Wednesday, September 4, 2019

Customs Tariff Changes

Customs tariff changes
Amendments for January 1st, 2022
Recommendation of the Customs Co-operation Council
The Customs Co-operation Council adopted a Recommendation that lists recommended amendments to the Harmonized System nomenclature that will enter into force on January 1st, 2022. The Federal Council Ordinance will be published in summer 2021.

Tuesday, June 25, 2019

Customs - Certificate of Origin - CH Fact Sheet


Certificates of Origin (CoO)

Fact sheet for determining the formal validity of proofs of origin:

In French:

Notice servant à la détermination de la validité formelle des preuves d'origine (état au 25 juin 2019)

Monday, June 24, 2019

U.S. Supreme Court, Dutra Group v. Batterton, Docket No. 18-266

Admiralty Law
Maritime Law
Common Law
Jones Act
Punitive Damages
Exemplary Damages
Unseaworthiness Actions
Maritime Claim of Maintenance and Cure.

By granting federal courts jurisdiction over maritime and admiralty cases, the Constitution implicitly directs federal courts sitting in admiralty to proceed “in the man­ner of a common law court.” Exxon Shipping Co. v. Baker, 554 U. S. 471, 489–490 (2008). Thus, where Congress has not prescribed specific rules, federal courts must develop the “amalgam of traditional common-law rules, modifica­tions of those rules, and newly created rules” that forms the general maritime law. East River S. S. Corp. v. Transamerica Delaval Inc., 476 U. S. 858, 864–865 (1986). But maritime law is no longer solely the province of the Federal Judiciary. “Congress and the States have legis­lated extensively in these areas.” Miles v. Apex Marine Corp., 498 U. S. 19, 27 (1990). When exercising its inher­ent common-law authority, “an admiralty court should look primarily to these legislative enactments for policy guidance.” Ibid. We may depart from the policies found in the statutory scheme in discrete instances based on long-established history, see, e.g., Atlantic Sounding Co. v. Townsend, 557 U. S. 404, 424–425 (2009), but we do so cautiously in light of Congress’s persistent pursuit of “uniformity in the exercise of admiralty jurisdiction.” Miles, supra, at 26 (quoting Moragne v. States Marine Lines, Inc., 398 U. S. 375, 401 (1970)).

This case asks whether a mariner may recover punitive damages on a claim that he was injured as a result of the unseaworthy condition of the vessel. We have twice con­fronted similar questions in the past several decades, and our holdings in both cases were based on the particular claims involved. In Miles, which concerned a wrongful-death claim under the general maritime law, we held that recovery was limited to pecuniary damages, which did not include loss of society. 498 U. S., at 23. And in Atlantic Sounding, after examining centuries of relevant case law, we held that punitive damages are not categorically barred as part of the award on the traditional maritime claim of maintenance and cure. 557 U. S., at 407. Here, because there is no historical basis for allowing punitive damages in unseaworthiness actions, and in order to promote uniformity with the way courts have applied parallel statutory causes of action, we hold that punitive damages remain unavailable in unseaworthiness actions.

The seaman’s right to recover damages for personal injury on a claim of unseaworthiness originates in the admiralty court decisions of the 19th century. At the time, “seamen led miserable lives.” D. Robertson, S. Friedell, & M. Sturley, Admiralty and Maritime Law in the United States 163 (2d ed. 2008). Maritime law was largely judge­made, and seamen were viewed as “emphatically the wards of the admiralty.” Harden v. Gordon, 11 F. Cas. 480, 485 (No. 6,047) (CC Me. 1823). In that era, the pri­mary responsibility for protecting seamen lay in the courts, which saw mariners as “peculiarly entitled to”—and particularly in need of—judicial protection “against the effects of the superior skill and shrewdness of masters and owners of ships.” Brown v. Lull, 4 F. Cas. 407, 409 (No. 2,018) (CC Mass. 1836) (Story, J.).

Courts of admiralty saw it as their duty not to be “con­fined to the mere dry and positive rules of the common law” but to “act upon the enlarged and liberal jurispru­dence of courts of equity; and, in short, so far as their powers extended, they acted as courts of equity.” This Court interpreted the Constitution’s grant of admi­ralty jurisdiction to the Federal Judiciary as “the power to . . . dispose of a case as justice may require.” The Reso­lute, 168 U. S. 437, 439 (1897).

Courts used this power to protect seamen from injury primarily through two causes of action. The first, mainte­nance and cure, has its roots in the medieval and renaissance law codes that form the ancient foundation of mari­time common law.

The duty of maintenance and cure requires a ship’s master “to provide food, lodging, and medical services to a seaman injured while serving the ship.” Lewis v. Lewis & Clark Marine, Inc., 531 U. S. 438, 441 (2001). This duty, “which arises from the contract of employment, does not rest upon negligence or culpability on the part of the owner or master, nor is it restricted to those cases where the seaman’s employment is the cause of the injury or illness.” Calmar S. S. Corp. v. Taylor, 303 U. S. 525, 527 (1938).

