The National Law Forum

Supreme People’s Court Upholds China’s First Patent Linkage Ruling – Decision Released

On August 28, 2022, 知识产权那点事 published the first patent linkage decision from the Supreme People’s Court (SPC). The SPC upheld the Beijing IP Court ruling that Wenzhou Haihe Pharmaceutical Co., Ltd.’s application for marketing authorization for a generic form of “Aidecalcidol Soft Capsule” did not fall within scope of protection of the relevant patent. China’s patent linkage system prevents marketing authorization for a generic prior to the expiration of the patent term on the branded equivalent unless the Beijing IP Court or the China National Intellectual Property Administration (CNIPA) rules that the generic does not fall within the scope of the relevant patent rights or is invalid.

On November 10, 2021, the Beijing IP Court announced that the plaintiff of the case, Chugai Pharmaceutical Co., Ltd., a subsidiary of Roche, claimed that it was the patentee as well as the holder of the marketing license for the patented drug “Aidecalcidol Soft Capsule”, and the patent involved in the drug was CN 2005800098777.6 entitled “ED-71 preparation.” The plaintiff discovered that the defendant Wenzhou Haihe Pharmaceutical Co., Ltd. had applied to the National Medical Products Administration (NMPA) for a generic drug marketing license application named “Aidecalcidol Soft Capsule”. The public information on the Chinese listed drug patent information registration platform showed that the defendant had made a 4.2 category statement regarding the generic drug (the generic drugs do not fall into the scope of protection of the related patents). Therefore, the plaintiff filed a drug patent linkage lawsuit with the Beijing Intellectual Property Court in accordance with the provisions of Article 76 of the Amended Patent Law, requesting the court to confirm that the generic drug “Aidecalcidol Soft Capsule” that the defendant applied for registration fell into the scope the rights of Patent No. 2005800098777.6 enjoyed by the plaintiff.

The Beijing IP Court held:

The technical solution used by the generic drug involved is neither the same nor equivalent to the technical solution of claim 1 of the involved patent, so the technical solution does not fall within the protection scope of claim 1 of the involved patent. Since claims 2-6 are dependent claims of claim 1, if the technical solution of the generic drug involved does not fall within the protection scope of claim 1, it also does not fall within the protection scope of claims 2-6. Accordingly, the plaintiff’s claim that the involved generic drug falls within the protection scope of claims 1-6 of the involved patent cannot be established, and the court will not support it.

In the decision, the Supreme People’s Court stated there were two key points:

1. In the process of drug marketing review and approval, disputes arising from the patent rights related to the drug to be registered between the drug marketing license applicant and the relevant patentee or interested parties are only one type of the related patent rights between the two parties – often referred to as drug patent link disputes. For chemical generic drugs, the drug regulatory department of the State Council conducts drug marketing review and approval based on the application materials of the generic drug applicant, and decides whether to suspend the approval of the relevant drugs according to the effective judgment made by the people’s court [or the China National Intellectual Property Administration] on such disputes within the prescribed time limit. Therefore, when judging whether the technical solution of a generic drug falls within the scope of patent protection, in principle, it should be compared and judged on the basis of the application materials of the generic drug applicant. If the technical solution actually implemented by the generic drug applicant is inconsistent with the declared technical solution, it shall bear legal responsibility in accordance with the relevant laws and regulations on drug supervision and administration; if the patentee or interested party believes that the technical solution actually implemented by the generic drug applicant constitutes infringement, a separate lawsuit for patent infringement may also be filed. Therefore, whether the technical solution actually implemented by a generic drug applicant is the same as the application materials is generally not within the scope of examination to confirm that the dispute falls within the scope of patent protection.

2. The court of second instance held that both the donation [to the public] rule and the estoppel rule can constitute a restriction on the application of the principle of equivalence, both of which aim to achieve a reasonable balance between equitably protecting the interests of the patentee and safeguarding the interests of the public. If the conditions for limiting the application of the principle of equivalence are met, there is usually no need to judge whether the two features constitute similar means, functions, and effects, and whether those skilled in the art can conceptualize them without creative work. In this case, since Haihe Company claimed the application of the estoppel rule by virtue of the amendment of the claims by Chugai Pharmaceutical Co., Ltd., and claimed the application of the donation rule by the patent text as the result of the amendment, the court of second instance first rendered a judgment on whether the rules on estoppel should be applied on the basis of the amendment of the claims by the patentee.

