Category: Litigation

Supreme Court Ruling Reverses Bad 9th Circuit Precedent on Class Action Fairness Act (CAFA)

The National Law Review recently published an article, Supreme Court Ruling Reverses Bad 9th Circuit Precedent on Class Action Fairness Act (CAFA), written by Thomas R. Kaufman with Sheppard, Mullin, Richter & Hampton LLP:

Sheppard Mullin 2012

On March 19, 2013, the U.S. Supreme Court handed down Standard Fire Insurance v. Knowles, a short, narrow, and unanimous opinion addressing removal of class actions to federal court under the Class Action Fairness Act (“CAFA”).  The central holding of the case is that a district court should “ignore” representations by the plaintiff that the amount in controversy is under $5 million and instead consider the actual evidence concerning the number of class members and potential claims.  Although the Court did not expressly address Lowdermilk v. U. S. Bank Nat’l Ass’n, 479 F.3d 994 (9th Cir. 2007)—a 9th Circuit case that held that the defendant must establish with “legal certainty” that the amount in controversy exceeds $5 million when the plaintiff pleads that the amount in controversy is lower—the Supreme Court’s reasoning effectively reverses the Lowdermilk line of cases.

The Relevant Facts in Standard Fire Insurance

As relevant, the defendant removed a class action and made a showing through an analysis of the allegations in the complaint that the amount in controversy slightly exceeded $5 million.   The district court found no fault with the analysis, but noted that the Plaintiff had made a formal stipulation that the amount in controversy was less than $5 million. Invoking the old adage that the plaintiff is “the master of the complaint,” the district court held that it was bound to remand the case based on the Plaintiff’s purportedly binding representation that the class was seeking less than $5 million.

The Supreme Court’s Holding

The limited question the Supreme Court answered was, assuming the evidence otherwise indicated that the class’s potential recovery exceeds the minimum $5 million, did the formal stipulation defeat federal jurisdiction.  The Court answered this question “no.”  The plaintiff, as a mere potential representative for an uncertified class, had no power to bind the class and to require them to agree to the reduced recovery.  This is to be contrasted from where an individual stipulates that his damages are below the amount in controversy in an individual action, which does bind all relevant parties (i.e., there are no absent contingent parties).  The Court went so far as to say that the district court “should have ignored that stipulation.” Instead, the Court directed district court’s the proper process is simply “to add[] up the value of the claim of each person who falls within the definition of [the] proposed class and determine whether the resulting sum exceeds $5 million. If so, there is jurisdiction and the court may proceed with the case.”  In so concluding, the Court cited with approval Frederick v. Hartford Underwriters, 683 F.3d 1242, 1247 (10th Cir. 2012), where the Tenth Circuit rejected an attempt by a plaintiff to avoid federal jurisdiction by pleading in the prayer that the class was seeking only “a total award for compensatory and punitive damages [that] does not exceed $4,999,999.99.”

How This Impacts Ninth Circuit Precedent

Although I have never encountered a purportedly “binding stipulation” that the amount in controversy is less than $5 million in a class action, it is common in wage/hour cases filed in California for the plaintiff’s counsel simply to plead in an unverified complaint that the amount in controversy is less than $5 million. Under binding 9th Circuit precedent, Lowdermilk v. U. S. Bank Nat’l Ass’n, 479 F.3d 994, 995 (9th Cir. 2007), where a plaintiff includes such a statement in the complaint, the burden on the defendant to establish the $5 million amount in controversy is greatly raised to a “legal certainty” standard, meaning that “the party seeking removal must prove with legal certainty that CAFA’s jurisdictional amount is met.” This is contrasted with the general rule where the complaint is silent on amount in controversy that the employer merely must “prove by a preponderance of the evidence that the amount in controversy requirement has been met.” A key rationale for the Lowdermilk rule was that “it is well established that the plaintiff is ‘master of her complaint’ and can plead to avoid federal jurisdiction.”

There is no way to reconcile this reasoning with the Supreme Court’s in Standard Fire Insurance. Implicit in the Supreme Court’s reasoning is that pronouncements by the plaintiff about the amount in controversy should have no binding effect, but rather the district court should simply consider the claims pleaded, the number of potential class members, and the potential aggregate recovery for this class while “ignoring” the plaintiff’s asserted conclusions on amount in controversy. There is no logical reason why a formal stipulation to limit jurisdiction should have no impact on the CAFA analysis, while a mere statement in an unverified complaint that the amount in controversy falls below $5 million should have the impact of altering the burden of proof and making it harder for the defendant to establish amount in controversy.

