Ebola Vaccine and Treatment Makers Need Liability Protection

670px-ebola_virus_virionU.S. politicians and regulators, many of whom ordinarily trend toward hyper-caution on new drug reviews and approvals, are rushing forward with policies aimed at speeding up development of Ebola vaccines and treatments. These measures include coordinated research among public health officials and drug makers, Food and Drug Administration (FDA) pledges of regulatory assistance, and congressional interest in legislation to qualify Ebola-targeted products for an FDA priority-review program. Such cooperation is encouraging, but government also needs to take action on another R&D disincentive which, if left unaddressed, could completely undermine current efforts on Ebola and frustrate future cooperative management of unforeseen pandemics. Ebola vaccine and treatment manufacturers need to have protection from tort liability exposure.

Any medical procedure, pharmaceutical product, or vaccine may have adverse health risks in some instances. Drug manufacturers must consider those risks when deciding whether to invest millions of dollars for product R&D, and the Food and Drug Administration (FDA) must weigh those risks against the benefits when approving a treatment. Such risks, along with the high regulatory barriers and low economic incentives attendant to investing in rare diseases, likely have been factors that explain the dearth of Ebola vaccines and treatments.

The United States government has the motivation and the means to minimize or eliminate such liability risks. Federal health agencies are already directly involved in vaccine development, and they will no doubt also be the major purchasers of the resulting drugs. Those federal entities could include a provision in the R&D agreements or purchasing contracts that would substitute the government as a defendant in any resulting lawsuits against private businesses, or indemnify companies from tort liability. The former option is certainly superior to indemnification, which could require the vaccine and treatment producers to litigate cases and then seek reimbursement for the losses or settlements. The companies would also have to negotiate with the government over whether the indemnification would cover litigation costs, such as attorneys’ fees.

The federal government indemnified manufacturers in contracts for a smallpox vaccine after the September 11, 2001 terrorist attacks. The companies argued that the proposed indemnification was insufficient, and in April 2003, Congress added expanded liability protections to the Homeland Security Act of 2002. For the one-year period of the national smallpox vaccination program (2003-2004), individuals allegedly harmed by a government-purchased smallpox vaccine could only sue the federal government under the Federal Tort Claims Act. Congress could consider the passage of a similar law for Ebola vaccines. Continue reading

First Circuit Permits Challenge to Massachusetts Prior Restraint on Billboards

billboardIn recognition of Free Speech Week, the WLF Legal Pulse celebrates what may be the First Amendment’s greatest virtue: it protects speech that may be unpopular due to the nature of the speaker or the medium within which it is spoken. We do so by applauding an October 20 U.S. Court of Appeals for the First Circuit ruling that addressed a prior restraint on a method of communication that some disfavor—billboards—and that predominantly carries messages some consider unworthy of full constitutional protection—advertisements.

Unbridled regulatory authority. Section 302 of the Massachusetts Code of Regulations requires all outdoor advertisers to obtain both an operating license and a permit for each specific sign. The regulation vests the Director of the Office of Outdoor Advertising (“Director”) with broad discretion to grant, withhold, or revoke licenses and permits for billboards. Section 302 enumerates several factors that the Director “may” consider, including “health, safety, and general welfare” and “not [being] in harmony with the surrounding area.” The regulation, however, states the listed factors are non-exclusive and that the Director’s authority is “[w]ithout limitation.”

Van Wagner Communications, which lobbied against the 2012 amendments to Section 302, filed a facial challenge to the regulation in federal court, arguing that it imposed an unconstitutional prior restraint on the company’s speech. The U.S. District Court for the District of Massachusetts held that because the Director had approved Van Wagner’s license and all 70 of its permit requests over two years, the company suffered no injury and thus lacked standing to sue. Continue reading

Federal Circuit Orders Eastern District of Texas Patent Suit Stayed

The WLF Legal Pufederal circuitlse has addressed the U.S. Court of Appeals for the Federal Circuit’s patent litigation venue jurisprudence in several posts (here and here). That court issued two rulings this past March (In re Apple Inc. and In re Barnes & Noble, Inc.) that, in our opinion, incorrectly applied factors the Federal Circuit had previously relied upon to order patent suits transferred to more appropriate venues. On October 9, a unanimous three-judge panel added another twist to the Federal Circuit’s venue case law with In re Google Inc.