The case numbers are:

北京知识产权法院（2021）京73民初1438号民事判决书

最高人民法院（2022）最高法知民终905号民事判决书

The full text of the decision courtesy of 知识产权那点事 is available here (Chinese only).

Article By Aaron Wininger of Schwegman, Lundberg & Woessner, P.A.

For more intellectual property legal news, click here to visit the National Law Review.

SEC Proposes to Clear-Up Clearing Agencies’ Governance to Mitigate Directors’ Potential Conflicts of Interest

Clearing agencies registered with the Securities and Exchange Commission (SEC) will have to make governance changes to their boards of directors under a new rule proposed by the SEC on August 8, 2022.

The SEC proposed the new rule¹ to mitigate the conflicts of interests inherent in clearing agency relationships. The rule follows episodes of market volatility in 2021 that included large fluctuations surrounding COVID-19 and the meme stock craze.

The new rule would amend Section 17Ad-25 of the Securities Exchange Act of 1934 (Exchange Act) to require additional management and governance requirements for clearing agencies that register with the SEC. The proposed rules provide specific new governance requirements on clearing board composition, independent directors, nominating committees and risk management committees. The rule also requires the board to oversee relationships with critical service providers and includes a board obligation to consider various stakeholder views and inputs.

Rationale

The SEC’s rationale for proposing Rule 17Ad-25, titled Clearing Agency Governance and Conflicts of Interest, is to reduce the risk that conflicts of interest inherent in various clearing agency relationships substantially harm the security-based swaps or larger financial market. The SEC is proposing this rule to mitigate conflicts of interest, promote the fair representation of owners and participants in the governance of a clearing agency, identify responsibilities of the board, and increase transparency into clearing agency governance.

The SEC noted that those episodes of increased market volatility revealed certain vulnerabilities in the US securities market and the essential role clearing agencies play in managing the risk if securities transactions fail to clear.

The SEC observed three potential sets of conflicts of interest that the proposed rule attempts to address.

The proposed rule addresses the different perspectives the various stakeholders involved in clearing agencies might have. In particular, a clearing agency owner’s potential interest in protecting the equity and continued operation of the clearing agency diverges from a participant’s potential interest in avoiding the allocation of losses from another defaulting participant. For instance, in the event of a loss, clearing agency participants might prefer to limit access to clearing, while owners may choose to expand the scope of products offered to collect fees.
Larger clearing agency participants’ priorities may diverge significantly from the interests of smaller clearing agency participants. In particular, when a small number of dominant participants exercise control over a registered clearing agency concerning services provided by that clearing agency, those participants might promote margin requirements that are not commensurate with the risks they take, thereby indirectly limiting competition and increasing profit margins for themselves. In other words, a registered clearing agency dominated by a small number of large participants might make decisions designed to provide them with a competitive advantage.
Certain participants may exert undue influence to limit access to the clearing agency based on their own interests, and thus could limit the benefits of the clearing agency to indirect participants.

Rule Requirements

The proposed rule would impose these seven requirements:

define independence in the context of a director serving on the board of a registered clearing agency and require that a majority of directors on the board be independent, unless a majority of the voting rights distributed to shareholders of record are directly or indirectly held by participants of the registered clearing agency, in which case at least 34 percent of the board must be independent directors;
establish requirements for a nominating committee, including with respect to the composition of the nominating committee, fitness standards for serving on the board, and documenting the process for evaluating board nominees;
establish requirements for the function, composition, and reconstitution of the risk management committee;
require policies and procedures that identify, mitigate or eliminate, and document the identification and mitigation or elimination of conflicts of interest;
require policies and procedures that obligate directors to report potential conflicts promptly;
require policies and procedures for the board to oversee relationships with service providers for critical services; and
require policies and procedures to solicit, consider, and document the registered clearing agency’s consideration of the views of its participants and other relevant stakeholders regarding its governance and operations.

The proposing release will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days following publication of the proposing release on the SEC’s website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.

FOOTNOTES

¹https://www.sec.gov/rules/proposed/2022/34-95431.pdf

Article By Susan Light of Katten. Jacob C. Setton, an associate in the Financial Markets and Funds practice and candidate for admission to the New York State bar, also contributed to this advisory.

For more SEC and securities legal news, click here to visit the National Law Review.

