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Lorna Jane pays $5 million over false ‘anti-virus activewear’ claims

Lorna Jane Pty Ltd admitted that, between 2 and 23 July 2020, it falsely represented to consumers that its LJ Shield Activewear “eliminated”, “stopped the spread” and “protected wearers” against “viruses including COVID-19”. The misleading representations were made on in-store signage, on its website, on Instagram, in emails to consumers and in media releases.

The claims made by Lorna Jane about its LJ Shield Activewear included “Cure for the Spread of COVID-19? Lorna Jane Thinks So” and “LJ SHIELD is a groundbreaking technology that makes transferal of all pathogens to your Activewear (and let’s face it, the one we’re all thinking about is Covid-19) impossible by eliminating the virus on contact with the fabric”.

“Lorna Jane falsely promoted its LJ Shield Activewear as eliminating or providing protection from COVID amidst growing numbers of COVID-19 cases in Australia,” ACCC Chair Rod Sims said.

“The whole marketing campaign was based upon consumers’ desire for greater protection against the global pandemic.”

“The $5 million in penalties imposed by the Court highlights the seriousness of Lorna Jane’s conduct, which the judge called ‘exploitative, predatory and potentially dangerous’,” Mr Sims said.

Lorna Jane also admitted that it had falsely represented it had a scientific or technological basis for making the ‘anti-virus’ claims about its LJ Shield Activewear, when no such basis existed. The company admitted that it did not have any scientific testing results showing the effectiveness of LJ Shield Activewear on viruses, including COVID-19, nor did it have any scientific results or evidence which would establish the truth of the representations.

Lorna Jane also admitted that director and Chief Creative Officer, Ms Lorna Jane Clarkson, authorised and approved the LJ Shield Activewear promotional material, was involved in crafting the words and developing the imagery used in the marketing campaign, and personally made some of the false statements contained in a media release and an Instagram video.

The judge also said he had taken into account that ‘the conduct emanated from a high managerial level within the company’ and ‘was directed by Ms Clarkson’.

“This was dreadful conduct as it involved making serious claims regarding public health when there was no basis for them,” Mr Sims said.

“This type of conduct is particularly harmful where, as here, consumers cannot easily check or monitor the claims made.”

Before the start of a hearing on liability, Lorna Jane cooperated with the ACCC, making admissions and agreeing to make joint submissions regarding the imposition of penalties totalling $5 million.

The Court also ordered by consent that for a period of three years, Lorna Jane is restrained from making any “anti-virus” claims regarding its activewear clothing unless it has a reasonable basis for doing so, must publish corrective notices across the mediums utilised in the marketing campaign, must establish a consumer law compliance program, and must pay the ACCC’s costs.

Background

Lorna Jane is an Australian-owned company that manufactures and retails women’s activewear, founded by its co-director Lorna Jane Clarkson. It has 108 stores in Australia, as well as a number of international stores, including in the USA and New Zealand.On 17 July 2020, the Therapeutic Good Administration (TGA) issued three infringement notices to Lorna Jane in connection with its marketing campaign, with penalties totalling $39,960. The TGA’s infringement notices related to Lorna Jane’s failure to register goods on the Australian register of therapeutic goods, a breach of the advertising code and Lorna Jane’s failure to seek TGA approval prior to making certain claims.On 21 December 2020, the ACCC instituted proceedings against Lorna Jane Pty Ltd for alleged false and misleading claims and against Lorna Jane Clarkson for allegedly being knowingly concerned in the conduct.Lorna Jane claimed that the substance it marketed as “Lorna Jane Shield”, when sprayed on its activewear fabric, would eliminate viruses including COVID-19, when they came into contact with the fabric, protecting the wearer from contracting or spreading such dangerous viruses, including COVID-19. It described the technology as ‘ground breaking’, and claimed that the substance permanently adheres to the garments, making transferal of pathogens, including COVID-19, to the garments impossible, eliminating viruses on contact.These example images were used across various media that formed part of the LJ Shield Activewear marketing campaign in July 2020:Instagram:

Lorna Jane Instagram post 1
Lorna Jane Instagram post 2

Website advertising:

Lorna Jane website advertisement

 

In-store advertising:

Lorna Jane in-store advertisement

ACCC seeks leave to appear in Epic v Apple appeal

The ACCC has sought leave to appear at the hearing of Epic Games, Inc’s appeal to the Full Federal Court against an earlier Court decision to stay Epic’s proceedings against Apple Inc.

