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U.S. Commercial Service Fosters Global Trade

By Benjamin Bergan

September 2010

The U.S. Commercial Service, the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration, helps domestic companies who lack foreign customers to begin exporting, and helps U.S. companies who have some level of exporting to expand sales to new global markets. With offices located in over 100 U.S. cites, U.S. Commercial Service helps thousands of companies increase export sales every year.

U.S. Commercial Service delivers customized solutions to help U.S. business compete in the global market place, including trade counseling, market intelligence, business matchmaking and commercial diplomacy. Strategies and services are tailored to meet the needs of individual businesses.

Trade counseling consists of creating a comprehensive international business plan for entry or expansion into targeted markets. It also involves assistance with legal and regulatory issues, such as export licensing and complying with global standards. Further, trade counseling assists with potential trade problems, limiting the risk of non-payment of goods, formulating a pricing strategy, and financing and insuring export sales.

The business matchmaking service helps companies identify potential partners, obtain detailed company reports, and determine the marketability of the their product or service. Business matchmaking also utilizes international and U.S. trade shows to connect the companies with potential buyers.

The market intelligence service provides companies with detailed country and industry market reports, at no cost, from over 100,000 reports written by U.S. Commercial Service trade professionals. The reports highlight international companies competing in similar market segments as well as growth and sales figures of different foreign markets. The market intelligence service helps U.S. companies form a pricing strategy to remain competitive among international competitors.

Through commercial diplomacy, U.S. Commercial Service helps domestic companies overcome international trade obstacles to enter foreign markets, and helps the U.S. economy to grow by providing domestic companies the necessary resources to expand their export business and compete in the international marketplace.

Smartphone Technology Affects Healthcare Delivery

By Daniel Austin

September 2010

The most recent report by Deloitte’s Center for Health Solutions (September 2010) describes the use of the Personal Healthcare Records (PHR), which are embedded in mobile communication devices (called an ‘mPHR’). An mPHR securely and confidentially stores personal medical information into an application on an individual’s mobile communication device (MCD), such as a smartphone or tablet PC. Once installed, it allows users to access, monitor, and transmit their own medical information. This mPHR technology could dramatically change the healthcare industry, but barriers to the adoption and implementation of this particular technology could impede its success.

The information entered by an individual into their mPHR is transmitted to a decision support liaison that uses this data to make judgments about his or her care. Such judgments include patient reminders to take medication, healthy lifestyle tips, and correspondences with an individual’s insurance company.

The report mentions four barriers to successful implementation of the mPHR application. First, mPHRs must be integrated to include information from all of the physicians and healthcare facilities that a patient visits as well as information from their health insurance company. Secondly, consumer demand for PHR-accessible data is weak; only ten percent of Americans currently use a PHR. Thirdly, privacy and security concerns remain a barrier to patients utilizing PHRs. Finally, the integrity of medical information inputted into a PHR by medical professionals remains a concern. The legal medical record inputted by physicians and healthcare providers must remain entirely separate from patient-entered data to ensure data integrity.

There are forces working to overcome these barriers to bring the mPHR to more healthcare consumers in the future. These forces include greater adoption of Electronic Health Records (EHR) by the major stakeholders in the healthcare system, clearer regulations including privacy protections, MCDs with increasing capacity and functionality, and more focus on healthcare consumerism.

Over the next five years, greater EHR adoption by hospitals, physicians, and allied health providers is anticipated. Federal and state governments are offering a variety of incentives for healthcare providers to implement healthcare IT upgrades, including EHR and PHR.

Secondly, regulations surrounding healthcare records, including privacy and provider liability are becoming clearer. A universal PHR platform is being developed and standardized through both private corporations, like Microsoft and Google, as well as regulatory authorities.

Thirdly, MCD capacity and functionality are increasing. As mobile communication devices are getting faster and more functional, mPHRs have more utility, and more complex applications can be used to monitor patient conditions.

Additionally, the decreasing cost of MCDs and the increasing incentives for health insurance payers will lead to greater use of mPHRs. This trend can be seen in the increasing number of smartphones, which are the fastest growing segment in the mobile device market. Coupled with increasing use of smartphones, health insurance companies are offering consumers incentives, such as bio monitoring devices, that are integrated into a member’s smartphone at no cost to help monitor chronic conditions.

Lastly, consumerism in healthcare is increasing, meaning more patients are looking at what services they are using and determining if the same outcome can be reached at a lower cost. For example, a patient may use mPHR applications to determine if a generic drug would be just as effective as a brand name drug at a lower cost.

Increased use of mPHR has the potential to provide better outcomes for patients and reduce expenditures to the healthcare delivery system. In closing, mPHRs have enormous potential to consumers, healthcare providers, and health insurance companies, as they could serve to reduce costs while allowing consumers more control over their healthcare.

USPTO Considers New Three-Track System

By Jacob Berger

September 2010

The United States Patent and Trademark Office (USPTO) is currently considering a new method for analyzing patent applications. The new three-track program is supposed to help alleviate the patent backlog by making the review of applications more efficient. At the moment, the wait for patent approval is around three years from the date of application; however, with this new three-track program, as well as several other fast-tracking programs that have recently been implemented, the USPTO is hoping to cut that wait time significantly.

The new program would contain three separate tracks from which patent applicants could choose, depending on which suits them best.

In Track I, patent applicants would pay an additional fee, on top of the standard application fee, and could expect the first action from the USPTO within four months and final action within a year. This is a considerable improvement over the current wait, and the additional fee is expected to be quite substantial.

Track II patent applicants would follow the normal patent application process currently in place.

Track III is the deferred track. Here, applicants could defer docketing of their patent application for up to 30 months. Since many of these applications are somewhat speculative in nature, the additional wait time may result in many of these applications being withdrawn.

The USPTO is hoping that with the increased resources generated by the additional fees from Track I, combined with the withdrawal of many applications from Track III, efficiency will be increased.

Another part of the plan is to defer all applications that are first filed abroad. The application will be deferred until the USPTO receives the search report and first office action from the overseas office where the application was first filed. This new approach aims to alleviate a substantial amount of work for the USPTO as they will not duplicate work done by other offices.

This new three-track process is currently still in the proposed phase, and the USPTO took comments on the plan in August. As any increase in efficiency at the Patent Office would drastically decrease the time required to obtain patent approval, these recent developments are of great importance to health of the economy.

NYS Broadband Development Looking Forward

By John Amandolare

September 2010

In June 2009, New York Governor David A. Paterson officially created the state’s first Broadband Development and Deployment Council, recognizing the need for widespread, universal broadband service throughout the State. At the time, the United States ranked fifteenth among industrialized nations for broadband penetration. Declaring a need for further advancements that would ensure our competitiveness globally, President Obama’s American Recovery and Reinvestment Act of 2009 provided $7 billion in federal stimulus for broadband development and deployment. New York responded by creating the thirteen-member Council with a group of various professional backgrounds; ultimately, the Council will promote long-term growth of cutting-edge broadband services across New York State.

In May of 2010, members of the Broadband Development and Deployment Council participated in New York’s Broadband Summit in Lake Placid, a conference aimed at providing up-to-date information on existing broadband service, construction projects and future plans for broadband deployment in the Adirondacks, one of the State’s most underserved areas for high-speed service. Alongside the Council were representatives from a host of organizational actors, including CBN Connect, DANC, ION, Primelink, Westelcom, SLIC, the Akwesasne Broadband Project and Clarkson University. A host of forged relationships with these private and non-profit groups has led to several million dollars in federal stimulus money for broadband deployment and connectivity following federal stimulus funding opportunities.

More recently, in July, Governor Paterson announced a $540 million Public Safety grant application to improve broadband services, submitted by the State and New York City joined together in an effort to expand New York’s ‘New Economy’ of technology and innovation endeavors. The proposal seeks to deploy a 700 MHz wireless broadband network across 57 counties in the State for use by public safety officials. Normal and emergency response needs will be supplied under the program, including streaming video, digital imaging, mapping/GIS, and remote database access, among a range of other services. Ultimately, the deployment of the high-speed wireless program will connect much of the State’s public safety organizations to communicate with one another in a harmonized platform. The Federal Communication Commission expects to make an announcement of awardees this month; New York is competing with over twenty other state, county and city collaborative efforts to secure funding for improved public safety connectivity.

Obama Increases USPTO Funding

By Amy Kim

September 2010

On August 10, President Barack Obama gave the United States Patent and Trademark Office (USPTO) authority to spend an additional $129 million from the fees that are expected to be collected for the 2010 fiscal year. In July, after hearing Obama’s earlier request to allow the USPTO access to all the projected fees it will collect in the 2010 fiscal year, Congress approved the bill by unanimous consent. The $129 million of Department of Commerce funds will transfer from the Census Bureau to the Patent Office. Since the fees collected by the USPTO are often diverted to other agencies, those who criticize fee diversion are hoping this bill is the first step in allowing the USPTO access to full funding. The President stated that the money would “support efforts to reduce backlogs in processing patent applications – by spurring innovation and reforming the U.S. Patent and Trademark Office to make them more effective.”

After the bill was signed, David Kappos, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, stated that the additional funding would be used to invest in ways to decrease the amount of time needed to issue patents and reduce the current patent backlogs. Specifically, the investments are intended for hiring new examiners, allowing additional examiner overtime, and improving the current processes and IT systems.

One of the processes to be improved was announced by the USPTO in early June – a system that allows patent applicants to choose one of three tracks for the examination of new patent applications: prioritized, traditional or delayed. By adjusting the speed at which applications are processed, the USPTO is acknowledging that the current model of having one set process time is too inflexible for many applicants. While most applicants are willing to pay additional fees in order to receive priority consideration from the USPTO, biotechnology and pharmaceutical companies as well as universities stand to benefit more from a delayed process due to the nature of their patents.

In addition to the improvement in processes, a task force comprised of management and labor representatives of the Patent Office Professional Association (POPA) generated a number of recommendations for improving the quality and efficiency of patent examinations by evaluating the standards that patent examiners must meet. This evaluation is the first major update to the patent examiners' performance appraisal plan in 25 years. The ultimate objective is to match the performance standards for patent examiners with the USPTO's goals of improving quality in examinations while reducing the backlog of pending patent applications.

This bill is part of Obama’s larger goal of investing in the United States’ economic future. As more technology is patented, new industries and jobs become available to keep up with the growing challenges posed by China and other IP-competitive countries. In order to provide the necessary support for the improvement of the US economy, the USPTO must keep up with these growing IP demands.

