contrary, "the long-term effect of allowing authorized generics on the market during the 180-day generic exclusivity period will be less competition and reduced access to cheaper drugs."

The GPhA study of the PhRMA study concluded that the prices consumers pay will be virtually unchanged by the presence or absence of authorized generics (the GPhA claims that much of PhRMA's alleged "discount" associated with authorized generics is accounted for by higher brand name drug prices). It should be no big surprise that the GPhA also claims that allowing authorized generic entry during the 180-day exclusivity period harms the incentives generic firms have to challenge invalid patents or develop products.

An authorized generic is the brand's product repackaged and marketed either through a subsidiary or third-party. Because the brand is selling part of its inventory as a generic, it can currently compete with the true ANDA generic during the exclusivity period.

In creating the Hatch-Waxman Act, Congress determined that it was in the best interest of consumers to create the 180-day incentive to encourage generic companies to challenge questionable or frivolous brand pharmaceutical patents as part of the complex, intellectual property-based U.S. generic drug approval process. The 180-day exclusivity provision of the patent challenge process provides the check and balance in the drug patenting process, while also providing generic companies with a mechanism to recoup the significant costs of litigation and provides incentives to challenge more questionable patents in the future.

When authorized generics are marketed during the Act’s 180-day exclusivity period for first generic entrant, they reduce incentives for independent generic firms to challenge brand name patents and to develop non-infringing processes. Supporters argue that authorized generics offer significant consumer benefits.

The Drug Price Competition and Patent Term Restoration Act, known as the Hatch-Waxman Act, added section 505(j) to the Food, Drug, and Cosmetic Act. This created the Abbreviated New Drug Application (ANDA) process. The Hatch-Waxman Act, and specifically the ANDA process, were designed to provide independent generic firms a strong incentive to develop and introduce lower cost generic drugs to consumers. To implement this policy goal, Congress provided that the first generic ANDA filer that challenged an invalid brand name firm patent on which the brand name product relied, or that developed a non-infringing means to produce the same drug, would be granted a 180-day marketing exclusivity period. This process is known as the paragraph IV certification process.

The brand name firm may challenge the generic firm’s paragraph IV certification, claiming that the generic product violates the brand name firm’s patent rights. If a patent infringement action is filed within 45 days by the brand name firm, the FDA may not approve the ANDA for 30 months, or until the patent dispute has been resolved, whichever is sooner.

An ANDA applicant whose ANDA contains a paragraph IV certification is protected from competition from subsequent generic versions of the same drug product for 180-days after either the first marketing of the first applicant’s drug or a decision of a court holding the patent that is the subject of the paragraph IV certification to be invalid or not infringed.

Don't look for this sparring over authorized generics to end soon. This political football is hotly contested by the generic and brand-name drug companies, due to the billions of dollars at stake. The fact is that the number of authorized generics produced by the name brand companies has increased considerably over the past few years, and the issue will only get hotter. Where brand name drug pipelines are not as full as they could be, these companies will do whatever it takes to hold on to market share.

See the GPhA Report here.

For more on the FTC’s investigation into the matter, see here.

For the bill introduced to limit authorized generics, see here.

As I was scrolling through i-Tunes looking for some summer music to download, I happened to come across the song “Buttons” at almost the same time the news reports had come on reporting that the Senate, in a 63-37 vote, gave final approval to expanding federal funding for embryonic stem-cell research, which many scientists believe offers the potential for finding cures for Parkinson's, diabetes and other illnesses that afflict millions of Americans. While the strength of this vote in a Republican-based senate is rather amazing, this falls just 4 votes short the two-thirds majority that would be needed to override Bush's veto. The President however, left little doubt he would reject the bill despite late appeals on its behalf from fellow Republicans Nancy Reagan and Arnold Schwarzenegger.

Embryonic stem cells are essentially master cells, able to morph into all the cell types found in the body. If scientists could learn to control these cells and coax them into becoming specific types on demand, they could grow replacements for damaged tissue. The idea is to use this process still theoretical to cure or treat a raft of diseases and injuries, from diabetes to Alzheimer's and spinal cord damage.

Senate supporters of the bill likened that logic to opposition suffered by Galileo, Christopher Columbus and others who were rebuked in their time but vindicated later.

Schwarzenegger (governor, R-CA) wrote, "I urge you not to make the first veto of your presidency one that turns America backwards on the path of scientific progress and limits the promise of medical miracles for generations to come."

House Majority Leader John Boehner, R-Ohio, disagreed, predicting that science soon would find a less controversial way to develop equally promising cell therapies. "I don't think it will be an issue in the future," he said. "I think science is moving way down the road in a big hurry where this will no longer be an issue." I personally find such remarks to be disingenuous and naïve. You don’t just predict something in order to make it happen.

Rick Santorum R-Pa.,who voted against the bill, went so far as to say that he thought many scientists lack sufficient moral standards.

We all know that President Bush has said that he'll veto this bill Wednesday (tomorrow). It will be his first veto since he took office in 2001. He opposes the research because it involves destroying human embryos, which he considers taking life, White House Press Secretary Tony Snow said Tuesday. This continues to be a very difficult question of politics, morality and science, which many, including the President struggle with. Within hours of Bush's veto, the House of Representatives will vote to override it, but it's certain to fall short of the two-thirds majority needed.

The president and his followers risk alienating many Americans — and a chunk of their rank-and-file — who support stem cell research using human embryos. Stem cell research funding is all but certain to be a political issue heading into the 2008 presidential campaign as many scientists continue to press the federal government to act because existing stem cell lines are unsuitable for clinical trials.

Polls show as much as 70 percent public support for embryonic stem cell research. Have the Republicans lost touch with the majority of the voting electorate that put them in majority positions in the Senate and House for so many years?

And, have the results of this Senate vote simply served to get the hopes up of the American stem cell researchers (again) into thinking that they might actually be able to finally obtain US Federal funding for their research rather than have to take this research to other countries?

“I'm tellin' you loosen up my buttons babe
But you keep frontin' me
Sayin' what you gon' do to me
But I ain't seen nothin'

I'm tellin' you loosen up my buttons babe
But you keep frontin' me
Sayin' what you gon' do to me
But I ain't seen nothin' ”

Buttons (Pussycat Dolls)

In a bit of shameless self-promotion, we simply must announce that the Patent Baristas were ranked (again!) in the 2006 Edition of Chambers USA, a publication that ranks attorneys and their practices based upon peer and client review.

Chambers USA touts the Intellectual Property Department as known for their "exceptional" attention to detail and impeccable biomedical knowledge. Frost Brown Todd LLC is said to boast one of the top Intellectual Property practices in the region. Clients use adjectives such as "impeccable", "genius", "simply superb", and "quite excellent" in describing Stephen Albainy-Jenei, Karlyn Schnapp, Steven Goldstein, David Schmit, and Joseph Dreitler.

From Chambers:

This team "understands academic culture and speaks the language of the scientist-inventor." The firm is hoping to build on its strengths in patent litigation and the biomedical sector with a concerted push in trademark and copyright matters; this was boosted by the arrival of IP lawyers from Jones Day. The team has a healthy line in advising startups and managing cutting-edge issues for institutional clients like Ethicon. It eclipses the competition in the area of medical devices and recently handled several matters relating to spinal implants. Attorneys are active for hospitals and universities. Clients declare: "They do an excellent job of protecting and managing our creative assets ." They also "prompt us and let nothing fall through the cracks ." In a recent highlight, the team has been representing iPix in a patent infringement lawsuit concerning imaging technology on real estate Web sites.

The arrival of Joseph Dreitler from Jones Day is a triumph for the team. His trademark and copyright expertise will undoubtedly rejuvenate the firm's IP roots. He recently successfully defended Joel Hyatt and former Vice President Al Gore against a trademark lawsuit attempting to scupper the launch of a new cable channel, CurrentTV. Chair of IP Steven Goldstein has over 30 years' experience of patent prosecution under his belt and the useful experience of being former in-house counsel at Procter & Gamble. His background in biochemistry is invaluable to his pharmaceuticals-focused practice. The centerpiece of his year was succeeding in an EPO opposition proceeding involving a patent on the H. pylori assay. David Schmit concentrates on IP litigation and recently completed a case involving trade dress, trademark and unfair competition issues for toy companies making magnetic games. With his biotechnology background, Stephen Albainy-Jenei "speaks the language of scientists and communicates extremely well with them," say clients. He has been busy developing a substantial patent portfolio for a pharmaceutical company's treatment for inflammatory ailments. Karlyn Schnapp "always does an excellent job ," in part thanks to her PhD in organic chemistry. She does opinion work for pharmaceutical companies and her clientele ranges from corporate and university researchers to entrepreneurial startups. Nicole Vickroy Hickey is now in-house counsel for Abbott Laboratories.

The qualities on which rankings are based include technical legal ability, professional conduct, client service, commercial awareness/astuteness, diligence, commitment, and other qualities valued by the client. Editorial comment is also derived from the research, with quotations used when they sum up the prevailing opinion of the market. The rankings and editorial comment about attorneys are independent and objective. Inclusion in the guide is based solely on the research team's findings. For the current Global directory, over 6,500 of these interviews were conducted covering 170 countries. They were carried out by a team of 30 full-time researchers over a period of 12 months.

Now, if only we could win a Bloggy Award...

See more in the Frost Brown Todd LLC Profile

Pfizer announced today that the United Kingdom's Court of Appeal has upheld the exclusivity of the main patent covering atorvastatin, the active ingredient in the company's cholesterol lowering drug Lipitor. The appellate court ruling affirms a lower court decision in October 2005 which found that a proposed generic from Ranbaxy Laboratories Ltd., an India-based pharmaceutical company, would infringe the basic patent of Pfizer's Lipitor. (see an earlier Barista post by Stephen and associated links). Ranbaxy had wanted to release a generic version of the drug in Britain. The patent covers atorvastatin, the active ingredient in Lipitor.

The appeals court backed the lower court by ruling invalid a second Pfizer patent covering the calcium salt of atorvastatin, which expires in July 2010.

The UK appellate court ruling affirms an October high court decision that found the basic patent on Lipitor, expiring in November 2011, was valid, but a more specific patent, running out in July 2010, was not. The ruling prohibits Ranbaxy from introducing a generic version of Lipitor in the United Kingdom before the expiration of the basic patent in November 2011, subject to a possible further appeal. Lipitor is known by the chemical name atorvastatin with annual sales of $12 billion.

In December, a U.S. federal court judge upheld the validity of two of Pfizer's patents, dealing another setback to Ranbaxy, which had hoped introduce a cheaper copy as soon as 2008.

But let’s keep our eye on the ball - when looking at the patent landscape of the statins, this may have been only a small a victory for Pfizer that will play well in the press and for stockholders ever so briefly. Now that Zocor is off-patent in the US (which is also the major market), generic Zocor (which was approved by the FDA last Friday for Teva Pharmaceuticals) may actually represent a much bigger threat to the Lipitor market share and profitability in the US and worldwide.

Today, the US Supreme Court refused to become involved in a closely watched case that tested the legality of multimillion-dollar settlements between big pharma drug companies and their generic rivals. The issue in that case was whether these big drug companies – such as Schering-Plough, the company involved in the case – should be allowed to pay generic rivals to stay out of the market in order to settle patent challenges. Schering-Plough has repeatedly maintained that these types of patent settlements are legal.

This case provoked a very open and public disagreement between the top two federal anti-trust regulators over whether such settlements should be allowed. In declining to hear the case, the Supreme Court sided with the Justice Department, and rejected the views of the Federal Trade Commission, the antitrust regulator that has criticized such settlements. The FTC maintains that such deals are anti-competitive and hurt consumers by keeping drug prices high. The US solicitor-general, writing for the Justice Department, sent a petition to the court in May saying that the Schering case was not a “good vehicle” to test the underlying legal question over the validity of the deals. (Why not?)

Earlier, the FTC had appealed a deal between Schering-Plough and Upsher-Smith Laboratories Inc. of Minneapolis for a generic alternative of the high blood pressure potassium supplement K-Dur 20. Under federal law, drugmakers are allowed to seek U.S. Food and Drug Administration approval for generic versions of brand-name drugs such as K-Dur before a drug's patent expires. They must certify that the patent is invalid or will not be infringed by the new generic version. But the high court's rejection of the appeal came after the FTC and the U.S. Solicitor General's office, which brings federal government cases to the Supreme Court, openly argued over whether the justices should take this particular case.

U.S. Solicitor General Paul Clement, in a brief requested by the Supreme Court, said the FTC's appeal "does not present an appropriate opportunity for this court to determine the proper standards for distinguishing legitimate patent settlements." I still have not quite figured out what he really means.

In a brief filed June 12, the FTC general counsel William Blumenthal said the Solicitor General's office was wrong to tell the justices to pass over this case. "The U.S. fails to appreciate the extent to which this ruling will place pharmaceutical patent settlements beyond antitrust scrutiny," Blumenthal said. "The U.S. does not address the urgent practical reasons why immediate review is needed."

In making its case for a hearing, the FTC alleged that the $60 million agreement, which among other things delayed marketing the generic alternative, violates federal antitrust laws. The FTC filed an administrative complaint in 2001 to stop the deal. An administrative law judge dismissed the matter in 2002, but the FTC overruled the judge in 2003. On appeal, the 11th U.S. Circuit Court of Appeals sided with Schering-Plough and Upsher-Smith, rejecting the FTC's complaint.

Today, the Supreme Court rejected the FTC's appeal despite the fact another similar case could be appealed to the Supreme Court regarding an agreement to delay introduction of a generic alternative to Tamoxifen, a breast cancer drug sold by AstraZeneca PLC.

After all the explanations by the Justice Department, why does this still seem like a “pay-off” to me and a dodge by the Court?

The Law of Karma states that “for every event that occurs, there will follow another event whose existence was caused by the first, and this second event will be pleasant or unpleasant according as its cause was skillful or unskillful.' Apparently Merck has decided to create some karma of its own, deciding that it has had just about enough from generic manufacturers that want to make generic versions of its branded drugs. In a move that has already shaken up some folks, Merck has aggressively targeted leading generic company Teva Pharmaceuticals by pricing its brand-name cholesterol drug, Zocor, below the generic price for some customers, just prior to it going off-patent, which is Friday, June 23.

What's at stake is Teva's profits from its 180-day exclusivity period (gained by being the first to challenge the validity of Merck's patents) and perhaps industry-wide profits in the future. For a generic, this 180-day window is critical and possibly pivotal in filing strategies since this 180-day window affects the profitability of the generic company to not only develop a drug but to risk the litigation to overturn the patent in question.

What Merck has done is negotiate separate deals with health insurance companies like United Health and Well Point under which patients will be able to get Zocor at a lower cost than the generic version. Although the total number of people involved at present looks to be a fairly modest minority of the total population, the threat in such a move sets a fairly clear precedent.

Under the deal, members of United Health Group Inc. will pay around $10 for a month's supply of brand name Zocor and $40 for a generic after the drug loses patent protection on Friday. Both Merck and United Health say the arrangement demonstrates how market competition drives down costs, and that's good for patients.

Of course, that's not the way you're going to hear it from Merck. From Merck's point of view, this is just the competitive market working itself out and that this great for consumers since they will benefit from lower-cost drugs.

Teva Pharmaceuticals said that the United Health Group-Merck contract will not significantly affect the company's sales since the specific United Health program covers less than 5% of the insured US citizens. The company's generic Zocor is expected to receive the final approval from the FDA after the expiration of the branded version later this week.

However, George Barrett, CEO and president of Teva North America, said other health plans had spurned Merck's offer of low-cost Zocor and that his company is considering legal action over the issue. Still, he expressed optimism about the prospects of Teva's version of Zocor. Litigation is still pending about whether Teva is entitled to the six months of exclusivity and Barrett declined to say whether it would launch its product on Friday.

What will be interesting to watch is whether other large pharmaceutical companies like Pfizer, GlaxoSmithKline, and Novartis follow suit and what the government decides to do about this and when something will be done about it (recall 2006 is an election year).

Consumer advocates typically cheer lower prices but in this instance they worry that a short term benefit for patients will ultimately result in long term problems. They say moves such as Merck's undermine generic companies' chances to generate the profits that fuel their ability to conduct research and challenge drug company patents -- eventually resulting in fewer cheap medicines.

Generic companies make most of their profits when awarded six months of market exclusivity because a lack of competition means they don't have to sell their product at an enormous discount to the brand. If the brand chops its price, the generic may be forced to follow suit.

'Sen. Charles Schumer, D.-N.Y., accused Merck of engaging in predatory pricing and called its actions ''a legal bribe.'' He has asked the Federal Trade Commission to investigate the deal between Merck and United Health. ''Merck is taking an end run around the generic drugs laws to make sure there are no generic drugs,'' Schumer said.

When the dust settles, it is unlikely that Congress will let the branded pharmaceutical industry choke off the generics through authorized deals and predatory pricing. However, since a solution to this will not happen overnight, what we will likely see is a period of uncertainty and legal wrangling as people debate and lobby for their respective needs and interests and reap the results of the karma they have created.

I'm really quite disturbed by a recent Federal Circuit decision which held that method claims can be infringed if the method is performed abroad, so long as "components of the method" are exported from the US. See Union Carbide v. Shell Oil Co. (Fed. Cir. 2005). This case is so wrong that I don't know where to begin. The problem is that until it is overruled (not unless, until), it is going to create mayhem in patent law and business planning.

The authority, of course, for patent infringement comes solely from statute. There is no federal common law of patent infringement or unfair competition. The statute at issue provides:

(f)(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Congress enacted what is now Section 271(f)(1), as you know, in response to the Supreme Court's decision in Deepsouth, which held that it was not infringement to assemble abroad a product even where the unassembled parts were shipped from the United States. It is clear that 271(f) was designed to, and seems largely to have, made it so that the owner of a patent on a product can prevent someone in the US from exporting most or all of the components with the intent that they be assembled abroad. That was its purpose, and it seems to have done the job.

Does 271(f) do more than make it an infringement to export components of a patented product for assembly abroad? The Union Carbide court said so. It held that 271(f)(1) permits the owner of a patent on a method to prevent the exportation of components that will be used abroad to practice the claimed method.

I just wrote a book on statutory interpretation and so maybe the errors are obvious to me. But let's see.

Remember that method claims cover only use of the method. You're supposed to construe statutes with ordinary meaning. Let's try. How do I export a step in a method? It's not enough to export instructions: instructions are not the doing of the method. Is there a "component" of a "method"? I've never heard anyone refer to a step in process as a component. "Have you performed all the components in the process?" Now, "have you used all of the components specified in the method claim" makes sense, but notice that it is not the component that is an element in the method: it is the step of using that component. I can export a component that can be used in a method claim, but what is covered by the method claim is the use of the component, not the component.

Suppose you think I'm wrong. One core principle of statutory construction is that you have to construe a statute as a whole. Is the word "component" used somewhere else in 271? You bet. Check this out:

(

c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer….

Notice that Congress used two words: components describe what are parts of patented products; "material or apparatus" are "for use in practicing a patented process." Thus, Congress used distinct phrases -- components are what go into products, materials or apparatus are what are used to practice method claims -- in this section. Thus, under this section, if someone sells in the US a material or apparatus used to infringe (and it's not a stapel article, etc), then they infringe.

Now look back at 271(f): it says people who export components that are assembled abroad infringe; it says nothing about materials an apparatuses (apparati?) used for practicing a patented product.

So, where we are is the ordinary language of the statute doesn't apply, and the phrase "component" is used in the same statute to apply only to product claims.

How did the Federal Circuit miss this? I don't know. I do know, however, that the case is already the subject of discussion among CLE programs I've attended. "How do you draft a method claim to insure it includes components" was one question I heard asked.

It can't because they won't. But we won't get this fixed for a while.

Tell me why I'm wrong, and yes I get mad about this sort of decision.

David Hricik
Mercer Law School

The Baristas are pleased to announce that Professor David Hricik from Mercer University School of Law will be a guest Barista on this site, contributing in the area of IP ethics on a regular basis. David receieved his B.A. in 1984 from the University of Arizona and his J.D. in 1988 from Northwestern University Law School. He has been a member of the Mercer Law Faculty since 2002.

For those of you who are not familiar with David, David is currently the Chair of the Professionalism & Ethics Committee of the American Intellectual Property Law Association. In addition, David has also served as the Chair of the ABA Committee on Professional Responsibility of the Intellectual Property Section from 2002-2003.

From time to time, David will be posting to the Barista site, and sharing with us his own insights into some of the current legal ethics issues faced by practioners in the bio/pharma area and patent law generally. We hope you will enjoy David's own special brew of wit and wisdom as he shares with us his thoughts and opinions regarding IP legal ethics.

I will be at the ABA's Intellectual Property Law Summer Conference in Boston from June 21-24. If you'd like to take time to meet next week, drop me a line and we'll arrange a meeting at the Marriott Copley Place Hotel. I'll be there chatting with fellow bloggers over a cup o' joe at the get acquainted reception that's 6-7 on Wednesday evening.

The ABA IP Section has organized a "Bloggers' Corner" event where gurus such as Matt Buchanan of Promote the Progress, John Welch of the TTABlog, Dennis Crouch of the Patently-O blog, and others will be set up in one corner of the room for discussion of all things blawg. It should be an interesting time. I look forward to seeing everyone at the meeting.

See the Flyer here.

Apparently after making substantial campaign contributions, the Baristas from Patent Baristas have been named Blawgers of the Year in the 2006 TechnoLawyer @ Awards!

There's no cash prize but it beats a poke in the eye. Of course, it's an honor to just be nominated. It just happens to be even better to win.

Blawgger of the Year is awarded to the blogger(s) responsible for the largest number of downloads of BlawgWorld 2006: Capital of Big Ideas. Apparently, our readers like this eBook. See the rest of the winners (who were actually voted in) at TechnoLawer. LexisNexis appears to have donated even more money than we did.

Earlier, we had an article featured in BlawgWorld 2006: Capital of Big Ideas, an eBook sampler of 51 of the most influential law blogs (blawgs). BlawgWorld is published by TechnoLawyer, a publisher of various e-mail newsletters for the legal marketplace. The Barista article, "Misconduct (and Not Just Scientific) is a Problem for Everyone," provided a discussion of recent allegations of misconduct by U.S. researchers in light of a survey showing one in three researchers admitted to some type of professional misbehavior.

See the Patent Baristas Sampler article here.

If you don't yet have a copy of BlawgWorld, download it today. BlawgWorld is available free in its entirety just by clicking on the link here.

The is a direct link to the eBook, which means readers can download it without joining TechnoLawyer. Although, we recommend that you join TechnoLawyer using the BlawgWorld home page, and check out their legal newsletters.

The World Health Organization (WHO) said it would look at whether the international drug patent system prevents developing countries from obtaining needed medicines, vaccines and diagnostic tests. The 192 WHO members agreed at an annual meeting in Geneva to launch an intergovernmental group to look for gaps in medical research and development, and draw up a global strategy to ensure the health needs of poor people are met. The report, commissioned by the WHO in 2003, did not call for a weakening of patent rights but urged big companies to reduce the price of medicines sold to developing countries and to avoid filing for patent protection there.

The report of the Commission on Intellectual Property Rights, Innovation and Public Health contends that the current system works well in developed nations but not in developing countries. While pharmaceutical industry insists that the current system is crucial for encouraging and financing the invention of new drugs, others claim it fails because people in the developing world often cannot afford to pay for high-priced new drugs, and because they sometimes need treatments that offer little profit for drug companies.

Governments should therefore develop and finance an alternate system for drug development and distribution in the developing world, the report concluded. More controversially, it suggested that drug companies should not seek patents in poor countries. An example are AIDS drugs costing $10,000 a year, too expensive for residents of African nations afflicted with the disease.

Another example is the FDA recommended approval of the first vaccine to prevent cervical cancer, the leading cause of death from cancer among women in poor countries, with 80 percent of the world's cases. In the developed world, routine tests usually detect the disease in its treatable, precancerous stages. At $500 for the series of three shots, it is unaffordable in poor countries.

In the past, drug companies offered deals with poorer countries for discounted rates and foundations and international projects purchase and distribute costly drugs in pilot projects but these fall far short of meeting the global need. Drug companies won't develop drugs unless they can charge for the drugs. Big surprise.

The WHO report generally concludes what we already know. That is, "Governments have the major responsibility to mobilize funds and promote new financing and incentive mechanisms to meet our shared goals." It's easy for governments, rich and poor, to shirk their responsibility of providing healthcare to teir people by blaming drug companies.

Admnittedly, healthcare is not the same as wanting to buy some patented, high-tech toy and not wanting to pay the MSRP but the burden for caring for the sick falls on all of us.

What does the report say?

• Intellectual property rights are a general incentive provided by governments to promote innovation in all fields. In respect of public health, they are embedded in a set of other incentives which influence the pattern of innovation. They need to be looked at as part of a bigger picture.



• In particular, because the market demand for diagnostics, vaccines and medicines needed to address health problems mainly affecting developing countries is small and uncertain, the incentive effect of intellectual property rights may be limited or non-existent.



• Because intellectual property rights may not be an effective incentive in this area, there is a need for other incentives and financial mechanisms to be put in place and for collaborative efforts between different stakeholders.



• Without access to the products of innovation, there can be no public health benefits. Defining the conditions by which products can be accessed is therefore an important aspect of the report.



• There has been significant progress in recent years, in particular initiatives taken by different stakeholders to promote innovation in health-care products e.g. increased funding by foundations and the formation of public-private partnerships for product development.



• This momentum for change is welcome but is insufficient.



• More needs to be done. There are unsettled and debated issues in intellectual property for example the effectiveness of the recent amendment to TRIPS in increasing access to medicines in countries without manufacturing capacity, the impact of data exclusivity laws and the impact of intellectual property provisions in bilateral trade agreements.



• And there is a need to ensure enhanced financing on a sustainable basis of innovation and access and promote synergy between the different partners.



• Ultimately it is a responsibility that governments must accept if these objectives are to be achieved.



• It is appropriate that WHO should now take the lead in promoting a more sustainable and better-funded effort and addressing unresolved issues.



• WHO should accordingly develop a Global Plan of Action to secure enhanced and sustainable funding for developing and making accessible products to address diseases that disproportionately affect developing countries.

Click here to get the entire Report: Public health, innovation and intellectual property rights.

The Boston Globe recently ran an article that nanotechnology is about to be the next big thing in bioscience. Although nanotechnology has had a lot of ups and downs in its enthusiam in the marketplace, it's still remains mostly a laboratory study subject. Now, nanotech seems staged to make huge leaps in medical treatment, so some say.

Nanotechnology is the understanding and control of matter at dimensions of roughly 1 to 100 nanometers, where unique phenomena enable novel applications. Encompassing nanoscale science, engineering and technology, nanotechnology involves imaging, measuring, modeling, and manipulating matter at this length scale. At the nanoscale, the physical, chemical, and biological properties of materials differ in fundamental and valuable ways from the properties of individual atoms and molecules or bulk matter.

Nanotechnology could introduce whole new classes of materials and products but could also present tough challenges to regulatory agencies. The National Science Foundation predicts that the global marketplace for goods and services using nanotechnologies will grow to $1 trillion by 2015, and there are already over 500 products being sold that claim they are made with nanoscale or engineered nanomaterials. These include products like self-cleaning windows, automobile paint, sunscreens, and tennis rackets. In the future, a marriage of nano and biotechnology will likely create a whole new generation of drugs, biomedical devices, and other products.

Nanomedicine has been defined as the monitoring, repair, construction and control of human biological systems at the molecular level, using engineered nanodevices and nanostructures. Current applications of nanotechnology in medicine involve engineered molecules to develop drugs, drug delivery techniques, diagnostics, medical devices and enhanced gene therapy and tissue engineering procedures. "Nanosizing" is a term developed in the pharmaceutical industry to describe how some previously approved products with particle sizes greater than 100 nm are being produced with smaller particle sizes, in order to change certain physical and performance characteristics, such as pharmacokinetic profile (i.e. the rate and extent of absorption and clearance from the body). To date, the FDA has no knowledge of reports of adverse reactions related to the "nano" size of resorbable drug or medical device products.

Not everyone is thrilled. A coalition of consumer and environmental groups petitioned the FDA to increase its regulation of nanoparticle-containing sunscreens and cosmetics and recall some products. Among the FDA-regulated products being sold are sunscreens containing titanium dioxide or zinc oxide nanoparticles (which offer strong ultraviolet protection while remaining colorless) and cosmetics with nanoscale liposomes. A number of animal studies have shown that at least some nanoparticles can penetrate cells and tissues, migrate through the body and brain and cause biochemical damage. But whether these pose health risks remains largely unknown, pending completion of long-range studies recently begun by the FDA and other agencies. The FDA has six months to respond to the petition.

The FDA has not established its own formal definition for nanotech, though the agency participated in the development of the NNI definition of "nanotechnology." Using that definition, nanotechnology relevant to the FDA might include research and technology development that both satisfies the NNI definition and relates to a product regulated by FDA.

However, the FDA only regulates certain categories of products. Though existing requirements may be adequate for most nanotechnology products, many of the nanotechnology products will be Combination Products (i.e., drug-device, drug-biologic, or device-biologic products). The current policy regarding combination products helps prevent duplication of effort and a protracted approval process. If the product meets the definition of a combination product, it will be assigned to an Agency center that will have primary jurisdiction for its regulation. The assignment of a lead center is based upon a determination of the primary mode of action (PMOA) of the combination product. For example, if the PMOA of a combination product is that of a biological product, then the combination product would be assigned to the Agency component responsible for premarket review of that biological product.

FDA published a proposed rule defining the primary mode of action of a combination product. The proposed rule defines primary mode of action as "the single mode of action of a combination product that provides the most important therapeutic action of the combination product." In some cases, neither the FDA nor the sponsor can determine the most important therapeutic action at the time a request is submitted. A combination product may also have two independent modes of action, neither of which is subordinate to the other. Depending upon the type of combination product, approval, clearance or licensure may be obtained through submission of a single marketing application, or through separate marketing applications for the individual constituent parts of the combination product. For most combination products, a single marketing applicition is sufficient for the product’s approval, clearance or licensure.

However, nanotech is better known to the public for its potential to run amuck like in the the "gray goo" (or "global ecophagy") scenario developed by an early nanotech theorist, which holds that a tiny, self-replicating device could end up consuming all the organic material on earth, turning the world into a sterile mush.

Granted, there are genuine toxicity questions raised by the use of nanomaterials in consumer products, such as sunscreens and cosmetics, in which ultrafine particles are incorporated into the formulations. The dilemma, of course, is that the growing concerns over the use of nanoparticles in consumer products could outweigh the benefits that can be had in medicine and technology. Every new technology brings a new set of benefits and fears that are dealt with as they arise but public perception means a lot in both the marketplace and in the world of regulation where the FDA rules are often driven by politics.

Although the safety of nanoparticles and nanomaterials deserves careful consideration, what the public thinks about gray goo is critical. If they're not careful, nanotech companies will lose the battle over public opinion and suffer the backlash felt by companies like Monsanto over biotech foods.

The Human Genome Project, started in started in 1990 to identify genes, has finally come to a close with the publication of the last chromosome sequence in the Human Genome, chromosome 1.