The second claim, unseaworthiness, is a much more recent development and grew out of causes of action unre­lated to personal injury. In its earliest forms, an unsea­worthiness claim gave sailors under contract to sail on a ship the right to collect their wages even if they had re­fused to board an unsafe vessel after discovering its condi­tion. See, e.g., Dixon v. The Cyrus, 7 F. Cas. 755, 757 (No. 3,930) (Pa. 1789); Rice v. The Polly & Kitty, 20 F. Cas. 666, 667 (No. 11,754) (Pa. 1789). Similarly, unseaworthiness was a defense to criminal charges against seamen who refused to obey a ship master’s orders. See, e.g., United States v. Nye, 27 F. Cas. 210, 211 (No. 15,906) (CC Mass. 1855); United States v. Ashton, 24 F. Cas. 873, 874–875 (No. 14,470) (CC Mass. 1834). A claim of unseaworthiness could also be asserted by a shipper to recover damages or by an insurer to deny coverage when the poor condition of the ship resulted in damage to or loss of the cargo. See The Caledonia, 157 U. S. 124, 132–136 (1895) (cataloging cases).

Only in the latter years of the 19th century did unsea­worthiness begin a long and gradual evolution toward remedying personal injury. Courts began to extend the cases about refusals to serve to allow recovery for mari­ners who were injured because of the unseaworthy condi­tion of the vessel on which they had served. These early cases were sparse, and they generally allowed recovery only when a vessel’s owner failed to exercise due diligence to ensure that the ship left port in a seaworthy condition (…) Because a claimant had to show that he was injured by some aspect of the ship’s condition that rendered the vessel unseawor­thy, a claim could not prevail based on “the negligence of the master, or any member of the crew.” (…) Instead, a seaman had to show that the owner of the vessel had failed to exercise due diligence in ensuring the ship was in seaworthy condi­tion. See generally Dixon v. United States, 219 F. 2d 10, 12–14 (CA2 1955) (Harlan, J.) (cataloging evolution of the claim).

(It was only after the passage of the Jones Act that negligence by a fellow mariner provided a reliable basis for recovery (fn. 4)).

Tremendous shifts in mariners’ rights took place be­tween 1920 and 1950. First, during and after the First World War, Congress enacted a series of laws regulating maritime liability culminating in the Merchant Marine Act of 1920, §33, 41 Stat. 1007 (Jones Act), which codified the rights of injured mariners and created new statutory claims that were freed from many of the common-law limitations on recovery. The Jones Act provides injured seamen with a cause of action and a right to a jury. 46 U. S. C. §30104. Rather than create a new structure of substantive rights, the Jones Act incorporated the rights provided to railway workers under the Federal Employers’ liability Act (FELA), 45 U. S. C. §51 et seq. 46 U. S. C. §30104. In the 30 years after the Jones Act’s passage, “the Act was the vehicle for almost all seamen’s personal injury and death actions.” Gilmore & Black §6–20, at 327.

But the Jones Act was overtaken in the 1950s by the second fundamental change in personal injury maritime claims—and it was this Court, not Congress, that played the leading role. In a pair of decisions in the late 1940s, the Court transformed the old claim of unseaworthiness, which had demanded only due diligence by the vessel owner, into a strict-liability claim. In Mahnich v. South­ern S. S. Co., 321 U. S. 96 (1944), the Court stated that “the exercise of due diligence does not relieve the owner of his obligation” to provide a seaworthy ship and, in the same ruling, held that the fellow-servant doctrine did not provide a defense. Id., at 100, 101.

(…) Less than two years later, we affirmed that the duty of seaworthiness was “essentially a species of liability without fault . . . neither limited by conceptions of negligence nor contrac­tual in character. It is a form of absolute duty owing to all within the range of its humanitarian policy.” Seas Ship­ping Co. v. Sieracki, 328 U. S. 85, 94–95 (1946).

From Mahnich forward, “the decisions of this Court have undeviatingly reflected an understanding that the owner’s duty to furnish a seaworthy ship is absolute and completely independent of his duty under the Jones Act to exercise reasonable care.” Mitchell v. Trawler Racer, Inc., 362 U. S. 539, 549 (1960). As a result of Mah­nich and Sieracki, between the 1950s and 1970s “the unseaworthiness count was the essential basis for recov­ery with the Jones Act count preserved merely as a jury-getting device.”

(…) The shifts in plaintiff preferences between Jones Act and unseaworthiness claims were possible because of the significant overlap between the two causes of action. One leading treatise goes so far as to describe the two claims as “alternative ‘grounds’ of recov­ery for a single cause of action.” 2 R. Force & M. Norris, The Law of Seamen §30:90, p. 30–369 (5th ed. 2003). The two claims are so similar that, immediately after the Jones Act’s passage, we held that plaintiffs could not submit both to a jury. Plamals, supra, at 156–157 (“Sea­men may invoke, at their election, the relief accorded by the old rules against the ship, or that provided by the new against the employer. But they may not have the benefit of both”). We no longer require such election. See McAl­lister v. Magnolia Petroleum Co., 357 U. S. 221, 222, n. 2 (1958). But a plaintiff still cannot duplicate his recovery by collecting full damages on both claims because, “whether or not the seaman’s injuries were occasioned by the un­seaworthiness of the vessel or by the negligence of the master or members of the crew, . . . there is but a single wrongful invasion of his primary right of bodily safety and but a single legal wrong.” Peterson, 278 U. S., at 138.