The ACCC seeks the Court’s leave to appear as an ‘amicus curiae’ (‘friend of the Court’), or to intervene as a non-party, to make submissions to the Full Court about the public policy in favour of disputes involving Australia’s competition laws being heard and determined by Australian courts.

Epic instituted proceedings in the Federal Court of Australia against Apple in November 2020, making allegations that Apple had engaged in anti-competitive conduct in breach of the Competition and Consumer Act (CCA) in relation to the App Store.

Apple sought a stay of these proceedings on the grounds that the commercial agreement between Apple and Epic requires all disputes between the parties to be determined in courts in the Northern District of California in the United States.

On 9 April 2021, Justice Perram granted the stay of the proceedings sought by Apple, on the basis that he did not consider Epic had shown there were strong reasons not to grant the stay. In reaching this conclusion, he indicated that he was troubled by the outcome, which would result in Epic’s claims under Australian competition law being determined by a foreign court.

Epic has appealed from that decision, and an expedited hearing before the Full Federal Court has been fixed for 9 June 2021.

“The ACCC has taken the unusual step of seeking leave to appear in this appeal because the stay application raises significant public policy issues about which, as the statutory agency responsible for administering Australia’s competition law, we believe we can be of assistance to the Court,” ACCC Chair Rod Sims said.

“This is a case filed in an Australian Court involving Australian consumers and raising significant issues under Australia’s competition laws. We believe it is in the public interest for significant competition law cases such as this case to be determined by Australian courts, given the outcome of such cases can have significant implications for the broader Australian economy.”

If granted leave to appear, the ACCC would not become a party to the proceedings, but would make submissions on limited issues.

The ACCC’s application for leave to appear is in respect of the appeal from the stay ordered by Justice Perram. At this stage, the ACCC has not sought leave to appear in the substantive proceedings in which Epic alleges that Apple has contravened the CCA.

Background

In November 2020 Epic instituted proceedings against Apple in Australia in relation to the removal of its game, Fortnite, from the Apple App Store. Epic alleges that Apple has breached the CCA by not allowing alternative app stores on its iOS operating system for Apple mobile devices, and by charging app developers a 30 per cent commission on in-app purchases of digital content.

Epic separately instituted proceedings against Apple in the US in August 2020 and the three week trial in the proceedings began on 3 May 2021.

The ACCC is seeking leave to appear as ‘amicus curiae’ (or ‘friend of the Court’) or alternatively leave to intervene as a non-party to the appeal. An amicus is a person who assists the court on particular points of law in a case, and who is not a party to the proceedings.

Further information about the ACCC guidelines on intervening in private proceedings is available on the ACCC website.

The ACCC recently released its second interim report as part of its inquiry into markets for the supply of digital platform services. It provides in-depth consideration of competition and consumer issues associated with the two key app marketplaces used in Australia, the Apple App Store and the Google Play Store.

Pfizer and BioNTech Claim Immunity from COVID-19 Vaccine Testing IP Claim

Pfizer and BioNTech recently asked the Southern District of California to dismiss a patent infringement claim from Allele Biotechnology related to Pfizer and BioNTech’s Covid-19 vaccine.

Allele holds a patent for a fluorescent protein called mNeonGreen, which causes some cells to glow when exposed to certain kinds of light.  Allele does not claim that mNeonGreen is used in the vaccine or was used by Pfizer and BioNTech to develop the vaccine, but rather that mNeonGreen is used in one of the clinical tests to detect the presence of antibodies in a patient that was given the Covid-19 vaccine.  A third party created a pseudo Covid-19 virus containing mNeonGreen, which then introduced to a sample of a patient’s blood cells.  If the patient has no antibodies to Covid-19, the pseudo virus will infect the blood cells and the cells will fluoresce, allowing the detection of the virus.  No fluorescence means that the cells were not infected with the virus, and that the patient therefore has antibodies to Covid-19.

