Funding for Life Sciences

My name is Terry Mumford. I'm a partner with Ice Miller LLP. We work with governmental pension plans across the country – single employer, multiple employer, multiemployer. We have been and will continue to be assisting our clients in preparing written comments on the ANPRM.¹ And as a firm we will file a formal comment letter. I appreciate very much the opportunity to speak to you today.

At the Town Hall meeting in Oakland, I presented you with an overview of many issues that our clients are facing with regard to the definition of a governmental agency or instrumentality. My goal today is to focus on issues that our clients are facing with respect to the participation of non-profit entities in governmental plans. At the outset, I would note that I have read ERISA Advisory Opinion 2012-01A² . I do not believe that my comments are inconsistent with that letter, but I'd be happy to provide any clarification on that point.

1. Our clients believe that the final regulations should clearly recognize that a non-profit corporation can be a participant in a governmental plan if it is also treated as a governmental entity. The examples in the draft proposed regulations paint a pretty bleak picture for non-profit entities' participating in a governmental plan. Our clients believe that the final regulations should provide more examples of when a dual status entity may participate in a governmental plan.
2. Our clients have observed that a number of truly governmental functions are being performed by non-profit entities. The Service has heard and received extensive testimony on behalf of charter schools. In addition to the education field, non-profits in many states perform governmental functions in other fields. Also, many legislatures, governors, local governing bodies, and mayors have provided for participation in governmental plans by these non-profits that perform governmental functions. It seems that the draft proposed regulations do not fully recognize the current relationship between non-profits and governmental entities, which has evolved over the decades. We view this as part of the modernization that Ms. Kinard³ referenced. We would suggest the following revisions for the proposed regulations to achieve that recognition.
   1. 1. We believe that because policy makers focus primarily on the question – does the entity serve a governmental purpose? – that should be a Main Factor. Under the draft proposed regulations governmental purpose is Other Factor H.
   2. The current version of the draft proposed regulations focuses on control in both the Main and the Other Factors. With regard to non-profit entities, our experience is that the control comes from the contract or the charter between the non-profit entity and the state or political subdivision. Contrary to what the draft proposed regulations currently provide, we believe that the final regulations should recognize that a contract or a charter can be the equivalent of the control that is described in the current version. Therefore, we would ask that the Main Factors A and B and Other Factor A be modified to recognize this broadened definition of control. Our clients do not take the position that any contract is sufficient to meet the control requirement, but that certain contracts should be sufficient.
   3. The current draft proposed regulations (Main Factor D) ask whether employees of the non-profit entity are treated as public employees for purposes other than employee benefits. In states or political subdivisions where there is no civil service system, being treated as a public employee may boil down to eligibility for employee benefits. Therefore, we would suggest that that question be refined to ask whether the employees of the non-profit are treated as public employees for purposes other than the governmental retirement plan.
   4. In Main Factor E, the Service has quite appropriately focused on sovereign powers and the delegation of sovereign powers. Education and the health and welfare of children, the disabled, and senior citizens are paramount governmental purposes. It would seem that entities that perform these functions on behalf of state or local government should be viewed in the same light as entities that have been delegated taxing or police powers. Therefore, we would ask that the Main Factor on delegation of sovereign powers be broadened and perhaps combined with the Other Factor on governmental purpose. We believe that this approach would recognize the modern realities of state and local government and the role that non-profit entities play in providing governmental services.
   5. We would recommend that a change be made to the funding factor (Other Factor B). If a non-profit entity is primarily funded by tax dollars via a contract or charter, we believe that factor should weigh in favor of governmental status. The draft proposed regulations imply that funding via contract or charter is not enough. We believe that is an area for substantial revision. Again, we are not saying that public funding via contract on charter should be an automatic "passing" factor – but neither should it be an automatic "fail."
   6. The current version of the draft proposed regulations leaves the impression that a non-profit entity that is established under a general statutory provision as opposed to a specific statute will have a "failing mark" in the "Other Factor" category. (This is Other Factor C.) Instead we would ask the Service to make it clear that this is not the case. Having a "special" incorporation statute may provide a clear legislative determination that an entity is performing a governmental function. But the absence of such a statute should not be viewed as a legislative determination that an entity is not performing a governmental function.
3. We also want to raise with you an issue that we do not believe is addressed in the draft proposed regulations – the issue of affiliated non-profit entities. Treas. Reg. §1.414(c)-5(b) provides that, if a 501 entity's employees participate in a plan, then the employer with respect to the plan includes "any other organization that is under common control with that exempt organization." This is required aggregation. Permissive aggregation is described in Treas. Reg. §1.414(c)-5(c), which allows aggregation of non-profit entities that regularly coordinate their day-to-day exempt activities. In each case (required and permissive aggregation), governmental plans would need guidance as to whether the decision to categorize a non-profit entity as a governmental entity would mean that all aggregated entities would also be required to be treated as governmental entities for purposes of plan participation or whether they could permissively be treated as governmental entities.

