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February 2006 e-BULLETIN

Page MEMBER NEWS • Asahi Koma Law Office Announce Opening Shanghai Office 2 • Clayton Utz Best ‘s Return a Bonus 2 • Luce Forward Re-Elects Robert Bell, Managing Partner; Elects Kathy Jorrie to Executive Committee 3 • Morgan Lewis & Bockius Gary Hermann Joins Premier Private Investment Funds Practice Team Move to SF 4 • NautaDutlh Appoints New Partner in Luxembourg 5 • Tilleke and Gibbins to Host PRAC Thailand Conference May 13-19 6 MAKING NEWS • Clayton Utz Heats Up Versacold A$435 million deal 7 • Gide Loyrette Nouel Advise Arrangers on €2.4 billion financing for the Buy-Out of Hertz Corporation 8 • Hogan & Hartson Advises Mobile Satellite Ventures in Contract with Boeing to Develop Next Generation Satellites 8 • Muniz Ramirez Perez-Taiman & Luna-Victoria Acts in Landmark Peru Gaming Transaction 9 • WilmerHale – Federal Court Finds Massachusetts Violates Medicaid Act in Failing to Provide Children’s Mental Health Services 10 UPCOMING MEMBER EVENTS 11 COUNTRY ROUNDUPS • AUSTRALIA – Clayton Utz – APRA Settles Stage 2 Reforms 12 • CHINA – King & Wood – Biotech Patent Protection in China 14 • TAIWAN – Lee and Li - Legislature Beefs Up Alternative Minimum Tax Act 17 • UNITED STATES • Davis Wright Tremaine – IP ALERT - Intellectual Property Protection at Tradeshows, Conferences, Symposia 20 • Hogan & Hartson – Amendments to the Medical Rebate Statute Made by the Deficit Reduction Act of 2005 22 • Morgan Lewis & Bockius – IMMIGRATION ALERT – DOL Issues Proposed Rule Eliminating Alien Employment Certification Substitution and Imposing 45 Day Window for Filing Immigrant Petitions 26 PRAC EVENTS (Members Only) • Thailand 2006 Conference – May 13-19, 2006 (advance programme available on line) • San Diego 2006 Conference – October 14 -18, 2006 • Los Angeles 2006 Follow on Program – October 18 -19, 2006 Tools to Use • PRAC Contacts Matrix & Email Listing –Update (members’ version only) • Directory 2005 Member Firms now available at PRAC web site • Expert System available at PRAC web site Private Libraries (members only) • Intellectual Property & Licensing Capabilities Survey – 2005 Update Now Available on line (members only) PRAC e-Bulletin is published monthly Visit us on line at www.prac.org

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ASAHI KOMA LAW OFFICE OPENS IN SHANGHAI

TOKYO, January 1, 2006 Asahi Koma Law Offices is pleased to announce that our Beijing office in China has moved to Shanghai and started operations in January 2006. The Shanghai office is headed by Shingo Hisata, our partner with a long experience in China practice since the opening of our first Chinese office in Beijing. The new office is situated at 4105 Office Tower, Bund Center, 222 Yan An Road East, Shanghai 200002, China. The office phone number is +86 21 6335 2190 and fax +86 21 6335 2195. The email address is sh@alo.jp. For additional information visit www.alo.jp/english CLAYTON UTZ BEST’S RETURN A BONUS

Sydney, 27 January 2006: Clayton Utz is pleased to advise that one of Australia's leading real estate lawyers, Gary Best, has returned to the firm as a partner in the firm's Sydney office.

Mr. Best who was previously a partner at Clayton Utz in the 1980s is held in very high repute and considered by many in the marketplace to be the leading lawyer practising in the Australian real estate markets sector. Mr. Best specialises in major projects, real estate development projects, structured property investments, corporate and project equity, finance investment structuring, corporate finance and tendering. Mr. Best said that he was delighted to be returning to Clayton Utz.

Especially recognised for his skills and experience in structured finance, Mr. Best has advised on many high profile deals including IPO’s for the Multiplex Group and Record Realty (a structured property trust investment vehicle). Other major work includes the Rouse Hill Regional Centre Project, the Parramatta Justice Precinct Project, the Olympic Village Project, and the Qantas Sydney Airport Centre Securitisation.

Announcing Mr. Best's return, the departmental head of the firm's Property, Environment & Construction group Craig Pudig said, having such an eminent lawyer available within the group complements the existing practice which has been consolidating its reputation as top tier advisors.

"Gary's return further assists the business goals and imperatives for our Real Estate Markets Group and we believe that having Gary in the team will increase that momentum."

For additional information visit www.claytonutz.com

Disclaimer Clayton Utz Media Releases are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this Media Release. Persons listed may not be admitted in all states.

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LUCE FORWARD HAMILTON & SCRIPPS RE-ELECTS ROBERT BELL; ELECTS KATHY JORRIE TO EXECUTIVE COMMITTEE

February 13, 2006

Luce Forward has announced that Robert J. Bell has been re-elected to serve as the Managing Partner of the firm, and Kathy A. Jorrie, Partner-In-Charge of the firm's Los Angeles office, will join Luce Forward's 4-person Executive Committee.

Bell began his law career at Luce Forward, and has served as the firm's Managing Partner since January 2004. He has been elected to another 2-year term. Jorrie, who has been instrumental in the firm's leadership and the growth of Luce Forward's Los Angeles

office, has served as Partner-In-Charge in Los Angeles since 2000. Jorrie replaces San Francisco-based partner Michael A. Isaacs, who has completed his two-year term. In addition to Bell and Jorrie, Partners Nancy T. Scull and John W. Leslie will remain members of the Executive Committee in 2006. "Being Managing Partner of Luce Forward has been very rewarding, and I am honored that my partners have re-elected me to this position," Bell said. "Kathy Jorrie is a highly-regarded partner, and her strong leadership capabilities make her an exceptional addition to the Executive Committee." "It is a great honor to be elected to Luce Forward's Executive Committee, and I am looking forward to serving my partners in this new position, and reaffirming Luce Forward's strength throughout the state," Jorrie said. For additional information visit www.luce.com

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MORGAN LEWIS & BOCKIUS GARY A. HERMANN JOINS PREMIER PRIVATE INVESTMENT FUNDS PRACTICE IN MOVE TO MORGAN LEWIS

San Francisco, February 13, 2006 — Morgan, Lewis & Bockius LLP is pleased to announce that Gary A. Herrmann has joined Louis H. Singer, Jedd H. Wider and Georgette A. Schaefer as they bring their nationally recognized and highly ranked private investment funds practice to the firm from Orrick, Herrington & Sutcliffe LLP. Mr. Herrmann is a senior tax partner who has played a significant role in the group’s involvement in the formation of over 150 funds in 2005 and in their representation of a considerable number of the largest and most active global institutional investors in private investment funds. Mr. Herrmann further enhances the recent addition of the fund formation and investment counseling group to Morgan Lewis’ existing private funds capabilities, making the firm one of the preeminent providers of legal services in this area. Mr. Herrmann, also formerly of Orrick, joins the firm’s San Francisco office as a partner effective immediately.

