Category Archives: Business Law

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Merck’s patent win over Gilead reversed over false testimony

Merck & Co.’s $200 million jury verdict against Gilead Sciences Inc. was voided in a patent dispute over a breakthrough for hepatitis C because of misconduct by a witness at the companies’ trial.

A federal judge concluded Monday that dishonest and duplicitous testimony by a retired Merck scientist before and during a March trial played into the jury’s finding that the company was responsible for early discoveries that led to the development of Gilead’s Sovaldi and Harvoni medicines.

The scientist “intentionally fabricated testimony” and Merck supported his “bad faith conduct,” U.S. District Judge Beth Labson Freeman in San Jose, California, said in her ruling.

The reversal of the fifth-largest U.S. verdict this year vindicates Gilead in its refusal to share royalties with Merck on the more than $20 billion revenue the hepatitis C drugs generated from 2013 through 2015 in the U.S. The Foster City, California-based company’s sales have started to slow this year as competition for the liver disease market intensifies among drugmakers.

“This is a nice little bump for Gilead who’d already accounted for the $200 million,” said Bloomberg Intelligence analyst Asthika Goonewardene. “But of course, this is a big win and will be beneficial to Gilead and how they can claim ownership of the drug in the long run.”

Merck vowed to appeal Monday’s ruling, saying it “does not reflect the facts of the case.”

“In its decision, the jury recognized that patent protections are essential to the development of new medical treatments,” the company said in an email. “The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners.”

Gilead said it “has always believed Merck’s patents are invalid and unenforceable.”

“We are pleased the court has ruled in Gilead’s favor and determined that Merck’s patents are unenforceable against Gilead, and therefore, Merck is not entitled to recover any damages,” the company said in an email.

Labson Freeman re-opened the case in April after Gilead alleged that ex-Merck scientist Phil Durette gave conflicting statements about his participation in a key phone call some 15 years earlier when the drug’s basic composition was first presented to Merck.

Durette initially said in a pretrial deposition he wasn’t on a phone call in which secrets about the compound’s basic chemistry were discussed while Merck was exploring a take-over of Pharmasset Inc., a company that was later acquired by Gilead. When testifying to the jury after checking his notes, Durette admitted to playing a role in the meeting.

“Dr. Durette’s lying at his deposition, recanting that testimony at trial without proper prior notice to Gilead, and further untruthful testimony at trial all support the court’s conclusion that Merck did intend to deceive Gilead and the court,” the judge wrote.

She said Merck’s actions were “even more egregious” because Durette was acting as the company’s patent attorney.

Merck’s victory at trial had set the stage for it to seek future royalty payments from Harvoni and Sovaldi, which sells for $1,000-a-pill in the U.S., before discounts and rebates.

While Gilead continues to dominate the market, the lull in its hepatitis C treatment revenue opened the door to Amgen Inc. retaking its place as the world’s top biotech firm by market capitalization.

The case is Gilead Sciences Inc. v. Merck & Co., 13-cv-04057, U.S. District Court, Northern District of California (San Jose).

Full Article – http://www.theindianalawyer.com/mercks-patent-win-over-gilead-reversed-over-false-testimony/PARAMS/article/40559

Vacation Rental Company Faces Lawsuit Over Service Changes


Some customers across the country are outraged, saying VRBO took their money for a service, then changed the terms of that service.

Just steps from sunny cove beach in Santa Cruz is Carrie Walton’s vacation home. She rents it to travelers who book on the website VRBO. Walton paid the company $1,200 for a one year “Platinum membership,” designed to boost her home’s ranking in search results.

“Someone looks, there’s maybe 10 pages of homes, and maybe this way, with platinum, you’ll be on the first page, mostly likely at the top,” she said. “We thought it was worth the cost — it was an investment in marketing.”

Walton said it worked for a few months. Then VRBO started charging travelers a “service fee,” an extra 4 to 9 percent that VRBO pockets.

Walton said it’s killing her business. She thinks travelers aren’t renting her home because it’s more expensive now.

“We didn’t pay a platinum subscription to have VRBO scare business away,” she said.

Walton said VRBO told her it made another change. Her “Platinum membership” alone no longer guaranteed high search results.

Leena Shah’s story echoes Walton’s. She paid a platinum membership fee too and said she is now seeing rentals of her Maui condo drop drastically.

“I’m just throwing my hands up in the air now with VRBO,” Shah said.

Complaints about VRBO litter the internet. Angry homeowners even created a Facebook page.

“We receive dozens and dozens of calls,” said Michael Bowse, an attorney.

Bowse filed a class-action lawsuit against HomeAway, which owns VRBO, accusing the company of bait and switch, and breaching its contracts by charging the new service fee.

“So it essentially took people’s money under one set of circumstances and then changed the circumstances once it took their money,” he said.

Walton and Shah aren’t part of this lawsuit. But they do want their money back.

“I want my money refunded because it’s a breach of contract,” Walton said. “This is not what I signed up for.”

VRBO wouldn’t say whether it would refund Walton and Shah, citing pending litigation.

The company said since adding the new service fee, it’s introduced new security guarantees and “24/7 customer service.”

They said they’re now quote, “Delivering more happy consumers to VRBO owners.”