Allele claims that mNeonGreen was used repeatedly throughout Pfizer and BioNTech’s vaccine trials and was referenced multiple times in their Emergency Use Application to the FDA.  At the same time, Allele filed suit against Regeneron, the maker of an experimental antibody cocktail found to be successful in treating Covid-19 (and was famously given to President Trump just days before Allele filed suit against Regeneron).  Allele claims that its product was infringed by both the antibody cocktail and the vaccine.

Pfizer and BioNTech argue that they fall within the safe harbor in 35 U.S.C. 271(e)(1), which allows the use of patented inventions for “uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs….”  Citing Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 671 (1990), Pfizer and BioNTech claim that they are permitted to “engage in otherwise infringing activities necessary to obtain regulatory approval,” including under their Emergency Use Application to the FDA.  Because Pfizer and BioNTech used mNeonGreen only in the context of clinical trials to asses the presence of Covid-19 antibodies, Pfizer and BioNTech argue that they fall within the safe harbor provision of the statute.

The hearing on Pfizer and BioNTech’s motion to dismiss is set for May 3.  Given the high stakes of the Covid-19 testing and vaccine market, it will certainly be closely watched.

CLM ContractPodAi Launches ‘Cloud’ in Major Expansion of Platform

CLM company ContractPodAi has launched ‘Cloud’, in what is a major expansion of the platform that streamlines a broad range of inhouse legal processes beyond contract management, and also provides the ability for inhouse lawyers to build their own no-code applications to use within the system.

For example, Cloud also allows teams now to better manage matters such as RFP review and IP portfolios, as well as the day to day contracting needs one would expect.

Sarvarth Misra, CEO of ContractPodAi, commented: ‘ContractPodAi Cloud is crafted according to the most advanced principles of modern legal design thinking. It puts the needs of corporate counsel at the centre of the technology experience.’

All well and good. But, how much of a change is this? And what does this mean for clients in practical terms? Artificial Lawyer caught up with Richa Kaul, ContractPodAi’s Chief Strategy Officer, to find out some more.

How is this different to what was there before?

This is a core change. ContractPodAi’s offering is changing in three main ways.

First, what we have now is one legal platform that supports in-house legal teams across their workload. The platform offers different modules or applications, one of which is contract management, to help legal teams streamline the management of their day-to-day legal scenarios.

Other pre-built applications beyond contract management include: RFP Review, IP Portfolio Management, Claims Management, Real Estate Portfolio Management, and more.

For example, the RFP review module automates workflows between legal, procurement, and the relevant function, and it creates a repository for RFP responses.

Another example is our IP portfolio management application, which enables better protection of IP rights via a centralised repository that abstracts data like jurisdictions and expirations for easy ongoing management, and more.

There is also a fully revamped user experience, [and] all processes and workflows are fully guided, with the user being presented at each stage with only their potential next steps (see screenshot below). This supports organic adoption for maximum impact to clients.

Then there is the Legal Application Launcher [which you can use to] build custom applications in minutes. This experience is made easy for non-technical audiences with guided forms and templates that take you step by step through the process of building a tailored application in a no-code format.

A client can use the legal application builder to address a frequent legal use case or manual-work-heavy task that they face and want to streamline and scale in a standardised way. This really applies to any task that they do often.

For example, the senior legal team members might be responsible for corporate governance or corporate secretarial administration. They can create a custom legal application that has a smart, fully searchable repository for all their Board documents, automated workflows for approval of Board minutes, e-sign for any corporate governance items that require attention, and even relevant tasks noted and managed in-platform.

More broadly, there is a foundation of technical tools underlying the ContractPodAi Cloud platform, which users can leverage towards their specific use cases and needs.

The foundational features include functions like smart repository, dynamic workflow builder, self-service document authoring from templates, AI review and extraction, advanced cognitive search, foreign language translation, visual reporting and analytics, and more.

Clients have the ability to use this toolkit in a tailored way against each of their legal scenarios.

BRYTER Bags $66m – In Legal Tech Funding Speed Record

Decision automation company BRYTER has bagged $66m in a Series B funding round, reaching $90m in total investment in just three years, making it by Artificial Lawyer’s reckoning the first legal tech company to reach this level of growth funding so rapidly from a standing start.

In fact, it’s quite possible that BRYTER, which is based in Berlin, but has offices in the US and UK, has now received more VC investment than the entire German legal tech sector combined over the same three year period.