Copyright © 2013, Sheppard Mullin Richter & Hampton LLP

Employee Retaliation Claims: Will the Supreme Court Stem the Tide?

Barnes & Thornburg

It was no surprise for practitioners and their clients alike to learn that, statistically, retaliation claims remain the largest number of claims brought before the EEOC (in 2012, almost 38,000 charges alleged retaliation—38.1% of all charges). Worse, retaliation claims are expensive to defend. This point is painfully highlighted in this week’s submissions with the U.S. Supreme Court.

Last week, the U.S. Chamber of Commerce (along with the Retail Litigation Center) filed with the Supreme Court an amici curiae brief in a case in whichretaliation is the central issue. The case, captioned Univ. of Texas Southwestern Medical Center v. Nassar (U.S. No. 12-484), has been appealed from the 5th Circuit.

The underlying case arose when a doctor was not hired after he complained about his treatment at another organization. But, his complaint is of little consequence on the big stage. The central question before the Court—and the one on which the U.S. Chamber focuses—is the standard required to prove retaliation under the Civil Rights Act of Title VII.   Should employees be required to prove that their employers would not have taken an adverse action against them but for an improper motive?  Or, does the standard require employees only to show that an improper motive was one of multiple factors? The latter—a mixed-motive standard—is the one the 5th Circuit applied.

The U.S. Chamber’s brief argues that the “mixed-motive standard” lowers the bar for retaliation claims, resulting in increased costs for employers. The Chamber’s brief is boldly specific—it cites research estimating that in 1988, the cost of defending a wrongful discharge claim averaged more than $80,000.  The brief cites research supporting that today, it costs employers “possibly over $500,000 to defend a case at trial.”

As businesses on the front line, we, of course, already knew that.

Oral argument is scheduled for April 24, 2013.

You can follow the case and read the U.S. Chamber of Commerce’s brief at the SCOTUS Blog by clicking on the following link: University of Texas Southwestern Medical Center v. Nassar.

© 2013 BARNES & THORNBURG LLP

Chief Litigation Officer Summit – March 21-23, 2013

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

Chief Litigation Officer Sept 13-15 2012

The primary objective of the Chief Litigation Officer Summit is to explore the key aspects and issues related to litigation best practices and the protection and defense of corporations. The Summit’s program topics have been pinpointed and validated by leading litigation counsel as the top critical issues they face.

March 21-23, 2013

The Broadmoor, Colorado Springs, CO

Preservation of Error: Prejudicial or Argumentative Closing Arguments

The National Law Review recently published an article, Preservation of Error: Prejudicial or Argumentative Closing Arguments, written by Jennifer R. Dixon with Lowndes, Drosdick, Doster, Kantor & Reed, P.A.:

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The Second District Court of Appeal, last week, issued an opinion that reversed a trial court’s order granting new trial, Carnival Corporation v. Jimenez, 38 Fla. L. Weekly D455a, Case No. 2D11-5482 (2d DCA February 27, 2013).  The order was predicated on the trial judge’s finding that “comments made [by defense] counsel during closing arguments are perceived to have been prejudicial and highly inflammatory in nature because of their cumulative effect and their accusatory undertones.”  Id.

Jimenez was a personal injury case in which a large part of the defense strategy was to discredit the plaintiff’s expert/treating physician, because he had treated the plaintiff under a letter of protection.  According to the order on appeal, defense counsel “argued in closing . . . that plaintiff’s counsel . . . had collaborated or conspired with [the doctor] to conjure a non-injury into this lawsuit.”  While the trial court recognized that it had allowed evidence of the letter of protection, the introduction of such evidence “is to enable defense counsel to suggest that the doctor may have a financial bias, or stake in the outcome of the case.  Not for the impermissible purpose of allowing Defendant’s attorney to suggest a ‘neighborly’ conspiracy between the doctor and Plaintiff’s attorney.”  In sum, the trial court determined that the defense went so far in putting forth the conspiracy theory that the jury could not fairly assess the issues of causation and damages.

