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Wednesday, December 11, 2019

From Zero Hedge:

Update: IG Horowitz told Congressional investigators on Wednesday that FBI officials should have seriously reconsidered their surveillance efforts on former Trump campaign aide Carter Page in early 2017, when information they gathered cast significant doubt on their legal justification to surveil him, according to Bloomberg.

Horowitz also said that the FBI misled the FISA court in order to keep spying on Page.

"I don’t think the Department of Justice fairly treated these FISAs, and he was on the receiving end of them," he said.

At one point Sen. Ted Cruz (R-TX) asks, "A lawyer at the FBI creates fraudulent evidence, alters an email that is in turn used as the basis for a sworn statement to the court that the court relies on. Am I stating that accurately?" to which Horowitz responds: "That's correct. That's what occurred."

Then there's this gem:

***

While every painful second of every individual's testimony during the impeachment hearings was relayed and narrative-managed by the mainstream media (and still failed to increase public awareness, let alone support for the Democrats' plan), interested viewers were hard-pressed to find Justice Department Inspector General Michael Horowitz testimony before the Senate Judiciary Committee (on his findings regarding alleged surveillance abuse during the 2016 election) anywhere on the mainstream.

There are plenty of nuggets to enjoy - if you can find a live stream (here) - but this one was particularly noteworthy.

A day after a smug-sounding James Comey tweeted that the IG's report vindicated him:

“So it was all lies. No treason. No spying on the campaign. No tapping Trumps wires. It was just good people trying to protect America.”

Howoritz, in one short sentence, destroyed the former FBI Director's credibility by explaining simply...

"I think the activities we found here don't vindicate anybody who touched this FISA."

As Mr. Horowitz wrote in his report, he lays the blame at the top (cough Comey cough):

“We are deeply concerned that so many basic and fundamental errors were made by three separate, hand-picked investigative teams; on one of the most sensitive FBI investigations; after the matter had been briefed to the highest levels within the FBI; even though the information sought through use of FISA authority related so closely to an ongoing presidential campaign; and even though those involved with the investigation knew that their actions were likely to be subjected to close scrutiny. We believe this circumstance reflects a failure not just by those who prepared the FISA applications, but also by the managers and supervisors in the [investigation’s] chain of command, including FBI senior officials who were briefed as the investigation progressed.”

As WSJ noted ironically, Mr. Comey’s memoir, “A Higher Loyalty,” relates how as FBI director he kept on his desk a copy of the October 1963 memo from J. Edgar Hoover asking for permission to wiretap Martin Luther King. He claims he did so to help ensure the bureau would never forget how a “legitimate counterintelligence mission . . . morphed into an unchecked, vicious campaign of harassment and extralegal attack.”

Mr. Horowitz’s findings about what was done under Mr. Comey’s leadership suggest there’s still a need for such a reminder.

Finally, in case the entire "Russia, Russia, Russia" narrative of the last three years has just become too much for you, here is Senator Lindsay Graham, in two short minutes explaining the whole farce so clearly that we dare even the most dyed in the wool NeverTrumper to explain how this was not a clear act of sedition...

Of course, as Sen. Marsha Blackburn exzclaimed on Twitter, "The fact that CNN and MSNBC refused to run Lindsey Graham's opening statement uninterrupted, but is now carrying Senator Feinstein's, is proof that political bias is not isolated to the FBI."

Update: Horowitz says the Carter Page FISA warrant was based "entirely" on the debunked Steele dossier...

The AG’s costly, quixotic crusade against Exxon

From NY Daily News:

A historic hybrid of political grandstanding and legalese has finally come to a close. After four years of litigation, reams of documents, a laundry list of failed legal theories and countless taxpayer-funded court resources, the New York Attorney General’s embarrassing climate change case against ExxonMobil is over.

Manhattan Supreme Court Justice Barry Ostrager admonished the state’s lawyers while ruling in Exxon’s favor, saying that New York failed to provide evidence that “ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor.”

Calling the lawsuit “meritless,” “bizarre,” “twisted” and outside the realm of “objectivity and fairness” at the trial’s opening arguments, Exxon’s lawyer, Theodore Wells Jr., defended the company against the AG’s demand for up to $1.6 billion in payouts. Lawyers for the AG lobbed allegations that ExxonMobil has deceived the public and investors for years by misrepresenting financial risks related to current and future climate change-related regulations. The case, said Wells, was the result of a “political alliance with activists for the purpose of advancing an agenda.”

How did we get here? In early 2015, Rockefeller Family Fund director Lee Wasserman met with then-AG Eric Schneiderman’s office to urge the ideologically-aligned prosecutor to use New York’s powerful Martin Act to probe the company for allegedly denying the impact of climate change on its assets. That November, the now disgraced ex-AG officially announced an investigation.

