Substantially Similar--A Blog on IP Issues, Writing and Film

The Rise and Fall of Theranos: The Speed of Some Innovation Fools Us

by John Aquino on 05/24/18

The rise and fall of the medical testing company known as Theranos was recently detailed on the CBS news television show 60 Minutes. The Wall Street Journal broke the story that started the fall in 2015. I covered some of it for Bloomberg Law. The question is being asked, how did an inexperienced CEO convince investors and scientists that her one-prick-of-the finger blood test worked? I can give my own answer from my perspective and experience.

I remember covering remarks about women and innovation by Michelle K. Lee, then-director of the Patent and Trademark Office (PTO), and she heralded the work of Elizabeth Holmes, founder and CEO of Theranos. The company was valued at $9 billion. In October 2015, the WSJ's John Carreyrou began a series of articles suggesting that the Theranos test didn't work and the company had been misleading its investors, its blue-ribbon board of directors, and physicians and medical researchers. His sources included former Theranos executives. (Carreyrou has just published a book on his investigation, Bad Blood: Secrets and Lies in a Silicon Valley Startup.)

In April 2016, Theranos announced that the Center for Medicare and Medicaid (CMS) had sent it a letter detailing proposed sanctions. I was assigned the story, which meant locating the letter, which the CMS hadn't released, nor had Theranos. I quickly began calling attorneys in my contact file for both comments and their advice on how to locate the letter. I was amazed to find that the letter had been circulating among a select group of patent attorneys, and I obtained a redacted copy in a relatively short period of time. My story can be found at https://www.bna.com/theranos-faces-cms-n57982069961/ , in which I referred back to PTO Director Lee's tribute to Holmes. The CMS did impose sanctions against Theranos, the Securities and Exchange Commission did charge it with fraud. Once valued at $9 billion, the current value has been estimated at next to nothing.

How did the company reach such heights with a test that didn't work? The world has experienced incredible changes in just the past two decades. Cell phones, smart phones that can access the Internet, watches that can measure heart rates. In medicine, the mapping of the human genome has made possible treatments for cancers and other diseases that were the stuff of fantasy not too long ago. Other things have not changed. I remember writing articles about the garbage industry for a magazine I worked for and talking to professors about the future of the industry. I mentioned to these futurists that solid waste companies no longer kept track of their routes by clipboards but monitored them by computers. And yet trash was and is still being picked up by garbage trucks, just as it was when my grandparents were alive. I mentioned that in 1939 as part of the World's Fair in New York City futurists unveiled their predictions for what the world would be like by 1960, which included flying cars that still haven't happened. In science fiction films made in the 1960s, they showed a future with computers that filled rooms rather than those that fit in your hand.

The futurists I spoke to said that innovations proceed at different rates. Transportation is on a slower track. There was a burst of innovation in this area in the 19th century. But people get around in 2018 by trains, planes, automobiles and railroads, just as they did in 1918. And in the medical field, the world of Theranos, the pace of innovations has been uneven. While the mapping of the human genome in 2003 has led to great medical discoveries, it hasn't produced as many as were predicted at the time. In 2009, medical researchers were predicting that synthetic biology--defined as the design and construction of new biological entities or the redesign of existing biological systems using the principles of engineering--would revolutionize medical science. Ten years later, scientists acknowledge that, while synthetic biology has been successful in the creation of new fuels and plants, human biology has proved to be tricky.

One of the reasons why people were fooled by Theranos is that the great innovations that we have experienced have led us to think that all innovation is easy. We have grown to expect rapid changes and are eager to believe that anything is possible, even if the change is described by a very convincing, if inexperienced, presenter who has no scientific evidence. A lot is possible, maybe even a one-prick-of-the-finger blood test. But it will move from the impossible to the possible at its own pace. We must be patient and a tad skeptical.

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Patents at the Crossroads and Dreams of Trade Secret Land

by John Aquino on 05/11/18

One thing those working in businesses affected by U.S. patents--which is includes most industries in the country--is that the concept of patents serving as protection for innovations is in crisis or in peril or at the crossroads.