FDA Publishes 2022 Retail Food Program Standards

On August 24, 2022, FDA announced that it had published the 2022 edition of its Voluntary National Retail Food Regulatory Program Standards (Retail Program Standards). The standards are intended to provide information on the key elements of an effective retail food regulatory program for local, tribal, state, and territorial regulatory agencies.
The Retail Program Standards provide recommendations for creating and managing retail food regulatory programs. Recommendations include how to provide effective inspections, reinforce proper sanitation, implement foodborne illness prevention strategies, and identify areas for improvement.
This year’s edition of the Retail Program Standards considers comments that were made during the Conference for Food Protection 2020 Biennial meeting, including reformatted curriculum forms and alternative sampling methods. A list of jurisdictions currently enrolled in the Retail Program Standards is available here.
Article By Food and Drug Law Practice Group at Keller and Heckman LLP

For more food and drug law legal news, click here to visit the National Law Review.

DHS Proposes Rule Updating I-9 Verification Requirements

On August 18, 2022, the Department of Homeland Security (DHS) published a proposed rule in the Federal Register that would grant it broader authority to permit alternative document inspection procedures for I-9 document verification in lieu of the physical inspection requirement.

In response to the COVID-19 pandemic, DHS implemented temporary accommodations for remote I-9 document inspection in order to encourage social distancing and remote work. These accommodations have been extended several times, and currently remain in effect until October 31, 2022. While the proposed rule does not directly make these accommodations permanent, it does codify into the regulations the agency’s authority to set forth either temporary or permanent alternative document inspection procedures.

The proposed rule provides significant flexibility to DHS in determining whether, when, and how to implement alternative examination procedures. According to the proposed rule, DHS may implement new examination options as part of a limited pilot program, upon the agency’s determination that such alternative procedures would not diminish the security of the I-9 verification process, or as a temporary measure in response to a public health emergency.

The proposed rule also includes details about how DHS may implement future document inspection changes, including:

limiting implementation only to employers enrolled in E-Verify
updating document retention requirements
changing the Form I-9 to allow employers to clearly note the use of alternative examination procedures

Now that the proposed rule has been published in the Federal Register, the public will have a 60-day comment period to provide feedback on the proposal as well as comments on how DHS may use this additional authority to make I-9 document inspection easier for employers. After the public comment period closes, DHS will have the opportunity to review and analyze all comments provided and, should the agency decide to move forward with the regulation, proceed with publishing the final rule.

Article By Derek J. Maka of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For more immigration legal news, click here to visit the National Law Review.

Do I Have to Sign Over All My Assets when I Enter a Long-Term Care Facility?

I get asked some version of this question fairly frequently. I generally reassure clients that most facilities simply require you to pay month-to-month, and you can leave at any time. Now I may have to change my response, as news broke this week that a New Jersey woman allegedly had all her assets stolen by the very entity she trusted to care for her.

The woman entered a facility for a short-term rehab stay with every intention of returning home. Apparently the facility thought otherwise, as they enlisted a financial company to “assist” the woman in liquidating her assets to pay for her facility care and spend down to apply for Medicaid. I and other elder lawyers, along with several consumer protection agencies in the state, have long warned consumers about nonlawyer Medicaid advisors. These entities work closely with the nursing home industry, often having the same ownership and leadership. In this case, the POA is both an officer with the facility and the principal of the Medicaid advisor company that was hired to make the resident Medicaid eligible without her knowledge.

Some facilities require or coerce residents to hire these Medicaid advisors to prepare Medicaid applications for them. Unfortunately, they are not lawyers, and their allegiance is clearly to the facilities and not the residents or their families. Therefore, they fail to advise residents of opportunities to protect assets or income. Even worse, in many cases they failed to complete or submit the application or did so in a negligent manner, resulting in the application being denied. But unlike when an attorney messes up, there is no recourse for families, as these entities do not carry malpractice insurance. Sometimes the Medicaid advisor will simply close up shop and disappear – only to resurface later with a different organization.

There have been prior reports of facilities and the Medicaid advisors they work with requiring residents to sign POAs and even accessing resident accounts through questionable means. These latest allegations, however, bring this situation to a new level. It is alleged that the resident was forced to sign a POA when she did not have the capacity to do so due to medications she was prescribed. It was further alleged that Future Care Consultants liquidated the resident’s assets without her knowledge, and the funds were not returned when she left the facility. The family also alleges they were prevented from visiting or communicating with the resident.