The company currently has about 120 staff and will aim to grow to 200 by the end of this year. The additional money, which comes just eight months after the last round, will be partly invested into expansion in the US – the largest legal market on the planet.

The latest funding was led by New York based investment firm Tiger Global, with participation from existing investors Accel, Dawn Capital, Notion Capital and Cavalry Ventures. Ulf Zetterberg, the former CEO of legal AI company, Seal Software, has also become an investor and an advisor to BRYTER, although he made his investment a few months ago.

All in all, it’s quite an achievement, especially given that several no-code (or low code) legal tech companies that also help with decision automation pre-date BRYTER’s launch.

So, what is their secret sauce? How did BRYTER go from $0 to $90m funding in so short a time, and grow so fast, winning around 100 clients including ING, Telefonica, Baker McKenzie and PwC along the way?

As founder and CEO, Michael Grupp, explained to this site, their goal has been to focus on the stuff that may not seem exciting, but actually works and that really does provide ROI, because when you bring in no-code decision automation it speeds up processes and makes them easier for a business, and that in turn saves money. That money saving can be clearly explained to the company’s CFO and so support for BRYTER grows across a business.

Of course, that may sound simple, but turning complex processes into something that feels intuitive and provides a clearly tangible benefit has always been the Holy Grail of software companies.

‘There is no secret sauce for us, we just focus on a solution that brings ROI today. People want ROI and BRYTER just works,’ he said.

‘But, there is also something about timing, [to grow as we have] you need companies that are thinking about these things. You need GCs and heads of compliance to be thinking about [this kind of solution]. You need them to be looking at this process that currently costs X, and [considering that] with BRYTER it will now cost Y,’ he explained.

And there is a lot of truth to that. Being early, or being late, can be a cruel fact of life for many startups. BRYTER seemed to arrive just as no-code applications saw a surge of interest, and just as inhouse teams were really getting to grips with automation.

But, there is one other aspect – and it reminds Artificial Lawyer of what Agiloft’s CEO, Eric Laughlin, said to this site recentlyit’s also about having an enterprise mindset. I.e. to stop thinking small and to approach large businesses in the same way Salesforce approaches them.

As Grupp explained, any company with around $200m in revenue would be a good fit for BRYTER’s capabilities. And there are thousands of such companies across the planet. Not all legal tech companies think in this way. Although, to be fair, if your product is tailored for mostly the Top 50 largest transactional law firms in the world, then such an enterprise approach is tricky because the numbers are just not there.

Grupp added that the main investor in this round, Tiger Global, has a new multi-billion dollar fund and with their continued support ‘if we want to go big, we can’.

At this point, Artificial Lawyer asked: given how fast you are growing won’t you aim to sell soon, to benefit from that during a market that is hot for M&A? Grupp said: no, certainly not now. They have only been going for three years, the team is young and dynamic, and there is so much more expansion ahead of them. There is far more growth in the US to come, and then there is the Asia-Pacific region to expand into.

And when you hear how Grupp sees things you can understand that from his point of view this really is just the beginning. He points to RPA pioneer UiPath, which now has annual revenues of $0.6 billion, as a potential model for the path BRYTER could take in terms of future growth.

‘UiPath were ten years before us, they were the first wave, and we’d love to be in the second wave,’ Grupp concluded.

But, the last word goes to key investor, John Curtius, Partner at Tiger Global, who said in a statement: ‘BRYTER has all the characteristics of a top-tier software company: high quality product that solves a real customer pain point, a large market opportunity and a world-class founding team. The feedback from BRYTER’s customers was resoundingly positive in our research, and we are excited to see the company reach new heights over the coming years.’

Good luck to all the team at BRYTER. Their success is ultimately good news for many other companies in the legal tech world, as it is sending the message that software businesses that originate in the legal sector can have huge potential.

A Taxonomy of Contract Pre-Execution Tools

A few weeks ago Artificial Lawyer published the New Legal AI Map, which showed the main branches of NLP tools used in the legal sector today. One key branch is Pre-execution tools, i.e. pre-signature, which covers areas such as contract red-lining, risk analysis and negotiation.

