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McKinsey to pay $573M to settle claims over opioid crisis role: source

508 pointsby onetimemanytimeover 4 years ago

45 comments

crumbshotover 4 years ago
This is far too low. A fine large enough to destroy the company (as was effectively done to Purdue) would have been the only palatable outcome. And even more importantly, legal repercussions for all their employees who were personally responsible for this.<p>All this settlement achieves is &#x27;a cost of doing business&#x27;, as they say. It&#x27;s not punishment or deterrence. McKinsey and other companies like them will do similar in the future, and simply pay it off, again.
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ihaveajobover 4 years ago
I know someone who worked for McKinsey for a few years, and some of the projects he described were straight up slimy. The one I recall right now was helping a big payday lender (read: large scale loan shark) figure out how to get their money back from people who were behind on their payments. The problem was that they can only attempt to withdraw so many times from someone&#x27;s bank before they&#x27;re banned, so the agreed solution was to estimate the best time of the month when the client had received their paycheck, but before they had used it to pay rent and other expenses.<p>This person is no longer working there, and I&#x27;m not surprised.
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sharkweekover 4 years ago
The absolutely most fascinating part of this is learning how McKinsey has long argued that making recommendations that businesses may or may not act on does not create legal liability (until this).<p>I’m trying to see that argument applied in any other instance and it becomes totally ridiculous.<p>“You see, your honor, I merely suggested to my client that he kill his neighbor in order to take his land, I didn’t think he’d actually <i>DO</i> it!”
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BitwiseFoolover 4 years ago
When company management wants to make a big change they hire consultants to provide cover and justification for it. The consultants role is to agree to and implement whatever the management&#x27;s desired change is. The consultants exist to provide an air of authority behind the decision and to act as a smokescreen to the employees facing the change. If the plan succeeds, upper management takes the credit. If it fails, the burden can be shifted onto the consultants.<p>Companies like McKinsey will say whatever you want them to say, and there is no shortage of conflicting case studies to &#x27;prove&#x27; their points.
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neurotech1over 4 years ago
Let&#x27;s not forget, these are the same consultants that did work for Enron, work leading up to the 2008 financial crisis.[0] McKinsey is also advising various government agencies on optimizing their Covid-19 response[1], generating revenue of $100m and counting.<p>[0] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;McKinsey_%26_Company#Controversies" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;McKinsey_%26_Company#Controver...</a><p>[1] <a href="https:&#x2F;&#x2F;www.propublica.org&#x2F;article&#x2F;how-mckinsey-is-making-100-million-and-counting-advising-on-the-governments-bumbling-coronavirus-response" rel="nofollow">https:&#x2F;&#x2F;www.propublica.org&#x2F;article&#x2F;how-mckinsey-is-making-10...</a>
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vypr007over 4 years ago
Approaching this from a cold math perspective, like a McK consultant would.. $573M settlement for approx 450k deaths, is a a little over $1200 per death if that is given away as compensation at all.<p>Not bad for McK I&#x27;d say. The consultants really managed this well.
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iujjkfjdkkdkfover 4 years ago
The war on drugs is responsible for the opioid crisis.<p>Companies psychopathically seek out profits, and need to be kept in check, but that does not diminish the fact that US (and Canadian) drug policy bears direct responsibility for opioid deaths.<p>This kind of news story, while maybe satisfying, is a red herring. As long as addiction is criminalized, and legal drug supplies dont exist, it doesn&#x27;t matter how many Purdues or McKinseys we punish, the problem does not go away.
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haltingproblemover 4 years ago
Lets not forget this episode where McKinsey charged NYC $27 million for a flawed, nay, doctored analysis which actually caused violence to soar at Rikers. The software they delivered never worked. The sheer notion of Harvard&#x2F;Princeton educated McKinsey consultants ripping off NYC for millions and putting inmates at Rikers at more risk of violence is sickening.<p><a href="https:&#x2F;&#x2F;www.propublica.org&#x2F;article&#x2F;new-york-city-paid-mckinsey-millions-to-stem-jail-violence-instead-violence-soared" rel="nofollow">https:&#x2F;&#x2F;www.propublica.org&#x2F;article&#x2F;new-york-city-paid-mckins...</a>
spaetzleesserover 4 years ago
It&#x27;s really tiring to constantly hear how people or organizations with deep pockets can &quot;settle&quot; things by handing over money. Nothing will ever change until either some high level people go to jail or the company goes to jail (as in suspending its business for a while). Or make the fines outrageously high so it really hurts the company and not just as a small part of their profits.
