Foley Hoag LLP

SUMMARY

As soon as January 1, 2009, new construction or gut renovation of a health care facility in Massachusetts may need to meet green building standards.

On September 24, 2008, the Massachusetts Department of Public Health ("DPH") approved new guidelines (the "Guidelines") that incorporate the Leadership in Energy and Environmental Design-Health Care ("LEED-HC") and Green Guide for Health Care ("GGHC") green building standards into the Determination of Need ("DoN") process. The Guidelines will apply to all DoN applications filed on or after January 1, 2009 (for hospitals and clinics) or July 1, 2009 (for nursing homes). [continues...]

SUMMARY

Last week, the Massachusetts Division of Health Care Finance & Policy issued new regulations defining what is “a fair and reasonable” contribution by an employer towards health insurance under the Massachusetts Health Care Reform Law. Under that law, the state is permitted to assess an annual per-employee fee called the Fair Share Contribution (FSC) against non-contributing employers with 11 or more full-time equivalent employees. The fee can be as much as $295 per employee. To avoid the fee, the law requires an employer to offer a group health insurance plan and to make a “fair and reasonable” premium contribution towards that insurance. The new regulations make this test more stringent in order to increase the number of employers who are subject to the FSC.

SUMMARY

Foley Hoag LLP’s interdisciplinary team counsels and protects the interests of its clients facing new realities, challenges and risks framed by today’s tumultuous economic and market conditions. By maintaining an active and engaged dialogue with our clients during this period of economic distress, our lawyers are better able to adapt to the changing legal needs of clients affected in the short term. More importantly, our immersion in their businesses and industries enables our lawyers to provide sound, strategic counsel to protect our clients’ interests in the longer term. The Economic Crisis Team delivers forward-thinking advice, focusing on long-standing core, integrated strengths of the firm.

Topics include:

• Financial investigations, enforcement proceedings and litigation
• Federal and state securities regulation
• Deal-making, corporate finance and investment restructuring
• Bankruptcy, corporate reorganization and financial disputes

SUMMARY

Yesterday, in Broadcom Corp. v. Qualcomm Inc. (Nos. 2008-1199, -1271, -1272), the Federal Circuit held that an accused infringer’s failure to obtain an opinion of counsel may be considered as evidence to support a determination that it actively induced infringement by a third party. Specifically, the Court ruled that the presence or absence of an opinion is relevant to whether an accused infringer “‘knew or should have known’ that its actions would cause another to directly infringe.”

SUMMARY

Section 409A is an extremely broad law that covers many arrangements not generally considered deferred compensation, such as stock options, bonus plans, and severance and change in control agreements. In general, 409A governs any arrangement where an employee or consultant has a vested right to compensation in one year that will be paid in a later year, unless the arrangement fits into one of the exemptions to 409A. Arrangements subject to 409A must comply with strict rules as to the time and form of payment, and it is very difficult to make changes to an arrangement once it is in place. Any deferred compensation arrangement that does not comply with 409A will subject the employee or consultant to income tax liability at the time that the right to payment vests (even if there is no right to receive payment at that time), together with a 20% penalty tax on the deferred amount. (continues)

SUMMARY

Included in this Issue:

• A Market Perspective

  Ham Lord, Managing Director, Launchpad Ventures

  Angel financing is more than just seed round financing for future venture capital deals. In fact, angels fund 10 to 20 times more companies than venture firms do on an annual basis. This is because many angel deals will never need the type of large financing ($10M+) that is typical of most venture deals.

• Structuring a Seed Stage Investment

  David A. Broadwin, Partner, Foley Hoag LLP

  Many of the entrepreneurs who walk through our doors at the EEC are at the seed/angel stage and are looking for those kinds of investments as well as advice around how to structure the investments so as to (a) fund the early needs of the business and (b) not create barriers to a larger investment later in the life of the business.

SUMMARY

In a decision that will have far reaching implications for drug and medical device development, the Court of Appeals for the Federal Circuit held yesterday that the Hatch-Waxman safe harbor of 35 U.S.C. § 271(e)(1) is inapplicable to patented research tools that are not themselves subject to the FDA review process. While the decision is good news for the providers of research tools such as drug screening assays, it will make drug and medical device development in the United States costlier and more risky.