While the general rule is that improper comments made during closing argument may provide a basis for granting a new trial (see Mercury Ins. Co. of Fla. v. Moreta, 957 So. 2d 1242, 1250 (Fla. 2d DCA 2007)), the issue must be properly preserved by contemporaneous objection and a motion for mistrial.  Engle v. Liggett Grp., Inc., 945 So. 2d 1246, 1271 (Fla. 2006).  If the error has not been properly preserved, a new trial is only warranted when the improper behavior amounts to fundamental error. Companioni v. City of Tampa, 51 So. 3d 452, 456 (Fla. 2010).

The Jimenez court, noted that the plaintiff’s counsel only made two objections relative to the defense counsel’s references to the letter of protection.  Both were sustained, but there was no motion for mistrial.  The court, relying upon the 4-part test articulated in Murphy v. International Robotic Systems, Inc., 766 So. 2d 1010, 1027-31 (Fla. 2000) determined that while the plaintiff established the first prong of Murphy–that the challenged conduct was improper–she did not establish the remaining three prongs:  that the challenged conduct was harmful, that the challenged conduct was incurable, and that public interest in our system of justice requires a new trial.

Because the application of the Murphy factors did not show that the challenged conduct was so highly prejudicial that it denied the plaintiff her right to a fair trial, the order granting new trial was reversed, and the final judgment was ordered to be reinstated.

Practice tip:  when objecting to prejudicial or argumentative closing arguments: 1) object contemporaneously, 2) request a curative instruction (if appropriate), and 3) move for a mistrial, or be bound by the heightened standard for new trials articulated in Murphy.

© Lowndes, Drosdick, Doster, Kantor & Reed, PA

Chief Litigation Officer Summit – March 21-23, 2013

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

Chief Litigation Officer Sept 13-15 2012

The primary objective of the Chief Litigation Officer Summit is to explore the key aspects and issues related to litigation best practices and the protection and defense of corporations. The Summit’s program topics have been pinpointed and validated by leading litigation counsel as the top critical issues they face.

March 21-23, 2013

The Broadmoor, Colorado Springs, CO

State Law Resale Price Maintenance: We’re not in Kansas anymore

Womble Carlyle

I recently participated in a roundtable discussion on state law resale price maintenance actions presented by the ABA Section of Antitrust Law.

The discussion focused on the Kansas Supreme Court’s decision in O’Brien v. Leegin, in which the court determined that vertical price fixing was still per se illegal under Kansas antitrust laws despite the fact that such conduct is analyzed under the rule of reasons under federal antitrust law.  One of the participants suggested that the if the logic of the Kansas Supreme Court’s decision was extended, then all types of vertical restraints (i.e. geographic restrictions, non-compete agreements) which are typically analyzed under a reasonableness standard, may be subject to attack under the per se rule.  Other participants dismissed such concerns, but noted that state antitrust law can be (and often is) more restrictive than federal antitrust law.

A Deputy Attorney General for the State of California described several post-Leegin developments in state prosecutions of RPM and MAP agrements, including New York’s action against Tempur-Pedic.  The takeaway from that discussion seemed to be that, regardless of the outcome of those cases (which were resolved in favor of the manufacturer), state enforcers may still consider certain RPM and MAP agreements as per se antitrust violations.  Additionally, state enforcers may take an especially narrow view of the Colgate doctrine, which allows a business to unilaterally announce the terms and conditions upon which it will do business with its retailers/resellers.

At the conclusion of the program, one participant suggested that attorneys practicing in this area should give advice to their clients as if Leegin were never decided.  In other words, sometimes state law trumps federal law.  That is exactly what we have been saying on this blog ever since the Leegindecision was announced.

Copyright © 2013 Womble Carlyle Sandridge & Rice, PLLC

Federal Court Rejects Americans with Disabilities Act (ADA) Suit Over Random Alcohol Testing of Probationary Plant Employees

The National Law Review recently published an article regarding Random Alcohol Testing written by Robert S. Nichols, Robert E. Sheeder, and Amy Karff Halevy with Bracewell & Giuliani LLP:

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A federal judge in Pennsylvania has dismissed an Equal Employment Opportunity Commission challenge to U.S. Steel Corporation’s random alcohol testing of probationary employees at one of the company’s most safety sensitive facilities. The Court’s ruling in this carefully watched suit is significant for employers because it represents a forceful rejection of one of the more extreme positions the EEOC has taken in interpreting how the Americans with Disabilities Act (ADA) regulates workplaces.

