► ABNR and RODYK Team Up to Set Aside International Arbitration Award in

Singapore

► BRIGARD URRUTIA - Acts for Citibank Group on Sale of Colfondos’ Shares

► CLAYTON UTZ Advises Valemus on $1.3BN IPO

► FRASER MILNER CASGRAIN Acts in Syndicated Underwriting

► GIDE LOYRETTE NOUEL Advises Central Bank of Haiti on Telco/Viettel P3

► HOGAN LOVELLS Advises Onexim on Acquisition of New Jersey Nets

► KING & WOOD China Huarong Financial Leasing Successfully Issues First

China Bond

► NAUTADUTILH Advises MISC Berhad in Acquiring Stake in VTTI

►TOZZINIFREIRE Advises Mastercard Brasil Soluções de Pagamento Ltda ►WILSON SONSINI Par Pharmaceutical Prevails in Patent Infringement

Dispute with Purdue

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►Brigard Urrutia Welcomes Return of Two Lawyers ►Davis Wright Tremaine Expands Technology & Digital Media Practice ►Fraser Milner Casgrain Adds to International Petroleum Practice ►NautaDutilh Announces New Board ►TozziniFreire Expands Capital Markets Practice ►Wilson Sonsini—Larry Shatzer joins Firm’s IP Litigation Practice ►AUSTRALIA New South Wales Budget Changes to Benefit Asset Backed Securitisations CLAYTON UTZ ►BRAZIL New List of Tax Haven Jurisdictions and Clarification of Favorable Tax Regimes TOZZINIFREIRE ►CANADA Enforcement of Letters of Credit in Ontario FRASER MILNER CASGRAIN ►CHINA China Reaffirms Support for Foreign Investment KING & WOOD ►INDIA Finance Bill 2010 Passed—Union Budget Enacted - KOCHHAR & CO ►NETHERLANDS EU Finance Regulator Tightens Requirements on Remuneration Policies NAUTADUTILH ►NEW ZEALAND Patents Reform Bill Sent for Second Reading - SIMPSON S GRIERSON ►SINGAPORE Protection Well Known Marks RODYK ►TAIWAN 2010 Guidelines Governing Application of Double Tax Agreements LEE and LI ►UNITED STATES ►IP Report—Controversial District Court Decision Finds Purified Genes Unpatentable Subject Matter BAKER BOTTS ►U.S. Department of Health and Human Services Issues Proposed Rule on Investigator Conflicts of Interest in Federally Funded Research HOGAN LOVELLS ►Department of Ecology Releases Guidance on Climate Change and SEPA DAVIS WRIGHT TREMAINE ►Patentees Beware—Fed Circ Decision Makes it Easier for False Marksmen to Troll for Dollars LUCE FORWARD ►American Needle v. National Football League - NFL Can Be Liable for Conspiring under Section 1 of Sherman Act WILSON SONSINI GOODRICH & ROSATI

P R A C T O O L S T O U S E

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June 2010 e-Bulletin

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PRAC 48th International Conference Kuala Lumpur Hosted by Skrine

October 16-19, 2010 Work Sessions include: ● One on One Meetings - series of meetings among firms ● Banking – Opportunities and Challenges Working with Islamic Finance ● PRACtice Management - Developing Associates & Young Lawyers ● Litigation – Updates - OECD Convention of Combating Bribery of Foreign Public Officers and Foreign Corrupt Practices Act ● Intellectual Property - Business, Legal and Privacy Issues in Use of Social Media PRAC Members Gathering @ IBA Vancouver October 4, 2010 49th International PRAC Conference - Amsterdam - May 21 - 24, 2011 Full reports and registration at www.prac.org/events.php

M E M B E R D E A L S M A K I N G N E W S

Earlier this year BRIGARD & URRUTIA welcomed the return of two lawyers to the firm. Manuel Quinche works with our Mergers and Acquisitions, Capital Markets, Banking and Finance and Project Finance teams. He has participated in a significant number of M&A, financings and capital markets transactions. In mergers & ac-quisitions, Manuel has participated in transactions with an aggregated value that exceeds US$20 billion. In capital markets and has worked in a variety of securities transactions, including bond offerings under Rule144A/Reg S by Latin American issuers such as the City of Bogotá (US$400M), Empresas Públicas de Medellín (US$500M), Cervecería Nacional Dominicana (US$500M), and Transmilenio S.A. Manuel has also participated in securities offerings by structured vehicles and special purpose investment vehicles, ADR offerings and private placements (including affiliate block trades) and In the area of banking and finance, he has acted in various credit, structured and project financing transactions.

A graduate of Colegio Mayor de Nuestra Señora del Rosario (J.D. 2001), Universidad de los Andes (Commercial Law Gradu-ate Degree) and New York University School of Law (LL.M in Corporate Law). Admitted to the practice of law in Colombia and New York.

Named by Chambers & Partners as an “Associate to Watch” in New York in the area of practice devoted to Latin American Capital Markets.

Julián Ávila - relevant experience focused in the insurance sector as Legal Director of “La Equidad Seguros O.C”, and as Manager of Multinational Insurance Programs in Jardyne, Lloyd & Thompson España S.L. Julián has participated in the design and implementation of Reinsurance programs in Colombia and in Venezuela

A graduate of Colegio Mayor de Nuestra Señora del Rosario, (awarded Special Distinction for Prescription of Actions Derived from the Insurance Contractulián ), Julian specialized in Financial Law and Contractual Law at the same University, and then obtained a Master in Insurance and Risk Management at Pontificia Universidad de Salamanca, where he presented his thesis on the Operating Risk Management as Competitiveness Tool in the Financial Sector.

Julián has participated in academic events carried out in different countries, on diverse issues of interest for the insurance market, such as the Directorate of Insurance Entities and Risk Management Practices. In 2009, Julián was appointed as Representative for Spain in the annual FERMA (Federation of European Risk Management Associations) forum carried out in Prague. For additional information visit www.bu.com.co

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May 31 2010 - Calgary Fraser Milner Casgrain LLP (FMC), one of Canada’s leading business and litigation law firms, is very proud to welcome Jeff Scobie as a partner in the firm’s Corporate | Commercial and Energy Groups, and as a member of FMC’s International Petroleum Law Practice Group. Jeff focuses on international midstream petroleum law matters, including gas, LNG, GTL, pipelines, refining, petrochemicals, and independent power and water projects. Based in Calgary, he serves both Canadian and international midstream energy clients, and complements FMC’s strong team of international upstream petroleum lawyers.

"We are delighted to welcome Jeff as the newest member of Fraser Milner Casgrain’s prominent Energy Group, whose 60 lawyers across the country are recognized nationally and internationally for their depth and breadth in all areas of oil and gas, power and utilities," said Matthew Lindsay, Managing Partner, FMC Calgary. "As a recognized expert in the international midstream petroleum area, Jeff’s vast insight, advice and bench strength will be extremely valuable to our clients, our multidisciplinary teams and to the entire firm."

Jeff has negotiated and drafted a wide variety of transactional and financial agreements relevant to the international midstream petroleum sector. From 1998 to 2004, Jeff worked in Doha, Qatar, as General Counsel of Qatar Petroleum (QP), the national oil and gas concern of the State of Qatar, where he directly handled significant legal activities on behalf of both QP and the State of Qatar, including those involving the development and financing of major energy projects.

Prior to joining QP, Jeff practised law in Calgary with two major law firms and an international pipeline company. He is a former chairman of the International Business Law Subsection of the South Alberta Branch of the Canadian Bar Association, a former chairman of the International Business Committee of the Calgary Chamber of Commerce and the Calgary Economic Development Authority, and a former committee member of the Calgary Exhibition and Stampede.

FMC’s International Petroleum Law Practice Group acts for international oil company clients at all phases (including structuring for optimum security of investment) of international petroleum projects worldwide. In addition, our firm has an international mining practice, acting for clients throughout the world. With more than 500 lawyers in six full-service offices located in Canada’s key business centres, FMC focuses on providing outstanding service and value to our clients, which is complemented by an ongoing commitment to diversity and inclusiveness to broaden our insight and perspective on our clients’ needs. For additional information visit www.fmc-law.com

D A V I S W R I G H T T R E M A I N E E X P A N D S T E C H N O L O G Y & D I G I T A L M E D I A P R A C T I C E

F R A S E R M I L N E R C A S G R A I N A D D S T O I N T E R N A T I O N A L P E T R O L E U M P R A C T I C E

Michele Herman, a technology, licensing and patent attorney, has joined the Seattle office of Davis Wright Tremaine LLP as a partner. Ms. Herman has nearly 20 years of experience serving clients in the technology industry.

“Michele has built an international reputation working with standard setting bodies and on open source software issues, as well as being a patent lawyer with strong licensing experience,” said Kraig Baker, chairman of the firm’s technology and digital media practice. “She is a tremendous addition to our team.”

Ms. Herman focuses her practice on open source software, industry standards and product licensing, and she regularly negotiates complex multiparty agreements. As a former associate general counsel and senior director of IP strategy at Microsoft Corp., Ms. Herman has extensive experience with a range of complex IT- and IP-related legal issues. She has formed, and serves as general counsel to, several trade organizations.

Ms. Herman says she is excited about working with her new colleagues. “Davis Wright Tremaine’s great lawyers do interesting work for great clients and I am very happy to be a part of this strong team.”

Prior to joining Davis Wright, Ms. Herman spent five years as a partner with Woodcock Washburn LLP and was also an associate there for eight years before joining Microsoft.

Ms. Herman earned her J.D. with honors from Rutgers University School of Law. She received her B.S.E.E. with high honors from Rutgers School of Engineering. She is admitted to practice in Washington and Pennsylvania. Ms. Herman presently serves as an adjunct professor at Seattle University Law School.

