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WLF Web Seminar Program Spotlights Physician Payment Sunshine Act

PodiumPic1Washington Legal Foundation hosted a Web Seminar program yesterday, Physician Payments in the “Sunshine”: Implications of CMS Regulations for Businesses and the Future of American Health Care.

Speakers James Stansel and Meenakshi Datta of Sidley Austin LLP delved into the complicated and often vague data collection and reporting mandates required under the Physician Payment Sunshine Act and the regulations promulgated to implement it. They paid particular attention to how the mandates will impact research and development of new drugs, biologics, and medical devices, processes where physicians play an integral role.

The program is available as an on-demand file by clicking on the title above.

Click here for the slides our speakers utilized.

During the program, it was mentioned that WLF would be filing comments with CMS on the First Amendment problems with the Sunshine Act rules failing to exempt the sharing of medical textbooks and chapters of textbooks with doctors and teaching hospitals.  Those comments can be downloaded here.

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Federal Circuit Affirms ITC’s Determination on Sec. 337 Domestic Industry Litigation Expenses

ItoGuest Commentary

by Emi Ito Ortiz, Adduci, Mastriani & Schaumberg, L.L.P.

On May 13, 2013, in Motiva, LLC v. U.S. Int’l Trade Comm’n, No. 12-1252 (Fed. Cir. May 13, 2013), the Federal Circuit affirmed the International Trade Commission’s determination that a complainant failed to satisfy the domestic industry requirement of Section 337 based on litigation expenses allegedly related to licensing.  The case was an appeal from ITC Investigation No. 337-TA-743, Certain Video Game Systems and Controllers.  Section 337 requires a complainant to prove it has “an industry in the United States, relating to the articles protected by the patent . . .  [that] exists or is in the process of being established.”  19 U.S.C. § 1337(a)(2).  Such an industry can be based, inter alia, on a substantial investment in exploitation of the patent through licensing.  See 19 U.S.C. § 1337(a)(3)(C).  In Motiva, the Federal Circuit agreed with the ITC that litigation expenses can count towards the establishment of a domestic industry only if the litigation encourages the adoption and development of articles that incorporate the asserted patents.

Underlying Investigation.  In the underlying investigation, Motiva accused Nintendo of violating Section 337 by importing, selling for importation, or selling after importation its Wii game system, which allegedly violated two Motiva patents.  Nintendo asserted that Motiva had no domestic industry because it did not have commercialized products incorporating the asserted patents nor activities aimed at creating such products.  Instead, Motiva’s sole activity relating to the patents at issue was litigation against Nintendo, which was insufficient to establish a domestic industry.  The ITC sided with Nintendo, finding no domestic industry. Continue reading →

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Supreme Court Observations: “Blame-the-Bean” Defense Fails in Bowman v. Monsanto

Haas_ThomasGuest Commentary

by Thomas M. Haas, Thompson Hine LLP

In a short, unanimous decision, the U.S. Supreme Court held Monday that the doctrine of patent exhaustion “does not permit a farmer to reproduce patented seeds through planting and harvesting without the patent holder’s permission.” (Bowman v. Monsanto) Thus, for the time being, the Supreme Court has maintained the status quo for patent exhaustion.

Farmer Vernon Hugh Bowman purchased patented “Roundup Ready” seeds for his initial crop of soybeans. He subsequently chose to plant cheaper seed for late-season soybean planting. He went to a grain elevator that held soybeans typically sold for feed, milling and other uses to purchase new seed, reasoning that most of those soybeans would be resistant to Roundup, as they initially came from patented Roundup Ready seeds. Bowman was correct; the seeds did in fact contain the genetic material conferring resistance to Roundup.

Bowman argued that Monsanto’s patent rights were exhausted with the sale of the first crop of beans. Bowman also said he should not be liable, in part, because soybeans naturally sprout when planted.