EEOC’s Restrictive Interpretation of Employer Rights

The EEOC has adopted a very restrictive view of an employer’s right to conduct across-the-board medical examinations or inquiries of current employees even when the examination or inquiry is plainly motivated by workplace safety concerns. According to the EEOC, employers are prohibited in most circumstances from conducting generalized medical examinations, including random alcohol testing or periodic physical examinations of current employees.

The EEOC has pointed to a provision of the ADA that provides that an employer may not “require a medical examination and shall not make inquiries of an employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity.” 42 U.S.C. § 12112(d)(4)(A). Conducting random testing for the unlawful use of drugs, as opposed to testing for the use of alcohol, does not create the same legal impediments because a test for the unlawful use of drugs is generally not regarded as a “medical examination” under the ADA.

The very limited exceptions to this prohibition on across-the-board medical examinations or inquiries of current employees that the EEOC has recognized include examinations of certain public safety employees in police and firefighter positions as well as, of course, examinations or inquiries that are required by other federal agencies, such as the Department of Transportation.

EEOC Lawsuit Against U.S. Steel

In the U.S. Steel suit, the EEOC argued that across-the-board medical examination or inquiries, including random or other generalized alcohol testing, could not be justified by the business necessity defense even in a highly safety sensitive work environment. Rather, the EEOC has taken the position that alcohol testing can only be justified based upon individualized suspicion that the particular employee to be tested was under the influence of alcohol at work.

U.S. Steel argued in a motion for summary judgment that given the highly safety sensitive nature of the plant at issue, where employees work with materials that are at temperatures of more than 2,100 degrees, random testing was justified as a matter of business necessity.

The judge in the case granted U.S. Steel’s motion and dismissed the EEOC’s claims finding that the random alcohol testing of probationary employees was justified by the business necessity defense. The Court first pointed out that there was no disputing that safety in and of itself can be a matter of business necessity. As a result, according to the Court, the only question remaining was whether the policy of random alcohol testing served that asserted business necessity. After analyzing the facts at issue, the judge found that the alcohol testing policy plainly served the business necessity of workplace safety.

In doing so, the Court specifically rejected the EEOC’s position that across-the-board medical examinations or inquiries of current employees could only be justified in the case of law enforcement or firefighting employees. The Court explained that there was no legitimate basis for not extending the same rationale to employees in other highly safety sensitive positions. Also, the Court noted that in this instance selecting employees for testing based on individualized suspicion would not work effectively because personal protective equipment obscures the U.S. Steel employees’ faces and speech.

Additionally, the Court concluded that the random alcohol testing approach was not inconsistent with the ADA’s goal of preventing employers from targeting specific employees with disabilities based upon stereotypes and misconceptions. The Court pointed out that, after all, random testing, as opposed to individualized suspicion testing, was not potentially based upon conclusions about particular individuals with disabilities.

The Court also noted that the testing program at issue was the product of negotiations with the union representing plant employees and not a process unilaterally imposed by the employer.

Takeaways

The decision in the U.S. Steel case offers employers new hope that more federal courts will reject the EEOC’s very restrictive view of the right to conduct across-the-board medical examinations or inquiries, including, across-the-board random alcohol testing of employees in certain safety sensitive positions. While this decision is encouraging, employers need to recognize that the EEOC continues to adhere to its position regarding this issue and other federal courts may ultimately side with the EEOC. Nonetheless, the Court’s decision in the U.S. Steel suit is an encouraging sign for employers that courts, recognizing the importance of workplace safety, may adopt a far more reasonable and pragmatic view than the EEOC on this question of across-the-board medical examinations and inquiries of current employees.

© 2013 Bracewell & Giuliani LLP

What Constitutes an Abstract Idea in Intellectual Property?

GT Law

On February 8, 2013, the United States Court of Appeals for the Federal Circuit (“CAFC”) reheard CLS Bank International v. Alice Corporation en banc. The en banc CAFC opinion that eventually results may clarify the long-unsettled question of what constitutes an “abstract idea” and is thus unpatentable under Section 101 of the Patent Act. The CAFC’s ruling is expected to have widespread implications, which may affect how courts, the United States Patent and Trademark Office, patent prosecutors, patent litigators, inventors, and patent holders analyze and value certain patents and patent applications. The opinion is expected to be of particular importance in the fields of software and business method patents.