In closing, I would like to reiterate what are probably the most consistent requests from our clients:

1. Please open a ruling program as soon as possible after the regulatory process.
2. If the final regulations are not modified as suggested above to allow flexibility in the participation of non-profit entities in governmental plans, then the final regulations should provide grandfathering for non-profit entities that participate in a governmental plan as of the effective date of the final regulations if those entities were participating in the governmental plan pursuant to state or local law and the terms of the plan document.

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1. On May 3, 2012, the Internal Revenue Service conducted the second of two scheduled town hall meetings to allow public testimony and Q&A with regard to the Advanced Notice of Proposed Rulemaking (ANPRM) that was issued November 8, 2011 regarding the definition of governmental plans under IRC Section 414(d). Reg. 157714-06, 76 Fed. Reg. 69172, https://federalregister.gov/a/2011-28853. At this town hall meeting, held in Cleveland, OH, Terry Mumford presented these remarks. Presenters were limited to 8 minutes each, so Terry focused her remarks on client concerns regarding non-profit entities. Ice Miller will be filing more detailed, complete comments prior to the deadline for comments – June 18, 2012.
  
2. This advisory opinion, issued by the Department of Labor's Employee Benefits Security Administration on April 27, 2012, found that participation by private, nonprofit employers in Connecticut's state group health plan would adversely affect its status as a governmental plan under ERISA Section 3(32).

3. Pamela Kinard, Senior Technician Reviewer, Qualified Plans Branch 2, Office of Division Counsel/Associate Chief Counsel (Tax-Exempt and Governmental Entities).

          On February 24, 2011, the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury issued final regulations under 31 CFR Part 1010 addressing the reporting of foreign financial accounts and the form used to file these reports (Form TD-F 90-22.1, Report of Foreign Bank and Financial Accounts, which is commonly referred to as the "FBAR" form). While the language in the final regulations is substantially consistent with the proposed FBAR rules that were published one year ago (read our March 10, 2010 summary of the proposed regulations), the FinCEN clarifies and revises certain provisions regarding which persons will be required to report accounts and which accounts will be reportable, as well as any specific exceptions to the filing requirements.

          The final rules are effective March 28, 2011, and apply to FBARs required to be filed by June 30, 2011, for foreign financial accounts maintained in 2010 and for reports required to be filed for all subsequent years. In addition, filers who properly deferred their filing obligations under IRS Notice 2010-23 (which extended the FBAR filing due date from June 30, 2010 to June 30, 2011 for certain groups) may, but are not required to, apply the provisions of the final rule in determining their FBAR filing requirements for reports due June 30, 2011, for foreign financial accounts maintained in years beginning before 2010.

          Note that the regulations under the Bank Secrecy Act (BSA) have been reorganized; therefore, the text of the final FBAR regulations have been renumbered for consistency. The regulations that were originally under 31 CFR 103.24 in their proposed form now appear under 31 CFR 1010.350 as the final regulations.

Applicability to Governmental Pension Plans

          The regulations still exempt governmental pension plans from the FBAR filing requirements. The proposed rules were accompanied by proposed revisions to the FBAR instructions which, among other things, specifically exempted governmental entities from the filing requirements, as follows:

A foreign financial account of any governmental entity is not required to be reported on an FBAR by any person. For purposes of this form, governmental entity includes: (1) a college or university that is an agency or instrumentality of, or owned or operated by, a governmental entity; and (2) an employee retirement or welfare benefit plan of a governmental entity. (Emphasis added.)

