U.S. Courts Display Commendable Restraint in Addressing Venezuela’s Property Rights Abuses

venezuelan flagThe government of Venezuela has become a notorious abuser of private property rights, seizing the property of corporations and political opponents without offering any compensation. Unable to obtain redress in Venezuelan courts, property owners with increasing frequency have turned to U.S. courts for compensation. The U.S. Court of Appelas for the Eleventh and D.C. Circuits issued nearly simultaneous decisions earlier this month in suits filed by property owners against Venezuela. While the courts reached facially inconsistent results—the Eleventh Circuit dismissed one property owner’s claim while the D.C. Circuit allowed the claims of another group of property owners to move forward—the two courts sent a similar message. Both courts made clear that while they are reluctant to inquire into the validity of a foreign sovereign’s internal conduct, such judicial restraint does not prevent courts from protecting Americans’ rights when property is taken in clear violation of international law.

Any effort to sue a foreign sovereign in a U.S. court faces a major obstacle: the Foreign Sovereign Immunities Act (FSIA). The Supreme Court has held that the FSIA is the sole basis for obtaining jurisdiction over a foreign state in our courts. The statute states explicitly that a foreign state is absolutely immune from the jurisdiction of U.S. courts unless a specific FSIA statutory exemption is applicable. The only exemption potentially available to those whose property has been confiscated is 28 U.S.C. § 1605(a)(3), which denies immunity in cases “in which rights in property taken in violation of international law are in issue.” The Eleventh and D.C. Circuits agreed that the availability of the § 1605(a)(3) exemption depends to a large extent on whether the plaintiff is a citizen of the foreign state; if so, federal courts are far less willing to exercise jurisdiction. Continue reading

Raisin Farmers’ Video Explains What’s at Stake in Pending “Horne v. USDA” SCOTUS Case

This video explains why Laura and Marvin Horne have taken their case that a U.S. Department of Agriculture marketing program violates the Fifth Amendment of the Constitution all the way to the Supreme Court.

Washington Legal Foundation filed an amicus brief in Horne v. USDA supporting the farmers’ argument that the program’s seizure of raisin crops without compensation is an unconstitutional taking. The Court heard oral arguments in the case on April 22. On the afternoon of the argument, WLF held a Web Seminar program assessing the arguments, which featured one of the Hornes’ attorneys, Stephen Schwartz.  A video of the program can be viewed here.

Will the American Law Institute “Restate” or Try to Rewrite U.S. Copyright Law?

copyrightOn April 24, 2013, House Judiciary Committee Chairman Bob Goodlatte announced that the committee would be undertaking “a wide review of our nation’s copyright laws and related enforcement mechanisms.” Five months later, UC Berkeley School of Law Professor Pamela Samuelson formally requested that the American Law Institute (ALI) prepare a restatement of copyright law. It might seem odd that a prestigious institution like ALI would devote time and resources to restating the “law of copyright” when the U.S. House of Representatives is taking steps to possibly amend the federal Copyright Act. But it is going forward with a Restatement of the Law, Copyright project.

ALI is an organization of academics, lawyers, judges, and other legal professionals that studies various areas of law and prepares treatises that “clarify, modernize, and otherwise improve the law.” Courts and legislatures look upon ALI’s best-known treatises, such as the Restatement of Contracts, as authoritative summaries of state common law—i.e. legal principles derived from judicial decisions. A review of its current projects, though, suggests that ALI is drifting away from its traditional approach.

Professor Samuelson’s letter stated that an ALI copyright project “could provide an invaluable and timely analysis and framework for other reform efforts that are currently underway.” Further on in the letter she implies a much larger ambition when decrying the “long and contentious process” of passing laws that makes “comprehensive reform of the statute . . . unlikely to happen any time soon”: Lawyers, academics, and judges at ALI, she seems to suggest, are better positioned to bring clarity to the law of copyright than elected officials in Congress. Continue reading

WLF Program to Assess Supreme Court Arguments in Critical Property Rights Case

PodiumPic1Studies have shown a correlation between strong protections for private property ownership and environmental quality. It is quite appropriate, then, that the U.S. Supreme Court will be hearing arguments today, Earth Day 2015, in a critical property rights case, Horne v. U.S. Department of Agriculture. The case involves, among other issues, whether a “categorical” or per se taking of property under the Fifth Amendment occurs when government seizes personal property, rather than real property. The personal property in Horne were raisins, and the seizure occurred under a Depression-era “Raisin Marketing Order.”

Washington Legal Foundation, which filed an amicus brief supporting Marvin and Laura Horne’s takings claim, will be hosting a live Web Seminar program this afternoon at 1:00 p.m. EDT, Takings of Personal Property: An Assessment of U.S. Supreme Court Arguments in Horne v. USDA. Click here for free registration.

Our panelists this afternoon will be:

Timothy S. Bishop, Partner, Mayer Brown LLP
Stephen S. Schwartz, Associate, Kirkland & Ellis LLP
Richard A. Samp, Chief Counsel, Washington Legal Foundation

The Supreme Court Should Not Abandon “Stare Decisis” in “Kimble v. Marvel Enterprises” Case Given Reliance Interest

At issue in Kimble v. Marvel Enterprises

At issue in Kimble v. Marvel Enterprises

The Supreme Court’s 1964 decision in Brulotte v. Thys Co. has been among the Court’s more heavily criticized patent law decisions. A number of academics and appeals court judges have complained that Brulotte, which establishes a rule governing construction of patent licensing agreements, is based on a misunderstanding of the economic considerations underlying such agreements. Perhaps in response to that criticism, the Court granted certiorari in Kimble v. Marvel Enterprises, Inc. to consider a single question: should it overturn the 50-year-old Brulotte rule? The Court will hear oral arguments in Kimble on March 31.

