Federal Circuit Aligns Part of Patent Law With Realities of Biotechnology; Will the Court Go All the Way?
In a recent decision (In re Kubin, 561 F.3d 1351 (Fed. Cir. 2009)) the Federal Circuit has done an end around the principle established in In re Deuel, holding that a method of cloning a gene makes obvious a claim to the gene.
In Deuel (51 F.3d 1552 (Fed. Cir. 1995)) the Federal Circuit reversed a Board of Patent Appeals Interferences decision holding a claim to a specific cDNA sequence obvious over the sequence of the protein encoded by the cDNA and known methods of cloning cDNA molecules using the sequence of the encoded protein. The decision in Deuel was clearly based on the priciple that the cDNA claimed was a chemical compound with a specific structure. The Federal Circuit reasoned there that because the cited prior art taught a method of obtaining a cDNA but (according to the court) did not provide any suggestion of the structure of the claimed cDNA, the claimed cDNA could not be obvious. The court in Deuel clearly focused on the lack of teaching in the prior art of any structure of the claimed cDNA. Although the court also mentioned that the prior art method of obtaining the cDNA was "obvious to try" and that "obvious to try" art was insufficient render a claim obvious, this was not the basis of the decision in Deuel, nor was it the legal principle thereafter applied from Deuel. The lasting legal principle from Deuel was that the structure of a claimed chemical compound could not be described by a mere method of obtaining that chemical (in the absence of a teaching suggesting the structure of the compound).
With amnesiatic sleight of hand, the Federal Circuit in In re Kubin recast In re Deuel as a case about the “obvious to try” principle in obviousness analysis. In Kubin the court affirmed a Board of Patent Appeals and Interferences decision holding a claim to a polynucleotide encoding a protein structurally and functionally related to a cell surface receptor protein obvious over prior art teaching the same receptor protein and a general method of obtaining the gene encoding the receptor protein.
The court first highlighted how obvious the art made it to isolate the gene encoding the receptor protein based on the protein and emphasizing that it was undisputed that the prior art method would almost surely result in obtaining the gene. Thus, the court agreed that there would have been a reasonable expectation of success in obtaining the gene using the method. The court then recognized that affirming the Board decision in Kubin would require the court to address the contrary decision of In re Deuel. To do so, the court noted that the Supreme Court decision in KSR v. Teleflex (550 U.S. 398 (2007)) had changed the landscape for obviousness determinations. In particular, the court spent some effort highlighting how KSR weakened the status of the “obvious to try” principle in assessing obviousness. The court even suggested that the Supreme Court in KSR was repudiating the obvious to try principle of In re Deuel (“Insofar as Deuel implies the obviousness inquiry cannot consider that the combination of the claim’s constituent elements was “obvious to try,” the Supreme Court in KSR unambiguously discredited that holding.”). The court also noted that the Supreme Court cited In re Deuel as supporting the “obvious to try” principle. However, as noted above, the holding in Deuel does not depend on the “obvious to try” principle. In any case, this repudiation of the holding in Deuel (now apparently based on application of the “obvious to try” principle) allowed the court to hold that the prior art method of obtaining the gene for the receptor protein made the claim to the gene itself obvious, noting that the proper application of the “obvious to try” principle supported a conclusion of obviousness.
In a sense, the decision in In re Kubin brings obviousness of biotechnology inventions back to more rational ground. Even in 1995 (and in the 1980s, the era of the invention in Deuel), biotechnologists considered cloning of a gene based on a protein sequence to be routine, with success given a high probability. Thus, the decision in In re Deuel was greeted with some disbelief by those knowledgeable in biotechnology. The Deuel decision was pro-patent and so might not have had clear negative consequences on the development and funding of the biotechnology industry except for one significant anti-patent decision that followed directly from the true principle of the Deuel holding.
