Tag Archives: Supreme Court

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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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Does Federal Circuit’s K-Tech Communications Ruling Further Ease Path to Patent Litigation?

bethShaw-0580editConvertedProfile-e1360002102239Featured Expert Column

Beth Z. Shaw, Brake Hughes Bellermann LLP

Last week, the Federal Circuit reversed a district court’s judgment dismissing two patent lawsuits. K-Tech Telecommunications, Inc. (“K-Tech”) sued Time Warner Cable, Inc. (“TWC”) and DirecTV for patent infringement. TWC and DirecTV moved to dismiss the lawsuits because they argued the original complaints lacked factual specifics—including any identification of specific devices. The district court agreed and dismissed the cases for “failure to state a claim,” under the standards articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). On appeal, however, the Federal Circuit reversed, holding that the complaints contained enough specificity and plausibility for the lawsuits to continue. The Federal Circuit repeated that, to the extent any conflict exists between Twombly and the Federal Rules of Civil Procedure’s Forms regarding pleadings requirements, “the Forms control.”

K-Tech describes its patents as systems for modifying channel numbers or carrier frequencies to identify a television program. According to K-Tech, the Federal Communications Commission requires that all digital television signals in the U.S. follow certain specifications that define information included in a digital television signal (such as channel numbers and carrier frequencies). K-Tech contends that because TWC and DirecTV identify programs broadcast over their cable or satellite systems with a channel number, TWC and DirecTV use the methods and systems protected by the K-Tech patents to update the digital signals they receive.

Form 18 in the Federal Rules of Civil Procedure sets forth a sample complaint for direct patent infringement. The Federal Circuit stated that “any criticism we may have regarding the sufficiency of the forms themselves is strictly proscribed by Supreme Court precedent.” In other words, the Supreme Court has held what pleading requirements are enough to bring a case of patent infringement. The main requirements are a plausible short and plain statement of the plaintiff’s claim. Continue reading →

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Supreme Court Observations: Kiobel v. Royal Dutch Petroleum & the Future of Alien Tort Litigation

Barbary pirates

Barbary pirates

Cross-posted at WLF’s Forbes.com contributor site

The wave of tort suits under the Alien Tort Statute (ATS) may not be brought to an end as a result of a decision issued yesterday by the U.S. Supreme Court, Kiobel v. Royal Dutch Petroleum, but it is likely to subside considerably.  For the past several decades, the ATS has served as the favorite vehicle of human rights activists seeking to challenge the overseas business practices of U.S. corporations, but the Supreme Court has now ruled that the ATS applies only to conduct within the United States or on the high seas.

The ATS is a 1789 law that grants jurisdiction to federal courts to hear tort claims by aliens alleging violations of “the law of nations.”  The law lay dormant for two centuries, primarily because litigants assumed that the number of torts to which the law applied was extremely narrow – perhaps limited only to claims by foreign ambassadors that they had been assaulted in this country.  But in 1980, the U.S. Court of Appeals for the Second Circuit held in Filartiga v. Pena-Irala that the ATS applied to a wide array of alleged human rights violations.  In the decades that followed, activists sued U.S. corporations under the ATS for an increasing variety of overseas activities, from operating facilities that allegedly polluted the environment to administering medications without allegedly first providing informed consent to giving financial support to oppressive foreign governments.  WLF has been actively involved in many of those suits, opposing expansive interpretations of the ATS, including through an amicus brief in Kiobel. Continue reading →

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Supreme Court Observations: Standard Fire Ins. Co. v. Knowles

Cruz-Alvarez_FFeatured Expert Column

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. (co-authored with Talia Zucker, Shook, Hardy & Bacon, L.L.P.)

On March 19, 2013, the Supreme Court of the United States issued a unanimous opinion in Standard Fire Insurance Company v. Knowles, No. 11-1450, 2013 WL 1104735 (2013), derailing a plaintiff’s efforts to sidestep the provisions of the Class Action Fairness Act (“CAFA”) by way of a precertification stipulation for damages of less than $5 million.  With clever plaintiffs’ lawyers constantly dreaming up ways to prevent removal and avoid the rigorous proceedings in federal court, this opinion will assist defendants in future jurisdictional battles by eliminating this particular avenue for defeating jurisdiction.

