Open Source isn't just for code anymore... What do fashion, yoga, and libraries have in common? All are dealing with the issues of "intellectual property" and "open source." The fashion industry has a long history of valuing creativity and accepting the sharing and "remixing" of fashion ideas. Meanwhile, a teacher of the 5000 year old practice of yoga has copyrighted his methods and poses and is being opposed by an "open source yoga" movement. And, at the recent O'reilly Emerging Technology Conference, the theme was "Remix your world" and included Lawrence Lessig speaking about copyright, and Cory Doctorow spelling out the dangers of Digital Rights Management, and a fascinating presentation by Clay Shirky on Ontologies. Read on... * Ready to Share On January 29, 2005, the Norman Lear Center held a landmark event on fashion and the ownership of creativity. The event had an incredible variety of participants including John Seely Brown (former Chief Scientist of Xerox Corporation), musician and producer T Bone Burnett, Danger Mouse (creator of the Grey Album), and Siva Vaidhyanathan (Professor of Culture and Communication at New York University). More than any other industry, fashion treats a far larger portion of its creative output as a commons - shared resources that can be freely reused and transformed by other creators. Ready to Share is funded in part by a generous gift from the Center for the Public Domain. For lots more information see the press coverage and press releases page. For a quick overview of the issues, see the opinion piece, Control of creativity? Fashion's secret By David Bollier and Laurie Racine. Christian Science Monitor, September 09, 2003. * Bikram goes to the mat, By Hilary E. MacGregor. Los Angles Times, March 21, 2005. After he sued an Orange County yoga studio for copyright and trademark infringement in 2002, a small group of yogis went on the counterattack. Taking a page from the "open source" movement in the computer software world, they called themselves "Open Source Yoga Unity." * O'Reilly Emerging Technology Conference, March 2005, San Diego, Ca. o press coverage o Doctorow: All Complex Ecosystems Have Parasites by Cory Doctorow, For the O'Reilly Emerging Technology Conference. San Diego, California, 16 March 2005. Likewise, DRM has exacted a punishing toll wherever it has come into play, costing us innovation, free speech, research and the public's rights in copyright. And likewise, DRM has not stopped infringement: today, infringement is more widespread than ever. All those costs borne by society in the name of protecting artists and stopping infringement, and not a penny put into an artist's pocket, not a single DRM-restricted file that can't be downloaded for free and without encumbrance from a P2P network. o Lessig: Re:MixMe. Audio (MP3) of presentation by Lawrence Lessig, Professor of Law, Stanford Law School, Thursday, March 17. o Shirky: Ontology is Overrated: Links, Tags, and Post-hoc Metadata. Abstract of presentation by Clay Shirky, Wednesday, March 16. Ontology, far from being an ideal high-order tool, is a 300-year-old hack, now nearing the end of its useful life. The problem ontology solves is not how to organize ideas but how to organize things--the Library of Congress's classification scheme exists not because concepts require consistent hierarchical placement, but because books do.

Pillsbury Winthrop Shaw Pittman LLP - United States - Claim Construction: The Dictionary/Specification Dichotomy (20/04/2005) from Mondaq

Pillsbury Winthrop Shaw Pittman LLP - United States - Claim Construction: The Dictionary/Specification Dichotomy (20/04/2005) from Mondaq: "20 April 2005 Article by John R. Wetherell, Ph.D. and Michelle Mehok Companies understand that in order to protect their technology from competitors, the company must have a strong patent portfolio. However, achieving this goal is requiring greater levels of drafting sophistication and strategy. It has become increasingly clear, by the recent case ruling in Merck & Co., Inc. v. Teva Pharmaceuticals USA, Inc., just how important it is to have a well drafted patent document that has clearly defined claim terms. At issue in the Merck case was the meaning of the apparently simple term "about" in the claims and what the patentee asserted was the meaning of this term as defined in the specification. The Federal Circuit’s ruling on the legally operative meaning of this term emphasizes the critical need for the patentee to exercise caution in drafting patent applications where a term in the claim is redefined from its common meaning. Numerous court decisions have held that claim construction requires terms used in the claims to be given their "ordinary", "accustomed", or "dictionary" meaning unless the patentee has chosen to otherwise clearly define the terms in the patent specification or prosecution history. It is well settled that a patentee can act as his own lexicographer by choosing his own definition of a term and using it as he wishes so long as he remains consistent in its use and makes the meaning clear. The law provides the patentee with this opportunity because the public may not be schooled in the terminology of the technical art or there may be more than one way to interpret the structure or concept that is being claimed. However, the lexicographer privilege has recently come under criticism by some courts that have viewed it as imposing on the interpreter of the claims the burden of determining, through study of the patent’s specification or prosecution history, whether the patent gives an unconventional meaning to a term that otherwise has an established meaning. Most recently, courts have questioned what sources should be consulted during the claim construction process to determine the legally operative meaning of the words in a claim. In a recent decision, the Federal Circuit reversed an August 2003 district court ruling thereby invalidating Merck’s patent on Fosamax, an osteoporosis treatment that was Merck's second-best-selling drug. In a statement to the press after the verdict, Merck said that it disagreed with the court's ruling "and is considering its options, including a request for reconsideration by the court of appeals." Thus, Merck is considering asking the Supreme Court to review the ruling. It is doubtful that the Supreme Court would do so, because it rarely accepts patent cases. The district court held that Merck had acted as its own lexicographer and in the specification had redefined the ordinary meaning of the term "about". Merck had taken the position that it acted as its own lexicographer and that the claim term "about 70 mg of alendronate monosodium trihydrate on an alendronic acid base" should mean exactly 70 mg of alendronic acid. Ordinarily, of course, the term "about" would mean "approximately", but the district court sided with Merck and ruled that the term "about" meant "exactly". Relying on this latter construction of the term "about", the district court found the prior art cited against the patent to be insufficient to invalidate the patent based on anticipation or obviousness. Teva’s allegations that the claims at issue were invalid was based on (1) anticipation by a July 1996 Lunar News article and (2) obviousness in light of an April 1996 Lunar News article combined with the July 1996 article. However, the district court found the patent valid and infringed by Teva’s Abbreviated New Drug Application ("ANDA"), effectively delaying Teva’s FDA approval of the ANDA until the Merck patent expires. On appeal, the Federal Circuit addressed claim construction and obviousness. The Federal Circuit opined that when construing a claim term, the court must first consider the intrinsic evidence, starting with the language of the claims. "General claim terms should be construed consistently with their ordinary and customary meanings, as determined by those of ordinary skill in the art." In this regard, the specification is reviewed to determine whether the patentee acted as his own lexicographer of a term that already has an ordinary meaning. However, any "statement in the specification must have sufficient clarity to put one reasonably skilled in the art on notice that the inventor intended to redefine the claims term." Merck’s position was that the following passage from the specification redefined "about" to mean "exactly": Because of the mixed nomenclature currently in use by those or [sic] ordinary skill in the art, reference to a specific weight or percentage of bisphosphonate compound in the present invention is on an active weight basis unless otherwise indicated herein. For example, the phrase "about 70 mg of a bone resorption inhibiting bisphosphonate selected from the group consisting of alendronate, pharmaceutically acceptable salts thereof, and mixtures thereof, on an alendronic acid active weight basis" means that the amount of the bisphosphonate compound selected is calculated based on 70 mg of alendronic acid. The Federal Circuit disagreed and held Merck’s definition of "about" is ambiguous in that this passage was not clear enough to put one of skill in the art on notice that the ordinary meaning of "about" was redefined. The term "about" was amenable to two interpretations. The Federal Circuit stated that, under Merck’s construction, the phase "about 70 (or 35) mg" means that one should administer approximately 70 (or 35) mg of the derivative compound, such that the end result would be that the patient received exactly 70 (or 35) mg of active compound. In other words, the phrase "about 70 (or 35) mg" modifies the quantity of the derivative compound rather than the resulting active compound. However, according to Teva, the phrase could also be construed to mean that "about 70 (or 35) mg" refers to the amount of resulting active compound rather than the amount of the derivative compound administered. The term "about" would then serve to modify the quantity of the active compound in a way consistent with its ordinary meaning of "approximately". Given that the passage was agreeable to both interpretations, the Federal Circuit held that Merck did not clearly set out its own definition of "about". The Federal Circuit further decided the invention was obvious in light of earlier published articles. In short, the Federal Circuit opined that the district court clearly erred in not (1) distinguishing the claimed invention from the two Lunar News articles, (2) ascertaining the required motivation to combine references to achieve the claimed invention which clearly suggested the dosages described in the articles, (3) determining the probative value of the articles, and (4) weighing the secondary considerations or Merck’s commercial success. Judge Rader wrote a dissent in which he made two specific points: (i) that the majority erred in its analysis of the lexicographer doctrine and (ii) that the majority should have given some deference to the lower court's decision. The Merck decision warns the patentee to be clear when defining claim terms. It is hoped that another case pending before the Federal Circuit will provide additional clarification regarding the process of defining terms used in the claims. In Phillips v. AWH Corp., which was heard en banc on February 8, 2005, the Federal Circuit prudently chose to re-examine and consider seven issues: (1) how and to what extent various types of evidence, particularly the specification and dictionaries, serve the public notice function of patent claims; (2) how the specification should be used to interpret claims without impermissibly importing limitations into the claims; (3) how and to what extent various types of evidence, particularly the specification and dictionaries, should be used for claim construction; (4) whether the two approaches (dictionary and specification) should be treated as complementary methodologies such that there is a dual restriction on claim scope, and a patentee must satisfy both limiting methodologies in order to establish the claim coverage it seeks; (5) when, if ever, should claim language be narrowly construed for the sole purpose of avoiding invalidity under, e.g., 35 U.S.C. §§ 102, 103 and 112; (6) what role should prosecution history and expert testimony by one of ordinary skill in the art play in determining the meaning of the disputed claim terms; and (7) what deference, if any, the Federal Circuit should give to a district court's claim construction. Thus, this decision is expected to provide additional guidance on the proper approach to construing patent claims. In light of the fact that it is not uncommon for the patentee to use a word to mean something different than its dictionary definition and because a patent’s specification can be ambiguous, it is advisable that the patentee and his counsel work closely together to clearly define claim terms having technical, scientific, or multiple meanings. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Responding to Restriction Requirements

