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Jessica Chesher

Managing Editor

Innovation eReview

August 2013 Edition

In This Issue:


Welcome to the Summer 2013 edition of the Innovation e-Review.

There have been several changes at the New York State Science & Technology Law Center in the past few months. Sadly, Professor Ted Hagelin, director of the NYS STLC, passed away mid-May from an aggressive form of cancer. While no one can truly replace Professor Hagelin, the Center is fortunate to announce that Jack Rudnick, an experienced business attorney with a long history of work in technology commercialization, will be the new director.

The Center looks forward to continuing its efforts to support and inform New York State's many economic development resources as well as entrepreneurs, startups, and various technology companies.


Announcing Jack Rudnick as the New Director of the New York State Science & Technology Law Center

The New York State Science and Technology Law Center (NYS STLC) has named Jack Rudnick as director of the program. Rudnick succeeds Ted Hagelin, who served as director of the program from 2004 until his passing in May 2013. A graduate of the Syracuse University College of Law, Rudnick has a long history in law and technology commercialization. Since 2012, he has been providing business and legal consultation to companies with technology-based goods and services as of counsel at Hiscock & Barclay, LLP in Syracuse as part of the Emerging Technology Team. His work includes participating in startup and technology showcase events as well as providing connections to resources.

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Remembering Professor Ted Hagelin

Professor Ted Hagelin, founder and Director of the Technology Commercialization Law Program at Syracuse University College of Law; Director of the New York State Science and Technology Law Center; Crandall Melvin Professor of Law; and Kauffman Professor of Entrepreneurship and Innovation, passed away Saturday, May 18, 2013.

Professor Hagelin was an expert in technology innovation law with a passion for sharing that expertise with others. He graduated from the Wharton School at the University of Pennsylvania and obtained his J.D. from Temple University Law School. He earned an LL.M. degree from Harvard University and practiced corporate/commercial law with Dechert, Price and Rhodes (now Dechert) in Philadelphia.

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Resource Spotlight: The US Commercial Service

The US Commercial Service, a division of the U.S. Department of Commerce, offers a number of services to companies who export or are considering exporting to markets all over the world. Choosing a new market is complicated and best determined with relevant information about the size of the market, the business and political climate and past experiences in a particular place. This information is compiled and shared by experienced trade specialists in US embassies in many companies. Services include planning, development and implementation of export programs and strategies. John Tracy is an International Trade Specialist with the U.S. Department of Commerce, he recently gave a webcast regarding the services offered and how they work.

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IP Law Watch: Professor Lisa Dolak Reviews USPTO Post-Grant Contested Proceedings

On July 24th, the New York State Science & Technology Law Center hosted a webcast with Syracuse University College of Law Professor Lisa Dolak. Professor Dolak provided a review on the new Patent Office post-grant contested proceedings implemented in accordance with the America Invents Act. These new proceedings offer a variety of new courses of action for parties that wish to challenge patents while avoiding district courts.

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Association for Molecular Pathology v. Myriad Genetics, Inc.

Supreme Court Case involving: patents, DNA, medical industry

Background: A research firm that engages in genetic interpretation, Myriad Genetics, Inc., obtained patents on two “isolated” forms of genes. These genes, BRCA1 and BRCA2, are known to have mutations that suggest a higher risk of breast and ovarian cancer in women. In order to analyze these specific genes they must be isolated and fragmented.

In a 1980 decision, the Supreme Court had clarified that an inventor cannot get a patent if the idea is no more than an application of the laws of nature or natural phenomena. Essentially, naturally occurring phenomena are not patentable. Myriad’s patents claim exclusive control over the genes once they have been extracted from the body and isolated from human cells. These claims are under challenge by a lawsuit filed by various organizations of health professionals including doctors and researches as well as geneticists, genetic counselors, women’s health and breast cancer organizations, and even patients diagnosed with a hereditary version of breast or ovarian cancer. The challenge claims Myriad’s claims are overly broad and should not have been issued as the isolated genes are in no way altered from their characteristics when in the body.

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Bowman v. Monsanto Co.

Supreme Court Case involving: patents, bioengineering, biotechnology, agriculture industry

Background: Farmers who buy seeds from Monsanto, such as the soybeans containing the Roundup Ready gene which makes plants immune to the herbicide Roundup, must sign an agreement with the company not to save the seeds. This ensures that farmers who want to use the hugely popular technology, used in more than 90 percent of the nation’s soybeans, must each year buy new seeds from Monsanto.

In this case a 75-year-old Farmer, Vernon Bowman, bought and planted patented seeds from Monsanto for his first crop. He then went on plant a late season crop, going to a grain elevator where soybeans are sold typically for feed, milling and other uses but not as seed. As the majority of farmers use Monsanto’s patented seed technology it was likely that the seed they sold to the elevator would also contain the Roundup Ready gene even though it wasn’t identified as such. The second crop was successful and Bowman kept the seed generated to be used the following year, a pattern he repeated until 2007 when Monsanto sued for patent violation.