By using the Martin Act, a near-century old financial fraud statute — referred to as the “state’s most notorious” and “due-process-neglecting law” — the Empire State’s lead lawyer is able to assert authority without having to prove intent. And, of specific interest to headline-hunting pols like Schneiderman, the law allows the AG to keep an investigation secret or openly try a case in the press.

[More Opinion] Oh, the shooters weren’t white supremacists? Let’s focus on anti-Semitism no matter which end of the spectrum it comes from »

Employing the Martin Act to score political points was not pioneered by Schneiderman and ExxonMobil was not his first target in the energy sector. At a time when the fracking industry drew the ire of like-minded politicos, Schneiderman went after natural gas-firms Anadarko and EOG, seeking information regarding their financial disclosure practices related to now-banned upstate fracking projects.

This vague law — allowing the NY AG to subpoena and pursue penalties without providing proof of fraudulent intent — bullies most defendants into settling. But ExxonMobil fought back, demanding public release of documents and emails involving Schneiderman, his staff, and central actors in the coordinated legal war against the energy giant. Those include Matthew Pawa, the activist trial lawyer involved in New York City’s now-dismissed (and on appeal) federal case against Big Oil and the Bloomberg-funded NYU State Environmental Impact Center, which paid the salary of one of the AG’s lawyers who signed the initial filing against Exxon.

Over the years, as theory after theory failed, the AG’s charge against the company mutated. After previous efforts came up short, Schneiderman’s successor Barbara Underwood filed the current suit, alleging that the company relies on lower estimates of the cost of complying with government regulations than the estimates it used to report costs to investors. In essence, the AG’s office oddly claimed the company lied internally yet told the truth in public statements.

[More Opinion] Five things America can do to prevent the next anti-Semitic attack »

“I want to talk about the elephant in the room. Why would the New York Attorney General bring such a meritless case?” ExxonMobil’s lawyer asked the court.

Lo and behold, at the 11th hour, the AG withdrew all but one of their claims that the company allegedly misled investors. All three of the state’s shareholder witnesses could not credibly prove they were deceived or faced material harm. In dropping these charges, the AG’s lawyers admitted that their case lacked any real evidence of wrongdoing.

Only the claim under the Martin Act remained intact. Still, the judge did not buy it.

[More Opinion] Trump’s huge hypocrisy on anti-Semitism »

Truth is, tarnishing the company in the court of public opinion is what Schneiderman and his allies were after all along. If that isn’t abuse of that Martin Act, one of the nation’s most powerful laws, I don’t know what is.

When it comes to partisan prosecutions and petty politicking New Yorkers always seem to get a front-row seat. Shame on the current AG for keeping up this charade. We are happy to see that the judge saw through this baseless scheme and finally put an end to this ridiculous and wasteful case.

Tom Stebbins is executive director at the Lawsuit Reform Alliance of New York.

Who is Kyle Bass and Why is He Filing so Many IPR Petitions?

From Juristat:

IPR challenges arise most often when a party is sued for patent infringement and the defendant files an IPR petition to have the patent, or at least the claims at issue, invalidated. This scenario is the one that most legislators who drafted the America Invents Act had in mind when they established IPR as a quicker and cheaper alternative to federal district court litigation. Kyle Bass, the Dallas-based hedge fund manager and president of Hayman Capital, has found a more creative use for IPR. Hailed by many as a visionary, Bass rose to prominence after predicting several large-scale economic events, including the subprime mortgage crisis of 2008. In February of 2015, he announced that his next venture would be a foray into the world of pharmaceutical patents.
Bass’s latest strategy is to file and publicize IPR challenges against pharmaceutical patents, betting that the threat of invalidation will cause the parent company’s stock prices to drop. He then either short sells that company’s stock or invests in other companies that would profit if the patents at issue were invalidated. There is evidence that this strategy works, as Bass’s first IPR challenge against Acorda Therapeutics caused its shares to drop by 9.65%. Because pharmaceutical companies enjoy a 20-year period of market exclusivity while their patents are in force before generics can be sold, drug prices during that period are artificially high. Accusing pharmaceutical companies of holding “BS patents,” Bass believes that invalidating them, or at least causing their stock prices to drop through the threat of invalidation, will result in lower drug prices. To demonstrate this ostensible concern for the consumer, Bass even formed an entity called the “Coalition for Affordable Drugs” to be the petitioner in his IPR challenges. As of the date of publication, Bass has filed 32 such petitions.