          While the FinCEN states in the preamble that the FBAR instructions have been revised to reflect the language adopted in the final regulations, the instructions were not included in the final regulations, and the rules do not explicitly make the above statement. However, when the final FBAR instructions are released, we expect they will include this exemption. In addition, the final rules retain the language from the proposed rules excepting from the filing requirements persons who have a financial interest in or signature or other authority over an account of any State or any political subdivision thereof. 31 CFR 1010.350(c)(4).

          Thus, the rules provide a filing exemption for the accounts of governmental pension plans, both with respect to the plan itself and with respect to the plan's employees with signature authority over foreign investments. The exemption is applicable for accounts held during 2010 and subsequent years. In addition, both pension plan employees with signature authority over accounts but no financial interest in those accounts who took advantage of the extension provided in IRS Notice 2010-23, and pension plans having commingled funds, none of which were mutual funds, which did not file an FBAR for prior years in reliance on Notice 2010-23, may rely on the final regulations to determine whether the delayed filing is now required.

          For more information about FBAR, the final rule, and how the FBAR materials may impact your governmental plan, please contact Mary Beth Braitman, Terry A.M. Mumford, Katrina M. Clingerman,  Lisa Harrison, or your Ice Miller LLP employee benefits attorney.

A proposed rule has been introduced by the U.S. Securities and Exchange Commission to exempt advisers of venture capital funds and other funds with less than $150 million in private fund assets under management from the registration requirements of the Investment Advisers Act of 1940 that were enacted in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Without this exemption in place, as of July 21, 2011, all advisers of private fund assets regardless of size would be required to be registered under and comply with the Investor Advisers Act of 1940.

Read the entire alert on the proposed exemption rule.

For this trade mission, the decision was made to focus on four key sectors in Indiana: vehicles, life sciences, energy and agriculture. The format has been to engage in breakout sessions in each of these sectors and do on-site plant tours and meetings with various leaders from the host country. Today, we had numerous meetings set-up with various leaders in these areas.

The main purposes of this trade mission is to attract Asian companies to Indiana and to have them start businesses here. One entity on this trade mission, Sherry Labs, wants to introduce their services in China and are potentially considering a location here in China as well.

This is an incredibly engaged delegation. The majority of delegates either have businesses that are currently doing business in China, or are seeking to do business in China. China is an economy that is growing at an exponential pace. They are very interested in doing business with people in the U.S. China is rich with cash and has a tremendous amount of capital ready to be invested, so they do not need capital from the U.S. They plan to spend a few trillion dollars putting in roads and streets over the next couple of years.

China has great interest in our economy and our financial strength here in the state of Indiana. They were very inquisitive about how we fared in the recession, and they were very interested in how well our state has done compared to other states in the last couple of years. They do recognize Indiana as a leading state in the U.S. with regard to the economy, jobs and innovation. The leaders we've met are very impressed with our highly productive workforce and the number of colleges and universities we have. The Chinese leaders are also very impressed with our governor.

Currently, the delegation is in Hangzhou, China, a sister province to Indiana. Hangzhou means Paradise City. We have had an incredibly warm greeting from the various officials here in China as well as the business leaders. Last night, we attended a very impressive banquet with key leaders from Hangzhou where we toasted our continued long-term relationship. They had a group of young girls playing some of our favorite songs, such as Jingle Bells and The Old Swanee River.

Preparing for the Future

Ice Miller is reissuing an updated summary of the provisions under the Patient Protection and Affordable Care Act (PPACA) that impact employers.  Ice Miller originally issued this summary on March 30, 2010.  Since that date, the Departments of Health and Human Services, Labor, and the Treasury have issued several rounds of interim final rules and other guidance regarding the PPACA provisions that apply to Group Health Plans.  As of the date of this reissue, guidance has been published with respect to:

• a tax credit available to small employers that offer health coverage to their employees;
• the extension of dependent coverage mandate and related tax relief;
• the Early Retiree Reinsurance Program;
• rules for maintaining grandfathered plan status;
• application of the PPACA coverage reforms on retiree-only health plans and HIPAA excepted benefits;
• the prohibition on lifetime and annual dollar limits and procedures for a temporary waiver;
• the prohibition on pre-existing condition exclusions;
• the prohibition on rescissions in health plans;
• patient protections afforded under the PPACA;
• coverage for preventive health services with no cost-sharing requirements;
• requirements for internal claims and appeals processes and external reviews; and
• the HIPAA opt-out for self-funded nonfederal governmental health plans.