(The decline of Jones Act claims was arrested, although not reversed, by our holding that some negligent actions on a vessel may create Jones Act liability without rendering the vessel unseaworthy. See Usner v. Luckenbach Overseas Corp., 400 U. S. 494 (1971); see also 1B Benedict on Admiralty §23, p. 3–35 (7th rev. ed. 2018) (fn. 5)).

For claims of unseaworthiness, the overwhelming his­torical evidence suggests that punitive damages are not available.

(…) The lack of punitive damages in traditional maritime law cases is practically dispositive. By the time the claim of unseaworthiness evolved to remedy personal injury, punitive damages were a well-established part of the common law. Exxon Shipping, 554 U. S., at 491. Ameri­can courts had awarded punitive (or exemplary) damages from the Republic’s earliest days. See, e.g., Genay v. Nor­ris, 1 S. C. L. 6, 7 (1784); Coryell v. Colbaugh, 1 N. J. L. 77, 78 (1791). And yet, beyond the decisions discussed above, Batterton presents no decisions from the formative years of the personal injury unseaworthiness claim in which exemplary damages were awarded. From this we conclude that, unlike maintenance and cure, unseaworthiness did not traditionally allow recovery of punitive damages.

In light of this overwhelming historical evidence, we cannot sanction a novel remedy here unless it is required to maintain uniformity with Congress’s clearly expressed policies. Therefore, we must consider the remedies typi­cally recognized for Jones Act claims.

The Jones Act adopts the remedial provisions of FELA, and by the time of the Jones Act’s passage, this Court and others had repeatedly interpreted the scope of damages available to FELA plaintiffs. These early decisions held that “the damages recoverable under FELA are limited. . . strictly to the financial loss . . . sustained.”

(We also note that Congress declined to allow punitive damages when it enacted the Death on the High Seas Act. 46 U. S. C. §30303 (allowing “fair compensation for the pecuniary loss sustained” for a death on the high seas) (fn. 8)).

(…) Because unseaworthiness in its current strict-liability form is our own invention and came after passage of the Jones Act, it would exceed our current role to introduce novel remedies contradictory to those Congress has provided in similar areas. ((…) Declining to create remedy “that goes well beyond the limits of Congress’ ordered system of recovery”).

(…) The duty of mainte­nance and cure requires the master to provide medical care and wages to an injured mariner in the period after the injury has occurred. Calmar S. S. Corp., 303 U. S., at 527–528. By contrast, both the Jones Act and unseaworthiness claims compensate for the injury itself and for the losses resulting from the injury. Peterson, supra, at 138. In such circumstances, we are particularly mindful of the rule that requires us to promote uniformity between mari­time statutory law and maritime common law.

(…) Unseaworthiness claims run against the owner of the vessel (…) See Sieracki, 328 U. S., at 100 (The duty of seaworthiness is “peculiarly and exclusively the obligation of the owner. It is one he cannot delegate”).

Finally, because “noncompensatory damages are not part of the civil-code tradition and thus unavailable in such countries,” Exxon Shipping, 554 U. S., at 497, allow­ing punitive damages would place American shippers at a significant competitive disadvantage and would discour­age foreign-owned vessels from employing American sea­men. See Gotanda, Punitive Damages: A Comparative Analysis, 42 Colum. J. Transnat’l L. 391, 396, n. 24 (2004) (listing civil-law nations that restrict private plaintiffs to compensatory damages).

(…) In light of these changes and of the roles now played by the Judiciary and the political branches in protecting sailors, the special solicitude to sailors has only a small role to play in contemporary maritime law.

Secondary sources: Benedict on Admiralty (7th rev. ed. 2018); R. Force & M. Norris, The Law of Seamen (5th ed. 2003).

(U.S. Supreme Court, June 24, 2019, Dutra Group v. Batterton, Docket No. 18-266, J. Alito)

Monday, June 10, 2019

U.S. Supreme Court, Return Mail, Inc. v. Postal Service, Docket No. 17-1594, J. Sotomayor

Patent Reexamination
Post-Issuance Review Proceedings
Defense in an Infringement Action
Ex Parte Reexamination
Inter Partes Reexamination
Inter Partes Review
Post-Grant Review
Covered-Business-Method Review
Leahy-Smith America Invents Act
Interpretation (Statute)
Dictionary Act

In the Leahy-Smith America Invents Act of 2011, 35 U. S. C. §100 et seq., Congress created the Patent Trial and Appeal Board and established three new types of administrative proceedings before the Board that allow a “person” other than the patent owner to challenge the validity of a patent post-issuance. The question presented in this case is whether a federal agency is a “person” able to seek such review under the statute. We conclude that it is not.

(…) After a patent issues, there are several avenues by which its validity can be revisited. The first is through a defense in an infringement action. Generally, one who intrudes upon a patent without authorization “infringes the patent” and becomes subject to civil suit in the federal district courts, where the patent owner may demand a jury trial and seek monetary damages and injunctive relief. §§271(a), 281–284. If, however, the Federal Gov­ernment is the alleged patent infringer, the patent owner must sue the Government in the United States Court of Federal Claims and may recover only “reasonable and entire compensation” for the unauthorized use. 28 U. S. C. §1498(a).