I am at an attorney who works on most intellectual property issues, which are issues related to copyrights, trademarks and trade secrets. The fourth type of IP is patents, and I am not a patent lawyer. As a journalist, however, I have covered patent issues for 20 years working for American Lawyer Media and then for Bloomberg Law. I have studied the law and know enough to discuss it with patent attorneys and to write about patent litigations.

The reason U.S. patents are in crisis is because recent federal court decisions have resulted in invalidated patent types for which the U.S. Patent and Trademark Office had issued patents for years. In the medical research field, those types have included patents for isolated genes and some diagnostic methods. Another disruption for patent owners came from the legislative side. The America Invents Act of 2010 reshaped the PTO's patent court as the Patent Trial and Appeal Board and created the inter partes review to allow PTAB challenges to patents that the PTO has approved. Companies that have invested millions in innovations and spent years securing a patent have seen the patents invalidated. Some of these patents may indeed have been weak patents that should never have been issued. And the courts' reason for invalidating some biomedical patents has been that they are based on natural processes that don't deserve patent protection. Some of the patents have been invalidated by the PTAB through the IPR process have been respected patents that have brought cures and prolonged the lives of many people. As a result of medical research enterprises not being able to assure investors that the innovations they develop will retain patent protection, some of these enterprises, like the Cleveland Clinic, have stopped developing medical diagnostic products.

This situation led Gene Quinn of the legal blog IP Watchdog to ask on May 9 if the Supreme Court can correctly be labeled "anti-patent" ( http://www.ipwatchdog.com/2018/05/09/supreme-court-anti-patent/id=97011/ ). On April 11, PTO Director Andrei Iancu used the "patent system at the crossroads" phrase at the U.Ss. Chamber of Commerce Patent Policy Conference ( https: //www.uspto.gov/about-us/news-updates/remarks-director-andrei-iancu-us-chamber-commerce-patent-policy-conference ),He said that "the patent grant is less reliable today than it should be" as a result of "major reform legislation," like the AIA, major court cases, and actions by the PTO.

A few years ago, Kevin Noonan, a partner at McDonnell Boehnen Hulbert & Berghoff LLP, Chicago, and co-founder of the blog patentdocs, raised the possibility that those patenting medical research innovations in drugs, devices, or diagnostics might begin thinking about seeking trade secret protection rather than patent protection. I was on a panel at a conference in Cold Spring Harbor in New York at which the issue was discussed. I suggested that those standing in Patent Land looking across the border to Trade Secret Land might feel envious. In Trade Secret Land, I quipped, quoting a song from the musical South Pacific, "They got sunlight on the sand, they got moonlight on the sea, they got mangoes and bananas you can pick right off the tree, and they don't have to deal with the PTO."

While those seeking patent protection must get the patent approved by the PTO, those claiming trade secret protection do not seek any federal approval. They only have to keep the innovation secret. Think of the secret formulas for Coca-Cola or Kentucky Fried Chicken. While the texts for patents are published, trade secrets are not publicly known. They are kept under lock and key and known to only a few. That is their protection. Stealing trade secrets can result in criminal prosecution. Of course, if they were to become publicly known, they would be worthless.

Securing patents has become the practice of both biomedical and technological industries. Trade secrets are also utilized by these industries, often for the manufacturing process of the drugs or computer hardware. But patents for drugs, devices, and diagnostics have been called the life's blood of the biomedical industry that I covered for 10 years. I said at the conference that the worlds of patents and trade secrets are entirely different. The public nature of patents has allowed others to attempt to improve upon an issued patent, or to approach the issue from another direction, leading to more innovations. It is an active, burgeoning, even frenzied world. The world of trade secrets is a secret, anxious and, I would say, colder world. With every court decision invalidating an established biomedical patent, calls for biomedical companies to rely more on trade secrets have grown louder and louder.

When the PTO director says patents are at the crossroads, there's little reason to doubt it. Will a world with fewer patents lead, not to more openness, but to more secrets? To not more but fewer innovations? In his April 11 address, PTO Director Iancu said that "we must change the dialogue surrounding patents," focusing not on the faults of the patent system but on faults that have been corrected and by emphasizing "a new narrative that defines the patent system by the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to society." It sounds like a good idea. I hope it's enough.