It took 150 scientists 10 years to complete the sequence of chromosome 1, which contains nearly twice as many genes as the average chromosome and makes up eight percent of the human genetic code. It has 3,141 genes and is linked to almost 350 illnesses.

The finished sequence comprises 223.6 million base-pairs (Mbp), determined to an accuracy of >99.99%, and includes the centromere and a large non-coding region (heterochromatin) in the centre of the chromosome. The sequence of chromosome 1 published today includes 99.4% of the gene coding (euchromatin) regions of the chromosome amenable to sequencing with current technologies. Gaps within the sequence (most are due to repetitive sequence) comprise about 1.3 Mbp.

The entire human genome has 20,000 to 25,000 genes, with the sequencing of chromosome 1 identifying more than 1,000 new genes. They also identified 4,500 new single nucleotide polymorphisms (SNPs).

Almost 4500 single-letter changes in the genetic code (called SNPs) were identified that could lead to changes in protein activity. In addition, 90 SNPs were found that would result in a shortened protein. Although some 15 SNPs are associated with already known protection from malaria and predisposition to porphyria, the function of these newly located SNPs is yet to be discovered.

Sequencing was carried out at the Wellcome Trust Sanger Institute and the University of Washington Genome Center contributed 13% of the sequence finishing. Analysis of the chromosome content was carried out by Wellcome Trust Sanger Institute.

The details of the sequence are published in Nature (Gregory SG et al. (2006) The DNA sequence and analysis of chromosome 1. Nature 441: 315-21).

[Today's post is a guest commentary on the NewStandard article about drug companies getting taxpayer supported government grants and then extracting large profits on drug sales.]

If I may comment on the [previous post: Do Drug Companies 'Gouge' Consumers With Taxpayer Handouts? ], what is the fair price for any product? When people purchase high-priced drugs, every person who pays the price is indicating that they agree that the drug is worth the dollars paid. It is hard to say, for such individuals, that the drugs are "overpriced". After all, they are willing to fork-over their hard earned money to complete the purchase. What better definition is there for a "proper price" for a product.

The described scenario overlooks two considerations. One is that millions of poorer people may be unable to pay the cost of purchasing a high-priced product. Or more precisely, they will choose not to purchase such a product. The other scenario is that the vendor may be making a substantial profit, a profit well in excess of the amount of profit needed to encourage them to stay in business. This might be called "surplus" profit.

Patents are designed to produce "surplus" profit. Such increased profits arise in the absence of competition. Free competition sets a market price were producers settle for the minimum profit that they can tolerate. This produces a "competitive price". Typically, a competitive price allows many more persons to have access to a product. And it allows rich people to acquire a product at a much lower price than they would be willing to pay otherwise. Economists sometimes call the advantage enjoyed by rich persons in such a situation as "consumer surplus".

Why do governments sponsor a system wherein patents produce surplus profit? Patent systems are maintained because of the belief that they bring into existence products that would not otherwise come into existence if it weren't for the incentive of surplus profit. But how much profit is enough? Is 20 years too long for some inventions? And do some inventions command such market power that people will pay anything in order to obtain access to the product? These are concerns that arise when a government endeavors to operate under a one-size-fits-all patent law.

On the one hand, we have those who say "Keep it simple". On the other hand, there are those who say "Make sure the law is just". These are competing interests that cannot be easily reconciled.

So we have proponents of the patent system who advance a defense based on demonstrated examples wherein the patent system has worked. And we have opponents of the patent system who advance an attack on the basis of perceived injustice.

The pharmaceutical industry is subject to such attacks because:

1) their product commands such market power that they can charge especially high prices;

2) the high prices charged for pharmaceuticals limits access for many persons of limited means, and

3) there is a deep suspicion that the profits earned by the pharmaceutical industry are not needed in order to provide a reasonable incentive for the production of new pharmaceutical products.

Today's commentary comes from David J. French, an attorney with Milton, Geller LLP in Ottawa, Canada.

The NewStandard ran an article outlining that Drug Firms 'gouge' consumers by taking taxpayer handouts. The article points to the government grants offered to Big Pharma companies, which then make huge profits off the drugs they sell. Hence, the argument goes, we are paying twice for drugs.

If only it were that simple.

American consumers spent nearly $200 billion on prescription drugs a year. The cost reflects growth in the availability and use of prescription drugs and also a steep surge (twice the rate of overall inflation) in the price of drugs. And, the absence of pharmaceutical price containment in the United States leaves consumers paying two to three times as much as consumers in other countries, including neighbors Canada and Mexico.

The article points out that Genentech reported total product sales for the first quarter of 2006 increased 39 percent, to $1.64 billion, while sales of their colon-cancer drug Avastin increased 96 percent, raking in $398 million. Currently, colorectal cancer patients pay about $46,640 for a ten-month treatment regimen of Avastin.

The article tries to make a connection that drug prices are maintained at high levels due to the political leverage of pharmaceutical companies in Washington. Admittedly, a 2005 study found that the pharmaceutical and health-product industries spent $87 million on campaign contributions to federal candidates between 1998 and 2005. Probably not just as a goodwill gesture.

It seems, though, that it is more than just a lack of political will in Congress to stand up to the drug companies and enforce rules that require the drugs to be priced fairly. Clearly, it's difficult for the government to argue fair prices after a drug is proven to be beneficial and establishes its value on the market. You end up asking how much is it worth to keep a person alive.

The drug industry is dependent upon on government-granted monopolies in the form of patents and Food and Drug Administration (FDA) regulations. However, although nearly half of biomedical research spending in the United States is supported by either the government or non-profit sector, the bulk of the research involved in actually carrying drugs through the clinical testing process needed to gain FDA approval is carried on by the pharmaceutical industry and financed through patent protection. And, in exchange, we get access to newer and (presumably) better drugs. Drug companies need to make money to support research and to generate profits but who's to say how much is enough?

Basically, the prices drug companies charge appear to have little relationship to the costs of making the drugs. Research and development (R&D) is a relatively small part of the budgets of the big drug companies - more is spent on marketing and administration. And generally speaking, the industry has been the most profitable in the US. But is that necessarily wrong?

It could be argued that we receive a partially-subsidized drug cost based on taxpayer-funded research and grants. These funds help lower the prices of drugs from the full price. But, like all subsidies that are not 100%, it's difficult to say how much is enough. And drugs are different than common goods. People depend on them for their health and even their lives. People want there to be some checks and balances on the costs.

How can the pharmaceutical industry respond to the building wave of support for government intervention? Drug companies need to decide to make some changes by trimming their prices, or at least make them more equitable, and put more of their money into R&D. That would go a long way in smoothing over the unrest among consumers.

Meanwhile, as drugs come off patents, the costs should ease for patients. This week, Indian pharmaceutical firm Dr. Reddy's Laboratories received final approval from the Food and Drug Administration for its generic version of allergy medication Allegra (fexofenadine hydrochloride), which in allergy-prone Cincinnati should be put into the water supply like fluoridation. Mylan Laboratories also got tentative approval to sell a generic version of Allegra, joining Barr Pharmaceuticals and Teva Pharmaceuticals.

The Midwest will be showing its strengths, especially in the areas of agricultural biotech and in the convergence of the medical device, diagnostic and therapeutic companies, at the upcoming BIO 2006 in Chicago next week.

I will be among the predicted record attendance of over 25,000 registrants. If you'd like to take time to meet next Monday (April 10th), drop me a line and we'll arrange a meeting at the McCormick Place Convention Center. I'll be around the Exhibit Hall looking for a good cup o' joe.

As pointed out by G. Steven Burrill, CEO of Burrill & Company, a San Francisco based global leader in life sciences whose principal activities are in Venture Capital, Merchant Banking and Media, the "Midwest is not the first place people think of when considering centers of biotechnology excellence (most of the biotech activity is concentrated on the East and West coasts) but it's really more of an awareness issue than it is a fact issue."

The Midwest is involved in the life sciences industry in a very broad way, from medical devices and diagnostics to biopharmaceuticals, agricultural technology and industrial biotechnology. The region is home to hundreds of life sciences companies and, as Burrill points out, medical devices in particular is one of the fastest growing sectors in the Midwest.

Well, I'm back from my hiatus now that the Google-Patent Baristas acquisition has fallen apart (they don't even serve decent coffee). The WiredGC posted its own brand of foolery in an article about Large Firm Associates wanting to form a union to enforce wage and labor rules. Associates are upset over massive salary increases and "worker safety is a major concern as many associates cannot use their thumbs on the weekend due to excessive BlackBerry usage."

I noticed that not everyone thinks that April Fool's Day is fun. While I've received only positive feedback (to my face), Paul Kedrosky at Infectious Greed feels that April Fool's Day is just irritating. I thought someone would mention our new hire, Staff Writer April Balatro (Latin for April Fool).

I have to admit, it's difficult to be fresh and new whenever Google comes out with their own 4/1 announcement regarding their new Google Romance™ service. Google gets to the bottom of things in noting: "When you think about it, love is just another search problem. And we’ve thought about it. A lot. Google Romance™ is our solution." Don't forget to take the tour.

So, what's not a hoax? Google's push into multimedia. It appears that Google has begun looking for employees to make Google TV and radio products compatible with televisions, stereos, radios and cell phones.

While we're at it, Bruce MacEwen at Adam Smith, Esq., writes about what should have been merely an April 1st joke. Not to mention the $400K entry-level hires.

Will the Baristas be back next April 1st for another round of fun? We'll see.

Update: Don't miss Buzzaire - Metered Dose Caffeine Inhaler.

By April Balatro
Staff Writer
Saturday, April 1, 2006

Google Inc. (NASDAQ:GOOG) announced it has agreed to acquire Patent Baristas, an intellectual property law blog for the biotechnology and pharmaceutical industries, for $1.3 billion in stock and other consideration.

Patent Baristas offers innovative intellectual property blogging that connects millions of people around the world with bio/pharma chat every day. Through its freshly brewed look, Patent Baristas provides news and witty commentary on intellectual property law from the biotechnology, pharmaceutical and chemical fields. Engagingly cleaver, the Patent Baristas shine a bright spotlight on the absurdities that prevail in intellectual property law today.

In announcing the deal Friday, which had been rumored for weeks, Google said the acquisition of the Cincinnati-based Patent Baristas would strengthen Google's IP presence in the global marketplace. Plus, it's keen to open several new lines of java-based business. In the future, Google plans to integrate the Patent Baristas' technology into the Google AdWords platform, creating a new coffee-themed ad distribution channel for Google advertisers.

"Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media," said Tim Armstrong, vice president of Advertising Sales, Google. "We anticipate that this acquisition will bring new ad dollars and accountability to the patent field by combining Google's expansive network of advertisers with the Patent Baristas' talented blogging team and innovative writing style. We look forward to working together to continue to grow and improve the ecosystem of the bio/pharma industries."

The purchase comes as a surprise to few, as industry watchers have long floated the possibility of this exact acquisition, suggesting that the deal was just a matter of time considering where Google was headed with its plans to broaden its intellectual property base.

Dr. Eric Schmidt, Google's chairman and chief executive officer, said on a conference call that he was excited about the company picking up such a strong group of bloggers and the worldwide audience of over 31,000 monthly readers. "We believe the next big thing is to capitalize on intellectual property and the key to that is going to be services like Patent Baristas," Schmidt said. "With their trademark savage wit and a sassy attitude to match, this deal is right for us."

"We are excited to be joining one of the most innovative companies in the world," said Stephen Albainy-Jenei, President and Chief Blogger of Patent Baristas, Inc. "We are bringing together complementary visions of simplicity, efficiency, and barbed wit to the intellectual property scene. Google also provides free coffee to its employees."

The deal represents a heady zenith for Albainy-Jenei, who founded the fast-growing Patent Baristas in 2004. Last seen shopping for ocean-front property, Albainy-Jenei is expected to continue to head up the Baristas and will report to Google CEO Schmidt and join Google's senior executive team, the companies said.

The companies said Monday that the deal, subject to approval from regulators and stockholders, would provide more efficient, targeted and measurable marketing and advertising through the Internet and other media. The deal, the companies said, "will create the worldwide leader in online intellectual property chat." The acquisition is expected to close in the fourth quarter 2006.

Regulators at the Federal Trade Commission and the European Commission expressed serious doubts about the deal alleging that the combined company could reduce competition in the intellectual property arena. "It is illegal for a monopolist to lock others out of the market and we'll be looking very hard at this proposal to see if it violates Section 5 of the FTC Act or even our own sense of decency," says William Bear, the director of FTC's bureau of competition. "Although they're viciously funny and snappy dressers, we're not convinced that the Baristas know beans about anything."

Transaction and Financial Information

Under the terms of the imaginary merger agreement, Google will acquire all of the outstanding equity interests in Patent Baristas, a privately held company, for total up-front consideration of $150 million in Starbuck's coupons. In addition, Google will be obligated to make additional contingent cash payments from time to time if certain product integration, net revenue and advertising inventory targets are met over the next three years. The maximum amount of potential contingent payments is $1.15 billion over the next three years. Since these contingent payments are based on fantasy, actual payments may be substantially lower. The acquisition is subject to customary closing conditions. Google anticipates that the acquisition will close in the fourth quarter 2006. Substantially all of the payments will be accounted for as part of the purchase price for the transaction.

Safe Harbor

This press release contains forward-looking statements and satire that involve risks, uncertainties and down-right falsities, including statements regarding the actual amount of contingent payments that may be made pursuant to the transaction, Google's expectation that the acquisition of Patent Baristas will bring new ad dollars and improve Google's operating performance, Google's plans to integrate the Patent Baristas technology into the Google AdWords platform following the consummation of the acquisition, and the expectation that the Baristas will even show up for work. Such statements are just pretend and involve risks and uncertainties such that an actual acquisition may differ materially. Factors that could cause actual results to differ from our make-believe expectations include the failure to (1) accurately estimate the amount of the contingent payments because of mistaken assumptions or predictions about the ability of the Patent Baristas to achieve the performance targets described above, (2) receive regulatory approval for the acquisition, (3) successfully integrate Patent Baristas and its bloggers into our organization and achieve expected synergies, (4) compete successfully in this highly competitive and rapidly changing marketplace in which we have no significant previous experience and (5) provide decent enough coffee to retain key bloggers. These and other falsehoods are detailed from time to time in our periodic reports that are filed with the Securities and Exchange Commission.

Google is a registered trademark of Google Inc. All other company and product names may be trademarks of the respective companies with which they are associated.

Barista Stephen Albainy-Jenei is also a patent attorney and Member of Frost Brown Todd LLC. When not serving up patent chat over a cup of java, he's working closely with biotechnology and emerging growth companies to brew up successful technology transactions.

Contact:
Google-Patent Baristas, Inc.
baristas@patentbaristas.com

© Copyright 2006.

The Federal Trade Commission (FTC) is considering conducting a study to analyze the use and likely short- and long-run competitive effects of authorized generic drugs in the prescription drug marketplace. An authorized generic is chemically identical to a particular brand-name drug, but the brand-name manufacturer authorizes it to be marketed in a generic version.

In the United States, the Food and Drug Administration (FDA) must approve the marketing of any pharmaceutical drug, whether brand-name or generic. The Hatch-Waxman Act establishes the regulatory framework under which the FDA may approve a generic drug to be marketed. Typically, a brand-name drug obtains FDA approval through a New Drug Application (NDA), and a generic drug manufacturer obtains FDA approval through an Abbreviated New Drug Application (ANDA) in which it may be allowed to rely on the clinical data first submitted by the brand-name drug manufacturer.

To encourage generic entry as soon as is warranted, the Hatch-Waxman Act allows generic drug manufacturers, in certain circumstances, to market a generic drug prior to the expiration of claimed patent protection for the corresponding brand-name drug. To be permitted to do so, a generic drug manufacturer must first submit a paragraph IV ANDA in which it certifies that (a) its generic drug will not infringe patents listed in the FDA’s Orange Book, as claiming the relevant brand-name drug product, and/or (b) the relevant Orange Book patents are invalid.

If the paragraph IV ANDA leads to litigation, then 30 months after the litigation was filed (or after final decision in the litigation, if earlier), the FDA may authorize the marketing of the generic drug under the ANDA application. At that point, the first-filed paragraph IV ANDA applicant becomes entitled to a 180-day marketing exclusivity period, during which the FDA cannot approve any other, later-filed paragraph IV ANDA for a generic drug corresponding to the same brand-name drug product. This protects the first FDA-approved paragraph IV ANDA applicant from competition with other generic ANDA applicants during this time.

The 180-day marketing exclusivity period does not preclude competition from NDA-approved “authorized generics,” however. An authorized generic is chemically identical to a particular brand-name drug, which the brand-name manufacturer authorizes to be marketed in a generic version under the NDA-approval that the FDA granted for the brand-name drug. The brand-name manufacturer either sells the authorized generic itself through a subsidiary or licenses a generic firm to sell the authorized generic.

In recent years and with increasing frequency, brand-name drug manufacturers have begun to market authorized generic drugs at precisely the same time that a paragraph IV generic is beginning its period of 180-day marketing exclusivity. In the short run, the entry of an authorized generic drug may benefit consumers by creating additional competition that lowers generic prices further than if only the paragraph IV generic were marketed. Many generic manufacturers assert, however, that in the long run, consumers will be harmed because an expectation of competition from authorized generics will significantly decrease the incentives of generic manufacturers to pursue entry prior to patent expiration.

The FTC now proposes to undertake a study to examine both the likely short-term competitive effects of authorized generic drug entry and, to the extent possible, the likely long-term impact of entry by authorized generic drugs on competition by generic manufacturers.

Comments on the FTC’s "Authorized Generic Drug Study" will be accepted until June 5, 2006.

See additional information in the Federal Register Notice.

In an Op-Ed piece in the New York Times entitled "Patently Ridiculous," the editors state that "something has gone very wrong with the United States patent system.

That's not really "new" as far as patent reform claims of this sort go but the editors do finally concede that the problem lies "not just with the short-staffed patent office, but also with the courts." The article attempts to draw blame away from patent holders themselves and to shine light on the ease with which patent holders can get an injunction to shut down a competing business. Since injunctions are such a heavy hammer, many companies settle rather than fight it out à la RIM v. NTP.

The article provokes one to contemplate the questions raised by new technological advances. It also gives a nod to the fact that not everyone is effected equally -- high-tech and pharmaceutical industries are at odds on reform since patents affect their businesses so differently. The bottom line is that an understaffed Patent and Trademark Office needs to work cooperatively with inventors to carve out their inventions' proper niche.

Congress is currently looking at draft patent reform legislation to deal with the issue of patent infringement injunctions. Companies like eBay, which have to contend with the possibility that one device might be infringing hundreds of patents, want Congress to clarify existing rules that give district court judges discretion in deciding whether to issue injunctions while patent cases make their way through the appeals process.

The pharmaceuticals industry, by contrast, wants the legislation to reflect recent federal circuit court decisions - particularly the one eBay is appealing - which say injunctions against patent infringers should be standard during appeal except in extraordinary circumstances. Pharmaceutical and biotech companies tend to face fewer numbers of patents in developing a particular product and so immediate injunctions are more critical.

Meanwhile, in the eBay v. MercExchange case, the Court of Appeals for the Federal Circuit felt that eBay should be subject to an injunction in holding that a permanent injunction must follow all judgments of infringement unless such a decision would "frustrate an important public need," such as protecting public health. Note that RIM made this argument against an injunction on testimonials that its Blackberry e-mail device, used by doctors and emergency workers, fit that description.

When deciding whether to grant injunctions, the other federal appellate courts use a four-part test where the courts consider whether the plaintiff will be irreparably harmed if an injunction is not issued, whether the plaintiff has some other adequate legal remedy, whether an injunction is in the public interest, and whether an injunction (or lack of one) would pose an undue hardship to the plaintiff or defendant. A much less hardline approach.

Counterbalancing all this is the importance of an injunction for the "little guy" in all this. The power of an injunction can be the only weapon that a small start-up has to combat it's larger foes seeking to cruch it out of the marketplace using its vast cash resources. It's all a matter of balance and, hopefully, the Supreme Court will provide some guidance. The U.S. Supreme Court has agreed to review the ruling in the eBay v. MercExchange case will begin taking up the general merits of that case on March 29, when it is scheduled to hear oral arguments.

The U.S. government filed its own brief in the case arguing that the court handling eBay's appeal did not stick to a "general rule" but instead used ample "discretion" in issuing an injunction. The government said no special exemptions should be made in cases involving companies like MercExchange that do not make products using their patents but instead simply licence them. A 1908 Supreme Court decision established that injunctions can occur even if the patent holder itself has "'unreasonably' failed to practice its own invention."

For a round-up of amici briefs in the eBay v. MercExchange case, see Dennis Crouch's Review: EBay v. MercExchange Amici Briefs, Patently-O, March 13, 2006.

There are a lot of blogs in the world so I tend to cringe when I see another one (I don't want to have to keep up with yet more information). But, I'll just mention a new collaborative law blog, named Blawgr, that was set loose last month as the brainchild of Stephen Nipper, Doug Sorocco, Matt Buchanan and Kevin Heller.

Blawgr is a community weblog, which means other law bloggers can sign up for a blawgr.com account and make posts/comments. This can be good or bad, depending upon your perspective. While difficult to describe concisely, Nipper summarizes it thusly:

"If you have a blog and want to mention one of your stellar posts…this is the place to do it (just don’t be too shameless). If you have a blog and have an off topic (for your blog) post…this is the place to do it. If you don’t blog but want to see what it is like…this is the place for you."

We applaud the collaborative nature of the site and think it deserves to be added to your RSS list. We look forward to seeing it evolve.

Forbes ran an interesting article about Genentech that shows how it pursues a different path than traditional Big Pharma companies like Pfizer and Merck, which market drugs to the masses. Genentech takes a very different approach by foregoing mass-market medicines in favor of drugs specific for severe diseases even if that limits the market potential. Something must be working since Genentech racked up $6 billion in sales last year.

Chief Executive Arthur Levinson summed up the strategy for bringing a drug into trial as "98% science, 2% commercial."

Earlier, Genentech began a new strategy to speed the development of breakthroughs by testing combinations of multiple experimental cancer drugs simultaneously in new tumor types, instead of waiting for each one to be approved separately before combining them. The hope is that modulating multiple disease genes at once with highly targeted drugs will increase the chance of long-lasting remissions or even cures. Ultimately, the hope is that new combinations of gene-targeted drugs will be available with fewer side-effects to replace more toxic chemotherapy regimens.

This combinatorial strategy may have an additional side benefit of extending the exclusivity of the drugs. Since a new combination of old drugs can be patentable in its own right, it may be possible for some combinations to gain 20 years of patent protection even as the individual components fall into the public domain. This could spur research into drugs that otherwise would not have been economically feasible to develop due to the lack of market protection. Developing new combinations is different from the practice of layering where drug companies develop a new use or different version of their old drug.

In terms of patent term extension for combination products, though, at least one of the active ingredients (including any salt or ester of that active ingredient) of the product must have not been previously approved by the FDA to be eligible for term extension, based on the approval of the combination product, and then only the patent covering the newly approved component or the combination of components may be extended.

Genentech must be doing something right. It has developed three of the most important targeted cancer drugs to date, e.g., Herceptin for breast cancer, Rituxan for lymphoma and Avastin for numerous tumor types. Sales of Avastin could hit $4.7 billion by 2009.

In some other news of kudos for out site, TopTenSources has selected Patent Baristas to be a featured Top 10 Source site.

Top 10 Sources publishes a daily "Top 10" site of the best newsfeeds on the Internet. Their editors pick a topic then find the ten best sources on the Net on that topic that offer newsfeeds- whether they're blogs, mainstream media, or anybody else publishing great stuff online.

They archive every day's Top 10 list so you can look back at what was in the news by searching our directory by day or by topic. If you'd like to suggest a news source that should be included under a given topic, send it to suggestions@TopTenSources.com.

... and good will to all!

The U.S. House of Representatives approved $3.78 billion prepare for a possible avian flu epidemic, including stockpiling potential vaccines, training emergency officials and increasing international surveillance. At the last minute, an unrelated provision (called the Public Readiness and Emergency Preparedness Act) to protect vaccine, drug and medical device makers against lawsuits in a public health or bioterror emergency. The avian flu funding was attached to an unrelated FY 2006 Defense appropriations bill (H.R. 2863 - H. Rept. 109-359), and passed by the House by a vote of 308-106.

Under the provisions of the bill, drug companies are given complete immunity from civil liability for all aspects of the development and production of drugs, vaccines or devices specified by the government. There is no limitation in scope to pandemic flu or even to major public health hazards. Instead, the immunity can apply to just about any product directed at an "epidemic" and includes any product that mitigates the side effects of a drug used to counteract an epidemic. So, in theory, if a medicine produces high blood pressure or pain, then any blood pressure or pain medication could also be covered.

Consumer and health groups opposed the vaccine liability provisions, which were sought by pharmaceuticals, saying it would protect companies from "gross negligence." Some said the measure could make medical personnel and other emergency workers reluctant to get vaccinated if there was a chance they could suffer negative reactions and not get compensated.

The current measure to shield drug manufacturers from lawsuits is an effort to encourage them to develop new vaccines. But, the bill would make it very difficult for people harmed by vaccines distributed during a national health emergency to pursue legal action against the manufacturer. An earlier bill by Sen. Richard Burr, would also establish a Biomedical Advanced Research and Development Agency (BARDA) that critics say would be exempted from public and congressional scrutiny.

Here, the liability shield proposed can be granted to any product used to prevent or treat an epidemic or a pandemic, and the Secretary of Health and Human Services decides what that means. It also provided a compensation program without any of funding. The legislation puts in place a compensation system modeled after what Congress approved for those who experience harmful side effects from the smallpox vaccine. Under the program, pandemic flu vaccine recipients or their families could apply for lost income, medical expenses and death benefits but the legislation appropriates no money for the compensation fund.

The possibility of an avian flu epidemic, as well as the use of biological weapons, has spurred interest in stepping up production of new vaccines. Proponents argue that big drugmakers would never take much interest in vaccines until they were given strong protections against lawsuits. Here, the bill requires plaintiffs to prove "willful misconduct" by drugmakers in order to seek redress for harm. That's a higher standard than negligence, which is the failure to exercise reasonable care.

Just what constitutes "willful misconduct"? The definition of "willful misconduct" depends in some measure on which court is deciding the issue but some common factors that courts will consider are: (1) knowledge that an action will probably result in injury or damage, (2) reckless disregard of the consequences of an action, or (3) deliberately failing to discharge a duty related to safety. Courts may also consider other factors.

Willful misconduct is the intentional doing of an act which one has a duty to refrain from doing or the intentional failure to do an act which one has the duty to do when he or she has actual knowledge of the peril that will be created and intentionally fails to avert injury. On the other hand, wanton misconduct is the intentional doing of an act which one has a duty to refrain from doing or the intentional failure to do an act which one has a duty to do, in reckless disregard of the consequences and under such surrounding circumstances and conditions that a reasonable person would know, or should know, that such conduct would, in a high degree of probability, result in substantial harm to another.

[update] The Senate passed the bill 93-0 and it was sent to the President on December 28, 2005.

AstraZeneca New Zealand announced that it has reached an oral agreement with the New Zealand government drug-buying agency to continue supplying its prostate and breast cancer medicine Zoladex to the New Zealand market, ending a bad public relations nightmare for both the company and the New Zealand government.

AstraZeneca earlier made the decision to withdraw Zoladex followed a subsidy cut by the Pharmaceutical Management Agency of New Zealand (Pharmac), making the supply of the drug to New Zealand no longer commercially viable.

Pharmac was set up by the New Zealand government to improve the management of expenditure on pharmaceuticals. Pharmac also has a function to promote the responsible use of pharmaceuticals, which includes encouraging optimal prescribing and health outcomes for patients and running patient information campaigns. In this regard, Pharmac manages a list of subsidized pharmaceuticals, the Pharmaceutical Schedule, on behalf of the government.

Pharmac decided to cut by 20% its subsidy on the 10.8 mg three-month dose, which is currently being used by just over half of the country’s estimated 2,000 late-stage prostate cancer patients. In New Zealand, Zoladex and Lucrin are the two drugs available for late-stage prostate cancer patients.

Goserelin (‘Zoladex’) belongs to a group of drugs known as LH-RH analogues, which reduce production of the sex hormones in both men and women. It is a treatment for late-stage prostate cancer and some types of breast cancer. It is the only option currently available in New Zealand that has data from independent clinical trials showing prostate cancer sufferers lives can be extended. The other drug available for late-stage prostate cancer patients in this country was Lucrin, made by Abbott Laboratories.

Abbott Laboratories agreed to the 20% cut for Lucrin as part of a deal where in exchange, Pharmac is to fund Abbott Laboratories’ rheumatoid arthritis drug Humira, and to guarantee security of supply for Lucrin at the reduced price until January 2008.

Critics charged that drug companies just want to extract too much money for their drugs. Drug companies claim that they are just recovering their R&D expenses and that, ultimately, the drug wouldn't even exist without the ability to sell it for a profit in the end.

Third party insurers (governments, private insurance companies, etc.) always try to get out of paying for expensive treatments. But this is a game of chicken where governments and insurance companies threaten to not pay for certain drugs and manufacturers threaten to withdraw products from the market if they don't agree with the price. The patients, however, are always caught in the middle without much leverage to intercede.

New Zealand's market-size is too small to justify efficient production at home, which reduces the threat of a compulsory license for local manufacturing. Also, New Zealand is one of the countries that have "opted-out" of the recent WTO agreement which could have been used to make it easier to import generic drugs manufactured under a compulsory license.

The current mechanisms of drug pricing and payment of new medicines are a global crisis. But it's really just a question of who's going to foot the bill? I think it's wrong to say that pharmaceutical companies should be responsible for shouldering the burden for drug costs in every country just because their "in the business." It is a burden that must be borne by every citizen and every corporate entity equally to ensure equal access and availability.

Peter Zura's Two-Seventy-One Patent Blog has an interesting note about the valuation (or, overvaluation, as the case may be) of Biotech patents. Zura points to an article from Dominique Patton, questioning whether the current onslaught of high profile patent litigation is causing excessive valuations of the Intellectual Property Rights (IPRs) of technology companies. But, one of the biggest problems with intangible assets is that there are few fundamental accounting norms for actually calculating a patent's value.

Pointing to high-profile, high-value lawsuits, Patton believes this only increases the urge to count every patent as a winner. But, as she notes, "not all patents are valuable, and very many are worthless" and unless companies differentiate the wheat from the chaff, the currently excessive valuation of intellectual property could turn out to be the bubble of this decade.

Currently, intangible assets make up about two-thirds of corporate market value in the US with biotech firms typically showing IP as 60% of their market value. Yet, intangible assets can evaporate into thin air - witness that Enron's intangibles were once estimated to be worth $60 billion.

Patton writes:

Experts have long warned about the inadequacy of existing accounting norms in capturing the monetary worth of patents. Those that are generating licensing revenue and royalties can be valued on a discounted cash-flow basis. A further slice is deemed valuable because of the competitive threat it prevents.

