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Many aspects of Life Sciences are daunting and difficult
to grasp. Adding to this complexity are areas of law
— such as intellectual property protection — that are
often misunderstood and filled with unfamiliar terminology and/or
processes. We hope these FAQs take some of the mystery out of Life
Sciences and answer questions
you might have.
Patents
What Is a patent?
Are
there different kinds of patents?
How
long does patent protection last?
Can
I lose the right to file for a patent?
Trademarks
What is a trademark or servicemark?
What
are trademark rights?
Is
registration of my mark required?
What
rights are associated with a federally registered trademark?
When
can I use the trademark symbols TM, SM and ®?
What
is a copyright?
Why
should I register my work if copyright protection is automatic?
Who
is an author?
What
is a "Work Made for Hire"?
How
long does copyright last?
Do
trademarks, copyrights and patents protect the same things?
Immigration — H-1B Visa
What is an H-1B visa?
What are the requirements for an H-1B visa?
What is the definition of "specialty occupation?"
What if an H-1B applicant does not have a
U.S. bachelor's degree in the field?
Are there any limitations on what foreign physicians
can do under H-1B status?
How long can the foreigner stay in the United States
under H-1B status?
How much does it cost to apply for H-1B status?
How long does it take to obtain H-1B visa?
Are there any requirements regarding wages?
Are there any requirements regarding benefits, termination,
etc?
What is the "H-1B cap?"
Additional H-1B resources
Corporate Finance
What sources of financing exist for my life
science technology company?
Who are "Angel Investors"?
Should I seek funding from a Venture Capitalist?
What's the best way to approach a venture
capital firm?
What is preferred stock?
In addition to preferred stock, what other
types of rights do investors typically seek?
Should I use a placement agent or other
professional advisor to assist in finding investors?
Is debt financing right for me?
What are the benefits from strategic alliances
or joint ventures?
What laws apply to an offering of securities?
Research on Human Subjects
What is "research" on "human subjects"?
What
are the principal federal regulations that apply to research?
Who
does the HIPAA Privacy Rule apply to?
What
is "protected health information"?
Under
the HIPAA Privacy Rule, when can protected health information ("PHI")
be used or disclosed for research purposes?
Can
a covered entity disclose PHI to a researcher pursuant to a business
associate contract?
PATENTS
What Is a patent?
A patent is a right conferred by the United States Patent and
Trademark Office to exclude others from making, using, or selling
your invention. By this statutory definition of rights and contrary
to popular belief, a patent does not give the inventor and/or
patent owner the right to practice the invention described in
the patent. In fact, doing so may even infringe upon the patent
rights of others. The patent itself is a printed document which
describes the metes and bounds of the invention through the claims.
Are there different kinds of
patents?
Yes, there are three types of patents:
Utility patents relate to inventions or discoveries of
any new and useful process, machine, article of manufacture, or
compositions of matters, or any new useful improvement of the
same. This is most common type of patent and what most people
think of when referring to a patent;
Design patents are new, original, visible and ornamental
design for an article of manufacture. By this definition, an article
of manufacture, such as a lamp could have new and novel utility
features which may allow the granting of a utility patent as well
as ornamental or non-utility features which may be the basis for
a design patent; and
Plant patents may be granted on asexually reproduced,
distinct and new variety of plants.
How long does patent protection last?
Generally, the patent term is 20 years from the date on which
the application is filed with the Patent and Trademark Office.
U.S. patents are effective only within the United States, U.S.
territories, and U.S. possessions. Under certain circumstances,
patent term extensions or adjustments may be available.
Can I lose the right to file
for a patent?
Unfortunately, yes. Several actions can cause the loss of the
ability to file for patent protection (or bar patentability) if
they occur prior to filing a patent application, including: Commercial
use or sale for the invention, product or process, publication
of the invention and public disclosure of the invention. Because
matters related to bars to patentability can be very complicated,
we strongly suggest you seek the advice of competent patent counsel.
TRADEMARKS
What is a trademark or servicemark?
A trademark is a word, symbol, or device used in trade to indicate
the source of the goods and to distinguish them from the goods
of others. As such, a trademark serves multiple functions including:
1. Identifying the origin of goods
2. Signifying the quality of the goods
3. Creating a marketing advantage through consumer awareness and
association
A servicemark is the same as a
trademark except that it identifies and distinguishes the source
of a service rather than a product.
