Myriad Genetics isolated the two problem genes that indicate a high risk of breast and ovarian cancer and created a test [...]]]> The Supreme Court recently released a much awaited decision on Myriad Genetics’ ability to patent two genes linked to cancer, BRCA1 and BRCA2. In a unanimous ruling, SCOTUS held that human genes cannot be patented.

Myriad Genetics isolated the two problem genes that indicate a high risk of breast and ovarian cancer and created a test that allows women to see if they have the genes. Because of its patent on the two genes, Myriad had a monopoly on the test, making it quite expensive.

The ruling will allow rival genetic testing companies to offer the test as well, which may reduce the price for consumers. However, rival initial offerings do not seem to be much lower in price so far.

The result is not as straightforward as some of the plaintiffs had hoped because the ability to patent man-made “cDNA” was left intact in some cases. cDNA is a simplified version of DNA with specific inactive portions taken out, and many scientists and legal experts are unsure how to draw a line differentiating the two. How this shakes out in practice remains to be seen.

Because of the confusion surrounding cDNA it is very likely that we have not seen the last of this issue in the courts.

Patent trolls have another trick up their sleeves that could hurt small startups and entrepreneurs, and it involves crowdfunding.

For those of you who aren’t sure what this means, the names Kickstarter and Indiegogo may ring a bell. Basically, crowdfunding is a feel-good way to raise capital for a new venture. Fans or [...]]]>

image from siliconangle.com

Patent trolls have another trick up their sleeves that could hurt small startups and entrepreneurs, and it involves crowdfunding.

For those of you who aren’t sure what this means, the names Kickstarter and Indiegogo may ring a bell. Basically, crowdfunding is a feel-good way to raise capital for a new venture. Fans or supporters can donate money to an initiative, usually via the internet, and once a monetary goal is reached the project can start development.

Crowdfunding can be quite powerful. According to the New York Times, “Nearly three million people have helped a total of 30,000 projects meet their fund-raising goals on Kickstarter… to the tune of $300 million in pledges.” Often, crowdfunding raises money for tangible products, such as ElevationDock charging station for the iPhone, the first Kickstarter campaign to surpass the million dollar mark. Crowdfunding has also found its way to Hollywood. Popular TV show Veronica Mars raised funds to make a full length movie and was the “fastest campaign to reach its goal ($2 million in under 12 hours), and it had the greatest number of supporters in Kickstarter history (91,585 people donated $5,702,153).”

So why is crowdfunding the next target for patent trolls? In order to gain support and funding, entrepreneurs that use crowdfunding often have to reveal a good amount of information about their products, including technical details and timing for fundraising and product launch. This kind of insight gives patent trolls the opportunity to assess whether their IP is being infringed and file a lawsuit at the most painful moment. If trolls are already going after established businesses, imagine the damage they could do to small startups that haven’t even landed on their feet yet.

Yancey Strickler, one of the founders of Kickstarter, pinpointed a huge challenge for crowdfunding: “As a product reaches a certain scale, a person is expected to be a corporation.” (NYT). Most crowdfunding entrepreneurs are just the average Joe with a good idea and have no experience with product development, manufacturing, or legal processes that come with running a business, nor do they have the extra capital to defend themselves. In 2011, the median award in a patent case was $8.8 million. A startup cannot handle these kinds of fees no matter how much their fans love them.

There are a few provisions in place that can protect an inventor from patent trolls. Back in March we wrote about a “loser pays” update to the Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013 (SHIELD). If the court determines there has been no patent infringement, the defendant has the opportunity to recover all legal costs by showing that the plaintiff does not meet certain conditions. The chances of this happening are slim, especially without the necessary battalion of lawyers needed to fight the war.

So before starting a crowdfunding project, Scott Popma, Seth Ogden, and Andrew Holtman of Finnegan Henderson suggest that those considering this route take a close look at the freedom-to-operate (FTO) in their sector.

An FTO is essentially a risk-management audit and should be performed often as patents are constantly being filed or expiring. Popma, Ogden, and Holtman have divided the analysis into three steps:

1. Break the product down into the smallest possible components and then focus on the parts that are the most innovative/not obvious
2. Execute an exhaustive search for each of these components
3. Compare prior art to determine the likelihood of infringement

Here are some options if  infringement is likely:

• Move forward with the project and wait to see if someone sues you
• Abandon the project
• Approach a company and propose a merger
• Re-design the product so that it doesn’t infringe on any third-party patents
• Pay the holder a patent licensing fee
• Arrange a reciprocal patent licensing agreement
• Attempt to invalidate the third-party patent

With crowdfunding predicted to be on the rise after the Jumpstart Our Business Startups Act is implemented, it will be interesting to see how crowdfunders and their supporters will react to the increase of litigation. Could the rise of public interest in America’s patent issues spur change?

More on patent trolls.

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Here are a few of the latest trending industry stories we felt you may be interested in, as well as a note on the latest update to Liquid Lit Manager™.