About Davis Wright Tremaine Davis Wright Tremaine LLP is a national law firm with more than 500 lawyers representing clients based throughout the United States and around the world. For more information, visit www.dwt.com

Michaëla Ulrici, new chairperson of NautaDutilh June 01, 2010 - As from today NautaDutilh has a new board chaired by Michaela Ulrici. In addition to the new chairperson and Peter van der Meij, who took office in 2005, the Board consists of Warner Roeters van Lennep and ErikGeerling. After two three years. terms as chairman, Marc Blom will resume his practice in Banking & Finance. Earlier this year, Jan Loorbach left the Board to become General Dean of the Netherlands Bar Association. Michaëla Ulrici, when taking up office earlier today: "In general terms, we shall continue the successful policy initiated by our predecessors. In addition to this, we will focus even more specifically on our clients who are confronted with an increas-ingly complex legal environment. This underlines our role as a strategic team-player and the importance of thinking ahead with regard to their legal and strategic position, both now and in the future. Furthermore, as an independent Benelux law firm, we will continue to invest in cooperation with our international contacts - law firms worldwide in order to provide the optimal service to our clients in the Benelux and abroad." As of 1 June the Board of NautaDutilh is composed as follows: Erik Geerling [1962] is the Board member primarily responsible for practice development and the external profiling of NautaDutilh. A partner in the Finance & Capital Markets department, Erik is specialised in project financing, ship financing and maritime notarial services. He heads both NautaDutilh’s Project Finance Group and the Ship Finance Group in Rotterdam. He joined NautaDutilh in 1988 and has been a partner since 1996. Peter van der Meij [1958], took office in 2005 and continues to be responsible for the operational management of all NautaDutilh offices. Warner Roeters van Lennep [1954] took over the Human Resources & Organisation (HR&O) portfolio from Jan Loorbach on 1 January 2010. He heads the Employment Law group at NautaDutilh in Amsterdam and is specialised in individual and collective employment law and the law with regard to works councils. He joined NautaDutilh in 1981 and became a partner in 1990. Michaëla Ulrici [1966] took office today as chairperson of the Board. She has been a partner in NautaDutilh’s Banking & Finance group in Amsterdam since 2002 and is specialised in securitisations and other structured finance transactions. She has been working for NautaDutilh since 1994. She will be responsible for strategy and policy. About NautaDutilh NautaDutilh is one of the largest independent law firms in the Benelux with 400 lawyers, notaries and tax advisers. The firm has offices in Amsterdam, Rotterdam, Brussels, Luxembourg, London and New York and works on a non-exclusive basis with leading firms worldwide. NautaDutilh provides legal services of the highest level and advises a large variety of clients on complex transactions and legal issues. NautaDutilh is recommended by the leading international legal publications The European Legal 500 and Chambers' Global directory. For additional information visit www.nautadutilh.com

N A U T A D U T I L H A N N O U N C E S N E W B O A R D

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T O Z Z I N I F R E I R E E X P A N D S C A P I T A L M A R K E T S P R A C T I C E

We are pleased to announce that TozziniFreire Advogados has added Luciana Maria Agoston Burr to its group of partners. She has solid experience in the financial area and will be joining the Capital Markets practice group at the firm.

Luciana worked as a foreign associate at Greenberg Traurig, LLP, New York. She has also worked in the legal department of major banks, such as Banco Ford, Santander, HSBC Brasil and Rabobank International, where she was head of the Legal Department since 2007. She has specialization in Financial Law from Insper (Ibmec).

Contact Information: Luciana Maria Agoston Burr T 55 11 5086 5098 lburr@tozzinifreire.com.br For additional information visit www.tozzinifreire.com.br

New Partner Larry Shatzer Brings Extensive Patent Litigation and ITC Experience --

PALO ALTO, CA (June 1, 2010) - Wilson Sonsini Goodrich & Rosati, the premier provider of legal services to technology, life sciences, and growth enterprises worldwide, today announced that Larry L. Shatzer has become a partner at the firm. An expert in patent litigation with substantial trial experience before the U.S. International Trade Commission (ITC) and in federal district court, Shatzer joins the firm from Foley & Lardner, where he was the firm-wide chair of Foley's intellectual property litigation practice. He will be based in Wilson Sonsini Goodrich & Rosati's Washington, D.C., office.

"The firm's IP litigation practice has grown dramatically in recent years, resulting in an impressive track record for our work in bet-the-company patent cases," said CEO Steve Bochner. "Larry's demonstrated skill as a trial lawyer, years of experience in the technology field, and familiarity with the ITC and other key trial venues make him a welcome addition to the firm. He will be a great member of the patent litigation team and an invaluable D.C.-based resource for our clients."

With more than 20 years of experience litigating complex intellectual property matters, Shatzer's work has involved both jury and non-jury trials—including serving as first chair—as well as arguments before the U.S. Courts of Appeal for the Federal and Fourth Circuits. He has more than two dozen Section 337 ITC investigations to his credit, and his expertise encompasses a broad array of technology sectors, including biotechnology, chemicals, semiconductors, telecommunications, and mechanical systems. He served as president of the ITC Trial Lawyers Association in 2002 and has been a member of the organization's Executive Committee for nearly 15 years.

Prior to joining Wilson Sonsini Goodrich & Rosati, Shatzer was a partner in the Washington, D.C., office of Foley & Lardner. Before his tenure at Foley, Shatzer was an associate, and then a partner, at Adduci, Mastriani & Schaumberg in D.C. He received his J.D. from the Georgetown University Law Center in 1987 and his B.A. from David Lipscomb College in 1984.

For additional information, please visit www.wsgr.com.

About Wilson Sonsini Goodrich & Rosati Wilson Sonsini Goodrich & Rosati's broad range of services and legal disciplines is focused on serving the principal challenges faced by the management and boards of directors of business enterprises. The firm is nationally recognized as a leader in the fields of corporate governance and finance, mergers and acquisitions, private equity, securities class action litigation, employment law, intellectual property, and antitrust, among many other areas of law. With long-standing roots in Silicon Valley, Wilson Sonsini Goodrich & Rosati has offices in Austin, New York, Palo Alto, San Diego, San Francisco, Seattle, Shanghai, and Washington, D.C.

W I L S O N S O N S I N I G O O D R I C H & R O S A T I E X P A N D S I P L I T I G A T I O N P R A C T I C E

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TozziniFreire provided assistance to MasterCard Brasil Soluções de Pagamento Ltda. (“MasterCard”), in negotiating a sponsorship contract with T4F Entretenimento S.A. (Time for Fun) MasterCard is sponsoring the technology used to acquire tickets and access concerts and events organized in Brazil by Time for Fun by using MasterCard’s credit cards. The sponsorship includes the naming rights of the technology that will be entitled MasterCard ShowPass

TozziniFreire team was led by Maria Elisa Gualandi Verri – partner and Marcela W. Ejnisman – partner; João Alfredo Busin Fernandes – associate; Ana Carolina D’Atri – associate and Silvia Martins de Castro Cunha - associate

For additional information visit www.tozzinifreire.com.br

Malaysan shipping company MISC Berhad has acquired a 50 per cent stake in the Rotterdam tank storage company Vitol Tank Terminals International (VTTI). NautaDutilh assisted MISC in this acquisition. MISC is paying USD 735 million for the shares. The remaining 50 per cent will remain in the hands of Vitol. A listed company, MISC is a major international shipping company focusing on the oil and gas sector. The acquisition will allow MISC greater control over the transport chain. Based in Kuala Lumpur, MISC is majority-owned by the Malaysian state oil company Petronas. The transaction still awaits approval by competition authorities and is expected to be completed within a few months. MISC was advised by NautaDutilh's Energy & Utilities group (the Netherlands and Belgium), Jaap Jan Trommel being the engagement partner. For additional information visit www.nautadutilh.com

T O Z Z I N I F R E I R E A D V I S E S M A S T E R C A R D B R A S I L S O L U C O E S D E | P A G A M E N T O L T D

Sydney, 8 June 2010: In another significant appointment for the firm's Equity Capital Markets team, Clayton Utz has advised Valemus Limited (formerly Bilfinger Berger Australia) in relation to its A$1.3 billion Initial Public Offering which was announced today.

Clayton Utz Equity Capital Markets partner Stuart Byrne led the transaction, with support from partners Simon Truskett and David Landy.

This significant role represents the latest in an uninterrupted run of IPO advisory roles for Clayton Utz, which has acted on all significant IPOs that have launched since the window opened in late 2009. To date these include roles on the three largest floats of 2009 – the A$340 million Kathmandu IPO, the A$2.3 billion Myer IPO, and the A$160 million IPO of carsales.com – and the largest IPO in 2010 to date, the A$400 million Miclyn Express Offshore IPO. For additional information visit www.claytonutz.com

C L A Y T O N U T Z A D V I S E S V A L E M U S L I M I T E D O N A $ 1 . 3 B N I P O

K I N G & W O O D C H I N A H U A R O N G F I N A N C I A L L E A S I N G S U C C E S S -F U L L Y I S S U E S F I R S T C H I N A B O N D

May 27, 2010, China Huarong Financial Leasing Co., Ltd. successfully issued an RMB 1 billion financial bond with an AA+ credit rating on the inter-bank bond market.

The successful issuance was the first instance of a financial leasing company initiating direct marketized financing through a financial bond, marking the formal entry of China’s financial leasing companies onto the bond markets as issuers.

King & Wood represented the issuer on all matters. The handling partner was Jiang Guoliang of King & Wood’s Hangzhou office.

For additional information visit www.kingandwood.com

N A U T A D U T I L H A D V I S E S M I S C B E R H A D I N A C Q U I R I N G S T A K E I N V T T I

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B R I G A R D U R R U T I A A C T S F O R C I T I B A N K G R O U P O N S A L E O F C O L F O N D A S ’ S H A R E S

Brigard & Urrutia advised Citibank Group in the structuring, documentation and closing of the sale of 100% of the shares of CITI COLFONDOS S.A. PENSIONES Y CESANTIAS to MERCANTIL COLPATRIA S.A., who acquired such shares associated with the private equity funds LINZOR CAPITAL and PALMFUND, through vehicles incorporated by the purchasers in an operation that was approved by the Colombian Superintendence of Finance. CITI COLFONDOS has more than two million of employees affiliated to its severance and pension funds, and is the fourth pension and severance funds administrator in the market. The target company closed 2009 with incomes of COP$197 billion and an equity of COP$207 billion.

For additional information visit www.bu.com.co

H O G A N L O V E L L S A D V I S E S O N E X I M O N A C Q U I S I T I O N O F N E W J E R S E Y N E T S

LONDON and NEW YORK, 12 May 2010 – Hogan Lovells has successfully advised Onexim Sports and Entertainment Holding USA, Inc., in the acquisition of a majority stake in the capital of the New Jersey Nets basketball club. As part of the agreement, Onexim will begin development with Forest City Ratner Companies on a new stadium project in Brooklyn, New York. Russian entrepreneur Mikhail Prokhorov, President of Onexim, will be the first owner of an NBA team from outside North America. The deal, which closed on 12 May, is valued at $200 million and includes 80 per cent of the NBA league team and 45 per cent of the 22-acre Barclays Center in Brooklyn, which will include the new stadium for the Nets, as well as other non-residential and residential buildings. Hogan Lovells’ London-based partner Todd Schafer led the team that advised Onexim. He was supported by London partner, Chris Melville, and New York partners, Mitch Lubart, Maureen Hanlon, Alex Johnson, Mark Weinstein, and David Dunn. Schafer commented: "We've had the pleasure of working very closely and successfully with Onexim as well as the NBA, Nets and FCR/NSE and their advisors on this landmark transaction, and this is an excellent outcome." For additional information visit www.hoganlovells.com

About Hogan Lovells

Hogan Lovells is a new law firm combining the breadth of business-oriented legal advice and high-quality service that clients have come to expect through working with

its two founding firms – Hogan & Hartson and Lovells.

Hogan Lovells (the "firm") refers to the international legal practice comprising Hogan Lovells International LLP, Hogan Lovells US LLP, Hogan Lovells Worldwide Group (a

Swiss Verein), and their affiliated businesses, each of which is a separate legal entity. Hogan Lovells International LLP is a limited liability partnership registered in

England and Wales with registered number OC323639. Registered office and principal place of business: Atlantic House, Holborn Viaduct, London EC1A 2FG. Hogan

Lovells US LLP is a limited liability partnership registered in the District of Columbia.