What are trademark rights?
Trademark rights may be used to prevent others from using a confusingly
similar mark, but not to prevent others from making the same goods
or from selling the same goods or services under a clearly different
mark.
Is registration of my mark required?
No. Actual use of a trademark in commerce can establish rights
in the mark, without registration. However, the rights are not
as strong and could be limited by someone registering the same
or a confusingly similar mark in good faith. The rights outside
of federal registration are called common law rights.
What rights are associated with
a federally registered trademark?
Federal trademark registration on the Principal Register (the
primary federal registration) provides several advantages:
- National constructive notice to the public of the registrant's
claim of ownership of the mark;
- the ability to use ® next to the trademark as indication
of federal registration;
- the legal presumption of the registrant's ownership of the
mark and the registrant's exclusive right to use the mark nationwide
on or in connection with the goods and/or services listed in
the registration;
- the ability to bring an action concerning the mark in federal
court;
- the use of the U.S registration as a basis to obtain registration
in foreign countries; and
- the ability to file the U.S. registration with the U.S. Customs
Service to prevent importation of infringing foreign goods.
When can I use the trademark
symbols TM, SM and ®?
If you wish to claim rights in a mark (and the mark is not registered
to another party), you may use the "TM" (trademark)
or "SM" (service mark) designation to alert the public
to your claim, regardless of whether you have filed an application
with the USPTO. However, you may use the federal registration
symbol "®" only after the USPTO actually registers
a mark, and not while an application is pending. Also, you may
use the registration symbol with the mark only on or in connection
with the goods and/or services listed in the federal trademark
registration.
What is a copyright?
Copyright gives protection to authors of "original works
of authorship" which are in a tangible form, published or
unpublished. Works of authorship can be in numerous forms, including:
- Writings
- Computer software
- Architectural works
- Musical works
- Pantomimes
- Dramatic works
- Motion pictures
The 1976 Copyright Act generally gives the owner of copyright
the exclusive right to reproduce the work, prepare derivative
works, distribute copies and publicly perform or display the work.
The copyright protects the form of expression rather than the
subject matter of the writing. For example, a description of a
machine could be copyrighted, but this would only prevent others
from copying the description; it would not prevent others from
writing a description of their own or from making and using the
machine. Copyrights are registered by the Copyright Office of
the Library of Congress.
Why should I register my work
if copyright protection is automatic?
Registration is recommended for a number of reasons. Many choose
to register their works because they wish to have their copyright
a matter of public record and have a certificate of registration.
Registered works may be eligible for statutory damages and attorney's
fees in successful litigation. Finally, if registration occurs
within five years of publication, it is considered prima facie
evidence in a court of law.
Who is an author?
Under the copyright law, the creator of the original work is
its author. The author is also the owner of copyright unless there
is a written agreement by which the author assigns the copyright
to another person or entity, such as a publisher.
What is a "Work Made for
Hire"?
Although the general rule is that the person who creates the
work is its author, there is an exception to that principle: the
exception is a work made for hire, which is a work prepared by
an employee within the scope of his or her employment or a work
specially ordered or commissioned in certain specified circumstances.
When a work qualifies as a work made for hire, the employer or
commissioning party is considered to be the author.
How long does copyright last?
The Sonny Bono Copyright Term Extension Act, signed into law
on October 27, 1998, amends the provisions concerning duration
of copyright protection. Under this Act, terms of copyright are
generally extended for an additional 20 years. As such, for works
created after January 1, 1978, copyright protection will endure
for the life of the author plus an additional 70 years. In the
case of a joint work, the term lasts for 70 years after the last
surviving author's death. For anonymous and pseudonymous works
and works made for hire, the term will be 95 years from the year
of first publication or 120 years from the year of creation, whichever
expires first. For works created but not published or registered
before January 1, 1978, the term endures for life of the author
plus 70 years, but in no case will expire earlier than December
31, 2002. If the work is published before December 31, 2002, the
term will not expire before December 31, 2047. For pre-1978 works
still in their original or renewal term of copyright, the total
term is extended to 95 years from the date that copyright was
originally secured.
Do trademarks, copyrights and
patents protect the same things?