Background. Last October, non-practicing entity Rockstar Consortium filed a patent infringement suit in the Eastern District of Texas (EDTX) against five companies whose technology utilized Google’s Android operating system. At the end of 2013, Google filed a declaratory judgment action against Rockstar in the Northern District of California (NDCA) that involved the same patents that Rockstar was suing to enforce in Texas. Rockstar countersued Google in the NDCA and concurrently added Google as a defendant in the EDTX action. Rockstar then moved to transfer or dismiss the California action, which the NDCA denied. Google and its five customers petitioned the EDTX to stay Rockstar’s infringement action pending an outcome in the NDCA, or to transfer the case to California. EDTX Judge James Rodney Gilstrap denied the order, and the six companies appealed. Continue reading

Profit, Not Ideology, Motivates Cyberlockers that Facilitate Copyright Infringement

copyrightwarningInformation wants to be free” is a standard rejoinder to criticism of online entertainment piracy. Such a sentiment may motivate some copyright thieves, but profit, not ideology, drives the proprietors of “cyberlockers” whose business is trafficking pirated entertainment content. A recent study by the Digital Citizens Alliance (DCA)—”Behind the Cyberlocker Door“— has laid bare that reality. These websites generate profit margins that lawful businesses can only dream of, and they do so on the backs of countless workers in the music, movie, and television industries.

DCA analyzed data from the 15 top direct download cyberlockers and 15 top streaming cyberlockers. It found that 78% of the files on the direct download sites, and 84% on the streaming sites, were infringing content such as music, movies, and TV shows. Total annual revenue for the 30 businesses was $96.2 million, which averages out to $3.2 million a site. The average profit ratio of the direct download sites was 63.4%, with one site enjoying 88.5%. For the streaming cyberlockers, the average ratio was 87.6%, with the highest coming in at 96.3%.

Much like people who run the illicit cyberlockers, some of those who unlawfully access and share copyright-protected content may claim to be advancing an extreme public commons ideology or “sticking it to Big Entertainment,” but the volume of such piracy reflects a baser motivation. Pirated content consumers’ catchphrase shouldn’t be “information wants to be free;” it should be  “we want free information.” Continue reading

White House Boosts Fictional “Food Addiction” Concept to School Kids

BSFriesAs we’ve discussed numerous times here, some nutrition nanny activists, regulators, and plaintiffs’ lawyers have embraced and promoted the concept that food can be “addictive.” The term grabs people’s attention, conjuring up disturbing mental images of helplessness and withdrawal. It’s no wonder, then, that the notion of “food addiction” is often invoked in the context of greater government regulation, taxes, and advertising restrictions designed to redirect our dietary choices.

On September 26, the concept received its highest profile reference yet, from First Lady Michelle Obama, during an interview broadcast to millions of students on the in-school “Channel One News.” When asked about the criticism the federal government’s new school lunch rules have faced, the First Lady responded:

It’s natural. Change is hard. And the thing about highly processed, sugary, salty foods is that you get addicted to it. I don’t want to just settle because it’s hard. I don’t want to give up because it’s expensive. I don’t want that to be the excuse.

The interview appears to have been very carefully scripted, so her mention of “addiction” was hardly spontaneous or casual, nor was her referencing it in the context of “highly processed, sugary, salty foods.” Federal government regulation is taking direct aim at those demonized products and their ingredients.

For instance, the Department of Agriculture has proposed banning the sale of certain foods in public schools that don’t meet “Smart Snacks” guidelines, as well as banning advertising of those products in schools. Also, as part of its update of the Nutrition Facts label affixed to all packaged foods, the Food and Drug Administration (FDA) is proposing a new “added sugars” item. FDA is pursuing this mandate even though the agency acknowledges that no chemical difference exists between naturally occurring and added sugars in food. The “added sugars” mandate would also expose federal regulators to constitutional challenges under the First and Fourth Amendments, as leading food regulation attorneys Richard Frank and Bruce Silverglade argue in a September 26 WLF Legal Backgrounder.

