Archive for February 2012

PDUFA V Authorization: Just the Medicine the FDA Needs

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This year marks the 20th anniversary of the Prescription Drug User Fee Act (PDUFA).[1] In response to a sluggish drug approval process and inadequate congressional funding of the FDA’s research and development arms, Congress passed the PDUFA to create an additional revenue stream. The thought: if the FDA could generate more money and dedicate that money to speedier drug approval, everyone wins. Thus, the Act authorizes the FDA to collect substantial fees from applicants for New Drug Applications and Biologics License Applications, as well as renewal fees, among others. Under the statute, these fees must be dedicated to drug research.

The PDUFA sunsets every 5 years, requiring reevaluation and re-authorization to keep the program running. Having reached the 20-year mark, we are due for passage of the fifth PDUFA, to be called (unimaginatively) PDUFA V.

To date, Congress has judiciously re-upped the PDUFA with little issue. In part, this is because the PDUFA seems to be accomplishing its goals. At the end of the second five-year period, the GAO found that the PDUFA helped reduce the median drug approval time from 27 months to 14 months. In 2011, PDUFA revenues accounted for about a quarter of the FDA’s overall budget (65% of the drug approval budget).[2]

The approval process for PDUFA V seems poised to keep par for the course. Big Pharma wants it. The FDA wants it. To be sure, the PDUFA deserves the reauthorization it’s going to get: it’s a great deal for virtually everyone involved.

But it seems like a waste of an opportunity if Congress doesn’t use the reauthorization process to make it even better. For the first two five-year periods, PDUFA funds could only be allocated to pre-market research. Congress took the opportunity in the PDUFA III authorization round to allow limited funding to post-market supervision.[3]

The authorization process for PDUFA V could be equally productive. One promising framework for reform could be Senator Kay Hagan’s Transforming the Regulatory Environment to Accelerate Access to Treatments (TREAT) Act. The proposed legislation would offer a fast-track approval process for drugs targeting rare diseases without a current cure, an avenue currently lacking.[4] The PDUFA V authorization process would be an ideal forum for discussion and, hopefully, adoption of these and other improvements on the FDA drug approval system.


[1] Pub. L. No. 102-571, 21 USC § 379, 106 Stat. 4491 (1992).

[2] Gail Dutton, 2011 Budget Outlook: Trim, Cut, Then Slash, Genetic Engineering and Biotechnology News (Feb. 7, 2011), available at http://www.genengnews.com/analysis-and-insight/2011-budget-outlook-trim-cut-then-slash/77899360/

[3] See Efthimios Parasidis, Patients over Politics: Addressing Legislative Failure in the Regulation of Medical Products, 2011 Wis. L. Rev. 929, 944 (2011).

[4] For a survey of this and other shortcomings in the FDA approval process, see Avik Roy, How Big Pharma Undermined Medical Innovation for Financial Gain, Forbes (Feb. 15, 2012), available at http://www.forbes.com/sites/aroy/2012/02/15/how-big-pharma-undermined-medical-innovation-for-financial-gain/

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February 19th, 2012 at 3:37 pm

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Patents for Humanity: A Non-Market Approach to Invention

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The USPTO recently announced a new awards competition called Patents for Humanity. The competition is a pilot program meant to encourage the development of technology to meet humanitarian rather than strictly business means. The prize? Accelerated processing of the winners’ patent applications, though the real value is that the winner may use the prize certificate toward any one patent application in his portfolio, not just the prize-winning technology.

This new program is just one of a series of  initiatives enacted in response to President Obama’s push to accelerate global development through use of technology. In theory, such initiatives will not only aid developing countries but lead to a stronger and more stable global economy, which will help the United States. The USPTO will assign prizes to up to  fifty winners in four different categories: medical technology, food and nutrition, clean technology, and information technology, and has expressed a desire to find solutions to problems such as drought and famine through new technologies. The contest entries will be judged regardless of the field of technology, the location of the targeted population, and the cost of implementing such technology.