The word "partner" is used to refer to a member of Hogan Lovells International LLP or a partner of Hogan Lovells US LLP, or an employee or consultant with equivalent

standing and qualifications, and to a partner, member, employee or consultant in any of their affiliated businesses who has equivalent standing. Rankings and quotes

from legal directories and other sources may refer to the former firms of Hogan & Hartson LLP and Lovells LLP. Where case studies are included, results achieved do not

guarantee similar outcomes for other clients.

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On March 16, 2010, Superior Plus Corp. ("Superior") completed the issue of $150 million aggregate principal amount of 5.75% convertible unsecured subordinated debentures (the "Debentures") at a price of $1,000 per Debenture (the "Offering"). An over-allotment option has been granted to purchase up to an additional $22,500,000 aggregate principal amount of Debentures.

The Debentures were offered to the public through a syndicate of underwriters co-led by TD Securities Inc. and CIBC World Markets Inc. and including National Bank Financial Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc. and Cormark Securities Inc. (collectively, the "Underwriters").

The underwriters were represented by Fraser Milner Casgrain LLP with a team consisting of Bill Gilliland, Chima Nkemdirim, Keith Inman (securities) and Anne Calverley, Q.C. (tax). For additional information visit www.fmc-law.com

PRAC 48th International Conference Register Online now at www.prac.org/events

F R A S E R M I L N E R C A S G R A I N A C T S I N S Y N D I C A T E D U N D E R W R I T I N G

3 May 2010 - Gide Loyrette Nouel advised the central bank of Haiti (Bank of the Republic of Haiti, BRH) on the public-private partnership (PPP) agreement that the Haitian government and the BRH signed on 29 April 2010, with Viettel, the leading mobile operator in Vietnam. The agreement concluded one of the largest direct foreign investments in Haiti to date. Viettel will invest up to USD 100 million to expand telecommunications access as part of a national reconstruction initiative. In December 2009, Viettel won the international call for tender launched by the BRH for the partnership. Following the tragic earthquake of January 2010, Viettel reiterated its commitment to continuing the project. The international call for tender Viettel won was prepared by the International Finance Corporation (IFC), a private-sector division of the World Bank, which the BRH retained as its principal advisor for a PPP project in July 2007. Viettel will renew the services offered by the public company Télécommunications d'Haïti (Teleco) - which was formerly state-owned - by investing in a new company in which it will hold a 60% stake. The BRH or its subsidiaries will control the remaining 40%. Under the partnership agreement, Viettel will initially invest USD59 million, with, according to the projected financing, an additional USD40 million to be injected over the next four years. BRH Legal Counsel represented by Gide Loyrette Nouel (John Crothers assisted by Kateryna Korol and Julien Brusau Cuello for PPP issues, Thomas Urlacher for corporate aspects, and Olivier Cousi and Léonard Vielle for telecommunications issues. For additional information visit www.gide.com

G I D E L O Y R E T T E N O U E L A D V I S E S C E N T R A L B A N K O F H A I T I T E L C O / V I E T E L P 3

PRAC 48th International Conference Kuala Lumpur Oct 16—19, 2010

SKRINE

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A B N R A N D R O D Y K T E A M U P T O S E T A S I D E I N T E R N A T I O N A L A R B I T R A T I O N A W A R D I N S I N G A P O R E

ABNR team together with Rodyk & Davidson LLP litigators have managed to set aside the ICC Arbitral Award No. 16122/CYK (ICC Arbitral Award) in the case between CRW joint contractors v. PT Perusahaan Gas Negara (Persero) Tbk (PGN/our client) before the High Court of Singapore. The dispute arose from a FIDIC contract for the construction of 196 km pipe for the distribution of gas from South Sumatra to West Java. This case is the continuation of an arbitration case in Singapore, when last year the ICC Arbitral Tribunal had rendered an award in favor of the claimants (CRW joint contractors). After series of hearings, where of ABNR partners, M. Husseyn Umar, was also involved in one of them, the Singapore High Court Justice found and agreed with ABNR contention that the ICC Arbitral Award was erroneously rendered by the Tribunal as they simply transformed the Dispute Adjudication Board Decision into a final award, the High Court Justice saw that such is contravening the FIDIC 1999 provisions. The most event that has never been predicted before was the High Court Justice directly decided in favor of PGN without taking some time to consider, when judge realized that the ICC Arbitral Award contains serious defect. It is worth noting that Singapore judicial system is very strict in guarding the credibility of arbitration process conducted under its jurisdiction and thus it is very rare and limited to exceptional cases that the High Court of Singapore is willing to set aside an arbitral award. Therefore, Singapore has also been quite known as an international arbitration friendly country. This case has drawn the attention of the arbitration practitioners and litigators in Singapore and Malaysia for the result achieved in the High Court of Singapore. ABNR counterpart, CRW joint contractors, currently filed an appeal against such decision and the process is still ongoing in the Singapore Court of Appeal. For additional information visit www.abnrlaw.com

On June 3, 2010, the U.S. Court of Appeals for the Federal Circuit affirmed a ruling that Purdue Pharma Products' patent claims for controlled-release tramadol are invalid. In this patent infringement case, Purdue Pharma, Napp, and Ortho-McNeil asserted that Par Pharmaceutical infringed two Purdue patents by seeking FDA approval to market a generic product in competition with Ultram ER, a drug marketed by Ortho-McNeil under license from Purdue. Wilson Sonsini Goodrich & Rosati represented Par Pharmaceutical in the matter.

This decision affirms the August 14, 2009, decision by the U.S. District Court for the District of Delaware in which the court found both Purdue patents invalid due to obviousness, clearing the way for Par to receive FDA approval for its generic product.

The case is Purdue Pharma Products LP and Napp Pharmaceutical Group Ltd, and Ortho-McNeil Inc v. Par Pharmaceutical Inc.

The Wilson Sonsini Goodrich & Rosati team representing Par Pharmaceutical was led by partner Daniel Brown and also included partners Ron Shulman and Nicole Stafford and associate Jennifer Koh. For additional information visit www.wsgr.com

W I L S O N S O N S I N I G O O D R I C H & R O S A T I P A R P H A R M A C E U T I C A L P R E V A I L S I N P A T E N T I N F R I N G E M E N T D I S P U T E W I T H P U R D U E

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SEOUL 2007

October 20-24

PRAC Conference Materials

Available online at www.prac.org

PRAC e-Bulletin is published monthly.

Member Firms are encouraged to contribute articles for

future consideration. Send to editor@prac.org.

Deadline is 10th of each month.

PRAC 48th International Conference Kuala Lumpur Oct 16—19, 2010

SKRINE

08 June 2010

NSW Budget changes to benefit asset-backed securitisations

As part of the budget package released today by the New South Wales Treasurer, the State Revenue Legislation Amendment

Bill 2010 was introduced.

Amongst a number of other changes, the Bill contains a new exemption for asset-backed securities and related transactions.

Assuming the Bill passes both Houses of Parliament this exemption will become effective on 1 July 2010.

Clients familiar with the equivalent exemption in the Queensland Duties Act will recognise that the new definition of "financial

asset" is based on the Queensland definition of that term. A financial asset therefore includes a loan, a credit card account, a

hire purchase agreement, a lease, a floorplan agreement and, reaching beyond Queensland's definition, an insurance contract

or other financial service/product contract.

The breadth of this definition should allow most asset-backed securitisations to enjoy, for the first time in New South Wales, an

exemption from mortgage duty upon establishment of the program or the series. Alongside this exemption is the comfort offered

by express exemptions for the issue, transfer or termination of asset-backed securities.

This is indeed a welcome development for the industry.

For further information, please contact John Loxton, Louise McCoach or Trevor Robinson.

www.claytonutz.com

Disclaimer

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice.

Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not

be admitted in all states.

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BRAZIL: NEW LIST OF TAX HAVEN JURISDICTIONS AND CLARIFICATION OF FAVORABLE TAX REGIMES

The Brazilian Federal Revenue Service (RFB) has issued a new list of jurisdictions deemed to be tax havens for the purposes of Brazilian transfer pricing regulations, thin capitalization rules, and differential taxation on remittance of income and capital gains. The new list includes not only countries that do not impose income taxes, or that impose income taxes at a rate lower than 20%, but also jurisdictions where domestic laws provide for confidentiality of information concerning capital ownership and beneficiaries of legal entities. The highlight of the new list was the inclusion of Switzerland, which was not part of the previous list issued in 2002.

Additionally, the RFB clarified its understanding regarding favorable tax regimes for the purposes of transfer pricing and thin capitalization rules, characterizing as favorable tax regimes:

• the regime applicable to legal entities incorporated as holding companies under the domestic laws of Luxembourg, Denmark and the Netherlands; • the regime applicable to Uruguayan legal entities incorporated as Sociedades Financeiras de Inversão (Safis) until December 31, 2010; • the regime applicable to legal entities incorporated as International Trading Companies (ITC) under the domestic laws of Iceland; • the regime applicable to legal entities incorporated as Offshore KFT under the domestic laws of Hungary; • the regime applicable to legal entities incorporated as Limited Liability Companies (LLC) owned by non-US residents and not subject to income taxation under US domestic laws; • the regime applicable to legal entities incorporated as Entidades de Tenencia de Valores Extranjeros (E.T.V.Es.) under the domestic laws of Spain; and • the regime applicable to legal entities incorporated as International Trading Companies (ITC) and International Holding Companies (IHC) under the domestic laws of Malta.

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SECURTIES | CORPORATE FINANCEMAY 2010

ENFORCEMENT OF LETTERS OF CREDIT IN ONTARIO BY MICHAEL D. SCHAFLER

In Nareerux Import Co. Ltd. v. Canadian Imperial Bank of Commerce [2009] O.J. No. 4553, 2009 ONCA 764, the Ontario Court of Appeal considered whether an issuer of a letter of credit could refuse payment based on the beneficiary’s non-compliance with the letter’s terms and conditions. The Court ruled in favour of the beneficiary and held that where the issuer has knowingly contributed to, or acquiesced in, the circumstances that undermined the prospect of strict compliance, then that issuer is prevented from relying upon the defence of non-compliance. The issuer’s conduct was a direct breach of the principle of autonomy underpinning letter of credit transactions and a breach of the issuer’s implied duty of good faith.

Facts

Thai Fisheries Co. Ltd. (“Thai Fisheries”) accepted letters of credit from Canadian Imperial Bank of Commerce (the “Bank”) in order to ensure payment for shipments of large quantities of Thai shrimp to Douglas R. Robertson International Inc. (“Robertson”) in the United States. The shrimp was to be ultimately sold by Robertson to Sam’s Club.

Thai Fisheries and the Bank agreed to include the following provision in the letters of credit: “Payment of drafts or drafts drawn hereunder will be effected when accompanied by required documents and after receipt from the applicant of a signed purchase order(s) issued by Sam’s Club and related delivery receipt(s) showing container number(s), number of cartons and evidencing that goods have been received by Sam’s Club Distribution Centre(s).”

This provision provided the Bank with added protection as the payment to Thai Fisheries pursuant to the letters of credit would be delayed until a purchase order had been delivered by Sam’s Club along with related delivery receipts.