I. What is the abstract ideas exception and why does it matter?

Section 101 of the Patent Act provides, “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101 (2006 & Supp. V 2011). These categories (i.e., processes, machines, manufactures, and compositions of matter) are subject to three exceptions – laws of nature, physical phenomena, and abstract ideas – that, while not apparent from the statute’s text, are judge-made law constituting “stare decisis going back [more than] 150 years.” Bilski v. Kappos, — U.S. —-, 130 S. Ct. 3218, 3225, 177 L. Ed. 2d 792 (2010) (citing Le Roy v. Tathum, 14 How. 156, 174-75, 14 L. Ed. 367 (1853)). Thus, a patent application may be denied, or an issued patent may be ruled invalid, if it is deemed to be drawn to an abstract idea.

II. The CAFC is deeply divided about what constitutes an abstract idea.

Plenty of ink has been spilled and much time has been spent analyzing past cases, yet the CAFC remains split about what constitutes an abstract idea. Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323, 1327 (Fed. Cir. 2011) (“Both members of the Supreme Court and this court have recognized the difficulty of providing a precise formula or definition for the judge-made ineligible category of abstractness.” (citations omitted)), vacated sub nom. WildTangent, Inc. v. Ultramercial, LLC, — U.S. —-, 132 S. Ct. 2431, 182 L. Ed. 2d 1059 (2012). Neither the Supreme Court nor the CAFC has defined the word “abstract.” Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057, 1065 (Fed. Cir. 2011) (citing Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010), and Bilski, 130 S. Ct. at 3236 (Stevens, J., concurring)). As the CAFC put it,

This effort to descriptively cabin § 101 jurisprudence is reminiscent of the oenologists trying to describe a new wine. They have an abundance of adjectives – earthy, fruity, grassy, nutty, tart, woody, to name just a few – but picking and choosing in a given circumstance which ones apply and in what combination depends less on the assumed content of the words than on the taste of the tongue pronouncing them.

MySpace, Inc. v. GraphOn Corp., 672 F.3d 1250, 1259 (Fed. Cir. 2012). The waters are even murkier for business method patents. Id.

A. Points of agreement.

The U.S. Supreme Court has stated that “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,” Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. —-, 132 S. Ct. 1289, 1293, 182 L. Ed. 2d 321 (2012). Moreover, while abstract ideas themselves are not patentable, the application of an abstract idea is patent-eligible. Id. at 1293-94 (quoting Diamond v. Diehr, 450 U.S. 175, 187, 101 S. Ct. 1048, 67 L. Ed. 2d 155 (1981)). In addition, there is no per se rule against business method patents. Bilski, 130 S. Ct. at 3228-29. Furthermore, the machine or transformation test – wherein “‘[a] claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing’”– while not the sole test of whether an invention is drawn to an abstract idea, is “a useful and important clue.” Bilski, 130 S. Ct. at 3225-27 (quoting In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008)). Also, an invention that can be performed entirely in one’s head or with pen and paper is unpatentable. CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372 (Fed. Cir. 2011). In addition, a patent may not wholly preempt an abstract idea. Gottschalk v. Benson, 409 U.S. 63, 71-72, 93 S. Ct. 253, 34 L. Ed. 2d 273 (1972). Lastly, once it is apparent that the claims of a patent are drawn to an abstract idea, insignificant post-solution activity or an attempt to limit the claims to a particular technological environment are not enough to render the claims patent-eligible. Parker v. Flook, 437 U.S. 584, 590, 98 S. Ct. 2522, 57 L. Ed. 2d 451 (1978); Bilski, 130 S. Ct. at 3230 (citations omitted). While the foregoing principles are helpful, they have not made it clear for courts how various patent claims should be analyzed to determine whether they claim an abstract idea.

B. Whither goest ‘manifestly evident’?

In 2010, Chief Judge Rader, writing for a panel of the CAFC also composed of Judges Newman and Plager, declared: “this court . . . will not presume to define ‘abstract’ beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.” Research Corp., 627 F.3d at 868. The current divide amongst the CAFC judges may center around whether to follow the “manifestly evident” line of precedent, thereby interpreting the abstract ideas exception narrowly (invalidating fewer patents), or whether to disregard it, thereby interpreting the abstract ideas exception broadly (thereby making it harder to satisfy the Section 101 requirements).

