Welcome back to Legal Geek. This week, we take a look at the new fad in class action lawsuits called "pay for delay" antitrust suits and whether these lawsuits will chill the overwhelming desire companies have to settle patent infringement and invalidity lawsuits.
https://archive.org/details/LegalGeekEp27
Back in 2008 AstraZenica was embroiled in patent litigation over the wildly popular heartburn medicine called Nexium. Various generic drug makers wanted to invalidate the patents on the drug in order to jump into the lucrative market well before these patents would expire in late 2014. However, as many patent lawsuits do, this case settled before a final disposition on terms not disclosed to the public.
Thus, the exact terms of the agreement between Astrazenica and other companies like Ranbaxy were not known. But there's at least some evidence that this agreement included a large payment of money to Ranbaxy for the promise to drop the lawsuit and not make a generic version of Nexium until the middle of 2014. Now these former competitors in court are forced to defend together against a class action lawsuit in Massachusetts claiming that this payment and delay of the generic release is in violation of the Sherman Act.
We've briefly discussed class action suits before on this segment, and the biggest hurdle was cleared a year ago when the class of consumers who could sue was certified by the court. The court is now hearing oral arguments in the case this week, and the plaintiff drug stores and consumers are painting a picture of unfair gaming of the patent system by AstraZenica paying for a delay in the generic drug release, thereby artificially keeping prices on Nexium inflated for the final five or six years of patent coverage.
These pay for delay suits are a relatively new fad brought on by recent Federal Circuit and Supreme Court case law. As applied to the patent context, it seems to imply that companies like Ranbaxy who challenge the validity of a patent cannot drop that suit because they must serve the interests of fair market competition and consumer protection from negotiated monopolies. But is that a good thing for the patent system or judicial system?
If a duty to the consumers is created by filing and pursuing a lawsuit or claim to invalidate a patent, then any settlement or payment could end up leading to a claim (no matter how true) of pay for delay conspiracies...which means more patent litigations will fill court dockets for longer periods of time rather than being settled. In addition, patents are all about exclusivity and the right to monopolize innovations for a short period of time before it becomes public domain, so it seems strange that merely settling a case about patents could give rise to a claim of antitrust violations.
Perhaps the recent advent of post grant review proceedings for patents, which cannot be withdrawn or stopped once initiated, will help alleviate this problem by enabling challenges to a patent's validity without risking a settlement that could lead to claims of antitrust conspiracy later.
Bottom Line: efficient and quick settlement of patent lawsuits reduces a major drain on the court system, and if this pay for delay theory works for the class action lawsuit against Astrazenica, that's bad news for the marketplace generally as more companies will tie up resources fighting long battles in court. Nobody wins in that situation except the lawyers, and take it from a lawyer, that's not what you want to happen.
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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.
Thursday, October 23, 2014
Monday, October 6, 2014
Legal Geek No. 26: Are Smartwatches A Legal Problem?
Welcome back to Legal Geek. This week, we answer a listener question about whether new Smartwatches like Apple Watch and Google Wear will violate traffic laws regulating video screens in vehicles.
Listener James T. on Twitter [@jthatcher79] asked whether the new smartwatches will violate second monitor laws like California's vehicle code section 27602. Let's take a look at this specific law and then the ramifications across the country.
The California law prohibits operation of a motor vehicle if a television receiver, a video monitor, a video screen, or any other similar means of visually displaying a video signal for entertainment or business applications is operating and is located in the motor vehicle in front of the back side of the driver's seat, or located so as to be visible to the driver while driving. Exceptions to this rule include vehicle information displays, GPS displays, a mapping display, video feeds enhancing or supplementing the view around the vehicle such as back up cameras, and equipment that has an interlock device or is otherwise configured to disable the video screen for all non-exception uses during operation of the vehicle.
When parsing this law, the initial question is whether a smartwatch will be considered a means similar to a TV receiver or video screen for displaying a video signal for entertainment or business applications. Considering smartphones and similar devices have been interpreted as covered by these types of laws, the answer is most likely yes. Indeed, this California code section made national news a year ago for generating the first traffic violation tickets to people wearing Google Glass while driving. Its' hard to imagine the revenue-generating traffic cops will pass on the opportunity to bulk up a ticket fine with extra violations for smartwatch wearers.
The second question is whether smartwatches fall into any of the exceptions to the rule. Clearly the key question will be whether the smartwatch is configured to disable all use except for mapping and GPS. At this point, there is no indication this will be the case, which means wearing smartwatches (by the letter of the broad California law) likely violates this traffic law.