To that end, Dan Broderick, the CEO and founder of BlackBoiler, and his team, have kindly put together their own take on the taxonomy of this particular branch of the wider tree.

There are several similarities to Artificial Lawyer’s original map, but this branch map includes Broderick’s personal additions and comes with an explanation of what it shows – which naturally represents his own views. Your feedback is very welcome, especially if you are a company also working in this field. Enjoy.

Pre-Execution Contract Review Taxonomy

By Dan Broderick, BlackBoiler

The legal tech market has become increasingly crowded, especially the pre-execution contract review space. There are now dozens of pre-execution tools out there focused on solving some of the biggest issues that law firms and corporate legal departments currently face.

Yet, during recent conversations with peers, potential buyers, and even journalists, we began to realise that there is often confusion around contract lifecycle management (CLM) and more specifically, what pre-execution contract review products actually do.

There is a lack of differentiation in how the various companies define themselves to customers, so we felt it was important to create a taxonomy to help future customers, and the broader legal industry, understand which tools do what.

Let’s start with a few examples of similar marketing lingo and taglines on company websites or LinkedIn pages. Below are examples from four different legal tech companies:

  • ‘Automate Your Contract Review’
  • ‘AI-Driven’
  • ‘Pre-screening’
  • ‘Powered by artificial intelligence’

The lack of differentiation causes confusion for customers as they are unable to identify which tool will best fit their contract review needs. By carving out specific areas within the pre-execution space, it would better explain the individual tools – such as risk scoring, classification, extraction, and contract markup.

There also needs to be more education and segmentation from service providers to truly differentiate products, so customers know which tool is best for their specific problems.

So, how is the pre-execution space broken down? (In order of complexity):

Comparison to Client Standard: AI reads a contract and compares it against a client’s standard language, checklist, etc. Issues are then flagged to be checked by humans.

Comparison to Industry-Standard Language (Benchmarking): AI reads a contract and indicates whether language is close to an industry-standard document. If language differs, the static boilerplate text is inserted.

Clause-level Semantic Similarity: AI reads contracts and shows semantically similar language that the user has seen before.

Classification: AI scans through the document and understands the significance of each paragraph. Based on the content, AI classifies the clauses and terms.

Extraction: AI extracts key legal and business terms and organizes large sets of documents into specific categories.

Risk rating/scorecard: AI reads contracts and surfaces the risk in your contracts. AI pinpoints which of the proposed redlines could cause a deviation from your intended obligations, entitlements, or standing positions.

Automated Contract Markup: AI redlines contracts according to your company’s playbook in minutes, entirely done by AI.

Given that the legal tech world is ever-changing, we see this as a sort of living taxonomy as the space evolves. I’d also love to hear readers’ thoughts on this taxonomy as we tried to address each type of pre-execution tool on the market.

How to Challenge a Patent in the USPTO

The validity of a United States patent can be challenged in federal court litigation.  Patents can also be challenged in the U.S. Patent and Trademark Office, which, in most cases, is a quicker and less costly process.

The PTO provides three procedures by which a patent can be challenged: inter partes review (IPR), post grant review (PGR), and ex parte reexamination.  In IPRs and PGRs, the challenger and the patent owner both participate, and the proceedings are handled by the Patent Trial and Appeal Board (PTAB).  In an ex parte reexamination, the challenger is not involved after the request for reexamination has been filed, and the proceeding is handled by the PTO examiners.

In IPRs and PGRs, anyone except the patent owner may file a petition to challenge the patent.  The filing fees are high, $41,500 for an IPR and $47,500 for a PGR, with additional fees depending on the number of claims challenged.  The proceedings are handled by a three-judge panel of administrative judges with technical background in the field of the patent.  There are two phases in these proceedings.  The first phase consists of the filing of the petition by the challenger, the filing of a response by the patent owner, and the decision whether to institute the IPR or PGR by the PTAB.  If the PTAB institutes the IPR or PGR, then the second phase (the trial phase) begins.  The second phase consists of discovery (more limited than in litigation), briefing, an oral hearing, and a final written decision by the panel.  The entire process from institution to the final decision should take no more than 12 months.  The parties may appeal the decision to the Federal Circuit Court of Appeals.