In the food, pharmaceutical and biotech industries, for instance, where it is now commonplace to seek to block out an entire market space with a patent barricade, some 11 per cent of the patents filed are subsequently contested. A patent battle, alone, is the first mark of real value, according to some commentators.

Elsewhere, within some companies, the monetary value of patents is deduced by looking at what it would cost to license in the same notional technology. This provides a theoretical basis, but little real data to work with.

Yet the most striking fundamental of patent valuation, overall, is how few fundamentals there are. Companies themselves struggle to evaluate their own intellectual property.

For those managing both patent applications and granted patents it is essential to know the value of each sufficiently accurately if one is to make well-founded decisions about their management. Since only a small proportion of patents turn out to be of extraordinary value, methods which lead to a better understanding of the value of given patent applications or patents are necessary.

The problem in the case of patents is particularly complex due to the, sometimes lengthy and certainly complex, application process involving initial uncertainties about both the technical and commercial success in competitive markets of the underlying technology as well as uncertainties about the legal challenges which can occur both during the application and subsequent enforcement.

Several methods for valuing patents are in common use. Among the most popular are the cost method, the income method, the design around method, the comparable transactions method, and the discounted cash flows method. There are also some less popular methods of patent valuation, including relief from royalties, real options, and various rules of thumb. However, these methods are less popular because they tend to be complex and unreliable.

The cost method values a patent at the cost of developing the patented technology. The cost method may place a lower limit on the valuation, since the patent owner generally wants to at least recoup development costs. However, it does not account for the ability of a patent to generate profit. However, valuation methods based on the historic costs of acquisition make no allowance for the future benefits which might accrue from the patent. They are of no help other than in historical cost based accounting systems or where taxation methods dictate their use and not useful for making business decisions.

The income method involves some element of forecasting the future cash flows. However, it is only with the addition of trying to account for the elements of time and uncertainty in future cash flows that these valuation methods gain a solid foundation. The key issue in these methods is how the forecast cash flow is derived.

The design around method values a patent at the cost of designing around the claims of the patent. The design around method may place an upper limit on the valuation, since it usually doesn’t make sense to pay more for a patent than it would cost to develop an alternative product.

The comparable transactions method uses the sale of a comparable patent as a basis for valuation. However, this is only useful when comparable patents exist. It can be very difficult to find comparable patents. Even if there are benchmarks, there is no assurance that the purchase price of the comparable patent properly took into account an appropriate value (i.e., it the comparable transaction may have been over- or undervalued).

The discounted cash flows method attempts to account for the profit that a patent can generate and is the method most often used for patent valuation. However, this method relies upon company specific profit projections and the use of a risk premium, which make the valuation far too subjective.

As you can see, a patent is not a simple investment project involving initial costs and near certain future returns but a complex series of possibilities each involving costs and actual benefits or potential future benefits. These factors only are revealed over time with considerable uncertainty as to the final outcome.

Just be careful out there in case the bubble bursts.

In India, a team of doctors is reviewing ancient Indian medical texts and putting this information into a 30-million-page electronic encyclopedia of India's traditional medical knowledge, the first of its kind. As practitioners of ayurveda, unani and siddha, ancient Indian medical systems that date back thousands of years, these doctors are trying to put an end to Biopiracy.

'Biopiracy' describes a process in which living resources or traditional knowledge and practices are patented, thus applying intellectual property restrictions to their use. The resources in question are predominantly from developing countries, and are the subject of patent applications by companies in developed countries. An important criticism in this context relates to foreigners obtaining patents based on biological materials, and the pharmacopeias and oral knowledge, such as that of the Indian Ayurveda and other traditional systems of medicine. However, it is difficult to precisely define Biopiracy. One countries folk medicine is another countries recent find.

The project, called the "Traditional Knowledge Digital Library," will put together an encyclopedia of the country's traditional medicine in five languages in an effort to stop people from claiming them as their own and patenting them. The electronic encyclopedia, which will be made available next year, will contain information on the traditional medicines, including exhaustive references, photographs of the plants and scans from the original texts.

This is an especially difficult task in that the ayurvedic texts are in Sanskrit and Hindi, unani texts are in Arabic and Persian and siddha material is in Tamil language. Material from these texts is being translated into five international languages, using sophisticated software coding. Currently, there are nearly 150,000 recorded ayurvedic, unani and siddha medicines. Under normal circumstances, a patent application is rejected if there is prior existing knowledge about the product but this generally must be published in a journal or available on-line and not just an oral tradition.

When the USPTO granted a patent on the wound-healing properties of turmeric, Indian scientists protested and fought to get the patent revoked. And, as we reported earlier, after patent was awarded to the U.S. Department of Agriculture and the multinational company WR Grace & Co. in 1995 for the fungicidal properties of seeds extracted from the neem tree, native to India, the European Parliament's Green Party, India's Research Foundation for Science, Technology and Ecology, and the International Federation of Organic Agriculture Movements fought to have it revoked on the grounds of biopiracy.

The basis of the challenge to the patent was that the fungicide qualities of the neem tree and its use had been known in India for over 2,000 years. The neem derivatives have also been used traditionally to make insect repellents, soaps, cosmetics, tooth cleaners and contraceptives. In 1995, WR Grace patented neem-based bio pesticides, including Neemix, for use on food crops. Neemix suppresses insect feeding behavior and growth in more than 200 species of insects. But the EPO agreed that the process for which the patent had been granted had actually been in use in India for many years.

While patents should not be granted on known materials, many developing countries want to deny patents for new uses of a known product or process, including second use of a medicine. The fear is this could stall research into new areas for these known starting materials. There is the view that the TRIPS Agreement is aiding the exploitation of biodiversity by privatizing biodiversity expressed in life forms and knowledge but patents are granted under national patent laws and have territorial application only. But, the TRIPS Agreement merely provides minimum standards of protection for intellectual property rights including patents, while WTO Members are free to grant a higher level of protection under their national laws.

Thus, India and other countries are free to deny patents on life forms, except on micro-organisms and micro-biological and non-biological processes, as per the provisions of the TRIPS Agreement. However, if the U.S. chooses to grant patents on plants or other life forms, other nations cannot object. Nevertheless, such patents will have force only in the U.S. and cannot be enforced elsewhere.

The World Trade Organization (WTO) members approved measures to make it easier for developing countries to get cheaper generic versions of medicines for communicable diseases like AIDS. Changes to the WTO's intellectual property agreement would make permanent a waiver currently in place to allow poor countries without their own pharmaceutical manufacturing capacities to import cheaper copies of patented medicines for humanitarian purposes.

Its general council has agreed to make permanent a 2003 waiver that allows poorer nations to import generic drugs to treat serious diseases such as Aids. WTO members have set Dec. 1, 2007, as a deadline to ratify the amendment, the organization said. It would need to be approved by two-thirds of the 148 members. The waiver remains in force until then.

The World Trade Organization (WTO) is an international rules-based and member driven organization which oversees a large number of agreements defining the "rules of trade" between its member states and is the successor to the General Agreement on Tariffs and Trade (GATT) that was set up in 1947, and operates with the broad goal of reducing or abolishing international trade barriers. It ensures trade among nations operates smoothly, freely and orderly.

As of August 19, 2005, there are 148 members in which most of them are developing countries in the organization. All WTO members are required to grant one another most favored nation status, such that (with some exceptions) trade concessions granted by a WTO member to another country must be granted to all WTO members.

US Trade Representative Rob Portman said that the U.S. was fully behind the move. The European Union (EU) and the UK has also backed the change. Under the rule, poorer nations will be allowed to import the generic drugs for humanitarian reasons and not for commercial purposes. Some of the larger developing countries, like India, hope that they will be able to sell antiretroviral Aids drugs to Africa under the deal.

Flexibilities such as “compulsory licensing” are written into the TRIPS Agreement — governments can issue compulsory licenses to allow other companies to make a patented product or use a patented process under license without the consent of the patent owner, but only under certain conditions aimed at safeguarding the legitimate interests of the patent holder.

But some governments were unsure of how these flexibilities would be interpreted, and how far their right to use them would be respected. The African Group (all the African members of the WTO) was among the members pushing for clarification. A large part of this was settled at the Doha Ministerial Conference in November 2001.

In the main Doha Ministerial Declaration of November 2001, ministers stressed that it is important to implement and interpret the TRIPS Agreement in a way that supports public health — by promoting both access to existing medicines and the creation of new medicines.

"TRIPS" stands for Trade-Related aspects of Intellectual Property Rights. It is an Agreement drawn up by the World Trade Organization between 1986 and 1994 to ensure intellectual property rights are respected within international trade. It came into force on 1st January 1995, although implementation dates vary from country to country.

Governments can issue a compulsory license if a patent owner abuses their rights by, for example, failing to offer their product on the market, or offering it at a price that is too high for potential buyers to afford. Competitors can then produce the product or use the process under government license without fear of prosecution. In the case of generic drugs, compulsory licenses can be issued because of the high (and for developing nations, often unaffordable) prices charged by the major pharmaceutical companies for their products.

Article 31(f) of the TRIPS Agreement says that production under compulsory licensing must be predominantly for the domestic market. The concern was that this could limit the ability of countries that cannot make pharmaceutical products from importing cheaper generics from countries where pharmaceuticals are patented. As with the 2003 waiver, the permanent amendment will allow any member country to export pharmaceutical products made under a compulsory license for this purpose.

Now, the amendment itself is in three parts. Five paragraphs come under Article 31 "bis" (i.e., an additional article after Article 31). The first allows pharmaceutical products made under compulsory licenses to be exported to countries lacking production capacity. Other paragraphs deal with avoiding double remuneration to the patent-owner, regional trade agreements involving least-developed countries, "non-violation" and retaining all existing flexibilities under the TRIPS Agreement.

A further seven paragraphs are in a new annex to the TRIPS Agreement. These set out terms for using the system, and cover such issues as definitions, notification, avoiding the pharmaceuticals being diverted to the wrong markets, developing regional systems to allow economies of scale, and annual reviews in the TRIPS Council. An "appendix" to the annex deals with assessing lack of manufacturing capability in the importing country. This was originally an annex to the 2003 decision.

The new Article 31 "bis" and annex of the TRIPS Agreement are attached to a protocol of amendment. This in turn is attached to a General Council decision, which adopts the Protocol and opens it for members to accept it by 1 December 2007.

See a Draft Text of the Changes here.

Academics at Cambridge University are divided over a new proposal by the university to tighten its control over intellectual property created by faculty by managing patent applications and taking a stake in spin-out companies. Under the current regulations, the university has no effective control over intellectual property created by the majority of its staff.

The university says that the new rules will bring Cambridge in line with other universities; and that it is only right that the whole of the university benefits. The university says it is concerned that the current system penalizes junior staff who contribute to research but sometimes miss out while distinguished heads of departments can make millions.

Cambridge now owns the right to patent ideas arising from externally funded research by charities, research bodies or companies, which accounts for 70 per cent of the output. Faculty retain ownership of the intellectual property in other work they do. The inventor would receive about a third of the proceeds, with the rest going to the university. Academics would continue to be free to decide to publish their work rather than seek commercial development. Faculty will also be able to demand that the university assign back to them the relevant intellectual property rights so they can seek commercial sponsors, with the university claiming a proportion of the profits.

Opponents claim that the new rules will discourage entrepreneurs and damage growth in the region, which is home to more than 900 high-tech firms. Cambridge faculty are also worried that the university will try to strike a deal similar to the 2001 venture where IP2IPO, an investment vehicle, gave £20m to Oxford University in return for a stake in any companies that were spun out of its chemistry department over the following 15 years. Faculty have now forced a vote of all members of the university, which can over-rule the management's decision. Previous attempts by the university authorities to revise the rules on ownership of intellectual property have failed.

David Norwood, chief executive of IP2IPO, described the reforms as essential. "These academics are happy to take the money and use the university’s infrastructure," he said. "The idea that the intellectual property belongs to them is ridiculous. UK taxpayers are paying for this. We expect returns for the investment in them."

Enactment of the Bayh-Dole Act (P.L. 96-517) in the U.S. created a uniform patent policy among the many federal agencies that fund research. Bayh-Dole gave U.S. universities control of their inventions by placing few restrictions on the universities' licensing activities. The success of Bayh-Dole in expediting the commercialization of federally funded university patents is seen by the fact that prior to 1981, fewer than 250 patents were issued to universities per year. Slightly over a decade later, almost 1,600 were issued each year. Of those, nearly 80% stemmed from federally funded research. The ability to retain title to and license their inventions has been a healthy incentive for universities.

See the details here.

Visit Cambridge Enterprise here.

CincyTechUSA announced that Robert W. Coy, Jr. of St. Louis joined the organization as president. Coy was senior vice president for Entrepreneurial Development for the St. Louis Regional Chamber and Growth Association. He replaces Rich Kiley, who has served as interim executive director of CincyTechUSA since May of 2004.

CincyTechUSA focuses on assisting companies in life sciences and technology-related industries by leveraging the existing infrastructure. CincyTechUSA is expected to sharpen its strategies in the following areas:

• Connecting tech entrepreneurs to the critical resources they need for success: technology, money, customers, markets, management, partners and support services.

• Improving Cincinnati USA’s tech image with a focus on recruiting and retaining vital talent.

In addition, CincyTechUSA now offers a TechConnect program, designed to help technology-based companies grow and succeed. TechConnect is a one-stop approach that helps entrepreneurs identify resources and connect companies to them.

Red Herring this week ran an interesting article about a company called PeopleConnect. Basically, PeopleConnect helps high-tech startups hire pricey executives without actually having to pay them any cash. Angel Employees, like Angel Investors, invest their labor in exchange for an equity stake in the company. The companies, meanwhile, get top notch management while keeping their burn rate low.

As the article states, this is for people who like the “idea of working without pay at a startup without revenue, funding, or even a fully formed business plan in exchange for what basically amounts to a lottery ticket.” It’s the chance to work for a small, high-growth tech company that could either go bankrupt or turn into the next Google.

The firm has 15 clients and looks to fill two or three positions for each client at any given time. Once the manager goes on payroll, PeopleConnect collects 25 percent of the first-year salary of the managers it places as a finder’s fee. It also negotiates for a certain percentage of the startup’s options when it closes a financing round and sets a company valuation, usually less than 1 percent.

In taking a look at the positions available, it’s no surprise that the majority of companies are in California huddled around Silicon Valley. But, I did see some openings in Texas, Arizona, and New Mexico. While this is not a completely new idea, of course (since founders have always done this), extending it to more employees could be the next big thing in tech employment.

I didn’t see any attorney positions but I think this could be a good way to hire in expensive legal talent. The only issue is that attorneys tend to be a quite risk-adverse lot.

Panexa. Ask Your Doctor For A Reason To Take It

While the Panexa web advertising includes all the relevant drug interaction details, including safety information for squirrels, this parody doesn't seem too far off the mark in today's direct-to-consumer drug advertising.

Now, the U.S. Food and Drug Administration is weighing whether it should revisit its policy on direct-to-consumer ads and will take comments on the issue through the end of February. In 1997, it relaxed restrictions on broadcast and print ads, which led to a marketing explosion. Pharmaceutical companies now spend an estimated $4 billion a year promoting products this way on TV and radio, in print, and on the Internet.

One driver in this is the earlier recall of the arthritis drug Vioxx because of dangerous cardiac side effects - a medication heavily promoted directly to consumers. Merck & Co. spent up to $160 million annually on Vioxx ads, and sales of the drug skyrocketed, often to people who may not have needed to take it.

In August, the Pharmaceutical Research and Manufacturers of America (PhRMA) said its members would voluntarily delay broadcast ads for new products for six months, among other new restrictions. The policy does not apply to print ads. Earlier in the year, Senate Majority Leader Bill Frist proposed a moratorium on direct-to-consumer advertising - a move estimated could cost the industry as much as $10 billion if it ever comes to fruition. Many believe drug makers have too much influence over physicians and patients. While direct-to-consumer advertising can educate patients without inflating need, evidence suggests that direct-to-consumer advertising has unwittingly led to inappropriate prescribing, which can compromise patient safety and care.

Representatives of Consumers Union and the National Consumers League said all ads should be cleared by the FDA before they are broadcast or printed. Currently, ads only have to be submitted sometime during a campaign. In 2004, 586 TV ads and 52,848 other types of promotions were submitted to the agency. Consumer groups also called for more information on both risks and benefits of drugs that are marketed this way.

But drug makers defended the ads, saying they have motivated people to seek a doctor's help. J. Patrick Kelly, president of Pfizer U.S. Pharmaceuticals, said that 65 million people have talked to a doctor as a result of ads, and that 29 million had discussed a condition for the first time. Pfizer will wait six months before advertising a new drug, and will be running more consumer-friendly descriptions of drug risks in print ads, Kelly added.

AstraZeneca, the company responsible for "the purple pill," said that all such ads should be submitted to the FDA for review before they run.

But just remember: There are no known medical circumstances (based on extensive internal testing) in which PANEXA cannot be used!

More here.

The Editor 'n Chef of Blawg Review has come out with a double-barreled, two-fer blawg carnival this week. The double-shot features both Blawg Review #29 and Carnival of the Capitalists #107.

Besides the expected machinations on the Harriet Miers nomination, we enjoyed Bruce MacEwen's inquiry into the economics of law firms at Adam Smith, Esq. This week, Mr. Smith polls his audience on Yea or Nay on the Billable Hour - Will the billable hour ever lose its dominance?

Quoting Jim Taronji, an antitrust partner at Howrey, he writes:

"Eventually, the "billable hour" will go the way of the Model T (just a curious novelty from the past). Why? Because that's what corporate clients really want. They want certainty in billing because that's what they need for internal budgeting purposes.

...

The smart law firms will get ahead of their clients and accept (dare I say, "offer") flat fees for each project, with a "change option" for unplanned situations.

Professional service providers do this now with a detailed "Statement of Work" that is created by the service provider and the client. It lays out what will be done and when, the number and level of human resources devoted to the project (times the number of hours each person will devote to completing the project, times their hourly rates), and additional costs (travel, copying, etc.). The end result is a budget that is agreed on by both sides. Any changes to the "assumptions" will result in a change in the final cost of the project.

While I don't see billable hours going the way of the Dodo, for some types of projects, this may be the wave of the future. It takes careful planning and a knowledgeable client to make this work, though. Otherwise you have clients falling into a "penny-wise and pound-foolish" trap.

Also this week, there's also a great round-up of quotes in "Mixed Messages on Sexual Harassment — and a Movie Too" over at George’s Employment Blawg.

In another sign that Roche needs to act quickly to preserve their intellectual property rights, a recent report by the BBC says Taiwan has responded to rampant bird flu paranoia by starting work on its own version of the anti-viral drug, Tamiflu, without waiting for a license to the patent rights from Roche. Taiwan officials said they had applied for the right to copy the drug - but the priority was to protect the public. Several countries have asked Roche for the right to make generic copies of Tamiflu.

Taiwan says it will produce six kg of its version of Tamiflu to renew its stocks but said it will not market the drug commercially. They reported that a generic version of the drug produced by Taiwan's National Health Institute is "99% akin to the Tamiflu produced by Roche." 99%? So...well...what's in that last 1%? That wasn't mentioned but officials say they can make their version of the drug more quickly and at a lower cost than Roche.

I suppose this isn't as bad as Brazil threatening to break the aids patents since, in that scenario, the drugs are available to purchase - Brazil just doesn't want to pay for them. Here, supplies are not readily available and, if there were to be a start to a pandemic, stocks would not be available at any price.

I think Roche would be smart to just set out a blanket nonexclusive license for any and all takers. Like the PCR patents, the royalty and terms could be set at some bearable level and Roche could reap some revenue while avoiding all-out pandemonium. Then, no one could claim Roche has endangered public health or played favorites among countries or generic manufacturers. This could also prevent costly infringement litigation. Nearly every government is getting quite edgy about a possible flu epidemic and keeping too tight a grip on the Tamiflu patent rights could lead to the death of the golden goose. It will be interesting to see how this plays out.

In a new twist in the Tamiflu drama being playing out across the globe, it's now being reported that Gilead Sciences, Inc., the developer of Tamiflu, is believed to have terminated its agreement with Roche, which has the exclusive marketing right on the drug. Now, generic manufacturers like India's Cipla Ltd., are wondering who holds the patent rights on the drug.

According to a note from Gilead Sciences, dated June 2005, the company has "delivered a notice of termination to F. Hoffmann-La Roche Ltd (Roche) for material breach of the parties' 1996 Development and Licence Agreement for Tamiflu (oseltamivir phosphate), an antiviral pill for the treatment and prevention of influenza. Through this action, Gilead is seeking to terminate the 1996 agreement, which would result in the rights to Tamiflu held by Roche reverting to Gilead."

Nothing has been clarified yet by Roche or Gilead so the termination could be limited to certain markets and there could be a "cure" of any breach. Gilead's note states: "Despite our repeated communication of concerns over the last several years, Roche has not adequately demonstrated the requisite commitment to Tamiflu since its launch in the US nearly six years ago, nor has it allocated the necessary resources to realise the potential of the product as a treatment and preventive for influenza," said John C. Martin, President and Chief Executive Officer, Gilead Sciences.

Following the recent political-panic and stockpiling of Tamiflu, there has been a lot of pressure on Roche to scale-up production. This is probably what led to Roche agreeing to talk to generic manufacturers about additional production of Tamiflu.

See Notice here.

See Redacted License Agreement here.

As we've mentioned before, the entire planet seems to be getting jittery over the avian flu virus. Now, Roche AG has agreed to meet with generic manufacturers Teva Pharmaceutical Industries Ltd., Barr Pharmaceuticals Inc., Mylan Laboratories Inc. and Ranbaxy Laboratories Ltd. to license its patent and increase production of its antiviral drug Tamiflu (oseltamivir) to prepare for a possible bird flu outbreak. While only sixty-seven people in Asia are known to have been killed by the H5N1 virus, there is a real fear it could mutate and spark a worldwide pandemic.

Perhaps to avoid a public relations nightmare as well as a showdown on compulsory licensing for its drug, Roche now says it will sublicense Tamiflu production to any company that can produce it in sufficient quantities - now that just about every country is trying to stockpile the drug. Forty countries have placed orders with Roche so far and the company has been under pressure to allow others to produce Tamiflu so demand can be met. Some countries, such as Argentina, have said they will produce their own version of Tamiflu.

All of this is complicated by the fact that there isn't really an emergency yet, only the heightened apprehension of an impending crisis. Unfortunately, it will be difficult for generics to manufacture Tamiflu. Tamiflu, a neuraminidase inhibitor, is a complex drug and takes 12 months to produce. While Roche claims it's filling current Tamiflu orders on schedule, there could be a run on the drug if any major outbreak suddenly spooks the world. If generics are not licensed until its urgent, it may be too late. This gets trickier given that Tamiflu has a shelf life of five years and there is no way of knowing when an outbreak may occur.

And now there is the shortage of the raw material for Tamiflu!
Star anise, an unusual fruit grown in China with a pungent, licorice-like flavor, is the herb from which Tamiflu is made. It is grown in four provinces in China and "huge quantities" of its seeds are needed in order to be purified and the shikimic acid extracted at the start of a 10-stage manufacturing process which takes a year.

More commonly used in Chinese cooking and for flavoring liqueurs such as anisette and Pernod, Star Anise (Illicium verum, an evergreen tree of the Magnoliaceae family) is similar to Anise but not the same. Only star anise grown in the four provinces of China is suitable for manufacture into Tamiflu and 90 per cent of the harvest is already used by Roche.

While Roche has developed a synthetic source of acidinic acid, made from the bacterium E. coli, star anise remains the chief source. Once shikimic acid is extracted from the seeds of star anise it is converted to epoxide in a process requiring three chemical steps carried out at low temperature on seven separate sites.

We need to keep in mind that Tamiflu is not a cure for the flu but it can lessen symptoms if taken shortly after they first appear. Whileinternet firms are cashing in on the panic buying of $10-a-tablet anti-viral drug as a defense against bird flu, researchers warned last week that they have seen signs the avian flu virus is becoming resistant to the drug. UK Professor Hugh Pennington warned people risked being "ripped off" by buying a drug they did not need noting that "The risk of them getting bird flu is low. Tamiflu is not [a] wonder drug. It was given to some people in Asia and did not stop them dying."

I guess fire and pestilence is next.

Update: One commenter below pointed out that, according to an article in Nature, a 14-year-old Vietnamese patient (probably the one referred to above), was treated, recovered and was discharged from the hospital on 14 March 2005.

Douglas Sorocco over at rethink(ip) passed along a story about his encounter with a kind stranger at Starbucks. Naturally, he thought of us given the coffee theme of the event.

While we don't endorse any particular coffee shop, we've been known to frequent the Starbucks at Fourth and Main quite a bit and have had many good exchanges there. But, more often that not, I hurry along about my business and forget to do something nice for others. This week, I'll make an extra effort to pass along a bit of goodwill. It's the little things that make the difference.

Let me know if someone's done something nice for you lately.

*Side Note: Starbucks Gossip reported that Starbucks has opened 1,672 stores so far this year -- exceeding its 2005 target of 1,500. Also, sales were up 10% in September, thanks in part to the Pumpkin Spice Latte.

As if you didn't know already, the H5N1 strain of avian flu has been sweeping through poultry populations in Asia since 2003, infecting humans and killing at least 65 people, mostly poultry workers. The virus does not pass from person to person easily, but experts fear the virus could mutate. The 1918 influenza pandemic killed more than 40 million people. Subsequent pandemics in 1957 and 1968 had lower death rates, but caused extreme disruption.

Now, some health experts believe governments should consider forcing compulsory licensing. That is, to ignore Roche’s patent protection on the drug to make up for the Swiss company’s inability to cope with demand during a pandemic. The drug is already in short supply following fears of a possible epidemic. But the Swiss pharmaceutical company Roche Holding AG, which makes Tamiflu, has refused to license generic versions of the drug despite pressure from several countries and United Nations Secretary General Kofi Annan.

Cipla Ltd., the third-largest drug company in India, said it plans to bring a generic version of the anti-influenza drug Tamiflu into the market early next year, filling any potential shortages in event of a bird flu epidemic. Cipla Chairman, Y.K. Hamied, told Reuters: "We have finalized a process a few weeks ago, and now we are starting manufacture." However Roche has said the 10-step year-long production method of Tamiflu was too complex to be outsourced to other companies to boost supplies, and it would take other companies up to three years to be ready to produce the drug.

Roche will not be able to meet demand for its antiviral drug Tamiflu if an avian flu pandemic breaks out. Although Roche is well aware of the likelihood that demand for Tamiflu would surge during a bird flu pandemic, not just in Hong Kong, but worldwide, the company insists there is no shortage at present. But for the past few years, it has been advising health administrations around the world to stock up on this antiviral neuraminidase inhibitor. Few governments have been heeding Roche’s advice.

Roche claims it takes about 12 months to produce Tamiflu, which is one of the company’s more complex drugs. At present, the company requires 12-18 months to supply new orders and the supply of the drug worldwide is enough to treat only about 40 million people. Industry analysts expect the sudden demand for Tamiflu to generate windfall profits for Roche, although the company is also donating three million packs of Tamiflu to the WHO for use anywhere in the world. David Salisbury, head of immunization for the Department of Health in England, said: "We are getting 800,000 more doses of Tamiflu every month, so we will have the level we believe appropriate if we have a pandemic in this country. "The US will have something like one twenty-fifth of what we're building up in our stockpile."

Roche has quadrupled production capacity since 2003, and it plans to double capacity again by next summer. Roche produces Tamiflu at three sites in Europe and one in the U.S.

Gilead Sciences, the U.S. company that invented Tamiflu and licensed the drug to Roche in 1996, is unimpressed by the Swiss firm’s supply efforts. In June, Gilead sent to Roche a request to end the licensing agreement and recover its rights to the drug. These is a possible alternative to Tamiflu in Relenza (zanamivir), another neuraminidase inhibitor that GlaxoSmithKline produces under license from Biota, an Australian antiviral drug discovery company. Like Gilead, which licensed Tamiflu to Roche, Biota is not happy with the way the larger company is promoting the drug.

So far no one seems ready to step over the line and trigger a patent lawsuit but if a pandemic begins (or even appears to be beginning), I think all bets will be off regarding patent protection.

Blawg Review #27 is up at Legal Blog Watch - hosted by Lisa Stone, originator of BlogHer. Although not an attorney, it is said that she has "as much judicial experience as Harriet Miers." Stone is a journalist who covers legal blogging with pluck.

In this week's Blawg Review, Stone presents a nice update on Blawghers - women and legal blogging. Earlier this week on Coast to Coast, a legal audiocast by Bob Ambrogi and J. Craig Williams, Stone joined Monica Bay of the Common Scold and Attorney Sean Carter, who blogs Lawpsided, in a discussion of diversity in the blawgosphere. With the increasing amount of women attorneys and female law students, we are hoping women in the blawgs can mirror this trend as we all gain valuable insight from our female colleagues (like our own Karlyn).

We recommend that you check out the Legal Blog Watch and Blawg Review #27.

There was another article in the Washington Times about law firms outsourcing some of the work on their cases to other countries. One firm, Venable LLP, was quoted as saying "Clients are entitled to get these things done in an efficient way." *

This is a phenomenon that needs to be seriously considered. More than 3 million U.S. jobs have been outsourced to other countries in the past four years with a projected 13 million forecast to move offshore in the next 10 years. However, for patent legal work, the potential cost savings are more than a little murky. One article states that legal work that is done in the U.S. only costs one-tenth or one-twelfth the amount in India. I think they need to do their homework.

Offshore, we are told, you can get highly qualified people for a fraction of the cost in the U.S. Of course, for those of you who slept through math class, 99/100ths is a "fraction of the cost". In my own research, I have found that getting qualified people to help with some of the patent work takes an hourly rate of at least $60 and as much as $100. This does sound good initially compared with the $350 hourly rate charged by some large firms for even low-level associates - although hardly one-twelfth.

In a typical arrangement, the specification and drawings are prepared offshore and the application is then sent to a U.S. patent attorney to edit the specification, prepare the claims of the application and submit the patent application to the U.S. Patent and Trademark Office (USPTO). The U.S. patent attorney is also usually responsible for prosecuting the application in the USPTO until the patent issues.

The problem here is that the U.S. attorney must still get up to speed on the invention and review all the work product. This leads to quite a bit of duplication of work (all at the standard rates) and that "cheap" application ends up coming in closer and closer to the amount one would have paid anyway. One report showed that the "final" draft of the patent application has to be reviewed, modified and filed by an appropriate US patent attorney or agent, who usually ends up spending 10 to 20 hours or more (per application). This effectively "takes back" most or all of the supposed savings.

Moreover, the cost savings may be illusory. A recent study by the Gartner Group, a consulting firm, indicates that outsourced operations are on average 30 percent more expensive than in-house customer service operations. Gartner also reported that 80 percent of organizations that outsource customer management operations purely to cut costs will fail to do so, while 60 percent of those who outsource parts of the customer service process will have to deal with customer defections and hidden costs that outweigh any potential savings offered by outsourcing.