Mr. Herrmann recently has represented a number of sponsors of real estate funds with respect to tax issues, including those relating to structuring of the funds and of their investments. His practice includes advice concerning the special issues faced by different classes of real estate investors, such as public and private pension funds, foundations, endowments, REITs and non-U.S. investors. He regularly advises public pension plans with respect to the special tax considerations affecting such plans and the structuring and restructuring of their investments, both with respect to private equity funds and real estate investments.

With over twenty years of experience in a broad spectrum of federal and state tax issues, Mr. Herrmann’s practice also has included the tax aspects of corporate reorganizations, spin-offs, and other restructurings and corporate finance and financial products, as well as advice to many corporations and partnership entities, ranging from start-ups to major public companies, as to stock option and other employee and executive compensation issues.

About Morgan, Lewis & Bockius LLP

Morgan Lewis is a global law firm with more than 1,200 lawyers in 19 offices located in Philadelphia, Washington, D.C., New York, Los Angeles, San Francisco, Miami, Pittsburgh, Princeton, Chicago, Palo Alto, Dallas, Harrisburg, Irvine, Boston, London, Paris, Brussels, Frankfurt and Tokyo. For more information about Morgan Lewis, please visit www.morganlewis.com.

For more information about Morgan Lewis, please visit www.morganlewis.com

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NAUTADUTILH APPOINTS NEW PARTNER IN LUXEMBOURG

NautaDutilh consolidates its position on the Luxembourg market with the appointment of Josée Weydert (1969) as partner. Josée joins NautaDutilh after five years at Clifford Chance, where she advised on securitisation transactions, debt and equity offerings, and international finance structures. In international financial circles, Josée is well known as an expert in Luxembourg listing regulations. Prior to joining Clifford Chance, she headed up the Financial Markets Legal Group and the Listing and Agency Group of Fortis Bank Luxembourg SA, one of Luxembourg's largest banks. Josée is particularly well acquainted with Luxembourg's banking and legal environments. “The new Luxembourg securitisation law, the generally favourable legal environment and the attractiveness of the Luxembourg Stock Exchange leave high potential for future growth. At NautaDutilh, I can use my experience for participating actively in the development of financial products, in particular with respect to the debt and equity capital markets and securitisation. I look forward to contribute to NautaDutilh's position in these important fields and to join such a highly regarded team.” Benoît Strowel, a NautaDutilh board member adds, “We are delighted with Josée's decision to join our firm. Her significant experience in international capital markets and securitisation transactions will strengthen our capabilities in such practices. The appointment will be a welcome addition for many of our clients and will undoubtedly contribute to our advance to the top of the Luxembourg legal market.” Two years after its formation, the Luxembourg office of NautaDutilh numbers 11 lawyers and is growing quickly. The office specialises in tax law (corporate tax, international tax planning, structured finance, and financial products), corporate law and financial services (such as acquisition finance, private equity and venture capital fund structuring, and capital markets). For additional information visit www.nautadutilh.com

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MAKING NEWS – CLAYTON UTZ HEATS UP VERSACOLD IN A$435 MILLION DEAL

Perth, 17 January 2006: Clayton Utz has played a key advisory role in the recent acquisition of P&O Cold Logistics, a refrigerated warehousing and distribution business, by Canadian cold storage facilities operator Versacold Holdings Corp. from the Peninsular and Oriental Steam Navigation Company ("P&O"), for approximately C$382 million (A$435 million).

The transaction involved acquisitions in the United States, Australia, New Zealand and Argentina, and a debt and equity raising by Versacold in Canada, with the main closings taking place in Seattle and Sydney in December. The acquisition significantly strengthens Versacold's position as a leading operator of refrigerated warehousing in the North American, Australian and New Zealand markets.

Clayton Utz M&A partner Will Moncrieff led a team drawn from the firm's Perth, Sydney, Melbourne and Brisbane offices, with the core transaction and financing team comprising Peter Wilkes, Scott Girdler and Brett Cohen of the Perth office.

Mr Moncrieff described the closing process as particularly demanding due to the numerous advisers, jurisdictions and transactions involved.

"The Perth office of Clayton Utz has had extensive dealings with Canadian companies and advisers on many mining deals in the last few years, and it was pleasing to put our transactional skills to the test on a significant industrial acquisition for a Canadian client," Mr Moncrieff said. "Transactions of this nature require the co-operation of many to succeed, and on this deal we were particularly pleased to have had the opportunity to work closely with Versacold's Canadian advisers Fraser Milner Casgrain, US advisers Stoel Rives and New Zealand advisers Simpson Grierson."

Allens Arthur Robinson led by Jon North and Fred Chilton acted for P&O and Freehills led by Patrick Lowden acted for the financiers headed by Bank of Nova Scotia.

Clayton Utz, Fraser Milner Casgrain and Simpson Grierson are all members of the Pacific Rim Advisory Council, a strategic alliance of 31 top tier independent member law firms with a business focus on the Pacific Rim region.

For additional information visit www.claytonutz.com

Disclaimer Clayton Utz Media Releases are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this Media Release. Persons listed may not be admitted in all states.

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MAKING NEWS - GIDE LOYRETTE NOUEL ADVISES ARRANGERS ON €2.4 BILLION FINANCING FOR THE BUY-OUT OF HERTZ CORPORATION