In Regents of the University of California v. Eli Lilly (119 F.3d 1559 (Fed. Cir. 1997)) the Federal Circuit addressed the question of whether a method of obtaining a gene provided a sufficient written description of the gene to satisfy the requirements of 35 U.S.C. § 112, first paragraph. A specific human cDNA was claimed in patent at issue in Eli Lilly but the patent specification provided only the sequence of the rat version of the cDNA and a method of using the rat cDNA sequence to obtain the human cDNA sequence. It was agreed by the court and the parties that the method of obtaining the human cDNA was enabling and would (and did) result in the human cDNA when it was performed. However, neither the rat cDNA nor the method suggested the precise structure of the human cDNA. Citing the reasoning in Deuel, the court held that an enabled method of obtaining a gene did not provide an adequate written description of the gene because it did not provide sufficient information about the structure of the gene. There was no doubt that the method/structure aspect of Deuel was the basis for the holding in Eli Lilly:
"We had previously held that a claim to a specific DNA is not made obvious by mere knowledge of a desired protein sequence and methods for generating the DNA that encodes that protein. See, e.g., In re Deuel, 51 F.3d 1552, 1558, 34 USPQ2d 1210, 1215 (1995) ("A prior art disclosure of the amino acid sequence of a protein does not necessarily render particular DNA molecules encoding the protein obvious because the redundancy of the genetic code permits one to hypothesize an enormous number of DNA sequences coding for the protein."); In re Bell, 991 F.2d 781, 785, 26 USPQ2d 1529, 1532 (Fed.Cir.1993). Thus, a fortiori, a description that does not render a claimed invention obvious does not sufficiently describe that invention for purposes of § 112, ¶ 1. Because the '525 specification provides only a general method of producing human insulin cDNA and a description of the human insulin A and B chain amino acid sequences that cDNA encodes, it does not provide a written description of human insulin cDNA. Accordingly, the district court did not err in concluding that claim 5 is invalid for failure to provide an adequate written description.
* * *
A written description of an invention involving a chemical genus, like a description of a chemical species, "requires a precise definition, such as by structure, formula, [or] chemical name," of the claimed subject matter sufficient to distinguish it from other materials."
Eli Lilly, 119 F.3d at 1567-68 (emphasis in original).
The decision by the Federal Circuit in Ariad Pharmaceuticals v. Eli Lilly, 2008-1248 (Fed. Cir. 2009), issued the same day as In re Kubin, is just the latest written description case holding that a method of obtaining a compound does not provide an adequate written description of the compound.
I would hope that the more scientifically rational decision in In re Kubin would filter into the Federal Circuit’s written description jurisprudence, but I have serious doubts that it will.
Monday, July 27, 2009
Friday, July 24, 2009
Friday's Patent of the Week
Bill Gates won’t let anything stop him from reaching the peaks of success, not even a hurricane. So, what’s next for Bill Gates?..... The architect of the personal computer revolution is now controlling the weather.This Friday’s “Patent of the Week,” US Patent Application No. 20090175685 titled: “Water alteration structure movement method and system,” is a member of a group of patent applications which recently published naming none other than William H. Gates, Founder of Microsoft, as one of the inventors. This group of applications revolve (literally and figuratively) around Hurricanes and methods of reducing their formation.
The warm water of the ocean is a primary element in hurricane formation. Common theory is that cooling the water temperatures will aid in dissipating these tropical storms. In fact, NASA believes that in 1998 Hurricane Bonnie left cool waters in its aftermath therefore disrupting the formation of Hurricane Danielle, which was quickly approaching.
Mr. Gates and his fellow co-inventors claim a structure to be placed in a body of water that is capable of lifting cold water from deep below the water surface level to eliminate the warm water needed for hurricane formation. The structure’s propulsion system can be driven by things such as fuel, solar energy or wind.
The feasibility of this type of approach is yet to be determined. Many naysayers think it won’t work since there would be an extremely large surface area of water that would need to be temperature controlled, and controlling the atmosphere may be just as critical as controlling water temperature in hurricane formation.
Mr. Gates has proven himself successful time and time again, so just maybe he is the one to stop these tropical catastrophes. After all, he appears to have an “eye” for success.