PTO Funding Stabilization Act Introduced in House 

By Amy Kim 

June 2010

On May 18, a new bill was introduced to the House of Representatives by Reps. John Conyers Jr. and Lamar S. Smith, the leaders of the U.S. House Judiciary Committee. The Patent and Trademark Office Funding Stabilization Act of 2010 bill was proposed as a way to give the PTO authority to set fees related to IP protection and prevent unrelated government offices from receiving some of the fees that the PTO has collected. Currently, appropriations committees decide how much patent applicants and holders are to be charged by the PTO. Normally, the committees allow the PTO to keep enough fees to cover its budgeted expenses plus an additional $100 million on occasion; however, the committees have the right to take the remaining fees earned and use them for other governmental purposes. The amount of remaining fees that have been diverted since 1992 is estimated at $700 to $900 million.

The proposed bill was announced just one day after a narrower bill had been placed on the House’s calendar for voting. The narrower bill, the PTO Fee Modernization Act of 2010, addresses the current issue of the Congress being able to change fees charged by the PTO. The bill proposes a method by which the PTO Director can modify fees as needed. If the bill is passed, the PTO Director will be able to alter the fee amounts through a process that would last only four and a half months from the notice of change to the enactment of the change. This bill was pulled from the legislative calendar, and the Patent and Trademark Office Funding Stabilization Act of 2010 was introduced in its place, which includes the fee-setting aspects of the earlier bill. Conyers explained the replacement by stating, “We had initially planned to introduce a bill solely addressing fee-setting authority and bring it up for a vote . . . However, upon reflection, it has become evident that fee-setting authority, fee diversion, and a temporary surcharge are interrelated, and we hope to now work with all stakeholders on this package.”

The Funding Stabilization Act of 2010 has a number of key elements. The bill is geared towards correcting the interrelated issues of fee-setting authority and the diversion of PTO funds by replacing the appropriations committee with a “USPTO Public Enterprise Fund”, which will be under the PTO’s control. The proposed revision of the statute states that the collected fees “shall be collected by the Director and shall be available until expended.” More flexibility is given to the PTO Director by broadening the allowable expenses that are paid out of the fund. The definition of ‘allowable expenses’ gives much leeway to the Director by allowing costs “that are determined in the discretion of the Director to be ordinary and reasonable and are incurred by the Director for the continued operation of all services, programs, activities, and duties of the Office.” The new fund is expected to be established by October 1, 2011.

The new bill also establishes the fee structure for all PTO services. It authorizes a 15% surcharge to be added to the starting fees, effective 10 days after the bill is passed. The surcharge clause was added due to economic pressures and expectations of a shortage of funds. An exception is allowed for small businesses that file few patent applications and have low incomes, but a $400 surcharge is added for non-electronic filings. Critics of the bill claim that it does not fully provide the patent reform that is needed. American Intellectual Property Law Association President Alan J. Kasper stated, “AIPLA supports a comprehensive approach to patent reform now working its way through the Congress, and not the piecemeal approach represented by this bill.” In his view, the bill lacks “efficiency and quality-enhancing provisions such as those that would simplify the rules and procedures for granting patents, allow the public to provide patent examiners with relevant information before deciding whether a patent can be granted, or permit prompt challenges of newly issued patents to ensure they satisfy the rigorous standards for patenting.”

Conyers, in his announcement of the proposed bill, stated that a more comprehensive patent reform was still available. He clarified that the proposed bill was not intended to effect the discussions that were being held in the Senate over the comprehensive patent reform bill.

WIPO Prepares to Guard Indigenous Peoples’ IPR

By John Amandolare

June 2010

In early May, The World Intellectual Property Organization’s (WIPO) Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) made significant headway on a new international framework to prevent the misappropriation of “traditional knowledge, genetic resources and traditional expressions.” WIPO’s goal is to have indigenous peoples become beneficiaries from the rewards of exploited biodiversity within their homeland. Under the new framework, member states and indigenous peoples represented in WIPO that request the Organization’s support can receive a number of WIPO initiatives aimed at helping them gain a share of profits earned from genetic resources.

The IGC held its first session in early May in Geneva, Switzerland, and will continue active negotiations, allowing for member states to contribute to the IGC framework draft that will be up for official debate at the next scheduled meeting in December 2010. The May session represents a major step forward for WIPO. Previously, negotiations came to a halt in October 2009, following procedural disagreements. IGC intersessions are planned this summer to discuss key items of the new framework, although final arrangements and participants are still being coordinated.

IGC members are hopeful that the new instrument will offer protection for both developed and developing member states, and indigenous peoples as well, and provide for a fairer distribution of earnings from intellectual property associated with the IGC’s three core areas – traditional knowledge, folklore and genetic resources. Among other key topics, a developed nation genetic resources objective was submitted for negotiation.

IGC’s debate, both this summer and at next winter’s formal negotiation, is expected to hinge upon determining what sections of the agreement will be legally binding, especially regarding the misappropriation of resources. Specifically, developing countries and indigenous groups fear that, without a binding mechanism, they will be at a disadvantage in the face of developed countries that profit from the exploitation of the traditional knowledge, folklore, and genetic resources of indigenous peoples.

US and China Agree to Bilateral Patent Cooperation

By Amy Kim 

June 2010

The USPTO and China’s State Intellectual Property Office (SIPO) signed a memorandum of understanding (MOU) on May 19th regarding bilateral cooperation on patents between the two countries. The memorandum creates the general framework that will be needed in order to obtain bilateral cooperation. The framework provides for the creation of work-sharing programs to improve the exchange of information between both countries and allow for a more effective administration and IP system. The MOU also promises the development of best practices and cooperative activities. Proponents praise the bilateral Patent Prosecution Highway (PPH) agreement that both countries agreed upon as part of the MOU. The PPH agreement serves as a tool to reduce international patent backlogs and shorten the patent application process. Since 2006, the PTO has entered into PPH agreements with the patent offices of Australia, Canada, Denmark, Finland, Germany, Japan, Korea, Singapore, United Kingdom, and the European Patent Office.

David Kappos, the USPTO’s Under Secretary of Commerce for Intellectual Property and Director, released a press statement stating, “This memorandum reconfirms and further strengthens our commitment to the growing cooperative relationship between our two offices . . . I am especially pleased that we have agreed to work toward constructing a Patent Prosecution Highway where both Offices can leverage each other’s examination expertise to eliminate work redundancy, increase efficiency and increase patent quality.” Tian Lipu, the Commissioner of SIPO, added that the bilateral cooperation between the two offices has advanced significantly since his last visit to the PTO in 2006. He confirmed, “This MOU takes note of our accomplishments, advances our shared vision of bilateral cooperation, and further reinforces the partnership between USPTO and SIPO.” The United States and China agreed to have the MOU effective immediately, and intend to move forward on their plans as soon as possible.

Project Exchange Program Aims to Chop Backlog

By Erin Lawless

June 2010

In an effort to reduce the patent application backlog at the Patent and Trademark Office, USPTO Director David Kappos has implemented an additional program to expedite pending patents. This new program, dubbed “Project Exchange”, will be expanded to include all applicants who wish to expedite processing on a pending patent. Previously, only those entities that qualified as small inventors could take advantage of the program. Now, anyone with multiple filings can use it—but customers are limited to 15 applications per entity.

Here’s how it works. An entity with multiple filings can have one of their patent applications expedited if the entity withdraws one of their unexamined patents, hence the “exchange”. In a press release, Kappos said, “Project Exchange will help us reduce the backlog and enable us to process applications more quickly.” Kappos has proposed and implemented many new initiatives for reforming the USPTO and reducing the patent backlog since he was appointed by President Obama in August 2009.

USPTO Launches Ombudsman Pilot Program

By Amy Kim

May 2010

In April, the USPTO announced the launch of its new “Ombudsman Program”, which is designed to assist patent applicants with application processing problems if the regular channels of correcting the problem fail. The pilot program, which is planned to run for one year, was introduced with the goal of saving applicants and the USPTO both time and resources while improving patent quality.

The program is straightforward and was created in direct response to feedback that the USPTO received from members of the patent community. Under the Ombudsman program, applicants, attorneys or agents who encounter a problem in the course of their application process can now obtain assistance by contacting an ombudsman representative via the USPTO website. The applicant will receive a phone call within one business day to discuss the details. After the discussion, the ombudsman will coordinate with staff members at the Technology Center (TC) to correct the issues and allow the application to continue on its course.

In order to ensure quality assistance, each TC staff member is assigned an ombudsman representative and a backup, who are selected according to their experience. The program is staffed by senior supervisors and TC staff, including supervisory patent examiners, training quality assurance specialists, and subject matter experts. In addition to the highly qualified staff, a custom-designed tracking database is maintained to track general information about the problems that arise and whether an issue is open or closed. Ombudsman representatives are instructed to regularly review the database to confirm that all issues have been addressed within 10 business days. They also track any trends in the examination process that may reveal areas where additional training is needed. The information extracted from the database will also alert the USPTO to common problems that applicants encounter in the application process. These problems and solutions will be posted on a website in order to provide another resource for applicants to reference when encountering a problem.

Organizations like the Intellectual Property Owners Association have praised the USPTO’s initiative in addressing the concerns of the IP community. It stated in its comments to the PTO that “[c]reating an Ombudsman position will provide the patent community with another resource to turn to when it believes that prosecution of a patent application has gone astray.” The USPTO has left the decision open as to whether it will decide to extend the pilot program at the end of the 12-month pilot period or not. If extended, the program will include modifications based on the applicants’ feedback during the pilot period.

Peer-to-Patent Project Extended

By Erin Lawless

May 2010

The Peer-to-Patent project, also known as the Community Patent Review project, is one of the USPTO’s many attempts to reform the patent system. This particular reform seeks to capitalize on gathering public input in a structured, productive manner by connecting the PTO to an open network of experts online. If successful, Peer-to-Patent would be the first social software project directly linked by the federal government to decision making. Since 2007, when the Peer-to-Patent project began, it has helped to decrease the number of backlogged patent applications by about 60% according to the USPTO.

The purpose of Peer-to-Patent review is to help patent offices provide faster and higher-quality examinations of pending patent applications. Specifically, to accomplish this goal, the PTO enlists the assistance of active, online citizens to help find and explain prior art. The term ‘prior art’ is defined as any information that has been made publicly available related to the originality of a patent claim. It can include any earlier patent, academic paper, magazine article, webpage, or physical specimen – just to name a few.

Historically, patent examiners have been in charge of finding and comparing prior art to a claimed invention in order to make a determination on an application for a patent. A claimed new invention for which a patent application is pending must be new, novel, and not obvious in order to qualify for a patent. Because of the massive number of patents examined, patent examiners have only a few hours they may budget towards researching and examining prior art for each application.

Under the Peer-to-Patent change, however, patent examiners can rely on information brought to their attention by the social software feature to facilitate discussion amongst groups of volunteer experts. Users are able to upload prior art references and participate in discussion forums.