While there is still more expected, a critical mass of guidance has now been issued that allows employers sponsoring group health plans to move toward finalizing plan design changes for next plan year.  As employers begin preparing for open enrollment season in the coming weeks and months, the PPACA provisions discussed in this summary require a fresh look.  Ice Miller has, therefore, revised its original summary to include discussion of relevant guidance and the obligations such guidance places on employers sponsoring group health plans to timely amend plan materials, make required disclosures to employees, and offer special enrollment opportunities to their employees.

View and print the updated summary.

View and print Ice Miller's list of steps that plan sponsors should be taking now to comply.

Cindy Hoye, Executive Director, Indiana State Fair Commission

Optimism is in the air!  Our group felt truly a sense of pride in the marketable and treasured assets in Indianapolis and the entire state of Indiana.  Coupled with pride in the successful endeavors of the leadership in Indianapolis, all of us were honored to be at the enviable table on June 15.

Thanks to Ice Miller and Gerry Dick, we spent an evening comparing future trends, growth challenges and current findings in the tourism industry. And while obstacles were identified, I think we all prefer to relish in our “glimmers of hope” recently seen and have been forecasted for the immediate future. One such notable sign can be seen in the Fairgrounds’ user groups. From a blockbuster Car Auction this May to signs of our public and consumer show visitors do have confidence, attending events and enjoying themselves.  We are seeing the end-users back to “opening their wallets” with a sense of more security about the economy.  The planning and preparation for this year’s State Fair, the largest, most attended and oldest event in Indiana, speaks to the overall experience, which includes the need for entertainment value and understanding customers are making strategic choices for their time and discretionary funds.

Do we all have challenges? Absolutely.  The challenges may remain in the forefront of continued growth. However, given the creativity, passion and dedication in all aspects of the tourism industry…we are destined to be rock solid in Indiana!

Job satisfaction and hiring top managers remain top workforce concerns for Indiana executives.  Finding good management may be a concern, but the ability to find the majority of their workforce isn't causing Indiana leaders restless nights.  Non-skilled, manufacturing and bio-tech/life science workers are abundant.  Engineers and paraprofessional are also easily found.

Although there is a surplus of workers, there may be hope for job hunters.  CEOs of small, medium and large companies are optimistic about hiring in 2010.  We'll see if the hiring in 2010 makes the pool of surplus workers a little shallower.  We'll need to wait for the 2011 report to find out!

CEOs are less optimistic in 2010 than in 2009 about private funding in Indiana.  Interestingly, Indiana leaders believe the availability of public funding increased slightly in 2010.

CEOs are also positive about the state's ability to attract businesses to Indiana.  Which means that the state is doing a good job of "selling" Indiana to out-of-state businesses.  The state can bring in business, but can they keep them?  According to the report, yes.  The bottom line is Indiana is making the Hoosier state fertile ground for companies to plant deep roots that will flourish.

Study highlights from 2010 include the following

•  Corporate reputation is back on top as the highest ranked business issue. In 2009 the highest ranked issue was customer loyalty and retention.
•  Cost of living is still seen as the strongest advantage that Indiana has over neighboring states and has been on the rise as the strongest advantage since 2007.
•  CEOs appear optimistic about 2010. There is a stronger likelihood they will pursue adding jobs, green development, outsourcing, mergers and acquisitions, new alliances, and a variety of other forward looking or growth oriented activities, when compared to 2009.
•  CEOs continue to remain positive about Indiana’s ability to attract business to the state.
•  Perceptions regarding the strength of education programs in the areas of advanced manufacturing and alternative energy have increased since 2009.
•  CEOs report that workers lowest in demand are manufacturing, non-skilled and bio-tech/life science workers.

View the 2010 CEO Survey Full Report.

View the 2010 CEO Survey Excutive Summary.

The Butler University College of Business, Ice Miller and Inside INdiana Business announced today the results of their fourth annual statewide survey of Indiana's chief executive officers, senior executives and business owners. The survey, "The State of Our Business – A Perspective from Indiana Executives," provides insight and understanding on the significant issues facing the state's business leadership.