This new program is especially intriguing because the White House has rarely used the USPTO to implement policy goals in the past. As a result, investors generally focus on developments in areas with great potential market value rather than those with great humanitarian efforts. While the value of awards certificate is small monetarily, it helps resolve a common complaint among inventors regarding the length of time it takes to process a patent application. With the certificate, winners can ensure a final decision on their applications within a twelve-month period as opposed to the typical two-year process. Since a patentee cannot enforce his patent rights against others until the application is granted, and patent applications are published eighteen months after filing, the accelerated application process could prove a powerful incentive to companies looking to stop infringement of their most potentially valuable products.

 

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February 16th, 2012 at 10:43 pm

The Value of a Twitter Follower

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These Are My Followers

Well, I think they are, anyway.  Litigation over the ownership of a Twitter account is pending in the Northern District of California right now.  Here are the facts of PhoneDog v. Kravitz.

Noah Kravitz was hired as an independent contractor to advertise for PhoneDog.com – he appears to be have been successful, garnering over 17,000 followers.  When he quit working with PhoneDog, he changed his twitter handle from @Phonedog_Noah to @Noah_Kravitz; he kept the followers.   While phone dog sued on four grounds, the most interesting claims are those which require a damages valuation.  How much is a Twitter follower worth?

In much the same vein, litigation (Eagle v. Morgan) over a LinkedIn account is ongoing in Pennsyvlania.  The plaintiff in the case, Eagle, formed a partnership which was later purchased by Sawabeh Information Services.  The plaintiff then shared her LinkedIn account with the new company.  After she was fired, she claimed they continued to access her personal LinkedIn account, meaning they had access to her virtual rolodex.  For an in-depth discussion, see here.  How do you determine damages in the case of a misappropriated virtual contacts list?

While numerous blogs have puzzled over how to best  value these things, it does not seem an insurmountable task.  In PhoneDog they claimed each follower was worth $2.50.  Of course, they don’t explain where they got that number.  How much did they pay Noah Kravitz over the course of his contract?  Was a percentage of that contingent on the number of followers he obtained?  Believe it or not, there are companies which exist to manipulate our “social” experiences on the web.  On the link aggregation website, www.reddit.com, each vote you purchase for a submission can cost you fifty-cents.   N.B.the bulk discount!

The valuation of this type of “property” is an interesting question, but one that does not truly pose any novel difficulties.  First – if you are worried about it, contract around it (this twitter account is ours; your LinkedIn contracts are ours, etc.)  Second, if you fail to do so and end up in litigation, look to the market for damages estimates.  It exists and people participate in it.  Certainly total page traffic, the number of unique visitors and many other things need to go into the calculation, but it can certainly be done.  Notably, this may be more difficult to do for LinkedIn contacts.  What else can you think of?

 

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February 12th, 2012 at 4:41 pm

Ensuring the Super Bowl is Still All About the Commercials: Federal Crackdown on Illegal Sports Streaming Websites Leads to Arrest of Michigan Man

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Everyone already knows that Tom Brady wields tremendous power in the sports world. Add to that a Brazilian super model wife and the guy has some serious social capital as well. But who knew the former Michigan quarterback’s casual comment to a group of reporters could trigger a federal investigation that resulted in the shutdown of sixteen illegal sports streaming websites and the indictment of nine of the sites’ operator? This is exactly what happened last Thursday when Tom Brady expressed his awe that he had in one year gone from “watching the game on an illegal Super Bowl website” as he rehabbed his foot in Costa Rica to playing in the big game. Within hours prosecutors had launched an investigation of similar websites. With that kind of political capital and a face that I’m pretty sure could single handedly accomplish world peace: Tom Brady for president?

The crackdown is perhaps not surprising considering that the commercials set to air during the Super Bowl generated $250 million in revenue for NBC. That all falls apart if fans are tuning into illegal live streams rather than the NBC broadcast. Yonjo Quiroa, the 28-year-old man arrested in Michigan on charges of copyright infringement for operating nine live streaming sports websites, earned more than $13,000 from merchants purchasing advertising space on his sites. While that revenue was made on other sporting events besides the Super Bowl, as one ad executive explained, the Super Bowl is “essentially our prom night.” The stakes are higher and those with deep pockets care more.