Other countries’ governmental patent offices that have used peer-to-patent reforms include Australia, Japan, and the United Kingdom, as well as the European Patent Office.

TechCrunch to Host Startup Competition in NYC

By John Amandolare

May 2010

On May 24–26, TechCrunch, the popular online website devoted to tech startups, products and websites, will host its first conference devoted to all-things startup in the technology world, TechCrunch Disrupt. Topics to be discussed include the role of media and technology today and in the future, as well as the growing presence of tablet computing, smart phones, software in the cloud, and rich-media platforms, among others. In addition to the panel conversations listed on the schedule, there will be afternoon unveiling sessions for new startups and products competing for a prize.

Scheduled speakers include Fred Wilson, a partner at Union Square Ventures; Charlie Rose, host of the nightly Charlie Rose Show; Ron Conway, an angel investor from SV Angel (whose early investments include Google, Paypal and Ask Jeeves); and a few members of Google, including Vice President Vic Gundotra, Vice President of Search Product and User Experience Marissa Mayer, and President of Global Sales Operations and Business Development Nikesh Arora. In total, there are nearly thirty scheduled speakers across the three-day event.

Startups will be unveiling themselves to critics as well, including demos and exhibits of products in “Startup Battlefield”. Products either still in beta or less than three months old are eligible to compete in this Battlefield tournament, and TechCrunch is placing great emphasis on companies planning to launch for the first time at the conference – the winner of Battlefield receives $50,000 cash. Judges will include venture capitalists, angel investors and successful startup entrepreneurs.

The event is set to take place at 550 Washington Street in lower Manhattan, and the TechCrunch team has partnered up with AirBnB to offer a large number of housing options for people coming from out of town. Using the code DISRUPT100 on AirBnB can take up to $100 off for your stay.

WIPO Criticizes ICANN’s Stance on Cybersquatting

By Amy Kim

April 2010

The Internet Corporation for Assigned Names and Numbers (ICANN) recently proposed a Trademark Post-Delegation Dispute Resolution Procedure (PDDRP) that would provide trademark holders the right to initiate proceedings against registry operators who have acted in bad faith. The World Intellectual Property Organization (WIPO) criticized ICANN’s proposal as weakening WIPO’s original proposal, which would have allowed trademark holders to target registries for not taking sufficient steps to prevent abusive domain name registrations. WIPO feels that the registries should take a more proactive approach towards protecting trade names and that ICANN’s proposal focuses on blatant cases of registry owners exhibiting “bad faith” in facilitating cybersquatting. WIPO prefers to encourage registry owners to take preemptive steps to minimize and prevent cybersquatting before it occurs.

ICANN was created in 1998 to organize and manage the Internet’s vast domain name system (DNS), which allows website creators to register domain names. Domain names can be broken down into two components – the text to the right of the dot is known as a “top-level domain” or TLD (e.g., “com”, “org”, etc.), and the text before the dot is the domain name, which must be registered in order to be used for purposes like websites and email services.

Because the Internet has become such an integral part of the global community, the number of cybersquatting cases has increased dramatically over the past decade. Cybersquatting is the act of registering, selling or using a domain name to profit from the goodwill of someone else's trademark. Generally, opportunistic buyers purchase the domain names of existing businesses with the intent to sell the domain name back to the businesses for a profit. Global and domestic organizations have struggled to control these acts but have been unable to create an effective plan that synchronizes the efforts amongst different groups.

Some of the limitations of ICANN’s proposal stem from the inherent ambiguity of the rules and process. Registry owners are likely to find it difficult to determine whether an ICANN panel would find “bad faith” in their actions since the definition can be construed broadly or narrowly. In contrast, WIPO’s method would define specific safe harbors for registry owners by allowing them opportunities to make available certain dispute policies and resolution mechanisms, be responsive when complaints come in, investigate the complaints being made, and maintain certain minimal standards. By this method, registry owners would be protected from potential suits from trademark owners, and cybersquatting would be greatly diminished.

ICANN’s proposed PDDRP is currently awaiting summary and analysis. Various organizations, including WIPO, weighed in during the comments phase (see WIPO comments). The summary and analysis is expected to be issued within the coming months.

NYS Broadband Council Plans Access for All New Yorkers

By Erin Lawless

April 2010

On March 15, the NYS Broadband Development and Deployment Council held a quarterly meeting to review the status of broadband accessibility in New York and to address ways in which the State could incorporate the federal broadband stimulus programs. The four Broadband Technical Committee Chairs presented priorities for the Council to consider in order to advance broadband initiatives and obtain federal broadband stimulus funding. In regards to the upcoming year, each Chair presented a plan: the Digital Literacy & Adoption Chair suggested addressing affordability, computer ownership, digital literacy and training programs; the E-Government Expansion Chair suggested increasing access to government services by offering online government programs that can be accessed through the Internet; the Economic Development & Infrastructure Chair suggested building stronger economies through broadband access by promoting the increased usage of technology by NYS business owners; and the Planning & Policy Committee Chair encouraged the Council to focus on recommending and advocating for broadband policies that will advance computer adoption.

The Council discussed ways to leverage NY State’s broadband infrastructure with federal and state investors, thereby allowing citizens to connect to educational and training opportunities as well as government programs. In turn, the Council expects such training and government programming to enhance community involvement and foster economic development. Further, some organizations are providing support to help NY entities interested in applying for broadband stimulus funds. The Governor’s Recovery Cabinet and NYSTAR, along with the State of New York, are all providing such services.

One grant that was already disbursed includes a $625,000 grant from New York State to Tech Valley Communications in partnership with Albany Mayor Gerald Jennings for the purpose of expanding Albany FreeNet, a free wireless network, into new areas surrounding Albany where Internet adoption rates are low. The grant will also allocate resources towards providing free digital literacy classes to Albany residents. The Council is looking at the use and implementation of this grant as a model for other programs in the State.

Congress Hears Call for Manufacturing Innovation

By Erin Lawless

April 2010

On March 17, industry experts testified in a hearing to the House Committee on Science and Technology. The resounding call was for a shift in priorities toward innovation and advanced manufacturing so that U.S. manufacturers can keep up with foreign competition.

General Motors’ Director of the Manufacturing Systems Research Lab, Susan Smyth, called for government R&D programs that are “more focused on ways to provide high-quality assembly, non-destructive evaluation, and high rates of repeatability at large volumes.” Smyth pointed out that many technologies are critical to the operations of the automotive industry. She pointed to robotics, wireless standards, virtual manufacturing, and sustainability as key concerns for automotive manufacturing.

Debtosh Chakrabarti, President of the chemical manufacturer PMC Group, called for the United States to increase the number of high-wage jobs and reduce its dependence on foreign oil. Chakrabarti was optimistic that the chemical manufacturing industry could replace crude oil with chemicals based on renewable sources. However, Chakrabarti noted that the chemical industry is facing problems in the development and commercialization phase due to a lack of public and private funding.

Proctor & Gamble’s Vice President of Global Sustainability, Len Sauers, called for stronger research into renewable energy, stronger education in terms of undergraduate-level STEM education, and other “drivers of education”.

Other experts from private, public and academic institutions warned that more investment in public-private partnerships and the prioritization of key technologies are crucial because the United States is loosing its competitive edge to foreign competition.

At the end of the day, in seeming agreement with those who testified, Committee Chairman Bart Gordon (D-TN) commented that although U.S. manufacturing is not as vibrant as it once was, it is not dead. Gordon estimated that the manufacturing industry generates more than $1.5 trillion and accounts for more than half of U.S. exports. He concluded that Congress needs to take action now to “preserve, and perhaps even grow, the U.S. manufacturing sector for the future.”

Brazil Threatens to Breach US IP Rights

By Amy Kim

March 2010

On February 10, Brazil adopted measures to suspend its obligation to protect US intellectual property rights (IPR). These measures stem from a World Trade Organization (WTO) dispute that Brazil brought against the United States in 2002 over cotton subsidies. As the United States has made no significant reformations since then, Brazil brought the case back to the WTO in 2009.

In 2002, the WTO held that the United States had violated global trade rules by giving over $4 billion in annual cotton payments to US farmers, thereby encouraging excess production and driving down global cotton prices. In 2005, Brazil asked the WTO to allow sanctions of up to $2.68 billion on goods and to permit Brazil to place limitations on US IPR and services. The WTO determined that Brazil could retaliate by attacking US services or IPR only if the United States paid cotton farmers in excess of specified caps.

Although Congress tried in 2006 to conform to this ruling by cutting some export credits and repealing certain cotton programs, it proceeded to institute new farm bills in 2007 that allowed more cotton subsidies. The WTO responded by proposing that the United States cut cotton subsidy costs by 82%. Washington rejected the proposal and proposed no alternative.

In 2009, although the cap had been set at $460.3 million, the United States exceeded that by $340 million. To remedy this situation, President Lula adopted provisional measures that would streamline the administrative processes required to suspend US IPR. These measures have been given the force of law and ensure that the removal of IPR is valid from a domestic legal standpoint. The document provides that the following measures may be taken:

(1) suspension and limitation of IPR;
(2) changing of the rules and procedures that secure IP protection;
(3) changing of the measures for the application of IPR;
(4) temporary prohibition of royalty remittances on the exercise of IPR; and
(5) additional tax costs on the compensation of IPR.

These measures allow Brazil to suspend and limit the IP rights of citizens or companies domiciled in countries that violate WTO trade rules. Areas that these measures will affect include copyrights, trademarks, geographical indications, industrial designs and patents. The Executive Secretary of Brazil’s Chamber of Foreign Trade (“CAMEX”), Lytha Spíndola, announced that the group plans to publish the final list of retaliation products on March 1, 2010. A preliminary list in November mentioned 222 American products, including food, medicine, medical equipment, cotton, appliances, cosmetics and car parts. Services that may be affected include business, communication, transportation, financial, and tourism and travel-related services.

If Brazil proceeds with this, it will be the first country to apply sanctions on IP rights. Although these actions have been authorized twice in the past (by Ecuador and Antigua), sanctions were never enforced. The Head of the Economic Department of Brazil’s Foreign Ministry, Marcio Cozenday, stated, “The broader our retaliation, the better it will be, as it increases the pressure on the United States . . . Many sectors of American society will want their government to follow WTO rules.” CAMEX is giving the United States an extra 20 days to cut its subsidies to cotton, and will suspend the punishment if the United States complies.

Global Patent Agenda Eludes WIPO in Geneva

By Erin Lawless

March 2010

The World Intellectual Property Organization’s (WIPO) January meeting in Geneva failed to solidify an agenda for global patents. Amid discussions about implementing an international patent system and conducting future studies of international patent programs, no decisions were rendered. WIPO also failed to establish a new international treaty on patent harmonization, which would have helped countries work together in patent protection.