In particular, while Judges Rader, Linn, Plager, and Newman have construed the abstract ideas exception narrowly; Judges Prost, Schall, Mayer, Moore, Bryson, Wallach, and Dyk have construed the abstract ideas exception broadly; and Judges O’Malley and Lourie have ruled both ways. For example, in Myspace, Judges Newman and Plager held that it would have to be “clear and convincing beyond peradventure – that is, under virtually any meaning of ‘abstract’ – that the claim at issue is well over the line” for it to be well-advised for a court to address Section 101 in an infringement suit. 672 F.3d at 1261. In addition, in Ultramercial, which the Supreme Court has since vacated and remanded to the CAFC, Chief Judge Rader, writing for a panel also composed of Judges Lourie and O’Malley, held the claims patentable and wrote, “The eligibility exclusion for purely mental steps is particularly narrow.” Id. at 1329-30, vacated sub nom. WildTangent, 132 S. Ct. 2431. Similarly, in Classen, Judges Newman and Rader took a narrow view of the abstract ideas exception and reasoned that claims must be “manifestly abstract” to be found invalid, while Judge Moore, dissenting, would have invalidated claims that the majority held valid. 659 F.3d 1057.

In contrast, in PerkinElmer, Inc. v. Intema Ltd., No. 2011-1577, 2012 WL 5861658 (Fed. Cir. Nov. 20, 2012) (nonprecedential), Judges Bryson, O’Malley, and Wallach found claims invalid without even mentioning the “manifestly abstract” line of precedent. Judges Prost, Schall, and Moore did the same in Fort Properties, Inc. v. American Master Lease, 671 F.3d 1317 (Fed. Cir. 2012). Similarly, in Cybersource, Judges Dyk, Bryson, and Prost viewed the abstract ideas exception broadly. 654 F.3d 1366. Likewise, in Bancorp Services v. Sun Life Assurance Co., 687 F.3d 1266 (Fed. Cir. 2012), Judges Lourie, Prost, and Wallach held claims invalid, after distinguishing Research Corp. In addition, Judge Mayer advocated “a robust application of section 101 at the summary judgment stage” in his dissent in Highmark, Inc. v. Allcare Health Management Systems, Inc., 687 F.3d 1300, 1324 (Fed. Cir. 2012) (Mayer, J., dissenting).

IV. And then there was Alice.

At issue in Alice are Alice Corp.’s four patents, which cover a computerized trading platform for having a third party settle obligations between a first and a second party, thereby eliminating settlement risk – the risk that one or both parties would fail to perform. Alice, 685 F.3d at 1343.

Judges Linn and O’Malley found the claims patentable, and held, “when – after taking all of the claim recitations into consideration – it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101.” Id. at 1352. Judges Linn and O’Malley continued, “Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible ‘abstract idea’ under 35 U.S.C. § 101.” Id. Judges Linn and O’Malley emphasized the importance of viewing the claim as a whole, writing, “nothing in the Supreme Court’s precedent, nor in ours, allows a court to go hunting for abstractions by ignoring the concrete, palpable, tangible, and otherwise not abstract invention the patentee actually claims.” Id. at 1351. Judges Linn and O’Malley continued, “It is fundamentally improper to paraphrase a claim in overly simplistic generalities in assessing whether the claim falls under the limited ‘abstract ideas’ exception to patent eligibility under 35 U.S.C. § 101.” Id.

Judge Prost disagreed. She issued a dissent stating that the majority ruling defied the “Supreme Court’s unanimous directive to apply the patentable subject matter test with more vigor.” Id. at 1356 (Prost, J., dissenting). Judge Prost continued, “Worse yet, it creates an entirely new framework that in effect allows courts to avoid evaluating patent eligibility under § 101 whenever they so desire.” Id. (Prost, J., dissenting). In addition, Judge Prost took a different approach to the claims, analyzing their patentability under Section 101 only after she stripped them of “jargon”. Id. at 1357-58 (Prost, J., dissenting) (setting forth what Judge Prost called a “plain English translation” of the claims). Judge Prost noted, “The majority objects that ‘[i]t is impermissible for the court to rewrite claims as it sees them.’ . . . But that is precisely what courts do in claim construction everyday.” Id. at 1358 (Prost, J., dissenting) (citation omitted).

V. The CAFC rehears Alice en banc.

Importantly, only judges in regular active service and any senior judge who served on the original panel could participate in the en banc rehearing of Alice. See 28 U.S.C. § 46 (2006 & Supp. V 2011). Thus, Judge Bryson, who just assumed senior status on January 7, 2013, and Senior Judges Mayer, Plager, Clevenger, and Schall did not participate in the rehearing, while Senior Judge Linn – who served on the original Alice panel – opted to participate. That left Judges Rader, Newman, and Linn, who have construed the abstract ideas exception narrowly; Judges Prost, Moore, Wallach, and Dyk, who have construed the abstract ideas exception broadly; Judges O’Malley and Lourie, who have ruled both ways; and Judge Reyna, who is so new that he hasn’t yet served on a panel construing the abstract ideas exception.