SUMMARY

In recent months, the Massachusetts Legislature has been considering legislation to limit or ban certain marketing activities of pharmaceutical and medical device companies. On the last day of the legislative session, July 31, the House and Senate voted to accept the conference committee report concerning health care cost containment legislation, (Senate 2863.) This legislation includes the provision regulating gifts by pharmaceutical and medical device manufacturers to physicians.

SUMMARY

Global Bio-Chem Technology Group Company Limited (GBT), a Chinese biotechnology company, has prevailed in a patent litigation brought by Ajinomoto Co., Inc in the International Trade Commission.

A Foley Hoag patent litigation team, including Claire Laporte, DeAnn Smith, and Jeremy Younkin, invalidated the asserted claims of two US patents. The Administrative Law Judge of the International Trade Commission also found both patents unenforceable because Ajinomoto committed inequitable conduct.

The decision represents an important victory for the Chinese biotechnology industry. Li Weigang, Assistant General Manager of GBT, said, "We are pleased that the Administrative Law Judge has determined there was no violation of Section 337. This ruling maintains continued competition in the marketplace, which will benefit American consumers during this time of rising food prices."

The Washington, DC firm Adduci, Mastriani & Schaumberg LLP are co-counsel with Foley Hoag LLP. 

The full Press Release is available here.

SUMMARY

Understanding Medicare coverage and payment policy is critical to the successful launch of any new life sciences technology. Foley Hoag’s Medicare Coverage & Payment Practice provides regulatory and legislative advice to a broad array of leading life sciences companies, including:

• global pharmaceutical and biotechnology firms,
• trade associations,
• venture capital and investment funds,
• patient associations and advocacy groups, and
• early-stage companies.

SUMMARY

Foley Hoag’s Food and Drug Practice provides regulatory and legislative advice to leading biotechnology, pharmaceutical, medical device, and health care companies regulated by the Food and Drug Administration (FDA). Lawyers at Foley Hoag understand the critical regulations and policies affecting product development schedules, regulatory compliance, and timely product approvals. In representing clients, our lawyers work with senior agency managers, congressional staff, and Members of Congress to shape agency interpretations, clarify regulatory guidance, challenge adverse decisions, develop effective compliance plans, and enact legislation into law.

SUMMARY

Included in this Issue:

• A Market Perspective: Foster Hinshaw on 'B' Rounds - Opportunity in 'Gloom and Doom'

  In 2002, during the valley of the tech bubble burst, one of the most respected VC’s in the tech community said to me, "It’s all about survival, survival, survival – I don’t know if we will ever recover". Notwithstanding, the resiliency of our tech community proved its intrinsic value to the economy and there were some nice IPO’s and exits from companies that were incubating during the bubble years (including FAST, EqualLogic and Netezza). Today the news is similar: (a) zero IPOs in Q2 2008; (b) the financial sector is in a major, albeit predictably cyclical, reset; and worse (c) another 1970’s style energy crisis is on us. (continues...)

• Selected New England "Series B" and Later Round Transactions
• Terms of New England Series B and Later Rounds
• The Activity Level Summary

SUMMARY

In recent months, the Massachusetts Legislature has been considering legislation to limit or ban certain marketing activities of pharmaceutical and medical device companies. In April 2008, the Massachusetts Senate approved a proposal that would significantly restrict pharmaceutical marketing to physicians and health care facilities. This proposal was subsequently revised by the Massachusetts House on July 16, 2008. The progress and outcome of this marketing legislation is of significant importance to anyone involved in the Massachusetts biotechnology, health care, and drug and device sectors.

SUMMARY

Contents

1. Exposure to Liability in the Hiring Process

2. Failure to Adequately Document Terms and Conditions of Employment

3. Misclassification Issues
    - Employee or Independent Contractor
    - Exempt or Non-exempt

4. Failure to Comply with Wage Payment Laws

5. Inadequate Protection of Intellectual Property

SUMMARY

According to a study by PricewaterhouseCoopers and the National Venture Capital Association, venture capital (VC) investing hit a five-year high in 2006, with $25.5 billion invested. Notably, the Life Sciences sector, which includes biotechnology and medical devices, accounted for 28% of VC money invested, the largest investment sector in 2006.