The project partners identified 2,420 CEOs and other executive officers as potential respondents. Of those contacted, 428 responded to a comprehensive online survey designed by the Butler University College of Business.

The project partners identified 2,420 CEOs and other executive officers as potential respondents. Of those contacted, 428 responded to a comprehensive online survey designed by the Butler University College of Business.

"The survey found some reasons for optimism," stated Gerry Dick, president of Grow INdiana Media Ventures, LLC and host of Inside INdiana Business. "For example, many CEOs report there is now a stronger likelihood they will pursue adding jobs compared to their outlook in 2009." The survey found that central Indiana companies are more likely to add jobs as are companies with less than $5 million in revenue and those between $10 million and $50 million in revenue.

"We're now seeing several trends emerge as we start to analyze the data over a four year period," noted Byron Myers, chief managing partner, Ice Miller. "Many of the priorities of Indiana executives, with the exception of customer loyalty and retention, received importance ratings that are statistically equal to ratings received in 2009 as well as all past years of the survey. This may be an indication that even in times of major economic change CEOs maintain a relatively consistent structure of priorities."

"This year's CEO survey shows that the general business mood is improving but most CEOs are hesitant to implement solid growth strategies until the economy settles down somewhat," said Bill O'Donnell, director of graduate programs, Butler University College of Business. "We are also pleased that now, with four years of data, we can start tracking trends and see the direction CEOs view the state's economy to be moving."

Study highlights from 2010 include the following:

•  Customer reputation is back on top as the highest ranked business issue. In 2009, the highest ranked issue was customer loyalty and retention.
•  K-12 education and innovation continue to be ranked as the strongest disadvantages for Indiana as compared to neighboring states. Cost of living is still seen as the strongest advantage that Indiana has over neighboring states and has been on the rise as the strongest advantage since 2007.
•  CEOs believe the availability of private funding sources is significantly less compared to 2009.
•  A new question was added in 2010 regarding CEOs' plans to hire workers. There is optimism among CEOs that they will hire in 2010, as adding full-time and part-time workers was ranked above the midpoint on the scale.
•  Having enough time is still CEOs most challenging issue, although keeping up with technology has moved up in the ranking.
•  New questions about social media were added to the section relating to information technology. One-third of CEOs said they have a policy concerning social media usage for employees.

The project partners will continue to benchmark the results from the 2010 survey and monitor, discuss and analyze the state's progress. A full summary of the report can be found online at: www.inceosurvey.com.

In the wake of the recent financial crisis, on May 20, 2010, the U.S. Senate voted to adopt sweeping financial reform.  The proposed Restoring American Financial Stability Act of 2010 would:

• create a number of new governmental bodies designed to protect investors;
• severely limit government bail-outs;
• streamline bank regulation;
• regulate trading of derivatives;
• increase regulation of hedge funds and credit rating agencies;
• affect executive compensation;
• undertake some reform of the SEC;
• strengthen the Federal Reserve; and
• increase regulation of securitization and municipal securities transactions. 

But, could it also affect the availability of private equity funds?

The bill aims to end so-called "too big to fail" bail-outs.  The Volcker Rule is part of that effort.  The rule prohibits banks and their affiliates from investing in or sponsoring hedge funds and private equity funds and otherwise requires limited relationships with hedge funds and private equity funds.  Non-bank financial institutions supervised by the Federal Reserve will also have restrictions on their hedge fund and private equity investments. 

Banks and other regulated financial institutions provide a significant portion of the capital for private equity funds.  Without that capital, private equity funds will likely be smaller and less inclined to make investments.  In many instances, private equity dollars are available to companies seeking funding in circumstances under which traditional banks would not lend.  In those cases, the limited availability of private equity dollars could damage companies seeking funding.  Those companies may not be able to obtain funds for operations, strategic acquisitions or expansion if private equity money is not available.

While the financial reform bill has many legitimate purposes, it may have consequences that were not anticipated by the drafters.  Those consequences will affect not only private equity funds themselves but also companies that rely on private equity as a source of funding.