No. Trademarks, copyrights and patents all differ. The following
table compares the relative attributes of these different forms
of intellectual property protection.
|
Forms Of
Protection
|
Subject Matter
Protected
|
Requirement
For Protection
|
Sample Items
Protected
|
Scope Of
Protection
|
Items Not Covered |
Utility
Patent
|
Machines, Processes,
Articles of
Manufacture,
Compositions of
Matter, and
Improvements Thereof
|
New, Unobvious
and Utility
|
Products, Chemicals,
Software, Manufacturing
Processes
|
Right to Exclude Others From Manufacturing,
Using or Selling
|
Methods of Doing Business, Written Works,
Ideas not Reduced to Practice
|
Design
Patent
|
Ornamental Design or
Appearance - Refers to
Non-Utilitarian Exterior
Features
|
New, Original and
Ornamental
|
Appearance of Medical
Instruments, Lamps and
Any Other Object
|
Right to Exclude Others
From Manufacturing,
Using or Selling
|
Functional or Utilitarian
Features
|
| Copyright |
Literary, Musical,
Dramatic, Pictorial,
Graphic, Sculptural
Works, Motion
Pictures, Sound
Recordings, etc.
|
Original Work of Authorship
|
Books, Artwork,
Photographs, Software,
Data Bases, Graphics,
Advertising Copy, Graphics, Text
|
Exclusive Right to Reproduce the Work,
Prepare Derivative Works, Distribute Copies, Perform
the Work Publicly and
Display the Work Publicly
|
Blank Business Forms, Ideas, Processes,
Functional Design
Features
|
| Trademark |
Words, Names,
Symbols and Devices
Used to Identify
Products/Services
|
Bona Fide Intent to Use or Actual Use
in Interstate Commerce
Registered
|
Words, Logos, Non-
Functional Container and
Product Shapes,
Distinctive Color Schemes
|
Right to Prevent Use by Others Likely to Cause
Confusion, and to Prevent
Dilution
|
Generic Terms, Merely
Descriptive Words, or
Product Configurations
Until Distinctiveness
Acquired Thru Secondary
Meaning
|
Immigration
— H-1B Visa
What is an H-1B visa?
H-1B is a nonimmigrant visa that allows foreign professionals
to work temporarily in the United States.
What are the requirements for
an H-1B visa?
First, the job offered to the H-1B worker must be a "specialty
occupation." Second, the H-1B worker must have a bachelor's
degree or equivalent education, training and experience (and any
necessary license).
What is the definition
of "specialty occupation?"
"Specialty occupation" is defined as a job that requires
theoretical and practical application of a body of highly specialized
knowledge. Attainment of a bachelor's or higher degree in specific
specialty (or equivalent education, training and experience) is
a minimum for entry into the field. To qualify, the job offered
to the H-1B worker must meet one of the following four criteria:
- A baccalaureate or higher degree or its equivalent is normally
the minimum requirement for entry into the particular position;
- The degree requirement is common to the industry in parallel
positions among similar organizations or, in the alternative,
an employer may show that its particular position is so complex
or unique that it can be performed only by an individual with
a degree;
- The employer normally requires a degree or its equivalent
for the position; or
- The nature of the specific duties is so specialized and complex
that knowledge required to perform the duties is usually associated
with the attainment of a baccalaureate or higher degree.
What if an H-1B applicant does
not have a U.S. bachelor's degree in the field?
Equivalency of a foreign degree to a U.S. baccalaureate may be
determined by obtaining a formal education evaluation from a company
that is recognized by U.S. Citizenship and Immigration Services
(USCIS) as being qualified to evaluate foreign degrees. A combination
of work experience and education may also be deemed equivalent
to a U.S. baccalaureate in certain cases.
Are there any limitations
on what foreign physicians can do under H-1B status?
Yes. H-1B physicians may engage in teaching and research only,
unless a) the physician has passed U.S. medical licensing exams;
and b) he/she is competent in oral and written English or is a
graduate of a medical school accredited for this purpose.
How long can the foreigner
stay in the United States under H-1B status?
The H-1B petition is approved for an initial period of three
years and can be extended for another three years. After a total
of six years, the H-1B worker must remain outside the United States
for one year before reapplying for H-1B status. This six-year
limit does not apply to persons who spend less than six months
per year in the United States. An extension beyond the six-year
limit also is permitted for persons with a pending labor certification
application or an I-140 immigrant visa petition.