Just like with Google Glass, this isn't exactly what the law was written to cover. So expect any early tickets that do happen to be challenged in court, which will perhaps lead to more clear legislation regarding whether smartwatch manufacturers have to include interlock or similar features disabling the device in a moving vehicle. The law always takes a while to catch up to new technologies, and this is no different.
But for now, the Bottom Line is, at least in my view, smartwatches could lead to traffic ticket violations under California code 27602.
Many states have similar laws outlawing use of non-hands-free cell phones or television and video monitors. So while each state law is different and requires different analysis, the previous discussion of the California law likely applies equally in many states. So for now at this very early stage of the legal process, buyer beware...you may want to slip the smartwatch off should you get pulled over for speeding.
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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.
Thursday, October 2, 2014
Legal Geek No. 25: Mandatory Phone Kill Switches?
Welcome back to Legal Geek. This week, we take a look at a new law signed into effect in California last month and how it could make cell phones more secure than ever.
https://archive.org/details/LegalGeekEp25
California lawmakers enacted a new law which forces all smartphone manufacturers to provide automatically enabled Kill Switch technology on all phones sold after July 1, 2015. This Kill Switch technology is like the Activation Lock on Apple products, closely related to the Find my iPhone features. These Kill Switches enable an owner of a phone to remotely lock down and "brick" the phones, erasing all data and making the phone unusable.
The primary goal is deterring theft, as upwards of 70% of all robbery and theft crimes in bigger cities like San Francisco are related to smartphones. The resale market is so lucrative on these products and they have become so ubiquitous that it should come as no surprise this is the latest consumer product to get a lot of attention from thieves. But much like technological advances used to make cars harder to steal, it's only a matter of time before legislation and technology also secures this type of personal asset from thieves.
The early results speak for themselves, as iPhone theft in places like New York City have dropped 17-20% following the addition of the automatic Activation Lock feature.
The most important part of the law is that the phones must have this Kill Switch functionality enabled upon purchase, even if the option to opt-out is provided. If you've purchased an iPhone 6, you've already seen this change. Most consumers will not take the time to opt out, which means an extra layer of security will be present on almost all phones on the market in California within a year or two. That should slow the rate of violent crime for this particular type of consumer product.
California is the biggest market in the country, so what happens there will likely also cause phone manufacturers to adopt those standards nationwide (whether or not the other states also pass similar legislation). About the only party that opposes these types of laws are phone insurance companies that stand to lose significant market share if phones are more secure and less subject to loss/theft claims being required.
Much like the Delaware data destruction law covered a couple weeks ago on this segment, this is the type of pro-consumer law that benefits us all. Kudos to California for helping advance this safety technology in the phone field.
Bottom Line: Less robberies and thefts mean a more secure society, and everybody wins in that scenario. That's a rarity in lawmaking, so enjoy it for this week.
Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.
https://archive.org/details/LegalGeekEp25
California lawmakers enacted a new law which forces all smartphone manufacturers to provide automatically enabled Kill Switch technology on all phones sold after July 1, 2015. This Kill Switch technology is like the Activation Lock on Apple products, closely related to the Find my iPhone features. These Kill Switches enable an owner of a phone to remotely lock down and "brick" the phones, erasing all data and making the phone unusable.
The primary goal is deterring theft, as upwards of 70% of all robbery and theft crimes in bigger cities like San Francisco are related to smartphones. The resale market is so lucrative on these products and they have become so ubiquitous that it should come as no surprise this is the latest consumer product to get a lot of attention from thieves. But much like technological advances used to make cars harder to steal, it's only a matter of time before legislation and technology also secures this type of personal asset from thieves.
The early results speak for themselves, as iPhone theft in places like New York City have dropped 17-20% following the addition of the automatic Activation Lock feature.
The most important part of the law is that the phones must have this Kill Switch functionality enabled upon purchase, even if the option to opt-out is provided. If you've purchased an iPhone 6, you've already seen this change. Most consumers will not take the time to opt out, which means an extra layer of security will be present on almost all phones on the market in California within a year or two. That should slow the rate of violent crime for this particular type of consumer product.
California is the biggest market in the country, so what happens there will likely also cause phone manufacturers to adopt those standards nationwide (whether or not the other states also pass similar legislation). About the only party that opposes these types of laws are phone insurance companies that stand to lose significant market share if phones are more secure and less subject to loss/theft claims being required.
Much like the Delaware data destruction law covered a couple weeks ago on this segment, this is the type of pro-consumer law that benefits us all. Kudos to California for helping advance this safety technology in the phone field.
Bottom Line: Less robberies and thefts mean a more secure society, and everybody wins in that scenario. That's a rarity in lawmaking, so enjoy it for this week.
Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.
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