Source: http://www.nbclosangeles.com/news/local/Vacation-Rental-Company-Faces-Lawsuit-Over-Service-Changes-384217571.html#ixzz4CYZ4bqC3
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New lawsuit against Duke Energy alleges coal ash polluting N.C. lake

by Jenna Martin

A new lawsuit filed Monday alleges that a Duke Energy coal ash pond in the northern part of North Carolina is contaminating surrounding water sources and that the Charlotte-based utility stands in violation of the federal Clean Water Act.

Filed in the U.S. Middle District Court of North Carolina by attorneys with the Southern Environmental Law Center on behalf of the Roanoke River Basin Association, the 25-page complaint focuses on Duke’s coal-fired Mayo power plant near Roxboro. It asserts that about 6.9 million tons of coal ash is stored in a leaking, unlined pit along the banks of Mayo Lake and polluting the fishing lake, a stream feeding into Dan River and the Roanoke River Basin, adjacent wetlands and surrounding groundwater with heavy metals.

The suit states that the Roanoke River Basin Association notified Duke Energy (NYSE: DUK), the Environmental Protection Agency and the N.C. Department of Environmental Quality on April 11 of the violations and its intent to take legal action if they were not corrected within 60 days.

It contends that Duke Energy has built a lined landfill on property near the Mayo plant where the coal ash could be relocated. The association asks that the court require Duke to move the ash to a lined, solid-waste landfill away from the lake and tributary and asses a civil penalty of up to $37,500 per violation each day.

The plant, which according to Duke began operating commercially in 1983, is located near the Virginia border and about 70 miles east of Duke’s Dan River Steam Station near Eden — the site of a 2014 spill of 39,000 tons of coal ash into the river. Back in March, state regulators told Duke Energy it is subject to fines and penalties for improper leaks at coal ash ponds at 12 plants, including Mayo.

That follows a $7 million settlement reached last October between Duke and the DEQ to resolve groundwater-contamination issues at all 14 of Duke’s coal plants in the state — an order the SELC contested.

Full Article – http://www.bizjournals.com/charlotte/news/2016/06/14/new-lawsuit-against-duke-energy-alleges-coal-ash.html

Ad fraud could become the second biggest organized crime enterprise behind the drug trade

by Patrick Kulp

It may not make for a great Martin Scorsese film, but online ad fraud is growing into one of the biggest organized crime businesses in the world.

That’s according to a new report from the World Federation of Advertisers, which estimates that within the next decade, fake Internet traffic schemes will become the second-largestmarket for criminal organizations behind cocaine and opiate trafficking.

The WFA, an international marketing trade group, arrived at that projection by estimating the current pace of growth in the online ad industry and extrapolating it out over the next 10 years, assuming an accelerating rate of spending on digital media.

The stat puts in stark relief a growing problem: A huge number of online ads — more than half of them, by some accounts — never reach actual humans. Many fall victim to technical display problems, while others are viewed by networks of automated bots designed to mimic human behavior.

Even at conservative projections, the report claims, the total cost of fraud, if unchecked, could exceed $50 billion by 2025 — or one-tenth of the $500 billion the report loftily predicts the global digital ad market will be worth by then.

Researchers then compared that number to United Nations and FBI estimates of the size of other global criminal markets like human trafficking, firearms sales and natural resource smuggling.

According to the report, organized crime members and other criminals are attracted to ad fraud because it offers the prospect of higher payouts than many other criminal pursuits, at a lower risk and with relatively little effort.

The report also claims that law enforcement is not technologically equipped enough to regulate online ad space.

The WFA researchers bank their study on the assumption that ad fraud will most likely grow — either in the number of scammers or the efficiency of their technology — along with spending in digital media.

If that sounds like a lot of guesswork, it’s because illegal businesses don’t exactly keep public financial records, and the scope of the vast ad fraud underbelly is particularly nebulous.

The most widely cited authority on the matter is an annual report published by the Association of National Advertisers, which forecasts a $7.2 billion loss to fraud in 2016 — or about 5% of total spending.

But the WFA claims that the ANA report, which only covers select blue-chip American brands, may have lowballed the threat. Its own research cites various anti-fraud studies that peg the impact at anywhere between 2% and an eyebrow-raising 98%.

More of the studies (from a group of well-established publishers) come in on the lower end of that range, but the true extent of the problem is neither clear-cut nor universally agreed upon.

Part of that murk has to do with the difficulty of tracking the sources of fraud — the assortment of mobsters, former bank robbers, hackers and Russian millionaires in charge of the multibillion-dollar racket.

But cyber criminals aren’t the only ones with an interest in covering their tracks. Actors at every level of the digital ad assembly line, from publishers to agencies to advertising networks — basically everyone except for the brands actually paying for the ads — have at least some incentive to keep the problem in the dark.

“Nobody works alone in this sphere. They’re all sort of riding on each other’s backs,” says Jeremy Goldman, an attorney who specializes in technology and digital media law. “Nobody wants to take the fall and say they were the ones who hired the bad apple. It’s better to hide or push it under the rug.”

Full article – http://mashable.com/2016/06/09/ad-fraud-organized-crime/#0IBbBnRNGOqf