His request found no sympathy. The Court considered Bowman’s argument essentially an argument for an exception to the patent exhaustion doctrine. “Bowman planted Monsanto’s patented soybeans solely to make and market replicas of them, thus depriving the company of the reward patent law provides for the sale of each article,” Justice Kagan wrote for the Court. “Patent exhaustion provides no haven for such conduct.” The Court also failed to accept Bowman’s argument regarding the nature of seeds. “We think the blame-the-bean defense tough to credit,” the Court said.

This ruling is no surprise to those who follow the Supreme Court. In fact, this decision was foreshadowed in the opinion the Court set out in J.E.M. Ag Supply v. Pioneer Hi-Bred Int’l  (2001), in which the Court clearly explained that a patent holder could prohibit a farmer who legally purchases and plants a protected seed from saving harvested seed for replanting. For those in the biotech industry, Monday’s decision merely reaffirmed the law as it has been understood for years – the purchase of a patented product does not confer the right to make copies of the patented product. Mitchell v. Hawley, 16 Wall. 544 (1873).

For other industries, some mystery remains. Though the Court has maintained the status quo for certain types of patented products, it has left the door open for revisiting patent exhaustion in the future. “Our holding today is limited – addressing the situation before us, rather than every one involving a self-replicating product,” the Court said. “We recognize that such inventions are becoming ever more prevalent, complex, and diverse.”

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Want Clarity on Software Patents?: Skip CLS Bank Int’l Opinion and Wait for Supreme Court Review

bethShaw-0580editConvertedProfile-e1360002102239Featured Regular Expert Column

Beth Z. Shaw, Brake Hughes Bellermann LLP

In January, I wrote a WLF Legal Opinion Letter entitled CLS Bank Int’l v. Alice Corp.: Clearer Software Patent Guidance?, which asked if clear software patent guidance would emerge from the U.S. Court of Appeals for the Federal Circuit’s en banc review of CLS Bank (opinion). The answer is an unequivocal “no!”

Seven of the ten members (a majority) of the Federal Circuit court have agreed that the method and computer-readable medium claims in the case fail to recite patent-eligible subject matter. The court was evenly split on the patent eligibility of the system claims. No majority agreed on why, or how, system claims should be analyzed. Further, no majority agreed on the legal rationale as to why the method claims are not patent eligible. Thus, incredibly, despite 135 pages, “nothing said today beyond our judgment has the weight of precedent.”

Judge Newman, concurring in part and dissenting in part, quite accurately summarized the result of the en banc panel:

The ascendance of section 101 as an independent source of litigation, separate from the merits of patentability, is a new uncertainty for inventors. The court, now rehearing this case en banc, hoped to ameliorate this uncertainty by providing objective standards for section 101 patent-eligibility. Instead we have propounded at least three incompatible standards, devoid of consensus, serving simply to add to the unreliability and cost of the system of patents as an incentive for innovation. With today’s judicial deadlock, the only assurance is that any successful innovation is likely to be challenged in opportunistic litigation, whose result will depend on the random selection of the panel.

Continue reading →

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Selected WLF Blog Commentaries to Appear on Coca-Cola “Unbottled” Blog

Coca-Cola_logo.svgBeginning with a May 10 cross-posting of a March 18 Legal Pulse post, Desperate to Foment New Regulations & Lawsuits, Activists Ratchet Up “Food Addiction” Campaign, the Coca-Cola Company will be publishing occasional Washington Legal Foundation blog posts at is “Unbottled” blog. According to the company, “Coca-Cola Unbottled looks beyond what’s in the bottle, featuring globally important and topical community and behind-the-scenes Company stories that spark conversations.”

Placement of some of its commentaries in Coca-Cola Unbottled will help WLF draw increased attention to its public interest law education and advocacy efforts which we pursue under the rubric of our Eating Away Our Freedoms project. Through a dedicated website and WLF’s existing publishing, litigation, and communications tools, Eating Away Our Freedoms provides timely information and insightful analysis that both elevates and balances the debate over Americans’ freedom to choose.

