- Bill introduced for nationwide mandatory biotech food labeling (FDA Law Blog)
- Judge rejects new theory of “harm” in online privacy class action (Class Defense)
- Dispute between qui tam relator and his lawyer results in ruling increasing incentives for false claims qui tam suits (Original Source)
- Congress examines growing practice of activist groups suing federal agencies, which in turn agree to quick settlement, creating new regulations without public input (RegBlog)
- Claims that the Supreme Court is “pro-business” surface again, refuted again (Volokh Conspiracy)
- Former FTC official’s study indicates that pooling of patents may have anticompetitive effects (law.com)
- Accepting that Proposition 65 has inspired “unscrupulous lawyers driven by profit rather than public health,” California governor proposes “updates” to the notorious law (Consumer Advertising Law Blog)
A Judicial Solution to Non-Practicing Patent Holders’ Suits Vs. End Users?
Cross-posted at WLF’s Forbes.com contributor page
Litigation by “patent-assertion entities” (PAE) was back in the news again last week with a jury decision from the Eastern District of Texas. The jury found that patents held by Alexsam Inc. which purportedly cover a system for processing pre-paid electronic gift cards were valid, allowing Alexsam’s infringement claims against Best Buy, Barnes & Noble, Gap, Home Depot, McDonald’s, JC Penny, and other retailers to advance. Whether the actions will proceed or the retailers decide to cut their losses and settle is unclear.
Claims by patent-assertion entities rarely get to the stage at which the gift card litigation currently stands. This is especially true when patent holders target purchasers and users of technology which allegedly infringe on their rights, rather than (or in addition to) the technology’s producers. When posed with the choice of investing six-figures defending a product you didn’t even create, or paying the PAE a four- or five-figure licensing fee, most small businesses will choose the latter, no matter how weak the legal claims may be.
Online technology journal Ars Technica has shined a spotlight on some of these PAE litigation threat campaigns. Several stories (here and here) document one anonymous patent holder’s systematic targeting of small businesses and even some individuals who use scanners that can send the scanned files via e-mail. The “scanner-trolling scheme,” as Ars calls it, divides up the U.S. into six areas, and in each area, a separate shell company demands $800-$1,200 licensing fees per employee to avoid a lawsuit. Another story focuses on how a Luxembourg-based PAE is suing cash-strapped public transit systems over their use of vehicle-tracking systems. The Electronic Frontier Foundation recently stepped in to request a reexamination of this PAE’s patent. Other stories have documented the litigation crusade of Innovatio, which has sued businesses offering Wi-Fi service on their premises. One law firm even has an entire section of its website devoted to the suits.
Such targeting of end users has led to calls from leaders in business and Congress to immunize such companies and individuals from patent lawsuits. While that may sound promising to under-assault small businesses, their next thought will likely be, “how many years did it take to pass the America Invents Act?” Continue reading
Anti-Hydraulic Fracturing Activists Focus Firepower on California
Cross-posted at WLF’s Forbes.com contributor page
With a budget profoundly in the red and an unemployment rate hovering around 10%, one would think that elected officials and citizens’ groups in California would be figuring out how to move forward development of the massive shale “play” shown here to the right — The Monterey Shale. But instead, the same crowd that bestowed such regulatory gems as Proposition 65 on California’s business environment is busily plotting how to kill this golden goose.
Three proposals are currently advancing in the state Assembly to prohibit hydraulic fracturing in California until various studies can be done to definitively establish that the six decade-old gas extraction technique is 100% safe. The proposals eschew the traditional risk-based U.S. regulatory approach and embrace the European style of precaution, which demands ex post proof of safety even where no current evidence reveals environmental or health harms. Not surprisingly, a who’s who of activist groups support the bills, led by the Center for Biological Diversity, which has an ongoing suit against the state regarding hydraulic fracturing regulations. Even California’s state law schools are pitching in, with UC-Berkeley’s Center for Law, Energy and the Environment releasing a well-timed “report” calling for more controls.
“Let’s study the issue” is a non-threatening euphemism activists and government use in place of the scarier actual outcome sought: let’s forestall the activity being studied for as long as possible. New York’s moratorium on natural gas extraction has been dragging on for five years, with no timetable for release of the state health commission’s study of fracking (“I will continue to work on this until I am comfortable” says the Commissioner). While celebrity activists (or fracktivists as California-based think tank The Breakthrough Institute calls them) like Mark Ruffalo applaud the ponderous New York delays, jobs and revenue flow to neighboring states like Pennsylvania. Have any of the California legislators supporting the Assembly bills seen what natural gas development has done to nearby North Dakota’s economy?
The emergence of natural gas as an abundant, more efficient source of domestic energy than coal threatens the environmental activist movement’s utopian vision of alternative fuels. So hydraulic fracturing must be stopped. One supporter of a California moratorium from 350.org was clear on this: “We need a dramatic shift off carbon-based fuel: coal, oil and also gas,” calling natural gas “at best a kind of fad diet.” The three organizations listed as “co-sponsors” of one California fracking bill, AB 1301 – Center for Biological Diversity, Clean Water Action, and Food & Water Watch – each support outright bans on hydraulic fracturing.
The debate is ongoing in California, and as we learned from last year’s battle over mandatory biotech food labeling, when the public is fully educated about the negative ramifications of feel-good proposals, the best outcome for Californians can be reached. Here’s hoping that the facts can battle their way through the hype and emotion, so reasoned decisions can be made.