Congratulations!  You're one of few.  The next step is to negotiate the commitment letter.  There was a great article about negotiating loan commitments in the January/February 2010 issue of Business Law Today.  The article was titled "Negotiating the Loan Commitment:  The Borrower's Perspective" and was authored by John N. Oest.  Below are some of the major points made in the article: 

• Negotiate your important points up front before signing the commitment letter.  You will probably not get another opportunity.
   
• Understand that the commitment letter likely contains a number of conditions to the bank's commitment, and few for the borrower.  Some commitment letters contain an express agreement by the borrower to borrow the funds.
• Negotiate basic financial terms in the commitment letter, including amount of loan, interest rate, maturity date, fees, financial covenants and method of calculation of interest.
   
• Understand at the commitment letter stage how much money will actually be available to you.  For example, if your loan is based on "80 percent of Eligible Accounts Receivable" or some similar formulation, you'll need to understand up front what constitutes an Eligible Account Receivable.  If you do not, you could end up with less money available to you than you expect.
   
• Work through the prepayment rights and obligations at the commitment letter stage.  You may want to prepay the loan, but may find it triggers penalties or  yield protection payments .  Also, you need to understand when you will be required to repay the loan.  Often, an equity raise or a sale of substantial properties outside the ordinary course of business will trigger a prepayment requirement.
   
• Look for a due-on-sale clause.  Most mortgages contain these provisions that require repayment of the loan upon sale of the property.  These may be subject to limited enforceability in some states.
   
• Change of control provisions prohibit transfers of shares of a privately-owned company if the transfer would result in specified percentages of change of ownership.  The borrower should ask for some specific exceptions, including permitting transfers among owners and their affiliates, transfers for estate planning purposes and others.
   
• The commitment letter will generally limit other debt and other liens.  You should negotiate to obtain some standard exceptions such as unsecured trade debt, subordinated debt, intercompany debt, purchase money debt and capital leases.  You may also want to try to get a general basket for unsecured debt in a maximum amount.  With respect to liens, you should negotiate to allow existing liens, liens imposed by operation of law, liens security purchase money debt and other liens. Depending on your company's structure, the lender may require guarantees of the loan.  You and the guarantors will need to understand the scope of those guarantees.  

 
The basic point is, don't take the commitment letter lightly.  The early stage is when the key terms of the credit are mutually established, so pay attention to the details of the commitment letter and negotiate the issues most important to you at this stage.

During the financial crisis, private equity, mezzanine and venture capital firms have spent a lot of time "cleaning house."  The financial crisis has made cheap debt less available and thus private equity and other firms are not able to complete deals with the huge leverage ratios that existed prior to the crisis.  So, they have taken a close, hard look at existing investments in order to determine which could be saved and have allocated resources appropriately.  

This sort of review has included, from a legal perspective, review of debt covenants and commercial contracts.  The firms have wanted to determine which of their portfolio companies are in danger of violating a financial covenant or failing to perform under a critical contract. 

Recent reviews have also included analyses of potential exit strategies in a down economy.  The potential strategies include the traditional options of bankruptcy, sale and IPO.  IPO's have been down sharply until very recently, so this option has not been given much consideration.  Sales have continued, but with valuations low, this is often not a favored option.  Bankruptcy is, as always, fraught with difficulties as firms consider the opposition of creditors as well as the value of their secured positions, if any.

Throughout the financial crisis, distressed investing has continued.  With the credit markets tight, private equity and other firms have taken some opportunities to fund companies that have not been able to get credit in the traditional credit markets.  These efforts persist, and the firms continue to focus sharply on the fundamentals of these companies in order to protect their investments. 

If you haven't read the thousands of pages of the current Senate-proposed version of the Patient Protection and Affordable Care Act (that's the formal name of the proposed healthcare reform bill), you might be surprised by the kinds of opportunities that are available for businesses.  This commentary may be a bit premature given that a bill has not been passed, but because the Senate-proposed bill is currently forming the basis for congressional debates, it could become relevant to businesses very soon.

Everyone knows that the bill would require universal health insurance and impose a broad range of new requirements on the healthcare industry.  In addition, the bill has a variety of grants and opportunities it makes available to businesses both within and outside the traditional healthcare field. 