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Reverie in the Jurors' Lounge about Literary Influences

by John Aquino on 05/02/18

I was on jury duty this week. As an attorney, I spent some time beforehand wondering whether another attorney would pick me for a jury. He or she might think, I suggested to myself, that I could help guide the other jurors with my knowledge of the law. Or maybe that would be why they wouldn't pick me. As it turned out, the time I spent thinking about this was wasted. None of us who were summoned for jury duty that day served on a jury.

In our orientation session, at 8:30 a.m. the jury commissioner explained that it was expected to be a light day. He noted that sometimes a criminal defendant prepares for a jury trial but when he is told that a jury is ready and waiting decides to accept the prosecutor's plea bargain, just as civil defendants may seek a settlement for the same reason--in both cases, the verdict could go against them. But the court has to have a jury in place anyway, the commissioner said, indicating that he can't tell the judge to come back tomorrow. One of the court's judges also gave a speech to us, saying that as citizens we have a duty to have juries in place and ready and as potential litigants we would demand that as our right. All of which is true. By 10:30, the commissioner told us that none of the circuit court's trials that day required a jury but that, since they also supplied juries for the district court, he had to wait to hear from the district court until 12:30. At 12:30, we were all dismissed without having gone through the jury selection process known as voir dire let alone served on a jury.

But it was all good. As a journalist, I talked to the court personnel and, when we were dismissed, sat in on a trial, just to refresh in my mind the trial experience.

Anticipating that there would be long wait times, I had loaded my tablet with free books that I am entitled to with my subscription. The thing is, many of the ones that are available are public domain books from the 19th century. But I loaded on War and Peace, which I have always wanted to read, and Crime and Punishment, which I haven't read in a long while. Another one was Alfred Lord Tennyson's play Becket, based on the life of St. Thomas Becket, and this was a book of which I had never heard. For various reasons, this is the one I chose to read in the jury lounge.

One reason I chose it was that I thought that it might be easier reading than Tolstoy or Dostoevsky. Another was that I hoped it would turn out to be an undiscovered gem. In my theatre days when I was performing Shakespeare, I used to read obscure plays by Shakespeare's contemporaries, thinking that I could come to the company saying that here was a play that we should perform, a masterpiece that that no one knew anything about. I remember plowing through Thomas Heywood's The Golden Age, The Brazen Age, The Silver Age and The Iron Age, four plays derived from Greek and Roman legends and myths, and finding that they were absolutely terrible. Shakespeare really was a unique talent.

Tennyson's Becket is like that. He was known as a poet ("Charge of the Light Brigade," "In Memoriam," "Crossing the Bar") but also wanted to be a dramatist. Becket wasn't performed in his lifetime (1809-1892), had some performances over the next 40 years, but was eclipsed by T.S. Eliot's Becket play, Murder in the Cathedral in 1935. I read Tennyson's play for about an hour in the jury lounge, through a prologue that was as long as an act and through Act 1. I quickly decided that, great poet that he was, Tennyson had little knowledge of dramatic structure or skill at dramatic verse. In Act 1, he has Becket, who is dubious about whether he is worthy of being Archbishop of Canterbury, say

Am I the man? That rang

Within my head last night, and when I slept

Methought I stood in Canterbury Minster,

And spake to the Lord God, and said, 'O Lord,

I have been a lover of wines, and delicate meats,

And secular splendours, and a favourer

Of players, and a courtier, and a feeder

Of dogs and hawks, and apes, and lions, and lynxes.

Am I the man?'

Such a poetic catalogue of vices and animals! In my mind, I went on, "Of dogs and hawks, and apes, and lynxes, and lions and tigers and bears, oh my!"

After I finished Act 1, I felt that we were nearing the end of Becket's story as I remembered it and looked ahead to see how much more there was. I found out there were FIVE Acts and 102 pages and I was just on page 32. I stopped reading.

