Tuesday, May 30, 2017

Impression Products, Inc. v. Lexmark Int'l, Inc., Docket 15-1189

Patent exhaustion doctrine: International exhaustion (patent): First sale doctrine: License: Common law: Fee simple:

When a patentee sells one of its products, however, the patentee can no longer control that item through the patent laws—its patent rights are said to “exhaust.” The purchaser and all subsequent owners are free to use or resell the product just like any other item of personal property, without fear of an infringement lawsuit.

Two questions about the scope of the patent exhaustion doctrine: First, whether a patentee that sells an item under an express restriction on the purchas­er’s right to reuse or resell the product may enforce that restriction through an infringement lawsuit. And second, whether a patentee exhausts its patent rights by selling its product outside the United States, where American patent laws do not apply. Answer:  a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.

First up are the Return Program cartridges that Lexmark sold in the United States. We conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold them. The single-use/no-resale re­strictions in Lexmark’s contracts with customers may have been clear and enforceable under contract law, but they do not entitle Lexmark to retain patent rights in an item that it has elected to sell.

For over 160 years, the doctrine of patent exhaustion has imposed a limit on that right to exclude. See Bloomer v. McQuewan, 14 How. 539 (1853). The limit functions automatically: When a patentee chooses to sell an item, that product “is no longer within the limits of the monopoly” and instead becomes the “private, individual property” of the purchaser, with the rights and benefits that come along with owner­ship. Id., at 549–550. A patentee is free to set the price and negotiate contracts with purchasers, but may not, “by virtue of his patent, control the use or disposition” of the product after ownership passes to the purchaser. United States v. Univis Lens Co., 316 U. S. 241, 250 (1942). The sale “terminates all patent rights to that item.” Quanta Computer, Inc. v. LG Electronics, Inc., 553 U. S. 617, 625 (2008).

This well-established exhaustion rule marks the point where patent rights yield to the common law principle against restraints on alienation. The Patent Act “pro­motes the progress of science and the useful arts by granting to inventors a limited monopoly” that allows them to “secure the financial rewards” for their inventions. Univis, 316 U. S., at 250. But once a patentee sells an item, it has “enjoyed all the rights secured” by that limited monopoly. Keeler v. Standard Folding Bed Co., 157 U. S. 659, 661 (1895). Because “the purpose of the patent law is fulfilled . . . when the patentee has received his reward for the use of his invention,” that law furnishes “no basis for restraining the use and enjoyment of the thing sold.” Univis, 316 U. S., at 251.

We have explained in the context of copyright law that exhaustion has “an impeccable historic pedigree,” tracing its lineage back to the “common law’s refusal to permit restraints on the alienation of chattels.” Kirtsaeng v. John Wiley & Sons, Inc., 568 U. S. 519, 538 (2013). As Lord Coke put it in the 17th century, if an owner restricts the resale or use of an item after selling it, that restriction “is voide, because . . . it is against Trade and Traffique, and bargaining and contracting betweene man and man.” E. Coke, Institutes of the Laws of England §360, p. 223 (1628); see J. Gray, Restraints on the Alienation of Prop­erty §27, p. 18 (2d ed. 1895) (“A condition or conditional limitation on alienation attached to a transfer of the entire interest in personalty is as void as if attached to a fee simple in land”).

Lexmark cannot bring a patent infringement suit against Impression Products to enforce the single-use/no-resale provision accompanying its Return Program cartridges. Once sold, the Return Program cartridges passed outside of the patent monopoly, and whatever rights Lexmark retained are a matter of the contracts with its purchasers, not the patent law.

In sum, patent exhaustion is uniform and automatic. Once a patentee decides to sell—whether on its own or through a licensee—that sale exhausts its patent rights, regardless of any post-sale restrictions the patentee pur­ports to impose, either directly or through a license.

(…) What helped tip the scales for global exhaustion was the fact that the first sale doctrine originated in “the common law’s refusal to permit restraints on the aliena­tion of chattels.” Id., at 538. That “common-law doctrine makes no geographical distinctions.” Id., at 539. The lack of any textual basis for distinguishing between domestic and international sales meant that “a straightforward application” of the first sale doctrine required the conclu­sion that it applies overseas. Id., at 540.

Applying patent exhaustion to foreign sales is just as straightforward. Patent exhaustion, too, has its roots in the antipathy toward restraints on alienation, and nothing in the text or history of the Patent Act shows that Congress intended to confine that borderless common law principle to domestic sales. In fact, Congress has not altered patent exhaustion at all; it remains an unwritten limit on the scope of the patentee’s monopoly. See Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U. S. 104, 108 (1991) (“Where a common-law principle is well established, . . . courts may take it as given that Congress has legislated with an expectation that the principle will apply except when a statutory purpose to the contrary is evident”).

(…) Allowing patent rights to stick remora-like to that item as it flows through the market would violate the principle against restraints on aliena­tion. Exhaustion does not depend on whether the patentee receives a premium for selling in the United States, or the type of rights that buyers expect to receive. As a result, restrictions and location are irrelevant; what mat­ters is the patentee’s decision to make a sale.