There are numerous grant opportunities for states, and in many cases, the state can allocate funds through a bidding process.  Traditional healthcare organizations such as hospitals are eligible for a large number of grants and funded study and training projects.  Nonprofits have a number of opportunities available, too.  And colleges and universities also can take advantage of a wide range of potential grant and award programs.  Funds are also available for other businesses, such as grants to implement comprehensive workplace wellness programs or contracts to establish Web sites.

It will be an interesting road to see what happens to healthcare reform in the next weeks and months.  We will keep you posted on the funding opportunities that might be available for your business.

Just days before the United Nations Climate Change Conference in Copenhagen, Denmark, the U.S. Patent and Trademark Office (USPTO) initiated the Green Technology Pilot Program on December 8, 2009 to expedite the examination of "green technology" patent applications. By offering the program, the USPTO hopes to accelerate the development and deployment of green technologies, help create green jobs, and promote U.S. competitiveness in the clean technology sector. In the press release announcing the Pilot Program, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, David Kappos explained "Every day an important green tech innovation is hindered from coming to market is another day we harm our planet and another day lost in creating green businesses and green jobs."

According to its own statistics, the USPTO takes on average 30 months to issue an initial office action for green technology patent applications and approximately 40 months to make a final determination on the patentability of such applications. In the normal process, applications are taken up for examination based on their filing date. Recognizing that over a three and half year wait is too long in the green technology sector, the Pilot Program provides a mechanism for green technology patent applications to be advanced, out of turn, to examination without having to pay any additional fees or provide any additional examination support documentation. The USPTO estimates that this Pilot Program will reduce the examination time of these applications on average by one year.

The Pilot Program broadly defines the term "green technologies" as technologies that pertain to environmental quality, energy conservation, development of renewable energy resources, or greenhouse gas emission reduction. Despite this broad definition, the USPTO currently requires that a patent application be classified in one of 79 specific U.S. patent classifications outlined in the Pilot Program to be eligible.

The Pilot Program only applies to non-provisional utility applications filed prior to December 8, 2009 that have yet to be examined. Applications that are either filed after December 8, 2009 or already being examined are not eligible for the Pilot Program. The Pilot Program is set to expire on December 8, 2010 and the USPTO only guarantees that it will accept the first 3,000 petitions to make an application special under the Pilot Program. Thereafter, the USPTO will evaluate whether the Pilot Program should be extended based on the USPTO's workload and available resources. Thus, time is of the essence for those wanting to take advantage of the Pilot Program.

While there are limitations on the number and type of claims that can be included in the application and a requirement that an applicant waive its right to object to a restriction requirement, the Pilot Program does provide an inexpensive mechanism to expedite the examination of a green tech patent application. Such an expedited examination can prove beneficial to those looking to enforce their patent rights as quickly as possible and/or those looking for funding options.

The Official Notice of the Pilot Program can be found at 74 Fed. Reg. 64666 (Dec. 8, 2009) (See http://www.uspto.gov/patents/law/notices/74fr64666.pdf ) and the USPTO Press Release for the Pilot program can be found at www.uspto.gov/news/pr/2009/09_33.jsp.

If you have questions about the Green Technology Pilot Program, you can contact Alex Forman or Bill Lyon, members of Ice Miller's Intellectual Property Group.

Some studies suggest that the answer is  yes!  In a recent study, the Preqin Research Report Private Equity Investor Survey August 2009, many limited partners (LPs) investing in private equity funds reported that the balance of power in negotiations between the funds general partners (GPs) and the LP's had shifted in favor of the LPs.  In fact, according to the Preqin report, in April 2009, 27 percent of investors thought they had greater negotiating power.  Three months later, in July 2009, 55 percent of investors interviewed by Preqin believed they had greater negotiating power.

Why would that be?  Certainly, one of the reasons is that levels of LP investment have fallen significantly from previous years.  According to the Preqin report, private equity funds raised $194.5 billion in the first quarter of 2008, while they raised only $64 billion in the first quarter of 2009.  The GPs have to compete for the limited LP funds that are actually being invested now.  One of the ways to do that is to offer LPs more favorable terms.

So, cash-rich LPs appear to be returning to the market.  Private equity fundraising has already begun to improve in 2009.  According to the Preqin report, $79.7 billion was raised by private equity funds in the second quarter of 2009 as compared to $64 billion in the first quarter of 2009.