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Update: Class Action Settlement in Kellogg Food Labeling Case Preliminarily Approved

Last summer in the Legal Pulse post The Ninth Circuit Rains on Plaintiffs’ Attorneys’ Class Action Pay Day, Washington Legal Foundation K.K.Legett Fellow Lauren Murphree described the U.S. Court of Appeals for the Ninth Circuit’s rejection of a class action settlement in Dennis v. Kellogg Co.

Mr. Dennis and countless other fans of Frosted Mini-Wheats claimed Kellogg’s labeling statements had unlawfully misled them. The parties ended up settling, and the district court approved the settlement. The Ninth Circuit sent the parties back to the drawing board and back to the Southern District of California. On May 3, the presiding trial judge gave preliminary approval to the new settlement.

The Ninth Circuit was understandably troubled by several aspects of the original settlement, including a $5.5 million cy pres award aimed at feeding the indigent (which was “laudable” but had “little to do with the purposes of the underlying lawsuit”) and an attorneys’ fee that came out to $2,100 an hour.

The recipients of the new settlement agreement’s smaller cy pres distribution of $4 million are three “consumer” groups: Center for Science in the Public Interest, Consumer Watchdog, and Consumers Union (Nice of the court to hand over a slush fund of cash which could fund more food labeling lawsuits, and create jobs for lawyers and court staff, likely in California). The amount of money available for allegedly harmed plaintiffs went down from $2.75 million to “$2-2.5 million.” The amount of attorneys’ fees remarkably stayed the same.

District Judge Gonzalez had some questions about these new terms. She wondered:

  1. How did mere identification of proper cy pres recipients result in such a severe drop in the value of the class’s claims?
  2. How is it that the value to the class dropped approximately 75%, while requested attorneys’ fees appear nearly constant?

Excellent questions both, but they did not forestall Judge Gonzalez from giving preliminary approval to the settlement. She did, though, order the parties to “fully address these concerns in their final approval briefing and at the final approval hearing.”

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Update: Ninth Circuit Ruling a Final End to Copyright “Troll’s” Legal Charade?

copyrightNearly two years ago, in a Legal Pulse post and a WLF Legal Opinion Letter, we discussed the strong judicial response to the copyright litigation scheme pursued by a company called Righthaven LLC. Righthaven was created at the behest of newspaper-owning media company Stephens Media as a vehicle to sue bloggers and other online information outlets which had reprinted articles originally published in Stephens’ newspapers. Thankfully rather than pay the copyright troll’s “toll,” several bloggers refused and Righthaven sued them.

Federal District Judge Philip Pro dismissed Righthaven’s suit for two reasons.  First, because the agreement between Stephens Media and Righthaven assigned only the right to sue potential copyright infringers, Righthaven did not have the exclusive rights needed to possess standing to sue. Second, the bloggers’ reprinting of articles constituted fair use under federal law. Several days after this ruling, Judge Pro ruled that Righthaven had to pay $34,000 in attorneys’ fees. In a separate but related case, a federal judge sanctioned Righthaven $5,000 for failing to disclose its financial ties to Stephens Media.

Apparently not embracing the modified maxim “it’s time to quit while you’re behind,” Righthaven decided to spend more money on legal fees and appealed its loss to the U.S. Court of Appeals for the Ninth Circuit.

In an appropriately terse opinion yesterday, the Ninth Circuit panel unanimously affirmed Judge Pro on the issue of standing. Circuit Judge Clifton initiated his opinion with a reference to an Abraham Lincoln story about a lawyer who tried to “establish that a calf had five legs by calling its leg a tail.” As Lincoln observed, “calling a tail a leg does not make it so.” Similarly, just because Righthaven called itself a copyright owner does not mean it in fact is.

The court essentially went on to restate the very clear legal standards relied upon by District Judge Pro. Regretfully for bloggers and other online information providers, the court vacated the portion of Judge Pro’s ruling that the reprinting activity constituted fair use, since the case could be dismissed on procedural grounds.