The WIPO’s Standing Committee on Patents (SCP) discussed the addition of new issues to the list of patent topics recommended for further study, but settled on no agreements. The SCP Secretariat is responsible for running and delegating agreed-upon studies.

For the sake of comparison, back in June 2008, the SCP agreed on 20 issues for further study, and added an additional 2 in March 2009; however, in 2010, SCP participants were decidedly less amenable to the addition of new patent issues due to what seemed to be growing tensions between representatives from industrialized and developing nations.

Developing countries in Africa and Asia pushed for further study of the impact of the patent system on developing countries and food security; however, industrialized countries, like the United States, did not bite and instead argued that such studies were already ongoing, albeit under a different title.

Another big issue arose as a number of nations called for independent experts to examine the state of technology transfer. In particular, it was asked that experts study the ways in which the patent system may impede technology transfer. It seems that some undeveloped countries are questioning the SCP Secretariat’s capacity to conduct impartial research and studies on the agreed-upon topics. However, most comments regarding the need for “impartial studies” have remained politically vague.

At best, the WIPO’s January SCP meeting can be called a ‘stalemate’ as no items were added to the agenda and nothing concrete was accomplished. Discussions are scheduled to continue, however, at their next meeting in October 2010.


Grants.gov Realizes Record Submissions

By John Amandolare

February 2010

Recovery Act grant funding is being credited for helping to achieve a 60% submission increase for grant applications in 2009 at Grants.gov, the central repository maintained by the U.S. Department of Health and Human Services for grant programs across 26 federal agencies. Since its founding in 2003, Grants.gov has aimed to help grant applicants across all agencies engage in a simplified system that eliminates redundancy. Funding for the program is spread out among the participating agencies based on their size, and a representative body that includes one member from each agency handles oversight.

Recent improvements that have likely lent to the increase in 2009 include (1) a new Adobe Reader application package that allows all users, regardless of operating system, to apply for grants, and (2) a Speed and Reliability Upgrade program that has helped the website respond to increased traffic and submissions. Under the American Recovery and Reinvestment Act (ARRA) alone, Grants.gov processed over 64,000 applications, and the website received over 16 million visitors over the course of the year. The total number of submissions for the year (309,771) represents a 53% increase from that of 2008.

One of the biggest advancements in 2009 for the Grants.gov website was the introduction of the Applicant System-to-System (S2S) Web service. By streamlining the process and making applications easier to complete, S2S frees applicants and potential grant recipients from having to re-enter information when applying for multiple grants. S2S also allows organizational and agency users to submit applications through its automated Web service. Last year, the rejection rate for S2S submissions was only 3.4%, even as submissions increased 118% from 2008.

Currently, the areas of ‘Income Security and Social Services’, ‘Natural Resources’, ‘Science & Technology’ and ‘Other Research and Development’ have some of the largest numbers of opportunities available for grantees. To date, the ‘Science & Technology’ category has over five hundred available programs that offer funding. Grants.gov funding is available in a wide variety of categories, all of which can be viewed here.

WTO Rules Against China’s Appeal

By Amy Kim

February 2010

On December 21, the World Trade Organization (WTO) in Geneva announced its ruling that China’s import restrictions on films, books and music from the United States violated the free-trade agreements that China had made upon joining the WTO. China originally brought the appeal last August, after the WTO Panel had held that China could not force foreign importers to divert their media products through state-run companies.

China allows only 20 foreign films to be released to theaters each year, and selling music via the Internet is illegal as well, which limits music download companies like Apple’s iTunes from obtaining full access to the Chinese market. The United States had brought the suit against China because of losses to the domestic media industry in the amount of billions of dollars. As a result of China’s limitations, illegal counterfeit copies of foreign movies and music have flourished in the Chinese market.

The United States’ argument against China’s restrictions focused on the agreements China had signed in order to gain membership in the WTO—the Protocol of Accession, the General Agreement on Trade in Services (GATS), and the General Agreements on Tariff and Trade (GATT)—all of which require that WTO member countries allow the same level of market accessibility. China, however, argued that there was an exception contained in Article XX(a) of the GATT that allowed restrictions to be placed when it was in a country’s interest to protect its public’s morals.

Even though the original WTO ruling had deemed China’s “public morals” argument insufficient, China raised the same defense in its appeal. The defense had only been raised once before, and that was by the United States in an attempt to force a ban on Internet gambling. The WTO had rejected the defense back in 2005 and, therefore, experts were not surprised when, this time around, the WTO rejected China’s use of the same defense. Any country using the defense bears the burden of providing evidence that the trade restrictions are "necessary to protecting its morals." The WTO held that China failed to offer evidence showing that its restrictions on foreign copyrighted materials were “necessary” to protect public morals. It noted that the United States had offered an alternative method for monitoring the imported media goods that was less trade-restrictive but which still provided China with ample opportunity to review the content of the foreign media products. Despite the obvious win for United States, the WTO ruling did not address China’s limit of allowing only 20 films a year, so the outcome may not have a significant impact on U.S. revenues.

China cannot appeal the December ruling and has been given one year to comply with the panel decision. If the restrictions are kept in place, though, the United States may impose trade sanctions on China that will equal the estimated amount of lost revenue. U.S. Trade Representative Ron Kirk stated that the WTO’s decision was an essential step towards obtaining full market access to China and added, “We expect China to respond promptly to these findings and bring its measures into compliance.”

Torrent Liable for Inducing Copyright Infringement

By Erin Lawless

February 2010

The operators of the popular Internet file-sharing site, Torrent, were held liable for inducing copyright infringement in the U.S. District Court for the Central District of California last December. Plaintiffs against Torrent include Columbia Pictures Industries Inc., Disney Enterprises Inc., Paramount Pictures Corp., Tristar Pictures Inc., Twentieth Century Fox Film Corp., Universal City Studios LLLP, Universal City Studios Productions LLLP, and Warner Bros. Entertainment Inc. The court held that Torrent’s features were designed to purposefully lead users to “obviously” copyrighted works and encourage misuse.

According to precedent, in order to be held liable for inducing copyright infringement, the defendant must take purposeful steps to assist and encourage others to infringe copyright. The plaintiff must show that the defendant has actual knowledge of the infringing material on his or her site and, furthermore, that the defendant can remove it but fails to take simple available measures to prevent further damage to the copyright holder.

The court commented that the Torrent operators’ “inducement liability is overwhelmingly clear,” as there was an abundance of evidence against them. For example, in online forums, Torrent operators had answered users’ queries about how to create DVDs of pirated movies. The conduct exemplified in this evidence demonstrates that the Torrent operators were both aware of the users’ infringement and acted purposefully to promote such conduct. Furthermore, operators had posted comments on their site in which they admitted to “stealing from the lechers” as distinguished from the original artists.

According to the court, Torrent operators had designed their site to include features that draw attention to copyrighted content available for download. One of the Torrent operators had even said, in an interview, that one reason for the site’s popularity was the access it provides to content like ‘The DaVinci Code’, which was a top movie at the time.

If you are concerned that your own site may be held liable for inducing copyright infringement, here are some signs to look out for:

1. Does your site reproduce and distribute copyrighted content within the United States?
2. Is there a category for uploads and downloads where users can upload and download without limits?
3. Does the upload and download section of your website include categories for material that is copyrighted (e.g., “Box Office Movies”)?
4. Do you use piracy-related terms in the website meta tags?
5. Do you provide support to users seeking copyrighted works?
6. Are you posting comments that show your knowledge of infringement?
7. Does your website’s business model rely on copyrighted works?

Green Technology Cuts Ahead at the USPTO

By Amy Kim

January 2010

The U.S. Patent & Trademark Office (“PTO”) announced on December 7 its plan to accelerate the patent application review process for green technology. This Green Technology Pilot Program was introduced with the goal of expediting the development and deployment of green technology into U.S. markets. Under the PTO’s standards, green technology includes applications related to environmental quality, energy conservation, development of renewable energy resources and reduction of greenhouse gas emission.

Normally, patent applications were reviewed in the order in which they were filed. For applications in the green technology areas, applications were reviewed and issued a final decision within approximately 40 months. The expedited process will reduce this time by an average of one year.

An application will be advanced out of turn (accorded “special status”) for examination if the applicant files a petition to “make special” with the appropriate showing. The program began December 8, 2009 and will run for twelve months. Therefore, all petitions to make the application fall under the program must be filed before December 8, 2010. This new plan affects the first 3,000 green tech-related applications that are appropriately filed with a petition.

In order for an application to be eligible for special status, the invention must materially contribute to one of three specified goals:

(1) The invention must further the “discovery or development of renewable energy resources.” The USPTO defines the term ‘renewable energy resources’ as including hydroelectric, solar, wind, renewable biomass, landfill gas, ocean (e.g., tidal, wave, current and thermal), geothermal, and municipal solid waste, as well as the transmission, distribution, or other services directly used in providing electrical energy from these sources;
(2) The invention must create “more efficient utilization and conservation of energy resources.” These include inventions related to the reduction of energy consumption in combustion systems, industrial equipment, and household appliances; and
(3) Lastly, the invention must aid in “the reduction of greenhouse gas emissions.” These include inventions that contribute to advances in nuclear power generation technology, fossil fuel power generation, or industrial processes with greenhouse gas-abatement technology (e.g., inventions that significantly improve safety and reliability of such technologies).

The accelerated review process is being praised by inventors and business executives alike. Carl Horton, Chief Intellectual Property Counsel of General Electric, stated “We hail this initiative as an excellent incentive to fuel further innovation of clean technology and a terrific mechanism to speed the dissemination of these patented technologies throughout the world.” As patents begin to be granted more quickly, inventors will become able to secure funding and create businesses to further the presence of green technology in U.S. markets. And if the program proves to be a successful means of injecting U.S. markets with green technology, then the PTO plans to extend the deadline past its twelve-month pilot period.

USPTO Sizes Up Global Work Sharing

By Amy Kim

January 2010

Discussions pertaining to the advantages and disadvantages of the PTO’s Patent Prosecution Highway (“PPH”) agreements took place in a roundtable meeting on November 19, 2009. Participants included members of various IP industries, law firms and associations.

As the world’s markets merge, patent applicants often decide to pursue patent protection in those countries where their intellectual property will be manufactured, used or sold. Whether patent applications are filed directly in each country of interest or under the Patent Cooperation Treaty, the end result is that substantially identical patent applications with essentially the same claim and scope are pending simultaneously in multiple countries. Prior to the implementation of the PPH agreements, each country’s patent office examined its own version of the patent application, despite the fact that other patent offices around the world were simultaneously reviewing the same patent application issued by the same applicant. The speed at which the reviews were being completed, however, could not keep up with the demand, so backlogs grew. In 2006, the United States entered into its first PPH agreement to reduce the backlog of patent applications and eliminate the redundant work of the patent offices of participating countries.