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slumslumover 4 years ago
Ex McK-Intern here: From my short-term experience, I&#x27;d say there are folks who genuinely want to help their clients while others are mostly in for the prestige and the money. The business model of staffing young graduates alongside more experienced people is actually quite reasonable as the experts could steer the overall project while the juniors would do the number crunching and info gathering. I personally see their value for a broader circle in the sense that if the consultants can make a client $$$ or reduce costs, this can either lead to overall improvement of business and thus increase employment or - in case people need to be fired - save the rest of the employees from their whole company going out of business in the worst case. Just to briefly touch the most common criticisms.<p>Nevertheless, I decided not to take their offer afterwards, partly due to exactly those shady practices that went well beyond even my quite relaxed sense of business ethics.
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oaieyover 4 years ago
I hope they also fire everyone involved and substract the money directly from each partner compensation. That will maybe teach a lesson to a whole generation.<p>Okay, naive, wishful thinking.
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froidpinkover 4 years ago
One of the Mckinsey decks that got leaked can be found here in case anyone&#x27;s curious<p><a href="https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;consulting&#x2F;comments&#x2F;k2c8ku&#x2F;mckinsey_purdue_presentation_documents_per_latest&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;consulting&#x2F;comments&#x2F;k2c8ku&#x2F;mckinsey...</a>
the_drunkardover 4 years ago
McKinsey or its partners have been directly involved in Enron, Valeant, and now an opioid crisis that&#x27;s claimed thousands (if not millions of lives).<p>&quot;In for a penny, in for a pound&quot; - this should be McKinsey&#x27;s new corporate slogan.<p>Valeant article: <a href="https:&#x2F;&#x2F;www.ft.com&#x2F;content&#x2F;0bb37fd2-ef63-11e5-aff5-19b4e253664a" rel="nofollow">https:&#x2F;&#x2F;www.ft.com&#x2F;content&#x2F;0bb37fd2-ef63-11e5-aff5-19b4e2536...</a><p>Enron article: <a href="https:&#x2F;&#x2F;www.theguardian.com&#x2F;business&#x2F;2002&#x2F;mar&#x2F;24&#x2F;enron.theobserver" rel="nofollow">https:&#x2F;&#x2F;www.theguardian.com&#x2F;business&#x2F;2002&#x2F;mar&#x2F;24&#x2F;enron.theob...</a>
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jarielover 4 years ago
It&#x27;s interesting because McK is a club, not a company. They are a relatively disparate group of people operating on the basis of culture, it&#x27;s not top down.<p>Some partners can go way off the reservation compared to others, and they may have little to do with one another.
maybelsyrupover 4 years ago
One of my first jobs out of college was at small management consulting firm founded by an formerly very high level McKinsey guy. In a bigger firm, I wouldn&#x27;t have had much contact with this person, but since we were tiny, he would often be out in the field with the junior people.<p>One week I found myself with him in some faraway city. We were a bit lost (this was before smartphones) and late for our next appointment. He was frustrated about it because we couldn&#x27;t get a cab to save our lives. As the minutes ticked by, he&#x27;d get more and more irritated, muttering to himself about losing the fucking clients, etc. You can imagine one of these master-of-the-universe types when they get indignant; it&#x27;s just like the movies.<p>At some point in all the running around, he notices how he&#x27;s acting and tries to summon some perspective on it all, get out of his frustration. <i>&quot;You know,&quot; he said, &quot;when the plague comes, society&#x27;s not gonna need management consultants, nor is anyone gonna miss us. We&#x27;ll get to the meeting when we get to the meeting; no one&#x27;s gonna die because we&#x27;re not there.&quot;</i><p>From a guy who I&#x27;d only known as this very hard-charging white collar business guru, a guy who fell out of a Tom Wolfe novel, this was unexpected and funny to young, naive, impressionable me. I got the impression that while he may not have completely rid himself of being annoyed at being late, he was also sincere. I think about this moment a few times a year, actually, something I wouldn&#x27;t have predicted.<p>Looking back on it, I&#x27;m pretty sure that at the highest levels, these people know that they&#x27;re not giving civilization all that much, and that this is never very far from their minds.
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hospadarover 4 years ago
I wonder what McKinsey&#x27;s profit on this gig was - if &gt;= $573M, then this is just the cost of doing business, no problem, do it again and make some more $$.