U.S. Attorney Preet Bharara said in a statement on Thursday that although using such illegal websites may be tempting to sports fans, “These websites and their operators deprive sports leagues and networks of legitimate revenue, forcing spectators and viewers to bear the cost of this piracy.” Thanks, Tom Brady for passing on the cost of your Costa-Rica-viewing of Super Bowl XLV to the people.

Although for most viewers the Super Bowl is arguably the one broadcast event of the year where they don’t mind seeing the ads, the debate surrounding web streaming of events or shows that others have paid to air or have invested money in developing is a hot-button issue as of late (see previous MTTLR blog post, for example, here). It hardly needs to be mentioned that there is a bit of a fight in Congress over how things should and shouldn’t be shared over the Internet. It bears remembering that as that battle is waged with the pen in the legislature, enforcement is carried out in a manner federal prosecutors feel fit on the ground. The consequences of that policy are very real to Mr. Quiroa who faces up to 5 years in federal prison for the operation of the sports streaming websites. As the debate continues in Congress and as we sit back and watch the game and commercials that we will all be talking about for the next week and beyond, it is worth thinking about what we want the Internet to look like and whose interests we think are most important to protect.

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February 12th, 2012 at 4:30 pm

Not your Average Super Bowl Party: Immigration and Customs Enforcement Cracks Down on Street Vendors and Internet Streamers

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In the days leading up to the Super Bowl the United States Immigration and Customs Enforcement (ICE) seized $4.86 million worth of counterfeit merchandise and 307 websites. 291 of those sites were engaged in selling counterfeits, and the other 16 were set to stream the big game without NFL permission. Most people see the seizure of counterfeit NFL gear as a fair move, but in the midst of SOPA, PIPA, Megaupload, and a myriad of other online piracy and privacy issues, the seizure of the streaming sites has caused quite a stir.

ICE Director John Morton stated that the goal of the seizures is “defeating the international counterfeiting rings that illegally profit off of this event, the NFL, its players and sports fans,” but critics aren’t buying it. Of the 16 sites shut down for illegally broadcasting sporting events, 9 of them were being operated right here in Michigan by a single person.

US Attorney Preet Bharara, tasked with prosecuting the Michigan man, stated that “[s]ports fans may be tempted by illegal streaming websites, but in the end, it is they who pay the price” as piracy causes the prices of tickets and memorabilia to rise. Critics are, again, unswayed. In two full years of operation illegally broadcasting NFL, NBA, MLB, WWE, and other events, those nine sites only yielded an alleged grand total of $13,000 in profits for their Michigan proprietor. The NFL makes about $4 million for the TV rights to the Super Bowl alone. Many are finding it hard to believe that illegal streams of Super Bowl footage are really forcing the NFL to hike ticket prices to make ends meet without that extra bit.

The NFL certainly has a right to reap the rewards of its endeavors. If it wants to quibble over what essentially amounts to loose change, that’s its prerogative. Indeed, a lot of the noise would probably quiet down if it was the NFL who was pursuing illegal streamers. When a United States agency tasked with protecting the country’s borders and stopping pedophilic child molesters starts using its resources to make sure that the NFL is getting that last 0.01% of profit out of its efforts, however, the public attitude gets a little dicey. Regardless of who’s making what from the Super Bowl, government approval ratings are at an all time low – maybe now is not the best time to take away football and beer.

 

 

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February 12th, 2012 at 4:29 pm

Two Google Policy Changes You Should Know About

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Over the past month, Google has announced two policy changes it will be implementing in the near future. Free speech advocates and government officials charged with protecting individuals’ privacy on the Internet have voiced concerns over the forthcoming changes.

