January 2016

The Affordable Care Act, Meant to Increase Medical Care Accessibility, May in Practicality Hurt that Accessibility Through Narrow Networks

January 28, 2016
Competition, Healthcare, Healthcare Reform

Natalie Gao, MJLST Staffer

The Patient Protection and Affordable Care Act (PPACA) continues to perpetuate some of the issues of medical inaccessibility it was meant to fix. The PPACA uses insurers’ desire to dodge risk to make health insurance more widely available, preventing insurers from refusing coverage based on preexisting conditions and requires they guarantee renewalability without too extensive a waiting period. Although PPACA disincentive insurance companies to risk-select, insurance companies found new ways to compete.

Narrow Networks, the Very Sick, and the Patient Protection and Affordable Care Act: Recalling the Purpose of Health Insurance and Reform by Valarie Blake discusses the creation of narrow networks by insurance companies as new ways to compete, where insurance companies agree to better rates with a narrow group of providers. This allows them to give better prices and premiums to its customers, even if the potential consequences is that the customers actually end up with more restrictive coverage. PPACA theoretically regulates networks, guaranteeing network adequacy of by a minimum standard of care and that the network be with essential community providers. But PPACA does not require network adequacy of providers. Practically, narrow networks can affect the availability of specialize services that some patients need, and the quality and experience of those providers. Even if the need to compete for patients might also ensure that narrow networks never compromise the necessary care, tertiary and specialty care, and the quality of care and connection due the provider, can easily be limited.

“Network adequacy,” states Blake, “is not a debate about access of health insurance but rather access of healthcare.” One way to measure whether or not our health care system is doing what it is supposed to is to measure the health of the very sick, and it brings up the question of whether or not PPACA guarantees all the right of healthcare or the right to be healthy. And what does count as sufficient access and who should be responsible for paying the healthcare costs associated with that sufficient access? These questions evoke analysis for consumer choice and consumer rights. The article recommends that network adequacy standard in both State and Federal law include tertiary and specialized care, and not extra cost be added onto out-of-network care, and the article recommends a special standard for tertiary care be adopted into law. On principle and based the cases that have occurred already around PPACA, narrow networks can easily become an issue that, if left unregulated, can create the very thing it was meant to solve.

USPTO to Decide Who Will Own the Pioneer Gene Editing Patent for the Next Billion-Dollar Industry

January 28, 2016
Biotechnology, Competition, Intellectual Property

Na An, MJLST Staffer

Earlier this month, the United States Patent and Trademark Office (USPTO) declared an interference to determine which one of the two research groups will be awarded the patent protection of one of the most important scientific discoveries in the past decade: CRISPR technology. This technology enables deletion, repair or replacement of genes in such a precise fashion that it could be worth billions of dollars in human health, agriculture and biotechnology industries.

Clustered regularly-interspaced short palindromic repeats system (CRISPR) is a mechanism used by the immune system to resist invading viruses by recording their genetic information and then specifically target these exogenous genetic elements in bacteria, mammals and other organisms. It provides a reliable and precise tool for editing genes. Upon its discovery, CRISPR has been adopted for a wide range of applications from creating animal models with human cancers and turning specific genes on and off to genetically modifying plants.

In 2015, companies rushed to invest and occupy early markets of this potentially billion-dollar industry. The first was Novartis, who signed two deals with gene-editing start-ups to use CRISPR for engineering immune cells and blood stem cells, and as a tool for drug discovery. Soon after, AstraZeneca shook hands with the Wellcome Trust Sanger Institute, the Innovative Genomics Initiative, the Broad and Whitehead Institutes, and Thermo Fisher Scientific to identify and validate new targets in preclinical models with CRISPR. Simultaneously, immunotherapy firm Juno Therapeutics made deals with Editas and Vertex Pharmaceuticals to create anticancer immune cell therapies with an agreement that could be valued at $2.6 billion.

