Supreme Court Corner: Q1 2013

Intellectual Property and Technology News

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RECENT DECISIONS

Gunn v. Minton
Decided (9-0): 2/20/13

Patent

Holding: Patent litigation malpractice claims do not arise under the federal patent law

The Supreme Court reversed and remanded a Texas Supreme Court decision that patent law malpractice claims are exclusively within federal jurisdiction. After his patent was invalidated in federal court, Minton claimed negligent representation and sued his lawyers for malpractice in Texas state court. The Texas court rejected those claims. On appeal, Minton relied on two Federal Circuit cases to argue that federal courts have exclusive jurisdiction over patent law malpractice claims. See Air Measurement Tech., Inc. v. Akin Gump, 504 F.3d 1262 (Fed. Cir. 2007); Immunocept, L.L.C. v. Fulbright & Jaworski, L.L.P., 504 F.3d 1281 (Fed. Cir. 2007). The Texas appeals court affirmed by applying Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) concerning the scope of “arising under” jurisdiction. Subsequently, the Texas Supreme Court applied Air Measurement and Immunocept to vacate the trial court’s decision and dismiss the case on jurisdictional grounds. Gunn appealed to the Supreme Court. In its unanimous ruling, the Court applied Grable to hold that Minton’s legal malpractice claim does not arise under federal patent law. Even though the claim involved an actually disputed question of federal patent law, the Court deemed it “not substantial in the relevant sense” because it was merely hypothetical in this context and, thus, not substantial to the “federal system as a whole.”

 

Already, LLC v. Nike, Inc.
Decided (9-0): 1/9/2013

Trademark

Holding: Covenant not to sue can render a trademark invalidity counterclaim moot

Nike filed a trademark infringement suit against Already, and Already counterclaimed that the trademark was invalid. Nike later issued a covenant not to sue under the asserted trademark “based on the appearance of any of Already’s current and/or previous footwear product designs, and any colorable imitations thereof.” Applying the “voluntary cessation” test for mootness, the Court affirmed the dismissal of the case as moot because (1) Nike’s covenant was broad enough to cover all of Already’s allegedly unlawful conduct and (2) Already had not asserted any concrete plans to engage in any conduct not covered by the covenant. The Court rejected Already’s attempt to save its counterclaim from mootness based on alleged injuries that are too hypothetical or conjectural to support standing in the first place. The Court also rejected Already’s argument that a company can sue to invalidate a trademark simply because it competes in the same market as the trademark holder.

 

CASES TO WATCH

Kirtsaeng v. John Wiley & Sons
Argument: 10/29/2012

Copyright

Issue: Does the first sale doctrine apply to textbooks purchased in one country and sold in the US?

The Supreme Court is reviewing the Second Circuit’s decision concerning the scope and applicability of the copyright first sale doctrine. Kirtsaeng sold academic textbooks in the United States that were published by an Asian subsidiary of John Wiley & Sons. Kirtsaeng’s relatives lawfully purchased the textbooks for him in Asia. When John Wiley sued him for copyright infringement, the district court rejected Kirtsaeng’s first-sale defense as a matter of law because it ruled the defense “inapplicable to goods manufactured in a foreign country.” The Second Circuit affirmed in view of the Supreme Court’s 4-4 split decision on this issue in Costco Wholesale Corp. v. Omega, S.A., 131 S. Ct. 565 (2010).

Assoc. for Molec. Pathology v. Myriad Genetics, Inc.
Argument: 4/15/2013

Patent

Issue: Are isolated human genes patentable?

Petitioner AMP sought at trial to invalidate Myriad’s patents covering every naturally occurring version of two genes. On summary judgment, the district court invalidated the patents, reasoning that isolated genes are not “markedly different” from naturally occurring genes, relying on Diamond v. Chakrabarty, 447 U.S. 303 (1980). A divided Federal Circuit voted 2-1 to uphold the validity of the patents on first review and then again on remand in light of Mayo Collaborative Servs. v. Prometheus Labs, Inc., 132 S. Ct. 1289 (2012). The petitioner argues that naturally occurring, albeit isolated, human genes are not patentable under § 101. Myriad argues the genes are patentable because they are not isolated in nature.

 

Bowman v. Monsanto
Argument: 2/19/2013

Patent

Issue: Is the doctrine of patent exhaustion applicable to the progeny of self-replicating technologies?

Monsanto owns a biotechnology patent for a genetically modified seed and it is subject to post-sale restrictions on use. Bowman, a farmer, purchased this seed from a licensed Monsanto manufacturer. Each year, he planted the Monsanto seed as his first crop and sowed a second crop later in the season from a “commodity seed,” saving seeds from this second crop for replanting in later years. Monsanto discovered the progeny of this commodity seed contained the patented technology. The Federal Circuit affirmed summary judgment for Monsanto under its “conditional sale” exemption, finding that patent exhaustion was inapplicable here. The Federal Circuit held that even if a technology can replicate itself, patent exhaustion does not permit its use. Bowman argues Monsanto exhausted its rights to the seeds when it sold them with the post-sale restrictions. Monsanto agrees with the Federal Circuit that Bowman infringed because he made copies of the technology for later use.

Federal Trade Commission v. Watson Pharmaceuticals, Inc.
Argument: 3/25/2013

Patent

Issue: Are reverse payment agreements in patent cases anticompetitive?

A pharmaceutical patent holder and generic manufacturers entered into a reverse payment agreement whereby the patent holder paid the generic manufacturers in exchange for a promise not to challenge the patents and to market the generic drugs at a future specified date. The FTC filed suit, arguing the payments are anticompetitive and thus unlawful. The district court rejected the FTC’s challenge and the Eleventh Circuit affirmed. At present, the circuits are split on this issue. The Second, Federal and Eleventh Circuits have found reverse payment agreements are fair so long as the restraint on trade falls within the scope of the patent; contrarily, the Sixth and DC Circuits have found such agreements may violate antitrust laws, and the Third Circuit presumes that such agreements do.

 

For more information about these cases before the United States Supreme Court, please contact: 

Stan Panikowski

Brian Biggs

Andrew Stein

 

 

FROM THE ARCHIVE

 

The California Supreme Court clarifies class certification issues in Brinker decision