PPH agreements are bilateral agreements between national or regional patent offices to exchange information and expedite the processing of patent applications. By implementing these agreements, an applicant at a participating patent office may request accelerated processing at another office if the claims in the relevant overseas application have already been allowed by the office in the applicant's own jurisdiction. Currently, the United States has such agreements with numerous countries, including the United Kingdom, Denmark, Finland, Germany, Japan, Singapore, South Korea, Canada and Australia.

None of the participants at the roundtable discussions denied the potential benefits of work sharing. Herb Wamsley, executive director of Intellectual Property Owner’s Association (IPO), commented that he has yet to encounter a single IPO member who is against the concept. Patent attorneys as well as industry and association representatives have praised the way in which work sharing programs lower patent examination costs and move patent applications more quickly to final action.

Despite the advantages of utilizing the system, some concerns were raised during the roundtable discussions. Robert Budens, President of the Patent Office Professional Association, commented that examination quality should be a primary concern of any program. Several participants agreed and raised the additional concern that some national patent offices may develop a reputation for less rigorous searches while others might become known for higher-quality searches, thereby creating “one-way streets” instead of a “highway” whereby the workload is shared, which could potentially affect patent quality.

Although a solution to the problem was not proposed, the roundtable discussion concluded with a reaffirmation that quality must not be sacrificed as a result of speeding up the application process.

Nokia Accuses Apple of Infringement

By John Amandolare

December 2009

In late October, Nokia filed a lawsuit against Apple in Delaware’s Federal District Court, alleging that Apple’s iPhone uses technology protected by Nokia. Specifically, the suit challenges Apple’s use of ten patents owned by Nokia related to wireless data, speech coding, security and encryption. Many are describing Nokia’s suit as a strategic response to Apple’s refusal to license the core technologies that were developed through the organized effort of global telecommunications companies that included Samsung and Sony Ericsson. Nokia has been seeking licensing agreements from Apple for its use of the technology in the iPhone since the phone’s debut in 2007. Refusing to enter into any agreement, Apple has continued using the core GSM and UMTS technologies without paying any royalties to its developers, which include Nokia.

If Nokia succeeds in the suit, Nokia stands to gain somewhere between $200 and $400 million in back royalties. So, it may come as no surprise that their claim came at the heels of Nokia’s quarterly earnings report, which showed the Finnish communications giant slipping in market share to competitors Apple and Research in Motion (makers of the Blackberry series).

In Nokia’s defense, they described their action as a last resort and have entered into agreements with forty other companies to license the same technology being used in the iPhone. Their timing is raising questions though, largely because Apple has been using the technology in its iPhone since its rise to fame two years ago. Some say that the suit is being used as a leverage tool; Nokia would stand to gain less in royalties if the iPhone were pulled from shelves than if the phone continued to make market gains.

So its unlikely that Nokia is hoping for anything more than Apple being compelled to pay what it thinks is fair. In light of the increasing trend of major digital electronics makers using patent infringement allegations as a source of income, some think that Nokia waited as late as it did in order to allow Apple to gain a strong foothold in market share from which royalties could be paid. Either way, though, Nokia seems to be hoping that Apple plays by the rules that bound every other phone maker; and if it does, Nokia stands to gain significantly.

Microsoft Violates IP Rights in China

By Amy Kim

December 2009

In a recent decision by Beijing No. 1 Intermediate People's Court, Microsoft was found to have violated a Chinese company’s intellectual property rights by using particular Chinese fonts in prior Microsoft operating systems. The court has ordered Microsoft to cease selling Windows 98, Windows 2000, Windows XP and Windows Server 2003 in China. Microsoft, however, has announced an intention to appeal.

The creator of the font, Zhongyi Electronic (“Zhongyi”), argued that the license it had sold to Microsoft over a decade ago applied only to the Chinese version of Windows 95. Microsoft had used the Chinese font subsequently from Windows 98 to Windows XP.

Microsoft stated that it "respects intellectual property rights" and uses the intellectual property of third parties "only when we have a legitimate right to do so". In contrast, Ling Xin Yu, Zhongyi’s attorney, stated, “By winning this case against an internationally well-known company like Microsoft, it shows that China, although still a developing country, is taking positive steps to protect intellectual property rights.” It is expected that Zhongyi will seek large damage compensation since the spokesperson for the company highlighted the fact that the case had “dragged on for a long time and the scale and impact of the case was very large.”

Given the amount of piracy that exists in the Chinese market for programs issued by Microsoft and other manufacturers of operating and technological systems, the irony of the ruling has been widely noted. More than any other American company, Microsoft has been at the forefront of advocating for China to crack down on software piracy, so critics of Microsoft may reference this ruling to accuse Microsoft of hypocrisy.

Some believe, though, that the ruling will have no significant impact on Microsoft. Reuters quoted Edward Yu, a chief executive of the China-focused technology research firm Analysys International, as saying, “The majority of operating systems in the market today are illegal copies, and the ones that are Zhongyi-related have an even smaller share of the market, so I don’t think it will have much impact on Microsoft’s business.”

There is a chance that a higher court will overturn this ruling since Microsoft intends to appeal. In the meantime, though, Microsoft is in a weaker position in its fight against piracy in China.

Sales of Microsoft programs will be halted; however, the outcome of this ruling is not expected to have an effect on Microsoft’s release of Windows 7 in China.

Agreement Sought at Bangkok
Climate Change Talks

By Amy Kim

November 2009

In hopes of coming to an agreement over global climate issues, the fourth round of negotiations by the United Nations took place in Bangkok from September 28 to October 9, 2009. The negotiations attempted to create a clearer framework leading up to the final Climate Change Conference to be held in Copenhagen in December.

The key issues debated during the two-week event included talks about financial aid to developing countries, the promotion of clean technologies, and the commitment of the Western nations to firm emission targets. Achieving the goals proposed by the Climate Change talks hinges on technology development and its diffusion to countries that lack the economic and technological resources that can be obtained more readily by developed nations. Thus, the issue of intellectual property has been one of the major obstacles to reaching a common agreement.

Currently, countries have been persistent in maintaining their respective stances on the issue. The United States has claimed that it will reject an agreement containing compulsory licensing, while other developed countries have also shown an unwillingness to even discuss changes to their IP system. In a compulsory license, the government forces the holder of a patent, copyright, or other exclusive right to grant use to the state or others. There are obvious limitations on the rights of the holder, and this infringes upon many countries’ IP laws.

On the opposing side, many advocating countries argue that intellectual property has been a “barrier to the transfer of and access to environmentally sound technologies.” There are legitimate concerns that the IP laws would prevent developing countries from entering the competitive market.
The last day of the Climate Change conference introduced a new paragraph to the proposed text of the agreement, which was included on the request of a group of developing countries and China. The section stated that parties may “compulsorily license specific technologies for the purpose of mitigation and adaptation to climate change.” This statement was conditioned upon a showing that the specific patents and licenses acted as a barrier to the transfer of technology and hindered the implementation of the technology within a given country.

The United States, along with the European Union, held their ground opposing the new section. Jonathan Pershing, the U.S. Department of State’s deputy special envoy for climate change, stated that “the United States [would] not do compulsory licenses.” Opposing countries claim that compulsory licensing counters the development of technology since it discourages private corporations from investing in technologies that would then be distributed for use by other entities.

By the final day of the Bangkok Climate Change talks, a solid agreement on the IP issue had not occurred. This issue will be reviewed again next month in Barcelona, where many delegates have stated a desire to move towards a resolution that can be agreed upon by both developed and developing countries.

Rising Tariff on Chinese Tires Underscores IP Concerns

By John Amandolare

November 2009

On September 11th, President Obama signed into effect a controversial 35% tariff increase on auto and light truck tires imported from China. The decision came after calls for help from industry unions, including United Steelworkers, who had grown frustrated by the increasing gains in the market share held by Chinese imports into the United States. This comes as a marked shift from the policies of the Bush administration, which refused to impose tougher tariffs despite four requests made during his presidency by the International Trade Commission.

It is reported that over 5,000 Americans have lost their jobs over the past five years, during which period, Chinese tire makers have tripled their presence in the American market. The tariff increase is nearly nine times the previous mark of 4%, and the steep hike immediately raised concerns from trade experts about potential responses from China.

Beyond the immediate reactionary measures that China may take – which already include a complaint with the World Trade Organization (WTO) challenging the legality of the hike and opening investigations into American companies’ dumping patterns of auto parts and poultry products on Chinese soil – the risk of tensions in regard to IP enforcement in China is rising.

Despite China’s similarity to the United States in IP law, many foreign companies doing business in China have raised serious concerns about the Chinese government’s ability to enforce judgments against patent infringers. Others have expressed frustration about wanting to do business in one of the world’s fastest-growing economies but hesitating because of the risk it would pose to their IP rights. Concerns over IP enforcement run much deeper than increased tariffs because, as China grows, it will be unable to maintain trade allies in high-tech industries if it lacks an effective body to control patent infringement.

China’s Commerce Ministry spokesman, Yao Jian, said that the recent U.S. decision was in violation of WTO rules. He further described President Obama’s decision as counter to efforts made in curing trade remedy measures that can be detrimental to partners, set out during G-20 summits in which both countries took part.

President Obama’s Press Secretary, Robert Gibbs, responded to questioning about the risks that the tariff hike posed, expressing the administration’s belief that, “for trade to work for everybody, it has to be based on fairness and rules,” and he added that, “We’re simply enforcing those rules and would expect the Chinese to understand [them].” The rules he is referring to are described in Section 421 of the International Trade Act, which allows for the United States to impose tariffs on imports that disrupt the American economy due to high volume.

Experts were quick, however, to note that as China continues to develop its economy and subsequent high-tech industries, the demand for stricter enforcement of IP law will rise with it. So, while the current strain on tire imports into the States may leave both parties at odds in their immediate dealings, the climate for IP growth and protection appears intact, for now.

Google Books: Privacy Concerns Addressed in Amici Briefs

By Erin Lawless

October 2009

To address privacy concerns with the proposed Google Books settlement, on September 4, Consumer Watchdog and the Center for Democracy and Technology (CDT) filed separate amici briefs. This new feature currently offered by Google in beta form is called Google Books, and it enables users to search through the text of many books that have been scanned into a user-friendly online database. Books that are in the public domain would be available in their entirety; others would be available only in excerpt form. In response to concerns that have been raised about copyright infringement, Google has claimed that this sort of service would actually boost sales by helping users to find the book that best meets their needs. Back in the fall of 2005, however, Google was sued in a class action for massive copyright infringement (Authors Guild v. Google Inc.). Before a decision could be made, Google proposed a $125 million settlement with the publishers and authors who had challenged the searchable book database. Google’s proposed settlement with publishers and authors is awaiting approval by the U.S. District Court for the Southern District of New York, which will announce its decision on October 7, 2009.