Anything Under the Sun Made By Man: Responding to Restriction Requirements: "Responding to Restriction Requirements I recently had a three way restriction requirement from the US PTO on an application. The examiner had restricted the invention three ways: 1. An apparatus with features possibly usable outside the client’s business. 2. A special instance of the apparatus directly relating to a product being developed by the client. 3. A method for using either invention 1 or 2. The business situation of the client is this: they are in the process of developing a technology that could be widely deployed in 3-5 years. Right now, any potential infringers/licensees are very small players and do not pose a business threat. The client is feverishly working to deploy some product and prove that it works. If their trials are successful, the market is much bigger than they can supply right now. They may raise capital and expand to meet the market, or they may license the technology to one or more existing players in the market. The question is: how to respond to the restriction? My suggestion is to elect the first invention, the one which does not necessarily directed at the client’s product. Rather than filing divisional applications right away, I would wait and file a divisional on the method claim, then file a divisional on the invention directed specifically at the client’s product. There are several reasons for this. Looking at the invention directed specifically at an embodiment like the client’s product, if we pursue it now, we will get a patent based on today’s understanding of what we think is the important features of the invention. We would rather make that definition as far into the development cycle as possible. There is always the possibility that technology or market considerations may cause certain parts to be more important than we can see at this point. This is one reason why I want to do this embodiment last. Another reason is that there are no potential infringers that need to be dealt with immediately. If we did have a patent issue protecting the client’s product, we would do little with it, except hang a plaque on the wall. Having a patent issue on invention #1, the apparatus outside the client’s business, the client will have a bargaining chip or a potential licensing stream outside the core business. The client could negotiate such a patent away without losing coverage on the core product. Looking at the method inventions, the potential infringers may be customers who buy the product. However, because the product is not widely deployed and thoroughly shaken out, there may be some changes to the methods that we may wish to make to the application with a continuation-in-part application. Taking all of this into consideration, I suggest taking the generic invention first, the methods second, and the actual client device third. I also suggest doing them as serially as possible, filing a divisional as late as possible and on paper, and keeping the application alive. There are a couple situations that may change the strategy. The first is if the client feels like the product has matured and stabilized and that there is a potential licensee. In such a case, I would suggest pursuing the product invention as quickly as possible. Another situation is if another player in the market looks like they will infringe. In that case, I suggest beginning to tailor the claims to match the potentially infringing product so that a licensing deal can be reached quickly and amicably, or so the infringer be shut down fast. Because we have no knowledge of the merits of the case from the examiner, we cannot use the merits as a basis for evaluating one invention over the other in the restriction requirement. In summary, the business considerations of the client, including their ultimate potential business strategies, can be the key to deciding which step to take in this case. The patent attorney who does not have the ability to appreciate the client’s business interests and operate with those in mind does his client a gross disservice.

Anything Under the Sun Made By Man: Vagueness in the Written Description

Anything Under the Sun Made By Man: Vagueness in the Written Description: "April 07, 2005 Vagueness in the Written Description One of the biggest challenges in writing the written description is that it is almost impossible to guess how the invention might be used over the next twenty years, which is the life of the patent. Especially in developing technologies, what makes sense today may be turned on its ear by changes in technology or the market. However, reading that crystal ball is essential for good patent protection. There are a number of cases where limitations from the specification are read into the claims by the courts. In the Phillips v. AWH Corporation case before the Federal Circuit, the lower courts read a limitation into a claim because the drafter described ‘the’ advantage of the invention had a special feature. The drafter seemed to me to be describing only ‘an’ advantage of a particular embodiment. However, the applied the feature to all the claims. If the drafter had used ‘an advantage’ rather than ‘the advantage’, it is likely that the case would not be in front of an en banc Federal Circuit and would have been settled a long time ago. The best way to deal with this situation is to eliminate any mandatory language from the written description. Use terms like ‘may’ and ‘could’ rather than ‘must’ and ‘should.’ Give every alternative embodiment that can be imagined, and especially examples at the outlying extremes of the invention. Many times, the inventors see their specific embodiment as the most logical and rational of the possibilities. What is an optimal embodiment today may be obsolete in three years. I see the invention as a combination of several elements, regardless of the embodiment. When writing the written description, I try to take each element to its logical extreme and cover every possibility for that element. After going through each element in as much detail as possible with as many examples as possible, the entire field of various embodiments should be covered. Remember, the purpose of the written description is not only to support the claims, but to give as much breadth and scope to the claims as possible. Additionally, a broad written description effectively keeps other inventors from attempting to patent a close invention, one that may turn out to be even better than the inventor’s optimized embodiment of today.

Prism Legal Consulting, Inc.

Prism Legal Consulting, Inc.: "Outsourced Legal Services print Introduction and Explanation Outsourced Legal Services print Introduction and Explanation List of Outsourced Legal Services Outsourced Legal Services - Background This list of selected legal outsourcing activity was compiled and is maintained by Joy London, author of the blog excited utterances and Ron Friedmann, President of Prism Legal Consulting, Inc and author of the blog Strategic Legal Technology. We have observed with interest a recent trend by US law firms and law departments to outsource some legal work overseas. As bloggers, we have informally tracked legal offshoring activity and wanted to consolidate our observations in a single list. We hope that readers will offer updates, corrections, and comments as appropriate. The primary focus of our list is offshore outsourcing by US firms and corporations of certain substantive and administrative legal functions, specifically # Document drafting by lawyers # Legal research # IP legal work, substantive or administrative # Review of discovery documents # Paralegal services # Administrative and secretarial support services, excluding digital dictation The list does not include offshore litigation support coding or vendor-provided technology services. Nor does it include offshore vendors whose business does not focus primarily on the legal market. A secondary focus of the list is selected outsourcing by US law firms or vendors within the United States. The inclusion criteria are loose but exclude outsourcing to US-based vendors of technology support, legal research, and copy/mail-room services. This type of outsourcing has occurred for years and is thus of less interest to us. Our list is neither complete nor comprehensive. We assembled it based on web research, articles we have read, and people we have met. Each entry includes a source, either a web site or article. For web sites, we list the URL; for articles, we provide a citation. We checked URLs at the time we assembled the list. Where the source is an article, we have no way to track possible changes since the publication date. We welcome comments, suggestions, and corrections from readers. We reserve the right to post reader comments at excited utterances and/or Strategic Legal Technology unless requested otherwise. If we receive corrections and/or suggestions for new entries, we will include them in periodic updates to the list. List of Outsourced Legal Services Organization Organization Type Services Location Source | Notes Date Added Accenture Corporation Law dept. support (contracts) Mauritius Corporate Legal Times, Sep 2004, reports company has set up owned and operated office in Mauritius for company legal work. Mar 05 Andrew Corp Corporation Law dept. support (patents) NZ See Outsourcing Reaches Corporate Counsel, The Recorder, 8/25/04 Mar 05 General Electric Corporation Law dept. support (contracts) India See Outsourcing Reaches Corporate Counsel, The Recorder, 8/25/04 Mar 05 General Mills Corporation Patent work NZ and Australia See Corporate Legal Times article, July 2003 Mar 05 Microsoft Corporation Patent work India See Briefed in Bangalore American Lawyer, Nov 2004 Mar 05 Baker & McKenzie Law Firm Network ops & doc production Philippines See http://www.lwk.co.uk/ViewItem.asp?id=16509 Mar 05 Bickel & Brewer Law Firm Litigation Support India See also Briefed in Bangalore American Lawyer, Nov 2004 Mar 05 Orrick Herrington Law Firm Tech, finance, admin US (Wheeling, WV) See http://www.orrick.com/offices/goc/ Mar 05 Atlas Legal Research Vendor Legal research India See Briefed in Bangalore American Lawyer, Nov 2004 Mar 05 CBF Group Vendor Secretarial & admin support US (Fargo, ND) Mar 05 Docuserve Vendor Reception, telephone & fax services, mail-room, printing & reprographics & hospitality functions Scotland See http://news.scotsman.com/index.cfm?id=199662005 Mar 05 Evalueserve Vendor IP work & market research India Mar 05 Intellevate LLC Vendor Paralegal, docketing, technical research, proofreading, bookkeeping India See http://www.practicesource.com/ale/blog/pivot/entry.php?uid=standard-532 Mar 05 Intercom India Vendor Legal transcription, legal coding India See http://www.globallawreview.com/outsourcing.html#Annexure Mar 05 Law Abroad Vendor Legal work S. Africa and UK Not clear if operational yet (see http://www.lawabroad.com/outsourcing.php) Mar 05 Lawwave Vendor Legal research, IP analytics, doc review, back office India See also India Abroad article Jan 04 Mar 05 Lexadigm Vendor Legal research India Mar 05 http://www.lexwerx.com/ Vendor Legal research India Specializes in insurance and re-insurance; has a UK office Mar 05 Manthan Services Vendor Case management, legal transcription, data digitization & archiving India See http://www.globallawreview.com/outsourcing.html#Annexure Mar 05 Mindcrest Vendor Legal process outsourcing, legal research & business research services India See http://www.globallawreview.com/outsourcing.html#Annexure Mar 05 http://www.officetiger.com/ Vendor Document processing, legal research, professional support, finance & accounting services India See http://www.hildebrandt.com/Documents.aspx?Doc_ID=1802 Mar 05 QuisLex Vendor Legal support services India Web site does not specify services Mar 05

