In Owens Corning v. Fast Felt Corp., No. 2016-2613, 2017 U.S. App. LEXIS 19827 (Fed. Cir. October 11, 2017), the Federal Circuit reversed the Patent Trial and Appeal Board’s (PTAB) final written decision in IPR2015-00650. While the PTAB found that the petitioner had failed to show obviousness of any challenged claim, the Federal Circuit disagreed, finding that under a proper broadest reasonable interpretation of the claims, the “record conclusively establishe[d] obviousness.” Owens Corning, 2017 U.S. App. LEXIS 19827 at *2. The Federal Circuit therefore reversed the PTAB’s final written decision without remand, finding the challenged claims unpatentable as obvious. Background Owens Corning petitioned for inter partes review of Fast Felt’s U.S. Patent No. 8,137,757, which claims and describes methods of “applying nail tabs to roofing and building cover materials” which cover wood roof decks and stud walls. ’757 Patent, Abstract. For example, during the construction of a roof, an underlayment… Continue Reading
Executive Order Directs Agencies to Consider Expanding HRAs and Alternatives to the Public Health Insurance Marketplace
On October 12, 2017, President Trump issued an Executive Order directing the U.S. Departments of Health and Human Services, Labor, and the Treasury to “consider proposing regulations or revising [existing] guidance” for health reimbursement arrangements (“HRAs”), association health plans (“AHPs”), and short-term coverage related to loosening existing requirements under the Affordable Care Act (“ACA”). While the Executive Order does not literally order the agencies to issue regulations or change existing guidance, it is likely that the agencies will do so. This process should take months, and thus the Executive Order is a signal of change rather than change itself. There are few details at this time, but a high-level summary including open issues is below: HRAs – The clear intent is to enable employers to offer HRAs to current employees that can be used to purchase insurance policies from the individual insurance market. This could be accomplished by either permitting HRAs to integrate… Continue Reading
U.S. Department of Labor Proposes Extension of Applicability Date of New Disability Claims Procedures
On October 12, 2017, the DOL issued a proposed rule to delay for 90 days (through April 1, 2018) the applicability of the final regulations which amended the claims procedure requirements for ERISA-covered employee benefit plans that provide disability benefits. The final regulations were issued by the DOL in December 2016 and, as issued, would apply to claims for disability benefits filed on or after January 1, 2018. (Note: a more detailed discussion of the final regulations is available in our prior blog post.) Following the DOL’s issuance of the final regulations, various stakeholders asserted that the final regulations would drive up disability benefit plan costs and cause an increase in litigation and, in doing so, impair workers’ access to disability benefits. The DOL seeks public comments on its proposed 90-day delay of the applicability date of the final regulations in order to solicit additional public input and examine regulatory… Continue Reading
IRS Issues Regulations and Guidance Updating Mortality Tables and Procedures for Using Substitute Mortality Tables
On October 3, 2017, the IRS issued final regulations updating the mortality tables that most defined benefit pension plan sponsors must use when calculating lump-sum benefits for participants and determining annual funding obligations. In addition, the final regulations provide updated procedures for sponsors of large defined benefit plans to use when applying to the IRS to use substitute mortality tables based on actual plan mortality experience. In conjunction with the regulations, the IRS issued Notice 2017-60, which explains the new mortality tables, and Revenue Procedure 2017-55, which explains and supplements the changes to the requirements for using substitute mortality tables. The regulations apply to plan years beginning on and after January 1, 2018. The final regulations are available here. Notice 2017-60 is available here. Rev. Proc. 2017-55 is available here.
The U.S. Departments of the Treasury, Labor, and Health and Human Services have issued new interim final rules to expand the exemptions from the contraceptive coverage mandate under the Affordable Care Act. The new exemptions encompass (i) non-governmental plan sponsors and institutions of higher learning that object to the mandate based on sincerely held religious beliefs, and (ii) certain entities and individuals that object to the mandate based on sincerely held non-religious moral convictions. The interim final rules keep the accommodation process as an optional process for certain exempt entities that wish to use it voluntarily. Exempt entities must ensure that the exclusion of contraceptive coverage is clear in the plan document. The interim final rules were effective October 6, 2017. The interim final rules are available here and here.
A recent Federal Circuit case reminds us how difficult it is for a patent holder to win an infringement case based on a doctrine of equivalents (DOE) infringement theory. In Jang v. Bos. Sci. Corp. & Scimed Life Sys., Inc., No. 16-1275 (Fed. Cir. Sep. 29, 2017), the Fed. Cir. affirmed the district court’s vacatur of the jury’s infringement verdict, finding that Boston Scientific Corporation’s (BSC) product did not infringe the asserted claims of Dr. Jang’s patent under the DOE because Dr. Jang did not meet his burden of proving that his DOE theory did not ensnare the prior art. The DOE allows a patent holder to prove infringement by an accused device if the accused device performs substantially the same function as claimed in substantially the same way to obtain substantially the same result, even if it does not literally infringe the claims of the patent. Graver Tank &… Continue Reading
On September 21, 2017, the SEC issued interpretive guidance with respect to the pay ratio rule (i) clarifying its position on a registrant’s use of reasonable estimates, assumptions and methodologies, and statistical sampling permitted by the rule, which are made with a reasonable basis and in good faith; (ii) clarifying that a registrant may use appropriate existing internal records, such as tax or payroll records, in determinations regarding the inclusion of non-U.S. employees and in identifying the median employee; and (iii) providing guidance as to when a registrant may use widely recognized tests under another area of law (such as the Internal Revenue Code) to determine whether its workers are employees for purposes of the rule. In addition, the SEC’s Division of Corporation Finance issued separate guidance on using statistical sampling methodologies and other reasonable methodologies, providing examples to illustrate the use of such methodologies. View the SEC’s press release… Continue Reading
In Notice 2017-45, the IRS extended the temporary nondiscrimination relief that it provided in Notice 2014-5 for plan years beginning before 2019. Notice 2014-5 permits certain employers that sponsor a “closed” defined benefit plan and a defined contribution plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of Section 401(a)(4) of the Internal Revenue Code on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis. A “closed” defined benefit plan for purposes of these Notices provides ongoing accruals but was amended before December 13, 2013, to limit those accruals to some or all of the employees who participated in the plan as of a certain date (i.e., is frozen to new participants). View IRS Notice 2017-45. View IRS Notice 2014-5.
In Notice 2017-44, the IRS issued model amendments to describe the method of bifurcation for defined benefit plans that offer bifurcated benefit distribution options (i.e., partial lump sum and partial annuity distributions). Bifurcated benefits could arise if a plan that offered a lump sum option wished to offer participants the additional option of taking part of the benefit in a lump sum and part as an annuity. View IRS Notice 2017-44.
In a recent Chief Counsel Advise Memorandum, the IRS analyzed two factual scenarios in which a 401(k) plan participant missed certain loan payments. In the first scenario, the participant missed two consecutive installment payments, which were due in separate calendar quarters. Payments made subsequent to the missed payments were deemed to “cure” the prior missed payments, which resulted in a rolling cure period that would extend to the end of the calendar quarter following the quarter in which the last installment payment was made. Ultimately, the participant made a payment to the plan that included an amount for the two prior missed payments as well as the payment then due. Because all missed payments were cured within the applicable cure period, the IRS concluded that no deemed distribution of the loan proceeds had occurred. In the second scenario, the participant missed three consecutive payments, which were all due in the… Continue Reading