Despite active questioning from the CAFC judges, the en banc rehearing of Alice did not provide clear guidance as to how the eventual opinion will affect the Section 101 analysis. Rather, the en banc hearing put the CAFC judges’ differences of opinion on display. For example, while Judge Linn maintained his position that it is inappropriate to distill a claim down to its essentials, another CAFC judge (whose identity was not apparent from the audio recording) appeared to do just that, suggesting that the claim was to the goal that Alice Corp. sought to achieve, rather than to any particular way of achieving that goal. Similarly, Judge Moore read the claims in light of the specification, while another CAFC judge appeared to strictly limit his construction to the language of the claims. Several CAFC judges, including Judges Moore and Linn, expressed a concern that Section 101 should not serve the same function of screening for inventiveness as Sections 102 and 103. Other concerns raised by the CAFC judges included preemption, post-solution activity, whether the claims had been construed correctly as requiring computer-implementation, and whether Section 101 had to be addressed before Sections 102, 103, and 112.

VI. Conclusion.

The CAFC’s rift has left courts, patent litigators, prosecutors, patent holders, and inventors with no clear rules to define an abstract idea. The opinion that eventually results from the en banc rehearing of Alice may lend some clarity to this long-unsettled area of the law. Interested parties should also keep an eye out for what happens in Ultramercial v. WildTangent, No. 2010–1544, as that opinion may also have widespread implications regarding the fate of the abstract ideas exception. See WildTangent, 132 S. Ct. 2431, granting cert., vacating, and remanding Ultramercial, 657 F.3d 1323.

©2013 Greenberg Traurig, LLP

Chief Litigation Officer Summit – March 21-23, 2013

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

Chief Litigation Officer Sept 13-15 2012

The primary objective of the Chief Litigation Officer Summit is to explore the key aspects and issues related to litigation best practices and the protection and defense of corporations. The Summit’s program topics have been pinpointed and validated by leading litigation counsel as the top critical issues they face.

March 21-23, 2013

The Broadmoor, Colorado Springs, CO

I’m Too Sexy It Hurts… My Employment

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Studies often show that attractive workers tend to get hired sooner, get promotions more quickly, and are paid more handsomely than their less-attractive co-workers. But can good looks get you fired without any job protection? According to a unanimous decision by the Iowa Supreme Court, they can.

In Nelson v. Knight, the Iowa Supreme Court considered whether a female employee could be lawfully terminated because her boss believed that she was an irresistible attraction and keeping her employed was a threat to his marriage. Nelson, the terminated employee, had worked for Knight’s dental practice for ten years along with Knight’s wife.  Ultimately, Knight’s wife became jealous and demanded that Knight terminate Nelson.  Knight too believed that if Nelson remained employed he would likely have (or attempt to have) an affair with her.  Consequently, Knight notified Nelson that she was terminated because she was too irresistible and a threat to his marriage.  Nelson then brought a cause of action against Knight alleging that she was terminated because of her gender in violation of the Iowa Civil Rights Act.  Nelson did not allege at any time that Knight sexually harassed her.

The Iowa Supreme Court upheld Nelson’s termination.  In doing so, the Court drew an important distinction between an isolated employment decision based on personal relationship issues (which is lawful in most cases) and an employment decision based strictly on one’s gender (which is unlawful in most cases).  The court reasoned that this case fell under the first scenario in which Knight terminated Nelson because of personal relationship issues and not because of her gender.  Therefore, the court found that Nelson’s termination was lawful under the Iowa Civil Rights Act.

Although this may seem like a novel decision, it should not be a surprise.  In New Jersey, it is well-established that physical attractiveness is not a protected class under the New Jersey Law Against Discrimination.  It is also well established that an employee can be terminated because of relationship issues stemming from a consensual workplace relationship with his or her employer absent sexual harassment. In applying these principles, it is fair to conclude that a similar decision might have been rendered by a court in New Jersey.  On the other hand, Nelson was a threat to Knight’s marriage only because she is a woman; thus, it is not difficult to imagine that a court in New Jersey might have gone the other way.

© 2013 Giordano, Halleran & Ciesla, P.C.