Additionally, the cost for qualified people in developing countries is rising rapidly. Earlier, one could hire five engineers in India for the cost of on engineer in the U.S. That number is now less that three and is continuing to drop as costs increase in due to higher demands and standards of living.

There are other problems that arise if the outsourced patent is the subject of litigation. For example, the attorney-client privilege only protects "legal work" from discovery. Opponents could argue that the attorney-client privilege does not apply based on waiver through disclosure to the overseas drafter. In addition, the negative public perception of outsourcing could adversely affect patent litigation in front of a jury. Litigating will also be expensive given that discovery on the patent's history will lead overseas, resulting in increased costs logistical problems. There could also be challenges to the patent's validity based on allegations of inequitable conduct. How will the U.S. attorney ensure that that any prior art considered overseas is brought to the attention of the USPTO?

One particular concern that must be addressed with outsourcing is that any information sent abroad must comply with U.S. Export laws and violating these can result in unenforceability of the patent, denial of future export licenses, fines and even imprisonment. One would need to comply with the Arms Export Control Act and the International Traffic in Arms Regulations in addition to the U.S. Department of Commerce restrictions on certain exports to certain countries through the Bureau of Industry and Security (BIS). Regulated items include software encryption technology**, certain lasers, computers, and nuclear technology related items.

Another concern is protecting confidential information. Many countries have less stringent laws for protecting intellectual property rights than the United States and often do not have any criminal trade theft laws. There could also be problems where the same outsourcing company is handling applications for competitors with similar technology since they would not be bound to avoid conflicts of interest.

Bottom Line

I fear that this may often be another example of corporations treating patent applications as a commodity when the reality is that patents can make-or-break the entire company. A patent is often the most important link in the corporate organization. A penny-wise, pound-foolish approach is seen over and over with companies that try to squeeze the patent drafting and prosecution costs down and then can't seem to see the connection whenever they spend $2 million on litigation over a poorly drafted patent.

If you are at corporation interested is reducing your patent expenses, then you should call me to discuss strategies for reducing your costs. What we've found is that similar or better cost savings can be achieved by outsourcing patent work not offshore but away from the high-priced coasts. We work with many companies that have found the same work can be performed in the Midwest (we're in Cincinnati) -- but at far lower billing rates. When I had some work done at a Boston firm a few years ago, I was shocked to discover that a third-year associate was billing at a higher rate than our top partners. And he wasn't even knowledgeable!

Outsourcing to the Midwest may just be the answer to your needs.

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*Correction: September 30, 2005. The Washington Times in Monday's editions mischaracterized the type of patent work Washington law firm Venable outsources to Indian companies. The firm has outsourced document coding work for patent litigation cases.

**Update: Scott Gearity over at the Export Control Blog brought to light an earlier error in my post. I incorrectly indicated that encruption software is classified as a munition. While this was true at one time, the rule has changed -- although, as Gearity points out, "the 'ITAR makes crypto a munition' meme is utterly unkillable."

On December 30, 1996, the Bureau of Export Administration of the Department of Commerce ("BEA") published an interim rule that reflects the transfer of dual-use encryption items from the United States Munitions List ("Munitions List") to the Commerce Control List ("CCL"). See, 61 FR 68572. Among other significant changes, the interim rule provided for a relaxation of export controls on 56-bit key length digital encryption standard ("DES") or equivalent non-recovery encryption products where the manufacturer makes certain commitments to developing and/or marketing key recovery and key escrow encryption items. Prior to the issuance of BEA's interim rule, strong dual-use encryption products had been included on the Munitions List, subject to strict scrutiny by the Department of State's Office of Defense Trade Controls ("ODTC"), and were rarely accorded an export license for use abroad other than in the financial industry or by U.S.-owned subsidiaries.

More here.

In a move of shameless self-promotion, we simply must announce that the Patent Baristas were ranked in the 2005 Edition of Chambers USA, a publication that ranks attorneys and their practices based upon peer and client review.

Chambers USA touts the ranked Intellectual Property Department as known for their "exceptional" attention to detail and impeccable biomedical knowledge. Frost Brown Todd LLC is said to boast one of the top Intellectual Property practices in the region. Clients use adjectives such as "impeccable", "genius", "simply superb", and "quite excellent" in describing Stephen Albainy-Jenei, Karlyn Schnapp, Steven Goldstein, and David Schmit.

From Chambers:

This firm is said to boast one of the top IP practices in the region; in the biopharm arena there are no other major players with such a large market share, and in terms of dedicated specialists the firm has about 32 practitioners in Ohio alone. Known for their "exceptional" attention to detail and impeccable biomedical knowledge, attorneys have made a name for their diligence and efficiency. Said one client: "They can handle our discoveries and turn them into something really profitable." Successfully maintaining a balance between quality and value, the top trial lawyers are supported by an "exceptional" team that is "very helpful and business-oriented." Market commentators also enthuse about the "extremely good working environment," which facilitates the fostering of close client relationships. The firm is presently injecting further resources into another related growth area - advertising law. In this regard, a team of attorneys has been established to look after a growing number of consumer product clients.

The qualities on which rankings are assessed include technical legal ability, professional conduct, client service, commercial awareness/astuteness, diligence, commitment, and other qualities most valued by the client. The rankings and editorial comment about attorneys are independent and objective. Inclusion in this section of the guide is based solely on the research team's findings. No-one can 'buy their way in'.

For the current US directory, over 10,000 interviews were conducted covering the USA. The interviews were carried out by a team of 40 full-time researchers over a period of 8 months.

Well, technically, that's true but the real issue is: Are we obsessed with cataclysmic threats? Flu experts, including the World Health Organization, are warning that avian flu could be the Big One, an apocalyptic nightmare from a Hollywood script with each report giving more dire predictions. On Thursday, Dr. David Nabarro — the new U.N. coordinator for avian and human influenza — had warned that the "range of deaths could be anything between 5 and 150 million" from a new pandemic. Dr. Michael Osterholm, director for the Center of Infectious Disease Research and Policy at the University of Minnesota, who prophesies a death toll upwards of 360 million(!) Whoa, this wild-guessing fear-mongering arms race has really gotten out of hand.

The WHO has now backed away from these "flu tsunami" death toll estimates saying pandemic toll predictions are "guesswork" and that Nabarro was just suggesting the range of expert opinion on the subject. The WHO believes the estimate of 2 million to 7.4 million deaths, based on a study by the US Centers for Disease Control and Prevention, "is the most reasoned position," according to a Reuters report. Some reports estimate less than 50,000 deaths - a few orders of magnitude different from 360 million.

It seems like we're always bracing for the next imminent disaster-of-the-month -- fueled by the news organizations that tend to play off each other hyping the latest doomsday scenario: tsunamis, hurricanes, apocalyptic plagues, terrorism, earthquakes, killer bees, the Macarena, etc.

Not that there isn't a threat, mind you. H5N1, the deadly strain of avian influenza that has been spreading fear throughout Southeast Asia since late 2003, and may be heading west. The virus has already infected 115 humans, killing 59 -- with 16 more people under observation in a Jakarta hospital -- and commercial poultry flocks in China, Vietnam, Cambodia, Indonesia, Laos, Thailand, Hong Kong and Russia. Most human cases have been linked to contact with sick birds. The WHO has warned that the virus could mutate into a form that spreads easily among humans — possibly triggering a global pandemic that could kill millions.

There have been three flu pandemics in the last century: the Spanish flu of 1918-19, the Asian flu of 1957-58 and the Hong-Kong flu of 1968-69 which resulted in tens of millions of deaths worldwide. Experts have identified specific criteria that preclude and predict the outbreak of a pandemic and all but one have been met in regard to the H5N1 strain of bird flu - an efficient human-to-human transmission mechanism.

"Spanish flu," involving influenza A (H1N1), was the largest rapidly fatal pandemic in human history. The virus traversed the world in less than 1 year, causing at least 40 million deaths. Many people died within a few days of the onset of symptoms. Autopsies often showed a characteristic hemorrhagic, necrotizing viral pneumonia—not a bacterial superinfection that might now respond to antibacterial agents. The average time to death in 1918 was about 7 to 9 days after the onset of illness, an interval that might allow for intervention with specific antiviral therapy, if available. Subsequent studies of the 1918 strain showed that it had a constellation of genes that account for this unique virulence, although recent studies have pointed to a unique virulence related to the hemagglutinin of the 1918 strain.

But not everything is a disaster in the making. Generally, people don't tend to look at the probabilities - like when the Alar scare made people stop eating apples. How concerned should we be? The fact of the matter is, we've been awaiting an imminent H5N1 outbreak for several years, and even in China, a country of 1.3 billion people, an epidemic has not materialized. We have no way of knowing whether the virus will mutate into a form that will spread easily among humans. And even if it does -- unlike the 1918 situation when Spanish flu spread quickly and quietly in the disease-infested trenches of the First World War -- today we have means to anticipate, plan for and contain viruses.

Worried that avian flu could spur an influenza pandemic in the United States, the U.S. Department of Health and Human Services has awarded $100 million to France’s Sanofi Pasteur of Sanofi-Aventis to manufacture a vaccine and another $2.8 million to the United Kingdom’s GlaxoSmithKline for its antiviral drug Relenza. Now, the US Senate voted yesterday to provide $4 billion for antiviral drugs and other measures to prepare for a feared influenza pandemic. Almost $3.1 billion of the money would be used to stockpile the antiviral drug oseltamivir (Tamiflu), and the rest would go for global flu surveillance, development of vaccines, and state and local preparedness, according to a Reuters report. The government currently has enough oseltamivir to treat a few million people, with a goal of acquiring enough to treat 20 million.

Tamiflu is produced by the Swiss pharmaceutical firm Hoffmann-La Roche Ltd. and belongs to a group of medicines called neuraminidase inhibitors, which attack the flu virus and prevent it from spreading inside the body. The problem is, it's a complex drug and a single dose takes 12 months to produce. Currently, it's only manufactured in a single plant in Switzerland, but the company has plans to expand its facilities.

Relax, try to get outside and get some fresh air today. You’ll be OK – as long as you don’t drive on the highway while all the road rage maniacs are out there…

Dr. Bernard Fabre-Teste, a World Health Organization adviser, said the lack of low-cost AIDS drugs was "a key problem" for many developing countries and that countries facing severe HIV and AIDS epidemics should consider using domestic or international trade rules to circumvent patent laws on anti-retroviral drug therapies. Basically, he is referring to a World Trade Organization agreement reached in 2003 that allows countries facing a public health emergency to issue "compulsory licenses" to manufacture generic versions of patented drugs. It also allows those countries to export generic drugs to other countries that have no domestic pharmaceuticals industry.

Although no country has yet to use the WTO provision, earlier this year the Brazilian government threatened to use the WTO provision to break the patent on the AIDS drug Kaletra unless Abbott Laboratories significantly reduced the price of the medication. Kaletra, also known as Lopinavir/Ritonavir, is a protease inhibitor and is expected to bring in $1 billion in sales this year.

In July, Brazil's health ministry and Abbott said they had reached an agreement for Abbott to keep the government's annual expenses on Kaletra at current levels for the next six years and that Brazil would not break Abbott's patent to produce a generic equivalent of the drug. However, less than a week after the agreement was announced, incoming Brazilian Health Minister Jose Saraiva Felipe dismissed the agreement and said the country would continue to negotiate for a lower price and now Abbott says it submitted a revised pricing proposal last week. Officials from Argentina, Brazil and nine other Latin American countries earlier this month reached an agreement with 26 pharmaceutical companies to secure discounts of as much as 66% on antiretroviral drugs. The other countries participating in the agreement include Chile, Bolivia, Ecuador, Peru, Venezuela, Colombia, Mexico, Paraguay and Uruguay. Abbott, GlaxoSmithKline, Merck, Bristol-Myers Squibb, Roche and Bayer were among the companies involved in the agreement, and discounts range from 15% to 66%, depending on the medicine.

Abbott feels that Brazil, with the world's ninth-largest economy, can afford the "fair price" Abbott is demanding. And it argues that without strong profits from Kaletra and other successful drugs, Abbott would be unable to fund the research that produces such breakthroughs. But Brazilian says Kaletra itself eats up a third of the country's AIDS spending. Anti-HIV medicines account for a quarter of the Health Ministry's budget.

Fabre-Teste also said governments should consider taking unilateral steps to allow generic AIDS drugs to be imported from countries that produce them. In 2004, the Malaysian government enacted a law allowing it to import generic versions of AIDS drugs for "noncommercial" or non-profit distribution. Since then, the price of delivering AIDS drugs has dropped by 90 percent and the number of patients receiving treatment increased from 1,500 in 2003 to 3,000 in 2004.

Also, Saraiva Felipe has signed a memorandum of understanding with the Clinton Foundation that will allow the country to obtain generic antiretroviral drugs at lower prices. Under the agreement, the foundation will provide technical support to help the Brazilian government obtain the raw materials necessary to produce generic antiretrovirals. The agreement also will help Brazil purchase diagnostic tests and monitor the spread of HIV.

Finally, Argentina and Brazil have pledged to join forces in producing generic AIDS drugs to cut costs and expand care for people infected with HIV. The nations will begin by sharing information and technology and by bringing experts together. Left unsaid is whether the two countries plan to break international patents.

As we've discussed before, nothing in life is free. Drug companies won't develop drugs unless they can charge for the drugs. This isn't about a greedy drug company withholding life-saving drugs from the public. They're available. This is a case of greedy governments not wanting to pay the cost of healthcare for their own citizens. And who wouldn't want to pay less for any item? I'd like a big discount on every patented item I purchase.

I'm all for furthering discussions on how to share the burden of medical care costs but saying that the burden should fall solely on the patent holder is short-sighted and unfair. Perhaps countries with greater wealth should share more of the burden but breaking patents is not the route to go on this. Let's get this discussion on the right track.

Update on Our Earlier Story:

France's State Council, the highest court for administrative affairs, has found that the government's plan to protect companies in strategic sectors from foreign takeovers may not comply with EU law. According to the council, EU member states may not limit the free circulation of capital among the union unless a deal would disturb public order or security, meaning the government would not be able to protect all the 10 sectors it has identified as strategic. Furthermore, in sectors where the government could prove a risk to security, France could not limit a takeover from another EU member. It could only protect the company from takeover attempts coming from outside Europe.

It remains to be seen if yogurt proves to be a high security risk to France.

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[from 09-14-05]

In a soon-to-be-published decree, raised by ministers after rumors of a PepsiCo Inc. bid for French food company Danone SA, the French government will gain a veto over takeovers in 10 industries deemed "sensitive to national security."

Sectors on the list include some that most countries retain control, such as arms manufacturing and encryption but it also covers companies with activities in biotechnology, data security, casinos and antidote production -- fueling concern that it could lead to a broader kind of protectionism. French Prime Minister Dominique de Villepin, in fact, coined the term "economic patriotism" for the reason for these moves and asked that pension funds, banks, and insurers direct their investments toward his list of "strategic" industries.

EU Internal Market Commissioner Charlie McCreevy told an economic forum in Italy he would "vigorously pursue" breaches of EU law resulting from attempts to thwart foreign takeovers. France's conservative government, however, is getting criticism even at home as French companies warned the government away from protectionist temptations, likening some of the recent rhetoric to the massive concrete border fortifications that failed to stop Germany's World War II invasion.

The Finance Ministry said the decree will merely bring ''more precision'' to the current law -- which allows the state to block investments in any companies deemed sensitive to "public order, public safety or national defense interests." Yes, we wouldn't want yogurt falling into the wrong hands.

According to a government official, the draft legislation is not yet finalized and the veto would not apply to bids for entire pharmaceutical companies, for example, but to divisions making antidotes useful against bioterrorist attacks. I'm not quite sure how that would work in real life since companies are not always so neatly organized in discreet packets.

Last year, the government cited Aventis' "strategic" vaccine operations as it fended off a planned offer from Switzerland's Novartis AG and instead steering Aventis into an all-French merger with Sanofi-Synthelabo, forming Sanofi-Aventis SA. Novartis cited government intervention in its decision not to bid.

We'll keep an eye on the progress on this initiative and our safety from Lactobacillus bulgaricus and Streptococcus thermophilus cultures everywhere. More available here.

I was going to write a Friday rant on Britney Spears' new baby -- the one she had with some guy I've never heard of -- but then I realized how much I didn't care. I decided instead to write about Renee Zellweger's marriage -- the one she had with some guy I've never heard of.

Zellweger has filed for an annulment from her husband after just four months of marriage. In court papers filed Wednesday in Los Angeles County Superior Court, the listed "fraud" as the reason for the breakup with the country music star. Fraud? Really? Like, he pretended they were just going to get fishin' licenses and "Oops" they got married?

Zellweger tried to clear this up saying the term was "simply legal language and not a refection of Kenny's character." But, isn't that in itself fraud? Fraud generally involves one party misrepresenting some material fact to the other party, and that other party having relied on that misrepresentation as a basis for the marriage.

Usually, to file an action based on fraud, you must have immediately separated from your spouse as soon as you learned of the fraud. This is true for lack of consent circumstances as well. You cannot cohabitate after discovery of the fraud. The longer the marriage continued from the time consent was possible or fraud was discovered, the less likely the court will be to grant your request.

The realm of possibilities that one can imagine here is just too much to resist. He wasn't of age? He was already married and has eight kids in a housetrailer in Oklahoma? What is it? We can't wait to find out. We only wish we could be more charitable, like Ms. Zellweger, who's already demanded that the court rule out the possibility of financial support.

In a soon-to-be-published decree, raised by ministers after rumors of a PepsiCo Inc. bid for French food company Danone SA, the French government will gain a veto over takeovers in 10 industries deemed "sensitive to national security."

Sectors on the list include some that most countries retain control, such as arms manufacturing and encryption but it also covers companies with activities in biotechnology, data security, casinos and antidote production -- fueling concern that it could lead to a broader kind of protectionism. French Prime Minister Dominique de Villepin, in fact, coined the term "economic patriotism" for the reason for these moves and asked that pension funds, banks, and insurers direct their investments toward his list of "strategic" industries.

EU Internal Market Commissioner Charlie McCreevy told an economic forum in Italy he would "vigorously pursue" breaches of EU law resulting from attempts to thwart foreign takeovers. France's conservative government, however, is getting criticism even at home as French companies warned the government away from protectionist temptations, likening some of the recent rhetoric to the massive concrete border fortifications that failed to stop Germany's World War II invasion.

The Finance Ministry said the decree will merely bring ''more precision'' to the current law -- which allows the state to block investments in any companies deemed sensitive to "public order, public safety or national defense interests." Yes, we wouldn't want yogurt falling into the wrong hands.

According to a government official, the draft legislation is not yet finalized and the veto would not apply to bids for entire pharmaceutical companies, for example, but to divisions making antidotes useful against bioterrorist attacks. I'm not quite sure how that would work in real life since companies are not always so neatly organized in discreet packets.

Last year, the government cited Aventis' "strategic" vaccine operations as it fended off a planned offer from Switzerland's Novartis AG and instead steering Aventis into an all-French merger with Sanofi-Synthelabo, forming Sanofi-Aventis SA. Novartis cited government intervention in its decision not to bid.

We'll keep an eye on the progress on this initiative and our safety from Lactobacillus bulgaricus and Streptococcus thermophilus cultures everywhere. More available here.

We learned about a new (to us) blawg by Alan Rothman (a non-practicing attorney and an MBA in New York who specializes in implementing and teaching law office technology). It's called The Subway Fold, named after the urban engineering challenge necessary in order for a reader on the subway to maintain full access to all of the pages of the newspaper within an often very limited space.

The Subway Fold was one of those that Monica Bay mentioned recently in Blawg Review #18 and it covers, among other topics, law practice, IP, biosciences, media, telecom and visualization(?). We recommend checking it out for anyone interested in law office technology. No folding, crowding or ink smudges involved.

The Baristas' law firm, Frost Brown Todd LLC, is willing to offer temporary office space to lawyers displaced by Hurricane Katrina. To the extent a particular FBT office (we have seven offices across four states but our IP practice is mainly in Cincinnati, OH, home to great things like odd chili and Opening Day) has available space, the firm is pleased to be able to offer the space to a lawyer in need.

Paul Bromwell, our IT guru, has assured us that we can accommodate the lawyer's computer needs without jeopardizing the confidentiality of our clients.

Contact me if you have a need. Our best wishes to you all.

Note: The ABA also has set up Hurricane Katrina Disaster Relief pages for the attorneys, law offices, and many others needing legal assistance who have been caught in the catastrophic effects of Hurricane Katrina.

While spending time convalescing at home from my recent accident, I have spent a lot of time thinking about working at home and how to optimize the experience. Fortunately, my firm has great IT services and I am able to work at home almost seamlessly with my office by using scanners and email. I have found that (other than the pain from my current injuries) I enjoy working some at home. The key, of course, is having good administrative help.

There has been a lot of talk lately about the concept of "homesourcing," the migration of workers from expensive centralized coastal cities to a distribution of small towns and cities throughout the US (instead of overseas). This was recently discussed by Instapundit and the migration of computer jobs from Silicon Valley to rural towns.

On one hand, this movement of workers is a huge benefit to the employee. As a result of "homesourcing", employees are often allowed to take their existing salaries and home equity to other parts of the country where they can have a far greater quality of life at no increase in cost to the company, the ultimate win-win for employer and employee. The employer gets a happy employee, and the employee gets a huge increase in real income. One other benefit which is important is that there is no better gas saving device than a high-speed modem. Workers who are homesourced need very little gas on which to get to work, and as a result, their personal "cost of working" also goes down dramatically.

Homesourcing, of course, needn't be across the country. Just working from home wherever one lives has quite a few benefits in terms of cost savings and productivity. This can also have a dramatic effect on gaining a healthy lifestyle if one spends an hour each day at the gym instead of stuck in maddening traffic congestion. This is not just all about the employee, though. Employers stand to gain from more work-at-home through happier and healthier employees.

And giving employees a healthier lifestyle is important for both employee and employer. Leah Maclean, a professional coach and mentor, writes on Working Solo that a healthy lifestyle is critical to your business success. In asking other bloggers, guest blogger Andrea Lee writes that, though counterintuitive, "To the degree that I become a more physically active person, my businesses will take great leaps forward to seven figures and more."

Lifestyle is not just important to your business success, it's a path to it. Matthew Homann, of the nonbillable hour, believes that he must constantly remind himself that time with his family must be first on his 'to-do' list and not last. He even goes to the extent of making a list of the things he did each day that bettered his family life, improved his health, and built his business to build a report card of efforts to keep balance in his life. This is where working at home can come into play. Imagine not having to fight traffic all morning just so you can sit in a little office without natural lighting. Almost like a day at the beach.

Law firms tend to lag the curve on changes in the marketplace but it is inevitable the more firms will look to homesource lawyers to save on costs, especially if you set up office sharing so that the amount of expensive real estate and equipment is reduced. What can be better than reduced costs and increased productivity?

Carolyn Elefant and Mark Sindler have posted Blawg Review #21 over at My Shingle. I've been reviewing this week's theme of Endings, Beginnings and the Transitions and Crossings in Between (while convalescing with my own transitions and typing with one hand).

I especially enjoyed the post by Margaret Marks, who found the The Standard Catchall Universal Disclaimer Notice, over 7000 words long.

We also enjoyed the Wired GC's update on the legal Sex and the City (of London) over the book Fish Sunday Thinking, allegedly written by a young lawyer at an unnamed Top 50 law firm disclosing all of the sexual secrets of lawyers (that's gotta be a slow read). It was written pseudonymously by "Alex Gilmore" who has kept his real name secret in order to "protect his lucrative job as a legal beagle and pay his mortgage."

In a related post, Eh Nonymous has a round-up of what's been said, pro and con, about anonymous bloggers. While we don't really care that much, anonymous legal blogs seem like anonymous doctoring -- it's more appropriate for personal web logs where people post long missives about their cat's toenail fungus that nobody reads anyway.

Well, as many of you know, we've been posting lightly this summer. Karlyn has been busy dealing with moving (twice!) and I've been caught up in lots of other projects. One of those projects started about five weeks ago -- I decided to take up bicycling. Again. I used to bicycle regularly but that was over 18 years ago. Since then, I've spent most of my time sitting at a desk -- or taking care of kids.

I'm sure you know how easy it is to do this. Everything seems to be more important. I have to take care of work all day. I take care of kids all evening and weekends. Then there's the house, the car, the everything else... Somewhere along the line, I could never get to taking care of myself. I've always been last and last never comes.

The bottom line is that I bought a bicycle at my wife's urging and started riding. I decided to try my hand at a 62-mile (metric century) charity ride for the Davis Phinney Foundation. It was described as suitable for the beginning rider so I figured I was all set. Unfortunately, the course was not quite as flat and easy as I thought. You can see the course elevation profile below.

View Elevation Profile

To make a long story short, I rocketed down one of the larger hills and was surprised by a sharp left turn. In the turn, I hit loose gravel and my bike shot out from underneath me. I smacked into the pavement pretty hard resulting in a broken and dislocated shoulder and collarbone -- along with severe bruising of my ribs and pelvis. The shoulder was broken into four pieces and I had to have emergency surgery to put everything back together. It will now be 4-6 weeks before I can drive and I'll need about 6 months of rehab. It looks like I'll have to try taking up bicycling next year.

For now, it seems that I will be posting a little less for a few weeks. I hope to be back stronger than even very soon. To give you something to look forward to, look for a new "Barista" being added to the Patent Baristas in the coming weeks. Stay tuned.

Welcome to the Dog Days of Summer and Blawg Review #19, hosted this week by the Patent Baristas. We’re always glad to have company over so grab a cup of joe and we’ll see what’s been going on around the blogosphere. As is typical here, it’s currently a balmy 98 degrees in beautiful Cincinnati, OH, with the humidity hovering somewhere near steam bath. Bear with us if we sometimes seem incoherent due to the heat.

On Fire

Ellen Podgor writes in the White Collar Crime Prof Blog about the frightening situation where light sentences are received by cooperating witnesses involved in the WorldCom case and harsh sentences are received by those who seek trial. Podgor makes several potent observations, including:

"The Bill of Rights provides everyone accused of a crime with the right to a jury trial. Are we punishing individuals who avail themselves of this right?"

On Jury Geek, Clay Conrad notes the death of jury trials, writing that "We attorneys have gradually adapted to measures that reduce the viability or availability of jury trials - from acceptance of responsibility credits for those who plead guilty, to judges who require expensive, time consuming mediation prior to trial. As the jury trial gets rarer, and harder to attain, we adapt to our
environment.

"To mix culinary metaphors, we need to hop out of the pot before the jury is toast. Too often, we fail to recognize or object to procedures that raise the risk or cost of a jury trial."

Denise Howell at Bag and Baggage points to an interesting resource where you can search the published opinions of Judge John G. Roberts, courtesy of the folks at askSam. PrawfsBlawg's Kaimi Wenger writes about how to get fired for obscene political e-mail. Monica Bay, at The Common Scold, continues her pursuit against business speak everywhere. Learn how you can come up with a "Strateg-olution" to this problem.

Professor Douglas A. Berman, on Sentencing Law & Policy updates us on the (declining) state of the death penalty. Beth Simone Noveck, on Cairns, claims to have another patent troll solution in "Peer to Patent" (PtoP): A Modest Proposal.

Adam Smith, Esq. (a/k/a Bruce MacEwen) asks "Where Is Your Firm's Next Generation of Leaders Coming From?" in his article from Managing Partner magazine, which helps distill the roadmap:

Create a vision, walk the talk, face hard realities, breed cohesion, and celebrate wins.

Steamy
Balkinization, a group blog highlighted as "an unanticipated consequence of
Jack Balkin" brings us a very worthwhile discussion of Substantive Due Process as it developed in the Dred Scott decision and its implications for modern jurisprudence, including the recent Kelo decision. Balkin notes that the closest analogy to the substantive due process argument in Dred Scott v. Sandford isn't Roe v. Wade. It's the dissenters' position in Kelo v New London. He notes that powers, in relation to rights of person, are:

"...denied to the General Government; and the rights of private property have been guarded with equal care. Thus the rights of property are united with the rights of person, and placed on the same ground by the fifth amendment to the Constitution, which provides that no person shall be deprived of life, liberty, and property, without due process of law. And an act of Congress which deprives a citizen of the United States of his liberty or property, merely because he came himself or brought his property into a particular Territory of the United States, and who had committed no offence against the laws, could hardly be dignified with the name of due process of law."

Colin Samuels of Infamy or Praise has a helpful post warning us that technology has been developed to determine when a caller is being abusive or is feigning attention, impolitely labeled the "Jerk-o-Meter". [Note to Self: Do NOT let Significant Other get a hold of this!] Infamy or Praise ponders whether or not this device out of MIT could change the dynamics between what is deemed "zealous advocacy" and what is deemed "abusive conduct." Could carefully scrutinized lawyers return to a more formal, principally written, professional practice if these new technologies become more developed and widespread?

The IP Counsel Blog by Todd Mayover has some thoughts on protecting next-generation therapeutics while avoiding inherent anticipation. As seen in Schering v. Geneva, 339 F.3d 1373 (Fed. Cir. 2003), the Federal Circuit held that a patent claim which structurally described a metabolite of loratadine (Claritin®) was inherently anticipated and invalid because the metabolite was formed in a patient's body upon ingestion of loratadine.

Lawpundit takes note of a new Podcasting Blog at Patent Pod. Patent Pod offers computer-spoken .mp3 audio files of entire judicial opinions (with some material, such as citations, omitted). See Ericsson v. InterDigital v. Nokia. Lawpundit also has some interesting notes on globalization and its future consequences that are worth a read.

Heat Wave

In a post from this past week’s Illinois Trial Practice Weblog, Evan Schaeffer provides pointers on "how to start a deposition.." Being an IP attorney who drafts patents and writes opinions for a living, I found this glimpse of life on the other side (the parallel universe, so to speak) something I frankly had never thought about, but yes, something any attorney should know about but may have been too afraid to ask. Something like the old axiom from my professor days in that "there is no dumb question, only dumb answers."

Three current and hot law student podcasts can be found at the following sites:

1) Law School Podcast at http://www.lawschoolpodcast.com/#top;
2) Life of a Law Student at http://lifeofalawstudent.com/tlink; and
3) Ambivalent Voices at http://mowabb.com/ai/voices/tlink

As always, the eccentric (and sometimes quirky) Yeoman Lawyer blawg shows us life on another side of lawyering with some interesting offerings for the week. For instance, how many lawyers are also farmers and how many lawyers stop to look at their cows on their way back from a deposition?

It might not be law-related, but Neil J. Squillante at Techno-lawyer blawg writes that "a Retina Specialist Has an Important Message for Diabetics -- Get a Fluorescein Angiogram"…. With 3.1% of Americans suffering from diabetes, it's a good bet that some Blawg Review readers (or their loved ones) are among those who suffer from diabetes. While this Post doesn't concern the law, it could help save the sight of diabetics who read Blawg Review.

As a previous member of the "publish or perish" set, I was intrigued with the "law review publishing experiment" post by Professor Stephen Bainbridge on his blawg site from this past week. In his post he states that "logically, of course, the most likely way blogging makes one's name familiar to editors of law reviews is that one's blog readership includes a fair number of such editors." If you're a law review editor you might want to see what he’s proposing. However, now that the law review folks are on notice as to the "experiment" has the experiment been doomed? Time will tell.