I knew the story from other dramatizations of Becket's life (1118-1170) and particularly of his friendship and later friction with King Henry II. There were Eliot's Murder in the Cathedral, Jean Anouilh's Becket (1960), and Paul Webb's Four Nights in Knaresborough (1999). I am very familiar with Anouilh's play, which has two killer parts in Becket and Henry II. When the play premiered on Broadway, Laurence Olivier played Becket and Anthony Quinn, Henry. Quinn was nominated for a best actor Tony Award,, and Olivier wasn't. Olivier decided that Henry was the better part and he and Quinn switched roles, with Arthur Kennedy replacing Quinn as Becket on the national tour. In the 1964 film version, Richard Burton played Becket, Peter O'Toole Henry, both were nominated for Academy Awards and both lost to Rex Harrison in My Fair Lady.

In my reverie in the jurors' lounge, I began to wonder if any of these later playwrights had read Tennyson's play. And this hearkens back to an earlier blog of mine about historians, biographers and critics trying to find cultural and personal influences on the subject of their work. Eliot could have read Tennyson's Becket. He knew Tennyson's poetry and deconstructed it for his The Waste Land (1921). But Eliot's play was likely not influenced by Tennyson's because their poetry has no similarity and Eliot's focuses on Becket's murder in the cathedral while Tennyson's scope is broader, more of a chronicle. I am pretty sure Anouilh wasn't influenced by Tennyson because in his preface for his Becket he describes how he purchased a biography of Becket because its binding would fit in with the rest of the books on one of his library's shelves. He based his play on that book and later admitted that historians told him the book was factually incorrect--Becket wasn't a Saxon in a Norman world but rather a Norman himself Anouilh decided to leave it because the conflict worked better.

The assumption is that playwrights, filmmakers and novelists who write on subjects that others had dealt with before them have read or seen these earlier works. Sometimes they hadn't. An academic scholar named Alan W. Fredman recounted in 2009 how he had made a discovery about Samuel Beckett's (no relation to Thomas) absurdist play Waiting for Godot (1952), in which characters spend the play waiting for a man called Godot (which some people think is another name for God) and who doesn't come. Friedman happened to read Honore Balzac's 19th century novel Le Faiseur (1848), which concerns characters who are waiting for a Monsieur Godot. Anxiously, Friedman wrote Beckett and asked if he had read Le Faiseur and was influenced by it. Beckett said, no. Others have suggested that Beckett, an Irish-born writer who lived in Paris, may have seen the 1936 French film version of Balzac's novel or the 1949 U.S. version titled The Lovable Cheat (co-starring Buster Keaton, an actor Beckett admired) and been subconsciously influenced by it. But we'll never know.

A similar thing happened to me. I wrote my master's thesis on George Bernard Shaw's Back to Methuselah (1922), a cycle of five plays, the first of which is on Adam and Eve. The first half of that play takes place before Adam and Eve are expelled from the Garden of Eden and the second deals with the aftermath. In 1972, the U.S. dramatist Arthur Miller wrote a play about Adam and Eve titled The Creation of the World and Other Business. Sensing an article or even a book there, I wrote Miller, asking if he had been influenced by Shaw. Miller kindly wrote me back saying, no, although he understood why I might have thought that. He said he hadn't read Shaw's Methuselah and if he had the time he would take a look at it. I don't know if he ever did. But the end result for me was no book, no article.

This was my reverie in the jurors' lounge.

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De Havilland's Lawsuit on Film Fictions: She Doesn't Own History

by John Aquino on 04/29/18

The legendary film actress Olivia De Havilland sued filmmakers for their depiction of her in the 2017 tv miniseries Feud. De Havilland had two advantages that most people who sue in these situations don't have. She was the one portrayed and, at the age of 101, she is still alive.

Many suits against filmmakers are by the children or spouses of the deceased people portrayed and they face immediate problems in succeeding in their litigation. For libel, only the person portrayed can sue because it is his or her reputation that has allegedly been injured (another way of saying this is, the dead can't sue for libel). For invasion of privacy or violation of the right of publicity, there is the question of whether those rights are inheritable. But De Havilland has lived long enough that she doesn't have these problems. The problem she had is that, according to the decision of California Court of Appeals in De Havilland v. FX Networks LLC, she didn't have a case.