Amid the fast surge of research and commercial opportunities, a patent fight over CRISPR simmers in the background, which raises great uncertainties of the future market structure and commercial potential. The UC Berkeley team, lead by chemist Jennifer Doudna, filed a patent application (No. 13/842,859) on March 15, 2013 with a priority date of May 25, 2012. The application contained broad claims to CRISPR technology, but described only “genetically modified cells that produce Cas9,” an enzyme crucial to CRISPR mechanism, and “Cas9 transgenic non-human multicellular organisms.” On October 15, 2013, the MIT researcher Feng Zhang filed his own patent application (No. 14/054,414) with a priority date of December 12, 2012. Unlike the Doudna application, Zhang contemplated specifically adapting CRISPR in eukaryotic cells. Through Accelerated Examination, USPTO granted Zhang a patent on April 15, 2014, even though Doudna had an earlier invention date and filing date. After several amendments to Doudna application in response to two third-party submissions, the world has been waiting on the USPTO to make a decision. On January 19, 2016, the patent office finally agreed to conduct an interference to decide who was the rightful applicant to award the patent protection on CRISPR.

Since both applications have priority dates prior to March 16, 2013, the patent will be granted on a “first to invent” basis. Interference cases are historically rare and could stretch out for years, considering the high probability that the losing party will appeal the decision. It is unclear what the result will be. Mari Serebrov, regulatory editor at Thomson Reuters BioWorld, said “if the courts rule the technology isn’t patentable, it could chill investment. On the other hand, if one group is allowed the patent, it could result in a monopoly and will probably make licenses more expensive or discourage research because the patents could lock up the field, depending on how broadly they are written.” Faced with the great uncertainty, Monsanto has limited CRISPR’s applications until a decision is made. Tom Adams, vice president of global biotechnology at Monsanto, said “until we understand the intellectual property it’s hard to do much.”

As more capital is pouring in and risks skyrocketing, companies and researchers need to use caution in their inventive and investment activities relating to CRISPR.

Long-Term Success of Autonomous Vehicles Depends on its First-Generation Market Share

January 25, 2016
Autonomous Vehicles, Business Law, Competition

Vinita Banthia, MJLST Articles Editor

In its latest technology anticipations, society eagerly awaits a functional autonomous car. However, despite the current hype, whether or not these cars will be ultimately successful remains a question. While autonomous cars promise to deliver improved safety standards, lower environmental impacts, and greater efficiency, their market success will depend on how practical the first generation of autonomous vehicles are, and how fast they are adopted by a significantly large portion of the population. Because their usability and practicality depends inherently on how many people are using them, it will be important for companies to time their first release for when they are sufficiently developed and can infiltrate the market quickly. Dorothy J. Glancy provides a detailed account of the legal questions surrounding autonomous cars in Autonomous and Automated and Connected Cars Oh My! First Generation Autonomous Cars in the Legal Ecosystem. This blog post responds to Glancy’s article and suggests additional safety and regulation concerns that Glancy’s article does not explicitly discuss. Finally, this post proposes certain characteristics which must be true of the first generation of autonomous vehicles if autonomous vehicles are to catch-on.

Glancy thoroughly covers the expected benefits of autonomous cars. Autonomous cars will allow persons who are not otherwise able to drive, such as visually impaired people, and the elderly, to get around conveniently. All riders will be able to save time by doing other activities such as reading or browsing the internet during their commute. And in the long run, autonomous vehicles will allow roads and parking lots to be smaller and more compact because of the cars’ more precise maneuvering abilities. Once enough autonomous vehicles are on the road, they will be able to travel faster than traditional cars and better detect and react to dangers in their surroundings. This will decidedly lead to fewer crashes.

On the contrary, several other features may discourage the use of autonomous vehicles. First, because of the mapping systems, the cars will likely be restricted to one geographic region. Second, they might be programmed to save the most number of people during a car crash, even if that means killing the occupant. Therefore, many prospective buyers may not buy a car that is programmed to kill him or her in the event of an inevitable crash. In addition, initial autonomous cars may not be as fast as imagined, depending on whether they can detect faster moving lanes, frequently change lanes, and adapt to changing speed limits. Until there are significant numbers of autonomous cars on roads, they may not be able to drive on longer, crowded roads such as highways, because vehicles will need to interact with each other in order to avoid crashes. Some argue that other car-service provides will suffer as taxis, Ubers, busses, and trails become less relevant. However, this change will be gradual because people will long continue to rely on these services as cheap alternatives to car-ownership.

When these cars are available, in order to promote autonomous cars to enter the market rapidly, manufacturers should make the cars most attractive to potential buyers, instead of making them good for society as a whole. For example, instead of programming the car to injure its own occupants, it should be programmed to protect its occupants. This will encourage sales of autonomous cars, reducing the number of car crashes in the long run.