Secondary sources: E. Coke, Institutes of the Laws of England §360, p. 223 (1628); J. Gray, Restraints on the Alienation of Prop­erty §27, p. 18 (2d ed. 1895); M. Nimmer & D. Nimmer, Copyright §17.02, p. 17–26 (2017).

(U.S.S.C., May 30, 2017, Impression Products, Inc. v. Lexmark Int'l, Inc., Docket 15-1189, C.J. Roberts).

La protection conférée par le brevet cesse dès que la chose est vendue à un tiers, soit dès le transfert de propriété. Que la vente soit interne ou internationale ne change rien. Un contrat de licence n'est pas l'équivalent d'une vente. Mais le titulaire peut vendre par lui-même ou par l'intermédiaire d'un contrat de licence avec le même effet : ces types de vente mettent également fin à la protection.

Si le titulaire du brevet vend la chose en restreignant contractuellement le droit de l'acheteur de la revendre, ce titulaire peut-il requérir le respect de cette restriction par une action en violation du brevet ? La réponse est négative, seule la voie contractuelle est à disposition à cet égard.

C'est qu'en effet, le droit des brevets confère un monopole limité pour permettre au titulaire de bénéficier de la récompense financière qu'il mérite, promouvant ainsi l'innovation. Mais dès que le titulaire vend le produit de son invention, il est réputé avoir bénéficié des droits découlant du monopole limité. De la sorte, le but du droit des brevets est atteint quand le titulaire a reçu sa rémunération pour l'usage de la chose. Ainsi, la loi sur les brevets ne saurait servir à restreindre l'usage et la jouissance de la chose vendue.

La cessation de la protection conférée par le brevet en cas de transfert de propriété de la chose trouve sa source dans la Common law, qui ne permet pas de restreindre les droits de l'acquéreur. La Common law ne distingue pas suivant que la vente soit interne ou internationale. Ni l'interprétation littérale ni l'interprétation historique de la loi fédérale sur les brevets ne démontre d'intention du Congrès d'altérer le contenu de ces principes de Common law. La cessation de la protection telle que décrite demeure une limite non écrite au monopole découlant du brevet. Quand un principe de la Common law est bien établi, les Tribunaux peuvent tenir pour acquis que le Congrès a légiféré avec pour but l'application du principe, sauf indication légale contraire évidente.

Monday, May 22, 2017

Water Splash, Inc. v. Menon, Docket 16-254

Service abroad of documents: Hague Service Convention: Jurisdiction:

This case concerns the scope of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, Nov. 15, 1965 (Hague Service Convention), 20 U. S. T. 361, T. I. A. S. No. 6638. The purpose of that multilateral treaty is to simplify, standardize, and generally improve the process of serving documents abroad. Preamble, ibid.; see Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U. S. 694, 698 (1988). To that end, the Hague Service Convention specifies certain approved methods of service and “pre-empts inconsistent methods of service” wherever it applies. Id., at 699. Today we address a question that has divided the lower courts: whether the Convention prohibits service by mail. We hold that it does not.

In 2013, Water Splash sued Menon in state court in Texas (…) Because Menon resided in Canada, Water Splash sought and obtained permission to effect service by mail. After Menon declined to answer or otherwise enter an appearance, the trial court issued a default judgment in favor of Water Splash. Menon moved to set aside the judgment on the ground that she had not been properly served, but the trial court denied the motion.

((…) Service of process (which we have defined as “a formal delivery of documents that is legally sufficient to charge the defendant with notice of a pending action”).

(…) Article 10 permits direct service by mail . . . unless the receiving state objects to such service.

Dept. of State, Legal Considerations: International Judicial Assistance: Service of Process (stating that “service by registered . . . mail . . . is an option in many countries in the world,” but that it “should . . . not be used in the countries party to the Hague Service Convention that objected to the method described in Article 10(a) (postal channels)”), online at https://travel.state.gov/content/travel/en/legalconsiderations/judicial/service-of-process.html (all Internet materials as last visited May 19, 2017).

In short, the traditional tools of treaty interpretation unmistakably demonstrate that Article 10(a) encompasses service by mail. To be clear, this does not mean that the Convention affirmatively authorizes service by mail. Article 10(a) simply provides that, as long as the receiving state does not object, the Convention does not “interfere with . . . the freedom” to serve documents through postal channels. In other words, in cases governed by the Hague Service Convention, service by mail is permissible if two conditions are met: first, the receiving state has not objected to service by mail; and second, service by mail is authorized under otherwise-applicable law. See Brockmeyer, 383 F. 3d, at 803–804.

Secondary sources: B. Ristau, International Judicial Assistance §4–1–4(2), p. 112 (1990 rev. ed.); Hague Conference on Private Int’l Law, Practical Handbook on the Operation of the Service Convention ¶279, p. 91 (4th ed. 2016).