Arnall Golden Gregory LLP serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, http://www.agg.com/.
Thursday, July 23, 2009
Confusion Surrounds Eligibility for Patent Term Extensions and NCE Exclusivity
When has an active ingredient in a drug product been previously approved by the U.S. Food and Drug Administration (FDA)? That question, and conflicting precedent from the U.S. Court of Appeals for the Federal Circuit discussing that question, were addressed recently in a lawsuit filed in the Eastern District of Virginia against the Commissioner of the United States Patent Office, after the Commissioner refused to grant a patent term extension (PTE) to Photocure ASA. See Photocure ASA v. Dudas.
Whether an active ingredient has previously been approved is critical to drug companies in the United States because it determines whether an extension of patent term is available to the drug company, and whether the drug qualifies for exclusivity as a new chemical entity (NCE). Unfortunately, the legal situation is not always clear due to conflicting decisions from the U.S. Court of Appeals for the Federal Circuit. This lack of clarity is especially pronounced when evaluating different salts and esters of a previously approved drug product.
The U.S. Patent Laws provide that a patent for a drug that has been delayed from market by FDA approval requirements may have its term extended if the FDA approval is “the first permitted commercial marketing or use of the product.” A “product” is defined to include “the active ingredient of a new drug, including any salt or ester of the active ingredient.” Thus, a patent term extension is only available if FDA has not previously approved the same active ingredient or a salt or ester of the active ingredient.
Similar language governs the availability of new chemical entity exclusivity under the Federal Food Drug and Cosmetic Act (FFDCA). With limited exceptions, if FDA approves a new drug having an “active ingredient (including any ester or salt of the active ingredient)” that has not been previously approved, FDA will not accept another application for the same drug for five years. As with PTEs, NCE exclusivity is only available if FDA has not previously approved the same active ingredient or a salt or ester of the same active ingredient.
The similarity in language should come as no surprise to practitioners in this area because both provisions were included in the original 1984 legislation enacting the Waxman Hatch Act. But that is where the similarity ends. The Patent Office has interpreted the language in the Patent Laws differently than FDA has interpreted the FFDCA, and different court decisions have interpreted the language in the Patent Laws differently.
FDA’s interpretation of the NCE provisions has been consistent ever since the Hatch Waxman Act was first enacted. FDA considers the “active moiety” to be the active ingredient in a drug, and awards NCE exclusivity to the drug only if FDA has not previously approved the “active moiety” or a salt or ester form of the active moiety. FDA effectively substitutes “active moiety” for “active ingredient” in its interpretation of the law.
While this approach does not follow the strict language of the law, it does reflect FDA’s experience with drug approvals, during which FDA focuses on the active form of the drug after it has been administered and metabolized. In the case of a salt, which consists of the active moiety appended to a counter-ion, the active moiety is revealed after the drug is dissolved and the counter-ion disassociates from the active moiety. In the case of an ester, which consists of the active moiety appended to an ester function, the active moiety is revealed after enzymes cleave the ester function from the active moiety in the bloodstream.
Unlike FDA, the Patent Office has not been consistent in its interpretation of the PTE laws over the years, perhaps as a consequence of conflicting court decisions it has endured. These conflicts and inconsistencies culminated earlier this year in a lawsuit filed by Photocure ASA, when the Patent Office applied FDA’s active moiety approach and denied Photocure a patent term extension for its Metvix® chemotherapy product.
Against this backdrop were two conflicting decisions from the U.S. Court of Appeals for the Federal Circuit, the appeals court created in 1982. In a 1990 decision in Glaxo v. Quigg, a three-judge panel at the Federal Circuit had applied the literal terms of the Patent Laws and held that the axetil ester of cefuroxime was entitled to a patent term extension, even though two salts of cefuroxime had previously been approved, because FDA had not previously approved cefuroxime axetil or “any salt or ester of cefuroxime axetil.”