How much does it cost to
apply for H-1B status?
As of October 2003, the filing fee is only $130 (the $1,000 special
training fee has expired). There is also an optional $1,000 premium
processing fee. The legal fees for filing an H-1B petition are
usually in the range of $2,500 to $3,500.
How long does it take
to obtain H-1B visa?
The normal processing time is 60-90 days, but USCIS will guarantee
a decision within 10-15 days upon payment of a special $1,000
premium processing fee.
Are there any requirements
regarding wages?
Yes. The U.S. employer must pay the H-1B worker the higher of
(a) the actual wage paid by such employer to U.S. workers in the
same position or (b) 95 percent of prevailing wage paid to U.S.
workers in the local commuting area as determined by the Department
of Labor online wage library (http://www.flcdatacenter.com/)
or another valid salary survey which was published within the
past two years and shows the average or mean salary paid to U.S.
workers in the same occupation in the same local commuting area.
Are there any requirements
regarding benefits, termination, etc?
Yes. The U.S. employer must offer the H-1B worker the same benefits
as U.S. workers, which must be paid to the H-1B worker within
30 days of arrival in the United States. The employer must also
pay return airfare if the H-1B worker is terminated prior to the
end of H-1B validity period. The U.S. employer cannot bench the
H-1B worker due to lack of work. It is important for the U.S.
employer to notify USCIS upon termination of an H-1B worker, otherwise
the termination may be deemed an unlawful benching and the employer
may be liable for ongoing wages.
What is the "H-1B
cap?"
The H-1B cap is an annual limit on the number of H-1B visas imposed
by USCIS. The cap for fiscal year 2004 (Oct. 1, 2003 to Sep. 30,
2004) is 65,000 (it was reduced from 195,000 for fiscal year 2003).
This cap does not apply to extensions of existing H-1B petitions
or to H-1B petitions filed by certain educational and nonprofit
institutions. If the H-1B cap is reached prior to the approval
of the petition, the U.S. employer may consider other types of
visas (e.g., L-1, O-1, or TN) as alternatives.
Additional H-1B resources
U.S Citizenship and Immigration Services
U.S. Department of Labor
For more H-1B information, please contact one of DWT's immigration
lawyers below or visit our Immigration
Law web pages.
Richard M. Rawson,
Seattle, (206) 628-7746, RichRawson@dwt.com
Christopher R.
Helm, Seattle, (206) 628-7671, ChrisHelm@dwt.com
James M. Mei, Portland,
(503) 778-5315, JimMei@dwt.com
CORPORATE FINANCE
What sources of financing exist
for my life science technology company?
There are several major sources of financing to fund start-up
and emerging life science technology companies: money from "angel"
investors, venture capital financing, credit financing (debt),
investments from strategic partners and joint ventures. Each of
these sources has some advantages and disadvantages, and most
life science technology companies rely upon multiple sources of
financing to achieve their business goals. You should carefully
consider the following factors before deciding which source of
funding to pursue: How much capital is necessary to achieve appropriate
value-enhancing milestones? Is dilution of my ownership interest
acceptable? How much control do I wish to retain? Does a potential
investor possess strategic or other expertise needed by the company?
What is the the likely exit strategy for the company's investors?
Who are "Angel Investors"?
Angel investors are persons meeting certain financial and sophistication
requirements who invest in early-stage companies. Most Angels
are "passive" investors primarily interested in a financial
return on their investment and do not generally seek an active
role in the business (such as a board seat). Angel investors often
provide the initial capital to help a venture get off the ground,
usually by purchasing preferred stock. Seeking funds from Angel
investors is appropriate when a modest amount of money is needed,
and where the founders desire to retain control over the direction
of the company. Angels are often limited in the amount of money
they will invest in a particular company and, therefore, should
not be counted on to continue funding the company beyond their
initial investment. Angels often become aware of potential investment
opportunities through formal and informal networks of other investors,
professional service providers and business contacts.
Should I seek funding from a Venture Capitalist?
Venture Capitalists, or VCs, are professional investors who typically
invest in new or developing businesses. The source of funds for
these investments are individuals and institutions who pay VCs
for investing their money and managing their investments. Because
VCs are paid, in part, based on the success of their investment
portfolio, they often seek more control and oversight of the day-to-day
operations of the company (through board representation and other
rights) and will typically demand a higher rate of return on their
investment than other types of investors. This can sometimes make
things uncomfortable for management or founders who are used to
controlling many of the significant decisions regarding enterprise.