The Department of Justice (DoJ) has been investigating possible antitrust issues in the proposed settlement (see the May 2009 article), but the DoJ is not the only group to challenge the settlement. The Open Book Alliance, a group composed of Microsoft, Amazon, Yahoo and various library associations and distributors, have also challenged the settlement’s validity in regards to antitrust and copyright concerns. The DoJ is concerned that approval of the Google Books settlement would give Google control of such a substantial amount of online material that Google would effectively have a monopoly in terms of an online, searchable database of books.

On the last day to file before the deadline for amici briefs closed, two new briefs brought in one new issue – privacy. Consumer technology groups are claiming that the privacy policy that Google Books will offer is inadequate.

When the Consumer Watchdog and the CDT filed separate amicus briefs, the two groups fell on opposite sides of the pending issue regarding the settlement. While the CDT hailed the settlement as extraordinary and valuable, Consumer Watchdog called the project an opportunistic monopoly. Both agreed, however, that the privacy policy recently announced by Google in response to concerns raised by the Federal Trade Commission was seriously lacking. The groups also criticize Google for failing to say how long it intends to keep accumulated data and whether it would co-mingle the books’ data with other information to use for targeted advertising. Both groups want the court to retain oversight in order to monitor the implementation of a more substantial privacy plan that would give users the option to have no data gathered at all.

USPTO Starts Collaborating with Finland’s Office on Patent Review

By Eric Berlin

September 2009

On July 6, 2009, the US Patent and Trademark Office (USPTO) began a partnership with its Finnish counterpart, the National Board of Patents and Regulations of Finland (NBPRF), to expedite the patent review process and improve patent quality. This collaboration may look like a step towards a global patent system – and, in fact, many hope that it evolves towards that end – but for now, it’s just part of what is called the Patent Prosecution Highway (PPH) pilot program, a year-long partnership that is likely to be renewed as long as both countries find it beneficial.

The PPH is one of several ways that the USPTO has tried to decrease their backlog of patent applications, which has been growing rapidly over the past 14 years. In fact, the backlog has become so huge that some patent applicants have had to wait 5 years before their review even began.

The PPH between the USPTO and Finland is the tenth such partnership that the USPTO has adopted. The first was with Japanese Patent Office (JPO) in 2006, and it has been extended each year thereafter due to its success.

In the first stage of patent examination, a search for prior art is conducted in order to determine whether a claim is in fact “useful, novel, or non-obvious”; this determination plays a significant role in whether the patent will ultimately be granted. If any claim within the application is approved, then the applicant can request to skip this first stage of patent review at the partnering country’s patent office, thereby fast-tracking their application and eliminating the unnecessary duplication of work.

The PPH is not the only initiative that the USPTO has undertaken to reduce their backlog. In its quest for ways to expedite the examination process, improve patent quality, reduce patent cost, and bring innovations to market more quickly, the Office has also tried out some another initiatives, including the Peer-to-Patent system.

The Peer-to-Patent system, which was developed by the Community Patent Review Project of the Institute for Information Law and Policy at NY Law School, was first implemented in 2006 and was test run for about two years. For applicants who chose to have their patent reviewed in this way, the early stages of the examination process, including the search for prior art, were facilitated by public volunteers (e.g., doctors, scientists, computer experts) who reviewed applications in their areas of expertise, searching online for prior art and commenting on the uniqueness, usefulness and non-obviousness of each invention under consideration. After this review process had been completed, the top ten prior art references would then be forwarded to the USPTO to aid in their review. Critics of the Peer-to-Patent system claimed that it gave little incentive to volunteers, but, nonetheless, it managed to receive recognition from the White House for its transparency. Not insignificantly, an early proponent of this system was David Kappos, who was working as a patent litigator for IBM at the time, and who recently became Director of the USPTO.

Due to the overwhelming backlog, many technologies have been developed that currently languish in line, waiting to be examined and brought to market. Over the next few years, though, as more expeditious measures like the PPH between the USPTO and Finland are put into effect, it will be exciting to experience the pace of innovation begin picking up.

Syracuse University's New Data Center to Halve Energy Use

By Eric Berlin

June 2009

In these dire environmental and economic times, the demand for green energy-efficient technology is on the rise. Each year, a significant portion of the nation’s energy is consumed by data centers, most of which run almost constantly. In fact, according to the Environmental Protection Agency (EPA), in 2006, U.S. data centers consumed about 1.5% of the nation’s energy. And much of that energy is wasted.

On Syracuse University's South Campus, a solution to this problem is already being built. IBM, as part of its Smarter Planet initiative, has donated $5 million of equipment and services towards the creation of one of the world’s greenest data centers. This $12.4 million 6,000-square-foot facility will replace the old computer bank that currently stores student records, payroll information, and the like; and it will use 50% less energy.

In the name of energy efficiency, NYS Energy Research and Development Agency (NYSERDA) added $2 million to the project, and the University, which will pay the remainder, will be responsible for managing the center and developing analytical tools to continually assess and improve its performance. Cutting-edge hardware and software will be provided by IBM, but a key element of the center’s energy efficiency will be its infrastructure.

Functioning mostly off the grid, it will generate its own electricity from natural gas, thereby avoiding the energy loss that occurs during the conversion of AC to DC current when taking energy from a grid.

In another energy-saving measure, rather than running the entire server for each function, these servers will run just those parts that are needed. And rather than cooling the entire room with air conditioning, the center will send water through tubing to target only those parts that are heating up from use.

The exhaust heat generated by the operation of the servers will also play a significant role in the center’s energy efficiency; it will be converted into electricity and air conditioning through absorption chillers. In the winter, though, outdoor air will be used to cool components, and exhaust heat will be used to warm the center as well as adjacent buildings.

The relationship between IBM and SU is truly symbiotic. This center will allow IBM to showcase their cutting-edge design to clients who are interested in creating greener data centers of their own or improving their current operations, and if all goes as expected, the center will be up and running for SU by year’s end.

International Collaboration on Clean Tech Raises IP Protection Concerns

By Eric Berlin

June 2009

Back in February, when Chinese delegates arrived in Seattle for the U.S.-China Clean Energy Forum, both countries, as the world’s two biggest polluters, shared a common goal—to identify concrete ways in which they could address the threat of global warming.

One of the obstacles that kept getting arising, though, was the question of how to handle intellectual property for clean-tech innovations. Since each country has its own laws and regulations, the rules governing their collaboration needed negotiating and explicit spelling out. And with the United Nations Framework Convention on Climate Change (UNFCCC) coming up this December in Copenhagen, many developing countries, such as China, India and Brazil, worry that whatever new standards replace the Kyoto Protocol at that time may require them to limit their carbon emissions more strictly than they can afford to do.

As a result, these governments have raised the possibility of sharing IP, dropping protections on some technologies, or making use of compulsory licensing, which they say would be in the interest of public welfare.

On May 20, the Chamber of Commerce, together with a handful of companies, the likes of which include General Electric, Microsoft and Sunrise Solar, launched the Innovation, Development & Employment Alliance (IDEA), a coalition aimed, in part, towards educating Congress, administration, and international stakeholders about the crucial role that the protection of intellectual property (IP) plays in incentivizing innovation and creating jobs. If developing countries are allowed to license the state-of-the-art green technologies that cost U.S. researchers so much to discover and bring to market, then innovators will lose their incentive, as will their investors, according to IDEA. As proof that IP protection is necessary to the process of technology transfer, IDEA points to the successful dissemination of cell phones throughout developing countries.

From a different perspective, though, Steven Chu, U.S. Secretary of Energy, has welcomed the option of dropping of IP protections on certain technologies, such as cleaner power plants, which he says would help dramatically decrease the rate of global warming and benefit all countries involved. And since a clean power plant is not built in one country and then sent on a boat to another, Chu explains, jobs are not lost by sharing this technology.

As December approaches, more and more high-level international discussions will be held around the world, and IDEA will strive to shape the opinions of those who will hold the greatest sway.

DoJ Investigates Google Books for Antitrust Violations

By Erin Lawless

May 2009

Google Books is a new feature Google will offer in the future whereby, on the Internet, users can read books that have been scanned into a user-friendly online database. So far, many, but not all, authors and publishers have entered into agreements with Google to use the content of the books; however, the United States federal government’s Department of Justice (DoJ) is investigating whether this new Google feature would violate antitrust laws. Part of what the DoJ is investigating is the settlement agreement between authors, publishers, and Google.

The DoJ seems to be concerned that the agreement will give Google a monopoly in terms of an online searchable database of books. Under the current terms of the agreement, Google will invest a substantial amount of time, effort and money into the project of scanning books into the database that will eventually be made public. Also, publishers and authors will be able to register their works, get approved through Google and then collect royalties. Google speculates that this project will make information and literature available to new markets that were previously unreachable to some authors.

While this claim may be true, some critics still worry that the project will pose an antitrust issue in the sense that it will give Google ultimate control of a substantial amount of online material.

EPA's 'Endangerment Finding' Stirs Debate

By Eric Berlin

May 2009

Two years ago, the Supreme Court mandated that the Environmental Protection Agency (EPA) conduct scientific studies to determine whether six new greenhouse gases (GHGs), including carbon dioxide, be added to the pollutants listed under the Clean Air Act. If these gases are found to pose a threat to public health and welfare, then the implication is that the EPA would be required to regulate their emission. On April 17, however, when Lisa Jackson, the new EPA Administrator, proposed that these GHGs do indeed pose a threat to public health and welfare, a fierce objection arose to the threat of regulation.

Jackson comes to the job with 15 years of experience in the EPA and two degrees in chemical engineering from Tulane and Princeton, yet Sen. Barrasso (R-Wy), one of the most vocal opponents of this endangerment finding, called it more political than scientific. To support his claim, he cited passages from an Office of Management and Budget (OMB) interagency memo that implied that the White House disapproved of the finding. The OMB later explained, however, that this unsigned and undated memo was a compilation of comments from many different individuals sent to the EPA merely for their consideration, regardless of whether the claims were substantive or not. Nonetheless, Barrasso used several of these opinions to underscore his beliefs that global warming was not man-made and that this finding would have irreparable repercussions for small businesses.

While most agree that global warming merits a response, some anxiety has arisen as to whether the solution will involve regulation or legislation. To clarify her position on this issue, Lisa Jackson explained that she would much rather see legislation, such as the Waxman-Markey Bill, be passed and that the endangerment finding did not necessarily indicate a path towards regulation. On the EPA’s website, she states “I believe that the right answer will come through legislation that focuses on green jobs, clean energy, and new technologies.”