In 2004, a different three judge panel at the Federal Circuit reached a contradictory result in Pfizer v. Dr. Reddy’s. Applying the active moiety approach, the court held that Pfizer’s patent term extension for the besylate ester of amlodipine extended to all esters of amlodipine, including the maleate ester under development by Dr. Reddy’s, because the active moiety of both molecules was the same. Remarkably, the Federal Circuit did not refer to its earlier decision in Glaxo v. Quigg, or make any effort to reconcile the two decisions, even though both cases interpreted the exact same definition of “drug” in the Patent Laws.
Once the Photocure v. Dudas court appreciated the conflict that the Federal Circuit’s decisions had created, it had little difficulty resolving the conflict in Photocure’s favor. When decisions of two different panels of the same appeals court conflict, the first decision usually takes precedence over the second.
The Photocure v. Dudas court also had little difficulty resolving the Patent Office’s conflicting policies on the issue. While the Patent Office urged the court to defer to its judgment on the issue, the court had difficulty accepting the Patent Office’s argument because the Patent Office had not been consistent on the issue. To the contrary -- as of the 2008 printing of the Manual of Patent Examining Procedure (MPEP), the Patent Office was reportedly applying the Federal Circuit’s literal interpretation of the statute in Glaxo v. Quigg, stating: “the ester form is a different active ingredient from the salt form. Both the ester and the salt active ingredient may each support an extension of patent term of different patents provided the [base active moiety] itself has not previously been approved.” Because of the conflict between the interpretation advised in MPEP § 2751 and the active moiety approach used to deny Photocure’s PTE, the court refused to give the Patent Office’s decision any deference, and order the Patent Office to approve the patent term extension.
The district court’s Photocure v. Dudas decision is currently on appeal to the Federal Circuit. Unless the Patent Office can persuade the Federal Circuit to hear the appeal en banc, your authors predict that the district court’s decision will stand, and Photocure’s patent term extension will be granted. After all, as the district court so aptly observed, it is the first appellate decision on the issue that has precedential value, unless and until the court of appeals reconsiders its precedent through an en banc hearing.
Whether an active ingredient has previously been approved is critical to drug companies in the United States because it determines whether an extension of patent term is available to the drug company, and whether the drug qualifies for exclusivity as a new chemical entity (NCE). Unfortunately, the legal situation is not always clear due to conflicting decisions from the U.S. Court of Appeals for the Federal Circuit. This lack of clarity is especially pronounced when evaluating different salts and esters of a previously approved drug product.
The U.S. Patent Laws provide that a patent for a drug that has been delayed from market by FDA approval requirements may have its term extended if the FDA approval is “the first permitted commercial marketing or use of the product.” A “product” is defined to include “the active ingredient of a new drug, including any salt or ester of the active ingredient.” Thus, a patent term extension is only available if FDA has not previously approved the same active ingredient or a salt or ester of the active ingredient.
Similar language governs the availability of new chemical entity exclusivity under the Federal Food Drug and Cosmetic Act (FFDCA). With limited exceptions, if FDA approves a new drug having an “active ingredient (including any ester or salt of the active ingredient)” that has not been previously approved, FDA will not accept another application for the same drug for five years. As with PTEs, NCE exclusivity is only available if FDA has not previously approved the same active ingredient or a salt or ester of the same active ingredient.
The similarity in language should come as no surprise to practitioners in this area because both provisions were included in the original 1984 legislation enacting the Waxman Hatch Act. But that is where the similarity ends. The Patent Office has interpreted the language in the Patent Laws differently than FDA has interpreted the FFDCA, and different court decisions have interpreted the language in the Patent Laws differently.
FDA’s interpretation of the NCE provisions has been consistent ever since the Hatch Waxman Act was first enacted. FDA considers the “active moiety” to be the active ingredient in a drug, and awards NCE exclusivity to the drug only if FDA has not previously approved the “active moiety” or a salt or ester form of the active moiety. FDA effectively substitutes “active moiety” for “active ingredient” in its interpretation of the law.