The Paris and London offices of Gide Loyrette Nouel have acted as French and English legal advisers to BNP Paribas and The Royal Bank of Scotland plc as Mandated Lead Arrangers and Calyon as Co-Arranger (the “Arrangers”) in relation to the €2.4 billion International Senior Bridge Financing provided to Clayton, Dubilier & Rice, Inc., The Carlyle Group and Merrill Lynch Private Equity (the “Equity Sponsors”) for the purposes of part financing their U.S.$15 billion acquisition of the Hertz Corporation. Gide Loyrette Nouel acted as French and English legal counsel to the Arrangers on all matters relating to the security provided to secure borrowings under the International Senior Bridge Financing by members of the Hertz group of companies, as well as co-ordinating the provision of security related advice in the 12 jurisdictions in which the International Senior Bridge Financing was made available. Formerly a subsidiary of Ford Motor Company, the Hertz group is the world’s largest vehicle rental organisation and one of the leading equipment rental companies in North America. The acquisition and funding under the International Senior Bridge Financing closed on 21 December 2005, with Hertz companies in Belgium, France, Germany, Italy, the Netherlands, Spain, Switzerland, the United Kingdom, Australia, Brazil, Canada and New Zealand borrowing under the International Senior Bridge Financing. The Arrangers were advised by a cross jurisdictional team from Gide Loyrette Nouel comprising partner Error! Hyperlink reference not valid. and associates Paul Lenihan, Dimitrios Logizidis and Thomas Binet (French law) in Paris, and partner Error! Hyperlink reference not valid. and senior associates David Howe and Brad Robinson (English law) in London. Among Co-counsel to the Arrangers on the transaction was NautaDutilh (Dutch and Belgian law), For additional information visit www.gide.com MAKING NEWS – HOGAN & HARTSON ADVISES MOBILE SATELLITE VENTURES IN CONTRACT WITH BOEING TO DEVELOP NEXT GENERATION SATELLITES

NORTHERN VIRGINIA, January 31, 2006 – Attorneys with Hogan & Hartson L.L.P. recently advised Mobile Satellite Ventures (MSV) in its contract with Boeing to construct and deliver three next generation L-band satellites. These satellites, among the most powerful commercial satellites ever built, will form the backbone of an advanced commercial telecommunications network being developed by MSV and its Canadian joint venture partner, MSV Canada. The network will be based on MSV’s patented Ancillary Terrestrial Component (ATC) technology, which combines the best of satellite and cellular technology. It will deliver reliable, advanced, and ubiquitous voice and data coverage throughout North and South America. Each satellite’s primary antenna will be almost 75 feet across, about twice as large as any previous commercial satellite. The Hogan & Hartson team representing MSV included Robin Everett, Vicky Sheckler, and Ashley Dobbs from the Northern Virginia office. For additional information visit us as www.hhlaw.com

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MAKING NEWS – MUNIZ RAMIREZ PEREZ-TAIMAN & LUNA-VICTORIA ACTS IN LANDMARK PERU GAMING TRANSACTION

In what constitutes a landmark transaction in the Peruvian gaming market, US investors have acquired fifty percent interest in an offshore vehicle that represents the property of a Peruvian holding operating some of the most important slot machine facilities in Peru. As a result of this acquisition, the acquirers have gained significant participation in the increasingly developing gaming industry in Peru. The deal was structured as a stock purchase agreement and included a shareholder agreement and a trust agreement with a Mexican entity (Banca Mifel S.A., Institución de Banca Múltiple, Grupo Financiero MIFEL). This transaction involved three offshore vehicles and implied negotiations with sixteen Peruvian companies. Wilmer Cutler Pickering Hale and Dorr LLP (USA), Estudio Osterling (Peru) and Farara Kerins (BVI) acted as counsel to the purchaser, Cervantes, Aguilar-Alvarez y Sainz, S.C. (Mexico) as counsel to the trustee, while Muñiz, Ramírez, Pérez-Taiman & Luna-Victoria (Peru) and Arias, Fabrega & Fabrega (BVI) acted as counsel to the seller. For additional information visit www.munizlaw.com MAKING NEWS –WILMERHALE FEDERAL COURT FINDS MASSACHUSETTS VIOLATES MEDICAID ACT IN FAILING TO PROVIDE CHILDREN’S MENTAL HEALTH SERVICES

January 26, 2006 U.S. District Court Judge Michael A. Ponsor, sitting in Springfield, Thursday ruled that the Commonwealth of Massachusetts has violated federal law by failing to provide behavioral health services to an estimated 15,000 children with serious emotional disturbance, "the most fragile members of our society." "The result of this failure is that thousands of Massachusetts children with serious emotional disabilities are forced to endure unnecessary confinement in residential facilities or to remain in costly institutions far longer than their medical conditions require," the judge said in a 98-page decision. The landmark ruling, which has national ramifications for poor children throughout the country, held that Massachusetts violates the federal Medicaid Act by failing to provide medical assessments, service coordination and in-home behavioral supports. The class action lawsuit, Rosie D. v. Romney, was brought on behalf of nine named plaintiffs, aged five to 18, who were either hospitalized or at risk of hospitalization due to the state's failure to provide home-based services. Lisa, the mother of one of the named plaintiffs, said, "This decision opens the door for children and parents who are searching for treatment in their homes and communities." During the six-week trial last spring, more than 30 witnesses testified about the effectiveness of intensive home-based services, the state's failure to provide these services, the thousands of children who need these services, and the harm they suffer when denied this treatment. "Without such services, a child may face a stunted existence, eked out in the shadows and devoid of almost everything that gives meaning to the gift of life," the judge said. In evaluating the evidence, Judge Ponsor concluded that "this is not a close case; the evidence favoring the plaintiffs is

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overwhelming." The court concluded that the "failure" of the Commonwealth to comply with the Medicaid Act requires it to issue permanent injunctive relief unless voluntary remedial action is forthcoming. The judge will address the issue of remedy in February. James Burling of WilmerHale, counsel for the plaintiffs, said, "We find this decision very gratifying and are eager to secure the actual delivery of these services to Massachusetts children." Steven Schwartz, his co-counsel from the Center for Public Representation, added, "This is a stunning victory for children with serious emotional disturbance." Plaintiffs were represented by WilmerHale, the Center for Public Representation, and the Mental Health Legal Advisors Committee. Members of the WilmerHale pro bono trial team included, James Burling, James Prendergast, John Rhee, Chris Zimmerman and Janet Rountree, and invaluable pro bono expert support was provided by Chris Barry's Dispute Analysis and Investigation team at PricewaterhouseCoopers. For additional information visit www.wilmerhale.com

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UPCOMING MEMBER EVENTS

PRAC Member: Morgan Lewis & Bockius LLP Date: March 9, 2006 Place: Morgan Lewis & Bockius LLP, 101 Park Avenue, New York, NY Event: Seminar: Outsourcing in the Financial Services; Essential Business; Legal and Regulatory Considerations, New York Agenda: 8:30a.m. - 9:00 a.m. Registration and breakfast 9:00 a.m. -12:00 p.m.Program RSVP: Morgan Lewis New York Events, 212.309.6066

CLE credits will be available. For more information about this event, please visit www.morganlewis.com PRAC Member: Tilleke and Gibbins Limited Ltd Date: May 13-19, 2006 Place: Bangkok/Chiang Mai, Thailand Event: PRAC 39th International Conference Join PRAC member firms for the 39th International Conference hosted by member firm Tilleke and Gibbins International Ltd. Public Seminar and PRACtice Group Meetings will focus on Projects/Infrastructure; Business Investment & International Trade, Intellectual Property & Licensing and much more. Visit www.prac.org for complete details and registration information. Open to PRAC member firms only.