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csciuttoover 4 years ago
How your classmate became a con artist:<p>&quot;It’s a choice that’s laden with power. Unlike a bank or a traditional business, consultancies have little capital apart from the graduates they hire. A consultancy is a machine for prestige, and you are the source of their prestige, the smoke that obscures the truth of a business that subsists on the crudity of cutting and selling. They purchased your transcript, and they purchased your diploma, but you have the power to take them away. Without you, a firm has no more weight than the shells through which it is paid.<p>So withhold your labor, withhold your prestige, and watch as the façade begins tumbling down.&quot;<p><a href="https:&#x2F;&#x2F;stanfordsphere.com&#x2F;2020&#x2F;01&#x2F;30&#x2F;how-your-classmate-became-a-con-artist&#x2F;" rel="nofollow">https:&#x2F;&#x2F;stanfordsphere.com&#x2F;2020&#x2F;01&#x2F;30&#x2F;how-your-classmate-bec...</a>
chowardover 4 years ago
&gt; U.S. government data resulted in 450,000 overdose deaths from 1999 to 2018<p>They&#x27;re paying just over $1,000 per life. According to the U.S. government a human life is worth $10,000,000. Seems totally fair.<p><a href="https:&#x2F;&#x2F;www.npr.org&#x2F;2020&#x2F;04&#x2F;15&#x2F;835571843&#x2F;episode-991-lives-vs-the-economy" rel="nofollow">https:&#x2F;&#x2F;www.npr.org&#x2F;2020&#x2F;04&#x2F;15&#x2F;835571843&#x2F;episode-991-lives-v...</a>
throwawayseaover 4 years ago
McKinsey is a firm that simply does not do good work. I am unclear on what value their clients derive from them and why it has the reputation of being a good place to work at or have on your resume. They&#x27;re basically opinion guns for hire, who can parallel construct their way to whatever conclusion you want, granting the goals of [your company or government agency] a sheen of legitimacy. They manage to avoid oversight regularly (<a href="https:&#x2F;&#x2F;www.nytimes.com&#x2F;2019&#x2F;12&#x2F;14&#x2F;sunday-review&#x2F;mckinsey-ice-buttigieg.html" rel="nofollow">https:&#x2F;&#x2F;www.nytimes.com&#x2F;2019&#x2F;12&#x2F;14&#x2F;sunday-review&#x2F;mckinsey-ic...</a>). They have a history of of corrupt leaders and fingerprints on numerous fiscal disasters (<a href="https:&#x2F;&#x2F;www.independent.co.uk&#x2F;news&#x2F;business&#x2F;analysis-and-features&#x2F;mckinsey-how-does-it-always-get-away-it-9113484.html" rel="nofollow">https:&#x2F;&#x2F;www.independent.co.uk&#x2F;news&#x2F;business&#x2F;analysis-and-fea...</a>).<p>They are also very careful to play the PR game well. A good example of their incompetency intersecting with their PR efforts is their spurious claims on diversity (<a href="https:&#x2F;&#x2F;www.mckinsey.com&#x2F;business-functions&#x2F;organization&#x2F;our-insights&#x2F;why-diversity-matters" rel="nofollow">https:&#x2F;&#x2F;www.mckinsey.com&#x2F;business-functions&#x2F;organization&#x2F;our...</a>). The &quot;Diversity Matters&quot; report here has been quoted by virtually everyone - from the Harvard Business Review to corporate HR teams. And it is remarkably deceptive, because it has been bandied about as evidence that more diversity = better outcomes. Their own study at the link above admits there is no casual link here. It states this in an incredibly misleading way:<p>&gt; While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful.<p>And now here we are, with corporations normalizing discriminatory practices relating to hiring, promotion, and so forth.
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andrewonover 4 years ago
Failure of free market mechanism?<p>McKinsey optimized the business strategy to maximize profit. The strategy is locally optimal but a net negative at society scale.<p>I always puzzle why some economists oppose the basic idea of regulating drugs. Layman like us won&#x27;t have the prior knowledge to tell the difference between snake oil and effective treatment. Drug maker won&#x27;t have the incentive to conduct expensive randomized trials. Are we going to tell by reading Amazon reviews?
chiefalchemistover 4 years ago
This is going to sound heavy-handed but what they did was terroristic. It undermined individuals, families, and the social fabric. It&#x27;s not a passing event but an endless altering of fulfilling lives.<p>The dollar amount might feel impressive. But keep in mind the actual employees who contributed to the &quot;turbochargeing&quot; aren&#x27;t paying that, and they are still walking the streets.<p>I can&#x27;t imagine how this is Justice, or even justice.
haltingproblemover 4 years ago
This statement says that 40+ US States and DC. I have seen 50 states in other articles.<p>Does this mean that the Feds can still go after them? The Dems are historically <i>very</i> friendly to the Pharma industry in ensuring outcomes in-spite of populist posturing. Can Medicare&#x2F;Medicaid&#x2F;VA sue them for recovery of monies spent in treating addictions and prescriptions?
dia80over 4 years ago
The opinions on consultants in the thread is largely negative and it&#x27;s suggested hiring them is a sign of organisational dysfunction. If you can find information on consulting spend in annual reports you could create a &quot;consultant factor&quot; for stocks and see if big spenders underperform.