Robertson failed to deliver the receipts from Sam’s Club to the Bank and as a result Thai Fisheries did not receive payment for substantial amounts of shrimp supplied. The proceeds of sale, however, were used by Robertson to pay down his line of credit at the Bank. The Bank was informed that Robertson may have been withholding the required documents and that there would be no further shipments to Sam’s Club. Thai Fisheries was not advised of this information for more than a year thereafter.

Thai Fisheries claimed that the Bank and Robertson acted in collusion by arranging for shrimp to be sold without documentation from Sam’s Club and using the proceeds from sale to reduce Robertson’s overdraft, and therefore the Bank’s exposure.

The Bank claimed that the provisions of the letters of credit were not honoured because the requisite documentation was not presented, and that Thai Fisheries knowingly ran the risk of such an eventuality when it accepted the letters of credit in the first place.

Trial Judge’s Decision

The trial judge ruled in favour of Thai Fisheries and awarded approximately US$10.4 million, the unpaid balance under the letters of credit.

The trial judge held that by accepting the monies in payment of the loan owed by Robertson, the Bank acted as a lender seeking satisfaction of what it was owed. However, in doing so, it breached the separate and independent contract it had entered into with Thai Fisheries and an implied duty of good faith which was part of the contractual relationship between the Bank and Thai Fisheries.

The Bank appealed the trial judge’s decision.

Court of Appeal Decision

The central issue on the appeal was whether the Bank could rely on the defence of non-compliance, that is, the

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failure to receive receipts from Sam’s Club that would have triggered payment to Thai Fisheries.

The Court held that the Bank was disentitled from relying upon this defence as its own conduct partially generated the documentary non-compliance. The Court based its decision on the trial judge’s finding that the Bank was aware that no receipts were produced for US$6.9 million of shrimp delivered by Robertson to Sam’s Club and that shrimp was being sold to purchasers, other than Sam’s Club, that should have been subject to the requirement of producing receipts. The Bank failed to bring this information to Thai Fisheries’ attention and continued to accept the proceeds of sale to reduce Robertson’s line of credit.

The Court upheld the trial judge’s decision and held that the Bank’s conduct was correctly characterised as a direct breach of the principle of autonomy underpinning letter of credit transactions and as a breach of the Bank’s implied duty of good faith.

Breach of Principle of Autonomy

The fundamental principle of autonomy requires that the contract between (i) the buyer and the seller, (ii) the buyer and the bank, and (iii) the bank and the beneficiary seller be recognised and treated as three separate and distinct agreements. The Court agreed with the trial judge’s finding that the Bank permitted its conflicting concern respecting its financial over-exposure in the creditor/debtor relationship with Robertson to interfere with its payment obligation to Thai Fisheries under the letters of credit. As a result, the Bank had put itself in a position where its obligation under the letters of credit to act independently of the underlying relationships between it and its customer, or between its customer and the beneficiary, had been compromised. In finding a breach of the guiding principle of autonomy by the Bank, the Court held: “Letters of Credit by the issuer and its customer as a tap for payment, depending upon when the Bank and its client wanted to effect such payment – in order to better their own positions vis-à-vis each other as debtor and creditor – nullifies the entire autonomy principle and the independent role required of the Bank under the Letters of Credit.”

Breach of Implied Duty of Good Faith

Canadian law recognises an implied contractual duty of good faith to not act in a way that defeats the very purpose and object of an agreement. The Court agreed with the trial judge’s finding that the letters of credit were infused with this implied duty of good faith, which the Bank breached by acting out of self interest and

undermining the purpose of letters of credit, that is to provide a degree of financial security.

Failure to Provide Timely Notice

The Court identified an additional basis to reject the Bank’s appeal by finding that the contractual language of the letters of credit sufficiently engaged the Uniform Customs and Practice for Documentary Credits (UCP) 500. The letters of credit included the following provision: “This cable is the operative instrument and subject to the U.C.P. 1993 revision ICC Publication No. 500 and engages us in accordance with the terms thereof.”

Pursuant to UCP 500, the Bank failed in its obligation to provide timely notice of dishonour to Thai Fisheries when it held back on notifying the seller for more than a year that no receipts would be forthcoming and that the letters of credit would be cancelled. The lack of timely notice prevented Thai Fisheries from taking steps to protect itself by seeking return of the shrimp until it was too late and the shrimp had been sold.

Bank’s Arguments on Assumption of Risk and Passing of Title

The Court agreed with the Bank that Thai Fisheries assumed the risk of delayed payment and even the risk that Robertson would act dishonestly and fail to provide the required receipts. However, Thai Fisheries’ assumption of risk could not be stretched to include the possibility of the Bank and Robertson colluding together to frustrate compliance with the terms of the letters of credit and breaching principles of autonomy and the implied duty of good faith. The Court held that to interpret otherwise would “render the letters of credit commercially meaningless”.

The Court also rejected the Bank’s claim that upon Robertson acquiring title of the shrimp, the Bank acquired an interest in the shrimp as a secured lender, in priority to Thai Fisheries’ interest as an unsecured creditor of Robertson. The Court held that ownership of the shrimp was irrelevant for disposing of this action as Thai Fisheries was not seeking to assert its rights as an unsecured creditor of Robertson. Rather, it was seeking to enforce its contractual rights against the Bank under the letters of credit.

Comments

This case highlights the commitment of Ontario courts to ensure that letters of credit are interpreted in a manner that promotes commercial efficacy and the relative certainty that must surround the use of this financial instrument. This decision also emphasises the

3

importance of incorporating principles of contract law, including those invoking notions of fairness and equity, when enforcing letters of credit.

CONTACT US

For further information, please contact Michael D. Schafler of Fraser Milner Casgrain LLP.

I wish to acknowledge the considerable assistance provided by Saba Zia, an articling student with FMC, in preparation of this paper

China Reaffirms Support for Foreign Investment By Xu Ping *

China Bulletin June 2010

1

In continuing its support of foreign direct investment into China, on April 13, 2010, China’s State Council released the Opinions on Better Utilization of Foreign Capital (“Opinions”). These new guidelines for foreign investment encourage foreign capital to flow into high-end manufacturing, hi-tech and eco-friendly sectors to central and western China. Conversely, the Opinions restrict investment into environmentally unsound projects and in sectors suffering from overcapacity. Meanwhile, the Opinions also promise more favorable policies for foreign-funded companies, including an array of new tax incentives.

I. Foreign Investment More Welcomed in Certain Sectors

According to China’s economic development needs and planning goals, foreign investment in high-end manufacturing, high-tech, modern services, new energy, energy efficiency, outsourcing, and environmental protection industries will be welcomed. Polluting or energy-gorging projects and industries running at overcapacity will be disfavored. According to the Opinions, the Foreign Investment Industrial Guidelines Catalog issued in 20071 (“Catalog”) will be revised. 2

In addition, foreign-funded projects in the “encouraged” category of the Catalog will benefit from lower land prices which are 30% off the regular prices.3 These policies are intended to facilitate China’s continued economic growth by targeting foreign investment in industries higher up in the economic value chain and permit environmentally sustainability.

II. New Policies With Geographic Focus

Foreign enterprises are encouraged to increase investment in China’s central and western regions with a particular focus on environmentally sound and labor-intensive businesses.4 This will be accomplished through tax incentives, policy support and streamlining procedures for foreign companies to relocate operations westward from the coastal regions. Incentives will include potential matching funds, technical support, improved administration, and other favorable policies.5 Based on revisions to the Catalog, the Foreign Investment Dominant Industrial Catalog in Central and Western Regions will be revised accordingly.6

III. More Open Domestic Capital Markets

Foreign investors are encouraged to participate and acquire domestic enterprises through restructuring or M&A. In particular, foreign strategic investors are invited to participate in domestically listed companies, in which foreign investors were forbidden from investing. Foreign companies will also enjoy standardized and streamlined rules for investment in domestic securities and in corporate M&A moves. M&A transactions between foreign parties should be efficient but is subject to the review of a national security examination mechanism.7 Qualified foreign invested companies will soon be allowed to list and issue corporate bonds or medium term notes in China.8

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IV. Improved and Streamlined Operational Incentives

Multi-national companies will be encouraged to establish regional headquarters, R&D centers, financial management centers, and other critical management and operational centers in China. Imports for scientific and technological developments from qualified R&D centers will be exempt from tariffs, import VAT and goods and services tax by the end of 2010 under the Opinions.9

The approval procedures for foreign investment will be simplified and the scope of approval and authorization will be relaxed. Examination and approval competency for foreign investment will also continue to devolve to lower governmental levels whereby encouraged investment below US$ 300 million for encouraged and permitted projects will be examined by local authorities rather than national ones.10 The devolution of approval competency for most projects will simplify and speed up the approval process for foreign investment projects.

In addition, the procedures on settlement of foreign exchange capital funds for foreign investment companies will be simplified. With respect to foreign investment companies operating legally but unable to meet their capital contributions requirements as a result of a tight budget, their deadlines for capital contributions may be extended.11

Through the promulgation of the Opinions, China reiterates its support for foreign investment and responds to recent complaints that China was reversing its foreign investment policies in the wake of several high-profile matters involving Google and Rio Tinto. The Opinions aim to widen market access to foreign investors and better direct the inflow of foreign capital while improve China’s global competitiveness and efficiency of foreign investment in economically vital areas. Naturally detailed rules to implement these initiatives are still to come out.

* Xu Ping is a senior partner of King & Wood’s Foreign Direct Investment Group in Beijing.

1 The Foreign Investment Industrial Guidelines Catalog was jointly issued by the National Development and Reform Commission and the Ministry of Commerce on July 31, 2007 and became effective as of December 1, 2007.

2 See Article 1 of the Opinions. 3 See Article 11 of the Opinions. 4 See Article 8 of the Opinions. 5 See Articles 9 and 10 of the Opinions. 6 See Article 8 of the Opinions. 7 See Article 12 of the Opinions. 8 See Article 15 of the Opinions. 9 See Article 6 of the Opinions. 10 See Article 16 of the Opinions. 11 See Article 19 of the Opinions.

Financial regulator tightens requirements onremuneration policies

9 June 2010

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Introduction

EU Recommendation 2009/384/EC, which was published on April 30 2009, addresses the issue ofremuneration policies in the financial sector and responds to systemic problems in banks andinvestment firms. The recommendation is intended to create appropriate incentives withinremuneration systems to reduce the burden of risk management and to establish principles forsound remuneration policies.

Pursuant to the recommendation, the Supervisory Authority of the Financial Sector issued Circular10/437 on February 1 2010, implementing the recommendation.

Section I states that the circular applies to all entities that are subject to the regulator's prudentialsupervision, including branches located abroad.

It affects members of a bank's administration and management bodies, as well as certaincategories of employee whose professional activities have a material impact on the bank's risks.However, the circular does not apply to such persons if the bank allocates them a fixedremuneration; nor does it apply to commissions received by intermediaries or service providersunder subcontracting arrangements.

It is expressly stated that the size of the financial institution, as well as the nature and thecomplexity of its activities, will be taken into account.

Remuneration policy

Section II of the circular sets out certain requirements for a remuneration policy.

General principlesPoint 2.1 requires a bank or other financial institution to maintain a remuneration policy that isconsistent with sound risk management. Moreover, the policy must be consistent with the bank'sstrategy and its objectives and development plans, as well as the protection of its clients' andinvestors' interests.