The First Lady’s reference to “food addiction” was ill-advised, especially considering the age and maturity level of her captive audience on Channel One News. The concept of addiction has been significantly dumbed down and politicized over the past few decades to the point where it has almost lost any objective meaning. Reputable scientists have questioned not only the methodology behind “food addiction” studies, but also the researchers’ motivation.

The “Let’s Move” effort led by the First Lady advances the indisputably worthy goal of a healthier America, but that goal cannot be met by fomenting faulty food addiction concerns. Such a concept creates a serious moral hazard—people struggling to lose weight may throw up their hands because they believe addiction to (insert high-calorie product) has taken hold. Talk of addiction, and the choice-restrictive public policies it fuels, also diverts attention and resources from actual solutions to obesity in America.

Also published by Forbes.com at WLF’s contributor page

Not so “Grrr-eat”: The Response Nutrition Nannies Have Grown to Love

Half-full or half-empty?

Half-empty

Nice, but not good enough. That is the near-Pavlovian response professional activists routinely offer whenever their targets announce some voluntary action that, to the casual observer, seems to advance the activists’ agenda.

Consider, for instance, a September 23 Politico story, “Food, Beverage Firms to Dial Back Marketing to Kids.” The story reported on voluntary commitments International Food and Beverage Alliance member companies made to the World Health Organization regarding product marketing to children under 12. Those commitments include restrictions that nutrition activists have long sought from government regulators. Yet, there was the glass-half-empty response of Center for Science in the Public Interest’s (CSPI) nutrition policy director, Margo Wootan:

If they’re saying they’re covering all media, they’re not. They’re missing on-package marketing [and] in-store and on-display marketing.

Ms. Wootan’s comments confirm a theory WLF has been arguing for the past several years in the context of plain packaging initiatives for tobacco: activists have their sights on more than one category of consumer products. Continue reading

Federal Court “Shall” Hear Challenge on EPA’s Failure to Assess Job-Loss Impact of its Rules

EPA-LogoSection 321(a) of the federal Clean Air Act (CAA), titled “Continuous Evaluation of Potential Loss or Shifts of Employment,” states plainly:

The Administrator shall conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provisions of this chapter and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement.

The Environmental Protection Agency (EPA) has long treated this as yet another optional duty, which it may or may not perform at its discretion. Murray Energy Corporation and a number of other coal companies that have suffered substantial job losses due to environmental regulations disagree. The word “shall” in § 321(a), they argue, reflects that Congress required EPA to do this. Last March, these companies filed suit in the Northern District of West Virginia, seeking declaratory and injunctive relief. A June 6 WLF Legal Backgrounder by Vermont Law School Professor Mark Latham and Shook, Hardy & Bacon L.L.P. attorneys Victor Schwartz and Chris Appel, Is EPA Ignoring Clean Air Act Mandate to Analyze Impact of Regulations on Jobs?, described the suit and its arguments.

On September 16, Chief Judge John Preston Bailey rejected EPA’s specious argument that the agency is protected by sovereign immunity and allowed the suit to proceed. The plaintiffs sued under a section of the CAA which permits actions if EPA has failed to perform a non-discretionary duty. The court thus had to determine whether EPA had discretion to ignore § 321(a).

As Chief Judge Bailey noted, courts need not defer to federal agencies’ positions when determining jurisdiction. And Chief Judge Bailey certainly offered no deference. He cited extensive case law that supported Murray Energy’s argument that “shall” reflects a mandatory duty. As one court stated, “The word ‘shall’ does not convey discretion. It is not a leeway word, but a word of command.” EPA argued that § 321(a)’s lack of a “date-certain deadline” renders the provision discretionary. Chief Judge Bailey found that while that issue “was open to question,” relevant precedent dictated that the lack of a deadline was not “fatal to plaintiffs’ case.”  He added, “While EPA may have discretion as to the timing of such evaluations, it does not have the discretion to categorically refuse to conduct any such evaluations.”

In addition, Chief Judge Bailey refused to strike the plaintiffs’ request for injunctive relief.

Given the enormous implications of this case for EPA and for regulated entities, this decision marks, as the saying goes, merely the end of the beginning for Murray Energy Corp. v. McCarthy.

Also published by Forbes.com at WLF’s contributor site