law.com - Article

law.com - Article: "Briefed in Bangalore Briefed in Bangalore Legal services are moving offshore -- will India's lawyers help reshape the U.S. legal market? Helen Coster The American Lawyer 11-01-2004 In recent months Microsoft Corp. began using Indian professionals to search for prior art -- written information about an invention -- in preparation for filing patent applications. Other Fortune 500 companies, such as Oracle Corp., have considered it. And law firms, which often follow the lead of their clients on new initiatives, are finally catching on. Outsourcing may be a dirty word in this year's presidential campaign. But in the real world -- where costs and competitiveness matter -- lawyers, like other professionals, have started to recognize the value of tapping into the highly educated, English-speaking Indian workforce to carry out tasks that would typically be performed by junior-level employees. Several outsourcing companies are courting the U.S. legal market, using Indian lawyers, scientists, and other trained professionals in cities like Hyderabad, Bangalore, and Noida. There are a few different emerging models. Vendors like Lexadigm Solutions and Lawwave.com rely exclusively on Indian lawyers to conduct low-level legal work and analysis. Others, like OfficeTiger, use a mix of lawyers and trained professionals to handle legal and nonlegal tasks such as managing conflicts databases and document management and review. A few vendors specialize. Intellevate has hired an Indian staff of lawyers and Ph.D.s to conduct patent research and other IP work. The company has a dedicated team devoted just to Microsoft's patent work. Smaller law firms are taking advantage of the range of services offered by these companies. Document review is the most popular task to outsource. In most cases a vendor scans and uploads the documents onto a secure Intranet site. Lawyers in India access the documents, identify responsive and privileged documents, and, when complete, upload their findings back onto the Intranet. The process varies slightly for lawyers who outsource IP prosecution work, rather than just discovery. "A large company will send us an invention description," says Intellevate chief executive Leon Steinberg, who oversees 72 Indian employees and offices in Bangalore and Noida, a suburb of New Delhi. "We would have a computer science expert, or some other kind of trained specialist, do research and determine whether the invention can be patented. They use proprietary databases and online tools to conduct research. Then they post their search result on a Web site that only our client can access." Some law firms and legal departments have opened their own offices staffed by Indian employees, rather than outsourcing their work to a third-party vendor. This is called offshoring. In 2001 General Electric Co. established a legal team in Gurgaon, India, with lawyers and paralegals who draft documents like contracts. Bickel & Brewer, a 34-lawyer Dallas litigation firm, opened a facility in Hyderabad, India, in 1995. Several hundred Indian employees -- both lawyers and nonlawyers -- scan, code, index, and abstract documents. Bickel & Brewer's offshore practice has been so successful, says partner William Brewer, that the firm spun it off as a standalone company. While cost might be the most obvious incentive for outsourcing legal work to India, lawyers cite a number of other motivating factors. One is the 9-to-13-hour time difference between the United States and India, which gives U.S. lawyers the sense of operating on a 24-hour-basis. "When I go home at six I can have them do the grunt work, research, and proofreading that I would otherwise have other people do," says Solan Schwab, a New York-based solo practitioner who outsources research projects like analyzing state-by-state insurance regulations with QuisLex, which has 12 lawyers in Hyderabad. "Then when I come in in the morning, I receive a beautiful e-mail with research done exactly how I like it." Schwab sees outsourcing as the answer to the age-old dilemma facing solo practitioners: an erratic work flow that doesn't justify the overhead of a full-time staff. He estimates that by outsourcing legal work, he spends about one-third to one-half of what he would spend on hiring a full-time associate. He adds that because he has the manpower to take on new business, he has been able to generate about $50,000-$60,000 in new revenue. "I usually bill the clients a certain hourly rate and pay these folks a portion of that rate." Schwab says that the markup depends on whether the client is an individual or a corporation. Even with the occasional markup, lawyers say that the financial incentive of outsourcing legal work is the factor that most impresses their clients. "None of my clients have opposed it because it saves them money," says Noah Henry Simpson, of five-lawyer Simpson, Woolley, McConachie of Dallas. "It probably saves them at least half of what they would usually pay." Vendors charge an hourly rate or on a per-project basis. Lexadigm charges $60 per lawyer per hour, Atlas Legal Research charges $80, and OfficeTiger will not disclose its fees. (London's Allen & Overy is currently outsourcing word processing to 74 OfficeTiger employees, a practice that the firm says saves "a seven-figure sum.") Quislex gives clients the option of being billed by the hour or project. Intellevate offers three pricing mechanisms: a seat license, which can range from $1,200 to $4,500 per month; a straight hourly rate, which varies from $12 to $65 per hour based on experience; and a flat fee for a particular activity, such as $390 for seven hours of prior arts searching. The lure of inexpensive labor, however, isn't enough to convince many lawyers that outsourcing legal work to India is a good idea. Their primary concern is security, and how to deal with issues of attorney-client privilege. "If I'm one firm and I'm outsourcing work in India, then I don't know that another firm isn't using the same lawyers," says G. Hopkins Guy, an IP partner in the Silicon Valley office of Orrick, Herrington & Sutcliffe. Proponents of outsourcing explain that outsourcing work to India is no different from outsourcing scanning and coding of litigation documents to a vendor or legal work to a temporary lawyer. But Guy and others are not convinced. "We need to tightly manage conflicts," he says. "I've heard of instances where just by sending documents out to a place like Kinko's, lawyers have had problems with conflicts." Guy adds that while Orrick routinely uses outside vendors to do document imaging and processing, he prefers that those vendors be located fairly close to his office and within easy access to manage the quality of the end product. Orrick also hires temporary, or contract, lawyers. The difference, says Guy, is the hands-on way that Orrick manages and integrates these lawyers. "We'll put a group of contract attorneys with Orrick lawyers in a room with eight computer terminals," Guy says. "[While reviewing documents] someone will often have a question, like 'I see this here. Is this important?' and they can ask a supervising attorney. But if I have a contract attorney who is by himself, in India, what do they do with that question? Maybe he can send an e-mail and get a reply a day later. But quite naturally you would think that they would say it's not important and move on. And I want that question immediately answered. That's why I don't see outsourcing of this type working." Many lawyers feel uncomfortable with the idea of outsourcing work to professionals whom they've never trained, let alone met, yet whose work reflects the quality of the firm. "I would be concerned about the absence of quality assurance," says Matthew Powers, the head of patent litigation in the Silicon Valley office of New York's Weil, Gotshal & Manges. "If you ship work to India and there's a problem and the judge says, 'How did this happen?' and you say, 'I don't know,' then there's an abdication of responsibility." Powers says that he'd be nervous to rely on legal research completed by someone he doesn't know. "We invest a lot of time in training and managing our people to ensure that we get a high-quality work product. I'd rather find efficiencies in other forms." Other lawyers question the wisdom of outsourcing, citing the time needed to review the work done by Indian professionals or to manage the flow of information. Oracle, for example, decided it wanted its patent professionals closer to the business units. Yet proponents of outsourcing say that the practice becomes increasingly efficient with time. H. Wynne James III, a partner in 250-lawyer Louisville, Ky.-based Stites & Harbison, is realistic about the management required to outsource legal work to India. His firm has outsourced legal research and pieces of M&A transaction and is currently considering forming an alliance with outsourcing vendors and Indian firms. "If I think that I am going to get a high quality from the first day, I'm kidding myself," he says. "I think that this is not without its real challenges. One is efficiently managing Indians and American lawyers in the same engagement. I think that the internal mechanics of a lot of firms are not structured to handle that very well." Lawyers were reluctant to use temporary lawyers when the service started nearly two decades ago. Small firms were the first to embrace the concept. Today, they are present in firms of all sizes. But as some lawyers have found, this kind of universal acceptance doesn't happen overnight. As James says, "One of my partners said, 'I thought you were crazy when I thought you meant Indiana.'" THE INSIDE SCOOP ON LEGAL OUTSOURCERS Company Web site Personnel Most popular outsourcing requests: Atlas Legal Research atlaslegal.com 3 lawyers in Bangalore legal research and brief writing Intellevate intellevate.com 72 employees in Bangalore and New Delhi patent proofreading, prior arts searches, and paralegal functions Lawwave.com lawwave.com 8 lawyers working on an as-needed basis in Chennai document review and legal research Lexadigm Solutions lexadigm.com 6 lawyers in Gurgaon research memos, briefs, and surveys of state law OfficeTiger officetiger.com Declined to say how many lawyers and nonlawyers in Chennai word processing and legal research Quislex quislex.com 11 lawyers in Hyderabad research and document review The 2004 Global 100 Database is now available in an electronic spreadsheet. These definitive rankings of the world's largest international law firms can be sorted, searched and imported into an active database. The rankings include gross revenue for FY 2003, number of lawyers, average revenue per lawyer, profit per equity partner, number of countries in which the firm has offices, percentage of lawyers outside the firm's home country, key marketing contacts and more.

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It is proper to limit the scope of the claims according to the specification By Dennis Crouch PatentlyOImage022Rhodia Chimie v. PPG Industries Inc., (Fed. Cir. 2005) By Baltazar Gomez, Ph.D. Rhodia is an international chemical company and the assignee of U.S. Pat. No. 6,013,234 ("the '234 patent"). The patent discloses and claims certain essentially spheroidal precipitated silica particulates. Rhodia markets “Micropearl” which is a silica particulate covered by the patent. PPG also makes three silica products, namely, Hi-Sil SC60M, SC72 and SC72C. Rhodia alleges that these products infringe claim 1 of the '234 patent. The district court granted summary judgment for noninfringement in favor of PPG. On appeal, Rhodia argued that the district court erred in interpreting claim 1. The CAFC, however, affirmed the district court’s construction. Claim 1 of the '234 patent partly reads as follows: Dry, dust-free and non-dusting, solid and homogeneous atomized precipitated silica particulates essentially spheroidal in geometrical configuration… (emphasis added) In addition, the specification included examples tested both for flowability and dusting properties. Flowablity tests were performed by a pour test which compared the flowability of Micropearl with the prior art. The dusting tests were measured by the German DIN 53 583 standard (the "DIN test"). During the district court’s claim construction hearing, PPG asserted that the phrase "dust-free and non-dusting" should be interpreted literally to mean "no dust cloud whatsoever." Conversely, Rhodia argued that such a meaning was improper in view of the results of the pour test that showed production of some dust. Accordingly, Rhodia advocated construing "dust-free and non-dusting" to mean "very low dust." The district court was concerned, however, that Rhodia's proposed definition of the phrase was relative and that such a definition would not meet the statutory requirement that the claims particularly point out and distinctly claim the invention. Thus, to resolve the perceived ambiguity of the phrase, the district court adopted a construction based upon the only meaningful guidance provided in the patent, namely the DIN test. On appeal, Rhodia argued that the DIN test was not the only means by which to assess the amount of dust produced by the invention. Rhodia asserted that the pour test could also be used to determine the level of dustiness, and therefore, it is inappropriate for the district court to limit the phrase "dust-free and non-dusting" to the DIN test. Further, Rhodia cited statements made during prosecution of the ‘234 patent explaining that the pour test could be used to show the non-dusting and free-flowing properties of the ‘234 patent. In affirming the district court's construing of "dust-free and non-dusting", CAFC noted that although the pour test may also provide evidence of dustiness, the results of the pour tests presented in the '234 patent were only identified as evidence of the products' flowability. The CAFC further noted that there is no language in either the claims or the written description that taught the application of the pour test to determine the level of dustiness. Finally, CAFC stated that Rhodia's statements made during prosecution cannot serve to fill such a gap. Thus, the CAFC concluded that the district court did not erred in limiting the scope of the claims by defining the phrase "dust-free and non-dusting" to the only disclosure in the patent. Note: Dr. Baltazar Gomez is a scientific advisor at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. Dr. Gomez obtained his PhD in biochemistry from the University of Texas and researched retrovirology as a PostDoc at Cornell University. File Attachment: Chimie v. PPG.pdf (98 KB)

Pierce Law IP News Blog | All the IP News that's fit to blog.