Once sued, an accused infringer can attempt to prove by clear and convincing evidence “that the patent never should have issued in the first place.” Microsoft Corp. v. i4i L. P., 564 U. S. 91, 96–97 (2011); see 35 U. S. C. §282(b). If a defendant succeeds in showing that the claimed invention falls short of one or more patentability requirements, the court may deem the patent invalid and absolve the defendant of liability.

The Patent Office may also reconsider the validity of issued patents. Since 1980, the Patent Act has empow­ered the Patent Office “to reexamine—and perhaps cancel—a patent claim that it had previously allowed.” Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ___, ___ (2016) (slip op., at 3). This procedure is known as ex parte reexamination. “Any person at any time” may cite to the Patent Office certain prior art that may “bear on the patentability of any claim of a particular patent”; and the person may additionally request that the Patent Office reexamine the claim on that basis. 35 U. S. C. §§301(a), 302(a). If the Patent Office concludes that the prior art raises “a substantial new question of patentability,” the agency may reexamine the patent and, if warranted, cancel the patent or some of its claims. §§303(a), 304–307. The Director of the Patent Office may also, on her “own initiative,” initiate such a proceeding. §303(a).

In 1999 and 2002, Congress added an “inter partes reexamination” procedure, which similarly invited “any person at any time” to seek reexamination of a patent on the basis of prior art and allowed the challenger to partic­ipate in the administrative proceedings and any subse­quent appeal. See §311(a) (2000 ed.); §§314(a), (b) (2006 ed.); Cuozzo Speed Technologies, 579 U. S., at ___ (slip op., at 3).

In 2011, Congress overhauled the patent system by enacting the America Invents Act (AIA), which created the Patent Trial and Appeal Board and phased out inter partes reexamination. See 35 U. S. C. §6; H. R. Rep. No. 112–98, pt. 1, pp. 46–47. In its stead, the AIA tasked the Board with overseeing three new types of post-issuance review proceedings.

First, the “inter partes review” provision permits “a person” other than the patent owner to petition for the review and cancellation of a patent on the grounds that the invention lacks novelty or nonobviousness in light of “patents or printed publications” existing at the time of the patent application. §311.

Second, the “post-grant review” provision permits “a person who is not the owner of a patent” to petition for review and cancellation of a patent on any ground of patentability. §321; see §§282(b)(2), (b)(3). Such proceedings must be brought within nine months of the patent’s issu­ance. §321.

Third, the “covered-business-method review” (CBM review) provision provides for changes to a patent that claims a method for performing data processing or other operations used in the practice or management of a finan­cial product or service. AIA §§18(a)(1), (d)(1), 125 Stat.329, note following 35 U. S. C. §321, p. 1442. CBM review tracks the “standards and procedures of” post-grant re­view with two notable exceptions: CBM review is not limited to the nine months following issuance of a patent, and “a person” may file for CBM review only as a defense against a charge or suit for infringement. §18(a)(1)(B),125 Stat. 330.

The CBM review program will stop accepting new claims in 2020. See AIA §18(a)(3)(A), 125 Stat. 330; 77 Fed. Reg. 48687 (2012).

(…) Any party “dissatisfied” with the Board’s final decision may seek judicial review in the Court of Appeals for the Federal Circuit, §§319, 329; see §141(c), and the Director of the Patent Office may intervene, §143.

In sum, in the post-AIA world, a patent can be reex­amined either in federal court during a defense to an infringement action, in an ex parte reexamination by the Patent Office, or in the suite of three post-issuance review proceedings before the Patent Trial and Appeal Board.

(…) The AIA provides that only “a person” other than the patent owner may file with the Office a petition to insti­tute a post-grant review or inter partes review of an issued patent. 35 U. S. C. §§311(a), 321(a). The statute likewise provides that a “person” eligible to seek CBM review may not do so “unless the person or the person’s real party in interest or privy has been sued for infringement.” AIA §18(a)(1)(B), 125 Stat. 330. The question in this case is whether the Government is a “person” capable of institut­ing the three AIA review proceedings.

The patent statutes do not define the term “person.” In the absence of an express statutory definition, the Court applies a “longstanding interpretive presumption that ‘person’ does not include the sovereign,” and thus excludes a federal agency like the Postal Service.

(…) This presumption reflects “common usage.” (…) It is also an express directive from Congress: The Dictionary Act has since 1947 provided the definition of “‘person’ ” that courts use “in determining the meaning of any Act of Congress, unless the context indicates otherwise.” 1 U. S. C. §1; (…) The Act provides that the word “ ‘person’ . . . includes corporations, companies, associa­tions, firms, partnerships, societies, and joint stock com­panies, as well as individuals.” §1. Notably absent from the list of “persons” is the Federal Government.

(…) Given the presumption that a statutory reference to a “person” does not include the Government, the Postal Service must show that the AIA’s context indicates otherwise. Although the Postal Service need not cite to “an express contrary definition,” Rowland, 506 U. S., at 200, it must point to some indication in the text or context of the statute that affirmatively shows Congress intended to include the Government. See Cooper, 312 U. S., at 605.