Finger on the Pulse: From Our Blogroll and Beyond
- Internecine warfare?: Litigation funder sues class action lawyer (On the Case)
- Novel argument against generic drug preemption rejected in Philadelphia (Drug & Device Law)
- Challenge to SEC’s implementation of Dodd-Frank provision on overseas resource extraction disclosure falls by wayside in D.C. Circuit (SEC Actions)
- State attorneys general increase focus on food and beverage issues – from the newest addition to The Legal Pulse blog roll (State AG Monitor)
- Law firm survey reveals what keeps in-house corporate lawyers up at night, including consumer class actions like those brought in The Food Court (WSJ Law Blog)
- In case of first impression, NY state appeals court rejects preemption challenge to local anti-hydraulic fracturing ordinances (New York Law Journal)
Food Class Action Suit Invokes WLF-FDA Correspondence to Prove Website Is “Labeling”
Cross-posted at WLF’s contributor page at Forbes.com
Perusing yet another class action complaint filed in the Northern District of California, Gitson v. Clover-Stornetta Farms, we were positively amused to find that on page 19, the plaintiffs’ lawyers cite a letter from the Food and Drug Administration (FDA) to WLF for the proposition that under federal law, a company’s website is definitively considered “labeling.” FDA’s letter was in response to WLF’s April 2001 petition urging the agency to establish a formal policy on the nature of information on websites like that of Clover-Stornetta Farms.
While it’s flattering that WLF’s public interest work has such enduring relevance and utility, we can’t let the plaintiffs’ invocation of FDA’s letter pass without refutation.
Clover-Stornetta Farms’s alleged transgression was to misleadingly refer to the sweetener used in some of its yogurt products as “evaporated cane juice.” Misleading or false labeling under federal law, incorporated into the California laws under which Gitson is suing, renders the product “misbranded.” And according to the complaint, because the yogurt label referred to the company’s website (which did little more than helpfully reprint the ingredient label), the website constituted labeling which equally misbranded the product. Continue reading
Appeals Court Rejects EPA Effort to Avoid Judicial Review Through Guidance Documents
Featured Expert Column
Allison D. Wood, Hunton & Williams LLP
Guidance documents and letters setting forth so-called “agency-policy” present unique challenges to industry, particularly in the context of permitting. Rather than undergo notice-and-comment rulemaking, which would be subject to judicial review, EPA has instead developed a practice of issuing “guidance”–often in the form of memoranda–that set forth requirements that EPA expects states and EPA regions to follow in issuing permits. The dilemma arises because courts often find that these documents cannot be challenged, and a permit applicant then faces an unpleasant choice: agree to permit conditions that may not be required by law to obtain the permit, or have the permit application denied and head into uncertain and expensive litigation. When the permit is critical for business operations, this really presents a Hobson’s Choice and almost all permit applicants capitulate and accept the terms.
The U.S. Court of Appeals for the Eighth Circuit recently offered some relief to those seeking to challenge guidance documents. In Iowa League of Cities v. EPA, some cities that owned wastewater treatment facilities challenged two EPA letters that responded to inquiries by Senator Charles Grassley about certain Clean Water Act (CWA) requirements for wastewater treatment facilities involving “bacteria mixing zones” and “blending.” The cities contended that EPA’s letters were new rules promulgated without notice-and-comment rulemaking in violation of the Administrative Procedure Act. EPA countered that the letters were merely agency guidance which the court lacked jurisdiction to review.
The court began by examining whether EPA’s act of sending the letters could be considered a “promulgation” of a rule under the CWA. The court adopted the three factor test set forth in Molycorp, Inc. v. EPA, 197 F.3d 543, 545 (D.C. Cir. 1999), for determining whether an agency action constitutes promulgation of a regulation: “(1) the Agency’s own characterization of the action; (2) whether the action was published in the Federal Register . . . .; and (3) whether the action has binding effects on private parties or the agency.” The court said that the third factor “should be the touchstone of our analysis,” because “plac[ing] any great weight on the first two . . . factors potentially could permit an agency to disguise its promulgations through superficial formality, regardless of the brute force of reality.” Continue reading
9th Circuit Refuses to Designate Utility Poles as Solid Waste Polluter
Cross-posted at WLF’s Forbes.com contributor site
The U.S. Court of Appeals for the Ninth Circuit has certainly earned its reputation as a circuit willing to push out the boundaries of environmental laws and regulations. Consider its June 1, 2012 en banc ruling in Karuk Tribe of Ca. v. U.S. Forest Service, where seven of the sitting eleven judges held that the Forest Service’s decision not to regulate low-level mining activity on public lands constituted an action under the Endangered Species Act, requiring the Service to consult with the Fish and Wildlife Service. In a dissent joined by three other judges, Judge Milan Smith began his opinion with an image and quote from Gulliver’s Travels, and wrote “decisions such as this one, and some other environmental cases recently handed down by our court undermine the rule of law, and make poor Gulliver’s situation seem fortunate.” On March 19, the Supreme Court regrettably denied review in Karuk Tribe.
We must, however, give the Ninth Circuit credit on its environmental rulings when it is due, and it’s earned some accolades with its April 3 Ecological Rights Foundation v. Pacific Gas & Elec. ruling. And despite the “citizen’s group” plaintiff’s loss, the decision is one that on this Earth Day, environmental advocates should be applauding as well.
The plaintiffs sued under the citizen suit provisions of the Clean Water Act (CWA) and the Resource Conversation and Recovery Act (RCRA), alleging that poles treated with pentachlorophenol (PCP) contributed “solid waste” to waters of the United States through stormwater runoff. In other words, when it rains, PCP washes off of the poles and enters various bodies of water. As the court noted, EPA has not decided whether to regulate utility poles as “point sources” of pollution under the CWA. Reviewing applicable judicial precedents, the 9th Circuit panel concluded that because neither the poles themselves nor their owners channel or collect the runoff, the plaintiffs had no claim under the CWA. Continue reading