The allegations are reminiscent of the movie I Care a Lot, which I have previously criticized as being completely unrealistic. However, in recent months, I have had clients report they were threatened by facilities if they used the services of an attorney. It is essential that consumers know their rights. You cannot be required to sign a POA. You cannot be forced to hire anyone to file your Medicaid application. And you cannot be prevented from using an attorney if you wish to do so.

Article By Shana Siegel of Norris McLaughlin P.A.

For more family law legal news, click here to visit the National Law Review.

What’s in the American Data Privacy and Protection Act?

Congress is considering omnibus privacy legislation, and it reportedly has bipartisan support. If passed, this would be a massive shake-up for American consumer privacy, which has been left to the states up to this point. So, how does the American Data Privacy and Protection Act (ADPPA) stack up against existing privacy legislation such as the California Consumer Privacy Act and the Virginia Consumer Data Protection Act?

The ADPPA includes a much broader definition of sensitive data than we’ve seen in state-level laws. Some notable inclusions are income level, voicemails and text messages, calendar information, data relating to a known child under the age of 17, and depictions of an individual’s “undergarment-clad” private area. These enumerated categories go much further than recent state laws, which tend to focus on health and demographic information. One asterisk though – unlike other state laws, the ADPPA only considers sexual orientation information to be sensitive when it is “inconsistent with the individual’s reasonable expectation” of disclosure. It’s unclear at this point, for example, if a member of the LGBTQ+ community who is out to friends would have a “reasonable expectation” not to be outed to their employer.

Like the European Union’s General Data Protection Regulation, the ADPPA includes a duty of data minimization on covered entities (the ADPPA borrows the term “covered entity” from HIPAA). There is a laundry list of exceptions to this rule, including one for using data collected prior to passage “to conduct internal research.” Companies used to kitchen-sink analytics practices may appreciate this savings clause as they adjust to making do with less access to consumer data.

Another innovation is a tiered applicability, in which all commercial entities are “covered entities,” but “large data holders” – those making over $250,000,000 gross revenue and that process either 5,000,000 individuals’ data or 200,000 individuals’ sensitive data – are subject to additional requirements and limitations, while “small businesses” enjoy additional exemptions. Until now, state consumer privacy laws have made applicability an all-or-nothing proposition. All covered entities, though, would be required to comply with browser opt-out signals, following a trend started by the California Privacy Protection Agency’s recent draft regulations. Additionally, individuals have a private right of action against covered entities to seek monetary and injunctive relief.

Finally, and controversially, the ADPPA explicitly preempts all state privacy laws. It makes sense – the globalized nature of the internet means that any less-stringent state law would become the exception that kills the rule. Still, companies that only recently finalized CCPA- and CPRA-compliance programs won’t appreciate being sent back to the drawing board.

Read the bill for yourself here.

Article By Blair Robinson, a non-lawyer intern in the Data Privacy & Cybersecurity Practice Group at Robinson & Cole LLP

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

How To Help a Jury Understand Complex Litigation

We hear this quite a bit from our clients. An attorney, when introducing us to his pending complex litigation matter, tells us up front, “This is a complicated case.” It’s code for, “I don’t think jurors will understand this case.”

We hear it again in opening statements: “This is a complicated case.” So now, the attorney knows it’s a complicated case; the consultants know it’s a complicated case; the jurors know it’s a complicated case. Great. What now?

Here are a few ideas to help you connect your complex litigation to the jurors and make them more comfortable hearing it.

Change the Question

Instead of asking, “How can I make jurors understand my complex case?”, how about asking, “How can I simplify my case for the jurors (and the judge and the witnesses)?” This basic reframing can change your focus—instead of concentrating on the complexity, you and your team begin to think about simplification. There’s a big difference.

Don’t Tell the Jury It’s a Complicated Case

When you tell a juror the case is complicated, they hear one of two things: “They think I’m too stupid to understand this” or “This is going to be way above my head.” The first can cause them to feel offended and the second tends to stop them from listening. Finding ways to explain the unfamiliar in familiar terms helps them understand the concepts underlying your case. Characterizing the case does no good for anyone.

Tell the Jury a Story

Try thinking about your case as a story: What tale do you want to tell? Or think of it this way: If someone at a dinner party asked about your case, what would your side of the story sound like?