Kia Counsel Applies “Learn, Test, Repeat” Process to Technology Account Executive Cara Powers attended LegalTech West Coast and reports back on Kia GC Casey Flaherty’s keynote speech. [...]]]>

Here are a few of the latest trending industry stories we felt you may be interested in, as well as a note on the latest update to Liquid Lit Manager™.

Kia Counsel Applies “Learn, Test, Repeat” Process to Technology
Account Executive Cara Powers attended LegalTech West Coast and reports back on Kia GC Casey Flaherty’s keynote speech. Flaherty discussed how he developed an audit program that measures outside counsel’s technological proficiency.
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Webinar Recap: Purchasing Decisions for e-Discovery
A recap of the most salient points from Apersee’s “Purchasing Decisions for e-Discovery” webinar. Learn what requirements you should consider when choosing a service provider and get a jump start with a list of questions we’ve provided.
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Plan a Safe Retirement for your Email
Google recently announced a way for users of its popular online services, including Gmail, to create a “digital will” for their accounts.
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Press Release: LLM Pushes the Boundaries of Technology-Assisted Review
Our development team has implemented a new and proprietary “smart algorithm” that expedites the TAR process. The new algorithm takes a uniquely proportioned sample of documents whose classification has changed throughout review iterations and sets them aside for human review. This human review of documents helps train the system to make better and more consistent decisions, thereby reaching stability faster and more efficiently.
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Important milestones for the Sarbanes-Oxley Act:

February 3, 2012

In Lawson v. FMR, the First Circuit overturned the district court’s interpretation of § 1514A(a), stating that SOX’s protection does not apply to [...]]]> Section 806 of the Sarbanes-Oxley Act (“SOX”) protects whistleblowers from retaliation after having reported suspected violations of SEC or federal rules. SOX was ratified in 2002.

Important milestones for the Sarbanes-Oxley Act:

February 3, 2012

In Lawson v. FMR, the First Circuit overturned the district court’s interpretation of § 1514A(a), stating that SOX’s protection does not apply to contractors and subcontractors of a publicly traded company. The First Circuit stated that the title of the whistleblower provision, “Whistleblower Protection for Employees of Publicly Traded Companies,” excluded employees of contractors from SOX protection.

May 31, 2012

In Spinner v. Landau & Assocs. LLC, the Administrative Review Board (ARB) came to the opposite conclusion of the First Circuit. They found that Section 806 did explicitly limit protection to employees of public companies and ruled that employees of contractors and subcontractors should also receive SOX protection.

June 28, 2012

Last summer the plaintiffs of Lawson v. FMR filed a petition for certiorari with the Supreme Court based on the Spinner v. Landau verdict.

May 20, 2013

The Supreme Court granted a petition for a writ of certiorari to review the decision in Lawson v. FMR LLC.

Why is this notable?

Because it is the first time the US Supreme Court will resolve an issue under Section 806 of SOX. Nicholas De Baun, a partner at Seyfarth Shaw, says that it is unusual that the Supreme Court would get involved so early on. Usually they wait “until a number of the appellate courts have considered an issue, so that it is fully developed by the time it has reached the Court.” De Baun says that any employer who does business with a public company should brush up on the whistleblower provision. “In addition to requiring private employers to understand the rights that SOX provides to employees, a decision along these lines could also require private employers to understand the regulations governing public companies and when those regulations have been violated.”

Austin, Texas (May 22, 2013). Liquid Litigation Management (LLM), Inc. a company dedicated to excellence and effectiveness in e-discovery and case management software, released an update to its ground-breaking Technology-Assisted Review (TAR) feature today. The development team at LLM has implemented a new [...]]]>

3D printers have applications that go far beyond simple novelties. They have already been used to create functional prosthetics for amputees, working guns, and [...]]]> We’ve discussed copyright and 3D printing on the BLLAWG before, but with developments in 3D printing accelerating, legal issues sprout up faster than a MakerBot can print your new shower curtain toggles.

3D printers have applications that go far beyond simple novelties. They have already been used to create functional prosthetics for amputees, working guns, and of course a huge array of copyright-infringing items.

There have only been a few instances of intellectual property holders sending cease and desist letters to prevent unlicensed objects from proliferating on 3D printer schematic websites, and no legal battles to speak of. However, an IP and technology partner, Michael Molano, argues that it’s only a matter of time.

The cease and desist letter may lose its effectiveness as the 3D printing legal arena evolves. Already there are instances of banned schematics being hosted despite pressure to take them down.

Barely over a week ago, downloadable schematics for a functioning 3D-printed gun were uploaded to the internet. Not long after, the U.S. State Department ordered Defense Distributed, the company that created and was hosting the plans, to take them down. Defense Distributed complied, but the cat is out of the bag now because multiple sites, including the notoriously elusive Pirate Bay, have already begun hosting the file.

It remains to be seen how hard intellectual property holders fight against those who use their materials without permission in 3D printer schematics, but if Defense Distributed is any indication, traditional legal tactics may just come up short.

The webinar focused on law firms moving their litigation environments to the cloud and  we thought we’d share the most salient points of the presentation with you, so here they are.