Glancy also states that the first generation of autonomous vehicles will be governed by the same state laws that apply for conventional vehicles, and will not have additional rules of their own. However, this is unlikely to be true, and specific state and possibly even federal laws will most likely affect autonomous vehicles before they may be driven on public roads and sold to private individuals. Because autonomous cars will co-exist with traditional vehicles, many of these laws will address the interaction between autonomous and conventional cars, such as overtaking, changing lanes, and respecting lane restrictions.

In the end, the success of autonomous cars depends widely on how practical the first fleet is, how many people buy into the idea and how fast, as well as the car’s cost. If they are successful, there will be legal and non-legal benefits and consequences, which will only be fully realized after a few decades of operation of the cars.

Are News Aggregators Getting Their Fair Share of Fair Use?

January 20, 2016
Copyrights, Internet, Social Media

Mickey Stevens, MJLST Note & Comment Editor

Fair use is an affirmative defense to copyright that permits the use of copyrighted materials without the author’s permission when doing so fulfills copyright’s goal of promoting the progress of science and useful arts. One factor that courts analyze to determine whether or not fair use applies is whether the use is of a commercial nature or if it is for nonprofit educational purposes—in other words, whether the use is “transformative.” Recently, courts have had to determine whether automatic news aggregators can invoke the fair use defense against claims of copyright infringement. An automatic news aggregator scrapes the Internet and republishes pieces of the original source without adding commentary to the original works.

In Spring 2014, MJLST published “Associated Press v. Meltwater: Are Courts Being Fair to News Aggregators?” by Dylan J. Quinn. That article discussed the Meltwater case, in which the United States District Court for the Southern District of New York held that Meltwater—an automatic news aggregator—could not invoke the defense of fair use because its use of copyrighted works was not “transformative.” Meltwater argued that it should be treated like search engines, whose actions do constitute fair use. The court rejected this argument, stating that Meltwater customers were using the news aggregator as a substitute for the original work, instead of clicking through to the original article like a search engine.

In his article, Quinn argued that the Meltwater court’s interpretation of “transformative” was too narrow, and that such an interpretation made an untenable distinction between search engines and automatic news aggregators who function similarly. Quinn asked, “[W]hat if a news aggregator can show that its commercial consumers only use the snippets for monitoring how frequently it is mentioned in the media and by whom? Is that not a different ‘use’?” Well, the recent case of Fox News Network, LLC v. TVEyes, Inc. presented a dispute similar to Quinn’s hypothetical that might indicate support for his argument.

In TVEyes, Fox News claimed that TVEyes, a media-monitoring service that aggregated news reports into a searchable database, had infringed copyrighted clips of Fox News programs. The TVEyes database allowed subscribers to track when, where, and how words of interest are used in the media—the type of monitoring that Quinn argued should constitute a “transformative” use. In a 2014 ruling, the court held that TVEyes’ search engine that displayed clips was transformative because it converted the original work into a research tool by enabling subscribers to research, criticize, and comment. 43 F. Supp. 3d 379 (S.D.N.Y. 2014). In a 2015 decision, the court analyzed a few specific features of the TVEyes service, including an archiving function and a date-time search function. 2015 WL 5025274 (S.D.N.Y. Aug. 25, 2015). The court held that the archiving feature constituted fair use because it allowed subscribers to detect patterns and trends and save clips for later research and commentary. However, the court held that the date-time search function (allowing users to search for video clips by date and time of airing) was not fair use. The court reasoned that users who have date and time information could easily obtain that clip from the copyright holder or licensing agents (e.g. by buying a DVD).

While the court’s decision did point out that the video clip database was different in kind from that of a collection of print news articles, the TVEyes decisions show that the court may now be willing to allow automatic news aggregators to invoke the fair use defense when they can show that their collection of print news articles enables consumers to track patterns and trends in print news articles for research, criticism, and commentary. Thus, the TVEyes decisions may lead the court to reconsider the distinction between search engines and automatic news aggregators established in Meltwater that puts news aggregators at a disadvantage when it comes to fair use.

Requiring Backdoors into Encrypted Cellphones

January 20, 2016
Constitutional Law, Cyber Security, Data, First Amendment, Privacy

Steven Groschen, MJLST Managing Editor

The New York State Senate is considering a bill that requires manufacturers and operating system designers to create backdoors into encrypted cellphones. Under the current draft, failure to comply with the law would result in a $2,500 fine, per offending device. This bill highlights the larger national debate concerning privacy rights and encryption.