Pierce Law IP News Blog | All the IP News that's fit to blog.: "The Next Time You Want to do the 'Tree Pose,' it Might Be Wise to Check First With the Copyright Office Submitted by Carey on Sat, 04/09/2005 - 6:48pm. * In a decision announced on April Fools, U.S. District Judge Phyllis Hamilton handed down a mixed ruling, denying summary judgment to both the plaintiffs and defendant, in a copyright case that is starting to 'heat up.' Bikram Yoga, a form of Hatha yoga which its founder, Bikram Choudhury, has modified and shortened to 26 principal poses (or asanas) and 2 breath exercises (called pranayama), done in a room with a heated temperature of 105 degrees. Open Source Yoga Unity(OSYU), had challeneged the copyrights and trademarks that Mr. Choudhury holds in his form of yoga. The website for OSYU claims that the group was formed in part to 'provide a common voice, and the pooling of resources, to oppose the litigious position Bikram Choudhury is taking against the Yoga community by his attempted enforcement of copyright protection.'"

PATENTS & TRADEMARKS > FACTS & MYTHS

PATENTS & TRADEMARKS > FACTS & MYTHS PATENTS MAKE PEOPLE RICH There is no guarantee that an invention, design, or plant that is patented will sell. In fact, most patents do not generate income for their owners. (See sidebar) Fact U.S. PATENTS ARE ENFORCEABLE ONLY IN THE UNITED STATES A U.S. patent is only enforceable in the United States. Myth PATENTS CAN BE ISSUED FOR REALLY GOOD IDEAS Patents are not issued for great ideas or mere suggestions. Patents are granted to people who (claim to) "invent or discover any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof"—to quote the essence of the U.S. statute governing patents. Myth YOU MUST PATENT YOUR INVENTION A patent provides protection for your intellectual property, but when you are deciding if you should apply for a patent you should keep in mind that: 1) it takes work and it can be expensive to obtain a patent, and 2) patents protect your invention for a limited term, but they also disclose your information. Disseminating information while protecting inventors is one of the reasons patent offices exist. If you have invented something you think you can profit from but still want to keep the important details secret, you may opt not to get a patent. Myth A PATENT MEANS THE INVENTION WORKS The government does not get involved in testing or verifying submitted inventions to see if they work.

I/P Updates: A Three-Layered Patenting Strategy - News and Information for Intellectual Property Practitioners

I/P Updates: A Three-Layered Patenting Strategy - News and Information for Intellectual Property Practitioners: "A Three-Layered Patenting Strategy When Russell Krajec developes a patent strategy for a client with an emerging technology, he looks at 'three specific layers of coverage' from both the technology and business aspects of a client. As discussed in his artcle for Law.com, the first layer describes the basic underpinnings of the new technology and usually covers the first embodiments of the technology. The second layer is the 'tool' layer, covering the tools required to use the technology, and the third layer is the 'application' layer, detailing new uses and application of the technology."

Twenty Steps for Pricing a Patent - News and Information for Intellectual Property Practitioners

I/P Updates: Twenty Steps for Pricing a Patent - News and Information for Intellectual Property Practitioners: "Twenty Steps for Pricing a Patent The ability to appraise patents can be important for GAAP financial reporting purposes under FASB nos. 141 and 142, especially for auditors and valuators in high-tech industries in which there are lots of business combinations. Here are the '20 Steps for Pricing a Patent' according to J. Timothy Cromley, CPA, an accredited senior appraiser with the Valuation Advisory Services Group of JPMorgan Chase & Co: 1. Check whether the patent is in force. 2. Identify the business context. 3. Gather information including file history, business plans, licenses, etc. 4. Assemble a valuation team with expertise in patent law, an understanding of monopolies, business valuation skills, and a background in the technology of the patent 5. Read the patent or carefully interview an independent patent attorney who has. 6. Investigate the patent's claim scope. 7. Talk with a patent attorney. 8. Inquire about the patent's validity. 9. Inquire into blocking patents. 10. Investigate foreign patent protection. 11. Consider synergies among patents 12. Consider the remaining life of the patent. 13. Analyze any prior royalties paid for the patent. 14. Inquire into any actual or threatened litigation involving the patent. 15. Identify the next-best alternative technologies. 16. Estimate a demand curve for the patented item. 17. . Determine the patented product's point of profit maximization. 18. Consider the applicability of traditional valuation approaches. 19. Do an income-approach valuation. 20. Write the patent valuation report."

Anchen files ANDA for Wellbutrin XL (buproprion)

Anchen files ANDA for Wellbutrin XL (buproprion) Anchen files ANDA for Wellbutrin XL (buproprion) By Lawrence B. Ebert Taiwan-based generic company Anchen Pharmaceuticals has submitted an abbreviated new drug application (ANDA) to the FDA for Biovail's Wellbutrin XL (once daily dose of bupropion for depression). Litigation over bupropion has been extensive. Current issues are NOT about the drug itself (the composition of which is off patent) but about the formulations for controlled delivery of the drug. The Excel and Impax decisions of the Court of Appeals for the Federal Circuit have involved interpretation of the foreseeability prong of the US Supreme Court decision in Festo (535 US 722 (2002)). Wellbutrin is a drug used to treat depression, but the underlying chemical is also used for smoking cessation (marketed as ZYBAN). Of depression, the chemical is different from Paxil, Prozac and Zoloft, and as a result, Wellbutrin can often successfully treat people with depression whose condition has not improved from taking these other drugs. Although the chemical of Wellbutrin and Zyban has been off patent as a composition of matter for a long time, in 1995 Glaxo received a patent for the extended release formula of Wellbutrin SR. In 1999, generic drug manufacturer Andrx filed two ANDAs with the FDA seeking to sell generic versions of extended release Wellbutrin and Zyban. Andrx argued that because its generic used a different method of extended release, that it did not infringe on Glaxo's patent. Four other generic manufacturers followed Andrx's lead, and several have received tentative approval to manufacture and market their generic versions. In February of 2002, the US District Court for the Southern District of Florida ruled that Andrx did not violate Glaxo’s patent and therefore should be allowed to manufacture and market its generics. On appeal, however, the Federal Circuit Court of Appeals held that the district court in Florida erred in its construction of the patent infringement claims. Glaxo owns U.S. Patent No. 5,427,798 (the ’798 patent) directed to controlled sustained release tablets containing bupropion hydrochloride. Pharmacologically, bupropion (m-chloro--t-butylaminopropiophenone) is a monocyclic aminoketone antidepressant. See U.S. Patent No. 4,393,078 (issued July 12, 1983) (the ’078 patent). These compounds treat depression and inebriation. In addition, they facilitate the cessation of smoking by producing neural stimulation in mammalian systems. See ’798 patent, col. 1, ll. 5-10; ’078 patent, col. 1, ll. 29-39; U.S. Patent No. 3,819,706 (issued June 23, 1974). To avoid the need for multiple dosages with the attendant fluctuations in plasma bupropion concentrations, Glaxo invented a sustained release formulation of the compound. While bupropion hydrochloride itself was separately patented, Glaxo obtained the ’798 patent to protect its sustained release formulation of the drug. Glaxo markets this patented sustained release formulation as Wellbutrin®SR for treatment of depression and as Zyban® for smoking cessation. The key ingredient for achieving sustained release in this invention is hydroxypropyl methylcellulose (HPMC), which is a partly O-methylated and O-(2-hydroxypropylated) cellulose. In oral preparations, HPMC extends drug release by transforming into a gel that swells upon ingestion. The hydrogel state of HPMC releases bupropion hydrochloride from an ingested tablet over a period of time. The ’798 patent claims a sustained release tablet containing an admixture of bupropion hydrochloride and HPMC. However, many of the claims as originally filed did not recite HPMC as a limitation. During prosecution on the merits in the United States Patent and Trademark Office (Patent Office), the examiner rejected the claims that did not recite HPMC for lack of enablement under 35 U.S.C. § 112, 1. Glaxo amended those claims to overcome the rejection. The first independent claim of the ’798 patent states: 1. A controlled release tablet comprising 25 to 500 mg of bupropion hydrochloride and hydroxypropyl methylcellulose, the amount of hydroxypropyl methylcellulose to one part bupropion hydrochloride being 0.19 to 1.1 and said tablet having a surface to volume ratio of 3:1 to 25:1 cm-1 and said tablet having a shelf life of at least one year at 59deg to 77deg F. and 35 to 60% relative humidity, said tablet releasing between about 20 and 60 percent of bupropion hydrochloride in water in 1 hour, between about 50 and 90 percent in 4 hours and not less than about 75 percent less in 8 hours.

The WTO angle and TRIPS

The WTO angle and TRIPS: "The WTO angle and TRIPS By Lawrence B. Ebert Of the Ballmer quote: 'Someday, for all countries that are entering the [World Trade Organization], somebody will come and look for money owing to the rights for that intellectual property.' Section 5, Article 27, paragraph 1 of TRIPS recites: 1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. (5) Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. Paragraphs 2 and 3 don't say anything about business method or software patents. [http://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm#5] David Berlind writes: Given the significant overlap between the members of the WTO and the European Union [EU], I'm having a tough time imagining how, if Europe can't uphold patents on software, the WTO can. One poster observed that the EU could take the position that business methods/software are not a 'field of technology' or perhaps even 'inventions.' Further, if the USA did even try to get WTO to force a change in the EPC, the EU would counter-attack with TRIPS complaints about various aspects of the US patent system which currently favour US-based inventors. --> Mutually assured standoff. Berlind also wrote of the WTO remark: 'the easiest way to get rid of a potential customer forever is to sue them. Especially when that customer is a government. Governments usually have pretty big budgets.' Within the US, patent holders have sued customers. Go back to the days of the Selden patent on the automobile. One of the advertising slogans for licensed cars was 'Don't buy a lawsuit.' Henry Ford said that this tactic by the Selden patent holder (ALM) launched Ford's business. In the pharma business today, many claims on drugs are written such that patients, doctors, and pharmacists could be sued for use of competitor's infringing drugs. For example, this could have happened with omeprazole. But, of course, it didn't. In the area of copyright, there have been some exemplary suits brought by the RIAA against consumer-infringers, but this is tricky business. A different website gives a different example. http://www.linuxworld.com.au/index.php/id;1874419189;fp;4;fpid;1 -->Up to now, not many users have faced such threats. When asked for an example of a user actually getting sued over intellectual property rights, Microsoft spokesmen go back four years. In 2000, Allan Konrad, a computer scientist, sued three dozen corporations, including General Motors, Ford Motor, The Boeing Co., Daimler Chrysler, United Air Lines and Eastman Kodak. Konrad held three patents and ownership to the mechanism of Web-based delivery of information. He went after corporations serving Web information from back-end databases. 'Microsoft worked to get IBM, Sun and AOL, whose products were also implicated, to step in collectively on behalf of our customers. We hired one law firm to defend them, paid the cost of that. The outcome was very positive, the infringement claims were thrown out,' said David Kaefer, director of business development at Microsoft. <--"