(…) Patent Office’s Manual of Patent Examining Procedure (MPEP)

(…) This Court has not decided whether common-law estoppel applies in §1498 suits (cf. fn. 10).

(U.S. Supreme Court, June 10, 2019, Return Mail, Inc. v. Postal Service, Docket No. 17-1594, J. Sotomayor)

Parker Drilling Management Services, Ltd. v. Newton, Docket No. 18-389, J. Thomas, Unanimous

Admiralty Law
Maritime Law
Continental Shelf
Drilling Platforms
State Law Adopted as Federal Law?
California Law (Minimum Wages)
Interpretation (Statute)

The Outer Continental Shelf Lands Act (OCSLA), 67 Stat. 462, 43 U. S. C. §1331 et seq., extends federal law to the subsoil and seabed of the Outer Continental Shelf and all attachments thereon (OCS). Under the OCSLA, all law on the OCS is federal law, administered by federal officials. The OCSLA denies States any interest in or jurisdiction over the OCS, and it deems the adjacent State’s laws to be federal law “to the extent that they are applicable and not inconsistent with” other federal law. §1333(a)(2)(A). The question before us is how to determine which state laws meet this requirement and therefore should be adopted as federal law. Applying familiar tools of statutory interpretation, we hold that where federal law addresses the relevant issue, state law is not adopted as surrogate federal law on the OCS.

Respondent Brian Newton worked for petitioner Parker Drilling Management Services on drilling platforms off the coast of California. Newton’s 14-day shifts involved 12 hours per day on duty and 12 hours per day on standby, during which he could not leave the platform. He was paid well above the California and federal minimum wages for his time on duty, but he was not paid for his standby time.

(…) Parker, on the other hand, argues that state law is not “applicable” on the OCS in the absence of a gap in federal law that needs to be filled. Moreover, Parker argues that state law can be “inconsistent” with federal law even if it is possible for a party to satisfy both sets of laws. Specifically, Parker contends that, although the FLSA normally accommodates more protective state wage-and-hour laws, such laws are inconsistent with the FLSA when adopting state law as surrogate federal law because federal law would then contain two different standards.

Although this is a close question of statutory interpretation, on the whole we find Parker’s approach more persuasive because “ ‘the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.’ ” Roberts v. Sea-Land Services, Inc., 566 U. S. 93, 101 (2012).

That rule is particularly relevant here, as the terms “applicable” and “not inconsistent” are susceptible of interpretations that would deprive one term or the other of meaning. If Newton is right that “applicable” merely means relevant to the subject matter, then the word adds nothing to the statute, for an irrelevant law would never be “applicable” in that sense (…) And if Parker is right that “applicable” means “necessary to fill a gap in federal law,” it is hard to imagine circumstances in which “not inconsistent” would add anything to the statute, for a state law would rarely be inconsistent with a federal law that leaves a gap that needs to be filled.

(…) In short, the two terms standing alone do not resolve the question before us. Particularly given their indeterminacy in isolation, the terms should be read together and interpreted in light of the entire statute. See Star Athletica, L. L. C. v. Varsity Brands, Inc., 580 U. S. ___, ___ (2017) (slip op., at 6) (“ ‘Interpretation of a phrase of uncertain reach is not confined to a single sentence when the text of the whole statute gives instruction as to its meaning’ ”).

Our pre-OCSLA decisions made clear that the Federal Government controlled the OCS in every respect, and the OCSLA reaffirmed the central role of federal law on the OCS. As discussed, the OCSLA gives the Federal Government complete “jurisdiction, control, and power of disposition” over the OCS, while giving the States no “interest in or jurisdiction” over it. §§1332(1), 1333(a)(3). The statute applies federal law to the OCS “to the same extent as if the OCS were an area of exclusive Federal jurisdiction located within a State.” §1333(a)(1). Accordingly, the only law on the OCS is federal law, and state laws are adopted as federal law only “to the extent that they are applicable and not inconsistent with” federal law. §1333(a)(2)(A).

Taken together, these provisions convince us that state laws can be “applicable and not inconsistent” with federal law under §1333(a)(2)(A) only if federal law does not address the relevant issue. As we have said before, the OCSLA makes apparent “that federal law is ‘exclusive’ in its regulation of the OCS, and that state law is adopted only as surrogate federal law.” Rodrigue v. Aetna Casualty & Surety Co., 395 U. S. 352, 357 (1969). The OCSLA extends all federal law to the OCS, and instead of also extending state law writ large, it borrows only certain state laws. These laws, in turn, are declared to be federal law and are administered by federal officials.

Given the primacy of federal law on the OCS and the limited role of state law, it would make little sense to treat the OCS as a mere extension of the adjacent State, where state law applies unless it conflicts with federal law. See PLIVA, Inc. v. Mensing, 564 U. S. 604, 617–618 (2011). That type of pre-emption analysis is applicable only where the overlapping, dual jurisdiction of the Federal and State Governments makes it necessary to decide which law takes precedence.