Structure of the remuneration policyWhere remuneration is composed of a fixed and a variable amount (or a performance-relatedbonus), it must be structured so as to achieve a fair balance between the fixed and variablecomponents, and the policy must cap the variable component.

The bank must retain the right to withhold all or part of a bonus payment if performance criteria arenot met or if the bank's economic position deteriorates.

Points 2.5 and 2.6 of the circular state that payment of the principal part of the bonus must bedeferred for at least a minimum period, taking into account the risks inherent in the performancebeing rewarded.

The bank's board may require the reimbursement of a bonus which is paid on the basis ofperformance data that is subsequently revealed to be fraudulent.The structure of the remuneration policy must be updated after any amendment thereto.

Measure of performanceWhere remuneration varies according to performance, an individual's total remuneration must bedetermined in light of his or her performance and the economic performance of the bank as awhole.

Performance assessments must be made from a long-term perspective that looks beyond thecurrent financial year and takes account of the economic cycles to which the bank is subject.

Performance may be measured in order to calculate bonus amounts, but such amounts must beadjusted according to the actual or potential risks linked to such performance. In addition to purelyfinancial issues, compliance with other factors must be considered in evaluating an individual'sperformance, such as:

internal procedures and regulations;• the bank's systems and control mechanisms; and• the rules governing client and investor relationships.•

Governance principlesThe circular sets out the following requirements:

Points 2.15 to 2.24 provide that the remuneration policy must include measures aimed atpreventing conflicts of interest.

•

The board of directors must set remuneration levels for directors and members of themanaging bodies. The remuneration of directors (other than day-to-day managers) maynot be linked to the bank's short-term results, but must take account of other factors, suchas the time that directors spend in the performance of their functions.

•

The board of directors must set general principles governing the policy and may beassisted by a remuneration committee composed of directors who do not perform aday-to-day management role.

•

Point 2.19 of the circular states that persons or entities with supervisory functions, such asa bank's internal supervisory services, the compliance officer, the external auditor and thehuman resources department, must participate in the development of the policy, providedthat they satisfy the criteria for professional skills in this area. Once a year, a designatedsupervisory person or entity must verify that the remuneration policy conforms to thepolicies and procedures defined by the board of directors. A written report must besubmitted to the regulator.

•

The external auditor must report failings by the board of directors in respect ofremuneration policy.

•

Disclosure

Section III states that all relevant information on the policy and any changes thereto must bedisclosed in a clear and intelligible manner that facilitates an understanding of the policy. Suchdisclosure must include:

information concerning the procedure that led to the adoption of the policy, includinginformation about the composition and the mandate of the remuneration committee;

•

information on the link between remuneration and performance;• information on the criteria used to assess performance and risk;• information on the performance criteria used to determine the allocation of shares; and• the principal parameters and rationale for annual bonuses. •

Implementation and regulatory supervision

Section IV provides that the regulator must assess the risks to which the bank may be exposed.

According to Section V, the remuneration policy must be adopted by June 30 2010 and must enterinto force by 2011.

Contact

For more information, please contact Josée Weydert (T. +352 26 12 29 1).

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June 2010

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New Zealand currently limps on under the ancient Patents Act 1953, which includes quaint anachronisms such as local novelty. The reform process began well over a decade ago, with a draft Patents Bill circulated for comment as far back as 2002. The Bill was introduced into Parliament in July 2008. It now seems possible that the legislation will be passed in 2010, and perhaps come into force in 2011.

SOFTWARE PATENTS?

Rather than continue to treat software-related inventions in the same way as any other inventions, the Select Committee has decided to pitch New Zealand into the type of uncertainty which reigns in Europe, by excluding computer programs from patentability.

The Committee’s “reasoning” is sieve-like. The Committee asserts that there is no inventive step in software development. If that was the case, there would be no need to exclude computer programs from patentability. There was no exclusion for computer programs in the Bill prior to the Select Committee report. Computer programs would then, and appropriately, fall

to be considered by the same inventiveness tests as other asserted inventions. And, of course, there have been software inventions which are truly inventive.

Perhaps realising that the no inventive step argument was a bit flimsy, the Committee said that software patents can stifle innovation and competition, can be granted for trivial or existing techniques, and are inconsistent with the open source model. This is odd and somewhat paternalistic. It appears to assume that our examiners cannot be trusted to do their job.

Software patents stifle innovation and competition no more than other patents. Hand-in-hand with New Zealand’s patent reform, there is a drive to improve the standard of patent examination.

The competition justification is baseless; it is a feature of a free market that software developers can choose whether to use an open source or proprietary model. Last time we looked, the copyright system still catered for both proprietary and open source models, so it is difficult to see how relying on this as a policy argument in the patent sphere can be credible.

INTELLECTUAL PROPERTYHAS THE PATENT TORTOISE ALMOST REACHED THE FINISH LINE?The Patents Bill, which will provide a complete re-write and reform of New Zealand’s patent law, has been reported back from Parliament’s Commerce Select Committee and is heading for its second reading in Parliament. And in a new twist on the old fable, the Select Committee has added a few hare-like twists to this tortoise of a piece of legislation.

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Lastly, the Committee considered whether it may be possible to provide that “embedded software” inventions could be patentable, but decided that it was too difficult to make this distinction. The Committee was buoyed by advice - presumably from the Ministry of Economic Development - that excluding computer programs from patentability was “unlikely” to prevent patents being granted for inventions involving embedded software. For “unlikely”, read that the Committee’s recommendation to exclude software from patentability will lead to years of uncertainty and litigation on this issue. The types of distinctions the Committee grappled with on this issue reinforce how flawed the Committee’s reasoning about software inventions is.

OPPOSITIONS ARE BACK

Back at the start of the reform process, the Institute of Patent Attorneys advocated a re-examination system, asserting that the opposition process was inefficient and unpopular. When the draft Patents Bill was circulated (in 2002), the Institute did

a u-turn, and advocated for retaining oppositions. It is no wonder the Select Committee was confused.

The result is that the Bill provides for both re-examination and oppositions. Revocation is of course also available. There are limited restrictions on the number of bites at the cherry a party can take. This proposal is unlikely to achieve efficiency in the system. The dual system instead adopts a “worst of both worlds” approach, and will give determined opponents plenty of opportunities to disrupt, and add to the expense of, patent applications.

PATENT TERM EXTENSIONS

The Select Committee found no room for patent term extensions for pharmaceutical and other patents where regulatory processes delay the commercial life of a patented product. Whether this is a pure policy position, or something which is being held in reserve for Free Trade Agreement negotiations with the USA, remains to be seen.

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Protection Of Well-Known Marks in Singapore: A Review March 2010 | Intellectual Property | Intellectual Property & Technology | IP Edge

Catherine LEE

The decision of the Singapore Court of Appeal ("SCA") in City Chain Stores (S) Pte Ltd v Louis Vuitton Malletier [2009] SGCA 53 (the "LV Case") makes this an opportune time to review the case law to date on the protection of well-known marks in Singapore.

The causes of action available to the proprietor of a well-known mark, who has identified a misuse of its mark in Singapore, are (1) trade mark infringement, provided that the trade mark is registered in Singapore; (2) the tort of passing off; and (3) the statutory right to an injunction to restrain such use provided under section 55 of the Trade Marks Act (the "Act"). Insofar as trade mark infringement is concerned, the LV Case is significant as the SCA has signaled its inclination to adopt the stricter approach of requiring trade mark use by the defendant before finding infringement.

Before statutory protection under section 55 can be invoked, the proprietor of a well-known trade mark will have to show that any unauthorised use is likely to result in confusion. An exception to this is where the marks are "well-known to the public at large". Such marks are protected against unfair dilution and the taking of unfair advantage of their distinctive character, even in the absence of confusion. To fall within this exclusive category, the SCA in the LV Case emphasised that the mark must enjoy a much higher degree of recognition than a "well-known mark in Singapore". Proof of actual recognition by the public is required.

The difference between passing off and the statutory protection of marks which are "well-known in Singapore" is best summed up in the seminal case of Novelty Pte Ltd v Amanresorts Ltd and another [2009] 3 SLR 216 where the SCA held that the tests relating to passing off were concerned with the plaintiff's goodwill, whereas the tests under section 55(3)(a) relate to the interests of the plaintiff, who may not necessarily have goodwill in Singapore.

In the LV Case, the SCA reiterated that goodwill must be determined as of the date the conduct complained of commenced. Goodwill must also exist in the mark alone without other distinctive elements. The subject "Flower Quatrefoil" mark was thus found not to possess the requisite goodwill because it had never been used without LV's monogram or the words "LOUIS VUITTON".

The court will assess misrepresentation from the perspective of the actual and potential customers of the plaintiff. A person who desires to be the plaintiff's customer but lacks the ability should not form the basis of goodwill. The SCA in the LV Case thus found that the trial judge had erred when he held that misrepresentation is established if the defendant’s customer who purchased the watch may think that the defendant was licensed by the plaintiff and the defendant’s watch may easily be mistaken for the plaintiff's goods at a glance. Since the SCA opined that misrepresentation for luxury brands should be analysed from the perspective of those of a high income level, it is suggested that misrepresentation would not be easy to establish for well-known international luxury brands since their customers are likely to be "a discernible lot

RESOURCES

with equally discernible taste" and are likely to scrutinise the product carefully given the price of their goods.

Another interesting point raised in the LV Case was the SCA's reluctance to agree with the trial judge's judicial notice of "the fact that people do get put off certain luxury brands simply becausethere are so many fakes and cheap look-alikes in the market". The SCA's reservations were based on the fact that (1) the statement was more a feel than fact; (2) there was no indication as to the luxury brands affected; and (3) no evidence of a correlation between falling sales and an increase in fakes in relation to watches or luxury consumer articles was adduced. The SCA's finding that to take judicial notice of this one factor is too simplistic and unreliable to establish damage leaves open the question, particularly in the case of luxury brands, as to what would besufficient to satisfy the third element of damage.

Given the difficulty in establishing misrepresentation and damage, particularly for high end luxury goods which attract sophisticated and discerning clientele (for which cheaper look-alikes would be no substitute), the proprietor of a well-known mark who fails to prove that its well-known status extends to the public at large in Singapore, would still face considerable hurdles before it can avail itself of the protection under the law.

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2010 GUIDELINES GOVERNING APPLICATION OF DOUBLE TAX AGREEMENTS◎Josephine Peng/Christina Chen

The Guidelines for the Application of Double Taxation Agreements were first introduced by the Ministry of Finance (MOF) in 2001 (the "2001 Guidelines"). However, as Taiwan has signed a number of double tax agreements ("DTAs") with other countries since 2001 and more international rules have been developed in recent years, on 7 January 2010 the MOF promulgated the Guidelines Governing the Application of Double Tax Agreements (the "2010 Guidelines") to replace the 2001 Guidelines. The 2010 Guidelines are based on the OECD Model Convention Commentaries, the UN Model Convention Commentaries, the Tax Reform Committee's recommendations and relevant laws in Taiwan.

