California’s New Scrutiny of Patent Litigation Settlements Will Not Stand Under Federal Law

cali sealThe California Supreme Court earlier this month issued an opinion that subjects litigants who settle their patent disputes to scrutiny under state antitrust law. The court reasoned that such settlements may create unreasonable restraints on trade. While the decision in In re Cipro Cases I & II to reinstate antitrust claims was not overly surprising—after all, the U.S. Supreme Court had previously held in FTC v. Actavis, Inc. that some patent litigation settlements might violate federal antitrust law—the breadth of the California Supreme Court’s decision could have a particularly negative impact on the free-enterprise system. Indeed, the decision suggests that parties to a patent litigation settlement will have great difficulty ever avoiding California antitrust liability if the settlement entails transferring anything of value from the patent holder to the alleged infringer. Because Cipro’s new state-law antitrust standard is so much more exacting than the standard announced by the U.S. Supreme Court in Actavis, federal antitrust law may well trump California’s standard. Indeed, were Cipro to reach the U.S. Supreme Court, the Court likely would reverse on federal preemption grounds.

“Reverse-Payment” Patent Settlements

When parties to litigation enter into a settlement, one would normally expect that any cash payments would flow from the defendant to the plaintiff. The normal expectations have been reversed in the context of litigation involving prescription-drug patents, however, as a result of financial incentives created by the Hatch-Waxman Act, a federal statute designed to ensure that generic versions of prescription drugs enter the market more quickly. The Act includes a provision that permits generic companies, by declaring to the Food and Drug Administration a belief that the patent held by a brand-name drug company is invalid, to essentially force the patentee to immediately file a patent infringement suit. It also grants huge financial awards to generic companies that successfully challenge drug patents. 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.

Supreme Court Agrees to Review Uninjured Plaintiffs’ Lawsuit

supreme courtThe U.S. Supreme Court this morning granted certiorari in Spokeo, Inc. v. Robbins, a case from the U.S. Court of Appeals for the Ninth Circuit involving an issue that the Court declined to address twice in the past several years: whether Congress can grant citizens the ability to file lawsuits in situations where those plaintiffs could not otherwise satisfy the “case or controversy” requirement of Article III of the U.S. Constitution.

On April 15, a WLF Legal Pulse commentary by WLF Chief Counsel Rich Samp, Supreme Court Has Opportunity to Halt Lawsuits by Uninjured Plaintiffs, explained why the Court should decline the recommendation of the Solicitor General of the U.S., which, at the Court’s invitation, had filed an amicus brief urging the justices to deny review.

Also, soon after the Court sought the views of the Solicitor General, WLF hosted a Web Seminar program on Spokeo and the issue of statutorily-created injury that featured Spokeo‘s Counsel of Record, Andrew Pincus of Mayer Brown LLP, and Meir Feder of Jones Day.

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

Supreme Court Has Opportunity to Halt Lawsuits by Uninjured Plaintiffs

supreme courtFederal courts have been inundated in recent years by suits filed by plaintiffs who have suffered no injury but who allege that a federal statute provides them with “standing” to sue for alleged violations of federal law. Such lawsuits can be extremely lucrative for the plaintiffs’ bar when the statute provides for an award of statutory damages (typically, $100 to $1,000) for each violation; by filing their suits as nationwide class actions, attorneys can often plausibly seek to recover billions of dollars. The Supreme Court may soon make it much more difficult for such suits to survive a motion to dismiss. The Court on Friday will consider whether to grant review in Spokeo v. Robins, a case that squarely addresses whether plaintiffs can assert Article III standing where their only “injury” is the affront to their sensibilities caused by the belief that someone is not complying federal law. The Court has indicated a strong interest in addressing the issue; Spokeo is an appropriate vehicle for doing so and ought to be granted.

The U.S. Solicitor General recently filed a brief recommending that the Court not hear Spokeo. That brief may, ironically, increase the likelihood that the Court will agree to hear the case, because the Solicitor General very pointedly declined to endorse the appeals court’s rationale for concluding that the plaintiff has standing.

Spokeo involves claims filed under the Fair Credit Reporting Act (FCRA), one of dozens of federal statutes that offer a bounty (in the form of statutory damages) to those who demonstrate a violation of a federal statute. Spokeo, Inc. operates a “people search engine”—it aggregates publicly available information from phone books, social networks, and other sources into a database that is searchable via the Internet, and displays the results of searches in an easy-to-read format. It has always emphasized that it does not verify or evaluate any piece of data and does not guarantee the accuracy of information offered. Continue reading

Supreme Court’s “Omnicare” Decision Follows Middle Path Advocated by Lane Powell and WLF

greeneddavisjGuest Commentary

By Douglas W. Greene and Claire Loebs Davis, Shareholders with Lane Powell PC in Seattle, Washington. They co-authored WLF’s amicus brief pro bono in Omnicare.

In the opinion issued on March 24 in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund (“Omnicare”), the Supreme Court rejected the two extremes advocated by the parties regarding how the truth or falsity of statements of opinion should be considered under the securities laws. Instead, it adopted the middle path advocated in the amicus brief filed by Lane Powell on behalf of Washington Legal Foundation (“WLF”).

In doing so, the Court also laid out a blueprint for examining claims of falsity under the securities laws, which we believe will do for falsity analysis what Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007), did for scienter analysis. Hence, Omnicare will help defense counsel defeat claims that opinions were false or misleading in § 11 cases, as well as in cases brought under § 10(b) of the Securities Exchange Act. Continue reading

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