While this approach does not follow the strict language of the law, it does reflect FDA’s experience with drug approvals, during which FDA focuses on the active form of the drug after it has been administered and metabolized. In the case of a salt, which consists of the active moiety appended to a counter-ion, the active moiety is revealed after the drug is dissolved and the counter-ion disassociates from the active moiety. In the case of an ester, which consists of the active moiety appended to an ester function, the active moiety is revealed after enzymes cleave the ester function from the active moiety in the bloodstream.
Unlike FDA, the Patent Office has not been consistent in its interpretation of the PTE laws over the years, perhaps as a consequence of conflicting court decisions it has endured. These conflicts and inconsistencies culminated earlier this year in a lawsuit filed by Photocure ASA, when the Patent Office applied FDA’s active moiety approach and denied Photocure a patent term extension for its Metvix® chemotherapy product.
Against this backdrop were two conflicting decisions from the U.S. Court of Appeals for the Federal Circuit, the appeals court created in 1982. In a 1990 decision in Glaxo v. Quigg, a three-judge panel at the Federal Circuit had applied the literal terms of the Patent Laws and held that the axetil ester of cefuroxime was entitled to a patent term extension, even though two salts of cefuroxime had previously been approved, because FDA had not previously approved cefuroxime axetil or “any salt or ester of cefuroxime axetil.”
In 2004, a different three judge panel at the Federal Circuit reached a contradictory result in Pfizer v. Dr. Reddy’s. Applying the active moiety approach, the court held that Pfizer’s patent term extension for the besylate ester of amlodipine extended to all esters of amlodipine, including the maleate ester under development by Dr. Reddy’s, because the active moiety of both molecules was the same. Remarkably, the Federal Circuit did not refer to its earlier decision in Glaxo v. Quigg, or make any effort to reconcile the two decisions, even though both cases interpreted the exact same definition of “drug” in the Patent Laws.
Once the Photocure v. Dudas court appreciated the conflict that the Federal Circuit’s decisions had created, it had little difficulty resolving the conflict in Photocure’s favor. When decisions of two different panels of the same appeals court conflict, the first decision usually takes precedence over the second.
The Photocure v. Dudas court also had little difficulty resolving the Patent Office’s conflicting policies on the issue. While the Patent Office urged the court to defer to its judgment on the issue, the court had difficulty accepting the Patent Office’s argument because the Patent Office had not been consistent on the issue. To the contrary -- as of the 2008 printing of the Manual of Patent Examining Procedure (MPEP), the Patent Office was reportedly applying the Federal Circuit’s literal interpretation of the statute in Glaxo v. Quigg, stating: “the ester form is a different active ingredient from the salt form. Both the ester and the salt active ingredient may each support an extension of patent term of different patents provided the [base active moiety] itself has not previously been approved.” Because of the conflict between the interpretation advised in MPEP § 2751 and the active moiety approach used to deny Photocure’s PTE, the court refused to give the Patent Office’s decision any deference, and order the Patent Office to approve the patent term extension.
The district court’s Photocure v. Dudas decision is currently on appeal to the Federal Circuit. Unless the Patent Office can persuade the Federal Circuit to hear the appeal en banc, your authors predict that the district court’s decision will stand, and Photocure’s patent term extension will be granted. After all, as the district court so aptly observed, it is the first appellate decision on the issue that has precedential value, unless and until the court of appeals reconsiders its precedent through an en banc hearing.
Friday, July 17, 2009
TTAB ENDS FENDER’S BID TO REGISTER TRADEMARKS FOR ITS GUITAR SHAPES
In a recent decision, the Trademark Trial and Appeal Board (TTAB) ended Fender’s five-year fight to obtain federal trademark registrations for the shape of its Stratocaster, Telecaster, and Precision Bass guitars (pictured below). The TTAB determined that Fender did not show that the two-dimensional outlines of its guitars, standing alone, served to indicate source.