(…) The question is whether federal law has already addressed the relevant issue; if so, state law addressing the same issue would necessarily be inconsistent with existing federal law and cannot be adopted as surrogate federal law. Put another way, to the extent federal law applies to a particular issue, state law is inapplicable.

(…) In Chevron Oil Co. v. Huson, 404 U. S. 97 (1971), the Court again viewed the OCSLA as adopting state law to fill in federal-law gaps. In Huson, the question was whether federal admiralty law or a state statute governed a tort action arising from an injury that occurred on the OCS. Id., at 98–99. Describing Rodrigue’s analysis, we explained that where “there exists a substantial ‘gap’ in federal law,” “state law remedies are not ‘inconsistent’ with applicable federal law.” 404 U. S., at 101. We highlighted that “state law was needed” as surrogate federal law because federal law alone did not provide “ ‘a complete body of law,’ ” which is why “Congress specified that a comprehensive body of state law should be adopted by the federal courts in the absence of existing federal law.” Id., at 103–104. In other words, the OCSLA “made clear provision for filling in the ‘gaps’ in federal law.” Id., at 104. And because Congress had decided not to apply federal admiralty law on the OCS, leaving a gap on the relevant issue, we held that it was appropriate to “absorb” the state law as federal law. Id., at 104, 109.

(…) All law on the OCS is federal, and state law serves a supporting role, to be adopted only where there is a gap in federal law’s coverage.

(…) Applying this standard, some of Newton’s present claims are readily resolvable. For instance, some of his claims are premised on the adoption of California law requiring payment for all time that Newton spent on standby. See Mendiola v. CPS Security Solutions, Inc., 60 Cal. 4th 833, 842, 340 P. 3d 355, 361 (2015); Cal. Lab. Code Ann. §510(a) (West 2011). But federal law already addresses this issue. See 29 CFR §785.23 (2018) (“An employee who resides on his employer’s premises on a permanent basis or for extended periods of time is not considered as working all the time he is on the premises”); see also 29 U. S. C. §207(a). Therefore, this California law does not provide the rule of decision on the OCS, and to the extent Newton’s OCS-based claims rely on that law, they necessarily fail.

Likewise, to the extent Newton’s OCS-based claims rely on the adoption of the California minimum wage (currently $12), Cal. Lab. Code Ann. §1182.12(b) (West Supp. 2019), the FLSA already provides for a minimum wage, 29 U. S. C. §206(a)(1), so the California minimum wage does not apply.

(…) Of course, it is conceivable that state law might be “inconsistent” with federal law for purposes of §1333(a)(2) even absent an on-point federal law. For example, federal law might contain a deliberate gap, making state law inconsistent with the federal scheme. Or, state law might be inconsistent with a federal law addressing a different issue. We do not foreclose these or other possible inconsistencies (fn. 2, p. 14). 

(U.S. Supreme Court, June 10, 2019, Parker Drilling Management Services, Ltd. v. Newton, Docket No. 18-389, J. Thomas, unanimous)

Monday, May 13, 2019

U.S. Supreme Court, Apple Inc. v. Pepper, Docket No. 17-204, J. Kavanaugh

Consumer Law
Competition Law
Section 4 of the Clayton Act
Right to Sue
Direct Purchasers
Proximate Cause
Monop­sony Theory

Apple Inc. sells iPhone applications, or apps, directly to iPhone owners through its App Store—the only place where iPhone owners may law­fully buy apps. Most of those apps are created by independent devel­opers under contracts with Apple. Apple charges the developers a $99 annual membership fee, allows them to set the retail price of the apps, and charges a 30% commission on every app sale. Respond­ents, four iPhone owners, sued Apple, alleging that the company has unlawfully monopolized the aftermarket for iPhone apps. Apple moved to dismiss, arguing that the iPhone owners could not sue be­cause they were not direct purchasers from Apple under Illinois Brick Co. v. Illinois, 431 U. S. 720. The District Court agreed, but the Ninth Circuit reversed, concluding that the iPhone owners were di­rect purchasers because they purchased apps directly from Apple.

Held: Under Illinois Brick, the iPhone owners were direct purchasers who may sue Apple for alleged monopolization.

This straightforward conclusion follows from the text of the an­titrust laws and from this Court’s precedent. Section 4 of the Clayton Act provides that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue.” 15 U. S. C. §15(a). That broad text readily covers consumers who purchase goods or services at higher-than-competitive prices from an allegedly monopolistic retailer. Applying §4, this Court has consistently stated that “the immediate buyers from the alleged anti­trust violators” may maintain a suit against the antitrust violators, Kansas v. UtiliCorp United Inc., 497 U. S. 199, 207, but has ruled that indirect purchasers who are two or more steps removed from the violator in a distribution chain may not sue. Unlike the consumer in Illinois Brick, the iPhone owners here are not consumers at the bot­tom of a vertical distribution chain who are attempting to sue manu­facturers at the top of the chain. The absence of an intermediary in the distribution chain between Apple and the consumer is dispositive.

(…) Longstanding goal of effective pri­vate enforcement and consumer protection in antitrust cases.