Although an IPR is the most popular method of challenging a patent in the PTO, it has limitations.  A petition for an IPR cannot be filed until nine months after the patent is issued.  If a lawsuit for infringement has been filed, however, the accused infringer must file an IPR within one year of being sued.  The only grounds that can be asserted in an IPR are anticipation (35 USC §102) and obviousness (35 U.S.C. §103).  The only prior art that can be cited are patents and printed publications.  Thus, an IPR cannot be used to invalidate a patent based on patentable subject matter, written description, best mode, enablement, indefiniteness, or ownership, and an IPR cannot be based on prior art other than patents and printed publications.  Both parties in an IPR typically use experts to provide opinions on claim construction and on the grounds for invalidity.

The majority of the PTAB’s decisions in IPRs have found most or all of the claims invalid.  If the PTAB finds the challenged claims valid, the challenger is estopped from asserting in patent infringement litigation the grounds that were raised in the IPR or any grounds that could have been raised.

A PGR is similar to an IPR in some respects, but the challenger may assert more grounds of invalidity.  In addition to anticipation and obviousness, in a PGR a patent can challenged on patentable subject matter (§101), and written description, enablement, and definiteness (§112).  Another advantage of a PGR over an IPR is that the prior art in a PGR is not limited to patents and printed publications.  PGRs may only be filed for patents that were filed after March 16, 2013, when the America Invents Act went into effect, and must be filed within nine months of the date the patent issued.  PGR proceedings suffer from the same disadvantage as IPRs with respect to estoppel.

An ex parte reexamination proceeding is different from an IPR and a PGR.  Any person can challenge an issued patent, including the patent owner.  The proceeding is not brought in the PTAB, but before a panel of three patent examiners.  The patent owner is permitted to amend claims and add claims to the patent.  The proceeding is not inter partes, so the challenger is not involved once the request has been filed.  An ex parte reexamination must be based on patents and printed publications.  A disadvantage of ex parte reexaminations is that, compared to IPRs, they are much less likely to be successful.  An advantage of an ex parte reexamination, however, is that there is no estoppel effect.  Another advantage is that an ex parte reexamination is less costly than IPRs and PGRs.

In determining which procedure is best in a given situation, the advantages and disadvantages of each type of proceeding should be considered in light of the patent to be challenged, the relationship of the parties, the grounds to be asserted, the timing of the challenge, the likelihood of litigation, and the financial resources of the challenger.

Changes to The Building and Construction Industry Security of Payment Act

From 1 March 2021, builders will be able to use The Building and Construction Industry Security of Payment Act to recover money owed by homeowners.

In September 2020, Minister for Better Regulation, Kevin Anderson, said changes to the existing Security of Payments Act will deliver faster payouts for contractors and subcontractors and quicker and fairer dispute resolution.

“These reforms will raise the level of protection for tradies and subbies so they know they’ll be paid the money they are owed on time,” Mr Anderson said.

Master Builders NSW Executive Director, Brian Seidler, welcomed the changes, saying they were particularly important in helping the sector through the challenges of COVID-19.

“The removal of the owner occupier exemption, in particular, will provide a significant economic stimulus and help many tradies and small businesses,” Mr Seidler said.

The Building and Construction Industry Security of Payment Regulations 2020 commenced on 1 September 2020 and provides that the exemption of owner-occupiers from the SoPA will stop on 1 March 2021.

Further information is found here.

Is the Pandemic the Push Legal Needed to Really Embrace Technology?

Like so many employers, law firms were resistant to the idea of letting employees work from home or relying too much on technology – until they had no choice. The coronavirus pandemic forced many industries to reconsider how people work and use technology. Even the Supreme Court began holding oral arguments via video conference.

Although a recent survey shows that most lawyers don’t want to work from home full-time, it’s unlikely firms will be able to completely roll back remote work when the pandemic subsides. At least some of the tech tools used over the last six months will stick around. Consider these silver linings:…

Some People Aren’t Allowed to Vote and It’s Perfectly Legal

The 2020 General Election is less than a month away and millions of Americans will not be able to cast ballots. Among them, pop icon Britney Spears. Spears, 38, is among an estimated 1.5 million Americans who live under a conservatorship (or guardianship, depending on the state), meaning that a judge has appointed a guardian who makes decisions about daily life and financial affairs and, in some states, voting.

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