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COUNTRY ROUNDUP –AUSTRALIA – CLAYTON UTZ – APRA Settles Stage 2 Reforms

APRA has released the long-awaited Stage 2 prudential standards, which differ from the draft version (which we looked at in a previous Alert) as they are less prescriptive and use a more principles-based approach. In this Alert we'll focus on reinsurance, risk management and outsourcing.

Risk management

An insurer's Risk Management Strategy ("RMS") must, at a minimum

• outline the risk governance relationship between the Board, Board committees and senior management • describe the processes for identifying and assessing risks • describe the process for establishing mitigation and control mechanisms for individual risks • describe the process for monitoring and reporting risk issues (including communication and escalation

mechanisms) • describe the approach to ensuring relevant staff have an awareness of risk issues and instilling an

appropriate risk culture, including the level of accessibility of the RMS • identify those persons and their positions in the insurer (or insurance group) or groups of persons with

managerial responsibility for the risk management framework, and set out their roles and responsibilities • describe the process by which the risk management framework (including the RMS) is reviewed, and outline

the broad coverage for these reviews • provide an overview of the mechanisms in place for monitoring and ensuring continual compliance with the

Minimum Capital Requirement (MCR) • provide an overview of the processes and controls in place for ensuring compliance with all other prudential

requirements • cover both the Australian operations and the risks arising from the overseas operations of the insurer that

could impact on the Australian operations of the insurer.

There are additional requirements if the insurer is part of an Australian or global corporate group, or is a foreign general insurer.

Where there are institutional, operational or other developments relating to the insurer's operations that materially affect the risk profile of the insurer, the insurer must notify APRA as soon as practicable after the event has happened and amend its risk management framework and, if appropriate, the RMS to take account of the change.

Reinsurance arrangements and documentation

The key issue over the last few years has been identifying whether there has been real risk transfer, and consequently the new prudential standard is aimed at ensuring APRA is kept informed of reinsurance arrangements (including retrocession). APRA will only approve a Limited Risk Transfer Arrangement where:

• the arrangement has a legitimate purpose and effect • the arrangement will not disguise, or is not designed to disguise, a material risk to the insurer's current or

continuing profitability, solvency or capital adequacy from any party • the financial costs and benefits of the arrangement, and the nature and potential quantum of any potential

risks to policyholders, are reflected in the application for approval and the proposed accounting and disclosure arrangements

• there will be no adverse effect on the insurer's balance sheet and capital position in any one period or over the entire term of the arrangement

• the insurer has reviewed the effect of the arrangement within the context of its overall risk management and control systems; and

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• the arrangement will not adversely affect the interests of policyholders.

APRA will then determine whether the arrangement is reinsurance or financing for the purposes of calculating the minimum capital requirement and reporting under reporting standards made under the Collection of Data Act. This will be done by considering the nature and purpose of the arrangement.

The reinsurance declaration and Reinsurance Arrangements Statement in the draft standard have been retained, as has the two step verification process:

• two months after the arrangements have taken effect, the insurer must declare that the reinsurance has been fully placed and that it holds the final contract wording of the reinsurance arrangements as detailed in the Reinsurance Arrangements Statement previously lodged with APRA, or a detailed placing slip, a slip wording or cover note (conditions attach to the use of a placing slip or cover note)

• within six months of inception, the insurer would have to attest that it holds the final signed contracts relating to all its reinsurance arrangements.

The new standard also sets out the general requirement of a reinsurance management framework to manage the risks arising from its reinsurance arrangements. Part of this framework is the Reinsurance Management Strategy ("REMS"), which must

• define and document the insurer's objectives and strategy for reinsurance management and control, reflecting the insurer's appetite for risk; and

• identify the key elements of the insurer's policies and procedures, processes and controls that comprise the insurer's reinsurance management framework.

REMS must be reviewed at least annually and, where there are material changes to an insurer's operations, be amended. Upon approval by the Board, any revised REMS must be submitted to APRA within 10 working days (compare this to the "as soon as is practicable" requirement for notifying APRA of any changes to the general Risk Management Strategy).

Outsourcing

Outsourcing must still be formalised in written agreements, but the new prudential standard would also require those arrangements to detail service levels, performance requirements, default arrangements and termination provisions, and pricing and fee structures. Insurers would also be required to develop an outsourcing policy as part of their risk management frameworks, and back-up plans developed and regularly tested. The requirement in the draft that APRA would have to be informed of any outsourcing has however been dropped from the final version.

What to do now?

The new standards come into effect in October, so insurers should look now at their compliance systems to ensure they're ready for the change.

For additional information visit www.claytontuz.com

Disc la imer C lay ton U tz News A le r t i s i n tended to p rov ide commenta ry and genera l i n fo rmat ion . I t shou ld no t be re l i ed upon as lega l adv ice . Fo rmal l ega l adv ice shou ld be sought i n pa r t i cu la r t ransac t i ons o r on mat te rs o f i n te res t a r i s ing f rom th i s bu l l e t i n . Persons l i s ted may no t be admi t ted in a l l s ta tes .

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Biotech Patent Protection in China

By Xu Yanyi

Since Watson and Crick discovered the duplex DNA in 1953, life science has been experiencing a revolution. A distinctive character of such revolution is that biology was transformed from respectful revelations to the phenomenon of life in nature to an industry that gets involved in and changes people’s life. The milestones in the development of biology, such as transgenic animals and the sequencing of human genome, attracted grave attention of the public. Different from mechanic and electronic industries that were grown up in acclaims, biotech industry has been trudging along a long and muddy road. Because of involving the uncovering or even amending of the mysteries of life, especially human life, biological technology raised up the concern, panic or opposition of the public and is challenging the existing concepts of laws, politics, economy, religion, morals and ethnics. And we have to face a lot of new problems, such as whether the clone technology will be abused and cause genetic discrimination, or destroy the existing ecological balance. To accommodate such changes, patent policies shall also be adjusted to achieve a balance between individual and the public, tradition and development, as well as science and morality. China takes a positive approach in laying down patent policies in the area of biotech and grants patent to biotech products, including such human body products as cell line, gene, DNA sequence. The following paragraphs will discuss some practical issues. 1. Whether gene, human gene in particular, is the subject of patent protection Indubitably, genes or DNA fragment are natural substance. Consequently, the examination on patent application involving gene shall adopt the criteria for the examination on patent application for natural substance. That is to say, “substance in natural form found in nature is merely discovery of substance…shall not be granted patent. However, patent can be granted to such substance and the process to derive such substance where such substance is separated or extracted from the nature for the first time, its structure, form or others physical or chemical parameters have not been known by existing technologies but can be clearly characterized and such substance has practical value in the relevant industry. ” (The Guidelines for Patent Exanimation 2-155) “Genes” or “DNA fragment” (including that of human) in the sense of biotech are the subjects of patent protection, since they are separated from organism and their structures are deciphered by sequencing. Or in another word, they satisfy the said criteria. One thing needs to be noted is that genes shall be defined directly by sequence listing. It is prohibited to define genes by such description as” A gene or DNA molecule has x% of homology or identity with B sequencing illustrated in Figure 1”. 2. Sufficient disclosure of inventions concerning DNA fragment, gene, peptide or protein