(…) Applying §4, we have consistently stated that “the immediate buyers from the alleged anti­trust violators” may maintain a suit against the antitrust violators. Kansas v. UtiliCorp United Inc., 497 U. S. 199, 207 (1990); see also Illinois Brick, 431 U. S., at 745–746. At the same time, incorporating principles of proximate cause into §4, we have ruled that indirect purchasers who are two or more steps removed from the violator in a distribution chain may not sue. Our decision in Illinois Brick established a bright-line rule that authorizes suits by direct purchasers but bars suits by indirect purchasers. Id., at 746.

(…) In this case, unlike in Illinois Brick, the iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain. There is no intermediary in the distribution chain between Apple and the consumer. The iPhone owners purchase apps directly from the retailer Apple, who is the alleged antitrust violator. The iPhone owners pay the alleged overcharge directly to Apple. The absence of an intermediary is dispositive.

(…) Thirty States and the District of Columbia filed an amicus brief supporting the plaintiffs, and they argue that C should be able to sue A in that hypothetical. They ask us to overrule Illinois Brick to allow such suits. In light of our ruling in favor of the plaintiffs in this case, we have no occasion to consider that argument for overruling Illinois Brick. (fn. 2).

(…) Consider a traditional supplier-retailer relationship, in which the retailer purchases a product from the supplier and sells the product with a markup to consumers. Under Apple’s proposed rule, a retailer, instead of buying the product from the supplier, could arrange to sell the prod­uct for the supplier without purchasing it from the supplier. In other words, rather than paying the supplier a certain price for the product and then marking up the price to sell the product to consumers, the retailer could collect the price of the product from consumers and remit only a fraction of that price to the supplier.

(…) Here, some downstream iPhone consumers have sued Apple on a monopoly theory. And it could be that some upstream app developers will also sue Apple on a monop­sony theory. In this instance, the two suits would rely on fundamentally different theories of harm and would not assert dueling claims to a “common fund,” as that term was used in Illinois Brick. The consumers seek damages based on the difference between the price they paid and the competitive price. The app developers would seek lost profits that they could have earned in a competitive retail market. Illinois Brick does not bar either category of suit.

(…) Ever since Congress overwhelmingly passed and Presi­dent Benjamin Harrison signed the Sherman Act in 1890, “protecting consumers from monopoly prices” has been “the central concern of antitrust.” Areeda & Hovenkamp ¶345, at 179. The consumers here purchased apps directly from Apple, and they allege that Apple used its monopoly power over the retail apps market to charge higher-than-competitive prices. Our decision in Illinois Brick does not bar the consumers from suing Apple for Apple’s allegedly monopolistic conduct. We affirm the judgment of the U. S. Court of Appeals for the Ninth Circuit.

(U.S. Supreme Court, May 13, 2019, Apple Inc. v. Pepper, Docket No. 17-204, J. Kavanaugh)

Tuesday, April 23, 2019

U.S. Court of Appeals for the Eleventh Circuit, Hard Candy, LLC, v. Anastasia Beverly Hills, Inc., Docket No. 18-10877

Trademark Infringement
Remedy of an Accounting and Disgorgement of Profits
Remedies of Accounting, Constructive Trust, and Restitution
Injunctive Relief
Jury Trial
Seventh Amendment Right to Trial by Jury
Common Law
Monetary Damages Available to a Lanham Act Trademark Plaintiff
Fair Use Defense to Infringement
Likelihood of Confusion

Hard Candy filed a complaint in the United States District Court for the Southern District of Florida against Anastasia, claiming trademark infringement under § 32(a) of the Lanham Act, 15 U.S.C. § 1114(1); unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); common law trademark infringement; and common law unfair competition. Hard Candy sought an accounting and the disgorgement of Anastasia’s profits, statutory damages, a permanent injunction barring Anastasia’s use of its mark, declaratory relief, and fees and costs. The complaint included a request for actual damages, but, notably, Hard Candy dropped this application before trial. The district court then struck Hard Candy’s jury trial demand because all of the remaining remedies were equitable in nature.

To prevail on each of its claims, Hard Candy had to establish that Anastasia’s use of the words “hard candy” created a likelihood of confusion. See Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018, 1026 & n.14 (11th Cir. 1989) (noting that the elements of trademark infringement under common law and the Lanham Act “are the same,” and that “an unfair competition claim based only upon alleged trademark infringement is practically identical to an infringement claim”). Applying our seven-factor likelihood of confusion test, the district court determined that Hard Candy had not met its burden. The court also concluded that even if Hard Candy could establish infringement, Anastasia had made out a fair use defense because it used the term “hard candy” in good faith as a description of the product, not as a mark.

This appeal requires us to decide whether the Seventh Amendment right to trial by jury applies when a trademark plaintiff attempts to recover the profits the defendant made by selling the allegedly infringing goods.

A plaintiff is entitled to a jury trial in an action that is “analogous” to a claim that would have been brought in the English law courts at common law, but not if the claims sounded in equity or admiralty. See Tull v. United States, 481 U.S. 412, 417 (1987).

The remedy of an accounting and disgorgement of profits for trademark infringement is equitable in nature and has long been considered that way, so we hold that a plaintiff seeking the defendant’s profits in lieu of actual damages is not entitled to a jury trial.