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Mutual Pharmaceutical Co. v. Bartlett

Supreme Court Case involving: pharmaceuticals, FDA regulation, medical industry

Background: In 2004, a New Hampshire woman, Karen Bartlett, took Mutual Pharmaceutical Co.’s generic non-steroidal anti-inflammatory drug, sulindac. Bartlett suffered a known, but rare, skin hypersensitivity reaction. It was extremely severe and ultimately left here severely disfigured as two-thirds of her body was covered in burn-like lesions and even after 12 eye surgeries she is nearly blind.

At the time she was prescribed the drug, its label did not contain any specific warning about the serious skin reaction. Later the FDA required this warning be on the drug label. Bartlett sued the drug company under New Hampshire state law for “failure-to-warn” and “design-defect “claims. The District Court dismissed the “failure-to-warn” claim after Bartlett’s physician admitted he hadn’t read either the label or an FDA required package insert that warned about the risk of that potential side effect. She was able to go forward with the “design-defect” claim, the New Hampshire law that “requires manufacturers to ensure that the products they design, manufacture, and sell are not ‘unreasonably dangerous.’” She was awarded $21 million dollars.

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Gunn v. Minton

Supreme Court Case involving: patents, licensing, malpractice

Background: Vernon Minton developed a computer program intended to make securities trading easier, known as TEXCEN, and then leased the system to a securities brokerage in 1995. In 2000, he obtained a patent for his invention and then, represented by Jerry Gunn, he filed a patent-infringement lawsuit against NASDAQ and others.

NASDAQ moved for and was granted summary judgment. The “on sale” bar in patent law (35 U.S.C. Section 102(b)) states that an inventor is barred from obtaining a patent if there is a sale of the invention more than one year before the date of the patent application. Minton tried to argue that his lease fell within the “experimental use” exception to the on-sale bar. However, the court waived the argument holding that he had failed to raise the experimental-use exception earlier.

Minton sued his attorney, Jerry Gunn, for malpractice in Texas state court. He alleged that his loss of the patent-infringement lawsuit and the invalidation of his patent were Gunn’s fault as he’d failed to timely raise the experimental-use argument. Gunn moved for and was granted summary judgment by the Texas state court. He was able to demonstrate that the lease of the system was not for an experimental use and so the experimental-use argument would have failed even if timely raised.

Minton appealed the summary judgment with a new argument, the state court didn’t have jurisdiction over his case because the malpractice suit involved federal patent law and thus needed to be tried in federal court. A divided Texas Supreme Court agreed with Minton.

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Kirtsaeng v. John Wiley & Sons, Inc.

Supreme Court Case involving: copyright, importing/exporting, publishing industry

Background: Supap Kirtsaeng came from Thailand to the United States in 1997 to study at Cornell and later at the University of Southern California. While in the United States, Kirtsaeng had friends and family in Thailand buy copies of textbooks, where they were sold at a lower price, and then ship them to him in the United States. These imported textbooks were then sold on eBay for a profit. Eight of the textbooks sold where printed in Asia by the publishing company, John Wiley & Sons, Inc.

John Wiley & Sons, Inc. sued Kirtsaeng for copyright infringement. A portion of the Copyright Act (Section 602(a)(1)) states that it is illegal to import a work “without the authority of the owner.” Kirtsaeng argued that under a different section of the Copyright Act (Section 109(a)), known as first-sale doctrine, legally obtained copyrighted material may be sold without the copyright owner’s permission. The district court rejected Kirtsaeng’s arugment and the United State Court of Appeals for the Second Circuit held that first-sale doctrine only applied to works made in the United States.

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Already, LLC v. Nike, Inc.

Supreme Court Case involving: trademarks, business promises

Background: In July 2009, Nike, Inc. filed suit against Already, LLC for selling shoes similar to its Air Force 1 shoe, a design with multiple federal trademarks owned by Nike. In November 2009, Already, LLC counterclaimed to cancel Nike’s trademark. In a move to avoid further litigation, Nike dropped its claim and promised it would not assert its trademark against any of Already’s previous, current, or future products. A district court dismissed the counterclaim and the court of appeals affirmed the dismissal. While it consented to the dismissal of Nike’s infringement claim, Already still wanted to move forward in its attempt to invalidate the Air Force 1 trademark.

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Federal Trade Commission v. Actavis

Supreme Court Case involving: patents, antitrust law, pharmaceuticals, generic drugs, FTC, medical industry

Background: Developing new drugs is an expensive and time consuming process that involves years of research and the investment of large sums of money in preclinical and clinical trials. Pharmaceutical companies make much less money as soon as their patents run out and generic versions of their developed drugs are put on the market. In order to delay the entry of generic drugs and ultimate reduction in drug prices, many brand-name companies pay the would-be competitor to stay out of the market. These “reverse payments,” named for the opposite flow of money from traditional licensee and patent holder exchanges, were generally attached to some patent litigation settlement agreements between the brand-name and generic manufacturers.

The Federal Trade Commission views the practice as being anticompetitive and at odds with antitrust laws. They sued drug companies over one of these “reverse payment” deals. The court of appeals ruled that the FTC could not sue, saying that the patent held by the brand-name company includes the right to exclude competitors.

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