In addition to adopting part of the 2001 Guidelines relating to the definition of resident, tie-breaker rules, tax exemption, maximum tax rates on dividend, interest, royalty and technical service income and refund of over-paid tax, the 2010 Guidelines have adopted several tax directives. The key points of the 2010 Guidelines are as follows:

Application basis and principles

The investigation and assessment of applications for treatment under DTAs will besubject to the relevant DTAs; for matters not stipulated in the applicable DTAs, theTax Collection Act, the Income Tax Act (ITA), the Income Basic Tax Act, the 2010Guidelines, and other relevant laws/regulations will govern. However, where theprovisions in the ITA or other laws that reduce or exempt a taxpayer's income taxliability are more favorable than those in the applicable DTA, the more favorableprovisions will prevail. Moreover, during the investigation or assessment ofapplications for treatment under DTAs, the tax authorities should look at the actualeconomic facts and relationships, and the actual beneficiaries of the economicbenefits arising from such facts and relationships.

Definition of permanent establishment ("PE")

The 2010 Guidelines clearly define a PE, a construction PE, a deemed PE because ofrendering services for over a period of time, and an agent PE.

Under the 2010 Guidelines, a PE is defined as "a fixed place of business through which an enterprise carries on business in whole or in part". The criteria for determining whether an enterprise in the other Contracting State has a PE in Taiwan, are mirrored from the commentaries on Article 5 of the OECD Model Convention 2008, namely, permanency,

continuity and controllership. Accordingly, an enterprise of the other Contracting State will be deemed to have a PE in Taiwan if it: (a) has a fixed place of business in Taiwan (permanency); (b) carries on business at such fixed place of business for six months or more, or regularly carries on business at such fixed place of business (continuity); and (c) uses or controls such fixed place of business (controllership).

Also, the 2010 Guidelines provide clear standards for calculating the operationalperiod for determining a construction PE and a deemed PE because of renderingservices for over a period of time. The term of a construction begins from the time acontractor commences work and ends on the day the work is completed orpermanently terminated. If the work is subcontracted to another company, the timespent by that other company should be included in the calculation of the term. Adeemed PE because of rendering services for over a period of time is determined bythe total number of days of the actual presence and service provision of itsemployees, other employed personnel or other related people in Taiwan. The periodof presence will start from the day following the relevant persons' entry into Taiwanand end on the day of their departure; if more than one person renders services inTaiwan at the same time, the overlapping portion of their periods of presence will be counted once only.

With respect to an agent PE, the 2010 Guidelines stipulate that a person who has and habitually exercises authority to conclude contracts in Taiwan in the name of an enterprise of the other Contracting State refers to any individual, corporation or organization that is often authorized to conclude contracts or other binding documents, or to negotiate the terms and conditions of a contract on behalf of the enterprise of the other Contracting State. However, an agent carrying out preparatory or auxiliary activities only or is acting as an agent of an independent status (an agent who performs work in the ordinary course of business while acting on behalf of an enterprise of the other Contracting State) is excluded.

Application procedures for income tax exemption and reduction

In general, the 2010 Guidelines follow the 2001 Guidelines regarding the application procedures for income tax exemption or reduction for income of all kinds. For applications for business profit tax exemption/reduction, the 2010 Guidelines require the submission of documents that can evidence the non-existence of a PE in Taiwan or demonstrate that the relevant business is not carried on through a PE. If a foreign enterprise has a fixed place of business or business agent in Taiwan, the foreign enterprise can, instead of applying for prior approval for business profit tax exemption/reduction, ask its fixed place of business or business agent in Taiwan to apply for such tax exemption/reduction on its behalf when filing an income tax return.

Calculation of taxable income

The 2010 Guidelines stipulate the methods for calculating the taxable income of business profits, income from provision of professional services, and remuneration from employment. For the calculation of the taxable income of business profits of a foreign enterprise that are attributable to the foreign enterprise's PE, such PE should be deemed an independent enterprise undertaking activities identical or similar to those of the

enterprise in identical or similar conditions, and operating independently when doing business with the foreign enterprise. Moreover, the amount of the business profits attributable to the PE should be calculated in accordance with the Transfer Pricing Audit Rules whereby transfer pricing supporting documents should be made available for the tax authorities' examination.

With respect to the provision of professional services, if any professional services are rendered outside the territory of the ROC, and documents including the relevant contract and the calculation of taxable income can be provided upon request, the professional providing such services can apply to the local tax office in the jurisdiction where the payer is located to pay income tax for the income derived from the services performed within the ROC only.

As to the remuneration from employment that is deemed ROC-sourced income and subject to Taiwan income tax, it should be based on the amount of remuneration that an employee has received during his/her employment, multiplied by the ratio arrived at by dividing the actual number of days that the employee has stayed in Taiwan over the total number of days of his/her employment. However, if the percentage of contribution attributable to the services performed in Taiwan exceeds the aforementioned ratio, the percentage of contribution should apply in calculating the employee's ROC-sourced remuneration.

Taxation on foreign entity with a PE that is not a fixed place of business or business agent

The 2010 Guidelines provide that, where an enterprise of the other Contracting State has a PE in Taiwan that is not a fixed place of business or business agent under the ITA, and receives income subject to withholding tax under Article 88 of the ITA, the income payer should, upon payment, withhold income tax; the enterprise may later appoint an ROC individual or business entity as its agent to file an income tax return on its behalf with the local tax office in the jurisdiction where the income payer is located, and apply the withholding tax as tax credit against any income tax payable, and apply for a refund of the tax over-withheld.

Lee and Li Bulletin_March 2010 Issue

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VOLUME 7 ISSUE 5 | MAY 2010

INTELLECTUAL PROPERTY REPORT

Articles

Controversial District Court Decision Finds Purified Genes Unpatentable Subject Matter Anna Volftsun

Although many gene-related patents have been issued,1 a district court has recently held that certain claims of a group of gene-related patents are categorically invalid. In a somewhat surprising ruling issued in the closely-watched Assoc. for Molecular Pathology, et al. v. USPTO, et al. case, a district court held that the claims-at-issue, directed to isolated human genes and methods for the comparison of their sequences, are not patentable subject matter.2 Based on this holding, on March 29, 2010, the District Court for the Southern District of New York granted partial summary judgment to the plaintiffs, a group including the Association for Molecular Pathology, the American Civil Liberties Union and PubPat (hereinafter “Plaintiffs”).

The fifteen contested claims were select independent claims from seven patents held by defendants Myriad Genetics and the University of Utah Research Foundation (collectively, “Myriad”). These contested claims were divided into two types, composition and method claims. The composition claims were directed to isolated DNA containing all or portions of the gene sequences of the BRCA1 and BRCA2 genes, which can serve as markers for susceptibility to breast cancer. A representative independent claim was drawn to “an isolated DNA coding for a BRCA1 polypeptide, said polypeptide having the amino acid sequence set forth in SEQ ID NO:2.”3 The method, or process, claims were directed to methods of “comparing” or “analyzing” the BRCA1 and BRCA2 gene sequences to identify the presence of mutations correlating with a predisposition to breast cancer. A representative independent method claim was drawn to “a method for detecting a germline alteration” in a gene which “comprises analyzing a sequence of” that gene.4

First, the court detailed the arguments made by both sides as to the impact of Myriad’s patents on BRCA1 and BRCA2 gene testing and cancer therapy but held that this was a factual dispute that could not be resolved in the context of the submitted motions. Similarly, the court declined to resolve the issue of whether gene patents in general negatively impacted the advancement of science and medical treatment, stating that this was a question of fact and policy.

Next, the district court addressed the validity of the composition claims and found them invalid for being drawn to ineligible subject matter under 35 U.S.C. §101. It held that for a purified product to be patentable subject matter, it must possess “markedly different characteristics” from the natural product.5 In the past, applicants have successfully argued to the United States Patent and Trademark Office (the “PTO”) that an isolated or purified form of a biological substance that only occurred in nature in an impure or mixed form sufficed to establish patentability. But according to the court, the challenged composition claims to isolated DNA were not markedly different because of the uniqueness of DNA. The court distinguished DNA from other natural chemical products that were patentable because DNA encodes biological information about the construction of the human body. This being so, it is a “physical embodiment of laws of nature.”6 Because carrying information is a “defining characteristic” of DNA and is the same between natural DNA and the claimed isolated DNA, the court held that the claimed isolated DNA was not “markedly different” from naturally occurring DNA and thus was unpatentable subject matter under 35 U.S.C. Section 101.7

The court addressed Myriad’s arguments for validity of the challenged composition claims but found them unpersuasive. It held that the PTO’s grant of gene-related patents was not dispositive of their patentability because the issue was one of statutory interpretation, for which PTO legal determinations are given no deference. The court acknowledged that granted patents were presumptively valid but noted that this presumption was not very strong because courts historically invalidated a large percentage of all contested patents. Similarly, the court did not find it dispositive that Congress had failed to specifically prohibit such patents.

The district court held that previous cases upholding patents on biological products were irrelevant to the patentability of such subject matter because the parties in those cases had failed to raise Section 101 challenges and only parties can challenge patent validity. The court held that invalidating the patents-in-suit would not be an unconstitutional taking under the Fifth Amendment because of the long history of courts invalidating patent claims. It also held that this would not violate the United States’ obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) because TRIPS allows governments to incorporate public health concerns into their intellectual property laws and exclude particular inventions on public interest grounds.

The district court then addressed the validity of the contested method claims and also found them invalid for being drawn to ineligible subject matter under Section 101. The court analyzed these claims under the second prong of the so-called “machine-or-transformation” test recently outlined in the Federal Circuit case In re Bilski.8 It held that the act of “analyzing” or “comparing” two gene sequences for diagnostic purposes was not transformative. In doing so it distinguished the claims-at-issue from those in Prometheus Laboratories, Inc. v. Mayo Collaborative Services (“Prometheus”), in which the Federal Circuit had held that the step of “determining” metabolite levels was transformative because it necessarily involved a transformative act such as extraction and measurement of metabolite concentration.9

The district court found that unlike the claims in Prometheus, the “analyzing” and “comparing” claim steps did not necessarily include transformative acts but were broad enough to encompass purely “abstract mental processes.”10 It based this determination on the plain and ordinary meaning of the words “analyzing” and “comparing,” which require no physical act. The court also relied on the presumption that a limitation in a dependent claim is not present in the independent claim, noting that some of the dependent claims of the patents-in-suit were directed to physical transformations associated with obtaining DNA. Although the court agreed with Myriad that the transformative acts of isolating and sequencing DNA were required for the “analyzing” or “comparing” step, it held that the independent method claims-at-issue did not include such limitations. The court refused to incorporate these limitations into the claims, stating that doing so would be inconsistent with claim construction rules and would “effectively vitiate” the limitations on claiming mental processes.11 In addition, the court stated that even if it incorporated physical transformation limitations into the claims-at-issue, they would still fail the “machine-or-transformation” test because such limitations would “represent nothing more than data gathering steps.”12

Finally, the district court held that it did not need to decide the constitutional issues of whether Defendant PTO’s grant of patent protection to Myriad for the claims-at-issue was a violation of Article I, Section 8, Clause 8 and the First Amendment of the Constitution (a novel claim raised by the ACLU based on the patent monopoly’s alleged effect of limiting doctor’s rights to communicate accurate diagnoses to patients when the diagnosis depended on a method covered by the claims-at-issue) because plaintiffs had obtained sufficient relief on other grounds. In response to the Plaintiffs’ reply brief requesting a ruling that would bind the PTO to change its policy with respect to gene patents, the court stated that it was not required to do so because either the United States Court of Appeals for the Federal Circuit or the Supreme Court could issue such a decision.