The correct answer is a resounding “no.” At oral argument, the record will show that parties negotiating patent licensing agreements have relied on Brulotte for half a century when drafting terms governing royalty payments. Overturning Brulotte would be a patent troll’s dream. It could expose licensees to unforeseen royalty demands based on long-forgotten license agreements that they reasonably assumed—in reliance on the Brulotte rule—imposed no additional payment obligations after the expiration of the licensed patent. As with patent trolls, the potential liability in some cases may be so high that in terrorem settlement is the licensee’s only reasonable choice. In other cases, the nuisance value of the claim may be smaller than the cost to litigate. Either way, a shortsighted decision in Kimble could lead to decades of costly and vexatious litigation to no one’s benefit. Continue reading

Advertisers Develop Voluntary Program to Deter Unwitting Online Ad Support of Copyright Pirates

copyrightwarningLast fall, WLF Legal Pulse highlighted some copyright and patent owners’ use of self-help initiatives to bolster their intellectual property rights. The copyright owners discussed in that post—chiefly movie and entertainment studios—face an especially daunting challenge due to the digital nature and distribution of the content they produce. In addition to individual acts of copyright infringement, entertainment providers must confront sophisticated and elusive websites devoted largely to facilitating content piracy. As we discussed in another fall 2014 blog commentary, these “cyberlockers” enjoy an average profit ratio of over 64% thanks in part to legitimate businesses’ advertisements and the payment processing of services like MasterCard and Visa.

For the past several years, advertisers have worked to address ad-support for online piracy. Those efforts have now crystallized into a formal voluntary program announced last week by the Trustworthy Accountability Group (TAG). TAG, which consists of major advertising-related trade associations, launched the Brand Integrity Program Against Piracy. Under the program, TAG will work with independent third parties, such as Ernst & Young, to certify companies that assist advertisers and ad agencies to avoid ad placement on cyberlockers and other undesirable websites. If these companies meet certain effectiveness criteria, TAG will validate them as “Digital Advertising Assurance Providers” (DAAPs). The Business Integrity Program also allows large ad networks and publishers that have already implemented internal controls to self-verify as DAAPs.

TAG developed the voluntary DAAPs certification program without the involvement or encouragement of government regulators. As market actors whose legitimacy and credibility are crucial to their continued success, advertisers and ad agencies understood that ads for multi-billion-dollar brands could not continue to support unlawful activity. Much of that brand value exists thanks in no small part to intellectual property protection. No doubt entertainment content owners underscored that reality when encouraging those trademark owners and their advertisers to take action against content piracy. All those involved in the Brand Integrity Program Against Piracy have a shared stake in its success, and the voluntary nature of the program allows them to quickly adapt their efforts. Such incentives and flexibility do not exist in a one-size-fits-all government regulatory program.

TAG and the other architects of this certification initiative are to be applauded for their announcement. We will monitor further developments with great interest. We also hope that the voluntary, concerted effort sends a strong message to the payment processors whose services continue to assist copyright infringement. The next important move is theirs.

Also published by Forbes.com at WLF’s contributor site

Local “Fracking” Bans Face Constitutional Takings Challenges

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Ben Tannen, Sidley Austin LLP

Recently, the citizens of Denton, Texas voted to ban hydraulic fracturing within the city limits, becoming the first municipality in the state to do so. One day later, the Texas Oil and Gas Association filed suit, arguing the ordinance was unconstitutional and preempted by state law. N1 In enacting a ban, Denton joined the list of municipalities that have adopted limits on hydraulic fracturing, N2 including a number of outright bans. N3 The bans reflect the ongoing battle between state and local interests over the value and risks of oil and gas development. The legality of local bans is being hotly disputed in the courts, with two common challenges being that the bans are preempted by state law or constitute an unconstitutional taking.

Preemption

Plaintiffs have challenged local bans as expressly preempted by or in direct conflict with a comprehensive state oil and gas statute—quite simply, the argument goes, municipalities and other local governments cannot prohibit what has already been expressly authorized by the state. Moreover, as a policy matter, allowing local governments to restrict or otherwise regulate oil and gas development would create a patchwork of regulation within a state—or even within a single county. To date, several courts have found preemption, but others have deferred to local land use authority. N4

Takings

Plaintiffs have also challenged local bans on constitutional grounds, N5 asserting a range of claims, including a Takings claim under the Fifth Amendment (and state analogs). N6 Although as of yet no courts have ruled on the issue, here are a few of the basics:

Of course a traditional “taking” occurs when the government actually causes a “permanent physical occupation” of an individual’s property. N7 A regulation, however, can be a taking when it affects or limits the use of private property to a sufficient degree. N8 According to the Supreme Court, a “regulatory” taking occurs if the regulation deprives the property holder of all economically beneficial use of their property, Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), or satisfies a three-part balancing test set out by the Court in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). Continue reading