Knowles had filed a putative class action lawsuit in Arkansas state court against Standard Fire Insurance Company.  Knowles, 2013 WL 1104735, at *2.  In describing the relief sought, the complaint provided that plaintiff and the class (which had yet to be certified) would seek to recover total aggregate damages of less than $5 million.  Id.  The insurance company removed the case to federal court pursuant to CAFA.  Id.  Although the district court found that in the absence of the stipulation the amount in controversy would have fallen just above the $5 million threshold, it remanded the case to state court in light of the stipulation.  Id.  The insurance company appealed the remand order, but the Eighth Circuit declined to hear the appeal.  Id.  The Supreme Court, however, granted the insurance company’s writ of certiorari in light of conflicting lower court viewpoints.  Id.

CAFA provides federal courts with original jurisdiction over class actions in which, among other things, the matter in controversy exceeds $5 million.  28 U.S.C. § 1332(d)(2).  To determine whether that sum is exceeded, the claims of the individual class members are aggregated. § 1332(d)(6).  The issue presented to the Supreme Court – whether a precertification stipulation can defeat federal jurisdiction under CAFA – was answered in the negative.  Knowles, 2013 WL 1104735, at *3.   Continue reading →

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Federal Government Abandons Defense of Graphically Unconstitutional FDA Tobacco Warnings

nosmokingAfter obtaining extension after extension from the U.S. Supreme Court (something our Rich Samp criticized here a few weeks ago), the time had come this week for the federal government to “fish or cut bait,” as it were, on whether it would urge reversal in one case involving the FDA’s graphic tobacco warnings, and oppose certiorari in another case.

As reported by several news outlets this morning, the Department of Justice announced that it would not seek Supreme Court review of the U.S. Court of Appeals for the D.C. Circuit’s R.J. Reynolds Tobacco Co. v. FDA decision. There, the court held in a facial challenge that the tobacco warnings violated the companies’ First Amendment rights. DOJ’s decision not to pursue reversal leaves in place a powerful precedent which businesses in other industries might deploy in situations where government labeling or warning requirements go beyond disclosure of pure, noncontroversial facts. The Washington Post story noted that FDA said it would “go back to the drawing board and ‘undertake research to support a new rulemaking consistent with the Tobacco Control Act.’” So that’s the end of the controversy for now, right?

Not necessarily. The government has until Friday to respond to a petition in the Supreme Court that it review another challenge to the graphic warnings, this one an “as applied” challenge rather than a “facial” challenge. The Sixth Circuit upheld the graphic warnings in American Snuff Co. v. United States. No doubt, the Solicitor General will argue that its decision not to appeal R.J. Reynolds Tobacco Co. obviates the need for the Court to grant certiorari in American Snuff. Will the justices take the government at its word that it now realizes the warnings can’t survive First Amendment scrutiny and that FDA will “go back to the drawing board”? If one were to look at the FDA web page on the graphic health warnings, one might question FDA’s interest in giving up the fight.

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Supreme Court Observations: Clapper v. Amnesty International

supreme court

Cross-posted at Forbes.com’s WLF contributor page

The Supreme Court this week ruled that a group of American lawyers lack standing to challenge the 2008 law that expanded the U.S. government’s authority to engage in electronic surveillance of overseas aliens suspected of terrorism.  To hear the reaction of the ACLU and other civil liberties groups to the decision in Clapper v. Amesty International, one would think that the Supreme Court is abandoning the rule of law and abdicating its responsibility to oversee the activities of the Executive Branch.  Nonsense.  The Court simply denied a right to sue by individuals who concede that they have no evidence that they have been subjected to surveillance.  The decision is consistent with a long line of cases that have insisted on evidence of injury before a suit can go forward, particularly when the suit implicates national security concerns.

At issue are the 2008 amendments to the Foreign Sovereign Immunities Act (FISA).  The amendments permit the federal government to engage in overseas surveillance of suspected terrorists under limited circumstances.  But such surveillance is permitted under the FISA Amendments (FAA) only after the government has sought and obtained the consent of the FISA Court, a special court established to address national security issues.

On the day that the FAA was enacted, several lawyers and organizations (represented by the ACLU) filed a lawsuit seeking an injunction against surveillance conducted pursuant to the FAA.  They alleged that the FAA violated their First and Fourth Amendments rights as well as separation-of-powers principles.  Named as defendants were several senior Obama Administration officials, including Attorney General Eric Holder (whose authorization is required before any surveillance may be undertaken under the FAA).  Although the law does not permit American citizens to be targeted for surveillance, the plaintiffs expressed a fear that the government would end up overhearing some of their conversations with those foreigners who are being targeted. Continue reading →

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Ninth Circuit Decision and Dissenters Cry Out for SCOTUS Review on Cy Pres in Settlements

facebookCross-posted at WLF’s Forbes.com contributor page

Over the past year, we’ve applauded several positive developments from courts in the Ninth Circuit (here and here) where judges closely scrutinized and rejected the use of the cy pres device in class action settlements. Just last week we read at the Point of Law blog and elsewhere about a Third Circuit ruling which rejected an absurd cy pres distribution in an antitrust class action settlement.