In November of 2015, the Manhattan District Attorney’s Office (MDAO) published a report advocating for a federal statute requiring backdoors into encrypted devices. One of MDAO’s primary reasons in support of the statute is the lack of alternatives available to law enforcement for accessing encrypted devices. The MDAO notes that traditional investigative techniques have largely been ineffective. Additionally, the MDAO argues that certain types of data residing on encrypted devices often cannot be found elsewhere, such as on a cloud service. Naturally, the inaccessibility of this data is a significant hindrance to law enforcement. The report offers an excellent summary of the law enforcement perspective; however, as with all debates, there is another perspective.

The American Civil Liberties Union (ACLU) has stated it opposes using warrants to force device manufacturers to unlock their customers’ encrypted devices. A recent ACLU blog post presented arguments against this practice. First, the ACLU argued that the government should not require “extraordinary assistance from a third party that does not actually possess the information.” The ACLU perceives these warrants as conscripting Apple (and other manufacturers) to conduct surveillance on behalf of the government. Second, the ACLU argued using search warrants bypasses a “vigorous public debate” regarding the appropriateness of the government having backdoors into cellphones. Presumably, the ACLU is less opposed to laws such as that proposed in the New York Senate, because that process involves an open public debate rather than warrants.

Irrespective of whether the New York Senate bill passes, the debate over government access to its citizens’ encrypted devices is sure to continue. Citizens will have to balance public safety considerations against individual privacy rights—a tradeoff as old as government itself.

Patent Damages

January 20, 2016
Competition, Intellectual Property, Patents

Tianxiang (Max) Zhou, MJLST Staffer

In Dec. 2015, almost five years after Apple sued Samsung for infringing a smartphone design patent, Samsung agrees to pay Apple $548 million. Apple is now demanding Samsung pay an additional $180 million for the patent dispute. Besides the huge amounts of damages, the case is not over and it continues raising fundamental issues of how to evaluate values of design patent infringements.

In the petition for writ of certiorari challenging the $400 million that it has paid for infringing Apple’s design patent, Samsung writes, “The questions presented are: . . . Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?”

The second issue stated in the writ is noteworthy. Under the current rule, the awards in a design patent infringement case to the patent owner are the whole profits from the sale of the infringing products. This rule has created and will create massive jury verdicts in design patent infringement cases, and the Supreme Court has not reviewed the rule. As Samsung writes in the petition, “the Supreme Court has not reviewed a design-patent case in more than 120 years.” With the new development of the industries and various design patents, it is doubted whether the awards of whole profits are reasonable.

Although statistically the Supreme Court will not take the case, the issue of design patent awards raised heated discussions. In 2014, a group of 27 law professors submitted an amicus brief in support of Samsung urging the Federal Circuit to interpret the relevant statutory provision to limit the award of profits in design patent infringement cases. The amicus brief stated: “the Court should require proof of some connection between the patented design and the defendant’s profits, the order the district court to remit the award of profits to the extent it exceeds those profits attributable to the patented designs.” The professors argued the origin and context of the controlling statute Section 289, and that awarding a defendant’s entire profits makes no sense in the modern world, and to prevent disgorgement of profits.

As stated above, the Supreme Court has not reviewed the issue for over one hundred years. With the unsettled dispute between Samsung and Apple continuing, we could look forward to whether the Supreme Court would take the case and redefine Section 289. However, a question posed to the judges is, if the awards to the design patent infringement are not the whole profits of the sale, then what proportion of the profits should be awarded? Judges should figure out a reasonable standard to evaluate the amount attribute to the infringed design.

Recent Developments in Automated Vehicles Suggest Broad Effects on Urban Life

January 20, 2016
Autonomous Vehicles, Business Law, Competition, Intellectual Property

J. Adam Sorenson, MJLST Staffer

In “Climbing Mount Next: The Effects of Autonomous Vehicles on Society” from Volume 16, Issue 2 of the Minnesota Journal of Law, Science & Technology, David Levinson discusses the then current state of automated vehicles and what effects they will have on society in the near and distant future. Levinson evaluates the effect of driverless cars in numerous ways, including the capacity and vehicles-as-a-service (VaaS). Both of these changes are illuminated slightly by a recent announcement by Tesla Motors, a large player in the autonomous vehicle arena.