On the other hand, venture investors are seasoned professionals
that have experience with many different portfolio companies.
They can assist young companies in recruiting senior executives
and board members, developing business stratagy, enhancing financial
performance and negotiating difficult business challenges. Their
network of relationships among the financial and business communities
often leads to introductions to strategic partners or other funding
sources. Finally, they often have the resources to invest a significant
amount of capital into a company and to continue to fund the company
through its life cycle.
In the end, the decision to seek VC funding will usually hinge
on how much autonomy you are willing to give up in exchange for
the needed cash. For many life science entrepreneurs, the cash
necessary to successfully fund a start-up to an exit event is
significant enough that some form of venture funding is almost
always necessary.
What's the best way to approach a venture capital
firm?
VC funds vary widely in their preferred technologies, products,
industries, stage of development of companies in which they make
investments, investment amount and other criteria. It is important
that you to be aware what a particular fund's investment criteria
and to target only those funds that match your business and its
goals. Fund managers are inundated with business plans sent by
companies seeking financing, so it is better to be introduced
to a VC through someone who has a pre-existing relationship and
whom the VC trusts. Typically, your lawyers or accountants will
have relationship with many venture capital firms and can make
the appropriate introductions. They can also help you identify
which firms are most likely to be interested in your particular
technology, product or industry.
What is preferred stock?
Preferred stock is a class of capital stock that, as it name
implies, has certain rights and preferences superior to common
stock. These rights and preferences are set forth in a company's
articles of incorporation or similar organizational documents.
Typical preferred stock rights include preferences with respect
to dividends, automatic conversion into common stock upon the
occurance of certain events, a preferential payment upon liquidation
or sale of the company, the right to approve certain significant
corporate transactions (such as a sale of the company, issuance
of additional preferred stock, changes to charter documents, etc.),
redemption rights and the right to appoint directors. In addition,
most preferred stock has "downside protection" or "antidilution
rights", which essentially adjust the original per share
purchase price downward upon the occurance of a negative event,
such as a subsequent round of financing at a lower valuation or
a missed clinical milestone.
In addition to preferred stock, what other types
of rights do investors typically seek?
In addition to rights associated with the preferred stock, investors
typically require a number of contractual rights that allow them
to more effectively oversee and control their investment. These
rights are embodied in a number of agreements that are executed
simultaneously with their contribution of capital to the company.
Typical rights requested by investors include rights: to require
the company to register their stock for resale in the public market
after the company is public, to receive financial and other information
from the company, to appoint directors, to participate in future
rounds of financing, to sell their stock along with any founders
or other significant shareholders who sell their stock; to require
that founders or other significant holders sell their stock to
the investor before selling it to a third party ,and to require
that the company pay their legal expenses in connection with their
investment. The details and extent of these rights varies from
investment to investment and are often carefully negotiated
Should I use a placement agent or other professional
advisor to assist in finding investors?
It is possible to engage a broker-dealer as a placement agent
to help raise money. The placement agent will typicall distribute
a document (often called a private placement memorandum or offering
memorandum) describing the company and offering to suitable persons.
Commissions for placement agents are negotiable and commonly range
from 8 to 15 percent of the amount raised. Because of the cost
associated with using a placement agent, they are commonly used
in later-stage rounds when significant amounts of money need to
be raised from large, national institutions. For early-stage ventures,
it is often more efficient to rely upon your network of professional
advisors and business associates to introduce you to likely sources
of funding. Service providers, such as a law firms, do not charge
a fee for such services beyond their normal hourly rates.
Is debt financing right for me?
Debt financing, or borrowing money, is often difficult for an
early-stage life science company that has only a limited number
of "hard" assets. Nevertheless, sometimes a finance
company will loan a limited amount of money if there is valuable
collateral that can secure payment (such as patent and other rights).
In addition, equipment leasing companies will often "lend"
money by negotiating extended leasing arrangements for lab equipment
and other necessary furniture and fixtures. Because typical early-stage
life science technology companies have limited, if any, revenues,
it is often difficult to obtain straight debt financing until
later in the life cycle of the company when revenues are being
generated through product sales or technology licenses.