The lower court had declined to dismiss the action, showing great deference to De Havilland and indicating that she could conceivably succeed on the merits of her complaint that FX Networks had violated her statutory right of publicity, misappropriated her image, and that the miniseries constituted false light invasion of privacy. (She didn't sue for libel, which is a false statement fixed in a tangible medium that is defamatory, is clearly about the plaintiff, and that causes damages.) De Havilland based her claims on an interview in the film she is shown as giving at the 1978 Academy Awards ceremony that the filmmakers admit didn't actually happen but that they used to frame their story and on two comments in which she was shown calling her sister Joan Fontaine a "bitch." She also stressed that the filmmakers hadn't asked her permission or paid for the use of her name or likeness.

A difficulty for De Havilland was that the miniseries wasn't about her. She was a minor character in the series. Another was that while she hadn't called her sister a "bitch," she had publicly called her a "Dragon Lady." (While acknowledging tension with her sister, De Havilland's concern was evidently that she was shown as using "vulgar" language.) A third was that she is a public figure, and many of the events shown in the miniseries had actually happened.

The appeals court made its position clear early on in its opinion: "Whether a person portrayed in these expressive works is a renowned film star--"a living legend"--or someone no one knows, he or she does not own history. Nor does she have the legal right to control, dictate, approve, disapprove or veto the creator's portrayal of actual people."

Among other points the court made were

the U.S. Court of Appeals for the Ninth Circuit held in Sarver v. Chartier (9th Cir. 2016), which concerned the movie The Hurt Locker, that that film "was not speech proposing a commercial transaction" so as to constitute a violation of the right of publicity statute;
the California Supreme Court in Guglielmi v. Spelling-Goldberg (1979), which concerned a tv-movie about the silent film start Rudolph Valentino, ruled that movies, whether fictitious, fact-based, or a blend of fact and fiction, are protected by the First Amendment;
while some filmmakers enter into agreements with those portrayed in their films or their families, such agreements are not required by the First Amendment;
the filmmakers use of De Havilland's character was transformative and just one, small component of the creative work; and
a claim of false light invasion of privacy requires a showing that the portrayal is defamatory (causes damage to one's reputation) or highly offensive to a reasonable person, and De Havilland didn't do that.

The court's opinion also highlighted a problem a public figure has in suing a filmmaker for an allegedly false portrayal. If an expressive work is a work of fiction or a blend of fact and fiction, fiction by its very nature is false and assumed to be false and the plaintiff must prove that these "false" statements are defamatory or highly offensive to a reasonable person. This problem with proving the statements in question were defamatory is probably why De Havilland didn't sue for libel. And the court concluded that a reasonable person would not be offended by the miniseries' portrayal of her. Instead, the court wrote Catherine Zita Jones playing De Havilland acted as Dante's Beatrice from the Divine Comedy guiding the viewer through the film--there are few more non-derogatory, non-offensive images than that.

De Havilland's complaint drew a great deal of media coverage, as did the lower court's refusal to dismiss. The appeals court decision, which came at the end of March along with a flurry of other decisions, not as much. As the court suggested, De Havilland's fame brought her attention, but the ultimate picture it gives is that of a legendary film saw used to controlling her image who does not employ vulgar language. The court cited precedent to illustrate that those suing filmmakers for film depictions must show injury because being personally offended by the portrayal isn't enough.

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Copyright, Public Domain and Fictionalization in Films, All Together Now

by John Aquino on 04/19/18

I saw a film recently that seemed to bring together topics I've blogged about here before--fictionalization in fact-based films, the history of copyright, and use of public domain films by filmmakers.

The film is Till The Clouds Roll By, a 1946 M-G-M biography of the musical theatre composer Jerome Kern. He sold the studio the rights to his life story, was around during filming, but died before it was released. The Arthur Freed unit at M-G-M made the film a compendium of Kern's songs, wrapping his story around production numbers featuring many of the studio's top stars--Judy Garland, Frank Sinatra, June Allyson, Van Johnson, Kathryn Grayson, Lena Horne, and Tony Martin.

The film also illustrates what can happen to an individual's life story when it is put on film. Kern wrote memorable songs, the music for one classic of the musical theatre--Show Boat, and songs for at least three classic film musicals--Swing Time, You Were Never Lovelier, and Cover Girl. But, as Kern warned Arthur Freed when he sold M-G-M the rights to his life story, his life was otherwise unmemorable. His first song was placed in a professional production when he was just 20, his one marriage lasted 35 years until his death, he and his wife had one child, he liked to collect rare books and bet on the horses, and, while some his songs and shows were unsuccessful, neither his career nor personal life ever suffered any real crisis moments.