The main issue for patent observers is whether Bass’s actions are an abuse of post-grant PTAB proceedings. The legislative history of the AIA shows that IPR was established to give those with grievances an inexpensive, efficient forum in which to challenge a patent. Gene Quinn, patent attorney and editor of IPWatchdog.com, argues that it’s hard to believe Congress intended to allow pharmaceutical companies to be subjected to a challenge by an entity that would not have standing to sue in federal district court. However, if Congress wanted to limit IPR petitioners to those who had a vested interest in the case it could have done so, like it did with Covered Business Methods challenges. Unsurprisingly, many in the pharmaceutical industry view Bass’s tactics as abuse and harassment, alleging that he has no real interest in lowering drug prices, but is only in it for personal profit. Acorda Therapeutics CEO Ron Cohen contends that Bass is nothing more than a “reverse patent troll.” This argument is bolstered by Bass’s partnership in this venture with Erich Spangenberg, former head of IPNav, a firm widely regarded as one of the largest patent trolls in operation.

Bass’s tactics are pushing some into action. On July 28, 2015, Celgene Corporation filed a motion for sanctions against the Coalition under a theory of abuse of process. Celgene argues that IPR was designed as an expeditious and less costly alternative to federal district court litigation and not as a tool to affect the stock prices of public companies for financial gain to the detriment of those companies and the investing public. In reply, the Coalition contends that the motivation behind nearly every patent infringement suit and IPR challenge is profit and that it is in the public interest for economically motivated actors to challenge patents. The USPTO does have discretion to issue sanctions for abuse of process, among other infractions, but the Coalition argues that, because the AIA permits any party to file IPR challenges regardless of economic motivation, a dismissal sanction would amount to an impermissible substantive rule that changes existing law governing an individual’s standing to file an IPR petition.

On August 25, 2015, while the motion for sanctions was pending, the PTAB denied the Coalition’s IPR petitions challenging two patents owned by Acorda Therapeutics, finding that the prior art relied upon in the petitions was not sufficiently available to the public to qualify as prior art. The prior art in question was two posters the patent owner had displayed at industry meetings. This ruling caused Acorda’s stock to immediately trade up by 29%. On September 3, 2015, the PTAB once again denied the Coalition’s petition for IPR challenging a patent owned by Biogen. This time the prior art submitted by the Coalition was a description of a placebo-controlled trial of a novel oral agent, which allegedly rendered the claims of Biogen’s patent obvious. The PTAB held that this trial did not qualify as prior art because it had not been made of record, among other findings.

Congress has also taken steps against Bass’s tactics through several patent reform bills, including the Innovation Act (H.R. 9) and the STRONG Patents Act (S.632). The Innovation Act was introduced in February of 2015 and, among various other changes, would bar the institution of IPR unless the petitioner certifies that it and any real parties in interest do not own and will not acquire a financial instrument that is designed to hedge or offset any decrease in the market value of an equity security of the patent owner.The Innovation Act was approved by the House Judiciary Committee in June and was scheduled for a floor vote in July, but this has been postponed due to rising bipartisan opposition to some of the bill’s terms. The STRONG Patents Act goes even further than the Innovation Act. Introduced in March of 2015, it establishes a presumption of validity in IPR proceedings, raises the burden of proof to clear and convincing evidence, and limits standing to file a petition to those who have been sued for infringement of the patent in question. The STRONG Patents Act is still in committee as of the date of publication.

Despite a series of early setbacks, Bass appears to be gaining ground through a series of favorable PTAB decisions. On September 25, 2015, the PTAB denied Celgene’s motion for sanctions, essentially restating the Coalition’s argument that IPR is available to any party who is not the owner of a patent and that profit is at the heart of every IPR challenge, regardless of motive. The PTAB also rendered a decision to institute IPR proceedings on the Coalition’s petition against Cosmo Technologies on October 7, 2015, finding that there is a reasonable likelihood that it will prevail with respect to at least one of the challenged claims of the Cosmo patent. This is the first favorable decision on institution that Bass has received, indicating that more favorable decisions likely will follow.

Bass has raised many an eyebrow by testing the ethical limits of post-grant PTAB proceedings, and has lost several battles in his war against the pharmaceutical industry, with early defeats casting doubt on his ability to succeed. Not only does his venture come during an era of rapid patent reform that could stop it in its tracks, but the PTAB itself does not seem impressed with many of his arguments thus far. However, recent wins have given his venture an air of legitimacy and have no doubt provided him a renewed sense of purpose. The current state of affairs is looking up for Mr. Bass, but his foray into the world of patent litigation is just beginning and many more challenges lie ahead.

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Wednesday, December 11, 2019

The AG’s costly, quixotic crusade against Exxon

Who is Kyle Bass and Why is He Filing so Many IPR Petitions?