This case illustrates the importance more and more companies are placing on so-called “nonconventional” trademarks, and also the difficulty associated with obtaining a federal registration for such marks.
Most people are familiar with “traditional” trademarks, such as words, logos, or symbols. However, trademarks can take just about any form. Increasingly, providers of goods and services are claiming protection for nonconventional trademarks. Nonconventional trademarks can include sounds, shapes, textures, smells, movements, and even tastes.
Specific examples of nonconventional trademarks registered with the United States Patent and Trademark Office (USPTO) include the following:
O The sound of a roaring lion for use in connection with motion pictures (Metro-Goldwyn Meyer Lion Corp., U.S. Reg. No. 1,395,550).
O The scent of an apple for use in connection with office supplies (The Smead Manufacturing Company, U.S. Reg. No. 3,140,701).
O Velvet textured covering on the surface of a bottle of wine (American Wholesale Wine & Spirits, Inc., U.S. Reg. No. 3,155,702).
O The shape of an eight-sided competition mat for use in connection with multi-disciplined fighting competitions (Zuffa, Inc., U.S. Reg. No. 2,098,577).
O The motion in which the door of a vehicle is opened (Lamborghini, U.S. Reg. No. 2793439, “The doors move parallel to the body of the vehicle but are gradually raised above the vehicle to a parallel position”).
The key to obtaining trademark rights to a nonconventional mark is establishing that the mark is capable of functioning as a source indicator, meaning that consumers are able to identify the mark as being associated with the maker or provider of a product or service.
Demonstrating this source-identifying function tends to be more difficult with non-traditional marks, and many have tried, but failed, to register a nonconventional mark with the USPTO. In addition to Fender, other notable failures include Harley-Davidson’s attempt to obtain federal trademark rights to the exhaust sound of its motorcycles and drug manufacturer Organon’s attempt to register an orange flavor for its anti-depressant medication.
As competition for customers becomes more and more fierce, and as marketers become more and more creative, providers of goods and services are likely to continue their efforts to establish brand recognition through nonconventional marks.
- Tucker Barr
Tucker Barr is an associate in the Litigation Group and Intellectual Property Team at Arnall Golden Gregory LLP (tucker.barr@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, http://www.agg.com/.
This case illustrates the importance more and more companies are placing on so-called “nonconventional” trademarks, and also the difficulty associated with obtaining a federal registration for such marks.
Most people are familiar with “traditional” trademarks, such as words, logos, or symbols. However, trademarks can take just about any form. Increasingly, providers of goods and services are claiming protection for nonconventional trademarks. Nonconventional trademarks can include sounds, shapes, textures, smells, movements, and even tastes.
Specific examples of nonconventional trademarks registered with the United States Patent and Trademark Office (USPTO) include the following:
O The sound of a roaring lion for use in connection with motion pictures (Metro-Goldwyn Meyer Lion Corp., U.S. Reg. No. 1,395,550).
O The scent of an apple for use in connection with office supplies (The Smead Manufacturing Company, U.S. Reg. No. 3,140,701).
O Velvet textured covering on the surface of a bottle of wine (American Wholesale Wine & Spirits, Inc., U.S. Reg. No. 3,155,702).
O The shape of an eight-sided competition mat for use in connection with multi-disciplined fighting competitions (Zuffa, Inc., U.S. Reg. No. 2,098,577).
O The motion in which the door of a vehicle is opened (Lamborghini, U.S. Reg. No. 2793439, “The doors move parallel to the body of the vehicle but are gradually raised above the vehicle to a parallel position”).
The key to obtaining trademark rights to a nonconventional mark is establishing that the mark is capable of functioning as a source indicator, meaning that consumers are able to identify the mark as being associated with the maker or provider of a product or service.
Demonstrating this source-identifying function tends to be more difficult with non-traditional marks, and many have tried, but failed, to register a nonconventional mark with the USPTO. In addition to Fender, other notable failures include Harley-Davidson’s attempt to obtain federal trademark rights to the exhaust sound of its motorcycles and drug manufacturer Organon’s attempt to register an orange flavor for its anti-depressant medication.
