Foley Hoag LLP

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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.

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Despite the fact that securities fraud lawsuits involving auditors are said to be relatively few in number as a percentage of total new filings and new filings are below the historical average, auditors often come to be added as defendants, particularly in high-profile cases.1 In the past few years, for example, auditors have been named as parties in the five proceedings with the largest total dollar value settlements to date -- Enron, WorldCom, Cendant, Tyco and AOL Time Warner -- and in several other well-known actions including Global Crossing, Parmalat and Delphi. With the majority of all cases historically alleging accounting irregularities and over 90% of last year’s filings reportedly containing alleged misrepresentations in financial documents, suits against auditors are never far off.

This article reviews first the role of the auditor and reminds counsel of the benefits of understanding and educating the court regarding the role of the auditor, namely that the auditor does not prepare a company’s financial statements; rather, the auditor opines on the fair presentation of management’s financial representations based on the auditor’s testing those representations. This article then surveys three areas of law germane in suits against auditors: (1) scienter requirements with respect to auditors; (2) the scope of primary liability and “scheme” liability with respect to auditors; and (3) “one firm” theories asserted against international audit firms.

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The Prescription Drug Marketing Act was enacted in 1988 to establish, among other things, a system for tracking drugs through the manufacturing and marketing processes. implementing regulations regarding these pedigree provisions for prescription drugs have been delayed for years. The Food and Drug Administration has issued it’s own stay on implementation, and a recent lawsuit by prescription drug distributors over the scope of the pedigree requirements has contributed to the delay as well.

The resulting lack of clear of federal criteria for prescription drug pedigrees has created an opportunity for states to pass their own pedigree laws, leading to a patchwork of diverse, often conflicting, state standards. Prescription drug distributors find it increasingly difficult to comply with the multitude of state laws, thus the time is ripe for federal action to create uniform pedigree requirements.

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Health Canada released a draft guidance this week which would allow approval of “subsequent entry biologics” (SEB) based on an abbreviated complement of clinical data, provided the SEB is shown to be “similar” to a reference, approved biologic product.[1] While the U.S. continues to heatedly debate legislation which would create a pathway for abbreviated approval of biosimilars, or follow-on biologics, by the U.S. Food and Drug Administration (FDA), Canada is advancing its implementation of such a pathway with the release of the SEB draft guidance. The European Union has permitted approval of biosimilar products since 2005.

Like FDA guidance documents in the U.S., Health Canada guidance documents do not have the force of law in Canada. However, the draft guidance indicates that the Canadian Food and Drug Regulations will be amended to provide “a comprehensive legal basis” for the regulation of SEBs and that in the interim, the draft guidance will provide a flexible SEB regulatory framework. The Canadian Minister of Health also plans to publish additional guidance documents that will further elaborate information and data requirements for specific classes of SEBs. Public comments on the SEB draft guidance are due April 16. 

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This article was originally published in the ACEF Newsletter.

A good term sheet sets up the business for success. While we do include a variety of terms that may be useful at various times, everyone needs to recognize that the principal reason for a term sheet is to outline the participants’ understanding, not necessarily to set up a plan to enforce in court every right at every time.

When it comes time to negotiate terms, I encourage angel investors and entrepreneurs to keep these points in mind:

• How is everyone going to make money from the deal?
• How do you want to do the next round of financing because there will almost certainly be another round?
• What is your exit strategy?

Success and prosperity is a good theme; there are ways to draft the documents along those lines.

For purposes of this discussion, I will exclude valuation as a separate topic, recognizing its extreme importance and complexity and that it is more a business than legal issue.

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As was recently reported in these pages, many New England technology companies are hiring, creating an increasingly tight labor market.  When competition for workers heats up, litigation often ensues, as employers seek to send a strong message to both their competitors and employees that they are serious about protecting their interests.

 Each hiring event is unique, but the following guidelines can help tech companies avoid common pitfalls as they recruit and hire new employees.

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• In Stoneridge, the Supreme Court ruled that businesses may not be sued in private securities fraud lawsuits unless they themselves make deceptive statements or acts directly relied on by investors.

• The Court sought to shield parties in "the realm of ordinary business operations" who do not attempt to "affect securities markets" from the risks and costs associated with private shareholder litigation.

• The SEC and Justice Department may still proceed against businesses that participate in fraudulent schemes or otherwise "aid and abet" fraud.

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Originally published in Drug Discovery News, November 2007.

Affymetrix Inc. filed a second wave of patent infringement lawsuits against San Diego-based Illumina Inc. in late October. The three cases—in the United States, the United Kingdom and Germany—claim that all of Illumina’s BeadArray products, as well as the genome-analysis and array technologies Illumina acquired when it bought Solexa, infringe various Affymetrix patents.

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To succeed in today’s technology-driven world, every companymust maximize the strategic value of its intellectual property.At Foley Hoag, we use our technical expertise and deepexperience to enhance the power of your technology globally.Claims to exclusive ownership of a process, design or productraise complex issues. In today’s global marketplace, conflictshave increased—making intellectual property managementa top priority for successful companies. We will help you:

• Implement a strategy to protect and expand your intellectual property assets
• Proactively protect your assets to keep your success on track
• Evaluate the validity of conflicting claims, and if necessary, take action to defeat those claims
• Resolve conflicts through commercial agreements

We can help you manage your current intellectual property assetsand build value for your new technologies or other inventions.Our intellectual property lawyers have earned a reputation forcreatively handling the full range of intellectual property, includingpatent, trademark, copyright, trade secrets, due diligence, andlitigation throughout the United States and internationally for largeand small businesses, universities, individuals, venture capitalfirms and institutional investors.

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Excerpt:

Corporate globalization presents companies with unanticipated risks and challenges. Businesses are held to higher standards of accountability with respect to social, environmental and ethical practices. Companies unresponsive to these demands risk damage to their reputations, brand image and competitiveness. We help savvy business leaders limit their companies’ risk by incorporating internationally recognized standards into their strategic planning, crisis response strategies and relationships with stakeholders.

Benefits of our counsel include:

• Reduction of threat to corporate reputation
• Reduction of legal risks associated with the uncertainties of globalization
• Enhanced brand image
• Increased customer and employee loyalty and retention Improved relationships with external stakeholders and public opinion leaders

Download the Foley Hoag Corporate Social Responsibility Brochure (.pdf)