I. A Switch to Country Code Top Level Domains

One of the two policy changes will affect Google’s website Blogger—a free weblog publishing tool. Over the next few months, Google will begin to use country code Top Level Domains (ccTLDs) in order to control the site on a per-country basis, according to the country from which it is being accessed. As Google explains on its Q&A page, rather than seeing [blogname].blogspot.com, users accessing the blog from Australia, for example, will see [blogname].blogspot.com.au.

By using ccTLDs, rather than one general Top Level Domain (such as “.com”), Google will be able to comply with different laws of each country, without affecting users accessing the site from countries without such laws. For example, because pro-Nazi speech is prohibited in France, a French user may be blocked from viewing pro-Nazi content on a blog from Australia. A user in the United States, however, would not be blocked from accessing such content, since the Constitution protects pro-Nazi speech under the First Amendment.

The concern over this policy change is as follows: making it easier to comply with local speech-prohibiting rules will encourage a proliferation of new laws further oppressing speech. Twitter announced a similar policy change prior to Google’s announcement, and received a much more publicized backlash. Critics of Twitter’s move towards localized domains argued that the website was enabling oppressive regimes to continue to silence their citizens through mass censorship.  Users of the website even organized a protest in response to this change, joining a #TwitterBlackout, in which participants refrained from using the site for 24 hours on Saturday, January 28, 2012.

Google responds to the criticism by arguing that the policy change will actually “promote free expression and responsible publishing while providing greater flexibility in complying with valid removal requests pursuant to local law.” Google explains further, “By utilizing ccTLDs, content removals can be managed on a per country basis, which will limit their impact to the smallest number of readers. Content removed due to a specific country’s laws will only be removed from the relevant ccTLD.”

Lastly, Google advises concerned users that there will be a way to avoid being redirected to a country-specific domain. “Blog readers may request a specific country version of the blogspot content by entering a specially formatted ‘NCR’ URL. NCR stands for ‘No Country Redirect’ and will always display buzz.blogger.com in English, whether you’re in India, Brazil, Honduras, Germany, or anywhere.”

II. Condensing Multiple Privacy Policies into One

The second change that Google recently announced is its decision to combine about 60 privacy policies into one that, according to Google, is “a lot shorter and easier to read.” Google argues that it is doing this in order to “create a simple product experience” and its goal is “to provide you with as much transparency and choice as possible.” Although Google insists its privacy policies have not changed, the policy reiterates its ability to collect information from users and compile it for more targeted ads and search results. The policy change is set to go into effect on March 1, 2012. As such, organizations and government officials concerned with privacy rights of individuals have requested both more information, and a delay in implementation of this policy.

In the United States, as reported by CNN, a bipartisan group of Congressional members wrote a letter to the CEO of Google, Larry Page, asking for clarification about the changes. Further, authorities from the European Union have also written a letter to Page, requesting that the March 1st date be pushed back, so that it may conduct an investigation to ensure that the new policy does not infringe the rights of their users and EU citizens. According to reports, a French data protection agency has begun the investigation on behalf of 26 other E.U. governments in order to assess the implications of the new privacy policy. Google has not indicated a willingness to pause the new policy from going into effect; in fact, it responded, “delaying the new policy would cause significant confusion.”

Google clarifies, in a post on its public policy blog, that users do not have to log in to use most Google products, and no data is collected when a user is not logged in. Further, when logged in, users can edit or turn off their search histories. Google insists it is not collecting any more information than it has before, but rather, now it is simply being more upfront and transparent about it. Google contends that the information is assembled to enhance user experience by enabling better-targeted advertisements and search results. Lastly, Google reminds users, “[W]e’ll never sell your personal information or share it without your permission (other than rare circumstances like valid legal requests).”

Although Google insists its privacy controls have not changed, Microsoft is taking advantage of the attention Google has received regarding this privacy policy. Microsoft owns Hotmail, Bing and Internet Explorer – all of which compete with various Google programs. In a new print campaign, Microsoft pounces on Google, attacking its methods of gleaning information from its users in order to profit from advertisers, and encouraging users concerned with their privacy rights to make the switch to Microsoft products. Time will tell whether Google users choose to stay with the company, in spite of these policy changes.