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Similar to the general rules on patent in the field of chemistry, inventions involving DNA fragment, gene, peptide or protein shall be sufficiently disclosed. To be specific, the nucleotide sequence and aminoacid sequence as well as the biological activity of the said sequences shall be disclosed. The disclosure of a patent application will be deemed insufficient, where the biological activity of any of such sequence is not disclosed. An exception is protein. Where one of more protein derivatives are defined and the techniques of preparing such proteins and proving their functions are described in the examples in the specification, the claims may describe the derivatives with the functions of polypeptide or proteins, their physical and chemical characteristics, origin or source, and the methods of generating them, etc. Where DNA fragment, gene, peptide or protein is used in new pharmaceutical compound or pharmaceutical composition, their detailed medical use, effect, effective dosage and application shall be disclosed. Relevant qualitative or quantitative data of laboratory tests (animal tests) or data of clinical tests shall be disclosed to an extent that the professionals in the relevant area can expect that the technical solution for the patent under application could achieve the expected purpose or effect. The disclosure of effective dosage and application or preparation method shall be so sufficient that the professionals in the relevant field can implement the patent with such information. 3. Whether patents can be granted to genetically modified plants and animals Paragraph 1 Article 25 of the Patent Law provides that animal and plant varieties are not patentable. The current practice is that genetically modified animals and plants are deemed as animal and plant varieties so that they are not patentable. The theoretical ground for such practice is that transgenic animals and plants are protected by Animal and Plant Protection Regulation, since it is difficult for organism to maintain the repeatability of species via reproduction and such repeatability is necessary for mass production. To be specific, animal and plant varieties include individual animals, plants, and their parts, i.e., individual animal and individual animal at each stage of development, such as embryonic stem cells, germ cells, oosperm, embryos, etc., as well as individual plants and their reproductive materials, e.g. seeds, fruits, cuttings and so forth. 4. Inventions in contrary to social morality or detrimental to public interest are not patentable Since ethical and moral issues are involved in the development of biological technologies, such restrictive criterion of patent examination is adopted to avoid the abuse of biological technologies. Such criterion that is borrowed from Article 6 of EU Directives No. 98/44 regarding biotech inventions provides that “where the commercial use of biotechnological inventions is in contrary to social moral or detrimental to public interest, no patent shall be

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granted to such inventions on the basis that they are deemed as non-patentable inventions pursuant to Article 5 of the Patent Law”. For example, the following inventions are deemed non-patentable:

1) Human and the method of cloning human; 2) The method to change the reproductive genetic identity of human; 3) The industrial or commercial use of human embryos; 4) The method of changing the genetic identity of animals that makes animals suffer and is of no

substantial benefit to the medical treatment of human or animals as well as the animals derived from such method.

(The article was originally written in Chinese, the English version is the translation.)

FOCUS - LEE AND LI

LEGISLATURE BEEFS UP AMT ACT

Vincent Tseng On 23 November 2005, the Finance Committee of the Legislative Yuan reviewed the draft Alternative Minimum Tax Act, which introduces the alternative minimum tax (AMT) system in Taiwan. The committee accepted most of the wording proposed by the Executive Yuan, but in a number of major and controversial areas, it introduced amendments to improve the provisions of the original draft. The amended version approved by the Finance Committee then rapidly went to its third and final reading in the Legislative Yuan on 9 December 2005, and was promulgated by the President on 28 December 2005. The new law takes effect on 1 January 2006. The most salient point in which the version enacted by the Legislative Yuan differs from the Executive Yuan’s draft is in Article 12, Paragraph 1, Subparagraph 1, whereby non-ROC-source income not included in the calculation of individuals' consolidated income for income tax purposes, and income exempted from income tax under Article 28 Paragraph 1 of the Act Governing Relations with Hong Kong and Macao, are included in individuals’ alternative minimum taxable income for AMT purposes. This provision is the first step toward the principle of taxing individuals’ worldwide income. It is scheduled to take effect from 2009, but the Executive Yuan is empowered to defer implementation until 2010 if necessary. To reduce the impact of introducing taxation of overseas income, the Act provides for a tax-free allowance of NT$1 million in overseas income per filing household, and allows tax already paid overseas to be offset against ROC tax on the same income, to avoid income from a single source being taxed twice. The rate of ATM on profit-seeking enterprises is raised from 10%, as proposed by the Executive Yuan, to "not less than 10% and not more than 12%," with the actual rate to be set by the Executive Yuan. Moreover, the level of individual's alternative minimum taxable income above which AMT will be levied is reduced to NT$6 million from the NT$8 million proposed by the Executive Yuan. The above changes made by the Legislature Yuan to the Executive Yuan’s draft have clearly made the Act harsher. However, in its amended form the Act is a step of significant reform in

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terms of promoting fairer taxation and gradually adjusting the income tax system, which has long proved difficult to achieve. In addition to making individuals’ overseas income taxable, the Act also includes securities transaction income in the alternative minimum taxable income, applies fixed tax-free allowances to insurance payouts, and moves toward taxing employees’ bonus which is in the form of shares of the company on a market-price basis. On balance, the Act represents a highly positive contribution to building a healthier tax system. The main points of Taiwan’s new AMT system can be summarized as follows: Educational, cultural, public welfare, and charity organizations, public-sector enterprises,

non-resident individuals or profit-seeking enterprises, and profit-seeking enterprises in liquidation or bankruptcy, are exempted from the AMT system.

The AMT tax-free allowance is set at NT$2 million for profit-seeking enterprises, and NT$6

million for individuals. The AMT tax rate is set at 10–12% for profit-seeking enterprises, and 20% for individuals.