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tebuevdover 4 years ago
No one ever admits guilt. No one ever goes to prison. These fines are just &quot;cost of doing business&quot;.
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tharneover 4 years ago
Too bad they can&#x27;t be sued for ruining countless businesses with mindless self-serving &quot;advice&quot; meant to do nothing more than get their contracts re-upped.<p>The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR.
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todipaover 4 years ago
$573M will be minimally felt at the organization level. It is less than 5% of global revenues.
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fqyeover 4 years ago
McKinsey would think it is a badge of honor because it means they were competent and their advice made difference significant enough from pure BUSINESS point of view.
idclipover 4 years ago
Heh. Sure ... really? How high were the health costs of that crises and how high were their profits during that period?<p>Aaaah. What a world...
Clubberover 4 years ago
Sadly, I believe the money that will go to the states will help finance the incarceration of those very opioid users.
jypepinover 4 years ago
so $573M settlement for 450000 overdoses. So they value life at $1275. The Sackler family is worth $13b. Ridiculous.
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vmchaleover 4 years ago
Every time I hear about McKinsey in a headline it&#x27;s for doing something reprehensible.
yawaworht1978over 4 years ago
There are people here who say that the consultants are too expensive and are often needed by decision makers to tick a box. But many forget how this demand is created. In a startup, things have to happen fast, some technical debt is unavoidable or the lesser evil. So everything is carrying on, people are hired, many management layers are integrated with what I would call human resources debt( managers covers their own, the top level does not know what is happening at the bottom) and suddenly, the demand for an external consultant is created. This is the price you pay for the fast growth and overlooking the little obstacles. Now the top level management will send a corporate detective aka consultant because he does not trust the management layers, they want a neutral party review and a suggestion to fix it, because nobody else did. Makes sense to me and yes, this forum is very capitalism minded, a 100 usd haircut is fine, first impression and all.
olefooover 4 years ago
And not a single director goes to jail. Not even for a weekend.
0goel0over 4 years ago
Maybe ethics and morals should be mandatory trainings?
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aneilover 4 years ago
A slap on the hand.
samstaveover 4 years ago
To whom do the settlement proceeds go?
mjcohenover 4 years ago
Why aren&#x27;t these people in jail?
crawdogover 4 years ago
Through all of this, no one has received any jail time. That&#x27;s the biggest crime.
a3nover 4 years ago
A mere licensing fee.
StormyWeatherover 4 years ago
McKinsey employee here. There&#x27;s a lot of things that I think are quite disfunctional at the firm, but most of the criticism I read in the comments seems to me to be pretty wide of the mark and to be rooted in both an understandable indignation and an ignorance of the many realities of the firm.<p>I share the anger and I would probably point it at the firm too it if I didn&#x27;t work there and know things from the inside. There is real anger (and a sense of betrayal) inside the firm against the partners responsible for this, as there was over the collaboration with ICE or the South African corruption scandal. Not anger because they put the firm in jeopardy but because what they did was wrong and went against the firm&#x27;s values. Thankfully they have been terminated.<p>Some will say I am a mouthpiece for the firm on a PR rampage and I have no way to prove them wrong but I still feel I have to try and provide a bit of perspective from the inside. More of that can be found in my fellow firm member klmadfejno&#x27;s comments to which I subscribe 100%.<p>It doesn&#x27;t help that very little of what happens in the inside is visible publicly. It does not stem from a conspiracy to do evil things secretly but is considered necessary mainly because:<p><pre><code> 1. the firm serves competing companies and handles sensitive information (think strategic commercial and financial information, not conspiracy to feed on innocent newborns. Even internally we are not allowed to discuss a lot of what other teams do or only a very sanitized version) 2. the firm advises and clients must decide whether they follow that advice or not (they often don&#x27;t) and not be able to shield themselves behind someone else (particularly when the client is a government) for the decisions they eventually take. </code></pre> McKinsey is an archipelago where anyone who can convince a team to work with them and a client to pay for it can start an engagement (and I mean anyone).<p>This means that a lot of shitty things can happen (think advising ICE, the South Africa corruption scandal, Enron or the current Purdue situation).