Navigating the patent maze: Nap Hal - Comments Addressed

Navigating the patent maze: Nap Hal - Comments Addressed: "Nap Hal - Comments Addressed An interested reader commented on the post in which I expressed approval for the decision of the Indian Government to not oppose the European Patent, now owned by Monsanto, that used Nap Hal. The reader raised several points that I would like to address. I also hope that it evokes more discussion on this topic area. (Sidebar - there are currently 5 parties opposing this patent, including Greepeace and the European Flour Milling Association) The reader raises several points. The first point, quoted below, speaks to whether the patent claims are in violation of the European Patent Convention. The Patent in question explicitly claims a wheat variety, and so is squarely in violation of the European Patent Convention.?? The short answer is that the patent in question (EP 0 445 929) does not claim any plant varieties. The claims are directed to soft-milling wheat with particular characteristecs, flour prepared from that wheat, dough or batter prepared from the flour, edible products made from the dough or batter, and biscuits made from the flour. The second point of the reader is that 'the disclosure of the patent shows that the genetic traits which are key to the patent (double null allele in glu-D1 gene) were wholly derived from the landrace developed in India, namely, Nap Hal.' I'm not sure what the reader's objection is other than the landrace came from India. In fact, the landrace was obtained from a public germplasm bank. The accession was placed prior to the Convention on Biological Diversity, so that treaty does not control the situation. Until the CBD, typically there were no restrictions on accessions or, in the case of the CGIAR the restrictions regarding intellectual protection placed on germplasm held in FAO Trust were limited to the variety itself and did not extend to derivatives (such as the wheat claimed in the Monsanto"

REFUSING TO SUPPLY IN CHEAP JURISDICTIONS MAY BE OKAY, SAYS AG

IPKat - fishing for IP stories for YOU: "Friday, October 29, 2004 REFUSING TO SUPPLY IN CHEAP JURISDICTIONS MAY BE OKAY, SAYS AG Yesterday in Case C-53/03 Synetairismos Farmakopoion Aitolias & Akarnanias (Syfait) and Others v Glaxosmithkline AEVE Advocate General Francis Jacobs gave his Opinion as to whether a drug company may plead the threat of parallel trade as an excuse for limiting the amount of IMIGRAN, LAMICTAL and SEREVENTIT it sends to pharma wholesalers in 'cheapo' regimes. In his conclusion he recommends that the European Court of Justice rule as follows: '(1) A pharmaceutical undertaking holding a dominant position does not necessarily abuse that position by refusing to meet in full the orders sent to it by pharmaceutical wholesalers only by reason of the fact that it aims thereby to limit parallel trade. (2) Such a refusal is capable of objective justification, and thus of not constituting an abuse, where the price differential giving rise to the parallel trade is the result of State intervention in the Member State of export to fix the price there at a level lower than that which prevails elsewhere in the Community, given the combined circumstances of the European pharmaceutical sector at the current stage of its development, and in particular: �- the pervasive and diverse State intervention in the pricing of pharmaceutical products, which is responsible for price differentials between the Member States; �- the regulation by the Community and the Member States of the distribution of pharmaceutical products, which establishes nationally demarcated obligations upon pharmaceutical undertakings and wholesalers to ensure the availability of adequate stocks of those products; �- the potentially negative consequences of parallel trade for competition, the common market, "

The Use of Exculpatory Opinions in Defending Against A Charge of Willful Infringement (12/05/04) from Mondaq

McDermott Will & Emery - United States - The Use of Exculpatory Opinions in Defending Against A Charge of Willful Infringement (12/05/04) from Mondaq: The exercise of intellectual property rights has become a mainstay of business over the last 10 years. Indeed, business models are proliferating where obtaining patents for the purpose of licensing and enforcement are the sole activity of the enterprise. Even among those entities that routinely engage in R&D or the manufacture and sale of products, more and more are investing in the acquisition of IP rights, and many have realized that enforcement of those rights against competitors is an effective tool in protecting markets and/or generating revenue. As a consequence, corporate executives and general counsels are likely to face, at least once in their careers, a charge that their companies are infringing upon another entity’s intellectual property rights. Especially threatening is the receipt of a notice that your company’s products infringe patents held by another. The threat is worrisome for a variety of reasons. First, the threat is often leveled at a company’s core technology, changes to which are almost never trivial. Second, patent infringement carries with it the very real threat of devastating injunctive relief. Finally, damages in such cases, while nominally calculated in terms of a reasonable royalty or lost profits, may, at the discretion of the court, be enhanced up to three times for so-called willful infringement. In order to navigate this minefield and defend themselves against claims of willfulness, many companies engage counsel in order to obtain advice as to whether their actions violate valid patent rights of some third party and/or how to avoid such violations by design arounds. This article, addresses defenses to a charge of willfulness, and in particular, some of the issues which may arise when relying on opinions of counsel as a defense to a patent owner’s claim of willful infringement. The "Totality of the Circumstances" Test When considering whether an infringer acted in bad faith, thereby supporting an increased damage award, courts look at a "totality of the circumstances," including (1) whether the infringer copied the invention of another; (2) whether the infringer, when it knew of the other’s patent, investigated the scope of the patent and formed a good-faith belief that it was either not infringed, invalid or both; (3) whether the infringer mounted a substantial (albeit unsuccessful) challenge in the issues of validity and infringement; (4) the closeness and complexity of the legal and factual issues presented; (5) whether the infringer engaged in good faith efforts to design around the patent; and (6) the infringer’s behavior in the litigation. 1 Because there are few situations where sufficient evidence of actual copying or litigation conduct egregious enough to find willfulness are present, the primary focus for courts when considering willful infringement claims is usually on whether an alleged infringer has formed a good-faith belief that its conduct was justified. In the seminal case, Underwater Devices, Inc. v. Morrison-Knudsen Co.,2 the U.S. Court of Appeals for the Federal Circuit imposed as affirmative duty on a potential infringer to exercise due care to determine whether or not its activities are infringing. This duty includes obtaining competent legal advice from counsel before initiating possibly infringing activity. The requirements for an opinion of counsel as evidence of good-faith in defense to a charge of willful infringement has led to several problems relating to waiver of the attorney-client privilege with respect to such opinions, and often to matters beyond the scope of the opinions. Following Underwater Devices, in Kloster Speedsteel AB v. Crucible Inc.,3 the Federal Circuit found that silence by the accused infringer on whether it obtained legal advice relating to infringement could warrant an adverse inference that the accused infringer either had not obtained an opinion (as required by Underwater Devices) or that the opinion was adverse. The Court followed its Kloster Speedsteel decision with its holding that the failure of an infringer to introduce an exculpatory opinion of counsel at trial could lead to an adverse inference instruction to the jury. Fromson v. Western Litho Plate & Supply Co.4 Thus, although the test for determining willful infringement ostensibly requires a multifaceted review of the totality of circumstances, the Federal Circuit jurisprudence has, for many years, imposed an opinion requirement. In the view of many, the opinion of counsel "requirement," coupled with the adverse inference, has led to a serious erosion of attorneyclient privilege. Waiver of the Attorney-Client Privilege Under the present state of the law, in addition to the affirmative duty to seek and obtain advice-of-counsel, if a company finds itself in a lawsuit facing a charge of willful infringement it is all but required to disclose the legal advice it received relating to infringement and/or validity. In other words, by merely raising the willful infringement claim, a patent owner presents the accused infringer with the Hobson’s choice of either waiving its