The Ambivalent Imbroglio writes an insightful post regarding that AP story which ran last week regarding 3L’s and the necessity, or lack thereof for that third year of law school, as this. This post, and associated links, is well worth several reads for the ABA types, law school profs and students as well. Also, be sure to check out the countdowns.

Hot & Bothered

Minor Wisdom’s Ray Ward takes up the issue of a judge that's steamed at Wal-Mart's counsel. Judge Pregerson of the Ninth Circuit publicly chastising counsel for the defendant, Wal-Mart, for what he considered to be harsh language toward the trial judge in Wal-Mart's brief. Ward pulls out the passages that I think may have been the ones to draw the judge's ire. Do you think it’s a good idea to accuse the judge of "glossing over" claims or of "sidestepping the obvious"? Warning: Read this to learn how to avoid similar mistakes."

Dennis Crouch, over at the Patently-O: Patent Law Blog, has a nice update on Capon v. Eshhar v. Dudas (Fed. Cir. 2005) where the Federal Circuit held that a nucleotide sequence of claimed DNA not required to satisfy the written description requirement when the sequence is already known in the field. Important stuff for the Baristas.

At Going to the Mat, Matt Johnston asks will there be any more legal challenges to the McCain-Feingold Act. He feels that there should be since there are now two potential plaintiffs with standing to sue: Shrink Missouri and Buckley. The only question is, will they? Johnston presents three grounds for legal arguments for the invalidation of the Millionaire's Amendment.

The Wired GC writes this week about the differences between business development, marketing and sales and how one firm even has a director of sales.

For those who think that any mention of sales is antithetical to how legal services are marketed, three words come to mind: get over it. And for the marketing mavens who would have you believe that corporate legal services are just another commodity to be sold, three different words come to mind: not so fast.

Sizzling

We have a love/hate relationship with Powerpoint (most presentations suck) so it was refreshing to read Feld Thoughts asking "How Would The Civil War Have Ended If Lincoln Had PowerPoint?"

Announcer: And now please welcome President Abraham Lincoln.

President Lincoln: Good morning. Just a second while I get this connection to work. Do I press this button here? Function-F7? No, that's not right. Hmmm. Maybe I'll have to reboot...

See the Presentation here.

George Lenard over at George's Employment Blawg writes about the current state of workers being underutilized and bored at work. Despite the barrage of reports that Americans are working themselves to death (Note: a 2000 report showed that American workers spent the equivalent of almost a full month more per year on the job than they did in 1967), the Washington Post (reg. required)reported that 55 percent of all U.S. employees are not engaged at work. The article goes on to point out that boredom increases job stress, while decreasing morale, job satisfaction, and even safety. This may have more to do with not finding a good work-life balance.

George recommends that both employers and employees should be looking for productive uses for such time. For professionals and other self-employed workers, structured marketing-related activities, including networking, are a productive boredom-beater. See his post "Bored out of a job?"

Overheated

The Health Care Blog is a blog that covers the health care industry and health regulatory/compliance issues along with other legal odds and ends. We found this site useful since many biotech inventions bring up various HIPAA questions. A recent post from Bob Coffield considers how West Virginia hospitals might respond to a multi-million gift offer from one or more of the many prominent West Virginia plaintiff's lawyer. He writes:

I can see it now "___________ (add your favorite West Virginia medical malpractice lawyer) Tower" at ____________ (add your favorite West Virginia hospital).

In another recent post, he questions if the benefits from a national network of electronic health records are worth $200 Billion. One of his firm's IT department members has created a law firm IT related blogs cleverly titled "Law Firm IT: The view from the server room." Coffield also recommends Hospital Impact for health care-related blogging (with skins).

Lawrence Taylor looks at The Road to Prohibition on his DUI Blog. He writes that the ultimate goals of Mothers Against Drunk Driving lay well beyond lowering DUI levels to .08%, .05% and ultimately to .01%. The ultimate goal is, simply, resurrecting the failed experiment of prohibition:

"The first step, of course, would be a gradual shift of focus away from drinking *and* driving to one of just drinking. And the logical starting point would be the more politically-acceptable target of underage drinking."

Half-Baked

In Wake up and smell the trade mark opposition, Jeremy Phillips, on the IPKat Blog, writes about how the Ethiopian government is trying to prevent coffee giant Starbucks from registering the words "Ethiopian coffee" as a trade mark. The IPKat wonders if there's something missing from this tale. Coffee is grown in Ethiopia and has been almost since the dawn of humanity. If "Ethiopian coffee" is used for coffee from Ethiopia, it's unregistrable as a trade mark because it's totally descriptive; if it's used for coffee from anywhere else, it's unregistrable because it's deceptive.

In a related note, the Dead Programmer's Cafe shows how the Starbucks logo itself has made some interesting changes over the years to become less racy. Apparently, some consumers found the suggestive split tail of their topless siren too lurid and a simplified logo was introduced, hiding the siren's breasts under waves of hair, and that in turn was cropped and enlarged so the split in the siren's tail would no longer show. She eventual lost her belly button, too. I guess it drove customers wild.

Tom and Ray over at Car Talk have a brand-spanking-new Car Talk Auto Advisor. Basically, you tell the Advisor about your driving habits, your automotive likes and dislikes... and it'll tell you what new cars you should consider. Apparently, we should be driving a Peugeot 505. Speaking of cars, the Baristas are considering getting Patent Barista emblems for our cars from Your Emblem.

SPF 50

Dukes of Hazard gets burnt - Blawgers at PHOSITA have posted a piece on how a debacle behind the scenes of this movie, which has been less publicized by the studio, has cost the studio millions in $$ and left them burnt. In their post regarding the Dukes of Hazard movie, Phosita blawgers note that this movie was actually based on a never-seen movie called "Moonrunners." In the end, the copyright holder obtained $17.5 million for the rights to a movie that nobody has seen. Get those Daisy Dukes cheap while you still can!

In a second post for this past week, PHOSITA also discusses "the business of patents" and with this post, adds some numbers and insightful commentary to what a business this truly is. "Part of the mystery of intellectual property (IP) lies in its intangible nature. After all, when a person gets a patent, all they have to show off are a few papers. However, businesses are increasingly recognizing the value that these few papers can hold." From licensing revenues, to royalties, to gaming the patent system in the U.S. and in foreign countries, this post is worth a read for anyone that handles any type of IP matters.

The Conglomerate’s guest-blogger Joshua Wright discusses the "Economics of Payola" in a thoughtful post from this past week. In this post, he describes payments for product distribution ranging from arrangements in grocery stores to payola in the music industry. In his post, Joshua writes that "competition for product distribution is crucial to a variety of industries: slotting allowances for grocery store shelf space, payments for inclusion in mutual fund "supermarkets," and for listing preference in search engine results. Despite the widespread use of payments for distribution in markets, payola can lay claim to the most colorful history of regulation and controversy.' In one example, we have NY AG Eliot Spitzer’s investigation of Sony BMG Music Entertainment resulted in an agreement prohibiting Sony BMG (others may follow) from making payments in exchange for radio airplay. I found this post to be quite interesting since these are things I have wondered about since I encounter them everyday and I keep wondering why that radio station I listen to keeps playing the same songs over and over again.

In a series of posts from this past week, The Mommy Blawger discusses rights of mothers to breast feed in public. When will our breast-obsessed nation get over itself and allow mothers to feed their children in public. Must we all jet to Europe so that we can nourish our babies every 2-4 hours? Besides the emotional issues here, Mommy Blawger does a nice job discussing the more legal maneuverings involved with this debate. Don’t people have more important things to devote their time to than to harassing women for breastfeeding their children? In her post she states that "what many people do not know is that breastfeeding in public is legal in every state. A mother does not need to "cover up" or go somewhere more private. More than half of states have laws specifically protecting this right, but even in those that do not, it is still legal to breastfeed in public."

Cooked

First up is the linguistically-inclined site, Unused and Probably Unusable by blogger Eh Nonymous. While we’re personally against anonymous blogs, it has an interesting discussion of why large companies are often so afraid of class certification, using the class action against Wal-Mart as an example. Also, check out the discussion about whether the word niggardly should ever be used. We generally don’t use big words but if you’re of a polysyllabic bent, you'll find it interesting and not so easy to solve.

The profoundly gifted and prodigious J. Craig Williams, at May It Please The Court, says it's time to Pave Paradise, Put Up A Parking Lot and Catch A Yellow Cab.

Williams poses: Try to combine Joni Mitchell's Big Yellow Taxi song with Chuck Berry's Nadine and see if you can come up with a Ninth Circuit opinion on trademark protection in Yellow Cab v. Yellow Cab. They both want to use the same name, and prevent each other from using it. But, when you say "Yellow Cab" do you think of either of these companies or just a taxi?

"It's getting hot in herre (so take off all your clothes)"…Nelly.

And in a final commentary to one of the Barista’s favorite blog sites (as opposed to blawg sites), our review could not be complete with kudos to Go Fug Yourself. In the Baristas world of law and science, this is pure cotton candy but also pure enjoyment for us. Fuggers Heather and Jessica present Freaky Fug Friday: Salma Hayek.

Really Cool
We can't leave without noting Lance Armstrong's triumphant farewell to cycling in Paris with his seventh consecutive Tour de France victory. After following Team Discovery's 22 day, 2,241-mile trek across France, we got to see Armstrong finish first with a time of 86.15.02 -- at an average speed of 25.882 mph! Lance, we're gonna miss ya.

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Thanks for dropping by and visiting our place. We'll meet at your place next time.

Blawg Review has information about next week's host, and instructions how to get your blawg posts reviewed in upcoming issues.

Over the summer, whenever you'd think you'd have beaucoup time on your hands, I tend to be busier than ever with taking care of kids and my home and getting to all those things I put off during the school year. So, a lot of little "detail" action items tend to build up on my desk. This includes getting around to mentioning some of the blog sites that I find or become aware of.

One of those is the Patent Prospector, a blog "intended to be informed and practical information, opinion, and sassy entertainment about patents, especially aspects relating to the life cycle of patents." The site, by Gary Odom and others of Patent Hawk LLC, has a good assortment of helpful posts that tend to be useful for people in the IP field. Noteworthy is that the site is an open forum weblog for patent practitioners where contributions are welcomed.

Their latest item has a nice update on how Ross Perot has become a principal in a $200 million private equity fund set up to buy companies with undervalued patent portfolios in such areas as semiconductors, biotech, nanotechnology and software.

We recommend that you check them out.

We went to see a movie with the kids this weekend as we tried to get in family fun before the school treadmill starts up again. We went to the super-mega-multi-plex where they had a gaggle of movies playing, including a big fat ONE MOVIE that was rated G and OK to take the kids -- we saw "March of the Penguins" by Director Luc Jacquet.

For some inexplicable reason, Hollywood can't make a decent G movie. Many movies are made that could have been a decent G-rated movie yet instead they are made PG-rated where for no discernible reason, they contain off-color remarks or foul language which seems to have been inserted solely for the purposes of gaining a PG rating. If you've ever been forced to sit through Stuart Little, you know what I mean. But, I digress.

Anyway, Jacquet follows nine months in the lives of emperor penguins, from the time they march off on their annual trek 70 miles to a breeding ground to lay one enormous egg to their return to the sea. Amazingly, we don't know how they find their way, as changes in the ice shelf force them to find new routes each year.

The female lays the egg, transfers it delicately to the male and then walks 140 miles roundtrip (to the open sea and back) to gather food it can give the chick that hatches. Meanwhile, the male stands around and holds the egg between its feet and a belly of dense feathers, incubating it to keep it off the ice and basically fasting up to four months amid blizzards.

The story of these amazing penguins and the extreme levels of self-sacrifice they endure for their chicks is fascinating and incredibly moving. It does have a bit of a slow pace at times -- my three year old fell asleep. But overall, I would give it two thumbs up for a superb job of telling this tale. The cinematography is breathtaking in capturing the mood of the Antarctic.

Besides the story itself, the movie shows Herculean efforts by the film-makers. I would like to have had more of the story of the making of the film. It must have been some extraordinary circumstances to spend a year in 80-below temperatures. You can't believe you're able to watch all the moments they've captured.

Check out the movie (whether you have kids or not).

A new (to me) blog I noticed recently is the IP Counsel Blog by Todd Mayover. It's labeled as "discussing issues that concern the practice of in-house intellectual property attorneys." Mayover is an in-house intellectual property attorney for a medical device manufacturing company in Fort Lauderdale, Florida. The site is well-done and has some good tips for practitioners. I recommend you check it out.

He recently had an interesting post on how intellectual property rights are often intertwined with the regulatory clearance process by the Food and Drug Administration (FDA) before they are brought to market -- a lengthy and complicated application process.

Mayover makes an excellent point that intellectual property attorneys should be called upon to identify proprietary information embedded within filings that may be disclosed to the FDA. This is not just for ensuring proper submission of key invention details to the USPTO for patent purposes but equally so that documents containing proprietary information may be reviewed by IP attorneys in order to have an opportunity to redact proprietary information, such as trade secrets, trademarks and information described in unpublished patent applications, before the FDA makes the materials available to the public.

See more here.

I'm a fan of Feld Thoughts and recommend that you check it out if you don't already read it. Although the content is sometimes over my head in financial lingo, I enjoy the insights I can glean from it. My favorite past post is where Feld describes mission statements as "vapid phrases that don't inspire anything (except internal contempt)" and so adopted the motto "We Suck Less" where "Our goal in working with you is to suck less than the last guy that was here." More places should strive for such clarity.

Recently, Feld posted about discovering work-life balance. I know what you're thinking - "I've heard that a million times already!" Even so, it was nice to see how one person coped with the ever-elusive goal of having better balance. Most people tend to not understand that we all have a balance in our lives (whether we want one or not), it just might not be the balance that works right. Every day contains 100% of a day. No one ever gets a 110% day. Therefore, we all slice up that 100% into some mixture of work, home life, sleeping, eating, pooping, etc. We have no choice, it's inevitable.

What I've learned recently is that we all have to pick what we spend our time on but, unfortunately, we don't often choose wisely. I have spent too many years (decades!) putting everything else first: work, study, home, spouse, kids... Now, after too much stress and work, I realize I need to reapportion my time and effort. With that, I was able to connect to Feld's thoughts on work/life balance because I feel the same pressures and needs he did (although he was only 34 at the time -- I wish I had realized this earlier).

Feld writes that he discovered his own set of habits by which he realigned his work/life balance including:

1. Spend Time Away - he takes a regular vacation;
2. Life Dinner - they have a standing date on the first day of every month;
3. Segment Space - have separate and distinct spaces for work and home life;
4. Be Present in the moment to the other person; and
5. Meditate - that is, do whatever you want, but spend some of your time on yourself.

These habits won't work for everyone -- his Spend Time Away means that Feld and his spouse take a week long vacation each quarter. The average worker in the U.S. gets just 12 vacation days a year (compared with 27 for Germans and a whopping 39 for the French). A 2000 report showed that American workers spent the equivalent of almost a full month more per year on the job than they did in 1967. Also, in Segmenting Space, Feld splits his time between a home in Boulder and a home in Alaska. Clearly, Feld has more time and money than I do.

That being said, each of us can come up with our own set of habits and learn to better appropriate time between work and self. And it isn't about finding time but about making time, which is worth doing because regularly spending some of your time on yourself makes you a better person during all the remaining hours of the day. It can make your work and your life much more rewarding. By making time to just enjoy yourself, you get more done overall. If you take time for yourself, even though it makes you 'busier,' it's fulfilling. It gives you energy, brainpower, a sense of self-fulfillment that helps you perform in every other area of your life. You get more done in less time the rest of the week.

Below are some tips I picked up from Bicycling Magazine for making time for yourself:

1. Get a buddy to do things together.
2. Get a babysitter when you need time - you're worth it.
3. Make an appointment to take time for yourself at least once a week - put it in your Outlook or PDA.
4. Eliminate a TV show out of your life.
5. Pounce on an opportunity to take time for yourself when a window unexpectedly opens.

Now get to it.

I have been overwhelmed with comment and trackback spam of late to the point that I stopped posting for a while as I tried to deal with this problem. I noticed that Overlawyered had the same problem. It looks like Movable Type may do something about this in a future version but I had to deal with the problem now.

Basically, I had to take the brute force method of opening up every single past message and individually turning off comments and trackback and re-saving in order to get the rotten %$#@%$@%$! off my site.

I'm going to try to leave a few new posts open for a short time but it seems that the spam jerks can track down any post and flood my system with their crap.

Sorry for the inconvenience.

According to the Center for Public Integrity, Big Pharma has certainly benefited from the more than $800 million spent since 1998 on lobbyists and political campaigns. Not exactly chump-change.

While industry trade group, Pharmaceutical Research and Manufacturers of America (PhRMA) claims the money helped patients, they hired a former U.S. ambassador to Canada and his top aide to lobby the Canadian government organizing a campaign against legalizing importation of drugs from Canada. The industry's pressure must be paying off. Canada has announced they will ban the bulk export of prescription drugs and crack down on Internet pharmacies that sell drugs to Americans -- which could lower profit margins. Meanwhile, Pfizer made a profit of $11.3 billion last year, out of sales of $51 billion.

In the past year, the industry hired nearly 1,300 lobbyists, including dozens of former lawmakers and hundreds of people who worked for congressional committees or regulatory agencies. Last year, according to the center, the industry spent $128 million on such efforts, including lobbying for $5.6 billion in spending for biodefense and for a bill that allows easier access to patents for inventions researched jointly by public institutions and private entrepreneurs. The campaign has also led to a more industry-friendly regulatory policy at the Food and Drug Administration.

Lobbying efforts have led to the Medicare Modernization Act of 2003, which created a taxpayer-funded prescription drug benefit for senior citizens. By adding the benefit to Medicare, the industry found a reliable purchaser for its products. Thanks to a provision in the law for which the industry lobbied, government programs like Medicare are barred from negotiating with companies for lower prices! According to one study, 61 percent of Medicare money spent on prescription drugs will become profit for drug companies. Drug-makers will receive $139 billion in increased profits over eight years, the study predicts. The Medicare prescription drug benefit starts in 2006.

This, for an industry that spends up to $60 billion/year on drug marketing—nearly twice what it spends on research and development. In 2004, Pfizer spent almost $120 million for media ads for Lipitor, while companies promoting erectile dysfunction treatments Viagra, Levitra and Cialis spent $425 million.

[NOTE: I'm not picking on anyone here -- I'd love to have their profits -- it's just hard to feel sorry for an industry that just about prints money.]

More than 3,000 people over the past seven years have done lobbying work for a pharmaceutical company. The list includes at least 48 former members of the U.S. House of Representatives and 15 ex-senators to lobby. That includes Sens. Bob Dole (R-Kan.), Birch Bayh (D-Ind.), Lloyd Bentsen (D-Texas), Dennis Deconcini (D-Ariz.), Steve Symms (R-Idaho), Tim Hutchinson (R-Ark.) and Howard Baker (R-Tenn.) and Reps. Bob Livingston (R-La.), Bill Paxon (R-N.Y.) and James Blanchard (D-Mich.).

In addition to hiring former members and their staffs, the industry has also helped keep lawmakers in office by making political contributions. Since the 1998 election cycle, employees of the pharmaceutical and health product industry, their family members and industry political action committees have given $133 million in campaign contributions to federal and state candidates. Since 2000, the top drug corporations and their employees and PhRMA gave more than $10 million to 527 organizations, tax-exempt political committees.

The real scandal doesn't rest with the Pharma industry, though. I think everyone should be allowed to spend money on whatever they want to spend it on. The nauseating truth is that our politicians can be so easily bought. I don't know what happened to "...of the people, by the people, for the people..."

See the report here.

There has been a lot of reporting of allegations of misconduct by U.S. researchers. The Department of Health and Human Services received 274 complaints -- 50 percent higher than 2003 and the most since 1989 when the federal government established a program to deal with scientific misconduct. The federal Office of Research Integrity closed only 23 cases last year and, of those, eight individuals were found guilty of research misconduct. In the past 15 years, the office has confirmed about 185 cases of scientific misconduct.

More disturbing, however, a survey published June 9 in the journal Nature shows about 1.5 percent of 3,247 researchers who responded admitted to falsification or plagiarism. (One in three admitted to some type of professional misbehavior.) This doesn't seem to be new -- in 1974, Dr. William Summerlin, a researcher at Sloan-Kettering Cancer Institute, used a marker to make black patches of fur on white mice in an attempt to prove his new skin graft technique was working. It's just hard to tell, though, how much bad acts are increasing or just increasingly being found/reported.

Not to let anyone off the hook but there is a tremendous amount of professional pressure to publish papers and do more work in the academic setting than ever before. One researcher testified that he was working 80 to 90 hours a week, seeing patients two days a week, doing surgery one day a week, supervising medical residents, serving on as many as 10 different committees at the hospital and the medical school and putting on national medical conferences. He sought help from a psychiatrist who counseled him to cut back and from his boss who demanded he increase his research and refused to reduce his patient load (Gee, I think I know him).

While there are often many reasons cited, e.g., mental disorders and the like, it still all comes down to character. But not just the character of the researchers involved in the studies. What we have is a system that grinds people into the ground and then recoils as (horrors! gasp!) someone cracks under the strain.

Everyone is so quick to damn the individual researcher (and we should) but no one seems to be willing to indict their co-conspirators. The university administration that sets up a publish or perish environment; the requirement for more and more grants to support more and more (slave) students; the demanding federal grant application process. And even the whistleblowers tend to be punished instead of "upper management" -- who get to turn a blind eye to the consequences of the system, all the while reaping the benefits of increased output.

Noteworthy is that the National Institutes of Health is currently being asked to explain why one of the agency's scientists was fired after he complained about poor scientific practices within his division and inappropriate unprofessional conduct from his supervisor.

But, this practice is certainly not constrained to the research filed. With billable hour requirements exceeding 2000 hours (and many associates required to bill as many as 2400 hours annually in order to achieve the highest compensation levels) there can be a culture of "work or die" in a law firm just as intense as anywhere. The problem, of course, is that there are only so many billable hours in a day and increased pressure on associates (or any attorney, doctor, or other professional) to bill hours may, in turn, increase the temptation to engage in unethical billing practices, such as inflating the hours actually spent on tasks, euphemistically referred to as "padding."

Chief Justice William H. Rehnquist once observed, "if one is expected to bill more than two thousand hours per year, there are bound to be temptations to exaggerate the hours actually put in." The Legal Profession Today, 62 IND. L.J. 151, 155 (1987). Yet about a quarter of all partners and half of all associates are now billing more than 2000 hours per year.

This is not just a misconduct question here. This relates to quality of life for professionals as well as their communities. Do we want professionals to be well-rounded individuals capable of contributing to society at all levels or do we want billing machines? I guess we could all be like as one partner in one of Chicago's largest and most prestigious firms who recorded an average of 5941 billable hours per year for four consecutive years. Karen Dillon, 6,022 Hours, Am. Law., July/Aug. 1994, at 57. If we assume that 70% of work time is converted into billable hours, this lawyer needed to work 23.3 hours per day, 365 days a year.

Unfortunately, everyone is being asked to do more and more but no one asks where "more" comes from. When I was growing up, my father worked all the time (including his one week of "vacation"). He was lauded as a hero for working hard. Now, we're supposed to work even harder at work while also working more at home and elsewhere. More time at ballgames, dance lessons, school programs, and everything else we're told we need to do to be good citizens. There is such a thing as too much.

Let's hope that we hold the rule makers as accountable as the rule breakers.

More here.

Brazil has threatened to break a patent for Kaletra, one of three anti-retrovirals made by Abbott Laboratories Inc. Brazil said the price of Abbott's combination Lopinavir and Ritonavir pill is so high it created a public health threat. Brazil is encouraging other countries to use the World Trade Organization's rules on patents to challenge pharmaceutical giants in their pricing policy on AIDS drugs

The threat is credible and appears to be legal under the World Trade Organization's Doha Declaration (an amendment to the WTO's TRIPS agreement on trade-related intellectual property rights).

The Doha Declaration on the TRIPS Agreement and Public Health, adopted by the WTO Ministerial Conference in November 2001, affirms that the TRIPS Agreement should be interpreted and implemented so as to protect public health and promote access to medicines for all. The Declaration gives the right of WTO Members to make full use of the safeguard provisions of the TRIPS Agreement to protect public health and enhance access to medicines.

The WTO Declaration explicitly states that "intellectual property protection is important for the development of new medicines" and member countries made an unequivocal point of "reiterating our commitment to the TRIPS Agreement." Furthermore, the WTO members agreed to address the HIV/AIDS pandemic while "maintaining our commitments in the TRIPS Agreement." Article 31 (f) of the TRIPS Agreement stipulates that a compulsory license must be issued predominantly for the supply of the domestic market of the Member granting the license. Anti-retroviral virus treatment for HIV was the main impetus for this initiative.

Health Minister Humberto Costa said his country's actions were not primarily intended to set an example but to save the government millions on health costs. Oh, is that right? So the drug is available and Brazil could pay for it -- they would just like to choose not to do so. This isn't really a public health threat, only a government that would like to get out of paying for healthcare for its citizens. I wish I could choose my own payments for my bills.

In recent years, Brazil has repeatedly managed to get price reductions on drugs from big pharmaceutical makers by threatening to break patents. Brazil now says it would save US$54 million (euro44.4 million) annually by creating a generic equivalent of the pill.

Brazil is also in negotiations with two other makers of AIDS drugs, Merck & Co. and Gilead Sciences Inc. Brazil is seeking permission from the two companies either to produce generic equivalents or buy the drugs at discounted prices.

Abbott's combination Lopinavir and Ritonavir pill, Merck's Efavirenz and Gilead's Tenofavir are essential to Brazil's AIDS program, Costa said. The drugs would cost Brazil US$169 million (euro140 million) this year, or 67 percent of its annual budget for imported AIDS drugs. Not taken into account is that Abbott is already supplying drugs to Brazil at a loss.

On its face, this seems like a good outcome for people to access to cheap or free medicines. However, nothing in life is ever free and trying to kill the goose that laid the golden eggs will only bring short-term gain with long-term pain.

Pharmaceutical companies rely on government-granted patents to protect their huge investments in researching and developing new drugs. It takes 10-15 years and costs $800 million on average to bring a new medicine to market. If some countries try to break patents to get out of paying, guess who's going to foot the bill?

Without patents to protect all the inventions necessary to develop a drug for a limited time, others could simply copy the drugs immediately, offering their versions at a reduced price since they did not incur the high costs to develop the drug. This would seriously impact the pharmaceutical companies' ability to recoup their costs and reinvest in other research projects.

Brazil already legally makes copycat versions of several AIDS drugs, and has successfully forced international pharmaceutical companies to lower prices in the past by threatening to break patents. And for a country so concerns for it's citizens health, Brazil doesn't seem to mind adding a 9.6% import tariff for completed medicines and essential medical products. Apparently, it's not a public health threat unless the government is footing the bill.

Granted, it's the right of any nation to raise revenue but don't try to cloak yourself in some type of do-gooder image when you're really out to just save a buck. While the leaders of these countries are happy to lobby for more aid and demand that pharmaceutical companies offer their drugs at cost, they routinely tax medicines until they are unaffordable for the poor. These domestic taxes and tariffs directly prevent millions of their own citizens from receiving treatment.

Attacking patents and keeping high import tariffs only serves to hurt the sickest and poorest citizens in already poor nations. Let’s hope that the Brazilian government understands that it must pay it’s fair share.

Shares of Vicuron Pharmaceuticals increased 79% to an all-time high of $28.21 Thursday after Pfizer agreed to buy the biotechnology company for $1.9 billion, or $29.10 a share in cash (an price 84% premium with a market capitalization of about $1 billion).

The trend in Big Pharma seems to be one of buying biotech companies with products in late stages of development. Vicuron focuses largely on anti-infectives, with two New Drug Applications under review at the FDA. One, anidulafungin, is intended to treat fungal infections and recently showed superiority to fluconazole in a Phase 3 study. The other compound, dalbavancin, is an antibiotic targeted toward gram-positive infections. The present NDA for dalbavancin covers skin and soft-tissue infections (also called SSTIs).

Ever since penicillin, the first known antibiotic, was discovered in 1928 by Fleming, a small percent of the bacterial population is naturally resistant to antibiotics and drug pressure is increasing this percentage. In 1987 only .02 percent of bacteria were penicillin–resistant. By 2002, 16.5 percent were. Staphylococcus resistance is now at 40 percent. Resistance to Vancomycin, the most powerful of the antibiotics and so prescribed only as a last resort, had reached 12 percent by 1994.

All antibiotics are derived from the same 15 or 16 compounds. With the average cost of developing a new drug now at $500 million, there is a disincentive to developing new antibiotics. In 2000, $26.4 billion was spent on drug research and of that, only 14 percent was toward new anti-infectives. Within that category, most money is directed toward finding drugs effective against HIV. Because few new antibiotics have been discovered, newer ones tend to be held in reserve for use against resistant germs, thus limiting their market potential.

So, will other Pharmas follow suit? Drug companies seem to have plenty of cash (see our earlier discussion of the tax repatriation perk). Some companies, like Merck and AstraZeneca, will probably follow with their own deals given their shortage of big hits in the pipeline. But, it's probably not going to be a wave of M&A's washing across the continent. Many will look to increasing development partnerships and collaborations with smaller companies (why buy when you can rent?).

Still, the pipelines of new drugs that the big drug makers maintain are too thin to support their present valuations. Drug companies need lots of new drugs in order to maintain such amazing profitability and pick up slack for those drugs going off patent. This should make smaller, biotech companies look plenty attractive.

Seth Godin, listed as an author, entrepreneur and agent of change, recently published his thoughts that Small is the New Big. He argues that while big used to matter, small is now where it's at. [Disclaimer alert: I work for a law firm with 370+ attorneys spread over seven offices] In weaving together a conclusion from empirical evidence, he looks at Fortune 500 as where workers made value from efficiency of scale and contrasts that with the demise of Enron. He postulates that since American Airlines (big) is in trouble but Jet Blue (think small) is doing well, small is all that matters. I guess being shackled with labor and pension costs has nothing to do with it.

He laments that:

Big accounting firms were the place to go to get audited if you were a big company, because a big accounting firm could be trusted. Big law firms were the place to find the right lawyer, because big law firms were a one-stop shop.

And then small happened.

Without giving out too many real statistics, he touts that today, little companies often make more money than big companies. For example, he points out that Craigslist (18 employees) is the fourth most visited site according to some measures (his statistic).

This all is well and good but we part ways on our opinions with his belief that a "small law firm or accounting firm or ad agency is succeeding because they’re good, not because they’re big. So smart small companies are happy to hire them." This doesn't really tell the whole story, does it?

A small firm, with small overhead, often charges less -- and that can lead to success. For some, good enough is, well, good enough. But certainly large firms, especially in today's climate, no longer succeed because of their size and stature. Everyone is price (and value) conscious. That means larger firms also succeed because they're good.