(…) Injunctive relief is the quintessential form of equitable remedy; it does not entitle a plaintiff to a jury trial.

The monetary damages available to a Lanham Act trademark plaintiff can be divided into five rough categories: recovery of the defendant’s profits, actual business damages and out-of-pocket losses (like corrective advertising), lost profits, punitive damages, and attorneys’ fees.  “Actual damages” in this context covers everything from damages from lost sales or licensing fees due to the infringer’s sale of offending goods to intangible harm like reputational damage and loss of good will. As we have said, a trademark plaintiff “may recover for all elements of injury to the business of the trademark owner proximately resulting from the infringer’s wrongful acts.” Bos. Prof’l Hockey Ass’n, Inc. v. Dallas Cap & Emblem Mfg., Inc., 597 F.2d 71, 75 (5th Cir. 1979).

The Supreme Court has set out a two-part test to determine whether the Seventh Amendment’s guarantee applies to a particular claim: To determine whether a statutory action is more similar to cases that were tried in courts of law than to suits tried in courts of equity or admiralty, the Court must examine both the nature of the action and of the remedy sought. First, we compare the statutory action to 18th- century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature.

We begin, then, by examining the nature of the action, here trademark infringement and unfair competition based on infringement. “Trademarks and their precursors have ancient origins, and trademarks were protected at common law and in equity at the time of the founding of our country.” Matal v. Tam, 137 S. Ct. 1744, 1751 (2017). Trademark infringement claims began as common law actions for fraud or “deceit.” Sandforth’s Case, heard in an English court of law in 1584, may be the earliest trademark infringement action at common law. See Keith M. Stolte, How Early Did Anglo-American Trademark Law Begin? An Answer to Schechter’s Conundrum, 8 Fordham Intell. Prop. Media & Ent. L.J. 505, 509 (1998); 1 McCarthy § 5:2.

By the time the Seventh Amendment was ratified in 1791, the common law trademark infringement action was well established. See, e.g., Singleton v. Bolton (1783) 99 Eng. Rep. 661, 661; 3 Dougl. 293, 293 (stating that “if the defendant had sold a medicine of his own under the plaintiffs name or mark, that would be a fraud for which an action would lie”). Trademark actions also were brought in courts of equity during the same period. Blanchard v. Hill (1742) 26 Eng. Rep. 692; 2 Atk. 484, is the earliest reported trademark case brought in equity. See Mark P. McKenna, The Normative Foundations of Trademark Law, 82 Notre Dame L. Rev. 1839, 1852 (2007). Shortly thereafter, the accepted rule was “that equity could be invoked to protect the plaintiff’s title to his marks.” See id. at 1854. Early American case law likewise demonstrates that trademark rights could be enforced at equity. See, e.g., Taylor v. Carpenter, 23 F. Cas. 742, 744 (Story, Circuit Justice, C.C.D. Mass. 1844) (No. 13,784). Thus, because when the Seventh Amendment was ratified trademark rights had “been long recognized by the common law and the chancery courts of England,” Trade-Mark Cases, 100 U.S. 82, 92 (1879), this part of the Supreme Court’s test is indeterminate.

The second prong -- the nature of the remedy -- is the “more important” consideration and provides substantially more guidance here. Curtis, 415 U.S. at 196. Hard Candy does not seek actual damages, and it is undisputed that a plaintiff seeking only injunctive relief, costs, and fees would not be entitled to a jury trial. Thus, our analysis centers on Hard Candy’s request for an accounting of Anastasia’s profits and for the accompanying disgorgement of those gains. Our review is necessarily broader than the origins of the statutory remedy contained in the Lanham Act. As the Second Circuit recently explained, “the ancient remedies of accounting, constructive trust, and restitution have compelled wrongdoers to ‘disgorge’ -- i.e., account for and surrender -- their ill-gotten gains for centuries.” S.E.C. v. Cavanagh, 445 F.3d 105, 119 (2d Cir. 2006).

The remedy sought by Hard Candy, an accounting and disgorgement of profits, was historically a matter for courts of equity. (…) In other words, a court of law, limited to providing legal relief, would not be able to provide full redress to a trademark infringement plaintiff, but a court of equity could do so by providing an injunction along with ordering an accounting and disgorgement of the defendant’s profits -- precisely the remedy Hard Candy seeks here.

(…) Likelihood of confusion. The district court applied our seven-factor test (Op. III, A) (…) We look to the: (1) type of mark, (2) similarity of mark, (3) similarity of the products the marks represent, (4) similarity of the parties’ retail outlets and customers, (5) similarity of advertising media used, (6) defendant’s intent and (7) actual confusion.

(…) A defendant is entitled to the fair use defense if it establishes that it used the allegedly infringing term “(1) other than as a mark, (2) in a descriptive sense, and (3) in good faith.”

Secondary authorities: McCarthy on Trademarks and Unfair Competition (5th ed. 2018).

(U.S. Court of Appeals for the Eleventh Circuit, April 23, 2019, Hard Candy, LLC, v. Anastasia Beverly Hills, Inc., Docket No. 18-10877, Circuit Judge Marcus, for Publication)