Frank Spadafino, CIO of Epstein Becker Green, made the point that “you use more things in [...]]]> Yesterday Apersee hosted a webinar on  Purchasing Decisions for e-Discovery.

The webinar focused on law firms moving their litigation environments to the cloud and  we thought we’d share the most salient points of the presentation with you, so here they are.

Frank Spadafino, CIO of Epstein Becker Green, made the point that “you use more things in the cloud than you realize – eFax, Postini,” etc. So why is moving to the cloud so scary? Well, it doesn’t have to be. Spadafino recommends,  as with any contract negotiation, that you be very clear up front about what it was that was important to you. If you’re upfront, clear, and you know what’s important to your firm you’re on the right track.

“Having clear delineation of who does what is important,” added Joan Washburn, Director of Litigation at Holland & Knight. “There has to be clearly defined roles and responsibilities.”

Once you have a better idea of what your firm is looking for, it’s time to take a close look at potential providers. Washburn was adamant that you do your due diligence, understand what costs will be, and gather your facts and your metrics.

So what requirements should you consider when making a decision?

• Confidence in security and procedures.
• Complete confidence in the stability of the platform. Does the provider offer any guarantees?
• A company with a good reputation. How long have they been around? What do your peers say about their experience with this company?
• Make sure that the solution complies with security points on which you’re audited by the client.
• Responsiveness of the provider’s customer service team is crucial.

In essence, be prepared and know what questions to ask. Have your checklist ready in order to make sure that the hosted environment will work for your firm. Not sure what to ask? Read our article that explains cloud computing in relation to e-discovery and the legal world. The end of the piece has a solid list of sample questions to build off of when going through the vetting process.

The Justice [...]]]> Standard & Poor’s unit McGraw-Hill is currently defending itself against allegations from the United States Justice Department that the company fraudulently misrepresented the quality of mortgage-backed securities to investors. S&P asked a federal judge yesterday to dismiss the charges citing that the plaintiff’s case is based on vague statements that cannot prove fraudulent activity.

The Justice Department claims that S&P intentionally defrauded investors by inflating the ratings on mortgage-backed securities in order to win more business from investment banks and other security issuers that were paying S&P to provide the ratings. The Justice Department further indicates that S&P could face more than $5 billion in civil penalties based on the ensuing losses by federally insured institutions that counted these ratings. The Justice Department’s lawsuit is filed under the 1989 Financial Institutions Reform, Recovery, and Enforcement which allows the government to seek penalties for fraud that affects federally insured financial institutions.

In their filing requesting a dismissal, S&P states that the government cannot prove the company fraudulently rated these securities and accuses the Justice Department of cherry-picking emails and data to misconstrue how their analysts came to their rating conclusions. The filing further reflects the following, “It is more than ironic that two of the supposed ‘victims’, Citibank and Bank of America – investors allegedly misled into buying securities by S&P’s fraudulent ratings – were the same huge financial institutions that were creating and selling the very CDOs (collateralized debt obligations) at issue.” It will be interesting to see how the court handles these allegations and how significant the discovery process is in coming to a conclusion.

Quirky’s model provides revenue sharing to inventors in its online community [...]]]> GE and the 4 year-old product development company Quirky have come to an agreement that will allow the public to use many GE patents to spur invention and innovation. The initial deal will make 200 patents available to the public, but will eventually include thousands.

Quirky’s model provides revenue sharing to inventors in its online community while the company handles manufacturing and distribution. The terms of GE and Quirky’s deal have not been made public, but GE is likely going to receive a portion of any revenue generated from inventions using its patents in an arrangement that is beneficial to both companies.

Access to these patents will come as welcome news to small inventors, who have been increasingly targeted by patent trolls, as a way to use the lab-tested patents of a large corporation as protection against legal retribution from patent trolls. As patent and copyright laws lag further and further behind the realities of modern technology, private agreements designed to make patents more accessible are attempting to address these problems and are becoming more and more common.

These subscribers accused the cable company of monopolizing the Philadelphia cable television market by merging and swapping territory with other providers to eliminate [...]]]> The Supreme Court recently rejected a proposed class-action antitrust lawsuit against cable provider, Comcast. This decision overturned an appellate ruling which certified a class of approximately two million existing and former Comcast subscribers.

These subscribers accused the cable company of monopolizing the Philadelphia cable television market by merging and swapping territory with other providers to eliminate area competition and maintain higher prices. The individuals involved in the class provided the court with a general theory for determining overcharges and monetary damages associated with the lack of alternative cable options. However, the court decided, in a 5-to-4 decision written by Justice Antonin Scalia, that the class failed to meet the legal requirements for finding a common method by which to determine monetary damages for each party of the class.

In the decision Judge Scalia stated, “it is clear that, under the proper standard for evaluating certification, respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis.” Justices Ruth Bader Ginsburg and Stephen Breyer who dissented in this matter, accused the majority of focusing on the wrong issues and further claimed that the Supreme Court should not have heard the case in the first place. This divided Supreme Court decision may have repercussions for class-action lawsuits beyond this case.