Overview of CVSG Cases
on Jun 16, 2006 at 9:14 am
Last month the Solicitor General filed invitation briefs in eight cases. With five [note: thanks to a reader for the correction] of these cases on yesterday’s conference, we thought that this brief summary of the eight cases, prepared by Akin Gump summer associate Mike McGuinn, might be useful:
FTC v. Schering-Plough Corp.: The Solicitor General urged the Court to deny certiorari in this case involving a patent settlement agreement that provided for delayed entry into the market combined with a reverse payment from the patent holder to the alleged infringer. The case focused on patent settlement agreements entered into between Schering-Plough, the pharmaceutical company holding the drug patent, and two of its competitors. According to those agreements, the competitors agreed to delay releasing the generic versions of the patented drug into the market. In exchange, Schering-Plough agreed to make payments to the competitors to cover their legal fees and received an exclusive license of several products of one of the competitors. The Eleventh Circuit upheld the validity of the patent settlement agreement as being within the normal exclusionary power of a patent holder.
The FTC petitioned for certiorari to resolve the antitrust implications of the Eleventh Circuit’s ruling. The Solicitor General acknowledged the importance of antitrust evaluation of reverse-payment settlements in patent cases, but nonetheless recommended that the FTC’s petition be denied in this case because the case was an inappropriate vehicle for the Court to decide the issue. According to the SG, sufficient evidence had been presented that Schering-Plough’s payment to its competitor was not a prohibited reverse payment for delayed market entry, but was instead a royalty payment for licensing of the competitor’s products. The Solicitor General also noted that the issue had not been squarely presented and argued in the lower courts and that there was no circuit split on this issue. (Back in October 2005, Marty Lederman and Paul Wolfson had these thoughts (in the comments) on the unusual scenario presented by this case – viz., the FTC filing a cert. petition without the Solicitor General and Department of Justice on the brief. You can read the FTC’s supplemental brief, which responds to the arguments in the SG’s invitation brief, here.)
Air Conditioning and Refrigeration Institute v. Energy Resources Conservation and Development Commission: The Solicitor General recommended denial of certiorari in this case presenting the question whether state labeling and disclosure regulations are preempted by federal requirements set out in § 6297(a)(1) of the Energy Policy and Conservation Act. The suit was brought by appliance manufacturers, who argued that certain disclosure and labeling regulations of the California Energy Resources Conservation and Development Commission were preempted by § 6297(a)(1). The Ninth Circuit narrowly construed the federal disclosure and labeling requirements and held that there was no conflict with the California regulations. The Solicitor General recommended denial of certiorari, finding the court of appeals’ narrow construction to be consistent with Court precedent and contending that there was no circuit split on this issue.
Weyerhaeuser Co. v. Ross Simmons Hardwood Lumber Co.: The Solicitor General recommended certiorari be granted in this case, which involves the applicable standard in an allegation of “predatory bidding.†A sawmill operator filed suit and won judgment against a competitor sawmill on the ground that the competitor had engaged in anti-competitive market conduct, including predatory bidding. The U.S. District Court for the District of Oregon and the Ninth Circuit did not apply the predatory bidding standard set out by the Court in Brooke Group Ltd. v. Brown and Williamson Tobacco Corp., which held that a plaintiff who alleges predatory bidding must prove that (1) defendant suffered a short-term loss and (2) had a dangerous probability of recouping its loss in the long term. In affirming the district court’s rejection of a Brooke Group standard, the Ninth Circuit distinguished Brooke Group on the grounds that it involved sell-side predatory pricing, as opposed to the instant action involving buy-side predatory pricing.
Even without a circuit conflict on this issue, the Solicitor General argued that certiorari should be granted to correct the improper predatory bidding standard applied by the court of appeals because of its potential chilling effect on pro-competitive conduct and the suitability of the dispute for resolution by the Court.
SmithKline Beecham Corp. v. Apotex Corp.: The Solicitor General recommended that cert. be denied in this case, involving the novelty of an inevitably produced compound from a prior patented art. Patent holders of an anti-depressant drug filed suit against a competitor that was seeking to sell a generic version of the drug in variant composition. Both the district court and the Federal Circuit rejected the suit, holding the patent claim was invalid because the patented compound was inevitably produced by the prior compound and thus was inherently anticipated by that art, making it non-novel. The Solicitor General agreed with the lower courts and recommended a denial because the decision did not conflict with other decisions of the Court and was consistent with Federal Circuit precedent.
Burke v. Wachovia Bank: The Solicitor General recommended that cert. be denied in this case involving the preemption of state laws regulating mortgage lending activity by federal regulations issued pursuant to the National Bank Act. Wachovia Bank and its subsidiary Wachovia Mortgage brought suit challenging a cease and desist order of the Connecticut State Banking Commission on the ground that the federal regulations issued by the Comptroller pursuant to the National Bank Act preempt the enforcement of state laws regulating mortgage lending activity by a subsidiary of a national bank. Both the U.S. District Court for the District of Columbia and the Second Circuit overturned the order on those grounds. The Solicitor General recommended a denial, asserting that the case was correctly decided by the lower courts and did not conflict with precedent.
Empresa Cubana Del Tabaco v. General Cigar Co.: The Solicitor General recommended that cert. be denied in this case involving a foreign trademark unenforceable in the United States under the Cuban Assets Control Regulations (CACRs). Plaintiff trademark holder (Cubatabaco) brought suit against a U.S. company alleging trademark infringement. The Second Circuit threw out the infringement claim on the central ground that the CACRs prevented the plaintiff from acquiring, through the “famous marks†doctrine, ownership of its trademark in the United States. Cubatabaco appealed the judgment on alternative grounds. The Solicitor General agreed with the central holding of the court of appeals that the CACRs prevented Cubatabaco from acquiring ownership of its trademark in the United States. As to the alternative legal issues, the Solicitor General recommended a denial because the alternative issues presented were not properly presented and preserved for the Court and the questions presented were not of strong practical significance in the commercial world.
Davis v. International Union: The Solicitor General recommended that certiorari be denied in this case involving the federal Labor-Management Reporting and Disclosure Act’s preemption of state law claims arising out of a union election. A former union official filed suit alleging claims including age discrimination and wrongful discharge arising out of an underlying union election when he was removed from office. The Sixth Circuit dismissed the case because the claims were precluded by the Labor-Management Reporting and Disclosure Act, which exclusively governed challenges to the validity of union elections. The court reasoned that because the claims would necessarily require an evaluation of the validity of the union election, they were preempted by the federal statute. The Solicitor General recommended denial of certiorari, agreeing with the reasoning and decision of the court of appeals. The Solicitor General also argued that this ruling did not conflict with other circuit precedent and that the legal issue was prematurely and improperly presented to the Court.
KSR International Co. v. Teleflex, Inc.: The Solicitor General recommended that certiorari be granted in this case involving the Federal Circuit’s “teaching-suggestion-motivation†obviousness test. The patent holder brought an infringement suit against a competitor. The U.S. District Court for the Eastern District of Michigan ruled the patent invalid as obvious and granted the defendant’s summary judgment motion. The Federal Circuit reversed on the ground that the district court improperly applied its “teaching-suggestion-motivation†test in its obviousness determination and that a prima facie case of obviousness had not been presented in the lower court. The Solicitor General argued that certiorari should be granted on the grounds that the Federal Circuit’s obviousness test is inflexible, conflicts with precedent, and imposes too high a standard on patent challenges in future obviousness cases.