Often, large (and medium-sized firms) bring together a team of attorneys with individual specialties that no small firm can match. I am currently working with a client that in one "small" matter, has issues involving not just patent protection but issues in taxation, bankruptcy, interstate & international commerce, regulatory and criminal law, all rolled into one. Fortunately, we're able to put together the right mix of attorneys to work through the problems and come up with a success overall.

As with his Airline example above, on an average day, American Airlines will fly more than 2,600 flights. Meanwhile, Jet Blue has 68 aircraft that connect 32 cities (about 290 flights a day). Let's hope that we don't all need to rely on just Jet Blue or we'll be using a lot of bus service.

Don't get me wrong, I love small. I miss my small, corner grocery store every week whenever I'm forced to go to the big-boxes that have now forced everyone else out of the area. I love the family bicycle shop and the tiny corner coffee shop. But what really matters is personal attention. What we like to call Midwestern values or some sort of hometown attitude. People want to feel appreciated and to feel that their matter is important. To be known by name and to be get attention. That's why our firm doesn't feel "large" -- we take time to notice people and to care about what matters to them.

This is something every large(r) firm needs to learn.

Maybe we're on to something with coffee and legal work. The Editor of the Blawg Review suggested we trademark Patent Baristas and set up a new shop after seeing this posting on George Lenard's Employment Blawg

(photo by Fifi LePew/Marcia Cirillo via flickr)

We won't ask why he was looking for "law & coffee" but he stumbled across this Dallas-based coffeeshop/law office combination offering a la carte basic flat fee legal services.

While I think most anything goes better with coffee, patents would certainly pair particularly well (the tedious details, you know). We'll have to consider a new venture of "Patents & Coffee" ... by the ocean. And with scones.

If you aren't familiar with them already, check out the Employment Blog for their news, analysis & comments on labor & employment law.

We'll see you at the beach.

[Updated 06/10/05. ed.]

It appears that the Commonwealth of Kentucky has it out for blogs. As detailed by Ben Cowgill on his Legal Ethics Blog, the Kentucky Attorney's Advertising Commission has taken the position that a weblog is an advertisement.

This is the result of Rule 7.02 of the Kentucky Code, which states:

7.02 "advertise or "advertisement" means to furnish any written, printed or broadcast information or any other communication containing an attorney's name or other identifying information...

Like we've posted before, does this mean I can't leave my real name at a restaurant for reservations for fear of it being deemed an advertisement?

The regulations also require the lawyer to submit a copy of the advertisement to the Commission, along with a filing fee of $50.00. In the past, the Commission has interpreted those requirements to mean that the lawyer must pay a filing fee of $50.00 each and every time the content of the advertisement is modified. Ouch!

Needless to say, this would make blogging impossible as it is not static but constantly changing. Let's hope that the Commission does the right thing in this case.

You can send your comments directly to:

Linda Gosnell
Chief Bar Counsel
Kentucky Bar Association
514 W. Main Street
Frankfort, KY 40601
E-Mail: lgosnell--at--kybar.org

Bill Heinze of I/P Updates recently posted a note about "A Step-By-Step Guide To Getting a Patent," which ran in the Wall Street Journal's Startup Journal.

The article quotes a U.S. Patent Office spokeswoman as saying that 63% to 65% of applications are eventually allowed as patents, but then displays the following "reality check:"

I used to be in-house counsel at a major university handling a large patent portfolio and these numbers are no surprise to me. Very, very few inventions ever return a great ROI. What did shock me out of my chair was the quote in the Journal article that "This stage is also where the real money starts to pile up. A patent agent or attorney will usually charge around $2,000 to prepare a patent application." Sure, maybe twenty-five years ago!

Granted, the article did give the caveat "but the price can go as high as $10,000 or even $50,000, depending on the attorney's fees and the complexity of the invention." But this does not erase the disservice of printing such a low estimate for "usually charge" -- it makes it sound like any higher cost is only due to paying higher fees to some greedy attorney.

The AIPLA Report of the Economic Survey 2003, states that the typical charge for an "Original non-provisional application on invention of minimal complexity" was $5,504 in 2002 -- more than 2-1/2 times the Journal's estimate and this was three years ago. These kinds of articles get me fired up because they create such unrealistic expectations in the public. In complex, high-technology applications for chemical and biotech arts, patent applications run well over $10,000 to draft. There is just no way around it and it's better to be blunt upfront than sorry afterwards.

You just know some inventor is going to go to a patent attorney and say "Hey, it should only be $2000 so you're ripping me off." I have clients who are really quite sophisticated who still think that a complicated invention should only cost $4-5000 because that's the number they remember from a decade or two ago. It's like saying a car should only cost $10,000 because that's what you paid in the 1980's. This doesn't even get into all of the post-filing costs of prosecution, formal drawings, continuations, appeals, foreign filings, translations, and so on. I've had many inventions where the total cost ran far into the hundreds of thousands of dollars due to the complexity and the counties involved.

It doesn't help anyone to create false hope in an unviable number. I think we should be able to expect better from the Wall Street Journal than this kind of (misleading) journalism.

We've gotten behind in some (OK, a lot) of to-do items on the site so we'll try to get caught up on some housecleaning. One item of note is that the Patent Baristas received a nice mention by Monica Bay in the Common Scold. Besides being editor-in-chief of Law Technology News, editorial director of Law Firm Inc. and Small Firm Business, and a rabid Yankees fan, she includes singing with Luciano Pavarotti in her spare time.

The Common Scold, named after the Puritan act of dunking opinionated women in the local pond, is a tough, opinionated law blog but hard to describe in a nutshell. Law news? Check. Law practice management? Check. Legal technology? Double check. Lawyer jokes? Of, course! Wine recommendations? Got that, too. Line up of all the best baseball movies? It's in there.

If you're not already a regular reader, we recommend you check out the Common Scold (whether or not you happen to be a Yankees fan).

A recent Wall Street Journal article profiled the wrangling between publishers of scientific journal and academics over so-called open-access journals. That is, many researchers would love to abandon expensive journals from publishers in favor of web-based journals and databases that offer free research articles.

The WSJ depicted this as "a raging Internet-era debate about who should control information and what it should cost." The reality is not quite just a control issue. Faculty members are now trying to compete against publishers with free or inexpensive journals of their own. Two UC scientists even organized a world-wide boycott against a unit of Reed Elsevier, protesting its fees.

For a bit of perspective now. This is a big expense -- a $5 billion global market. For just the 10-campus University of California system, this represents a $30 million a year expense on scholarly periodicals. As we wrote about in an earlier post, this issue came to a head last year when the National Institutes of Health proposed that articles resulting from NIH grants be made available free online. That prompted protests from Reed Elsevier, John Wiley & Sons Inc. and several nonprofit publishers such as the American Diabetes Association, which argued such a move would hurt their businesses. The NIH retreated and in February made the program voluntary.

I'm a big fan of Paul Kedrosky's blog, Infectious Greed, and his "musing about the money culture". Kedrosky had an interesting post recently on this debate where, from his point of view, this has less to do with a high-minded, "science can only advance when information is freely available" (an open-source mindset) than the less high-minded perspective that cash-strapped universities want to use a wedge issue "to solve a problem that they created." That is, universities insist that faculty seeking tenure have to publish in top-tier journals, which begat journals ratcheting up subscription prices, knowing that universities had created the requirement that they publish in these top-tier journals. Now, universities would like to cut back on this Frankenstein's monster.

I think that the reality is somewhere between the two. For publishers, the process of selecting and editing journals is expensive but is a necessary filter to help sort out the wheat from the vast amounts of research chafe. The nonprofit publisher of the prestigious Science magazine makes content available free after 12 months. Other publishers note that with a combination of free abstracts, free distribution to the developing world and public-library subscriptions, much of the globe already has access to what they produce.

But, let's be honest here -- Elsevier's scholarly journals bring in about $1.6 billion in annual revenue with an operating-profit margin of about 30%. OK, raise your hand if you would like to see your business maintain an operating-profit margin of 30%. Now put them down.

While one could argue that all articles should be published and the public (scientists) can figure out the genius from the quack, it is the vetting of articles through the peer-review system that provides real value. At some journals, less than 10% of submitted articles make it into a publication. This lends real authority to the work and, often, is the only way to gain tenure. But this vetting costs real money. The WSJ notes that Science gets 12,000 submissions and publishes 800 articles a year on a $10 million editorial budget. That averages more than $10,000 per published article, although typical per-article costs are between $3,000 and $4,000. So, what's the solution? Competition.

Only through innovative business models and Internet-based alternatives can pressure be applied to drive down the costs of publications. For example, Harold Varmus, a Nobel laureate and former NIH director, has co-founded Public Library of Science, offering open-access journals. PLoS charges authors a fee of $1,500 for its first peer-reviewed journal, PLoS Biology, and also distributes its contents free on the Internet. But this battle is not over as publishers are lowering their fees in an attempt to keep universities from revolting - the UC System negotiated a 25% price reduction.

Get ready to rumble!

Jeremy Richey brings us Blawg Review #7 at his Blawg heralding:

“Wisdom is the chief and leader: next follows temperance; and from the union of these two with courage springs justice. These four virtues take precedence in the class of divine goods.” –Plato

Check out the review for a nice summary of this past week's activities.

On February 2, 2005, NIH Director Elias Zerhouni announced an overhaul of agency ethics guidelines that would restrict all 18,000 NIH employees' outside consulting activities for pharmaceutical companies, hospitals, insurers and health providers "in an effort to restore luster" to NIH's "tarnished reputation.”

Under the revised guidelines, about 6,000 high-ranking NIH employees would no longer be allowed to hold stock in pharmaceutical or biotechnology companies, and current stockholders in that group must sell all shares. Other NIH employees "with no control over purse strings or policies" would be subject to a $15,000 limit on "health-related stock holdings."

The guidelines would also limit awards that scientists may receive to no more than $200, with the exception of the Nobel and Lasker prizes.

The purpose of these revisions was to "codify the reversal of a trend toward liberalized links between NIH researchers and drug and biotechnology companies that began in 1995," when then-NIH Director Harold Varmus eased consulting restrictions in an effort to speed medical advances to the market.

This shift is policy was originally supported by those on Capitol Hill. Sen. Tom Harkin (D-Iowa) said, "I welcome (NIH's) decision today," adding, "NIH's well-deserved reputation as the world's premier biomedical research agency was in danger of being tarnished." Rep. Joe Barton (R-Texas) said, "For [NIH] to do the complex work of thwarting disease and saving lives requires near-absolute public confidence in the people who conduct the research. If the notion that private gain is supplanting public service as the guiding light for health research, NIH's value to our nation will plummet".”

Less than a month later, senior National Institutes of Health scientists met with NIH director Elias Zerhouni to discuss concerns that new ethics guidelines were excessive. Zerhouni stood firm on the new rules, while sympathizing with the grievances of the scientists, according to press accounts. Among other provisions, the new rules forbid 6,000 top NIH employees from holding stock in pharmaceutical or biotech companies. This rule, of course, drives the employees crazy and they want it relaxed or eliminated altogether.

These NIH scientists are now demanding the right to invest in the same companies that are affected by their research. Does this bother you as much as it bothers me?

The Washington Post reported that House backers of legislation that would loosen restrictions imposed by President Bush in 2001 say they have 201 co-sponsors and enough private commitments to put them at or over the 218 votes needed to pass.

See our earlier report here.

The Stem Cell Research Enhancement Act of 2005 would permit federal money to fund research on stem cells taken from days-old embryos stored in freezers at fertility clinics and donated by couples who no longer need them. The cells show great promise in treating a variety of diseases and injuries because they are able to morph into all kinds of tissues, but they are controversial because the embryos must be destroyed to retrieve the cells.

Specifically, the Act states that human embryonic stem cells would be eligible for use in any research using federal support if the cells meet each of the following:

(1) The stem cells were derived from human embryos that have been donated from in vitro fertilization clinics, were created for the purposes of fertility treatment, and were in excess of the clinical need of the individuals seeking such treatment.

(2) Prior to the consideration of embryo donation and through consultation with the individuals seeking fertility treatment, it was determined that the embryos would never be implanted in a woman and would otherwise be discarded.

(3) The individuals seeking fertility treatment donated the embryos with written informed consent and without receiving any financial or other inducements to make the donation.

Opponents, with the support of House Majority Leader Tom DeLay (R-Tex.), are hoping to persuade undecided Republicans to vote instead for a bill sponsored by Rep. Christopher H. Smith (R-N.J.), known as the Cord Blood Stem Cell Act of 2005, that would create a national umbilical cord blood bank. Cord blood cells display some of the same traits as embryonic stem cells but are more limited in the types of tissues they can become. DeLay said that he was "adamantly opposed" to the Castle bill.

You may not have heard but a new Star Wars episode opened today in theatres. Yes, after more than 25 years, "Star Wars: Episode III -- Revenge of the Sith" is certainly whipping up a frenzy among the public. ABCNews reported that Die-Hard fans of the epic paid $500 to attend the premiere of Episode III. Those not wanting to end up as fodder for Conan O'Brian's insult dog, however, should wait to see it later.

Some fanatical fans have taken Star Wars as a religion -- some more literally than others -- with "The Force" usually linked to ideas from the Chinese religion Taoism. In Taoism, the universe is constructed of energy which one must become in harmony with. Yoda and Obi-wan Kenobi are spiritual mentors, often compared to Hindu gurus and Buddhist monks. But, at least one popular spiritual blog Web site, dickstaub.com, connects Star Wars to Christian themes. Then again, on another site, the author claims to demonstrate that Yoda, a character from the movie "Star Wars" is actually a subliminal symbol of The Devil. I can't tell if they're serious.

Like Karlyn, not everyone is so enthralled. There are plenty of detractors, including an "I Hates Lucas" rant at the Bynk Zone where he chastises Lucas for changing the earlier episodes and for making Anakin an angst-filled teen, extolling:

"Thanks to George's appalling lack of subtlety and talent, one of the great embodiments of screen evil is now the lame embodiment of an over-privileged teen trust kid who had to settle for a stock Benz on their birthday instead of the AMG model."

Personally, Star Wars lost me with the prequels. As though the Jar Jar fiasco wasn't bad enough, you find out in Episode II (the fifth movie?) that Anakin's mother has spent the last decade as a slave -- all while the Jedi sit around. So the Jedi are all-powerful in the Universe, can use the force and save planets but no one could get off their butts to go over and GET HIS MOTHER OUT OF SLAVERY? No wonder he turns to the dark side. Although, it could have something to do with what seems to be a galactic-wide shortage of Starbucks. No one could spend all that time flying from planet to planet without a cup o' java in the spaceship drink holder.

For those interested in the science of Star Wars, Forbes provides an interesting pondering of the chances for success of the science in the movies. Although Forbes gives little chance for a lightsaber, don't miss this detailed explanation on How Stuff Works outlining how a light saber works, including this Important Safety Information:

"A lightsaber is not a toy! Keep it out of reach of children at all times. Lightsaber locks are required in most states."

For my son, who's too young to see the PG-13 flick, he has to be content with the Lego "Revenge of the Block," which is pretty darn good for adults, too.

We'll see you at the movies.

The New York Times had a great overview of the new tax boondoggle that is allowing the biggest drug makers to return as much as $75 billion in profits from international havens to the United States while paying a fraction of the normal tax rate.

The break is part of the American Jobs Creation Act, signed into law by President Bush in October, which allows companies a one-year window to return foreign profits to the United States at a 5.25 percent tax rate, compared with the standard 35 percent rate. See an overview here. Although any company with profits in other countries can take advantage of the law, drug makers have been the biggest beneficiaries because they can move profits overseas relatively easily. Not everyone thinks it's a great idea.

As detailed, the money comes from years of using tax loopholes to shelter profits from United States taxes. Basically, drug companies claim that their profits come mainly from international sales, even though the prices of medicines are far higher in the United States and almost 60 percent of their sales take place in America. You do the math.

For example, Pfizer said that in 2004 it had only $4.4 billion in pretax profits in the United States, compared with $9.6 billion internationally, though most of its sales came in the United States. The company says that its profit margins on international sales were almost three times as high as on American sales. Let's see ... a three-month supply of 40-milligram tablets Lipitor costs $305 at Walgreens.com and an internet pharmacy in Canada lists it for $174. Hmmmm. Appartenly, they went to the same bookkeeping lesson as my brother.

Apparently, the I.R.S. lacks the resources to challenge the companies so drug companies collectively pay a federal tax rate of less than 15 percent on worldwide profits. Although the act is intended to create jobs, Pfizer announced it would cut its annual costs by $4 billion over the next three years (read: get rid of workers) while it repatriates at least $28 billion under the act.

And the nifty part is that after the break expires, companies will probably go back to stockpiling profits overseas as they wait for another tax holiday in a few years. Congress has already shown it's willing to kow-tow to these companies.

MSNBC reported that the tax savings could run about $39 billion from the legislation. Money that won't go to social security, roads, etc. I guess making the tax rates reasonable for everyone was out of the question.

Oh, by the way, the government proposes to pay for the tax breaks, estimated at $143 billion over 10 years, mainly by closing tax loopholes and cracking down on tax cheats. That's you, my friend.

Fortunately, SUVs still get a break. The new tax bill reduces but doesn't eliminate the tax break for SUVs. Autos generally do not qualify with one exception: Vehicles that weigh more than 6,000 pounds -- which include most trucks, vans and SUVs. Great. Burn more fossil fuels and get a tax break.

And what's with the name? How does a 650-page bill that bestows billions in corporate tax breaks get titled the American Jobs Creation Act? Nice title for something that contains little that requires or even encourages companies to hire workers. Sen. John McCain, R-Ariz., who did not vote on the bill, called it the "worst example of the influence of the special interests I have ever seen." That would have been a better title for the bill.

The Patent Baristas need to lobby harder to get included in the next tax bill that comes around.

The National Inventors Hall of Fame added its latest class of inductees for 2005. The new inductees include the inventors of Streptomycin and the photocopier along with Grammy-Award winner Les Paul, inventor of the solid body electric guitar in 1946.

The 2005 honorees are:

LIVING

C. Donald Bateman: Ground Proximity Warning System (GPWS); Robert Gundlach: Modern photocopier; Alec Jeffreys: Genetic fingerprinting; Dean Kamen: AutoSyringe; Les Paul: Solid-body electric guitar; Leo Sternbach: Valium.

POSTHUMOUS RECOGNITION

Matthias Baldwin: Steam locomotive; Clarence Birdseye: Frozen foods; Leopold Godowsky, Leopold Mannes: Kodachrome color film; Garrett Morgan: Gas mask, traffic signal; Glenn Seaborg: Plutonium isolation; Jacob Rabinow: Optical character recognition; Selman Waksman: Streptomycin.

Inventors may be nominated by anyone for induction into the Hall of Fame, but they must hold a U.S. patent to be considered. The nominee's invention must have contributed to the welfare of society and have promoted the progress of science and the useful arts.

The not-for-profit National Inventors Hall of Fame, located in Akron, Ohio, was founded in 1973 by the U.S. Patent and Trademark Office and the National Council of Intellectual Property Law Association.

The Baristas received a nice mention on the IPKat blog, noted for "fishing for IP stories for YOU" by Jeremy Phillips and Ilanah Simon from the Queen Mary Intellectual Property Research Institute. They write about copyright, patent, trade mark and privacy/confidentiality issues from a UK and European perspective. We get our updates from the Kats and recommend you give them a read, if you've not already.

The Washington Post reported that a three-judge panel for the U.S. Circuit Court of Appeals for the District of Columbia said the Federal Communications Commission had exceeded its authority in requiring built-in, anti-piracy technology to let broadcasters and studios prevent digital shows from being copied.

The "broadcast flag" would have been required in digital televisions and consumer devices sold after July 1. Under the rule, producers were to be required to embed a Broadcast Flag into programs transmitted via DTV signals so that, for example, users could store a program on a hard disk but would be prevented from archiving it to a DVD in order to save hard drive space. A detailed description of the regulation is available from the Electronic Frontier Foundation.

Judge Harry T. Edwards wrote:

"In this case, all relevant materials concerning the FCC's jurisdiction -- including the words of the Communications Act of 1934, its legislative history, subsequent legislation, relevant case law, and commission practices -- confirm that the FCC has no authority to regulate consumer electronic devices that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission."

While it is a setback for the entertainment industry's anti-piracy agenda, it's also going to slow down the entrance of digital media products as the industry tries to keep a tight lock on digital media.

Edwards also stated that the court could:

"find nothing in the statute, its legislative history, the applicable case law, or agency practice indicating that Congress meant to provide the sweeping authority the FCC now claims over receiver apparatus. And the agency's strained and implausible interpretations of the definition provisions of the Communications Act of 1934 do not lend credence to its position."

This means that proponents of the broadcast flag, like the National Association of Broadcasters, will be running to Congress to try to get their agenda pushed onto the public. This will make for some interesting times as Congress tries to rewrite the 1996 Telecommunications Act, set a "hard date" for the transition to digital TV, toughen the nation's laws for indecent programming and (probably) revisit copyright law after the Grokster case.

See the entire opinion here.

Now, what might you ask do these things have in common? Well, in what some reports claim to be a “surprise” announcement by Merck, the drug company announced today that Raymond V. Gilmartin was stepping down as chief executive of and that a longtime company insider, Richard T. Clark, would replace him.

Frankly I don’t see what the “surprise” is. Maybe the timing? Maybe he wanted a nice summer vacation. But, for Gilmartin to state to the board and shareholders in a December 2004 business briefing that “Merck's response to the VIOXX withdrawal was swift and effective…and the long-term strategy we have in place is still very much the right one, given the environment in which Merck and the rest of the industry will be operating in the years ahead" is delusional.

This move was greeted with little enthusiasm by investors who had hoped for a high-profile outsider to help the embattled company rather than taking the easy way out and choosing just another old-school and ‘safe’ choice. Not too creative for a company that has not introduced a new successful drug for the last few years. In fact, Merck has been one of the slowest of the big drug companies to acquire new medicines from the outside -- either through licensing deals or acquisitions. Instead, it has insisted on relying on its own internal research. Merck has failed in recent years to launch many big-selling products, with the exception of two new cholesterol drugs it is co-marketing with Schering-Plough Corp.

Now what was that about dinosaurs and extinction? I am certainly tired of seeing top executives continually being rewarded for poor performance. If the phrase “you eat what you kill” applied to Gilmartin, he’d be dead from starvation by now.

We're seeing more interest in patenting of micro- and nanotechnology inventions. Red Herring recently ran an interesting article describing a report by Lux Research entitled "The Nanotech Intellectual Property Landscape," showing that, as of March, there were 3,818 nanotechnology patents issued by the USPTO with 1,777 more pending. The report describes a "crowded and entangled landscape" where startups, researchers and large companies are filing on anything that could be a patent in hopes for a windfall in the future.

This gold rush mentality of nanotech entrepreneurs has university and corporate researchers alike filing patent applications left and right, betting that their patents will generate sweet deals later. Often, without a lot of forethought.

Lux examined 1,084 U.S. patents that represented 19,485 claims on dendrimers, quantum dots, carbon nanotubes, fullerenes, and nanowires. Lux reported that the increase in filings has overwhelmed the USPTO, often with overlapping terms like "nanorod" and "nanowire," so that patents are issuing with broad, overlapping claims, making for some difficult litigation later if commercialization ever materializes.

More on Peter Zura's Two-Seventy-One Patent Blog, here.

A summary of the Lux report findings can be found here.

Often separating the facts from the hyperbole is quite difficult. On the NanoTech Lex blog, one of the blogs by Anthony Cerminaro, there are some great suggestions for evaluating the claims of nanotechnology companies in his post "7 Questions for Reporters to Ask Nano Companies." In order to separate out the real nanotech companies from those only using the flash of nanotech language for financial gain, he suggests reporters ask a few basic questions to ascertain whether a company is truly nanotech worthy:

1. Where's the nano? Show me the nano.

2. Is nanotechnology required for your technology to work? Could microtechnology be substituted instead?

3. Does your technology provide an answer to a specific industrial dilemma, or is it a solution in search of a problem?

4. Who are your competitors/competing technologies? Why is your technology a better solution?

5. Are other researchers/companies following your lead or are you a lone ranger?

6. What's your market strategy?

7. Have you been approached by other (especially larger) companies about licensing/acquiring your technology?

Cerminaro points out that, like any emerging technology, nanotech is "an uneven amalgamation of science, finance, marketing, personalities and luck" where more than $8 billion per year is being spent on nanotechnology research and development by federal, state and local governments, Fortune 500 companies, and universities. Just be careful out there.

One of Business Week’s blogs, Deal Flow, states in a recent post that with such a fragmented market, few investors are going to be able to understand the competitive landscape. Therefore, many investors might be tempted to believe a patent means more than it does, setting some investors up for a big loss. They point out that very often small cap, nano-companies can skyrocket or plummet on the mere mention of a new patent. Let's be careful out there.

See more here and here.

The next edition of Blawg Review is up at Law & Entrepreneurship News. Law & Entrepreneurship News is a collaborative project involving Professor Gordon Smith and students at the University of Wisconsin Law School.

Law & Entrepreneurship News provides a nice collection of information particularly of interest to small businesses and emerging growth companies. The Baristas wish they had their team of editors and their Research Advisor, Bonnie Shucha, who's "paid to be an information detective" and likes Almond Joy ice cream.

Next week's edition is hosted again by Professor Smith at Conglomerate , only this time he co-blogs with Christine Hurt, Assistant Professor of Law at Marquette University. The Baristas will be hosting the Blawg Review on August 15th, right after the Common Scold. Those interested in submitting a post should see the Submission Guidelines.

The Motley Fool offered the "Lowdown on Patent Shakedowns" and talked about the rise of the patent terrorists in a recent article. It seems that the rhetoric has really ratcheted up a notch recently - there must be some intense lobbying going on.

The term patent terrorists (or the more polite, patent trolls) has been showing up quite a bit lately in the news. This refers to any person/entity that owns a patent or patents but never develops products based on them but threatens others with litigation with demands for payment of license fees.

What’s interesting is that the article seems to draw a distinction between the business of licensing patents - described as a legitimate enterprise - and patent terrorism, a form of licensing that does not follow an established code of conduct. I don’t know where this code is posted but if someone has a citation, please send me a link, I’d like to see it.

From the article, patent licensing apparently means licensing if done by a large company (the article mentions IBM and TI), which for some reason is OK even though it is described as generating huge revenue streams for companies, revenue that must come from someone. Yet, the Fools say there is definitely a code of conduct for the licensing of innovative ideas here in the U.S., and patent terrorists often cross this time-honored line.

I realize they’re fools and all but what the eff are they talking about? And why do the Fools even care? If one is concerned primarily with investments in companies -- companies that could be on either side of the equation -- don’t you just want the company that reaps the greatest profit? Couldn’t a company that decides to license a product without commercializing it be a good investment? And how did the Fools come to be the arbiters of what practices in licensing patents will be considered legitimate?

The Fools seems to think that licensing is acceptable only if there is some form of return in kind, that is, cross-license agreements. The other "acceptable" scenario is if a company pays licensing fees to a patent owner and the ideas can give the company a significant boost in either time to market, profitability, or competitive advantage. The Fools say that in this case, the inventors "often provide consulting, design services, or other forms of technical assistance." Both of these forms of patent licensing are good because they represent collaborations between two parties.

Patent terrorism, though, is an evil presumably because it doesn’t include either cross-licensing or help for the licensee with product development. Therefore, the result is not legitimate but is instead, a shakedown. The Fools even mention the target's "so-called 'infringing' products."

I’m not sure how the Fools would classify Ampex Corp., whose share price rocketed from $1 to $40 (now $32). Founded in 1944, it had been one of Silicon Valley's greatest innovators. Ampex then hit a long, money-losing slump until it started aggressively enforcing its patent portfolio. Ampex filed lawsuits against large consumer-electronics companies, including Sony and Eastman Kodak, for infringing a patent on a method for displaying digital images. Royalties from that patent helped Ampex generate a profit of $47.1 million in 2004 on revenues of $101.5 million

Does that make it illegitimate? It's funny that the Fools often recommended tobacco stocks in the past because of the massive return on investment and have now come out against licensors for asserting their rights. While the Baristas aren't sure what the Fools have been smoking, they can’t help but notice the coincidence that this article came out just as Intel’s patent attorney is on a road show campaigning against those pesky patent trolls.

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Update: I received this Ampex response to BusinessWeek from Dan McGlinchey, Senior Vice-President, Emerging Growth Equities Ltd.

In what may be a sign that blogs have jumped-the-shark, the current issue of BusinessWeek has a cover story emblazoned with large letters that "Blogs Will Change Your Business. Look past the yakkers, hobbyists, and political mobs. Your customers and rivals are figuring blogs out. Our advice: Catch up...or catch you later." They cite some sobering statistics that there are now over 9 million blogs with about 40,000 sprouting up each day. Granted, a lot are the daily musings of the likes of Girly Shoes, who writes often about her last job (see "The Last Post Ever About My Old Job"). But others make you take a closer look at the business case for the use of a blog, e.g., the FastLane Blog set up by GM's Vice-Chairman, Bob Lutz. While the blog is carefully edited by the PR department, GM deserves some credit for opening up a window to one of its most senior executives. (Note to Bob: Love the site but you still need to build better cars)

This article may also come from the fact that BusinessWeek itself has spawned a half-dozen of its own, professionally run blogs, including a "new blog on blogs" called Blogspotting. Although, if you look at the posts on Blogspotting, it seems to have not found it's way yet. It features posts pondering "Mainstream press barely mentions blogs" and "Mainstream media's alleged strategy on blogs." Blogspotting even asks the question "What do you want this blog to be?" I suppose it's nice they asked but you'd think with having professional staffers running the blog they'd know what they wanted.

BW has several other blogs (all run by professionals) like Tech Beat, posted by a half dozen staffers. This has a fair bit of useful information, including the ironic Overcoming Blog Overload post on tagging.

But, I could be misguided. The Business 2.0 blog reported that the advertising on BoingBoing.net brings in about $500,000 a year in change for the group. Maybe the Baristas need to start talking to Starbucks about a joint venture.

Best Barista, Troels Overdal Poulsen of Copenhagen carried 12 liters of fresh, whole milk from his native Denmark to Seattle in beating five other finalists winning the sixth annual World Barista Championship.

The contestants competed in an against-the-clock competition that required each barista to make four espressos, four cappuccinos and four "signature" drinks in just 15 minutes. They were also allowed 15 minutes to set up and clean up, and were judged in part on cleanliness.

Poulsen’s signature drink, called ESB for "enhanced sensory balance," mixed pepper, espresso and lavendar. More here. Download poster here.

As Benjamin Franklin wrote in 1789, "Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes." It's Tax Day and all the little people have to pay their taxes by today to the Internal Revenue Service. Well, at least April 17 is Tax Freedom Day! Just think, you only had to work 107 days to pay your share of taxes to the government.

The Baristas, of course, are sunning themselves and sipping Long Island Iced Tea in the beautiful Cayman Islands. (There are no taxes in the Cayman Islands - government revenue comes from indirect taxes such as customs duties, stamp duty and annual fees levied on corporations.)

As we're enjoying the proceeds of all the money we make off our Patent Baristas blog - which have been deposited in an Offshore Holding Company - we thought this would be a good time to ponder a few items about taxes.