Conclusion

Although this case has created considerable concern for holders of genetic patents and diagnostic methods, its importance should not be overstated. First, the ruling only applied to the claims-at-issue. Several independent composition and method claims in the patents-in-suit were not at issue in this case and thus remain presumptively valid and enforceable. Second, this case is only the first step in the resolution of the patentability issues presented. The PTO has not announced changes to its patent practice in response to this judgment. Myriad Genetics has already announced that it will appeal this decision to the Federal Circuit.13 The Supreme Court will soon issue a decision on In re Bilski and a separate decision on whether to grant certiorari to hear Prometheus. Either could have a significant impact on the legal effect of Assoc. for Molecular Pathology, and all players in the life sciences industry will likely be closely monitoring the continuing development of the law on subject matter patentability.

1 Assoc. for Molecular Pathology, et al. v. USPTO, et al., No. 09-4515, slip op. at 70 (S.D.N.Y. March 29, 2010) (citing expert’s declaration stating that almost 20% of all human genes were claimed in patents). 2 Id. at 2-4 (S.D.N.Y. March 29, 2010). 3 Id. at 80. 4 Id. at 83.

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5 Id. at 121. 6 Id. at 124. 7 Id. at 125. 8 545 F.3d 943, 950 (Fed. Cir. 2008) (en banc), cert. granted, 129 S. Ct. 2735 (2009). 9 581 F.3d 1336 (Fed. Cir. 2009), petition for cert. filed (U.S. Oct. 22, 2009) (No. 09-490). 10 No. 09-4515, slip op. at 141. 11 Id. at 145. 12 Id. at 146. 13 “Federal District Court Rules Isolated DNA Claims are Not Patentable.” http://money.cnn.com/news/newsfeeds/articles/globenewswire/187674.htm

Department of Ecology Releases Guidance on Climate Change and SEPA

Calls for far-reaching analysis of GHG emissions; extensive mitigation may be required

06.01.10

By Craig Gannett, Lauren Giles Wishnie and Clayton P. Graham

On May 27, the Washington Department of Ecology (“Ecology”) released draft Guidance regarding the analysis of climate change impacts under Washington’s State Environmental Policy Act ("SEPA"). The Guidance, which will be open for comment until June 25, proposes extensive analysis of both direct and indirect greenhouse gas ("GHG") emissions potentially resulting from government actions covered under SEPA. Among the government actions that are subject to SEPA’s requirements are local governments’ issuance of land use and construction permits for many types of projects, especially commercial, industrial, or larger residential developments. The Guidance also describes potential mitigation measures that project proponents may be required to undertake. Given the broad scope of the Guidance, it is essential that owners and developers of real estate, as well as any business or institution with expansion plans, become familiar with these proposed requirements.

About SEPA

SEPA, which is codified under Chapter 43.21C, RCW, requires review of the environmental impacts of any project that receives state funding or a state approval (such as a land use or construction permit). SEPA is modeled on the federal National Environmental Policy Act ("NEPA") (see DWT’s recent alert on new Guidance regarding analysis of GHG emissions under NEPA). However, NEPA is a purely procedural statute, requiring only disclosure. In contrast, SEPA vests agencies with substantive authority to require mitigation of environmental impacts that are identified through a SEPA analysis. See RCW 43.21C.060.

Analyzing GHG emissions

The Guidance requires project proponents to calculate the GHG emissions of the proposed project during the SEPA process. Ecology describes three types of emissions that the developer must examine. “Scope One” emissions are those under the direct control of the proponent (e.g., emissions from on-site stationary fuel combustion and emissions from vehicles that are a necessary component of the proposed project). “Scope Two” emissions are those resulting from energy purchased by the project (such as power plant emissions by the utility that serves the project). “Scope Three” emissions are those that are a consequence of project activities, and include emissions from vehicle traffic, emissions from outsourced or off-site project activities, and “embodied” emissions resulting from the production and transportation of purchased goods used in the facility or project. See Guidance Part 5, Sources of Greenhouse Gas Emissions, here.

Therefore, the developer of a large shopping mall, for example, would be required to consider not only the GHG emissions of on-site heating and cooling systems, but also tailpipe emissions from customer and employee vehicles, emissions from the power plant supplying electricity purchased by the mall’s owner, and the emissions that resulted from the production and distribution of every product sold. Proponents should also consider the effect of changing the use of land on GHG emissions—such as, for example, loss of the carbon sequestration provided by any trees clearly during construction.

Mitigation

www.dwt.com

The new Guidance lists many different mitigation options, depending on project type. These range from clustering development to installation of combined heat and power systems to positioning buildings to take advantage of natural light. However, the Guidance is highly skeptical of the use of offset credits for mitigation. Ecology emphasizes that “many offset projects are highly controversial.” Ecology notes, particularly, that verification of offsets can be challenging, that it is difficult to ensure that the offsetting effect of the project will be permanent, and that projects may be abandoned. Ecology urges those considering the use of offsets for SEPA compliance to contact Ecology first. See Guidance Part 7, Reducing Greenhouse Gas Emissions, here.

For a perspective on how mitigation requirements might play out in Washington, project developers should take a look at a series of suits brought by the Attorney General of California under that state’s very similar environmental review statute. For example, a major retail chain recently agreed to install rooftop solar to comply with GHG emissions mitigation requirements. Other mitigation measures that have been required in California are listed at the Attorney General’s website.

Planning for SEPA review

Ecology is accepting comments on the proposed Guidance until June 25. The Guidance will become effective shortly after that date. Although guidance documents, unlike regulations, are not legally binding, they are a statement of how the agency interprets the law. Therefore, project proponents should be prepared to submit SEPA documents that comply with the requirements of the Guidance. In particular, project proponents should think early and creatively about mitigation strategies and should develop a clear, consistent methodology for measuring GHG emissions.

Disclaimer

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

www.dwt.com

Hospitals Alert June 2010

U.S. Department of Health and Human Services Issues Proposed Rule on Investigator Conflicts of Interest in Federally Funded Research On May 21, the Public Health Service of the U.S. Department of Health and Human Services (PHS) issued proposed amendments to its regulations on the "Responsibility of Applicants for Promoting Objectivity in Research for Which PHS Funding is Sought."1 For many hospitals that conduct PHS-sponsored research, such as under National Institutes of Health (NIH) grants and contracts, the proposed changes if adopted will entail amendment of institutional conflict of interest policy and disclosure forms. For such hospitals, the proposed changes also will increase the burden associated with administration of conflict of interest policy, including posting of the policy on a website, more disclosure by investigators, more institutional reporting to PHS, public posting of information about certain managed conflicts, investigator training, attention to sub-award agreements, records maintenance, and other administrative steps outlined below. Hospitals that do not receive federal research funds but have physicians on staff who participate in PHS-sponsored research also will need to be aware of the new regulatory requirements. Comments to the proposed rule are due on or before July 20, and officials have said a final rule will issue later this year. The Notice of Proposed Rulemaking (NPRM) has been seen as a response to Congressional and HHS Office of Inspector General criticism of NIH's oversight of grantee compliance with conflict of interest rules and negative media accounts of financial relationships between pharmaceutical and device companies and academic researchers. The proposed changes are aimed at increasing transparency, and institutional and NIH oversight, of financial interests of investigators in federally sponsored research. This memorandum outlines some of the proposed changes most likely to affect institutional administration of conflicts policy.

I. Investigator Disclosure of Significant Financial Interests The NPRM would revise the definition of "Significant Financial Interest" (SFI), broaden the scope of information investigators disclose, and shift from investigators to the institution discretion to decide whether a financial interest is related to PHS-funded research. Investigators currently must disclose Significant Financial Interests "[t]

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hat would reasonably appear to be affected by the research for which PHS funding is sought" and "[i]n entities whose financial interests would reasonably appear to be affected by the research." See 42 C.F.R. § 50.604(c). Under the proposed definition, investigators would disclose to the institution all SFIs related to their "Institutional Responsibilities," including, for example, research, teaching, and committee service; and the institution would determine whether the SFI "appears to be affected by the PHS-funded research". The NPRM also would lower or eliminate dollar thresholds for investigator disclosures. Current PHS regulations require disclosure of equity interests, salary, royalties, and other forms of remuneration greater than $10,000. The proposed rule lowers the disclosure threshold to $5,000 for remuneration and equity in public companies, and eliminates the threshold for equity in private companies. Investigators would be required to disclose payments received during the twelve months preceding the disclosure, and the disclosures must specify a dollar range. The proposed rule also dispenses with a threshold for disclosing intellectual property rights, including royalties. PHS also proposes to narrow the list of interests exempt from disclosure. For example, income received from non-profits, other than higher education institutions, for seminars, lectures, teaching, and advisory committee and review panel service would now be disclosable, although income from public entities for such service would remain exempt.

II. Enhanced Institutional Reporting Obligations Under the proposed regulations, PHS-funded institutions would be required to provide more information to PHS regarding identified financial conflicts of interest (FCOIs). In particular, FCOI reports to PHS would have to include, in addition to basic information about the grant: the conflicted investigator's name, the nature (e.g., equity, salary) and value (within specified dollar ranges) of the interest, the relationship between the interest and the PHS-funded research, and the basis for the institution's finding a FCOI. The report would also have to include a description of the institution's management plan, such plans now being required in each case of a FCOI. Annual updates to the Awarding Component on previously reported FCOIs would be required. If an institution adopts a policy that includes more stringent standards than the proposed regulations, the institution would be required to report to the PHS Awarding Component the FCOIs identified under its policy, even if the financial interest would not have been considered conflicting under the PHS regulations. Sub-awardees would be required to report conflicts to the prime awardee, which would be required to report to PHS. Institutions that identify a FCOI after work on a grant is underway would be required to implement a mitigation plan to assess whether the design, conduct or reporting of any PHS-funded research performed prior to the institution's identification of the FCOI was biased by the delay.

III. Public Access to Information An overarching theme of the proposed regulations is transparency. Consistent with that theme, the proposed regulations would require institutions to post their conflict of interest policies applicable to PHS-funded research on a publicly accessible website. If an institution finds a FCOI of "key personnel" on a PHS-funded project, the institution also must post publicly the investigator's name and position on the PHS project and the nature and value (within specified dollar ranges) of the SFI. This information would be updated annually or within 60 days of receipt of additional pertinent information, and would remain publicly accessible for five years from the date of the last revision.