The alternative minimum taxable income for AMT purposes will include income from

securities transactions (for individuals, only those from unlisted and non-OTC-traded securities), and business income that is exempted from ordinary business income tax by incentives for industries under various legislations, including any additional incentives under future legislation.

AMT paid by a profit-seeking enterprise may be added to its shareholders’ imputed tax

credit account, and is deductible for the purposes of the additional tax on undistributed retained earnings.

Payouts from life insurance policies and annuity policies for which the beneficiary and the

applicant are not the same person are included in the alternative minimum taxable income for AMT purposes. But death payments are exempt up to NT$30 million per filing household.

The amount of non-cash gift that is deductible for income tax purposes is included in

individuals’ alternative minimum taxable income. The amount by which the market value of the shares of employees’ bonus exceeds their par

value is included in individuals’ alternative minimum taxable income. Investment plans or investment contracts meeting certain criteria need not be included in a

profit-seeking enterprise’s alternative minimum taxable income.

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Underreporting, or failing to report, any amount that should be included in the alternative

minimum taxable income will be penalized by administrative fines of up to twice the amount of underpaid tax. Failure to file for the alternative minimum tax return will be subject to fines of up to three times the additional tax payable.

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Intellectual Property Advisory

Intellectual Property Protection at Trade Shows, Conferences and Symposia

By Joseph M. Paunovich and Seth D. Levy [February 2006]

The U.S. Department of Commerce recently published a notice requesting public comment on current policies and practices for protecting intellectual property rights in public forums, such as trade shows, and the problems associated with infringement that results from disclosure in these settings.1 Comments are due by Feb. 11, 2006. The notice highlights the competing interests of protecting valuable IP on the one hand, and presenting research and innovation to the public on the other. This is a constant tension across nearly every field of technology, and is faced by those in the public and the private sector alike.

Companies in the private sector can and should take steps to ensure that disclosure of proprietary technology at a trade show or other public forum does not undermine the strength or validity of IP associated with that technology. However, this issue is also important for organizations conducting research in the non-profit sector, such as universities, academic medical centers and independent research institutes. For these entities, an additional challenge is the pressure to publish the results of research early and often. Appropriate steps should be taken to protect valuable IP while balancing institutional academic interests. Indeed, “public disclosure” has important implications both for companies and academic institutions, because a significant loss of opportunity can result from a public disclosure that eliminates patent rights2 or the protections afforded under trade secret3 law. As such, policing disclosure by employees and researchers at trade shows, industry conferences, symposia, poster presentations and the like is crucial.

As a practical matter, it may not be feasible to prevent all disclosure of a proprietary technology, as disclosure is often essential to attracting new financing or grant funding, furthering academic pursuits, marketing products and services, developing collaborations and increasing an organization’s visibility in the field. Thus, companies and academic institutions take a variety of different approaches to the issue of protecting their IP. Even so, there are a number of basic steps that can be taken to protect IP while maintaining a commitment to disclose and market technologies:

Document research and product development (in particular, conception and diligent reduction to practice for the protection of U.S. patent rights); Continually evaluate new innovations to determine what, if any, mechanisms for IP protection might be available; Establish a system for employees and researchers to disclose new discoveries and innovations to appropriate institutional personnel who can assess the potential for IP protection and consider the commercial value of the technology; Require non-disclosure or confidentiality agreements prior to disclosure of IP to employees and researchers within the organization as well as to outside individuals; and Avoid disclosure in trade shows, symposia, publications and the like prior to taking appropriate steps to secure patent protection where such protection is of interest (in some instances, a timely filed provisional patent application can protect patent rights).

While it is unclear how public comment to the U.S. Department of Commerce will impact legislation relating to disclosure of IP at trade events, it is clear that companies and academic institutions must take an active role in policing the disclosure of IP in public forums to protect IP rights.

Footnotes:

1 Federal Register, Vol. 71(8):2024 (January 12, 2006); to read the Department of Commerce “Notice Requesting Comments on Intellectual Property Protection at Trade Events”, click here.

2 The Patent Act describes “public disclosure” in 35 U.S.C. § 102. Public disclosure may be found when an innovation is in public use in the U.S. (i.e., trade shows), disclosed in a printed publication anywhere in the world (i.e., press kits, websites, articles, patents), or sold or offered for sale in the U.S. Under U.S. patent law, in most instances public disclosure of an invention begins a one-year grace period in which a patent application must be filed to protect the rights in an invention. M ost other countries require that a patent application is filed prior to public disclosure.

3 The Uniform Trade Secrets Act defines a “trade secret” as information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. See Uniform Trade Secrets Act (UTSA) § 1(4); Cal. Civ. Code § 3426.1.

For more information, please contact:

This Advisory is a publication of the Intellectual Property and Life Sciences Departments of Davis Wright Tremaine LLP. Our purpose in publishing this Advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.

Copyright © 2006 | Davis Wright Tremaine LLP

Joseph M. Paunovich Los Angeles, California (213) 633-6824 josephpaunovich@dwt.com

Seth D. Levy Los Angeles, California (213) 633-6869 sethlevy@dwt.com

Copyright © 2006 Hogan & Hartson L.L.P. All rights reserved.

Pharmaceutical and Biotechnology

February 2006

Amendments to the Medicaid Rebate Statute Made by the

Deficit Reduction Act of 2005 On Wednesday, February 1, 2006, the House of Representatives passed the Senate-approved Deficit Reduction Act of 2005 (the DRA), which the President is expected to sign. Among the components of the DRA are a number of changes to the law governing the Medicaid Drug Rebate Program, 42 U.S.C. § 1396r-8. This Pharmaceutical and Biotechnology Update describes those changes below, the effective date for which is January 1, 2007 unless otherwise noted. While this effective date provides manufacturers with a year’s lead time to prepare for and address these changes, we encourage manufacturers to begin that process as soon as possible to ensure a smooth and effective transition. The DRA amendments represent the first significant computational changes to the Medicaid Rebate Program since the Program’s roll-out in the early 1990s. The amendments also direct CMS to issue a regulation by July 1, 2007 (discussed below) regarding the calculation of Average Manufacturer Price, and to take into account in that regulation recommendations that the HHS-OIG must make by July 1, 2006. The promulgation of this regulation presents manufacturers with an unprecedented opportunity to provide input and recommendations to both the OIG and CMS regarding calculation issues. Hogan and Hartson will be seeking a meeting with the OIG to discuss the recommendations and will include in those discussions issues and topics of interest to the manufacturing industry. While these changes are of obvious relevance to those manufacturer personnel who calculate Average Manufacturer Price (AMP) and Best Price (BP), they are also significant for: (1) those who participate in contracting strategy, given the changes relating to authorized generics and nominal pricing, as well as (2) those involved in financial accounting functions, given the likely changes in future rebate liability that

Pharmaceutical and Biotechnology | 2

will result from the revised definition of AMP, the authorized generics provisions, and the increased rebate claims for physician-administered drugs. These revisions are discussed in brief below, and we encourage you to contact any of the H&H personnel listed below to discuss these changes more fully.