This week Tesla announced Summon which allows a user to summon their tesla using their phone. As of now, this technology can only be used to summon your car to the end of your drive way and to put it away for the night. Tesla sees a future where this technology can be used to summon your vehicle from anywhere in the city or even in the country. This future technology, or something very similar to it, would play a pivotal role in providing urban areas with VaaS. VaaS would essentially be a taxi service without drivers, allowing for “cloud commuting” which would require fewer vehicles overall for a given area. Ford has also announced what it calls FordPass, which is designed to be used with human-driven cars, but allows for leasing a car among a group of individuals and sharing the vehicle. This technology could easily be transferred to the world of autonomous vehicles and could be expanded to include entire cities and multiple cars.

Beyond VaaS, these new developments bring us closer to the benefits to capacity Levinson mentions in his article. Levinson mentions the benefits to traffic congestion and bottlenecks which could be alleviated by accurate and safe autonomous vehicles. Driverless vehicles would allow for narrower lanes, higher speed limits, and less space between cars on the highway, but Levinson concedes that these cars still need to “go somewhere, so auto-mobility still requires some capacity on city streets as well as freeways, but ubiquitous adoption of autonomous vehicles would save space on parking, and lane width everywhere.” Tesla is seeking to alleviate some of these issues by allowing a vehicle to be summoned from a further distance, alleviating some parking congestion.

Audi, however, is seeking to tackle the problem in a slightly different fashion. Audi is partnering with Boston suburb Somerville to develop a network including self-parking cars. “UCLA urban planning professor Donald Shoup found 30 percent of the traffic in a downtown area is simply people looking for parking” and eliminating this traffic would allow for much higher capacity in these areas. Similarly, these cars will not have people getting in and out of them, allowing for much more compact parking areas and much higher capacity for parking. Audi and Tesla are just some of the companies working to be at the forefront of automated vehicle technology, but there is no denying that whoever the developments are coming from, the effects and changes David Levinson identified are coming, and they’re here to stay.

General Motor’s $500 Million Investment in Lyft: a Reminder to State Legislatures to Quickly Act to Resolve Legal Issues Surrounding Self-Driving Cars

January 20, 2016
Autonomous Vehicles, Business Law, Competition

Emily Harrison, MJLST Editor-in-Chief

On January 4, 2016, General Motors’ (G.M.) invested $500 million in Lyft, a privately held ridesharing service. G.M. also pledged to collaborate with Lyft in order to create a readily accessible network of self-driving cars. According to the New York Times, G.M.’s investment represents the “single largest direct investment by an auto manufacturer into a ride-hailing company in the United States . . . .” So why exactly did General Motors, one of the world’s largest automakers, contribute such a significant amount of capital to a business that could eventually cause a decrease in the number of cars on the road?

The short answer is that G.M. views its investment in Lyft as a way to situate itself in a competitive position in the changing transportation industry. As John Zimmer, president of Lyft, said in an interview, the future of cars will not be based on individual ownership: “We strongly believe that autonomous vehicle go-to-market strategy is through a network, not through individual car ownership.” In addition, this partnership will allow G.M. to augment its current profits. The president of G.M., Daniel Ammann, explained that G.M.’s ‘core profit’ predominately comes from cars that are sold outside of the types of urban environments in which Lyft conducts its main operations. Therefore, G.M. can capitalize on its investments by aligning itself at the forefront of this burgeoning automated vehicle industry.

A transition to a network of self-driving cars raises a variety of legal implications, particularly with respect to assigning liability. As Minnesota Journal of Law, Science & Technology Volume 16, Issue 2 author Sarah Aue Palodichuk notes in her article, “Driving into the Digital Age: How SDVs Will Change the Law and its Enforcement,”: “[a]utomated vehicles will eliminate traffic offenses, create traffic offenses, and change the implications of everything from who is driving to how violations are defined.” Underlying all of these changes is the question: who or what is responsible for the operation of self-driving cars? In some states, for example, there must be a human operator who is capable of manual control of the vehicle. As additional states begin to adopt legislation with respect to self-driving cars, it is foreseeable that there will be great debate as to who or what is responsible for purposes of liability. Yet, in the meantime, G.M.’s significant investment in Lyft signals to consumers and state legislators that these issues will need to be resolved quickly, as the automotive industry is moving full-speed ahead.

January 2016

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