The first U.S. income tax was in 1862 when the federal government was raising money for the Civil War. The first permanent U.S. income tax didn't come along until the 16th Amendment in 1913. The deadline for paying taxes, though, wasn't on April 15 until 1955 when it was moved later in the year to give the Tax Man more time to hang on to your money.

It's funny to imagine that a system designed so that only the wealthy paid taxes currently puts middle-class taxpayers in the rich category. Now, the alternative minimum tax, originally designed to catch just 155 super-wealthy Americans who paid no taxes at all, will hit nearly 3 million taxpayers, up from fewer than 200,000 in 1990. Unless something is done, some 20 percent of taxpayers will be caught in the AMT net next year, up from 4 percent currently.

"Worried about an IRS audit? Avoid what's called a red flag. That's something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That's a red flag." -- Jay Leno

But the Baristas are not the only ones who can benefit from traveling to the Caribbean. Intellectual property is often the principal source of value and revenue for pharmaceutical and biotechnology companies. To lessen the tax burden, companies should consider whether to place their intellectual property rights in a holding company outside the United States.

Typically, this is a subsidiary intellectual property holding company in a tax-free foreign jurisdiction. The offshore holding company then grants a license to the parent company or other third parties in exchange for royalty payments. The goal, of course, is to minimize the parent company's tax burden and limit taxation on revenue. Not only should the royalties generated by this offshore subsidiary be tax-free, but also generally the profits made abroad aren't taxable in the United States until they've been repatriated.

Sound good? Consider these tidbits:

1. You need to establish the holding company early in the development of your intellectual property — before the IP has significant value (presumably prior to commercialization). You will be taxed on the transfer of the IP offshore, so you'll want to soften the bite. Consider seeking the advice of a valuation expert to help substantiate the IP's value.

2. Once IP rights are transferred, you usually pay royalties to the holding company in exchange for use of the IP. When you deduct these royalties from your company's taxable income, the royalty rates become subject to scrutiny by U.S. taxing authorities. To lessen such scrutiny, establish a royalty rate as if it were between third parties in an arm's-length transaction. Due to the complexities of setting royalty rates for IP — especially noncommercialized IP — seek advice from an independent expert.

3. Depending on which foreign jurisdiction you choose, your subsidiary may be required to withhold a percentage of the royalty payments for tax purposes. This is why you want to choose a tax-haven country with a favorable U.S. tax treaty — or no treaty at all. Jurisdictions with no U.S. tax treaties and no corporate tax infrastructure may appear the best choice, but in this post-Enron* business climate, U.S. tax authorities have heightened inspection of offshore holding companies.

Warning: Do not make this kind of move without seeking adequate legal and tax advice for your jurisdiction in order to pass scrutiny from the IRS.

Enjoy the weekend. You deserve it!

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*Enron had about 800 Offshore Companies set up in the Cayman Islands for tax purposes. This was not the reason, by the way, that Enron had problems, in fact, it saved them millions of dollars in taxes. It was reported that Enron has not paid Federal income taxes for five years (since 1997) due to the tax credits, etc.

The premier issue of Blawg Review was hosted Monday, April 11th, at Evan Schaeffer's Notes from the (Legal) Underground with 31 noteworthy posts from this past week in the blawgosphere. Presented as "a group of law bloggers who are committed to making the best of the blawgosphere more easily accessible and enjoyable to read," Blawg Review is a site for the review of law blogs and postings.

The Baristas have been tied up (Karlyn's move and all) and didn't manage a submission in this inaugural edition but we plan to be a regular contributors to this tremendous effort. The Blawg Review will be hosted by the Baristas on August 15th so be sure to check back.

I realize there are about 9 million blogs out there so new sites do not generate the excitement they once did. And while I can only monitor a handful, I keep finding news blogs that are quite worthwhile. In case you didn't see these, I wanted to mention a couple of new ones noted by Steve Nipper.

The first is billed as "the final resting place for all of our thoughts, comments, insight, podcasts, whitepapers, action figure order forms, etc." to come out of the ABA Techshow meeting: the rethink(ip) blog.

This is another effort (evolution, really) by Douglas Sorroco, Stephen Nipper, and Matthew Buchanan to go with their pocasting site RETHINK(IP) ALOUD (in MP3 format). These guys are like the Army. They do more before 9 a.m. than most people do all day.

Also of note, the folks at TechnoLawyer.com have officially launched the TechnoLawyer Blog, a legal technology resource that will supplement the TechnoLawyer website. It is cited as "an amalgam of pithy commentary, industry news, and other helpful information compiled by Neil Squillante and Sara Skiff."

Extreme Makeover – Kids Edition:

A Cookie is a Sometimes Food? Sesame Street Re-packages its Beloved Cookie Monster

What is wrong with America these days? Must we be soooooooo PC that even Sesame Street’s beloved blue furry Cookie Monster needs to be harnessed in and white-washed like so much else in our culture (or now lack thereof)? Yes, it is sad but true. When Sesame Street opens its 36th season, Cookie Monster is going to learn some lessons about moderation and will now advocate eating healthy. Get this - his "C is for cookie" song has been replaced with a new song -- "A Cookie Is a Sometimes Food." That's right, the Muppet who once sang, "C is for cookie, that's good enough for me," is advocating eating a healthful diet and learns there are "anytime" foods and "sometimes" foods.

According to Rosemarie Truglio, the show's vice president of research and education, the focus of "Sesame Street" changes every year. This year, the show will focus not just on teaching numbers and letters but also on emotional and physical health. With the rise in childhood obesity, Truglio said "Sesame Street" is concentrating on the need to teach children about healthful foods and physical activity. This season, each episode opens with a "health tip" about nutrition, exercise, hygiene and rest. That will not go very far in my house.

"It's not a perfect solution. It's a 'Sesame' solution," admits "Sesame Street" executive producer Lewis Bernstein. "When we sat down to do the new curriculum, we thought, 'what are we going to do with (Cookie Monster) in health?' We are aware that children eat cookies. We've got a Cookie Monster. He's not going to become a Carrot Monster. We're not trying to get children to not eat cookies, but to eat other things, too."

And, in fairness to Bernstein, Cookie Monster will still get to eat cookies sometimes (remember, they're a sometimes food), including the Letter of the Day segment where poor Prairie Dawn habitually watches in dismay as Cookie Monster devours both the Letter and the cookie it's stamped on.

Now don’t misunderstand me, I am all about healthful eating and lifestyles. With childhood obesity rates soaring, something clearly needs to be done with our super-sized nation. Personally, I exercise 4-5 times a week in my own make-shift home gym, a lot of times with my kids present and watching what I am doing. I am careful about what I eat and try to purchase and serve healthy foods. My kids watch what I eat, purchase and serve. What I don’t do is preach to my kids about a healthy lifestyle and that they watch what they eat. Anyone who knows kids knows that is about as effective as putting a steak in front of a dog and asking the dog to not eat it. Kids learn best by the examples we as parents and family set everyday, year after year, as to what is acceptable and what is not acceptable.

Sesame Street certainly has a great idea about teaching these healthy lifestyle concepts to children and hopefully, the Sesame Street characters will be heard by our kids. But this cannot be the only voice they hear or examples they see. And someone needs to say that to our coach potato nation.

If you are like me and enjoy the economics of law practice as much as the practice itself, then you're probably familiar with Bruce MacEwen's blog, Adam Smith, Esq., where "law firm management comes under the microscope." (and what can I say about a guy who can work in the word "Jesuitical" in a blog article?*)

In a recent post (Deal Market is Back! But Hey, What About the Rest of Us?), MacEwen mentions an article by Aric Press describing that changes are afoot in the profession and that things are essentially unchanged, and that "both sentiments are exactly correct." This is because clients are dividing their legal work into two distinct categories:

Column A: These are the deals, cases, and issues where price is no object;

Column B: Everything else.

That is, companies hire firms at a money is no object level for their (perceived) mission critical work and then trying to get the rest of the work done at cut rates. I agree with the assertion that unless you have a tony NY address, you're not going to get the bulk of your revenue from Column A so that leaves a lot in Column B. What I have trouble with is how things get prioritized in column A versus B. My experience is that many clients (not ours, of course) are often penny-wise, pound-foolish. That is, they ask that you "commoditize" work that cannot be easily reduced to a commodity, e.g., patent work. They put Column A patents into Column B.

Clients will say they want an alternate billing arrangement (read: capped price) for patent applications when they really just want to lower the cost; not increase the value derived. Patent applications are as diverse as the inventors themselves. Almost without fail, the invention is presented as (quote) Just a simple invention (unquote) but then the inventor changes the invention in mid-stream or decides that he really has several related inventions. Recently, I had a single invention balloon into over a dozen applications - each one more complicated than the first - as we delved into the gritty details of just what it was the inventors had discovered.

Too often, patentees look to get a patent as cheaply as possible only to turn around and spend like there's no tomorrow in defending it. Often a lawsuit that could have been avoided had the patent been better crafted in the first place. Personally, I would not want my patent attorney to be incentivized to stop carefully crafting an application because too much time is being spent. Not if this patent covers my company's core technology. What, indeed, is to be done?

I don't mean that I'm against alternative arrangements. They can often make sense - just not always. Earlier, MacEwen put together the "Adam Smith, Esq." official "Savvy Blawgers Panel," a brain trust of outstanding members of the legal blogosphere and asked about the future of the billable hour (Savvy Blawgers Query #2: The Future of the Billable Hour). The answers often derided the billable hour as bad for the client, good only for the lawyers. But is this really so? No one pretends that the billable hours is perfect or all-wise but, as it has been said about democracy - it's the worst form of Government except all those other forms that have been tried from time to time.

I agree with Dennis Kennedy's take on the billable hour, that it is, by its definition, not the best way to make money for lawyers. There is only so much you can charge per hour. There are only so many hours in the day. Unfortunately, when clients ask for a patent application to be an alternative billing arrangement, they are asking that it be shifted from Column A to Column B. That is, they are treating it as a simple routine matter -- just file form 123PDQ and you're done. But patent drafting is not that way. It is an art, a craft, a give-and-take between the patentee and patent office.

This is not to say all patents must be in Column A. Certainly, sophisticated clients can and do decide that they do not intend to procure the best patent claim scope but merely some claim scope, knowing that they will never enforce the claims. Many companies just want patent numbers. For some, this is a way of keeping score. For others, it's a way to provide tender to barter with if a competitor ever comes knocking at their door.

There's certainly nothing wrong with trying to get a low cost patent - as long as careful thought goes into the decision. If one decides that a piece of intellectual property is important to the company's mission and business plan, then it should be treated like column A. If it is nothing more than a commodity-like procurement, then it could be a Column B item. Just be sure you can tell the difference. Like the saying goes, you can have cheap or good ... just not both.

Here's to savvy blawgers ... and clients and their attorneys.

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*Jes'u·it'i·cal (adj). One given to subtle casuistry -- the determination of right and wrong in questions of conduct or conscience by analyzing cases that illustrate general ethical rules.

In case you have not heard already from the many posts out there, Kevin Heller (Tech Law Advisor) and Evan Schaeffer (Notes from the (Legal) Underground) have rolled out Blawg Review, a site for the review of law blogs and postings.

It is not often you see a collaborative project like this from a group of lawyers on any topic, let alone blogging. As they put it, this site represents "a group of law bloggers who are committed to making the best of the blawgosphere more easily accessible and enjoyable to read."

The premier issue of Blawg Review will be hosted next Monday, April 11th, at Notes from the (Legal) Underground, where Evan Schaeffer is now accepting submissions all this week.

Blawg Review will have three general purposes:

Blawg Reviews: Readers and other bloggers will be able to submit reviews of various law blogs (hopefully with some thought involved). Since this covers all law blogs, this should prove to be a good way for specialty blogs to get noticed by those outside their practice niche. As they point out, "Reviews don't have to be serious; we'll accept hilarious."

Blawg Review Hosting: Various law bloggers are invited to host an upcoming Blawg Review on their own law blog, just let them know the Date Available that you would prefer to host, by sending an email addressed to: host at blawg review dot com

Blawg Postings: Everyone is invited to submit their own law blog posts for inclusion in the weekly Review by sending an email to: post at blawg review dot com. Apparently, using "technology that amazes us", this email address automatically forwards submissions to the attention of the next host.

Check out this great effort. We think this will be quite successful and, besides getting people noticed, will provide topics to people who would not otherwise see your posting. Sometimes, you don't know what you don't know. You know? Note: Not addressed is the question "Are Law Blogs Advertising?" as we posted earlier here. I don't think it's a problem with this very unique method of rotating hosts for the Review but let me know your thoughts.

Note that J. Craig Williams, on his blog May It Please the Court, after noting that blogging as a phenomenon is reaching epic proportions, believes they are ads noting that it would be difficult to identify a purely altruistic blog.

For the opposing view that blogs are not ads, see the post by David Giacalone of f/k/a ethicalEsq here.

I've held the view that a blog, even in one's own field, doesn't always constitute an advertisement but I have to admit it's vague. Hence, the Baristas have posted "This May be an Advertisement" on our own site. Vague enough for you?

The Baristas received a nice mention in Ben Cowgill's new blog, the Legal Ethics Blog where he mentions our web disclaimer.

Cowgill writes: "So what is the ethics angle of this post? It's this: I think the disclaimer is just right because it says what it needs to say while providing a little humor which actually makes it more effective in getting the attention of a sophisticated audience."

We'll keep trying to provide a little humor to a dry subject. In the meantime, check out the Legal Ethics Blog on issues related to professional ethics and don't miss the talking avatar on the About page.

[Update: The correct name of Ben Cowgill's Legal Ethics Blog has been added. -Ed.]

Those who know me know I have an attention span that's measured in microseconds. Therefore, when people started talking about podcasts and podcasting as "the next big thing", I let out a groan thinking this would be yet another thing I wouldn't be able to pay attention to long enough to benefit. But after giving it some thought, I'm starting to reconsider. After all, I do listen to some streaming audio as a way of time-shifting my listening and for some programs (like Car Talk on NPR with Click and Clack) reading the transcript on-line just wouldn't provide the same enjoyment as listening - or at least it wouldn't have nearly the same impact.

And so I tuned in to the new intellectual property law podcast put together by Douglas Sorroco, Stephen Nipper, and Matthew Buchanan as a joint venture called RETHINK(IP) ALOUD (in MP3 format) - a sort of three-way, long-distance intellectual property law podcast (now being called a blawgcast).

I was a little taken aback by the size of the first casting (21MB!) but I decided to give it a try. I found it engaging and enjoyed that it was very professional - including some cool guitar intro music ['Hastings Street' by Blind Blake and Charlie Spand]. It was also nice to hear some of the real "voices" behind Phosita, Promote the Progress, and the Invent Blog.

They're asking for any comments and/or suggestions and/or praise to: rethinkip@gmail.com. I recommend you give it a whirl as an alternative format for getting some IP updates and then send them your thoughts.

Also of note, if you are interested in blawgcasts, there is now one easy RSS feed to get updates from the new site called blawgcast.com, put together by Kevin Heller (Tech Law Advisor) and Evan Schaeffer (Notes from the (Legal) Underground) - a sort of one stop source for all your legal podcasts.

Both of these efforts are first rate and deserve high praise. We look forward to the evolution of the species.

Damon Darlin at B2Day posted a note about Postal Watch being up in arms about the Postal Service using Special Cancellations of stamps with little characters from the animated movie, Robots.

I have to admit, this is one of those items that seems like an abuse of governmental powers. Actually, I don't think it is as bad as when the commercial character is actually on the stamp, but pretty bad.

"Special Cancellations" are generally used to commemorate a ubiquitous non-commercial event but here, the Post Office is printing an Ad for the Twentieth Century Fox/Blue Sky movie "Robots" on billions of cards and letters.

PostalWatch points out that the mail is NOT the property of the Postal Service to deface and alter at will. The Postal Service is not free to sell, trade or otherwise barter with private for-profit business interests to piggyback commercial advertising messages onto the face of people's cards and letters.

According to the Domestic Mail Manual (DMM):

2.0 Special Cancellations - Special cancellations are authorized only if the scheduled observance either is for a national purpose for which Congress has made an appropriation or is of general public interest and importance for a definite period and not conducted for private gain or profit.

A robot movie is an important national purpose? Postal officials claim the deal is a cross-promotional licensing arrangement and that "no money changed hands." Great. Like the Post Office needs to advertise. I'm not going to be pacified unless I get my own cross-promotional licensing arrangement to have the Baristas put on a stamp in exchange for a Post Office Ad on patentbaristas.com!

There seems to be quite a few protests of India's passage this week of a new patent law that prevents domestic drug companies from making low-cost generics of expensive Western medicines, saying millions of poor people across the world will be affected.

The changes in patent rights come from India's membership in the World Trade Organization (WTO), which requires India to enforce stricter patent rules for its pharmaceutical industry. Groups like Oxfam seem to think that the problem lies with the TRIPS agreement (trade-related aspects of intellectual property rights) and that it should be reformed. Under TRIPS, India had to introduce amendments to its existing patent act by January 1, 2005. Unfortunately, the Indian government waited until the very last minute and then had to rush it through the parliament.

International aid groups believe the new law will limit the supply of cheap generic drugs to impoverished nations, threatening the survival of AIDS and cancer patients - when almost 50 percent of 700,000 HIV patients taking antiretroviral medicines in Africa, Asia and Latin America rely on low-cost drugs from India. A month's dose of a generic AIDS drug cocktail costs US$30, or 5 percent of similar drugs sold by Western producers.

There were some last minute amendments were to tighten the definition of "new inventions" to prevent drug companies from winning new patents by making minor changes to existing drugs. The law also allows patents to be challenged even before they are granted. On the other hand, the bill says the government's ability to override patents requires a wait of at least three years before this is allowed, except in a national emergency.

Amazingly, even though India has some 5.1 million HIV-infected people (the second largest number after South Africa) it is NOT seen as a national emergency(!).

The issue does not seem to be one of patents or drug company profits (whether the drug company in question is located in the West or in a developing nation). The issue is really one of how can affordable health care be provided to those who need it and who should pay for that care if they cannot? The answer can't be to place the entire burden on drug companies who then shift the cost to countries paying full freight. Instead, all wealthier developed nations need to step up and provide financial assistance to bring the costs down for those in need.

Then someday, just maybe, a drug company will have the resources to finally discover a cure.

Resources: the World Health Organization.

More here.

As brought to light by blogger B2fxxx there was a story in the Economist about a recent study published in Science magazine concerning the viability of gene patents in general. See here.

Jordan Paradise and her colleagues at the Illinois Institute of Technology, published a study stating that more than a third of the patents they examined had claims that did not meet the requirements for patentability, that is, useful, novel and non-obvious, as well as meeting the requirements for description and enablement under section 112.

The group looked at gene patents including include not just human gene sequences, but patents that cover any human genetic material, such as mutations in a gene, or diagnostic methods that utilize human genetic material that would effectively preclude the use of that material by others. They chose genetic diseases that were subject to "public attention" and for which problems in gene patents could potentially have an impact on research and health care. Collectively, they examined 1,167 claims in 74 patents on genes related to nine diseases. If a claim failed to meet one of the legal requirements for a patent, it was deemed "problematic."

In the judgment of the authors, 38% of the specific claims were problematic and 73% of the patents contained at least one such problematic claim. As for the causes of the problems, slightly more than 40% were due to concerns about utility - that is, whether the invention could yield correct results. Slightly less than 40% raised concerns because their descriptions were inadequate. The remainder failed the novelty and non-obvious requirements, or lacked "definiteness."

Without seeing the actual specifications and claims in question, it is difficult to assess their results and conclusions. They cite some problems that seem straight forward, such as patents claiming more than what the inventor actually discovered, for example, claiming the sequence of a protein within a patent and then also asserting rights over all of the DNA sequences that encode for that protein without describing those DNA sequences. That would seem to be a clear cut problematic claim. However, they noted written description problems by stating that "One patent covers not only the particular polymorphism the inventor discovered but all other polymorphisms discovered in the future by anyone else in a region encompassing over 12 mega-base pairs (Mbp)." If true, then this would seem to be also problematic.

There are some inherent problems with any study where patent claims are deemed problematic by the authors, rather than the courts, so it's difficult to say if what the authors deem problematic would ultimately be determined invalid by a court. While problematic claims can act as a drag on commercialization, there isn't any indication it is a worse problem in biotech versus other, high-tech specialties.

I don't think it's really new to point out that biotechnology patents are difficult to prosecute and often have less than optimal claim language. It feels a little like complaining about the weather. I agree with the authors that one potential remedy may be more training or special selection of patent examiners. Not to mention better pay so that better Examiners are attracted from the beginning and have more incentive to stay on board longer. I feel the little hairs on the back of my neck bristling, though, at some of their ideas such as having biotech applications reviewed by the USPTO with different levels of scrutiny. I think this will meet considerable resistance, if you agree that Anything Under the Sun is patentable. Besides, what specialized patents couldn't be improved with higher levels of scrutiny? I always have trouble with making any particular area more "special" than another.

I do like the author's suggestion that the USPTO could also change its financial incentives to promote quality over quantity. Currently, patent examiners are encouraged with monetary bonuses to grant patent applications since patent examiners receive a salary bonus based on the number of final allowances or rejections of a patent authorized. Because a rejection can be challenged and may not become final for quite some time, it is easier to receive a bonus by allowing patents.

Let's hope the changes announced by Commissioner Duddas will improve everyone’s circumstances.

See more on the Town Hall meeting here.

Legal Times published an article detailing the prevalence in the business of corporate espionage using the Freedom of Information Act (FOIA) to gain competitive information. Companies are increasingly turning to teams of hired lawyers and analysts who request all data involving a competitor. Targets have included Boeing, MCI WorldCom Inc., McDonnell Douglas, and the General Electric Co. At stake are potential trade secrets including detailed line item pricing schemes and labor rate data - sometimes more than 10,000 pages of detailed cost breakdowns.

The Freedom of Information Act is traditionally thought of as an instrument used by reporters and the public to obtain information on how the federal government operates and how tax money is spent. But during the past 20 years, a whole industry has sprouted that uses the FOIA to gain intelligence on companies doing business with the government and then sells the info to competing contractors. Typically, the FOIA request is not made by an intermediary so that the real party of interest remains private.

Meanwhile, targets try to do all they can to prevent such disclosures and, if they cannot persuade the government to keep the information confidential, they'll go to the courts and file what is known as a reverse FOIA action. However, government agencies will agree to release detailed pricing data since that increases competition among contractors in order to secure better deals for the government.

The Court of Appeals for the District of Columbia Circuit has defined a "reverse" FOIA action as one in which the "submitter of information -- usually a corporation or other business entity" that has supplied an agency with "data on its policies, operations or products -- seeks to prevent the agency that collected the information from revealing it to a third party in response to the latter's FOIA request." CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1133 n.1 (D.C. Cir. 1987). Typically, the submitter contends that the requested information falls within an Exemption of the FOIA, [5 U.S.C. § 552]

Update. See the Ten Excemptions: Download file

In a "reverse" FOIA suit "the party seeking to prevent a disclosure the government itself is otherwise willing to make" assumes the "burden of justifying nondisclosure." A challenge to an agency's disclosure decision is reviewed in light of the "basic policy" of the FOIA to "'open agency action to the light of public scrutiny'" and in accordance with the "narrow construction" afforded to the FOIA's exemptions.

The seminal case in the reverse FOIA area is Chrysler Corp. v. Brown, in which the Supreme Court held that jurisdiction for a reverse FOIA action cannot be based on the FOIA itself "because Congress did not design the FOIA exemptions to be mandatory bars to disclosure" and, as a result, the FOIA "does not afford" a submitter "any right to enjoin agency disclosure."

Federal trial and appellate courts across the country are split on whether certain pricing information should be released. In one recent case, a federal appellate judge in the District pointed out that the Justice Department has never litigated the fundamental question of whether prices charged to the government for specific goods could be confidential commercial information or trade secrets under FOIA or the Trade Secrets Act. Most cases turn on whether the company whose data is at stake can show that releasing the information would cause substantial harm.

More alarming is one court's holding that, "[t]he harm from disclosure is a matter of speculation, and when a reviewing court finds that an agency has supplied an equally reasonable and thorough prognosis, it is for the agency to choose between the contesting party's prognosis and its own." McDonnell Douglas, 215 F. Supp. 2d at 205; accord CNA, 830 F.2d at 1155).

However, the U.S. Court of Appeals for the D.C. Circuit has twice ruled that detailed price information should stay confidential. In one opinion from 1999, Judge Laurence Silberman wrote that the government failed to claim any legal authority for releasing line item pricing information involved in McDonnell Douglas' contract with NASA: "If commercial or financial information is likely to cause substantial harm to the person who supplied it, that is the end of the matter, for the disclosure would violate the Trade Secrets Act."

Inventors should be aware of the implications of FOIA since an invention is not patentable in the US if it has been described in a printed publication more than 1 year prior to filing a U.S. patent application and foreign filing rights are lost immediately. A grant is considered published when it is considered accessible, that is, after the grant was allowed and it had been indexed and a copy of the proposal could be obtained through a request under FOIA

It would therefore be possible for a research scientist, with a long-term federal (or state) grant, to propose a course of research and speculate on findings. Then, when the studies are concluded, this same scientist could find that the technology developed during the course of the research is barred from patent protection by the researcher's own proposal. To prevent a bar, and to fall within the exceptions of the FOIA, each individual page should be marked "Confidential" and a legend affixed to the front page that states:

"Confidential. This document, or portions of it, contains confidential information that is, or may become, the subject of a United States patent application and is important to future commercial efforts based on such confidential information. Accordingly, this document and the confidential information contained herein are exempt from disclosure under the Freedom of Information Act, Sections 552(b)(3) and (b)(4) of Title 5 of the United States Code and corresponding regulations of United States government agencies."

In addition, a cover letter should accompany each grant proposal submitted to an agency of the state and federal government providing a rationale for keeping the proposal confidential and request that the applicant is notified of all requests the agency receives for copies of the proposal under the FOIA.

Specific details concerning individual granting agencies are available from each agency. In addition, some changes in the language used in the proposal could help future patentability. If possible, avoid direct and definite predictions concerning the results of the research. Statements in a proposal that "the research should lead to outcomes such as ..." or "I believe that the research will result in ..." may constitute a public disclosure of a potential invention.

As you may have seen in the news (see, for example, here), Microsoft is now calling for reforms to the U.S. patent system in four areas: improving patent quality, reducing excessive litigation, improving the coordination of international patent law, and increasing the accessibility of patent laws for small companies and individuals. What's not to like?

While some of Microsoft's gripes are certainly legitimate, they're not all together novel or ingenious. Microsoft General Counsel Brad Smith is advocating:

a. An end to patent fee diversion to other government uses. The U.S. Patent and Trademark Office has seen annual applications triple to more than 350,000 since the 1980s while funds to support the agency have not kept pace. Smith stated that this would best address patent quality and limit a system of "patent litigation lottery." You'd be hard pressed to find someone who's against this -- other than the recipients of fee diversions, of course.

b. A special court to hear all patent cases at the federal district level, a la the Court of Appeals for the Federal Circuit, in an effort to bring consistency and predictability to patent litigation. Smith asked for a system that could alert the USPTO about questionable patents during the review process itself and not just after issuance through litigation, i.e., allow administrative challenges.

c. A need for patent plaintiffs to demonstrate that they or their company would face irreparable harm that could not be compensated by monetary damages before a court issues a patent injunction on a defendant. As pointed out by patent litigator Dave Schmit, the current standard for getting a temporary injunction is not different in that one must show: (1) likelihood of success on the merits; (2) irreparable harm to plaintiff, i.e., a non-economic harm that cannot be compensated for by monetary damages; (3) lack of irreparable harm to defendant in granting the injunction; and (4) that public interest is met. Therefore, it is not clear exactly what higher standard is being requested by Microsoft.

d. The coordination of international patent offices and their legal standards including mutual recognition of patents in Europe, Japan and the United States. Raise your hand if you've never heard this one. What, no one? Microsoft also lambastes the 'first to invent' standard for awarding patents pointing out the obvious that very other country applies a 'first to file' standard. Certainly not an original idea but maybe Microsoft has the clout to see some movement on this.

e. Finally, Smith called for the elimination of patent filing fees for individuals and small businesses. I don't know what to think about this idea other than it seems like the way some financial aid works where income alone doesn't really tell you the financial status of someone. Is this really the fairest system given that some individuals and small businesses have more economic power than many large businesses? What about eliminating taxes on individuals and small businesses?

Last year, the patent office received 376,810 applications, up 6 percent from the 355,418 applications in 2003. About 50 percent of the requests are for technology such as semiconductors, computer hardware and software, and telecommunications. And, as many of you are acutely aware of, the average wait is about 2-1/2 years from the time of filing except that patents for computer technology and biotechnology products are taking up to five years or more. Unfortunately, everyone seems to agree that the situation probably will get worse before it gets better.

A patent was awarded to the U.S. Department of Agriculture and the multinational company WR Grace & Co. in 1995 for the fungicidal properties of seeds extracted from the neem tree, native to India. But, the European Parliament's Green Party, India's Research Foundation for Science, Technology and Ecology, and the International Federation of Organic Agriculture Movements fought to have it revoked on the grounds of biopiracy.

'Biopiracy' describes a process in which living resources or traditional knowledge and practises are patented, thus applying intellectual property restrictions to their use. The resources in question are predominantly from developing countries, and are the subject of patent applications by companies in developed countries. The neem tree has been used for thousands of years in India in agriculture, public health, medicine, toiletries, cosmetics and livestock protection. According to advocates of the biopiracy rule, a patent application should always be rejected if there is prior existing knowledge about a product.

The patent was revoked five years after it was awarded, but the decision was appealed by the Department of Agriculture and WR Grace. The decision on March 8 brings the ten-year dispute to a close.

The basis of the challenge to the patent was that the fungicide qualities of the neem tree and its use had been known in India for over 2,000 years. The neem derivatives have also been used traditionally to make insect repellents, soaps, cosmetics, tooth cleaners and contraceptives. In 1995, WR Grace patented neem-based bio pesticides, including Neemix, for use on food crops. Neemix suppresses insect feeding behaviour and growth in more than 200 species of insects. But the EPO agreed that the process for which the patent had been granted had actually been in use in India for many years.

Biopiracy advocates are trumpeting the decision as a victory in the fight to stop big business exploiting plants and genes at the expense of poor people in the developing world. They believe the livelihoods of poor farmers in developing countries will be undermined.

Granted, patents should not be granted on known materials but many developing countries want to deny patents for new uses of a known product or process, including second use of a medicine. I believe in the old saying that only God works from scratch, the rest of us have to start with known materials. Why would any country want to stifle innovation of new uses for known materials? It sounds a little like cutting of your nose to spite your face.

See more here.

In Seattle this week, baristas will compete in the Specialty Coffee Association of America’s 2005 U.S. Barista Championship (USBC). Alas, the Patent Baristas will not being attending, given that they just enjoy drinking coffee -- not making it. The Barista Championship will feature fifty-five of the most skilled baristas from around the country creating some of the world’s finest coffee concoctions.