Faced with this situation, those responsible for the screenplay for TTCRB--Guy Bolton, George Wells, Myles Connolly, and and Jean Holloway--delved into the minute facts of Kern's life. They produced a story that shows the early trials of Kern's life as he struggles for recognition for his music. He is befriended by a composer, James Hessler, and his daughter Sally. Hessler sacrifices his dreams of writing a symphony to orchestrate Kern's songs. While in England working on a show, Kern meets a British lady named Eva, and they marry. Back in the U.S., he finally obtains success, but Sally has grown up spoiled and breaks her father's heart by her selfishness. She leaves home, Hessler dies, Kern searches for Sally for years, and when he finally finds her she has learned her lesson. The film ends with a musical tribute to Kern's work.

The thing is, almost all of what is in the preceding paragraph didn't happen. Kern did marry Eva when he was 24, but their daughter isn't mentioned to make room for Sally's sorry. The Hesslers didn't exist. Bolton, who wrote the basic story for the movie, made them up to give the film some conflict. Hessler's character may have been suggested by a friend of Kern's, but evidently the unfinished symphony and Sally and her selfishness were completely fictitious.

The situation is reminiscent of that of the baseball player Warren Spahn who, except for his baseball career and combat experience in World War Two, led a quiet, unexceptional life. A former newsman was commissioned to write a biography of Spahn for young readers. Stymied by Spahn's quiet life, he did was some old-time journalists used to do--he made things up, saying that Spahn won the Bronze Star, which he hadn't, and saved his company, which also didn't happen. Spahn was embarrassed and worried that people would think he had made these statements. He couldn't successfully sue for libel because libel is a false statement that is derogatory (hurts one's reputation). Claiming someone did heroic acts in the war doesn't hurt his or her reputation, it enhances it, however falsely. And so, because Spahn's injury was rooted in his embarrassment, he sued for false light invasion of privacy, and the New York court's decision is a landmark in this area of the law.

What happened to Kern's story and Spahn's is what screenwriters of film biographies and other films based on history have often done--resort to set character models and cliches at the expense of the facts. What is the difference between Kern's situation and that of people like Spahn? Kern gave his permission to his life story being filmed and allowed the script to go forward. And the falsifications didn't injure his reputation. The injury is to the truth. On the International Movie Database (IMDB), people have commented how moved they were by the Hessler's story, believing it to be true.

TTCRB is also useful to illustrate the history of copyright. When it was made, TTCRB was subject to the Copyright Act of 1908 which gave a registered work a copyright term of 28 years which could be renewed for a second term of the same length. Among other requirements were that the work carry a copyright notice. The Copyright Act of 1976 does not requirement either registration or a copyright notice and the term initially was the life of the author plus 50 years or, in the case of a corporate work 75 years (which were later extended to 75 years and 95 years, respectively). But this didn't affect TTCRB's situation because it was subject to the earlier version of the law. By 1973, when the copyright for TTCRB was up for renewal, M-G-M was in upheaval. It had gone through a number of corporate changes, and the latest management was interested in turning the focus of the company from films to real estate. In all of this transition, no one renewed the copyright, and the film fell into the public domain. This allowed anyone--television stations, civic groups, anyone--to show the film without having to pay a fee or obtain permission. It also resulted in companies who had no access to the original prints being able to release inexpensive, inferior videos by using copies of copies, which is the case of most public domain feature films.

TTCRB also touches on another topic about which I wrote--the availability of public domain films feature or documentary filmmakers to use in their films. However, films like TTCRB provide special difficulties for these filmmakers. The film itself is no longer protected by copyright. But, as noted, the movie is a compendium of songs for which Kern wrote the music. Works published prior to 1922 are in the public domain. A few of the songs in the movie were written before 1922, but the more famous ones were not. Performance of these later songs in a film for commercial use would likely violate the copyright of those songs. Attention must be paid, as Arthur Miller wrote.

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