We all think in stories, especially from the jury box. Jurors want to know what happened between these opposing parties that landed them in court, not a list of evidence and intricate facts. Instead, tell a story that answers jurors’ questions about motives for the lawsuit and the significance of your case, which should (again) simplify the details. Talking in stories makes your complex litigation more jury-friendly.

There’s a saying that goes, “What you focus on expands.” Ultimately, the key to helping jurors understand your complicated case lies in focusing not on its complexity, but on its simplicity.

Article By Robert Gerchen of IMS Consulting & Expert Services

For more litigation legal news, click here to visit the National Law Review.

The Inflation Reduction Act: How Do Tribal Communities Benefit?

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”), ushering in substantial changes for tax law, climate resilience, healthcare, and more in the United States. According to the Biden administration’s press release, the new $750 billion legislation aims to lower everyday costs for families, insist that corporations pay their fair share, and combat the climate crisis. During the signing ceremony, President Biden stated, “With this law, the American people won and the special interests lost […] For a while people doubted whether any of that was going to happen, but we are in a season of substance.”

Notably, the legislation provides significant provisions for tribal communities and the Bureau of Indian Affairs. Once the funding is appropriated by Congress, it will be directed toward drought mitigation programs, fish hatcheries, modernization of electric systems, and more for Native communities, including ones in Alaska and Hawaii.

How the Inflation Reduction Act of 2022 Supports the Environment and Tribal Communities

The Inflation Reduction Act of 2022 contains an array of provisions, including the reduction of drug prices, the lowering of energy costs, and, notably, federal infrastructure investments that benefit Native communities. Andrew M. VanderJack and Laura Jones, Co-Coordinators of Van Ness Feldman’s Native Affairs Practice, highlight the most significant facets of the bill: “This legislation provides some opportunities specifically for tribes and tribal entities, including programs related to climate resiliency and adaptation, electrification, and drought relief. For example, the Emergency Drought Relief program for Tribes extends direct financial assistance to tribal governments to address drinking water shortages and to mitigate the loss of tribal trust resources.”

Pilar Thomas, Partner in Quarles & Brady’s Energy, Environment & Natural Resources Practice Group, expanded on the most significant inclusions for Tribes: “[…] the creation of a Direct Pay tax credit payment program that allows Tribes to receive a payment equal to the clean energy technology tax credits – especially for solar, wind, storage, geothermal and EV charging stations; […] direct funding for electrification and climate resiliency through DOI and USDA; […] access to the greenhouse gas reduction fund, environmental and climate justice grants; and expanded energy efficiency tax benefits and rebates for tribes and tribal members.”

“Tribal governments are also eligible to apply for other programs such as the Clean Vehicle Credit program, the Energy Efficient Commercial Buildings Deduction, and the State and Private Forestry Conservation Programs,” noted Mr. VanderJack and Ms. Jones.

How the 2022 Inflation Reduction Act Has Been Received by Tribal Communities

The 2022 Inflation Reduction Act has received a warm reception from groups such as the National Indian Health Board and Native Organizers Alliance, who laud the bill’s potential to improve environmental, medical, and economic conditions for tribal communities, some of whom still lack access to electricity or clean water. The increase in funding will allow tribes to use green energy technology to increase climate resilience and decrease individual energy costs, while reducing the effects of environmental racism with risk assessments for drinking water and climate hazards. These infrastructural changes will stimulate economic development by creating new jobs. “With critical investments in the Inflation Reduction Act, we’re making sure the federal government steps up to support Native-driven climate resilience, advance tribal energy development, and fulfill its trust responsibility to Native communities,” said Senator and Senate Committee on Indian Affairs Chairman Brian Schatz.

“This legislation will result in hundreds of millions of funding available for Tribes, and non-profits that work with tribes and tribal communities to support the clean energy transition for tribal communities, reduce energy costs for tribal members, and create jobs,” said Ms. Thomas of Quarles & Brady. “The IRA will provide a substantial down payment for every tribe to take advantage of clean energy technologies, energy efficiency and energy savings, and climate resilient solutions for their communities and tribal members individually. The new projects, technology implementation and economic development opportunities are substantial and will create long term community and economic development sustainable improvements in tribal communities.”