This may assuage some fears about the EPA’s intentions, but as part of the executive branch, the EPA has the authority to regulate emissions if it so decides. Some suggest that this threat of regulation is being wielded by the administration to get the legislation process moving.

In the 1990s, when rising sulfur oxide emissions threatened to make acid rain a common occurrence, cap and trade developed a good reputation for cost-effectively curbing these threats. In cap and trade, a company buys a certain amount of permits according to the amount of pollution it emits. The largest polluters therefore pay the most, which gives them an incentive to decrease their emissions. Even if the permits are distributed freely at first, which is the current plan under the Waxman-Markey Bill, companies would still have an incentive to clean up their operations and sell whatever permits they have left over. Initially, the permits would be free in order not to disadvantage U.S. companies in relation to their unregulated counterparts around the globe.

The administration hopes to have a solution in place before the U.N. Climate Change Conference meets in Copenhagen in December 2009. With the EPA’s proposal of this endangerment finding, a 60-day public comment period commenced, including two hearings for stakeholders and members of the public to voice their opinions. The EPA will also accept written comments until June 23. Clearly, there is no shortage of opinions on this issue, but as global warming worsens, the need for action is becoming more urgent.

Saving on Patents: When Trade Secret Law Merits the Risk

By Erin Lawless

April 2009

Everyone knows the economy is not at its best, but few know about the newest money-saving trick in patent law.

The newest trend is to protect with trade secrets that which patents would usually be used to protect. The good news is that trade secrets are much cheaper than the traditional patent protections; however, they may come with greater risk.

To acquire trade secret protection, the trade secret must be economically valuable and the “secret” must be kept just that – private information – as trade secrecy laws prohibit disclosure. This is a significant difference from patent law, which requires disclosure to promote the free flow of ideas and information.

Something is, however, lost from the decision to rely on trade secret law instead of filing a patent. Patents are predictable. They define explicitly what is protected and, as such, can be sold, traded, and accounted for by whoever owns the patent. Therefore, if a company decides to save money by using trade secret law, there is a certain amount of unpredictability in that the trade secret information is largely undefined.

Since, when trade secret law is used, nothing is formally accounted for in the eye of the law, there is no assignment of who, in particular, owns the invention between employer and employee. In patent law, however, there is a clear assignment of the invention as belonging either to the inventor or to the company for which the inventor works.

When deciding whether to use trade secrets or patents to protect proprietary information, the pros and cons of each system should assessed carefully to ensure that the best choice is made for the particular invention at hand. Patents are safer, but trade secrets are cheaper, and in a poor economy, these decisions matter.

Stem Cell Research: Science Prevails Over Politics

By Melissa Dobson

March 2009

In early March, President Obama abolished contentious restraints on stem cell research. His encouragement of scientific research has changed U.S. science policy to ensure that scientific data is never distorted or concealed for political purposes.

Although opponents of stem cell research saw it differently, as impacting morality, the actions by the President will allow federally funded researchers to expand their current use of 21 stem cell lines (created before 2001) to the use of hundreds of new embryonic stem cell lines for potentially creating better treatments, and possibly cures, for conditions ranging from diabetes and Parkinson’s disease to paralysis.

Cloning for human reproduction will not, however, be permitted. President Obama stated that the stem cell policy is designed so that it "never opens the door to the use of cloning for human reproduction" as that "is dangerous, profoundly wrong, and has no place in our society or any society."

As the conflict between science, politics, and religion continues, the NIH has been creating guidelines on how to hand out the freely flowing federal money while also imposing ethical constraints. It will be months before the money is disbursed, but on average, the NIH stem cell grants include $1.5 million over a four-year period.

Does the Stimulus Plan Impact Your Research?

By Melissa Dobson

March 2009

In February, the National Institutes of Health (“NIH”) released general guidelines regarding its spending of the $10.4 billion received as part of the economic stimulus plan that was signed into law by President Obama. The NIH disbursements will go primarily to 2-year projects that fall within the following categories: already-approved research grants that have not yet received funds; supplements to existing grants; and new “NIH Challenge Grants” to represent cutting-edge areas of research.

One billion dollars has been included for extramural research facilities, $500 million for intramural facilities, $400 million for research on the effectiveness of medical treatments, and $300 million for shared instrumentation. No explicit designation was made, however, for young investigators.

IP Law is Stable in Economic Downturn

By Erin Lawless

March 2009

Although the economic decline has set in motion a trend of lay-offs, consolidations, and closures at law firms, not all law firms are feeling the crunch equally. In fact, according to the National Law Journal (NLJ), in 2008, about 71 percent of law firms increased the amount they charged clients. The same survey found that the top 250 firms increased billing rates for partners and associates while salaries of associates have remained the same since 2007. Similarly, bonuses during this period were rolled back by almost half of what associates earned in bonuses in 2007.

So where is all this money going? According to the NLJ survey, the answer lies in partner compensation. In 2008, law firm partners were doing better than in 2007. During a recession or economic downturn, the sustainability of different practice areas varies, and certain practice areas thrive. These areas include bankruptcy, litigation, labor, employment, securities, and intellectual property.

Litigation that seeks to protect patents, copyrights and trademarks often flourishes in an economic downturn because companies become aggressive about protecting their intellectual property as the economy falters. Also, when people are laid off, they become more likely to start their own businesses, and new businesses mean new ideas and inventions, which need to be protected with patents. This, in turn, creates work for patent lawyers who are hired to perform due diligence.

Perspectives on Power Line Renovation

By Eric Berlin

February 2009

This week, as the much-debated economic stimulus bill was signed into law, taxpayers throughout the country were wondering what impact this bill’s price would have on their lives. $11B of the $787B package is aimed at funding the initial steps of modernizing the nation’s power grid, but exactly where these renovations will be made is still up in the air.

Although the so-called “not-in-my-backyard syndrome” has spread like wildfire over the last few years, few of the parties involved would disagree that modernization of some power lines is sorely needed. Built in the early half of the last century, the power lines that transmit electricity from distant generators to major metropolitan areas are increasingly being deemed incapable of meeting modern needs. In fact, according to federal figures, the nation’s electrical generation facilities are growing four times faster than transmission lines; in other words, some wind farms are spinning their wheels and going nowhere.

A glaring instance of the power grid’s inadequacy occurred in 2003 – The Big Northeast Blackout. What began as a small outage in Ohio cascaded and snowballed until it ultimately knocked out power to New York City for a period of 29 hours. According to New York City Comptroller William Thompson, this cost the city over $1B – $800M of prevented economic activity and $250M of perishable goods perishing.

When the Department of Energy (“DOE”) conducted its first Congestion Study in 2006 to assess the location and degree of transmission inefficiencies, two areas of the nation were highlighted as being critically congested to such an extent that consumers were likely to be adversely impacted – the “Southwest Area” and the “Mid-Atlantic Area”. The Mid-Atlantic Area includes the District of Columbia and eight states: Ohio, West Virginia, Virginia, Pennsylvania, Maryland, Delaware, New Jersey, and New York. In order to initiate the process of resolving the grid’s unreliability in these areas, the DOE designated them as National Interest Energy Transmission Corridors (“NIETCs”), and in response, a wide range of voices began to raise their concerns.

Nanotechnology researchers, developers and manufacturers in upstate New York, for example, are wincing at the possibility of a 190-mile transmission line being run from Oneida County to Orange County. A recent report by Abbie Gregg Inc. investigated the impact of high-voltage DC lines on nanotechnology activities and found that these labs would essentially have to relocate in order to escape the 800-foot reach of the electromagnetic field emanating from these lines

Although much of the decision-making authority still lies primarily in the hands of individual states, the Federal Energy Regulatory Committee (“FERC”), an independent agency, has the right of eminent domain in light of the fact that these renovations are considered to be of critical importance and in the best interest of the nation as a whole. FERC’s website clearly states that their responsibilities include “ensur[ing] the reliability of [the] high-voltage interstate transmission system.”

Advocates of the Mid-Atlantic Area NIETC highlight the fact that NYC, as the nation’s most populous metropolis, plays a unique and vital role in the nation’s economy and, therefore, requires a fully reliable supply of energy. Furthermore, it is often mentioned that an updated grid would bring not only reliability but also energy independence and enhanced national security.

Some opponents to the plan, though, are still vying to be heard. Citizens of small towns that lie in the path of these transmission lines complain that their communities would be fundamentally changed. Others object that the power lines would visually alter the landscape of historical landmarks, such as the site of the Gettysburg Address, and mar natural landmarks, such as the Appalachian Trail – both of which lie in their trajectory.

This August, the DOE is scheduled to complete a second congestion study, but for many, the uncertainty is becoming unbearable. This week, though, the economic stimulus bill was signed into law, and as the coffers crack open and the currency begins to flow, one thing is becoming more certain—concerns on all sides will intensify, and a debate will be sparked about the definition of “national interest”.

Update on the Dreier Scandal

By Erin Lawless

January 2009

After its founder was jailed and accused of cheating hedge funds out of more than $100 million, the law firm Dreier LLP has filed for bankruptcy protection. Purportedly, the Manhattan law firm has assets in the $100 million to $500 million range and debt in the range of $50 million. Bankruptcy was filed in the U.S. Bankruptcy Court of New York. Dreier LLP is represented by Stephen Shimshak of Paul, Weiss, Rifkind, Wharton & Garrison.

Marc Dreier, who has been alleged of stealing about $380 million from his law firm and hedge funds, is appealing the court’s decision to deny bail. According to the charges, Mr. Dreier persuaded two unidentified hedge funds to give him more than $100 million by falsely claiming he was selling notes issued by a New York developer at a special discounted price.

Gerald Shargel, Dreier’s lawyer, will argue that Dreier does not pose a flight risk, that he has been cooperating, and that he needs his assets to be unfrozen for the purpose of paying his legal fees.

Government officials, however, aren’t buying it. When Dreier was arrested, he was in a foreign country impersonating other people. The Assistant U.S. Attorney, Jonathan Streeter, called Mr. Dreier the “Houdini of impersonation and false documents.” It was noted that Mr. Dreier had been fooling some of the most sophisticated institutional investors in the world. The government thinks that Mr. Dreier has access to millions of dollars in offshore accounts.

Dreier’s legal problems and subsequent arrest have caused at least 250 attorneys at Dreier LPP to loose their jobs.

Halliburton Attempts to Patent Business Methods After Bilski

By Erin Lawless

December 2008

In early November, Halliburton filed a patent application for a business method as a defensive measure to guard against parties deciding to use the tactics described in the application. The application seeks protection by describing a method for a non-inventor to acquire and assert a patent against a second party. In such a case, the first party obtains an equity interest in a patent and writes a claim to cover the product involved. The first party would then file a claim with the patent office for infringement of the claim with the intention of obtaining a monetary settlement from the second party.