As competition for customers becomes more and more fierce, and as marketers become more and more creative, providers of goods and services are likely to continue their efforts to establish brand recognition through nonconventional marks.
- Tucker Barr
Tucker Barr is an associate in the Litigation Group and Intellectual Property Team at Arnall Golden Gregory LLP (tucker.barr@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, http://www.agg.com/.
Friday, July 10, 2009
Friday's "Patent of the Week": The BILLION Dollar Patent
We have selected U.S. Patent No. 7,070,775 covering antibodies against tumor necrosis factor as this Friday’s “Patent of the Week.” The ‘775 patent is exclusively licensed by Johnson & Johnson, the maker of the drug Remicade. Abbott Labs markets a competing medicine Humira, which is used to reduce treat arthritis, psoriasis, Crohn's disease, and ankylosing spondylitis, and had $4.5 billion in sales last year.Last week, in the largest patent verdict in U.S. history, an Eastern District of Texas jury held Abbott's drug Humira to infringe that patent, and award J&J $1.67 billion in damages (Centocor (Johnson & Johnson) & NYU v. Abbott Labs (E.D.Tex. 2009)). The jury also found Abbott to be a willful infringer of J&J’s patent.
The litigation is far from over. The court must now decide whether to uphold the verdict, and whether the adjudged willful infringement warrants additional damages, which could theoretically triple the award. Furthermore, as expected, Abbott is planning to appeal the verdict. Abbott argues that the human antibodies used in Humira could not have been covered by the ‘775 patent, since J&J admits that it did not work on the fully human antibody until after the filing of the patent application. But with this much money on the line, even Dr. Evil raises an eyebrow.
Arnall Golden Gregory LLP serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, http://www.agg.com/.
Wednesday, July 8, 2009
Theft at Goldman Sachs: Even the Biggest Vulnerable to Trade Secret Loss
We just learned that Goldman Sachs, the venerable investment bank and one of the major movers in the U.S. financial markets, suffered a major security breach, one that teaches just how vulnerable companies are to rapid theft and potential devaluation of their trade secret information.
We know of the breach because the United States just lodged criminal charges against a former Goldman employee, a highly paid ($400K per year) programmer and vice-president for equity strategy tasked with developing one of the firm's most sophisticated trading programs. The facts are startling: the programmer, before he left to work for a Chicago firm, transferred computer code directly from Goldman's server to a London-registered computer server in Germany. Goldman makes it money, in part, using programs like this one to execute trades. This program delivered millions of dollars of value every year to the bank. So sophisticated was the program that the United States alleges in the criminal filings that it could be used to "manipulate markets."
The stolen program thus fits consummately the definition of a trade secret. With its theft disclosed, what are Goldman’s next steps?
An unnamed source reports that the investment bank say it has "secured its systems," http://tinyurl.com/m2gctg, but has the damage been done? We do not know where the actual code is now, or whether Goldman and/or the United States have foreclosed any possible future transfer. In the hands of another bank, with the right implementation, the program could be used to devastating effect. We wonder, too, whether Aleynikov (and his new firm if it employed him for any length of time) will be the subject of a civil lawsuit by Goldman to enjoin any work on similar trading models.
Another major question is how Goldman allowed Aleynikov to purloin a "crown jewel" application in the first place. The detection and response systems may have worked well, as one commentator observes in a New York Times piece, http://tinyurl.com/klnn28, but shouldn't an institution as large as Goldman have had controls to flag the export and data transfer of such commercially sensitive code?
For businesses trying to protect their own confidential business information, the story is a caution and reminder that trade secrets are only as valuable as the reasonable precautions taken to prevent their disclosure. For online data, that means, for example, restricted access, password protection, and it may mean, in addition to regular monitoring, firewall and other protocols to limit data transfer.
-Andrew Flake
Andrew B. Flake is a partner in the Litigation Group at Arnall Golden Gregory LLP (andrew.flake@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, www.agg.com.