Some groups feel that the new legislation does not go far enough. In an open letter to President Biden, Senate Majority Leader Chuck Schumer, and House Speaker Nancy Pelosi, Indigenous-led advocacy organization NDN Collective argued that Congress’ hesitance to fully reject fossil fuels undermines the stated goals of addressing climate change, a misstep that could disproportionately affect tribal communities at the frontlines of the environmental crisis. “We believe that moving away from investments in the fossil fuel and other extractive industries and reallocating the funding to further research and development will help us find the solutions we need for true decarbonization and large-scale equitable carbon emissions reductions,” the collective stated. “We are already aware of innovative, Indigenous-led solutions that just need the proper funding and support to be scaled and replicated.”

Challenges in Getting the 2022 Inflation Reduction Act Passed

Up to this point, the Inflation Reduction Act has faced significant challenges in Congress. The legislation is the product of extensive compromise over the Build Back Better Act within the Democratic party. The Build Back Better Bill was initially estimated to cost over $3 trillion, and ultimately, the Inflation Reduction Act was passed with a budget of $750 billion. Senator Joe Manchin of West Virginia held back his support of the bill until late July, and Republicans successfully blocked an aspect of the bill that would have capped the price of insulin for Americans with private health insurance. When presented to Congress, the vote was split by party lines with every Republican voting against the bill. Biden has criticized Republicans for this decision, saying at the signing of the Inflation Reduction Act, “every single Republican in the Congress sided with the special interests in this vote — every single one.”

Challenges for tribal governments remain as well, specifically concerning the IRA’s implementation. “Despite the incredible opportunity for tribes, major barriers remain including tribal internal capacity and capabilities, [and] federal regulatory hurdles (such as BIA leasing and easement approvals),” said Ms. Thomas.

“[…] Navigating the complexities of each program and actually obtaining funding is always the challenge,” said Mr. VanderJack and Ms. Jones of Van Ness Feldman. “Tribes and tribal entities should engage directly, whenever possible, with the grant funding agencies to make sure proposals are tailored to fit both program requirements and community needs.”

Early Assessment of How the IRA will Impact Tribal Communities

The Inflation Reduction Act, ultimately, provides meaningful resources and investments for tribal communities in a variety of ways. While the provisions are not as significant as COVID-19 relief and infrastructure funding that tribal governments have received in previous years, the new legislation is nonetheless beneficial. “While the federal grant funding is relatively small, the potential major impact is the ability to access funding through tax credit payments and rebates,” said Ms. Thomas. “This mechanism is critical as it is simplifies tribes’ access to funding (rather than, for example, seeking to obtain funding through the competitive grant programs).”

Article By Chandler Ford, Casey Karthaus, Crissonna Tennison, and Shelby Garrett of The National Law Review / The National Law Forum LLC.

For more tribal law / indigenous peoples legal news, click here to visit the National Law Review.

School Law Update: CDC Adjusts Direction on Exposure Quarantine Requirements for Employees

CDC Adjusts Direction on Exposure Quarantine Requirements for Employees

On August 11, 2022, the CDC updated its COVID-19 guidance as the risk of severe illness, hospitalization, and death from COVID exposure has significantly declined. More specific guidance for school districts was issued by the CDC, which can be found here.

In addition, the Department of Public Instruction has published guidance entitled “COVID-19 Infection Control and Mitigation Measures for Wisconsin Schools 2022/2023,” which can be found here.

While we published a Legal Update on the recent CDC guidance changes last week, that Update primarily focused on the private sector. This Update is primarily focused on the impact the new CDC guidance will have on school districts and identifies some of the key changes.

The more significant mask guidance has been reduced. Guidance now indicates that if COVID-19 is at a high Community Level, universal indoor masking in schools is recommended. The CDC also recommends masking in health care settings such as the school nurse’s office. The updated CDC guidance makes significant changes to quarantine and isolation protocols. Asymptomatic (exposed) children and staff, regardless of where the exposure occurred or vaccination status, no longer need to quarantine. Students or staff who self-identify as close contacts may continue to attend school/work if they remain asymptomatic.

Students or staff who come to school with symptoms or develop symptoms while at school should be asked to wear a well-fitting mask or respirator while in the building and be sent home. If testing is unavailable at school, students and staff should also be encouraged to get tested. Symptomatic people who cannot wear a mask should be separated from others as much as possible; children should be supervised by a designated caregiver who is wearing a well-fitting mask or respirator until they leave school grounds but masking with a high quality mask is suggested for 10 days from exposure.