<p>The leadership has nothing to do with initiating or managing engagements and doesn&#x27;t have the kind of executive power that you find in a traditional company. However they do have a role in setting the rules regulating how this takes place.<p>To avoid shit happening engagements must be approved by several committees and it&#x27;s part of the responsibilities of the leadership to ensure that the policies that these committees enforce are in agreement with the firm&#x27;s values.<p>The current leadership has recognized in the last couple of years that these policies were not strict enough and has worked hard to strengthen them (that&#x27;s my opinion, not fact). It now is not possible to start an engagement that would derive into harm against society, the environment, human rights etc...<p>An engagement as the Purdue one (dating back to 2017) would not be possible now, nor can we serve tobacco companies, arms manufacturers or start an engagement that would help create new fossile fuel extraction capacity.<p>To quote the firm&#x27;s Managing Partner:<p>&quot;As you know, we have made fundamental changes to our professional standards, policies, risk management and culture over the past two years. These changes include:<p>▪ Adopting a new Client Service Policy in 2019 that would have stopped us from doing this work on multiple grounds as the epidemic unfolded. It is also what led us to cease all opioid-specific work anywhere in the world.<p>▪ Introducing a new code of conduct that leaves no room for doubt as to the conduct that is expected of every colleague. We said we would have no tolerance for those who violate our professional standards. In this case, after a thorough investigation, two partners have been terminated for violating our Firm’s professional standards.<p>▪ Adopting a purpose statement after a year of debate and dialogue and using this to inform the decisions that we make.<p>But we need to go further. And we will. We must use this moment to bring further energy to the discussions we have around our values and, critically, to the actions we all take to ensure they are delivered without fail every day, everywhere &quot;<p>(<a href="https:&#x2F;&#x2F;www.mckinseyopioidfacts.com&#x2F;wp-content&#x2F;uploads&#x2F;2021&#x2F;02&#x2F;todays-settlement-on-opioids-and-setting-a-higher-standard.pdf" rel="nofollow">https:&#x2F;&#x2F;www.mckinseyopioidfacts.com&#x2F;wp-content&#x2F;uploads&#x2F;2021&#x2F;...</a>)<p>This means that a hard-left guy like me can work at McKinsey and be very proud of what he does and look at his children in the eye. While policies I am dead against are promoted somewhere else at the firm, as a firm member I can (and do) choose to work on projects that promote policies that I agree with.<p>The important part is that the control mechanisms that were too weak keep being strengthened as I think the current leadership is doing, but I am looking hard and will keep doing so and hold them accountable, as a lot of my colleagues are. I&#x27;d say most but that would be anecdata.<p>Regarding consultancy value, I can only provide more anecdata. There is a strong culture to overdeliver and bring more to the table than what the client paid for. The young consultant I have seen discussed across the comments is never left alone and is part of a team with experienced subject-matter experts. McKinsey recruits lots of seasoned experts and brilliant minds with amazing skills and working with them is the main part of what makes working at the firm so amazing (along with the challenging problems we are allowed to take a stab at solving).<p>I have definitely come across buzzword-wielding, smooth-talking McKinsey consultants bullshitting their way through an engagement and delivering little value but in my experience it is not the rule. I cannot discuss what I do but I can say we are very much encouraged to go above and beyond, to share all the knowledge we have and have often seen wizened, experienced, no-bullshit-taking and distrustful engineers ending up genuinely amazed with the new insight and actionable knowledge we have shared with them (and of course we learn a lot in the bargain too)
hehehahaover 4 years ago
McKinsey also implicitly involved in the whole Valeant debacle. These guys love extracting, no extorting, “value” from thin air.
asjldkfinover 4 years ago
It&#x27;s funny reading comment here saying how &quot;Consulting is useless BS&quot; whilst also condemning them for &quot;turbocharging Opioid sales&quot;
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minikitesover 4 years ago
Less than 5% of their revenue. I&#x27;m sure they learned their lesson.
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mathattackover 4 years ago
This is a significant hit for a private company. If McK has 2,000 partners, that’s almost $300k per partner. (Yes - they are very well compensated, and this is probably just a fraction of their pension plan)
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breckover 4 years ago
&quot;get an audience for our patent infringement suits so that we are feared as a tiger with claws, teeth and balls, and build some excitement with prescribers that OxyContin Tablets is the way to go.&quot; (CEO of Purdue, 1996)<p>There will be another Purdue, except 10x worse, if we don&#x27;t abolish the <a href="http:&#x2F;&#x2F;uspto.gov&#x2F;" rel="nofollow">http:&#x2F;&#x2F;uspto.gov&#x2F;</a>.