AIA and Double Patenting- Not Worth Taking Advantage Of

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The America Invents Act (AIA) was passed in September 2011, bringing with it many changes to patent law.  The most noteworthy change was the shift from inventorship being granted on a first to invent system to a first to file system. However, there were many additional changes to the system including, perhaps, some which were inadvertent.

For example, there has been a change with respect to double patenting. Prior to the passing of the AIA bill, your own patents could be used as prior art against your new application to support a double patenting rejection under 35 U.S.C. 103.  This situation could be avoided by filing a terminal disclaimer.

After the passing of the AIA, however, the new law states “a disclosure shall not be prior art to a claimed invention under subsection (a)(2) if — (c) the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.” 35 U.S.C. 102(b)(2)(C).

Now, under the new 102(b)(2)(C), which becomes effective March 16, 2003, your own prior disclosures cannot be used as prior art against you under 102(a)(2) to support a rejection.

As a result, certain inventions could be re-patented to extend the life of the patent, provided that other 102(a)(1) prior art is not cited.

So is it worth trying to take advantage of this loophole?  Probably not.

First, the benefit received from taking advantage of this new law is minimal: patent-filers at most gain a one year extension on their patent due to the fact that your own admissions become prior art against you after a year under 102(b)(1). Though, a year-long extension may be lucrative in industries where patent rights are very important, such as the pharmaceutical industry.

Second, if the prosecution history of your patent was ever being scrutinized during litigation, the Federal Circuit would most likely not allow this type of patent term extension.  To reach this analysis, the Federal Circuit could determine that references which do not qualify as prior art under 102(b)(2)(C) could nevertheless be combined to support an obviousness rejection pursuant to 103.  But this could be troubling, because under current law and prior case law, references used in a 103 rejection must qualify for prior art under 102.

More likely the court would rely on precedent and the judicial doctrine of double patenting to reject such a term extension, explaining that Congress would not implicitly overturn prior case law.

However, the main deterrent to exploiting this loophole may be the fact that you run the risk that not only will your extension be redacted- but worse yet, you might run into counterclaims of patent fraud, patent misuse or inequitable conduct invalidating your patent and exposing you to damages.

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February 12th, 2012 at 4:00 pm

Free Speech Online is No LOL Matter to the American Public

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The people have spoken—and the people want their digital freedom! As the 112th Congress found out just last week, the prospect of the federal government infringing on the open and free Internet has been both politically tumultuous as well as philosophically unpopular in the eyes of the American Public.

Currently, the Digital Millennium Copyright Act governs copyright infringement activities which take place on the Internet. Yet, there was a growing sense among some in the entertainment industry–and in Congress–that this Act was not doing enough to protect IP rights. So, lawmakers responding to pressures from the entertainment industry devised a new bill to combat online piracy, developed two broadly worded anti-piracy bills–the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA). The move pitted Hollywood and its woes over unauthorized downloading, against Silicon Valley techies who claim that “the legislation would hand the government Orwellian powers over the Internet.” However, just recently certain lawmakers–including the bill’s co-sponsor Republican Sen. Marco Rubio of Florida–withdrew their support. Even the White House came out publicly against SOPA.

A key impetus to the sudden turn in popularity for the bills came from a staged anti-SOPA protest on January 18th from Internet sites such as Google, Wikipedia, and Craigslist.com. Wikipedia, for example, “went dark” and shut down completely. The site’s co-founder, Jimmy Wales explained his concern in a recent CNN interview over the broad language in the bill, citing apprehension over the unprecedented amount of power the bill would give the government to take over the Internet and its content–Wikipedia and similar sites would struggle to function under the effects of SOPA due to the sheer number of links they would be required to check when posting content. Wales also affirmed his belief that “when it comes to First Amendment concerns, censoring the Internet is never going to be the right answer.”