Changes to the Definitions of AMP , BP, and Other Statutory and Agreement Terms Prompt payment discounts to wholesalers for drugs distributed to the retail pharmacy class of trade will no longer be included in the calculation of AMP. See DRA § 6001(c)(1)(A).

• To the extent this change raises a manufacturer’s AMP for a product, this change also is likely to raise the manufacturer’s Medicaid rebate for that product, and therefore also impact a product’s “PHS” price to 340b covered entities.

• The impact on state pharmaceutical assistance program (SPAP) and state supplemental rebate agreements will depend upon the terms of those agreements.

• Note that while the term “wholesaler” is not defined in the statute or DRA, it is defined in the Rebate Agreement as any entity to whom the manufacturer sells its product but does not relabel or repackage it. See Medicaid Drug Rebate Agreement (MDRA) § I(ee).

• The DRA amended the statutory reporting requirements to require manufacturers also to report data regarding the prompt pay discounts provided to wholesalers. Details regarding this reporting requirement are not included in the statute. See DRA § 6001(c)(2).

The Best Price exception for Nominal Prices, defined in the Rebate Agreement as any price less than 10% of the current quarter’s AMP (See MDRA § I(s)), has been narrowed. See DRA § 6001(d)(2).

• A Nominal Price will only be exempt from the calculation of Best Price when extended to: A covered entity described in section 340B(a)(4) of the Public Health Service Act; An intermediate care facility for the mentally retarded; A State-owned or operated nursing facility; and Any other facility or entity that the Secretary determines is a safety net provider to which

sales of such drugs at a nominal price would be appropriate based on specified factors.

• This more limited exception also would apply to the calculation of Average Sales Price. See 42 U.S.C. § 1395w-3a(c)(2)(B).

• The DRA amended the statutory reporting requirements to also require manufacturers to report data regarding nominal price transactions. Details regarding that reporting requirement are not included in the statute. The Medicare Modernization Act had already included a reporting requirement for nominal price transactions excluded from the calculation of Average Sales Price. That reporting requirement has not yet been implemented.

The definition of a “covered entity” eligible to receive discounted pricing under section 340b of the Public Health Service Act has been extended to include certain children’s hospitals meeting specified requirements as of the date of enactment of this bill. See DRA § 6004.

• Such discounted prices would be excluded from Best Price under the statutory exclusion for covered entities.

• Manufacturers of products with large pediatric populations could see an increase in the proportion of sales made to covered entities.

Pharmaceutical and Biotechnology | 3

CMS is required to issue a regulation regarding the calculation of AMP by July 1, 2007. See DRA § 6001(c)(3).

• The HHS-OIG is required to submit recommendations for that regulation by July 1, 2006.

• This rule-making process should offer manufacturers with an unprecedented opportunity to request guidance and provide input on issues relating to the calculation of AMP.

Inclusion of Authorized Generics in the Calculation of AMP and BP

The DRA revised the definitions of both AMP and BP to require the inclusion of pricing data relating to so-called “authorized generics.” The DRA does not use that term, but rather directs that AMP and BP for a given single source or innovator multiple source drug be calculated inclusive of pricing data for any such drug of a manufacturer that is sold under a new drug application approved under section 505(c) of the Federal Food Drug and Cosmetic Act. See DRA § 6003.

• The DRA may be read to extend the manufacturer’s statutory reporting requirements to all drug products that meet this definition.

• This requirement may raise significant operational and compliance issues where a different manufacturer sells the “authorized generic.”

State Rebate Claims for Physician-Administered Drugs

Many States currently are submitting rebate claims for separately-reimbursed physician-administered drugs. The DRA requires that States implement methodologies, e.g. NDC codes, for translating utilization data for physician-administered drugs into a format that permits the States to claim Medicaid rebates for that utilization. States that do not do so risk losing their federal matching funds for the costs of those drugs. See DRA § 6002(a).

• For single source drugs, States must implement such methodologies “as the Secretary may specify as necessary” by January 1, 2006. Unless the Secretary specifies that an alternative system should be used, NDC codes will be required not later than January 1, 2007.

• For multiple source drugs (as defined below), States must implement such methodologies by January 1, 2008, for a list of the 20 highest dollar-volume drugs to be published by the Secretary.

• Manufacturers of single source physician-administered drugs are likely to see an increase in the amount of rebates claimed by States because of this new requirement.

Revised Manufacturer and State Reporting Requirements

Manufacturers will be required to report AMP and BP on a monthly basis, 30 days after each month’s end, to facilitate monthly updates to Federal Upper Payment Limits, as discussed below. See DRA § 6003(a).

• The statute does not address whether and how the AMP and BP data to be reported on a monthly basis will be used to calculate Unit Rebate Amounts.

• The new prompt pay discount reporting requirement is subject to the new monthly reporting requirement, but the nominal price reporting requirement remains a quarterly obligation.

Effective July 1, 2006, the Secretary is obligated to provide AMP to the states on a monthly basis and on a public website on a quarterly basis. See DRA § 6001(b). AMP data previously were subject to statutory confidentiality protections.

Pharmaceutical and Biotechnology | 4

New Definition of Federal Upper Payment Limit The Federal Upper Payment Limit (FUL) for multiple source drugs will be set at 250% of the AMP for the least costly of the products within a given multiple source designation that also meets specified regulatory criteria. See DRA § 6001(a). The existing formula sets the FUL at 150% of the lowest AWP. See 42 C.F.R. § 447.332.

• The statutory definition of multiple source drug has been revised to require the existence of only two rather than three therapeutically and pharmaceutically equivalent products.

• The Secretary also has the option of contracting with a vendor to survey retail prices on a monthly basis, and providing that information to the States so as to permit the States to use that data to set reimbursement rates that do not exceed the FUL. See DRA § 6001(e).

• Because the DRA does not address the ability and/or obligation of a manufacturer to update monthly AMP and BP figures to reflect late-arriving data, it is unclear whether and how subsequent adjustments to previously-reported AMP and BP figures will affect FULs.

* * * * *

For more information about the topics discussed in this Update, please contact the Hogan & Hartson L.L.P. attorney with whom you work or an attorney listed below. If you are interested in any of our other publications, please see http://www.hhlaw.com/newsstand/.