IV. Other Changes The proposed rule would require institutions to provide conflict-of-interest training for investigators in PHS-funded research. Although not required, the NPRM "strongly encourage[s]" institutions to appoint a committee to review investigator disclosures and make FCOI determinations. In addition, the regulations would now apply to the Small Business Innovation Research and Small Business Technology Transfer programs, which had previously been exempt in part, and certain non-research grants. The NPRM does not propose requirements related to institutional conflicts of interest -- that is, conflicts presented by the financial interests held by the institution, such as an equity interest in a company -- a topic previously raised in an Advance Notice of Proposed Rulemaking. The NPRM states that PHS will consider comments on this topic and will consider regulations in the future. The NPRM does not identify an effective date for the new regulations nor does it address their application to ongoing research under previously awarded grants.

1 The regulations are codified at 42 C.F.R. Part 50, subpart F (PHS-funded grants) and 45 C.F.

R. Part 94 (PHS-funded contracts). The Notice of Proposed Rulemaking is at 75 Fed. Reg.

28,688 (May 21, 2010), and at edocket.access.gpo.gov/2010/pdf/2010-11885.pdf.

Disclaimer This publication is for information only. It is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. This is a commercial communication from Hogan Lovells. "Hogan Lovells" or the "firm" refers to the international legal practice comprising Hogan Lovells International LLP, Hogan Lovells US LLP, Hogan Lovells Worldwide Group (a Swiss Verein), and their affiliated businesses, each of which is a separate legal entity. Hogan Lovells International LLP is a limited liability partnership registered in England and Wales with registered number OC323639. Registered office and principal place of business: Atlantic House, Holborn Viaduct, London EC1A 2FG. Hogan Lovells US LLP is a limited liability partnership registered in the District of Columbia with offices at 555 13th Street, NW, Washington, DC 20004, USA. The word "partner" is used to refer to a member of Hogan Lovells International LLP or a partner of Hogan Lovells US LLP, or an employee or consultant with equivalent standing and qualifications, and to a partner, member, employee or consultant in any of their affiliated businesses who has equivalent standing. Rankings and quotes from legal directories and other sources may refer to the formerfirms of Hogan & Hartson LLP and Lovells LLP. Where case studies are included, results achieved do not guarantee similar outcomes for other clients. New York State Notice: Attorney Advertising. © Hogan Lovells 2010. All rights reserved.

e-Update INTELLECTUAL PROPERTY

Patentees Beware: Federal Circuit Decision Makes it Easier for False Marksmen to Troll for Dollars

WWW.LUCE.COM

MAY 24, 2010

Patent marking is a practice often neglected by patent holders, sometimes at great cost. The traditional reason to mark patented products is to provide constructive notice to would-be infringers so the patentee is eligible for monetary damages in an infringement suit.

Now a new breed of patent trolls is upping the ante. Taking advantage of a heretofore obscure provision of patent law and a recent Federal Circuit decision interpreting that provision, an increasing number of individuals and small companies are filing lawsuits targeting unsuspecting patentees for false marking.

The basis of these lawsuits is Section 292 of the Patent Act, which provides that whoever engages in false marking by indicating that an unpatented article is patented with the intent to deceive the public can be fined up to $500 “for every such offense.” Section 292 is an example of a “qui tam” statute that allows anyone to enforce the provision and split the damages 50-50 with the federal government.

Thanks to a recent appellate decision, the potential liability for patentees in false marking suits can be astronomical. In The Forest Group, Inc. v. Bon Tool Company, the Court of Appeals for the Federal Circuit held that each article falsely marked with intent to deceive constitutes an offense under Section 292.

Thus, a patentee found to have falsely marked a product that sold just 10,000 units could be liable for $5 million in damages, irrespective of the sale price of the product. If the patentee sold 100,000 units (of even a 99-cent item), the potential damages would be a whopping $50 million.

Not surprisingly, the number of patent false marking cases has spiked in recent months. Some of the notable patentees hauled into court for alleged Section 292 offenses include Adobe Systems, Fujifilm, UPS, Energizer, Ortho-McNeil-Janssen Pharmaceuticals, Activision Publishing and S.C. Johnson & Son.

How does a patentee avoid false marking liability? One fairly simple step is to monitor any patent marked on a product to determine if and when that patent expires. Patents typically expire 20 years from the filing date of the patent application, but older patents - the ones easily targeted by false marksmen trolls - expire 17 years from the patent’s issue date. Marking a product with an expired patent makes a patentee an easy target for a Section 292 false marking action.

A more complex, but necessary, step to ensure proper patent marking is to determine which patents, if any, apply to the product. This requires a detailed analysis of whether a product, or its components or features, embody the claims of one or more patents.

Now, more than ever, patentees should closely monitor their patent marking procedures. The costs of complacency couldn’t be higher.

Peter K. HahnPartner619.699.2585phahn@luce.comwww.luce.com/peterhahn

Eric L. LaneAssociate619.699.2471elane@luce.comwww.luce.com/ericlane

WSGR ALERTMAY 2010

AMERICAN NEEDLE V. NATIONAL FOOTBALL LEAGUE:NFL CAN BE LIABLE FOR CONSPIRING UNDER SECTION 1 OF SHERMAN ACT

Continued on page 2...

Austin new York pAlo Alto sAn DieGo sAn FrAncisco seAttle shAnGhAi wAshinGton, D.c.

In a decision that was highly anticipated byantitrust lawyers and sports enthusiasts alike,the U.S. Supreme Court unanimously heldthat the National Football League (NFL) teams were not immune from liability forcollaborative decisions.1 The Court concludedthat “NFL teams do not possess either theunitary decisionmaking quality or the singleaggregation of economic power characteristicof independent action.”2 Instead, the Courtheld that “[e]ach of the teams is asubstantial, independently owned andindependently managed business.”3 As aresult, agreements among the individual NFLteams are subject to potential liability underSection 1 of the Sherman Act.

In 1963, the NFL and its constituent membersformed the National Football LeagueProperties (NFLP) for the express purpose ofacting as the agent responsible for licensingindividual team IP, and then sharing therevenues generated from the license of suchIP equally among the NFL teams. AmericanNeedle was a licensee of NFLP and, as aresult of its status as an NFLP licensee, wasable to sell apparel bearing NFL teaminsignias. In December 2000, however, NFLPand Reebok reached an exclusive arrangementwhereby Reebok would become the onlylicensee of NFLP that would be able to selltrademarked headware for all 32 teams;concurrently, and as a result, NFLP declinedto renew American Needle’s license.

In American Needle, Inc. v. National FootballLeague, the plaintiff filed an action allegingthat agreements between the NFL, its teams,the NFLP, and Reebok related to the license ofintellectual property and the marketing oftrademarked items—such as team caps andjerseys—violated Section 1 of the ShermanAct.4 The teams moved to dismiss, arguingthat the NFL, the NFLP, and the individualteams were a single economic enterprisewith respect to the license of IP, andtherefore were incapable of conspiring inviolation of Section 1 of the Sherman Act.The district court agreed with the league andgranted the NFL’s motion to dismiss,5 and theSeventh Circuit affirmed.6 The Supreme Court granted certiorari and reversed, in a 9-0 decision.7

As background, Section 1 only condemnsillegal agreements by two or more persons.Actions by a single economic entity are not covered by Section 1; they are onlypotentially subject to liability under adifferent statute, Section 2 of the ShermanAct, for illegal monopolization or attemptedmonopolization. This distinction is importantbecause the restraints of trade covered bySection 1 are broader than the monopolisticacts reached by Section 2.

In Copperweld Corp. v. Independence TubeCorp., the Supreme Court concluded that an“intraenterprise conspiracy”—where a single

entity is involved—cannot be reached underSection 1 because “an internal agreement toimplement a single, unitary firm’s policiesdoes not raise the antitrust dangers thatSection 1 was designed to police.”8 Suchagreements, quite simply, do not “depriv[e]the marketplace of independent centers of decisionmaking.”9

The defendants in American Needlecontended that they were immune fromSection 1 because they were a single entity,and exempt from antitrust liability under theCopperweld doctrine. The Supreme Courtfound this argument overbroad: “To a firmmaking hats, the Saints and the Colts are twopotentially competing suppliers of valuabletrademarks. When each NFL team licenses itsintellectual property, it is not pursuing the‘common interests of the whole’ league but is instead pursuing interests of each‘corporation itself.’”10

The NFL also argued that the formation of theNFLP shielded the joint decisionmaking fromSection 1 scrutiny, and further contended thattheir cooperation was necessary to thefunctioning of NFL football. The SupremeCourt disagreed with this argument as well.As a first matter, the Court found itunpersuasive that the formation of a singleentity by independent third parties couldsomehow immunize joint conduct. The Courtreasoned that it was not “dispositive that the

1 American Needle v. National Football League, No. 08-661, 2010 WL 2025207 (May 24, 2010). 2 Id. at *2.3 Id.4 496 F. Supp. 2d 941 (N.D. Ill. 2007).5 Id. at 943.6 American Needle v. National Football League, 538 F.3d 736 (7th Cir. 2008). 7 American Needle, 2010 WL 2025207.8 467 U.S. 752, 769 (1984).9 Id. at 768-69.10 American Needle, 2010 WL 2025207, at *9 (citing Copperweld, 467 U.S. at 770).

teams have organized and own a legallyseparate entity that centralizes themanagement of their intellectual property.”11

Such a sweeping immunity, according to theCourt, could potentially protect a host ofillegal agreements simply by forming a singleentity to carry out the decisions of otherwiseindependent actors.

Furthermore, the justification that the NFLPwas “necessary” for the functioning of NFLfootball, according to the Court, did not allowthe individual NFL teams to collectivize theirindependent decisions without any concernfor antitrust liability. “The mere fact that theteams operate jointly in some sense does notmean that they are immune.”12 “Apart fromtheir agreement to cooperate in exploitingthose assets, including their decisions as theNFLP, there would be nothing to prevent eachof the teams from making its own marketdecisions relating to purchases of apparel and headwear to the sale of such items, and to the granting of licenses to use itstrademarks.”13

The Court cautioned that even though thecollective decisions of the independent NFLteams were subject to Section 1 liability, thatdid not mean that every joint decision wasactually illegal under the antitrust laws: onlythe question of whether Section 1 couldreach the joint decisions of independent NFL

teams was before the Court. Whether Section1 liability should attach to such collectivedecisions was a question remanded back tothe district court. The Supreme Court set forthplausible justifications for the joint conduct,including a shared interest in making theentire league successful and profitable, andmaintaining a proper competitive balanceamong the teams. However, in a caution tothe defendants, the Supreme Court, in dicta,suggested that “it is not apparent that thealleged conduct was necessary at all.Although two teams are needed to play afootball game, not all aspects of elaborateinterleague cooperation are necessary toproduce a game. Moreover even ifleaguewide agreements are necessary toproduce football, it does not follow thatconcerted activity in marketing intellectualproperty is necessary to produce football.”14

American Needle will now proceed before thedistrict court, to determine whether, under theantitrust rule of reason, the decision to jointlymarket and sell individual team intellectualproperty is on balance procompetitive orharmful to consumers.

For more information regarding the AmericanNeedle decision, please contact any memberof Wilson Sonsini Goodrich & Rosati’santitrust practice.

Austin new York pAlo Alto sAn DieGo sAn FrAncisco seAttle shAnGhAi wAshinGton, D.c.

American Needle v. National Football League . . .Continued from page 1...

11 Id. at *10.12 Id. at *11.13 Id.14 Id. at *11, n.7.

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