For now, Congress has put further debate on these bills on-hold, although it is clear that the fight is far from over. On January 21st the FBI shut down the file-sharing website Megaupload as part of what seems to be the federal government’s theme for 2012: taking a hard anti-piracy stance. The debate also touches upon the existential question of whether Internet access is a basic human right or whether it is simply a vital tool which our society has obligations to guard against potential abuse in the face of an increasingly interconnected world.

For now, we can just remain thankful that the government has backed down and we are still able to catch up on missed episodes of Glee on various Megaupload-like sites–even if they have Japanese subtitles.

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February 4th, 2012 at 6:16 pm

Megaupload takedown creates trouble for users and cyberlocker community

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On January 19, US authorities shut down Megaupload.com, a Hong Kong-based digital storage and file sharing company.  Megaupload provided a cloud service that enabled users to easily share content, including hosting video and entire music libraries.  The site is accused of illegally profiting from the distribution and reproduction of copyrighted work, including movies online before their theatrical release, as well as music, TV shows, e-books, and software.  Seven people, including the Megaupload founder, were indicted and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering, and two counts of criminal copyright infringement.  The Justice Department alleged that the accused generated more than $175 million and caused over $1 billion of harm.

The indictment alleges that Megaupload is different than other file sharing sites, and lists a number of points indicating criminal activity.  Though Megaupload calls itself a file storage site, most users do not have long term storage capability, as continued storage is dependent upon regular downloads – files that are not quickly downloaded are removed, while popular downloads remain on the site.  Megaupload used a rewards program providing financial incentives for uploading popular content that would drive more traffic to the site.  Further, though the business is dependent on advertising for most of its revenue, advertisements are primarily viewed only when files are downloaded.  Finally, Megaupload users commonly discuss how to find links to infringing content and many have indicated that they use the site primarily for that purpose.  Though the Digital Millenium Copyright Act provides a safe harbor for sites that promptly take down infringing material, Megaupload had a procedure of only removing some links rather than the content itself, meaning its activity will unlikely be protected by the safe harbor provision.

After the seizure of the site, many users wondered what would happen to the data they had stored.  Federal officials have finished reviewing the data they wanted to look at, and the fate of the stored files is now in the hands of two hosting companies in Virginia. Users, even those who stored legitimate files, are in danger of losing all their information (though Megaupload is currently in negotiations to preserve the data). This raises questions about users’ rights to data they have stored in the cloud and undermines the security many feel in having their files backed up online.

The takedown of Megupload has affected not only its users, but the internet community as a whole. The Megaupload takedown occurred immediately following the online protest of SOPA and PIPA, and internet activists retaliated once again.  “Hacktivist” group Anonymous took credit for taking the Department of Justice’s website and others offline through denial of service attacks.  The takedown has also shaken some members of the cyberlocker community, as similar sites began acting on their own in fear of being the next company under scrutiny by US authorities.   Uploaded.to now refuses to accept traffic from the United States, while FileSonic, a popular file sharing website has suspended all file sharing on its site.  However, other file-sharing services such as MediaFire and Dropbox have expressed confidence they won’t be targeted by law enforcement, despite the fact that those sites can also be used to download copyrighted material.  As the Megaupload case plays out, we will see where the balance falls between harm to copyright holders and harm to society from the impact on the structure of the internet as we know it.

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February 1st, 2012 at 4:53 pm

Will the end of tax credits take the wind out of alternative energy?

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As the New York Times recently reported, certain tax credits that were included in the Energy Policy Act of 1992 (P.L. 102-486) are set to expire at the end of this year unless Congress acts to extend them.  Of particular importance to producers of wind turbines is the production tax credit, which is estimated to cost approximately $6.8 Billion per year and has been shown to encourage investment in new wind projects that might otherwise be economically unfeasible.  Indeed, the nation’s leading provider of wind power, Xcel, issued an update in which it stated wind generation may not be a cost-effective investment without the tax credit.

Despite the potential benefits to wind power, extending any tax credits would be very controversial given the current state of affairs in Washington.  Developers will just have to hold their breath to find out whether any of the hot air coming out of Congress will find its way into the wind industry in the form of a tax credit extension.

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February 1st, 2012 at 4:52 pm

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