A Ninth Circuit decision yesterday, McCall v. Facebook, Inc., blows up that recent trend. It was actually an indecision — a denial of a request for rehearing en banc by objectors to a class action settlement approved by a three-judge panel of the Ninth Circuit last year in Lane v. Facebook, Inc.  In Lane, the panel approved a class action settlement with zero dollars going to the purportedly harmed class members, $3.2 million to the lawyers, and around $6.3 million in cy pres to an organization called “Digital Trust Fund” (DTF) which did even not exist prior to the settlement. Type “Digital Trust Fund” into your search engine; you’ll find a for-profit company with that name, but no charity.

Thankfully, we aren’t the only ones who thought that was quite curious. Six judges dissented from the Ninth Circuit’s denial of rehearing en banc. They forcefully note that the cy pres award violates both of the two requirements for such awards: 1) reasonably certain to benefit the class and 2) advance the objectives of the statutes utilized in the suit. Continue reading →

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4th Circuit Demands Greater Particularity in False Claims Act Suit Pleading

Mayer_Kirsten_72Hallward-Driemeier_Douglas_72ppiGuest Commentary

by Kirsten V. Mayer and Douglas Hallward-Driemeier, Ropes & Gray LLP

Last month, the U.S. Court of Appeals for the Fourth Circuit reaffirmed that False Claims Act relators must plead presentment of a false claim with particularity.  The decision in United States ex rel. Nathan v. Takeda Pharmaceuticals N.A. Inc. requires that relators proceeding under Section 3729(a)(1)(A) of the False Claims Act offer concrete details that plausibly allege—not just speculate—that actual presentment of a false claim occurred.  By requiring that relators plead false claims with particularity, the Fourth Circuit strikes a blow against relators who would prefer simply to allege a fraudulent scheme and proceed directly to costly discovery.  The holding should be particularly useful to defendants in “off-label” promotion cases, where relators often only speculate that ineligible claims were submitted for reimbursement to government-funded programs.

In Nathan, a Takeda sales manager alleged that Takeda’s Kapidex marketing caused false claims to be presented to the government in two main ways: (1) Takeda allegedly promoted Kapidex to rheumatologists, who do not typically treat patients with conditions that can be treated by Kapidex on-label; and (2) Takeda allegedly promoted Kapidex use at higher doses than FDA had approved.

Liability under Section 3729(a)(1)(A) requires that a defendant actually presented false claims to the government for payment.  Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 789 (4th Cir. 1999).  Nonetheless, the Nathan relator urged the Fourth Circuit to adopt a relaxed application of Rule 9(b) that would rely on inferring from an alleged “fraudulent scheme” that false claims essentially must have been presented to the government.  In support, the relator pointed to a Fifth Circuit decision, United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009).   In Grubbs, the relator had alleged with detail that doctors fraudulently recorded medical services that were never performed, and the Fifth Circuit held that this satisfied Rule 9(b), even though the complaint did not provide specific allegations that those records caused the hospital’s billing system to present fraudulent clams to the government.  Id. at 192. Continue reading →

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Will “Sea Change” in Florida Class Action Standards Unleash Flood of Suits?

Cruz-Alvarez_FFeatured Regular Expert Column

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. (co-authored with Talia Zucker, Shook, Hardy & Bacon, L.L.P.)

On January 24, 2013, in Soper v. Tire Kingdom, Inc., No. SC11-1462, — So. 3d —, 2013 WL 264441 (Fla. Jan. 24, 2013), the Florida Supreme Court took its most recent step to further distance itself from the United States Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, — U.S. —, 131 S. Ct. 2541 (2011).  Despite Wal-Mart’s comprehensive analysis of the commonality requirement for class certification, the Florida Supreme Court insists on watering down what commonality means and how it is applied.

As Florida Supreme Court Justice Charles Canady rightly observed in Soper, the Sunshine State’s class action laws have undergone a “sea change”, beginning one and a half years ago – post Wal-Mart­ – with the decision of Sosa v. Safeway Premium Finance Company, 73 So. 3d 91 (Fla. 2011).  See Soper, 2013 WL 264441 at *2 (Canady, J., dissenting) (emphasizing that “[t]he majority’s commonality analysis in Sosa cannot be reconciled with the reasoning of Wal-Mart.”). Continue reading →