attorney- client communications or confronting an adverse inference instruction on the issue of willfulness. Most choose waiver. The "choice" mandated by the Federal Circuit authority requires considerations not found in any other area of law. The most obvious is the effect and scope of the privilege waiver resulting from reliance on an opinion of counsel. There is no question that reliance on opinions of counsel as evidence of goodfaith results in a waiver of privileged communications. The thorny question facing accused infringers is just how broad a waiver results. Accused infringers agonize over this question and district courts have found the task of line drawing to be a daunting one. The uncertainty on this issue is well illustrated by the following quote from a court struggling to fairly decide the issue: "In few, if any, areas of the law has the tail taken to wagging the dog as vigorously as in the privilege waiver disputes endemic to patent infringement cases. Defendants often rely upon an advice-ofcounsel defense when confronting the threat of enhanced damages for willful infringement. The consequent waiver of privileges and protections that the adviceof- counsel defense entails, however, is now the basis of innumerable disputes like the one at bar, distracting the court and the parties from addressing the fundamental questions of infringement and validity. It seems that a whole subspecialty of opinion practice has developed as part of infringement defense strategy. Litigation resources are heavily invested in delaying the moment when an accused infringer must choose between relying on advice-of-counsel or maintaining typical privileges, or in seeking bifurcation on the issue of willfulness, or in trying to control the scope of waiver, once the advice-ofcounsel route is taken." Rhodia Chimie, et al. v. PPG Industries, Inc. 5 Scope of Waiver It is long settled that if an accused infringer chooses to rely on an advice-of-counsel defense, it waives privilege with respect to the communications transmitting the reliance opinion. Thorn EMI North America, Inc. v. Micron Tech.6 Materials considered by reliance counsel in rendering the opinion, but not communicated to the accused infringer, are typically protected as work product and are not discoverable. EMI No. Am. See also, Dunhall Pharm., Inc. v. Discus Dental, Inc.;7 and Steelcase, Inc. v. Haworth, Inc.;8 Even when a work product waiver occurs it is not unlimited in time but ends once a lawsuit is filed.9 However, some courts have extended the waiver to include all communications between the client and counsel, in some instances including trial counsel. Haney v. Timesavers, Inc.10 (Broad waiver found where "document logs show that a number of documents were sent from the [defendant’s trial counsel] to the [reliance opinion counsel] and to others concerning infringement and validity…as a result, [trial counsel] has provided opinions to advise [defendants]);" FMT Corp. v. Nissei ASB Co.;11 Electro Scientific12 (Trial counsel implied that communications with reliance opinion counsel were substantial.); Matsushita Elec. Corp. v. Loral Corp.13 (Defendant patentowner’s defense of good faith litigation was based on opinion given by trial counsel.); Carl Zeiss Jena GmbH v. Bio-Rad Labs. Inc.14 (Written and oral reliance opinion were given by trial counsel.); Fonar Corporation, et al. v. Johnson and Johnson15 (Various outside lawyers’ authored opinion signed by in-house counsel.). While the scope of the waiver in any given case cannot be accurately predicted, the cases provide some guidance that will help counsel limit the potential scope of the waiver. First, where practical, opinion counsel should be separate from trial counsel. Broad waivers, including trial counsel’s work product, have been found where trial counsel also rendered an opinion regarding the infringement or validity matters at issue. While the different counsel can be members of the same law firm, the risk of a broad waiver is mitigated if they are not. Second, opinion counsel and trial counsel should not communicate on the substance of the opinions lest it be inferred that trial counsel influenced opinion counsel. Broad waivers have resulted where trial counsel and opinion counsel share information and theories. Though opinion counsel may be able to bring trial counsel "up to speed" more quickly, it must be remembered that opinion counsel was engaged to provide objective advice on issues of infringement and validity. Trial counsel’s view on whether opinion counsel was articulate and appropriately analytical is only marginally relevant to trying the substantive defenses of the particular action. In preparing an opinion memo, the opinion writer typically has no more than a commercial validity search report and/or a relatively abbreviated consultation with a person knowledgeable about the accused device or method. When this is compared to the resources typically available to defense counsel, it is no wonder that different prior art and different or additional reasons for asserting non-infringement are likely to percolate up. As long as the opinion was competent as delivered and was relied upon in good faith by the client, the Underwater Devices criteria are met. Third, avoid any appearance of "opinion shopping." Don’t engage counsel to prepare an opinion and then stop the process in favor of a new counsel without good cause to do so. Are the Winds of Change Blowing? Based upon recent actions, the Federal Circuit appears to be keenly aware that these scopes of waiver issues—sequela to the duty to obtain an opinion and the negative inference imposed if the opinion is not produced to the plaintiff—need to be reviewed and addressed. Recently, the Court sua sponte decided to review en banc certain issues regarding exculpatory opinions, waiver and the adverse inferences. In Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corp., et al.,16 the Court asked for amicus submissions on the following questions: (1) Is the adverse inference appropriate when an accused infringer invokes the attorney-client privilege and/or work-product doctrine with regard to willful infringement? (2) Is it appropriate to draw an adverse inference with respect to willful infringement when the accused infringer has not obtained legal advice? (3) Should the existence of a substantial defense to infringement be sufficient to defeat liability for willful infringement even where no legal advice has been obtained? At least 14 amicus briefs were submitted. With near unanimity, the amici answered the Court’s questions as follows: (1) The adverse inference is inappropriate when a defendant invokes the attorney-client privilege and/or work-product doctrine with regard to willful infringement. (2) It is not appropriate to draw an adverse inference even when a defendant has not secured legal advice. (3) The existence of a substantial defense to infringement should be sufficient to defeat a willfulness claim regardless of whether legal advice was sought and obtained. Some parties went even further, asking the Court to simply abolish the Underwater Device rule. As of this writing, oral argument has been completed and the patent bar eagerly awaits guidance from the en banc Federal Circuit. Given the Court’s request and the overwhelming call for change, it appears that some Federal Circuit guidance on these issues may soon be forthcoming. However, until that happens, it is important to understand the opinion "requirement" and the attendant attorney-client privilege waiver virtually inherent in presenting a defense to a charge of willful infringement. Paul Devinsky Stephen J. Akerley Paul Devinsky, a Washington, D.C. based-partner, concentrates his practice on patent, trademark and copyright litigation, counseling and prosecution and on trade secret litigation. Stephen J. Akerley, a partner in Silicon Valley, focuses his practice on high-profile patent, trade secret, trademark and copyright cases as well as technology-related commercial disputes. Footnotes 1 See, e.g., Anjimoto Co. v. Archer-Daniels-Midland Co., 228 F.3d 1338 (Fed. Cir. 2000); SRI Int’l Inc. v. Advanced Tech. Labs. Inc., 127 F.3d 1462 (Fed. Cir. 1997); Gustafson, Inc. v. Intersystems Indus. Prods., Inc. 897 F.2d 508, 510 (Fed. Cir. 1990) ("Willfulness is determined from the totality of the circumstances...."); and Bott v. Four Star Corp., 807 F.2d 1567, 1572 (Fed. Cir. 1985). 2 717 F.2d 1380, 1389-90 (Fed. Cir. 1983). 3 793 F.2d 1565, 1580 (Fed. Cir. 1986). 4 853 F.2d 1568, 1572-73 (Fed. Cir. 1988). 5 Civil Action No. 01-389-KAJ, Memorandum Opinion, October 8, 2003. 6 837 F. Supp. 616 (D. Del. 1993). 7 994 F. Supp. 1202, 1205-06 (C.D. Cal. 1998). 8 954 F.Supp. 1195 (W.D. Mich. 1997). 9 Dunhall, supra. 101995 U.S. Dist. LEXIS 15222, *8-9 (D. Ore. 1995). 111992 U.S. Dist. LEXIS 21500, *7, 24 U.S.P.Q.2D (BNA) 1073 (N.D. Ga. 1992) 12175 at F.R.D. 539, 540 (N.D. Cal. 1997). 131995 U.S. Dist. LEXIS 12880, *1-4 (S.D.N.Y. 1996). 142000 U.S. Dist. LEXIS 10044 *1. 15227 U.S.P.Q. (BNA) 886, 887 (D. Mass. 1985). 16Case Nos. 01-1357, - 1376, 02-1221, - 1256 (Fed. Cir.); on appeal from the U.S. District Ct for the Eastern District of Virginia (Case No. 00-CV-803).