Alice Valder Curran Washington, D.C. avcurran@hhlaw.com +202-637-5997

Ann Morgan Vickery Washington, D.C. amvickery@hhlaw.com +202-637-8605

Isabel P. Dunst Washington, D.C. ipdunst@hhlaw.com +202-637-5818

Kristin Krause Cohen Washington, D.C. kkcohen@hhlaw.com +202-637-6154

www.hhlaw.com This Update is for informational purposes only and is not intended as basis for decisions in specific situations. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. To receive future Updates or to have your e-mail address removed from the list for distribution of future issues of this newsletter, please contact Parsippany Howard at 202-637-3286 or via e-mail: pkhoward@hhlaw.com

DOL Issues Proposed Rule Eliminating Alien Employment Certification Substitution and Imposing a 45-Day Window for Filing Immigrant Petitions

February 14, 2006

The Department of Labor (DOL) issued yesterday a Notice of Proposed Rulemaking (NPRM) that sets out four proposed measures designed to protect the alien employment certification process (AEC, also commonly known as the Labor Certification process) from fraud and abuse. First, the NPRM seeks to eliminate the current permissible practice of allowing employers to substitute as a beneficiary of an AEC application a worker other than the worker named in the application filed originally. Second, the NPRM proposes a requirement that employers that have obtained a certification of an AEC application must file an immigrant petition based on that application with the United States Citizenship and Immigration Services (USCIS) within 45 days of the date the application is certified. Third, the NPRM bars employers from amending PERM applications after these are filed. Fourth, the NPRM prohibits the “sale, barter, or purchase” of AEC applications and forbids employers from seeking or receiving payment for filing AEC applications. Fifth, the NPRM clarifies the DOL’s procedures for dealing with fraud in the AEC process and establishes a debarment procedure for employers found to have engaged in fraud related to the AEC process.

Please note that none of the provisions in the NPRM are effective yet; the NPRM allows a 60-day comment period, and the final rule implementing these provisions will presumably appear a few months after the close of this period.

Background

In its commentary to the NPRM, the DOL makes it clear that the purpose of the NPRM provisions is to address the rampant misuse of the AEC process perceived by this agency. Specifically, the DOL aims, through these provisions, to stamp out the practice of filing fraudulent AEC applications (for example, by a nonexistent employer for a nonexistent employee) with the objective of selling a certified AEC application to an alien seeking permanent resident status, as well as the “black market” in certified AEC applications that has resulted. The impact of the NPRM provisions on employers that file legitimate AEC applications and may have a valid reason to object to some of these provisions is only cursorily discussed.

Elimination of AEC Substitution

Although no legal or regulatory provision addresses this practice, employers have for some years been allowed to substitute into a pending or certified AEC application an employee other than the employee named in the application at the time of filing, as long as certain conditions were met, most notably that the substitute worker fill the position described in the application, and have met all of the requirements for that position, as spelled out in the application, as of the priority date of that application. Generally, the substitution occurs at the time that the immigrant petition is filed, with the employer submitting a new ETA-750B or 9089 in the name of the substitute. The practice has become relatively frequent as employees have become more mobile and employers that have filed an AEC application on behalf of an employee only to have that employee depart before concluding the process have sought to mitigate the significant costs incurred in the AEC process by substituting another employee or prospective employee for the departed beneficiary of the AEC application.

The NPRM intends to eliminate the practice of AEC beneficiary substitution by mandating that a certified AEC application will be valid only for the worker named in the AEC application that is filed originally. Only

attempted substitutions occurring on or after the effective date of the final rule (regardless of the date of the AEC application’s certification) would be barred. Substitutions allowed before this effective date are not affected.

It should be noted that the NPRM prohibition on substitution appears to apply only to AEC applications that are still being processed by the DOL and are thus within its jurisdiction. Nothing in the NPRM purports to prevent the USCIS from accepting an I-140 for a substitute employee (as noted above, it is at the time of the immigrant petition filing that substitution generally occurs). USCIS policy on the issue of AEC substitution will presumably be expressed at some future point.

45-Day Window for I-140 Filing

The NPRM provides that the certification of an AEC application will expire if the application is not filed with the USCIS in support of an immigrant petition within 45 calendar days of the date of the certification. Applications that are certified as of the effective date of the final rule will have to be filed in support of I-140 petitions within 45 days of that date. Currently, certifications of AEC applications are valid indefinitely.

Please note that the 45-day window would apply to all AEC applications (whether filed under the Traditional, RIR, or PERM processes) for which I-140 petitions have not been filed as of the final rule’s effective date.

Prohibition on AEC Application Amendment

A provision in the NPRM would prevent employers from amending AEC applications filed under the PERM process. AEC applications filed under the RIR or Traditional pre-PERM processes that are pending at a Backlog Processing Center are not covered by this provision and may be amended. The DOL justifies this provision on its belief that PERM AEC applications are generally processed rapidly, and that the “back and forth exchange” between the DOL and an employer that is involved in the amendment process would be inconsistent with the PERM program’s streamlining objective.

Prohibition on Employers Seeking or Receiving Payment for Filing an AEC Application

The DOL proposes to forbid employers from seeking or receiving payment of any kind, from any source, including the foreign worker, for any actions in connection with the AEC process. The NPRM prohibits the payment by someone other than the employer of an employer's legal fees and other costs related to preparing, filing and obtaining an AEC application. The NPRM notes that some employers routinely seek reimbursement of legal and other costs from alien AEC beneficiaries, but insists that such expenses should be the sole responsibility of employers.

Fraud and Debarment

Although the overwhelming majority of employers file legitimate AEC applications, it is important to note that the NPRM specifically prohibits the sale, barter or purchase of AEC applications, and would debar employers, attorneys or agents from filing AEC applications for up to three years for a number of reasons, including: (1) the sale, barter or purchase of an AEC application; (2) the provision of false or inaccurate information in an AEC application; (3) a failure to comply with the terms of the application form; (4) a failure to comply with the PERM audit process; (5) a failure to comply with the supervised recruitment process; and (6) conduct resulting in a finding by a court, Department of Homeland Security, or Department of State of fraud or willful misrepresentation involving an AEC application.

How this Affects You

As noted above, no provision in the NPRM is effective yet. The DOL is inviting comments on the NPRM provisions for a period of 60 days, and we encourage all employers who believe they may be negatively affected by these provisions to share their concerns with the DOL. We will be contacting all clients that we consider may be disadvantaged by the NPRM’s limitations, especially those affecting AEC substitution and the short window to file I-140 immigrant petitions, with suggestions on how to submit criticisms of these limitations to the DOL.

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