We know of the breach because the United States just lodged criminal charges against a former Goldman employee, a highly paid ($400K per year) programmer and vice-president for equity strategy tasked with developing one of the firm's most sophisticated trading programs. The facts are startling: the programmer, before he left to work for a Chicago firm, transferred computer code directly from Goldman's server to a London-registered computer server in Germany. Goldman makes it money, in part, using programs like this one to execute trades. This program delivered millions of dollars of value every year to the bank. So sophisticated was the program that the United States alleges in the criminal filings that it could be used to "manipulate markets."
The stolen program thus fits consummately the definition of a trade secret. With its theft disclosed, what are Goldman’s next steps?
An unnamed source reports that the investment bank say it has "secured its systems," http://tinyurl.com/m2gctg, but has the damage been done? We do not know where the actual code is now, or whether Goldman and/or the United States have foreclosed any possible future transfer. In the hands of another bank, with the right implementation, the program could be used to devastating effect. We wonder, too, whether Aleynikov (and his new firm if it employed him for any length of time) will be the subject of a civil lawsuit by Goldman to enjoin any work on similar trading models.
Another major question is how Goldman allowed Aleynikov to purloin a "crown jewel" application in the first place. The detection and response systems may have worked well, as one commentator observes in a New York Times piece, http://tinyurl.com/klnn28, but shouldn't an institution as large as Goldman have had controls to flag the export and data transfer of such commercially sensitive code?
For businesses trying to protect their own confidential business information, the story is a caution and reminder that trade secrets are only as valuable as the reasonable precautions taken to prevent their disclosure. For online data, that means, for example, restricted access, password protection, and it may mean, in addition to regular monitoring, firewall and other protocols to limit data transfer.
-Andrew Flake
Andrew B. Flake is a partner in the Litigation Group at Arnall Golden Gregory LLP (andrew.flake@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, www.agg.com.
Wednesday, July 1, 2009
Tax Preparation Firm That Dumped Sensitive Customer Records Faces Liability
If your company handles sensitive customer information, as most companies these days do, a recent lawsuit, Pinero v. Jackson Hewitt Tax Service, Inc., pending in a federal court in
The Lawsuit
The plaintiff in the lawsuit was a customer of one of the defendants, a popular tax preparation franchisee. In 2005, before engaging the defendant franchisee to provide tax preparation services, the plaintiff was shown the franchisee’s privacy policy, and was assured that her personal information would be safeguarded.
The plaintiff, likely angry that her confidential information had been disposed of so irresponsibly, brought suit against the franchisee and franchisor, setting forth a variety of claims, including fraud, breach of contract, and violation of state statutes. In a series of rulings, the court dismissed some of the plaintiff’s claims, but did allow the plaintiff to proceed with claims of fraud, violation of
What This Means For You
The Pinero lawsuit is a reminder that companies must handle sensitive customer information with great care. Not only can improper exposure of private customer information lead to liability, it can also create a public relations nightmare for your company.
Privacy policies should be drafted carefully to define what constitutes private information and should set forth the company’s obligations and the customer’s rights. These policies should also be updated periodically to stay current with changes in law, technology, or to keep up with your company’s products and services.
Adequate security technology should be employed to safeguard the storage and transfer of electronic records of customer information. Employees should also be trained and routinely refreshed as to what constitutes “private” information, how that information should be handled and disposed, and their responsibility in ensuring that the information remains private.
Of course, despite the strictest measures, private customer information may be compromised inadvertently or through criminal acts such as hacking. In that situation, swift action must be taken to resolve the problem. In certain cases, it may be make sense to proactively inform the customer about the breach and the steps you are taking to remedy the situation.
Not If, but How
Arnall Golden Gregory, LLP has significant experience in the area of privacy law, ranging from drafting privacy policies, counseling clients about privacy security technology solutions, as well as resolving related disputes. We serve the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen.
Please visit our website for more information, http://www.agg.com/.
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