What are the benefits from strategic alliances
or joint ventures?
A strategic alliance or joint venture is a collaberative arrangement
with an established company that has complementary needs or objectives.
Generally, the parties to the relationship commit themselves to
sharing resources, facilities, technology or information in connection
with achieving a common business goal. Risks and rewards are also
shared. Stategic alliances can take many forms. A separate entity
can be set up to which both parties contribute their promised
resources. Alternatively, one company can make a minority investment
in an established company or agree to fund such company's research
costs in exchange for a right to exploit or market the product
or technology developed. Sometimes the relationship will involve
cross-licenses of technology. In almost all cases, strategic alliances
or joint ventures involve giving up some autonomy in order to
collaborate with a partner toward a common goal.
Because both sides of a joint venture are contributing something
of value (technology, cash, marketing power, etc.), a strategic
alliance may provide a young company with a less costly funding
alternative than venture capital. For life science technology
companies, these arrangements often take the form of collaberations
with established pharmaceutical companies that have vast resources
and sales organizations, but require new and novel technologies
for their product pipeline. In this way, a relatively young company
can leverage the strength of a much larger organization while
developing its technology. On the other hand, because strategic
alliances and joint ventures are contractual relationships, they
are often cumbersome to manage and sometimes result in disagreements
between the parties.
What laws apply to an offering of securities?
An offering of debt or equity securities to private investors
must comply with applicable state and federal securities laws.
These laws govern the type of investors that may appropriately
purchase offered securities, the amount of money that may be raised,
the type of disclosure required to be given to investors and the
manner in which the offering is conducted. In most financings
of emerging growth companies, offerings are made to "accredited"
investors that meet certain specified financial and sophistication
criteria. In other cases, companies may rely upon exemptions from
the securities laws applicable to small offerings or offerings
to a limited number of persons. In any event, it is essential
that prospective investors be provided adequate and accurate information
about the company when making their investment decision. As you
begin to plan an offering of securities, it is essential that
you consult with legal counsel to determine the size, scope and
manner of your offering so that you can comply with applicable
laws.
RESEARCH ON HUMAN
SUBJECTS
What is "research"
on "human subjects"?
The Common Rule (discussed below) defines research as a systematic
investigation, including research development, testing, and evaluation,
designed to develop or contribute to generalizable knowledge.
A "human subject" is a living individual about whom
an investigator conducting research obtains (1) data through intervention
or interaction with the individual, or (2) identifiable private
information.
What are the principal federal regulations that
apply to research?
- Department of Health and Human Services ("HHS"):
45 CFR Part 46, Protection of Human Subjects. These regulations
include the Federal Policy for the Protection of Human Subjects
(the "Common Rule"), which applies to most research
that is conducted or funded by a federal department or agency
(such as the National Institutes of Health) or conducted by an
institution that has elected to have the Common Rule apply by
filing with the Office for Human Research Protections a "federalwide
assurance" that contains this election. Privately funded
research that is subject to regulation by a federal department
or agency (e.g., research by a company seeking FDA approval for
a new drug or medical device) must be reviewed and approved by
an Institutional Review Board ("IRB") in accordance
with the Common Rule, although not all of the Common Rule's other
provisions will apply to this research.
- Food and Drug Administration: 21 CFR Parts 50 and 56.
Generally, research regarding new drugs, biologicals, or medical
devices for human use is subject to regulation by the FDA.
- HIPAA Privacy Rule: 45 CFR Parts 160 and 164. The Privacy
Rule significantly limits the use or disclosure of protected health
information in connection with research. See below for additional
questions and answers regarding the Privacy Rule.
Who does the HIPAA Privacy Rule apply to?
The HIPAA Privacy Rule applies to "covered entities"-health
plans, health care clearing houses, and health care providers
that transmit health information electronically in connection
with certain transactions covered by HIPAA. Many, but not all,
health care providers will be covered entities subject to HIPAA.
The HIPAA Privacy Rule also affects those researchers that are
not covered entities because it limits the ability of covered
entities to disclose protected health information to them.
What is "protected health information"?