LEX ORBIS - India - Data Exclusivity � The Indian Perspective (21/09/04) from Mondaq

LEX ORBIS - India - Data Exclusivity � The Indian Perspective (21/09/04) from Mondaq: by Manisha Singh Nair, Under Special 301 of the U.S. Trade Act of 1974 India has been put on the ‘PRIORITY WATCH LIST’ of USTR (United States Trade Representative) for failing to provide an adequate level of protection or enforcement and market access for persons relying on Intellectual Property protection. The absence of ‘data exclusivity’ legislation inter alia forms the reason for India’s inclusion in the list. Special 301’ is a part of the U.S. Trade Law that requires the USTR to identify countries that deny adequate protection for Intellectual Property Rights or that deny fair equitable market access for the U.S. persons who rely on IP protection. PRIORITY WATCH LIST’ are the countries or trading partners that have very serious problems in terms of scope and/or impact on U.S. commerce requiring the focus of increased bilateral attention on the problem areas. The Government of India has constituted a High level Inter-ministerial committee to consider steps to be taken in the context of the provisions of Article 39.3 of the TRIPS agreement for the protection of undisclosed information. As the Indian government caves in to the economic coercion of the U.S. government backed by the omnipotent Pharmaceutical lobby of U.S this paper attempts to analyze what India stands to lose or gain and what alternative we have to come out of this conundrum victoriously. There are several burning questions that come to the forefront with regard to the issue of data exclusivity – does Article 39.3 of the TRIPS agreement mandate ‘data exclusivity’ or mere ‘data protection’? should the developing countries like India adopt measure of data protection other than data exclusivity? would data exclusivity sound death knell for the India pharmaceutical industry with a strong generic base? what would be the ramifications of such legislation on Indian Population more than half of which lives under abject poverty? It is imperative to find answers to these questions, as we have to reconcile the apparently opposing mandates of public health and strong IP protection. The predicament before the developing countries like India is how to strike a fine balance between public health and the demand of increased IP protection. Before attempting to analyze these issues it is important to understand the meaning of ‘data exclusivity, its genesis, impact on drugs and the reasons for conferment of this privilege. Data exclusivity –meaning, genesis and impact Data exclusivity is generally defined in United States as a period of exclusive marketing rights granted to a new drug application (NDA) upon obtaining marketing approval by the regulatory authority if certain statutory requirements are met. The regulatory bodies require the pharmaceutical companies to submit extensive data establishing the safety and efficacy of a new drug before approving it for sale. This data arises out of many years of research and clinical trials and is the most expensive part of drug development. It is estimated that the total cost of drug development and marketing is approximately $500 in industrialized countries. Data exclusivity laws prevent the regulatory bodies from accessing the originators data when considering an application for a generic competitor seeking approval to sell an equivalent competing product. Thus in the countries where data exclusivity is granted the regulatory authorities can take up the applications for generic versions only after the expiry of data exclusivity period. In the alternative the competitor is required to generate his own marketing approval data. The period of data exclusivity is provided by the national legislation of a country and as such there is no uniform period. Data Exclusivity legislation was for the first time enacted by United States of America in the year 1984.The 1984 Drug Price Competition and Patent Term Restoration Act popularly known as Waxman-Hatch Act provides for there different terms of marketing exclusivity depending on the type of drug. Each type of exclusivity has specific requirements and results in various lengths of time for which the applicant is granted the exclusive marketing rights. Three main Types of exclusivity are Orphan, Waxman-Hatch and Pediatric granted for 7years, 5years and 3 years respectively from the date of approval of the drug. Exclusivity for the first time approval of a new chemical entity in the US is for a period of 5 years. Interestingly data exclusivity provision is seen in US as balancing the interests of innovator or pioneer drug firm that bear the research and development and the interests of the generic drug industry that can increase competition and lower the cost of the drug The reasons for granting exclusivity in United States have been enumerated as- to achieve balance between the pioneer drug industry and the generic drug industry Costly clinical trials that established the safety and effectiveness of the drug would not need to be repeated in order for a generic drug to enter the market place. Once information has been established about a drug, there is no requirement for a second sponsor to prove the safety and efficacy a second time. exclusivity is an incentive to a new drug development in particular in the absence of patent protection. unnecessary death of and suffering to the animals due to duplication of tests could be avoided. Side effects to the human subjects due to repetitive trials can be obviated. European Community adopted data exclusivity in the year 1987 vide the Directive 65/65 EE (amended 87/21/EEC). The period of data exclusivity in European community varies from 6 to 10 year. Data exclusivity arose in the European Community during the time when there was no patent for biotech products in order to protect the biotech industries and afforded the biotech products some form of market protection. U.K., Sweden, Netherlands, Germany, Italy, France and Belgium grant 10 years data exclusivity. More than half of the members of European union provide 6 years of data exclusivity. In Japan, the data exclusivity period varies from 4 years (for medicinal products with new indications, formulations, dosages, or compositions with related prescriptions) to 6 years (for drugs containing a new chemical entity or medicinal composition, or requiring a new route of administration) to 10 years (for orphan drugs or new drugs requiring pharmaco-epidemiological study). In New Zealand the protection period is 5 years. There is no data exclusivity period for data relating to new uses or formulations of old active ingredients Data exclusivity is primarily granted for pecuniary reason that is to enable the initial registrant to recover investment made by him in obtaining the marketing approval. In the absence of data exclusivity period, generic drugs could be introduced onto the market on the basis of bioequivalence tests without the having to replicate the time consuming and expensive clinical trials that are used to establish safety and efficacy of the product. The duplication of the tests would be inefficient use of the resources. Bioequivalence means-‘the absence of a significant difference in the rate and extent to which an active ingredient or active moiety becomes available at the site of drug action when administered at the same molar dose under similar conditions’ If bioequivalence is established, the products will have the same clinical effect and safety profile, and are considered to be therapeutically equivalent and interchangeable. TRIPS Agreement As a part of the Uruguay Round of the World Trade Organization (WTO) multilateral negotiations a new and rigorous treaty on intellectual property rights- the TRIPS was established in 1994. Beginning on the 1st of January 1995, the Agreement on Trade Related Aspects of Intellectual Property Rights administered by WIPO became the standard for protecting IPRs in those nations seeking to engage in international trade and enhance their prospects for economic growth. Thus the members of WTO are obliged to adhere to and provide for the minimum protection prescribed by the TRIPS. Accordingly, member countries are required to amend their laws to bring them in conformity with the substantive standards laid down by TRIPS. Failure to do so within the conceded time would certainly lead to referral of the matter to the Dispute Settlement Body of WTO. An affirmative finding of the Body and non-compliance may culminate into trade retaliations by the member nations. Developing countries where product patent was not being granted at the time of adoption of TRIPS were given time till 1st January 2005 to bring their patent law in line with TRIPS. India being one of them is legally bound to make the requisite amendments in its domestic patent law by the said date. However there are certain controversial and unsettled provisions in TRIPS, which have triggered considerable deliberations and debate in the international fora. The scope, meaning and the manner of their implementation remain nebulous. Article 39.3 dealing with data protection is one such provision. Article 39.3 runs thus: 3. Members when requiring as a condition of approving marketing of pharmaceutical or of agricultural chemical product which utilize new chemical entities, the submission of undisclosed test or other data, the originator of which involves considerable efforts shall protect such data against disclosure, expect where necessary to protect the public or unless steps are taken to ensure that the data are protected against unfair commercial use" Thus, if in respect of pharmaceutical or agricultural chemical products which utilize a ‘new chemical entity’, the regulatory authority of a country requires submission of ‘undisclosed clinical and test data’ for granting marketing approval it is under obligation – protect the data against ‘unfair commercial use’ protect the data against ‘disclosure’ expect where it is necessary to protect the public or unless steps are taken to ensure that the data are protected against ‘unfair commercial use’. The diclosure is permitted only in two circumstances- Where it is necessary to protect the public Where the data is protected from unfair commercial use As it is evident from the language of the Article, latitude is given to the individual members to take such steps as they deem fit for protecting data against ‘unfair commercial use’. The purpose of Article 39.3 can be inferred from paragraph 1 of the same article that is to ‘ensure effective protection against unfair competition’. Article 39.1 provides- 39.1. In the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with paragraph 2 below with data submitted to governments or governmental agencies in accordance with paragraph below. Unfortunately the agreement refrains from defining the practices that would constitute ‘unfair commercial use’, thus allowing the several interpretations to creep in. The term ‘unfair competition’ has been defined in article 10bis of Paris Convention but that does not aid in identifying the practices that would fall within the gamut of the ‘unfair commercial use. Reference may also be made here of the WIPO model provision on protection against unfair competition (1996). Article 6 of the model provisions lays down the acts that would amount to unfair competition in respect of Secret Information. It reads as follows: Article6 (1) -Any act or practice, in the course of industrial or commercial activities, that results in the disclosure, acquisition or use by others of secret information without the consent of the person lawfully in control of that information (hereinafter referred to as "the rightful holder") and in a manner contrary to honest commercial practices shall constitute an act of unfair competition. Two points emerge from this general principle: Firstly the disclosure, acquisition or use of the secret information must be without the consent of person lawfully in control of that information. Secondly it must be in a manner contrary to the ‘honest commercial practices’. Applying it to pharmaceutical products utilizing new chemical entity, when the undisclosed data is submitted to the drug Regulatory authority, it becomes the trustee of that data and the originator remains the person lawfully in control of the data or ‘the rightful holder’. The authority thus not being the ‘rightful holder’ cannot use the data for any purpose other than for which it is submitted without the consent of the ‘rightful holder’. The sole purpose for which the data is submitted by the originator is to enable the authority to evaluate the data for ascertaining the safety and efficacy of the drug before granting marketing approval. Therefore the regulatory authority should not be allowed to rely on that data without the consent of the originator for testing the safety and efficacy of the subsequent applications. Further where considerable cost is incurred by the originator in order to earn reward for his investment, it would be unjust to deprive him of the legitimate and reasonable profits by allowing the other persons to avoid the cost of undertaking the similar procedure and rolling out the same drug at much lower price. Thus compelling a person to suffer loss would tantamount to acting in a manner contrary to honest commercial practices. The model also provides some examples of unfair competition in respect of secret information. It provides that disclosure, acquisition or use of secret information by others without the consent of the rightful holder may, in particular, result from (i) industrial or commercial espionage; (ii) breach of contract; (iii) breach of confidence; (iv) inducement to commit any of the acts referred to in items (i) to (iii); (v) Acquisition of secret information by a third party who knew, or was grossly negligent in failing to know, that an act referred to in items (i) to (iv) was involved in the acquisition. [Article 6(2)] This list is however inclusive and not exhaustive in nature and can very well include use of data to grant approval for those drugs for which it was not meant. Information is regarded as secret if - (i) It is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (ii) It has commercial value because it is secret; and (iii) It has been subject to reasonable steps under the circumstances by the rightful holder to keep it secret. Article 6(4) of the said model correspond with Article 39.3 of the TRIPS agreement and is full of the same ambiguities as the latter. The model also deliberately refrains to define unfair commercial use. Article 39.3 of TRIPS has bifurcated member nations into two camps viz: - One consisting of developed countries reading ‘data exclusivity’ into Article 39.3.The most vociferous advocates include United States of America and European Union. The second Group consisting of Developing countries who subscribe to the view that data protection does not extend to granting ‘data exclusivity’ as data exclusivity invariably leads to market exclusivity, which is not envisaged by Article 39.3. Opponents of data exclusivity rely on the negotiating history of TRIPS to refute the contention that TRIPS mandates ‘data exclusivity’. The United States and European Union had made the proposal to the GATT signatories to adopt explicit language that would obligate members to Guarantee data secrecy and exclusivity for "a reasonable period" except upon compensating the initial registrant for the "reasonable value" of any use that offered a "commercial or competitive benefit" to any other person, including the government. However the proposal was rejected by the negotiators who finally adopted the present provision. An insight into the background of the Article 39.3 would make it amply clear that the interpretation forwarded by the developed countries does not withstand scrutiny. Moreover, an author argues that if the intention had been to have such exclusive marketing rights, this term, which is used in Article 70.9 of TRIPS, would have been used here too. Therefore, she avers, that a reasonable interpretation would be that the obligation on the authorities would be to keep the test data secret and to prohibit others from accessing this test data for unfair commercial use, such as sale to rival firms and this substantive obligation would exclude use by the authorities without disclosure of the data (Jayashree Watal, 2000). It is evident from bare reading, that Article 39.3 does not per se mandate data exclusivity. However many countries recognize marketing approval data as ‘trade secret’ of the drug developer and hence justify the data exclusivity laws. Proponents of this view give cogent reasons for regarding ‘clinical and test data’ as trade secret. The reasons forwarded are- Protection in form of confidentiality obligation, granted to the data is consistent with the treatment of the data as trade secret. Article, 39 falls in section 7 of the Part II of the TRIPS Agreement, which is concerned with Trade secrets and the Drug Marketing approval provided in Paragraph 3 is just a subset of the trade secret. Article 1.2 of the TRIPS Agreement labels the subject matter protected by Section 7 as a category of ‘intellectual property Article 1.2 reads thus: For the purposes of this agreement, the term "Intellectual Property" refers to all the categories of intellectual property that are subject to Sections 1 to 7 of Part II Therefore it is argued that prohibition on unfair commercial use when considered in the backdrop of trade secret principles does require data exclusivity (Aaron Xavier Felmeth, 2004). Should India adopt measure of data protection other than data exclusivity? Developed countries traditionally take the view that strengthening IPR protection fosters economic growth in developing countries by facilitating international investment while simultaneously rewarding domestic innovation. By contrast developing countries see IPR protection as impeding the flow of knowledge by increasing cost and decreasing access to new technology. Developed countries argue that IPRs therefore slows economic development and decrease social welfare, at least in short term (Gary Smith, 1999). This argument against IPRs becomes all the more vehement in respect of Pharmaceutical products, as patented drugs are costly and unaffordable for the poor population. Moreover developing countries do not have the economic resources to provide health insurance cover to the people. Data exclusivity protection is often charged of being a superfluous or sui generis form of protection. Many arguments are advanced against data exclusivity, which can be summed as follows- Undermines genuine innovation as it encourages originator companies to focus their activities in changes in the product rather than focus on developing new innovative and beneficial product. All the TRIPS members to 20 years have uniformly extended the product patent period. Patents are increasingly being granted for new uses, indications, dosages and change in formulations. Data exclusivity period is granted without originator having to demonstrate any of the basic principles of novelty or inventiveness. Data exclusivity leads to ever greening of patents. Hypothetical example is often cited-suppose X Company applies for marketing approval of its drug in 17th year of patent, assuming data exclusivity period to be of 5 years, the total period of protection will increase to 22 years. Thus it could keep the generic drug producers out of the market for longer duration. Poor consumers of medicines would suffer as a result of lack of competition in the market. The battle lines over data exclusivity are predictably drawn between net exporters and net importers of intellectual property. The developing countries including India are reluctant in granting exclusive marketing privileges to affluent foreign drug companies for the fear that it would escalate the prices of drugs. On the other hand the developed countries fail to see any incentive to market such drugs in India in the without adequate recompense in form of data exclusivity. Many sections of Indian Society fear that the data exclusivity will cause slew of problems for the consumers in India, would give excessive benefits and protection to the MNC pharmaceutical companies, deprive people of the generic equivalents, prices of the drugs would become exorbitant as a result a large chunk of the population will have to go without even the essential drugs. Before we consider the ill effects of data exclusivity we must bear in mind that India is different from the other developing countries in various aspects. India has a well-developed Pharmaceutical industry, which has already notched up a large share in US generic market. Unlike other countries India has excellent outsourcing opportunities for clinical trials, R&D and technical services. In addition, fleet of highly trained scientists makes India an attractive destination for research projects. More than 15 percent of the scientists engaged in pharmaceutical R & D in US are of Indian origin. Empirical evidence suggests that a stronger intellectual property protection would facilitate the flow of FDI in the developing countries. A study conducted by Mansfield indicated that effective intellectual property rights protection could be an important factor in securing foreign direct investment and technology transfer, especially in high technology industries. The findings indicate that, in relatively high-technology industries like chemicals, pharmaceuticals, machinery, and electrical equipment, a country's system of intellectual property protection often has a significant effect on the amount and kinds of technology transfer and direct investment to that country by Japanese and German, as well as U.S. firms (Edwin Mansfield, 1995). Some of the international researches clearly indicate that a close relationship exists between level of Intellectual property protection and R & D expenditures. It was found that foreign R & D expenditures by Research based pharmaceutical firms was concentrated in Western Europe where patents are adequately protected and the R &D expenditures decreased by 6.6 percent over a period 1977 to 1987 in Latin America where the protection is relatively very poor (Rapp and Rozek, 1990) According to a US representative protection of test data is key to company decisions on location of clinical trials. According to the U.S. National Institutes of Health (NIH), lack of data exclusivity in India is the primary reason why India only ranks 9th (compared to China which ranks 2nd), in funding given by the NIH outside of the U.S. U.S. pharmaceutical companies spent $30 billion on R&D in2001. Pharmaceutical industry is a research and development intensive industry. Indian Pharmaceutical companies on an average allocate only 2 percent of their sales for R&D activities (only some allocate 6 percent). The growth of this highly competitive, technology-based industry is not possible without substantial investment. Most of the Indian companies do not have the requisite financial resources to conduct extensive researches for bringing out novel drugs. If data exclusivity legislation is enacted in India it would provide the necessary incentive to the originators to market their drugs in India without the fear of generic manufacturers and other multinational drug manufacturers free riding on their data. The benefits that would flow would be numerous. The Data Exclusivity laws would set the environment that would Afford the opportunity to the Indian Research based pharmaceutical companies to bag important research projects form top pharmaceutical companies of US and European countries. Increase the diffusion of knowledge and technology. Indian pharmaceutical industry needs to be aware and in possession of latest technologies used in developed countries in order to acquire a cutting edge in this sector. India is lagging behind in developing technology for the latest drug delivery system. Create demand for Indian scientists in the domestic research organizations and thus would be effective in checking brain drain from India. Most of the talented Indian scientist migrate to the greener pastures in US, UK and other European countries. These scientists would have less incentive to emigrate if their creative work was adequately protected in India. The research organizations once equipped with the structural resources can conduct researches that are specific to the diseases prevalent in India. Diseases such as tuberculosis, malaria, leprosy, plague and dengue fever continue to pose serious problems in India and take millions of lives each year. It is unlikely that such researches would be undertaken by the research firms located in developed countries. Facilitate the entry of new drugs in the market particularly those that are not protected by patent. Employment opportunity in the pharmaceutical sector would increase manifold. Bring about scientific and technological integration. More over if the Indian Pharmaceutical Industry has to give strong competition to countries like China and Israel we must create an environment, which allures the foreign firms to invest in India rather than to these countries. In china, the period of data exclusivity is 6 years and a data exclusivity law is already in the offing in Israel. China in September 2002 PRC Drug Administration Implementing Regulations introduced a new data exclusivity right. Under this law, the government (that is the SFDA) has an obligation to "protect against [the] unfair commercial use by any other person the undisclosed clinical data and other data … submitted by a manufacturer or marketer in obtaining the approval of manufacturing or marketing a drug containing new ingredients. During this six year period, any person who relies on data which is subject to the exclusive right shall be refused marketing approval unless the data relied upon is generated by himself or on his behalf. Data Exclusivity and pharmaceutical industry in India The Indian pharmaceutical industry is one of the most advanced among those of the developing countries. The ranking of the industry in the global market is fourth in volume (eight percent share in world market) and thirteenth in terms of value (1 percent share in the world market). The industry exports products worth rupees 141 billion to over 65 countries. The annual turn over is rupees 226 billion. Besides all the above, India has the largest number of US Food and Drug Administration (FDA) approved manufacturing facilities outside US. The number of Drug Master Files (DMFs) filed with the US FDA is twenty six percent higher then Spain, Italy, China and Israel. The Indian pharmaceutical industry has availed tremendous advantage of the absence of product patent regime in the past. By using the copycat technique of reverse engineering, it has succeeded in bringing out generic versions of almost every new drug developed in the other parts of the globe within 5 to 6 years of its introduction in the market. At present there are over 60,000 generic brands in 60 therapeutic categories in the market. The generic pharmaceutical companies of India offer cheap alternative for expensive branded drugs. Bristol-Myers Squibb (BMS) an American firm sells stavudin treatments for $3,400/year in US and $55/year in Africa, Cipla an Indian firm can sell the same drug for $40/year. Similarly Cipla and Ranbaxy laboratories can provide a daily dose of three antiretroviral for $244 and $292 per patient per year. A similar treatment from major US Pharmaceutical costs at least $562 per year. National Sector units like Ranbaxy, Dr. Reddy’s laboratories, CIPLA, Sun Pharmaceuticals, Wokhardt, Zydus Cadila and others have come out with original research on development of new drugs, delivery system and even new molecules, acquiring patents in countries US and others. The products of Indian manufactures are accepted on the WHO list of essential drugs and also approved by the regulatory authorities in EU and US. The pharmaceutical industry is not unanimous on the issue of grant of data exclusivity in India. There are two Trade associations representing the Pharmaceutical industry - Organization of Pharmaceutical Producers of India (OPPI) and the Indian Drug Manufacturers’ Association (IDMA). OPPI has requested the government to amend Schedule Y of the Drug and Cosmetic Act to include provisions for Data Exclusivity for period of 4 or 6 years from the date of marketing approval whereas IDMA opposes data exclusivity legislation in India. IDMA attributes the growth of the Indian pharmaceutical industry to the Indian Patent Act of 1970 or in the other words to the absence of product patent regime. OPPI is of the view that the discovery, development and bringing to market a new drug the originator requires to conduct extensive chemical, pharmacological and clinical research and testing and generate data for submission to the Drug Regulatory Authority for marketing approval of the new drug. This activity takes 8-10 years of painstaking efforts. The data generated in such work is proprietary to the originator and needs to be protected OPPI is composed of both the national as well as multinational firms. Most of the leading pharmaceutical companies are its members.foreg- Aventis Pharma ltd, Novartis India ltd, Pfizer ltd, Eli Lily &Co. (Ind) Pvt., Workhardt ltd, Johnson &Johnson ltd, Merck Ltd, Glaxo Smith Kline etc. IDMA represents the national sectors of the of the Indian Manufacturers. It has a membership of 500 Indian large, medium and small companies. Members include: Ajanta Pharma Ltd, Cadila Health Care Ltd, Cadila Pharmaceuticals Ltd, Dabur India Ltd, Dr. Reddy’s Laboratories, Lupin laboratories, Merrill Pharmaceuticals etc. Unlike Indian Pharmaceutical industry, generic industry of US strongly advocates strengthening of the Intellectual property regime by accepting the data exclusivity laws. Once the period of exclusivity is over the generic drug producers can prove bioequivalence on the basis of the clinical and test data submitted to the regulatory body. Thus the interest of consumers can be balanced with that of the intellectual property holders. Impact of data exclusivity on access to health care "The Hatch –Waxman period of data exclusivity works in this country because the people in US have Health insurance that pays for essential drugs and because we have a safety care net to assure that the poorest in our society are not left without medical care and treatment. But to impose such a system on a country without a safety net, depriving millions of people of life of life saving drugs is irresponsible and even unethical. In developing countries we must do every thing in our power to make affordable drugs for the life threatening diseases available now"- Henry Waxman In India, however the drugs, which are put in the Indian essential drug list, are not patented and the prices of these drugs will not be affected by strong patent protection. Moreover the product patent would only apply to new drugs, which would make a very insignificant percentage of the total market. The empirical data is not clear whether data exclusivity definitely has adverse impact on the prices of drugs. The multinational Pharmaceutical companies practice the policy of differential pricing that is to say that the prices of the drugs vary from country to country depending on the purchasing capacities of the consumers. Differential pricing policy provides a mechanism, which ensures that the consumers in the developing countries are not excessively burdened with the high prices of the drugs. The flexibilities, which are inherent in Trips like compulsory licensing under Article under Article 31 or the parallel importing from other countries can always be used as a tool for making the drugs more affordable in cases of emergencies and on the grounds permitted by the TRIPS agreement. Compulsory Licensing is "an authorization given by a National authority to a person, without or against the consent of the title-holder, for the exploitation of a subject matter protected by a patent or other intellectual property rights": (Correa, 1999) An author divides the middle income countries like China, Argentina, India etc the consumers of medicines can very well be bifurcated into two groups viz: - rich and the poor. On humanitarian and social grounds the poor people can be exempted from paying the additional cost of a patented product but the rich, must contribute to the cost of research and development that goes towards creating a patented product. So he is opines the Rich cannot be allowed to reap unjust advantage by free riding on the clinical and test data produced by the originator (Arvind Subramanian, 2001). Benefits of granting data exclusivity to the Pharmaceutical products utilizing new chemical entities would certainly outnumber the drawbacks Intellectual Property protection encourages innovation, which is a key factor that contributes to improved health care, through promoting both development of new medicines and economic growth generally. (Nozek and Tully, 1999) Therefore the Indian Government must expedite the enactment of the data exclusivity legislation in India.