If the school provides COVID-19 testing, a symptomatic student or staff member may remain in school if they are tested immediately onsite, and that test is negative. Best practice would include wearing a mask, if possible, until symptoms are fully resolved. If the student is “too ill” to be in school (fever, severe cough, vomiting, diarrhea, etc.), they should be sent home regardless of COVID-19 test results. If the symptomatic student or staff cannot be tested immediately, they should be sent home and encouraged to use an at-home-test-kit or be referred to a testing site.

Students and staff who test positive for COVID-19 should isolate for at least 5 days. If they are asymptomatic, they may end isolation after Day 5 (return Day 6). If they had symptoms, they may return to school/work after Day 5 if:

they are fever-free for 24 hours (without the use of fever-reducing medication)
their symptoms are improving

If the individual still has a fever or other symptoms have not improved, they should continue to isolate until the symptoms improve. Once isolation has ended, people should wear a well-fitting mask or respirator around others through Day 10. Testing is not required to determine the end of isolation or mask use following COVID-19 infection.

Article By James R. Macy, Ryan P. Heiden, and Anthony S. Wachewicz III of von Briesen & Roper, s.c.

For more coronavirus legal news, click here to visit the National Law Review.

Your Horse May Be Subject to IRS Seizure

The Internal Revenue Service (IRS) has broad powers to seize assets in payment of outstanding taxes including income tax, excise tax, employment tax, and estate and gift tax. Assets the IRS can seize in exercise of its levy power are those that constitute “property or rights to property” of the taxpayer as defined under local law. Equine industry assets that could be subject to seizure include real estate, equipment, and the horses themselves, although horses valued below $10,090 are exempt from levy. For example, in 2012 the IRS seized hundreds of horses to collect a tax debt from a defendant convicted of stealing millions of dollars in city funds. The defendant used the funds to finance the breeding and showing of American quarter horses. The government auctioned off more than 400 of the seized horses to pay the defendant’s outstanding federal tax obligation.

But because animals require food and veterinary care and could die, the IRS has specific procedures relating to the seizure of livestock, such as horses. If the horses are considered “perishable goods,” section 6336 of the Internal Revenue Code (the Code), which provides the statutory requirements for disposing of perishable goods, will apply. Under section 6336, if it is determined that the seized property is liable to perish, the IRS must appraise the value of the property and either return it to the owner or put it up for immediate sale. The Internal Revenue Manual (IRM) provides further guidance on what constitutes perishable property. IRM 5.10.1.7 (12-20-2019) says that the property must be tangible personal property and have a short life expectancy or limited shelf life.

Prior to July 1, 2019, the definition of perishable goods included property that may “become greatly reduced in price or value by keeping, or that such property cannot be kept without great expense.” Horses would seem to fit within either or both of these categories. Now, under the revised definition of perishable goods, a collection officer would have to show that the horse had a short life expectancy.

A revenue officer seeking to seize perishable property must determine that the property cannot be kept and sold at a public sale under normal sale time frames set forth in section 6335 of the Code. Despite the change in the definition of perishable goods in 2019, the IRM suggests that examples of property likely to perish “may be food, flowers, plants or livestock [emphasis added].” Once the revenue officer determines that the property is perishable, he must secure approval of this finding. The determination is subject to high-level IRS review and planning, including an estimate of the expected net sale proceeds to be received from a forced sale. If the revenue officer concludes that the property is not perishable, sale of the seized property must proceed under normal procedures and within the time frames set forth in the Code.

A recent Bloomberg news article reported that the U.S. government had seized a 15-year-old Holsteiner that had been purchased for $750,000. The horse was a champion show jumper. As might be expected, the cost of maintaining the horse was high. IRS agents determined it would cost $45,000-$50,000 a year to feed the horse, not including the medical costs it might incur. The IRS also learned the value of the horse had dropped sharply from its $750,000 purchase price. Thus, in an unusual deal, the government sold the horse to the taxpayer’s daughter (for whom it had been purchased originally) for $25,000.

The considerations, planning, coordination, documentation, and approval of these types of sales may discourage a revenue officer from seizing perishable property like horses where other assets may be levied more easily. Nonetheless, sometimes the IRS will take action to seize a horse perceived to be valuable, like with the Holsteiner, even if it is not deemed perishable under the Code definition.

Article By Barbara T. Kaplan and Scott E. Fink of Greenberg Traurig, LLP

For more tax law legal news, click here to visit the National Law Review.

The National Law Forum

Supreme People’s Court Upholds China’s First Patent Linkage Ruling – Decision Released

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