Protected health information is information:
- that is created or received by a health care provider, health
plan, employer, or health care clearinghouse;
- that relates to the past, present, or future physical or mental
health or condition of an individual; the provision of health
care to an individual; or the past, present, or future payment
for the provision of health care to an individual; and
- that identifies the individual, or with respect to which there
is a reasonable basis to believe the information can be used to
identify the individual;
other than certain education records, student medical records,
and employment records.
Under the HIPAA Privacy Rule, when can protected
health information ("PHI") be used or disclosed for research
purposes?
- Screening: Review Preparatory to Research Exception.
A researcher can review medical records to prepare a research
protocol or for similar purposes preparatory to research (e.g.,
research subject screening) if the researcher provides the covered
entity representations that the use or disclosure of PHI is solely
for these purposes, that no PHI will be removed from the covered
entity in the course of the review, and that the PHI is necessary
for the research purposes.
- Recruitment: Waiver of Authorization for Outside Researchers.
A researcher who works for the covered entity (e.g., a physician
researcher who is a member of a medical group) can use PHI for
research subject recruitment without prior authorization from
the subject. A covered entity likely will need to obtain a partial
waiver of authorization from an IRB or privacy board to be able
to disclose PHI to an "outside" researcher for recruitment
purposes.
- Enrollment: Written Authorization. When enrolling a subject
in a research study (e.g., a clinical trial of an investigational
new drug or device), the researcher should obtain the subject's
written authorization to the uses and disclosures of the subject's
PHI that are necessary for research purposes. This authorization
can be combined with the informed consent form if desired.
- Data Analysis: Limited Data Set. When a researcher wishes
to analyze existing PHI held by a covered entity and identifying
information for the individuals to whom such PHI relates is not
needed, the covered entity may provide the researcher a limited
data set. A limited data set is PHI that excludes certain identifiers,
such as names, certain address information, and telephone numbers,
but is not fully de-identified. To use the limited data set, the
researcher must enter into a data use agreement with the covered
entity that limits the researcher's use and further disclosure
of the limited data set.
- Data Analysis: Decedents' PHI. The HIPAA Privacy Rule
permits a covered entity to disclose PHI of decedents to a researcher
who represents that the use or disclosure sought by the researcher
is solely for research on the PHI of decedents, provides documentation
of the death of the individuals whose PHI is sought upon request
by the covered entity, and represents that the PHI is necessary
for the research purposes.
- Databases and Tissue Repositories: Written Authorization
or Waiver. Researchers who wish to create a database of PHI
for research purposes can do so either by obtaining an authorization
from each individual whose PHI is included or can seek a waiver
of authorization from an IRB or privacy board. To grant a waiver,
the IRB or privacy board must determine that the use or disclosure
of PHI involves no more than minimal risk to the privacy of individuals
and that the research could not practicably be conducted without
the waiver and without the requested access to and use of the
PHI. Because creating a tissue repository involves direct contact
with the research subjects providing tissue samples (who are thus
available to provide authorization for the inclusion of their
tissue samples in the repository), it is unlikely that an IRB
or privacy board would grant a waiver and thus an authorization
would be required. Assuming there is no more than minimal risk
to individuals' privacy, a researcher should be able to obtain
a waiver of authorization to permit him or her to use PHI in existing
databases and tissue repositories.
Can a covered entity disclose PHI to a researcher
pursuant to a business associate contract?
No. The Office for Civil Rights of HHS has taken the position
that research is not a service listed in the definition of "business
associate" and that it is not a function or activity regulated
by the HIPAA Administrative Simplification Rules, such as payment
or health care operations. Accordingly, a covered entity is not
required to enter into a business associate agreement with a researcher,
and doing so does not permit the covered entity to disclose PHI
to the researcher for research purposes. Uses and disclosures
of PHI for research must be made with the subject's authorization,
pursuant to a waiver of authorization properly granted by an IRB
or privacy board, pursuant to the exception for reviews preparatory
for research or for research on decedents' PHI, or as part of
a limited data set subject to a data use agreement between the
researcher and the covered entity.
DISCLAIMER
These Frequently Asked Questions are a publication of the Life
Sciences Group of Davis Wright Tremaine LLP. Our purpose in publishing
these FAQs is to inform our clients and friends of developments
in life sciences. They are not intended, nor should they be used,
as a substitute for specific legal advice as legal counsel may
only be given in response to inquiries regarding particular situations.
Copyright © 2004, Davis Wright Tremaine LLP.
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