Competitors will prepare and serve 12 coffee drinks – four espressos, four cappuccinos and four original signature drinks of their own creation – all within a 15-minute timeframe. Judges will focus on station cleanliness, taste, beverage presentation, technical skills and total impression.

While we don't know beans about running an espresso machine, we'd like to show support of some of our favorite people on earth. Send us a photo of yourself at the competition and we'll post it here!

The Finals and Award Ceremony will be Sunday, March 13. More info here.

As a follow-up to my Friday, March 4 post regarding Biogen’s MS drug Tysabri, in an “unrelated” event, Biogen announced the resignation of the executive, Thomas J. Bucknum, effective immediately, and gave no reason for the resignation.

Bucknum's sudden departure, comes amid a regulatory inquiry into his sale of Biogen stock the same day the company says it learned of patient illnesses that led to Tysabri's withdrawal from the market. Besides Mr. Bucknum, at least three other Biogen executives or directors sold shares before Feb. 18.

Bucknum exercised stock options and sold 89,700 shares on Feb. 18 at $67.12 a share, earning a profit of nearly $2 million, according to a filing with the Securities and Exchange Commission. Not bad for a days’ work, if you can get it. That same day, Biogen said that it learned two patients in a clinical trial of Tysabri were suspected of having a rare but deadly brain infection. Ten days later, Biogen and its partner, the Elan Corporation, suspended the sale of Tysabri, setting off a 43 percent drop in Biogen's share price and a 70 percent decline in Elan's.

In the same year that the international patent system marked the filing of the one millionth international patent application, a record number of applications, just over 120,000, were filed in 2004 using the Patent Cooperation Treaty (PCT) of the World Intellectual Property Organization (WIPO). Despite reports of the early demise of its research capabilities, the United States continued to top the list of largest users with 41,870 applications, representing 34.9% of all applications in 2004.

See the report here.

Applicants from Japan (16.6%), who unseated their German counterparts in 2003 for the number two spot, maintained their second place position, followed by Germany (12.4%), France (4.4%) and the United Kingdom (4.2%). Use of the PCT in Japan grew by 15% in 2004. The Republic of Korea (19.3% growth), and China (37.8% growth) also showed a significant increase in filings. The report indicated that further growth is expected from the Asian continent in the coming years, noting that if current rates of growth continue, China will overtake Australia in 2005 to become the twelfth largest user of the system.

The top ten users of the PCT from developing countries include: Samsung Electronics, (Republic of Korea), LG Electronics (Republic of Korea), Huawei Technologies (China), Ranbaxy Laboratories (India), Agency for Science, Technology and Research (Singapore), ZTE Corporation (China), LG Chem (Republic of Korea), Electronics and Telecommunications Research Institute (Republic of Korea), Council of Scientific and Industrial Research (India), and UTStarcom (Republic of Korea).

The rise in applications reminds me of the oft-misquoted line "Everything that can be invented has been invented" erroneously credited to Charles H. Duell, U.S. Commissioner of Patents, in 1899. It's now believed to stem from Patent Office Commissioner Henry Ellsworth’s 1843 report to Congress in which he states, "The advancement of the arts, from year to year, taxes our credulity and seems to presage the arrival of that period when human improvement must end." Ellsworth was merely using some rhetorical irony to emphasize the growing number of patents but the hyperbole was lost on someone. Don't look for the end of invention any time soon.

See more here.

The Baristas will be attending the Ohio Valley Affiliates for Life Sciences Group (OVALS) regional conference  "The Promise of Innovation: OVALS Making It Happen" on March 7-8, 2005, at the Dayton Marriott Hotel in Dayton, Ohio. 

Register and see Agenda.

The OVALS Partnership developed in 2002 as a forum to discuss and stimulate economic development opportunities for Life Sciences within the "Ohio Valley" region.

The World Intellectual Property Organization (WIPO) has published a manual entitled "Exchanging Value – Negotiating Technology Licensing Agreements," which provides a review of some of the basic issues that arise in licensing negotiations of intellectual property, particularly patents. The publication offers a practical introduction to negotiating licensing agreements and is designed to address the needs and concerns of non-specialists. The Guide focuses on the identification, acquisition and transfer, through licensing agreements, of intellectual property, in particular patent-protected technologies.

This begs the question: "Why is WIPO, a specialized branch of the UN, publishing a booklet on negotiating licensing agreements?"

Whatever the reason and for what it's worth, "Exchanging Value - Negotiating Technology Licensing Agreements" is currently available online from WIPO’s website at www.wipo.int/ebookshop/ or from the ITC’s website at www.intracen.org/eshop.

The Baristas have updated their look and gotten a new attitude.  Thanks to Barbara, at CaricatureConnection, we now have new images on our Get to Know Your Baristas page. 

We'll be brewing up news and comments on a regular basis and appreciate your comments and suggestions. Let us know if you like our new look.  Hope you enjoy our site.

Blogger and Patent Attorney Axel H Horns posted a nice review of the recent EU-CREST Committee on "IPR and Research" report. The Committee for Scientific and Technical Research (Crest) is the advisory committee to the Council and the Commission on subjects relating to scientific and technical research and in particular, on the co-ordination of national R&D policies.

It hasn't a great month for the Big Pharmas when it comes to battling the on-slaught of generics. Despite being the time for Valentines and amore, Pfizer is feeling blue since the Technical Board of Appeal revoked Pfizer's "Viagra-Patent" EP-0 702 555 by dismissing the appeal against an earlier lost.

Well, I have decided to give up my Bio-IP.com site on TypePad and switch to PatentBaristas.com on a new hosting service running on MovableType. I like the idea of having the flexibility of MT and my new hosting service on iPowerWeb provides plenty of bandwidth.

Many thanks to Christina at Moxie Design Studios for helping to set up such a fun site. If you like the new design, drop me a note and let me know what you think. Take a look around, relax over a cup of joe and enjoy.

Under a new National Institutes of Health (NIH) public access policy, which is designed to provide easier access to tax supported research, researchers who receive grant money from the National Institutes of Health will be "asked" to submit their results to a public Web site within a year after they are published in a scientific journal.

In this split-the-baby compromise, the NIH backed off its original proposal to require such disclosure. Publishers of scientific journals, fearing that free access would undermine their subscription base, lobbied hard to against it. Advocates argued that taxpayers should not have to pay subscription or per-article fees to see the results of federally supported medical research and that it applies only to about 10% of published articles. Both sides were left dissapointed.

Proponents of free access felt that the policy should have required disclosure instead of leaving it up to scientists to decide. Now, researchers will risk the wrath of publishers if they allow free access. While no one wants to see their market share threatened, I don't think publishers should be put ahead of taxpayers.

Upon acceptance for publication, authors will be asked to submit their articles to PubMed Central (PMC), an NIH digital repository of full-text, peer-reviewed biomedical, behavioral, and clinical research journals. It is a publicly-accessible, permanent, and searchable electronic archive available on the Internet at http://www.pubmedcentral.nih.gov/.

Details of the new policy can be seen here.

As reported in the New York Times, the National Institutes of Health (NIH) announced a new supplemental ethics regulation that addresses the concerns raised by the activities of some of its employees, particularly regarding outside consulting with the pharmaceutical and biotechnology industries. The regulation was developed by the Department of Health and Human Services (HHS), with the concurrence of the Office of Government Ethics (OGE), the federal agency that prescribes executive branch-wide ethics standards.

I am against an outright ban on consulting.  While I don't think every activity should be allowed, I don't think you can ever completely eliminate conflicts of interest.  It would make more sense to try to effectively manage the conflicts than to ban them completely.  With proper disclosure and oversight, commercial activities can co-exist with academic research.

I suspect, though, that the ban has more to due with trying to put a pristine shine back on research after a few high-profile cases gave consulting a black eye.  Such Dr. Bryan Brewer Jr., chief of the National Heart, Lung and Blood Institute's molecular disease branch, who published an article on the benefits of Crestor in a medical journal "supplement" that was paid for by AstraZeneca.  In another case, Dr. P. Trey Sunderland, a senior researcher at the National Institute of Mental Health, received more than $500,000 in consulting fees from Pfizer at the same time that he was collaborating with it in his government capacity of studying patients with Alzheimer's disease.

Noteworthy is that in Sunderland's case, he did not disclose his consulting fees despite NIH rules require their disclosure.  This makes you wonder how effective this new ban will have on preventing conflicts.  There will always be some people who won't follow the rules.

The new regulation focuses on outside activities, financial holdings, and awards for all NIH employees.  Under the new rules, all NIH employees are prohibited from engaging in certain outside employment with:

1) substantially affected organizations, including pharmaceutical and biotechnology companies;
2) supported research institutions, including NIH grantees;
3) health care providers and insurers; and
4) related trade, professional or similar associations.

Investments in organizations substantially affected by the NIH, such as the biotechnology and pharmaceutical industries, are also not allowed for those employees who are required to file public and confidential financial disclosure reports, and are restricted for other staff.

See:  NIH Conflict of Interest Information and Resources and the Federal Register

mMicrosoft put out its own search engine on its MSN Web site, today.  This, after  admitting that it totally missed the boat sailed by Google Inc. and others.  While one can argue the merits of putting a lot of resources into searching the web, I thought I'd at least take a look.

I did a quick search for "Merck Teva Fosomax" on MSN and on Google in a head-to-head search comparison (yes, I know, not a scientifically valid test but that's all I had time for today).  Interestingly, MSN pulled up 11,301 web results and Google pulled up 10,600.  Given that it's newer, I expected MSN to pull up fewer spots.  More importantly, when I looked through the sites pulled up in the listed top 10 references, the quality of the references were quite different. 

While highly subjective, I felt that the Google search provided more relavent and authoritative(?) references in siting articles by CBS Marketwatch, Reuters, Boomberg, and ABCNews.  The MSN search brought up a blog site, and various marketing feeds that merely provided a short snippet and a link to another reference.  I think MSN still needs to iron out some difficulties in their page ranking methods.

To be more thorough, I looked at AskJeeves and Yahoo.com.  AskJeeves brought up 854 references, mostly from sites wanting to sell me Fosamax!  Yahoo pulled up a mere 811 references but, interestingly, many in the top 10 overlapped with those in the top 10 of the Google search.

Use this at your own risk, your milage may vary and past performance is no indication of future returns.  For now, though, I think I'll stick to Google.

The Intellectual Property Owners (IPO) announced a call for nominations for their 32nd National Inventors of the Year Award. See the brochure here.

An inventor is eligible for the 2005 award if the invention:

1. Originated in the U.S.;
2. Is covered by a U.S. patent; and
3. Was either patented or first made commercially available since the beginning of 2001.

Nominations are solicited from independent inventors and from inventors employed in industry, universities, and government. Nominees should epitomize the American traditions of technological leadership and "Yankee ingenuity." The IPO publicizes Inventors of the Year with an awards ceremony, which this year is scheduled to be held on Capitol Hill on June 14, 2005. In addition to promoting recognition, IPO provides a $10,000 honorarium to be shared by the winners.

The Deadline for Entries is March 24, 2005.

By now, you've probably heard of the high-definition DVD format war brewing up as consumer electronics companies and Hollywood studios choose sides.   This is a battle between two high-definition DVD formats, Blu-ray and HD DVD, which are expected to arrive late this year and which will require new high-definition DVDs and a new class of expensive players.

This probably reminds everyone of the Sony Betamax-VHS lawsuit in the early days of videocassette recorders and there are billions of dollars at stake.

Now, the New York Times reports on a new high-definition solution available - DivX 6 software.  DivX is to video what mp3 is to audio, a compression scheme.  This is noteworthy in that you can buy a player right now for $250 and the competing Blu-ray and HD DVD players will be $1000, when they're finally available.  This all sounds nice until you realize that all the content holders (read: movie studios) haven't allowed any of their content on DivX.

Why do all the electronics and media companies hate us so much? I just spent big dollars for a high-definition television, only to find out that THERE'S NOTHING TO WATCH! I can't rent any movies in high-definition and, even if I could, I wouldn't have a player to play them on.  What's the problem here?  When are these people going to get together and get something out on the market that works?  I don't care about formats, I just want to watch my copy of "Master and Commander" in high-def.

And don't get me started on all the jacks on the back of my receiver...

Scott Gottlieb, MD, in a Forbes opinion, opines the Food and Drug Administration's increasingly cautious approach to the approval of new medicines. Previously, the FDA rejected the testosterone patch Intrinsa and recommended against over-the-counter status for the cholesterol-lowering drug Mevacor. Now, the FDA's Oncology Drug Advisory Committee (ODAC) may delay approval of new drugs.

Apparently, the chair of the FDA's cancer drug advisory committee rejected the idea that cancer drugs should be allowed onto the market if they are reasonably safe and have some degree of effectiveness ("efficacy") with the understanding that oncologists will determine their value through routine use of the drug, as is now customary.

This doesn't bode well for biotech companies working on cancer drugs, most of whom are already suffering from a high burn rate. Currently, the approval process can take as long as ten years and cost nearly half a billion dollars. 

This begs the question:  Shouldn't patients who are dying have some say on the cost:benefit ratio they are willing to accept?  As Dr. Gottlieb states, "A fresh crop of caution inside the FDA may keep the agency out of the news, but it won't keep my cancer patients from dying."

Details behind the European Patent Office's (EPO) decision in May 2004 to revoke Myriad Genetic's 2001 BRCA1 gene patent have been made public. The main claim related to a method of diagnosing a predisposition to human breast/ovarian cancer by analysing mutations in the BRCA1 gene. The gene was defined broadly by reference to a specific amino-acid sequence and variant sequences "with at least 95% identity to that sequence". The Opposition Division of the EPO rejected the claims of the granted patent on the grounds that there was inadequate basis in the application as originally filed for inserting the feature "with at least 95% identity" into claim 1 of the granted patent. Several sets of amended claims filed by Myriad were then considered in turn by the EPO. Myriad first tried to avoid the limitation of the claims to a specific BRCA1 sequence by removing the sequence from the claims, arguing that the term 'BRCA1 gene' was clear in itself and that the sequence of the gene was not necessary to carry out the invention. This was rejected by the EPO on the grounds that the sequence was an essential technical feature of the claim and also that its removal would illegally extend the scope of the patent. Myriad then tried to amend the claims to refer to the specific BRCA1 gene sequence and also to several specific mutations that are characteristic of breast and ovarian cancers.

The priority date of the claims then became a key issue, because a sequence of the BRCA1 gene and details of all three mutations claimed by Myriad were published in the interval between the filing of Myriad's earliest US priority application and their European patent application.   Myriad's original patent filing in 1994 contained several errors in the DNA sequence of the BRCA1 gene. In 1995, the company had submitted a revised sequence, correcting the errors but it turned out that the new sequences had already been published.  Myriad has until 21 January 2005 to file an appeal.

This shows the strict approach that the EPO takes regarding claim amendments and priority for gene sequences.   It's just an example of the need to be incredibly stringent in filing gene applicaitons.

J. Craig Williams, on his blog May It Please the Court, after noting that "blogging as a phenomenon is reaching epic proportions, asks the question: Are blogs advertising?  Williams believes yes.  He thinks that "it would be difficult to identify a purely altruistic blog" and thinks that, in the broadest sense of the word, all legal blogging is advertising.  He then asks, if blogging is advertising, is the ad "just restricted to that rectangle at the top of this page?"

Post your thoughts on his blog here.

For the opposing view that blogs are not ads, see the post by David Giacalone of f/k/a ethicalEsq here.

I think that a blog, even in your field, doesn't always constitute an advertisement.  If this were so, then any activity undertaken by a lawyer would be an ad.  If I'm coaching my son's Little Leage game, should I be required to wear a jersey that states "This is an Advertisement" since I might bump into someone who might want some legal advice?   Now for the argument of what the definision of ad is.  Let me know your thoughts.

The partners of Boston firm Testa, Hurwitz & Thibeault, LLP voted to wind up the business of the Firm and dissolve it.  In early December, 10 partners decided to leave the Firm and the remaining partners decided to dissolve the partnership.  The Firm had one of the largest patent and intellectual property practices in New England.

Read more here.

In honor of Martin Luther King Day, I went with my daughter's school class on a trip to see the National Underground Railroad Freedom Center in Cincinnati.  It was quite moving, even for second-graders, to see a slave pen, a two-story structure rescued and preserved inside the Center.  The movie on slave escapes across the river was a bit intense (and loud) but the kids came away with a deeper understanding of our history.  I recommend visiting the Center when you get a chance.

Force Field Wireless claims to have developed a solution to the international menace of marauding geek wardrivers - DefendAir paint "laced with copper and aluminum fibers that form an electromagnetic shield, blocking most radio waves and protecting wireless networks". According to a South Florida Sun Sentinel article, one coat of the water-based paint "shields Wi-Fi, WiMax and Bluetooth networks operating at frequencies from 100 megahertz to 2.4 gigahertz", while two or three applications are "good for networks operating at up to five gigahertz". There are some downsides as Force Field Wireless admits that "radio waves find leaks" andthe company asks users to be aware that the product "must be applied selectively" otherwise it "might hinder the performance of radios, televisions and cell phones". Although DefendAir is available only in grey, it can be used as a primer, so those who require wireless peace of mind plus bold fashion statement can cover it up quite nicely.  And I thought the aluminum foil I have all over my house would be enough.  Hmmmmm.

The inventor of an LED technology has reluctantly agreed to a record settlement from his former employer in a dispute. Shuji Nakamura, now a professor at the University of California, Santa Barbara, will receive 840 million yen ($8.1 million) from his former employer, the Nichia Corporation, for inventing blue-light-emitting diodes. Nichia secured lucrative patents for Mr. Nakamura's invention, which allowed the creation of more vibrant video billboards and traffic signal lights and helped lead to the development of blue lasers, which are used in the latest DVD players. His invention was also useful in creating white-light-emitting diodes, which may someday replace incandescent bulbs as a source of indoor lighting.

The case goes against the tradition that employees should sacrifice everything for their companies. Traditionally, in Japan, corporate engineers and scientists are treated just like less-skilled employees. It is unusual for Japanese companies to sign contracts with their researchers that specify how profits from their inventions will be shared, as is often the practice in American companies.

The amount of the settlement was significantly smaller than the $190 million the Tokyo District Court awarded inventor Shuji Nakamura in January as reasonable compensation.

By mandating that employee-inventors receive fair compensation for the value their inventions provide to their employer, Japanese patent law stands in stark contrast to its American counterpart. Japan's fair compensation provisions have been on the books since 1959, but employee-inventors have only recently started to sue under these statutes.

Mr. Nakamura sued his former employer four years ago, seeking a share of the royalties from his invention after the company gave him an award of 20,000 yen, or less than $200, for his work.  See the entire article here.

I thought I'd post an update since I was making a donation today and thinking about the victims of the tsunami. The American Red Cross today announced a massive relief plan for those affected by the tsunamis, requiring an estimated $400 million to respond to both immediate and long-term needs now and years into the future. The plan calls for specialized relief in five areas, including food and safe water, healthcare and disease prevention, immediate family supplies, mental health counseling, and disaster preparedness and prevention measures.

The first priority for the American Red Cross is providing lifesaving help in the form of food, clean water, and sanitation, and other relief items like tents, hygiene kits and cooking utensils. Teams of American Red Cross experts have already been deployed to some of the affected areas, and are working hard to provide support to the ever-growing relief effort. Implementation of this plan has already begun in coordination with the International Federation of Red Cross and Red Crescent Societies and other important partners.

The American Red Cross will work in partnership with other relief organizations in a massive immunization campaign, while offering mental health services to those who have been so profoundly affected by this immense disaster.

Donate here.

According to a January 9, 2004 article in the New York Times Magazine by Ted C. Fishman, what makes China so troubling for American and other foreign companies is that the country is both a potential rival, with an alternative legal approach to intellectual property that limits their prospects in China and weakens their competitive strength globally, and a haven for pirates and counterfeiters.  Fishman points out that China's failure to police industry and to protect intellectual-property acts, in effect, like one of the greatest industrial subsidies in the world.  Chinese manufacturers and industries freely exploit foreign ideas and technologies.  This is particularly true with high-tech and pharmaceuticals.  For the most part, China fears no repercussions from its actions because the size and potential of its markets give China an undiminished (for now) power to lure the world's most advanced technology to its shores.  Read the entire article here.

In Law Technology News,  Attorney Laura Owen of Cisco Systems recommends steps that companies must take to adapt to the changing legal landscape in her article "The Tech Evolution: Change or Die." While I don't agree that failure to adapt legal practices causes a lot of corporate carcasses, embracing advances in legal work can make any company more successful and more profitable.  She makes a good point about reigning in the cost of IP legal work, an area that typically commands the highest billing dollars.

3.  Move your legal work to low cost firms located in the Midwest, South or other regions away from high cost centers. Doesn't sound like technology here, but it is. Extranets provide ways for companies to work with firms across the country (and the world ). Web-based worksites are always open, always on. Work flow tools -- putting the right person in the right order at the right time -- can dramatically improve productivity and reduce costs.

For example, patent prosecution works well for this model -- and if the client uses an online patent application tool for its employees, connecting to the firms that do the work, clients improve the patent prosecution for the company and the firms make more money through an increase in patent filings.

We already do work with many coastal high-tech companies that like my firm's low billing rates and personal service.  If you are interested in finding out about what we can offer, call me at: 513.651.6839 or send me a note at: salbainyjenei@fbtlaw.com.

I thought I'd mention that I have been working on updating my process for disseminating IP news.  I am currently in the process of switching over to TypePad blogging service to make things easier for people to find and review.  I will keep people posted on developments.

I'm sure that you have already heard about last Sunday?s massive earthquake and tsunami. It is expected to become the largest ever as the death toll continues to climb and now tops 115,000 victims, according to the United Nations. Millions of others are now homeless and without the basics needed for survival including food, water, and shelter, and the International Red Cross and Red Crescent Movement and other international aid groups are rushing to fill the need.

The United Nations (UN) World Health Organization warns that up to 5 million people in South Asia are without basic services. Health experts are concerned that in the aftermath, as many people may fall victim to diarrhea diseases, respiratory infections, malaria, and dengue fever, as were affected by the tsunami.

You can help those affected by this crisis and countless others around the world each year by making a financial gift to the American Red Cross International Response Fund, which will provide immediate relief and long-term support through supplies, technical assistance, and other support to those in need. Call 1-800-HELP NOW or 1-800-257-7575 (Spanish). Contributions to the International Response Fund may be sent to your local American Red Cross chapter or to the American Red Cross International Response Fund, P.O. Box 37243, Washington, DC 20013. Internet users can make a secure online contribution by visiting Red Cross

Louisville, Kentucky Office

David S. Kaplan is a Member in the Firm?s Litigation Department.  He concentrates his practice in complex commercial and regulatory disputes, state and federal constitutional questions, and in representation of State and municipal governments.  Mr. Kaplan received his B.A. with highest distinction from the University of North Carolina, his J.D. degree from Harvard Law School, cum laude, and his M.P.P. from Harvard.

Christopher M. Mussler is a Member in the Firm?s Litigation Department.  He concentrates his practice in insurance defense and bad faith litigation.  Mr. Mussler received his B.A. from the University of Kentucky and his J.D. degree from the University of Louisville Brandeis School of Law .

Lexington, Kentucky Office

C. Bradford Harris is a Member in the Firm?s Business/Corporate Department.  He concentrates his practice in banking, securities, mergers and acquisitions and general business law.  Mr. Harris received his B.A. from the University of Kentucky, his J.D. degree from the University of Kentucky, and his M.B.A. from the University of Kentucky.

Cincinnati, Ohio Office

Stephen Albainy-Jenei is a Member in the Firm?s Intellectual Property Department.  He concentrates his practice in patent preparation and prosecution, patentability, validity and infringement opinions, licensing and other intellectual property-related agreements, counseling inventors and management of intellectual property issues.  Mr. Albainey-Jenei received his B.S from the University of Dayton, his J.D. degree from the University of Cincinnati and his M.S. from the University of Dayton.

Kevin L. Cooney is a Member in the Firm?s Business/Corporate Department.  He concentrates his practice in securities and emerging growth companies, mergers and acquisitions, investment companies and public finance.  Mr. Cooney received his B.S. from Purdue University and his J.D. degree from Washington University.

Joanne Wissman Glass is a Member in the Firm?s Labor Department.  She concentrates her practice in worker?s compensation defense and certified worker?s compensation.  Ms. Wissman Glass received her B.A. from Xavier University and her J.D. degree from Chase College of Law.

Nicole Vickroy Hickey is a Member in the Firm?s Intellectual Property Department.  She concentrates her practice in trademarks, unfair competition and copyright.  Ms. Vickroy Hickey received her B.A. from Miami University, cum laude and her J.D. degree from Case Western Reserve University.

Katherine Cook Morgan is a Member in the Firm?s Labor Department.  She concentrates her practice in wrongful discharge and discrimination litigation and ERISA litigation.  Ms. Cook Morgan received her B.A. from Swarthmore College and her J.D. degree from the University of Cincinnati College of Law.

Jeffrey S. Rosenstiel is a Member in the Firm?s Litigation Department.  He concentrates his practice in banking, commercial and bankruptcy litigation.  Mr. Rosenstiel received his B.S. from Kentucky State University, magna cum laude, and his J.D. degree from Salmon P. Chase College of Law, cum laude.

Robert D. Shank is a Member in the Firm?s Litigation Department.  He concentrates his practice in products liability, trade secrets and non-compete provisions, real estate litigation, and employment law.  Mr. Shank received his B.A. from Xavier University and his J.D. degree from Vanderbilt University Law School.

Columbus, Ohio Office

Jeffrey G. Rupert is a Member in the Firm?s Litigation Department.  He concentrates his practice in general business and commercial litigation.  Mr. Rupert received his B.A. from Northwestern University and his J.D. degree from Ohio State University, with honors.

Frost Brown Todd LLC is a regional law firm with approximately 370 attorneys with offices in Kentucky, Ohio, Indiana and Tennessee.   The Firm has been recognized by Corporate Board Member magazine as the top corporate law firm in Kentucky as well as the Top 10 patent Litigation Firms in the United States by Managing Intellectual Property magazine.  In December 2003, United Parcel Service (UPS) awarded Frost Brown Todd its Law Firm of the Year award.

I want to wish everyone a Happy Festivus. In case you don't remember the history of Festivus from the show "Seinfeld," Frank Costanza went to buy a doll for his son one Christmas. He went to reach for the last one at the same time as another man and as Frank rained blows upon him, he thought there could be another way. The doll was destroyed, but out of that, a new holiday was born. He named it Festivus.

Festivus takes place during the last few weeks in December, families and friends gather at the dinner table and have "The Airing of Grievances". Durning this time, family and friends share all the ways they have disappointed each other during the past year.

After the Airing of Grievances, the "Feats of Strength" takes place. This is where the head of the household tests his/her strength with another friend or family member. Festivus is not over until the head of the household is pinned.

Finally, the house is decorated with the Festivus Pole, not a tree. It is a metal pole with no decorations. Frank Costanza believed that tinsel is very distracting. The pole is tall and silver.

For everyone who's wished they had a patent on something ubiquitous, there was a recent article on Bill Holloway who has a patent on a formula for water - and four more pending. About this point, you're thinking: "Isn't the formula H20?" Apparently, the company Penta is the leading pure-water company at health food stores.

Holloway claims "Our water is purified with a unique molecular structure that has been proven to be absorbed by human cells faster and more effectively than other water.  Simply put, Penta will help your body stay healthy and function like it's supposed to."  Holloway claims the water formula even saved his life. Some years ago, he was diagnosed with Fibromyalgia, a chronic fatigue immune dysfunction syndrome, and he began researching ways to combat the disease, working on the simple fact that water is the conduit that delivers and manages the recovery of damaged cells in the body.

So, Holloway set about figuring out how to purify ordinary city water with a new method of reverse osmosis. The resulting highly purified water caused him to feel better and to lead a relatively normal life. He claims that Penta is the only formula utilizing a natural physics process instead of chemicals to restructure water. It's this process that they've patented. The patent, U.S. Pat. No. 6,521,248, entitled "Micro-cluster liquids and methods of making and using them" is described as:

Abstract

The invention provides novel micro-cluster liquids and methods for manufacturing and using them. The micro-cluster liquids comprise fractionized or micro-cluster liquids, (e.g. water, such as oxygenated micro-cluster water). The methods comprise causing cavitation of a liquid to form cavitation bubbles under a first pressure followed by depressurization to a second pressure to cause implosion and explosion of the cavitation bubbles such that acoustical energy shockwaves are created.  The micro-cluster water (e.g., oxygenated micro-cluster water) is used to deliver hydration, oxygenation, or agents, such as nutritional agents or medications, and increasing overall cellular performance and exchanging liquids in the cell within minutes of consumption.

1. A process for producing a micro-cluster liquid, comprising: subjecting a liquid to cavitation such that dissolved entrained gases in the liquid form a plurality of cavitation bubbles; and subjecting the liquid containing the plurality of cavitation bubbles to a reduced pressure, wherein the reduction in pressure causes breakage of large liquid molecule matrices into smaller liquid molecule matrices, thereby producing a micro-cluster liquid.

...

33. A micro-cluster liquid produced by the process of claim 1 or 16.

...

44. A method for modulating a cellular performance comprising contacting a cell with a micro-cluster water made by the process of claim 1 or claim 16.

He said cancer chemotherapy patients seem to be at the top of the list of people drinking the water, along with teenagers suffering from acne and people with cirrhosis and congenital heart disease.  He said that with chemo patients, as with people with arthritis, his water helps to reduce swelling.

I have to wonder how much is attributable to the fact that most people could stand to drink some extra water.  No word yet on whether or not the micro-cluster water could be used for cold fusion.

A proposal in Arizona to allow universities to enter partnerships with corporations was defeated despite no organized opposition and widespread support from prominent groups and top elected officials from both political parties. The proposition, defeated 52 to 48%, was to amend the Arizona Constitution, which prohibits the state government from becoming a shareholder or joint owner in a company.

Proposition 102 would have allowed the state to license or transfer interests in technology or intellectual property created by the state's universities. Officials of Arizona's three universities said most states have no such restrictions.

Only one person submitted a statement of opposition, claiming the proposal could lead to human cloning. Really?  It could lead to human cloning?  While there are some reasons for not wanting a state to get entangled in corporate ownership, e.g., conflicts of interest and fiduciary duty, human cloning isn't one of them.  This is a good illustration of how the general public doesn't understand university research or the process of tech transfer.  See more details here.

As many know, I have started publishing a newsletter back in 1997 when I was still in-house patent counsel at the University of Cincinnati.  Basically, I wrote a collection of news items and updates on intellectual property and licensing issues and, when I collected 10 or 12 or so, I emailed it out in the form of a newsletter to the IP Office list of about 700 people.  After moving to private practice, I wrote few but more substantial articles and continued with the "push" technology of emailing these out to friends and clients.  I have now changed to using a passive "blog" system so that I don't have to wait to send out emails when I think I've collected enough items.  I think this more immediate format will prove better in providing more immediate updates on IP law in biotech, pharma and chemical arts as well as licensing and technology transfer.  We shall see.