As Life Sciences venture capital investing has risen, the biotechnology industry has become increasingly dependent on such funding. This is particularly true for start-up companies that cannot rely on revenue from marketed biologics to fund their research and development pipeline. To cover the nearly $1 billion capital investment required to bring a biologic drug to market (from discovery through clinical trials and FDA approval), early-stage companies rely on VC investing. Investing in emerging companies, however, is risky for a venture capitalist: only 1 in 10 drugs discovered actually makes it to market, and despite the more than $50 billion spent on biotech drugs in 2006, the great majority of early-stage companies never reach the point of net profitability.

SUMMARY

Preface:

Patenting generally offers a superior means for legally protecting most inventions, particularly since:

• copyright, when available, does not provide a broad scope of protection; and
• the ability to effectively protect an invention as a trade secret is in constant jeopardy, due to publication or oral disclosure.

Unfortunately, the patenting process can be complicated, time-intensive and costly. However, costs can often be minimized and opportunities for establishing value in products and technology maximized if scientists and business professionals with an understanding of the patenting process are actively involved throughout.

This publication was prepared to provide an overview of patenting, particularly as it pertains to innovative technologies such as biotechnology and information technology.

SUMMARY

On June 16, 2008, Massachusetts Governor Deval Patrick signed into law legislation (.pdf) that provides a total of $1 billion over the next ten years to support the development of the life sciences industry in Massachusetts. The legislation, commonly known as the Life Sciences Initiative (LSI), is designed to stimulate research, development, manufacturing, and commercialization in the life sciences sector and, ultimately, to increase employment and associated tax revenues. To achieve these goals, the LSI significantly expands the activities of the recently created Massachusetts Life Sciences Center (LSC) by dramatically increasing the funding available for capital expenditures, grant programs and other incentives. The LSI also establishes an aggressive set of tax incentives that include a broad array of refundable and other types of tax credits. 

SUMMARY

Established in December 1980 by the partners of law firm Foley Hoag, The Foley Hoag Foundation is a private foundation that seeks to combat racism, especially among youth, in the City of Boston. The Foundation awards grants to organizations working to improve the racial climate in Boston by addressing issues of diversity and racism. Grantee organizations achieve their goals through a variety of means, including arts and cultural activities, youth leadership and recreational programs. Other grantees provide advocacy assistance, enabling individuals to confront racism through legal or political action. Some grantee organizations work to prepare young children to live in the reality of a multicultural society, others engage teens, and a few target a primarily adult constituency.

The Foley Hoag Foundation was the first—and remains the only— foundation to focus exclusively on the improvement of race relations in Boston. The trustees are fortunate to have the unqualified endorsement of Foley Hoag, which has provided an enormous amount of financial, administrative and moral support.

SUMMARY

Included in this Issue:

• A Market Perspective: Axel Bichara on the State of the Technology Industry

  Technology innovation has been accelerating during the last centuries and will continue to do so. Innovation helps drive entrepreneurship and new business opportunities. That’s good news for entrepreneurs and early-stage investors in the US where the state of innovation andentrepreneurship continue to be exceptional. There are plenty of excellent startup opportunities. The funding environment for start-ups will remain strong, with an abundance of capital from both VC and private investors. (continues...)

• New England First Round Transactions

SUMMARY

Until now, most small tax-exempt organizations, defined as those with gross receipts of $25,000 or less per year, have not been required to file an annual information return with the Internal Revenue Service (the “IRS”). 

However, small tax-exempt organizations must now file an annual electronic information return – the Form 990-N, also known as the e-Postcard. This requirement covers all tax periods beginning after December 31, 2006. The e-Postcard must be filed no later than the 15th day of the 5th month following the end of the organization’s tax year. For example, an organization whose tax year ends December 31 must submit the e-Postcard by the following May 15.