In a press release, Halliburton made clear its intention in filing the patent application, stating, “Halliburton intends to use any patent that may issue from this application defensively to discourage entities that engage in such tactics.”

Citing the result of the Bilski case, a number of patent lawyers speculate that the USPTO will likely reject the patent in the Federal Circuit. These lawyers also point out that the patent that Halliburton has applied for is far less complicated and innovative than the patent at issue in Bilski.

This October, in Bilski, the Federal Circuit ruled that the patent application at issue failed because business patents must comply with the “machine-or-transformation” test in order to qualify for a valid patent. While the Federal Circuit’s ruling did not abolish business method patents, it has rendered many existing business methods invalid, and business method patents, such as the one that Halliburton is now requesting, are expected to be more difficult to obtain.

Studies Estimate Many Patentable Discoveries
Diverted From Universities to Industry

By Olivia Y. Truong

November 2008

A recent study by researchers at the University of Georgia (“UGA”) concludes that as much as one-third of patentable research conducted on university campuses may be improperly diverted to industry. The UGA study, which tracked 7,650 patented discoveries in the areas of biomedicine, information science, and engineering at fifty-four universities over a fourteen-year period, also suggests that the most valuable university research (as measured by the frequency with which resulting patents are cited in subsequent patents) may be the most likely to be diverted to industry. A forthcoming study by a research team at Indiana University is expected to corroborate these results.

Another study, however, interprets these results differently. Researchers at the Georgia Institute of Technology (“GT”) found that approximately one-quarter of 5,800 university-related patents had been diverted to industry. The GT researchers, however, concluded that many of these patents had been properly diverted pursuant to approved outside consulting agreements between university researchers and industry.

These results may have significant implications for research universities. Under the Bayh-Dole Act of 1980, universities may claim a right to federally funded patentable research conducted on their campuses and thereby generate licensing revenue from these discoveries.

Provisional Patent Applications Likely to Increase During Economic Downturn

By Erin Lawless

November 2008

In a sluggish economy, an increasing number of early-stage startups are expected to file provisional patent applications in order to trim their patent-related legal expenses. Provisional patent applications permit filers to claim a priority filing date and “patent pending” status for 12 months until a standard patent application is filed. Application forms are available from the U.S. Patent and Trademark Office’s website.

Provisional patent applications offer several advantages for cash-strapped startups. For example, the costs associated with filing a provisional patent application are significantly lower than the costs of a standard patent application, which can then be deferred for 12 months. Compared to standard patent applications, which typically require additional documentation, illustrations, and other supporting materials, provisional patent applications are much simpler, require less time, and thus can often be completed with minimal assistance from outside legal counsel. Provisional patent applications also allow inventors who later opt to file a standard patent application to claim a priority filing date over subsequent patent applications for the same or similar inventions. Patent practitioners caution, however, that a provisional patent application must be well-drafted to avoid any possible complications for a subsequent standard application.

Standardized Financing Documents for Early-Stage Startups,

Courtesy of Y Combinator

By Erin Lawless

October 2008

Y Combinator (“YC”), a technology venture firm that specializes in funding early-stage startups, recently “open sourced” its standardized financing documents for startups seeking angel round financing. The documents, which were previously available only to YC-funded startups, are now publicly available on YC’s website.

The documents, created with the assistance of YC’s outside counsel, Wilson Sonsini Goodrich & Rosati, P.C., include the following:

• Series AA Termsheet
• Series AA Stock Purchase Agreement
• Series AA Board Consent
• Series AA Stockholder Consent
• Series AA Amended and Restated Certificate of Incorporation
• Series AA Investors' Rights Agreement

YC hopes that making these financing documents publicly available will help to spur startup growth by reducing some of the legal fees associated with an initial financing round. YC cautions, however, that startups using these standardized documents should still seek legal counsel to modify the documents as necessary.

New York State Researchers Examine Green Algae - Cheese Whey Combination as Possible Source of Biodiesel Fuel

By Melissa K. Dobson

October 2008

Researchers at the Central New York Biotechnology Research Center (“CNY BRC”) and the State University of New York College of Environmental Science and Forestry (“SUNY ESF”) are investigating green algae as a potential source of biodiesel fuel and a possible catalyst for economic growth in upstate New York.

Green algae, which have been colorfully described as the “great green hope”, are a potentially cheaper source of biodiesel fuel than soybean, canola, and other food crops. In addition, green algae produce omega-3 fatty acids, which may be used in nutritional supplements.

Specifically, John Fieschko of the CNY BRC, in collaboration with Kimberly Schulz and Jacob Gillette of SUNY ESF, is investigating whether cheese whey, a waste byproduct of dairy food production, could be an economically viable feedstock for producing green algae. The dairy industry, a critical economic sector in upstate New York, produces and disposes of significant quantities of cheese whey waste each year. This research is still in its preliminary stages.

150 Million CPU Hours on RPI Supercomputer
Available to New York State Researchers and Companies

By Erin Lawless

September 2008

As part of its investment in the $100 million Computational Center for Nanotechnology Innovations (“CCNI”) at Rensselaer Polytechnic Institute (“RPI”), New York State has reserved 20 percent, or approximately 150 million CPU hours, of the CCNI’s IBM Blue Gene supercomputer usage over the next three years for New York State researchers and companies.

The CCNI’s supercomputer has an operational capacity of more than 80 peak teraflops (trillion floating-point operations per second). Applications that may require a month to run on conventional computers can be completed in roughly 15 minutes on the CCNI’s supercomputer.

New York State officials expect that public and private researchers with access to the supercomputer will be able to substantially expedite product development and reduce time to market. The supercomputer’s computational power may be particularly valuable for research that requires significant data modeling and simulations, including semiconductor, biomedical, advanced materials, and nanotechnology research.

New York State researchers and companies interested in applying for CPU hours on the CCNI’s supercomputer should contact Michael Ridley, Director of High Performance Computing at the New York State Foundation for Science, Technology and Innovation (mridley@nystar.state.ny.us).

Venture Capital Funding by Students for Students

By Mark Williams

May 2008

Recognizing that initial financing is often a significant barrier to commercializing university-based technologies, Stanford Student Enterprises (“SSE”), a student organization with approximately $13 million in assets, recently launched a venture fund to provide early-stage funding to student entrepreneurs at Stanford University.

The newly created venture fund, SSE Ventures, has partnered with several venture capital firms, including the Founders Fund and Charles River Ventures, to solicit and evaluate proposed business plans submitted by Stanford undergraduate and graduate students. SSE Ventures expects to invest as much as $100,000 in each accepted proposal. In addition to funding, SSE Ventures will also provide student entrepreneurs with business-related assistance services. SSE Ventures expects to fund its first student business plans later this year.

Google Stores Health Records Online:

Third Parties and the Health Insurance Portability and Accountability Act

By Cristin Cavanaugh

April 2008

Google, Inc. (“Google”) has announced plans to test a pilot program that will allow patients to store and retrieve their health records online. The pilot project involves the health records of 1,500 to 10,000 volunteer patients at the Cleveland Clinic, which currently stores its patients’ health records on its own online service. Although the patients’ information will be password-protected, the storage of health records by Google and other third parties, including Revolution Health and Microsoft’s HealthVault, raises potential confidentiality concerns under the Health Insurance Portability and Accountability Act (“HIPAA”).

HIPAA sets forth certain privacy protections that govern the disclosure of medical information outside of the physician-patient relationship. For example, HIPAA requires a physician to notify a patient when subpoenaed for medical records. These privacy protections, however, may no longer apply if a patient transfers his or her health records to a third party. Hence, medical information stored by a third party may be more susceptible to discovery through litigation or related proceedings. The information stored by third parties also may be subject to data mining for potential marketing purposes. To date, however, Google has not disclosed how it expects to generate revenue from this storage service.

Microsoft Offers to Buy Yahoo

By Mark Williams

March 2008

In early February, the software giant Microsoft offered $44.6 billion to acquire Internet search provider Yahoo. Microsoft’s move was prompted by Google’s growing dominance over Internet search services and advertising revenue. Microsoft regards the potential acquisition and integration of Yahoo as critical to its plan for creating an Internet search and service package that can compete with Google and claiming a greater share of the associated advertising revenue, most of which is currently controlled by Google.

Yahoo’s Board of Directors initially rejected Microsoft’s offer. Recent reports, however, indicate that Yahoo is still exploring its options. Senior managers from both Yahoo and Microsoft have reportedly met recently, providing Microsoft with an opportunity to pitch its plan for generating additional advertising revenue. However, it has been reported that Yahoo is also exploring its options to repel Microsoft, which has threatened a hostile takeover if Yahoo does not come to the negotiation table in a timely manner. Yahoo is rumored to be exploring alliances with several of its competitors, including Google, News Corp., and Time Warner’s AOL. The next month should provide more information about the future of Yahoo. On April 22, Yahoo will release its first quarter 2008 earnings.

Bailing Out Bear Stearns

By Mark Williams

March 2008

The credit markets have been at the forefront of the news during the first quarter of 2008, and the proposed acquisition of Bear Stearns by J.P. Morgan Chase (“J.P. Morgan”) has garnered much of the attention. Under the terms of its initial bid, which was brokered on March 16, 2008, J.P. Morgan proposed to purchase Bear Stearns at approximately $2.00 per share.

Over the past year, Bear Stearns’ stock has traded at close to $160.00 per share. However, in the wake of the current credit crisis, some investment banks, including Bear Stearns, have teetered on the verge of bankruptcy due to their leveraged holdings of sub-prime home mortgages. In the days following the announcement of the initial bid, which received significant support from the Federal Reserve Bank in New York, J.P. Morgan’s stock gained nearly 25%. When the market opened on March 17, 2008, J.P. Morgan traded at approximately $37.00 per share, and by close of trading on March 20, 2008, the stock had surged to approximately $46.40 per share.

This proposed acquisition, however, is not without risks for J.P. Morgan. Several parties, including Joseph Lewis, the British billionaire who was heavily invested in Bear Stearns and has reportedly lost nearly $800 million since the merger announcement, have raised the possibility that Bear Stearns’ shareholders may reject the proposed merger, and Lewis has reportedly assembled a legal team to bring litigation to block the merger. Several financial experts, however, have expressed concern about finding a more appropriate suitor for Bear Sterns if Lewis or others are, in fact, able to thwart the merger.

To preempt a potential shareholder action to block the merger, J.P. Morgan raised its offer for Bear Stearns to $10.00 per share on March 24, 2008. J.P. Morgan also acquired 95 million shares of newly issued Bear Stearns’ stock, raising its total holdings to almost 40%. The initial and amended merger agreements are available at bearstearns.com.