(U.S.S.C., May 22, 2017, Water Splash, Inc. v. Menon, Docket 16-254, J. Alito. All other Members joined, except J. Gorsuch, who took no part in the consideration or decision of the case).

Notifications à l'étranger. La notification par poste peut être admise. Application de la Convention de La Haye.

L'affaire débute devant une cour de l'état du Texas. La demande est signifiée par voie postale à la défenderesse, laquelle réside au Canada. Elle ne dépose pas de réponse et ne comparaît pas. Un jugement par défaut est rendu en faveur du demandeur. La défenderesse dépose une demande de relief, invoquant une notification affectée d'un vice. La demande de relief est rejetée.

La Cour juge en l'espèce que la Convention de La Haye permet une notification directe et par poste à une partie, pour autant que l'état de dite partie permette une telle notification. Le Département d'état s'est prononcé dans le même sens. Encore faut-il que l'état du for le permette aussi, car la Convention se limite à prévoir qu'elle n'interfère pas avec une notification postale si l'état du défendeur permet l'usage de la voie postale.

Monday, May 15, 2017

Midland Funding, LLC v. Johnson, Docket 16-348

Debt collection: Statute of limitations: Unfair collection:

The Fair Debt Collection Practices Act, 91 Stat. 874, 15 U. S. C. §1692 et seq., prohibits a debt collector from asserting any “false, deceptive, or misleading representation,” or using any “unfair or unconscionable means” to collect, or attempt to collect, a debt, §§1692e, 1692f.

(…) Whether Midland’s assertion of an obviously time-barred claim is “unfair” or “unconscionable” (within the terms of the Fair Debt Collection Practices Act) presents a closer question. First, Johnson points out that several lower courts have found or indicated that, in the context of an ordinary civil action to collect a debt, a debt collector’s assertion of a claim known to be time barred is “unfair.” See, e.g., Phillips v. Asset Acceptance, LLC, 736 F. 3d 1076, 1079 (CA7 2013) (holding as much); Kimber v. Federal Financial Corp., 668 F. Supp. 1480, 1487 (MD Ala. 1987) (same); Huertas v. Galaxy Asset Management, 641 F. 3d 28, 32–33 (CA3 2011) (indicating as much); Castro v. Collecto, Inc., 634 F. 3d 779, 783 (CA5 2011) (same); Freyermuth v. Credit Bureau Servs., Inc., 248 F. 3d 767, 771 (CA8 2001) (same).

We are not convinced, however, by this precedent. It considers a debt collector’s assertion in a civil suit of a claim known to be stale. We assume, for argument’s sake, that the precedent is correct in that context (a matter this Court itself has not decided and does not now decide). But the context of a civil suit differs significantly from the present context, that of a Chapter 13 bankruptcy proceeding. The lower courts rested their conclusions upon their concern that a consumer might unwittingly repay a time-barred debt. Thus the Seventh Circuit pointed out that “few unsophisticated consumers would be aware that a statute of limitations could be used to defend against lawsuits based on stale debts.” Phillips, supra, at 1079 (quoting Kimber, supra, at 1487). The “passage of time,” the Circuit wrote, “dulls the consumer’s memory of the circumstances and validity of the debt” and the consumer may no longer have “personal records.” 736 F. 3d, at 1079 (quoting Kimber, supra, at 1487). Moreover, a consumer might pay a stale debt simply to avoid the cost and embarrassment of suit. 736 F. 3d, at 1079.

(U.S.S.C., May 15, 2017, Midland Funding, LLC v. Johnson, Docket 16-348, J. Breyer).

Poursuivre une créance prescrite peut être déloyal et contrevenir à la loi fédérale sur le recouvrement équitable des créances (15 U. S. C. §1692 et seq.). Cette jurisprudence ne semble toutefois s'appliquer qu'aux sociétés de recouvrement qui ne sont pas titulaires originaires de la créance.

Friday, May 12, 2017

International Competition Network (ICN), new recommended practices

Antitrust: Competition: Market studies: ICN:

At its annual meeting, the International Competition Network (ICN) adopted new recommended practices for merger review, addressing notification thresholds, remedies, and efficiencies; a framework for analyzing unilateral conduct; guiding principles for market studies; and a report on setting cartel fines, the Federal Trade Commission announced today.

The Advocacy Working Group provides guidance and facilitates experience sharing to improve the effectiveness of ICN members’ competition advocacy. This year, the group created new Market Studies Guiding Principles, a compilation of effective practices for agencies to consider when undertaking studies to understand the state of competition in specific sectors. It also expanded its “Explaining the Benefits of Competition” resources to include tips, messages, and case studies on communicating with the public.

Monday, May 8, 2017

Mendoza v. Nordstrom, Inc., S224611

Labor law in California: Wage and hour claims: Conditions of labor:

The provisions of the Labor Code are not to be construed in isolation, but in harmony with a second set of rules governing employment. The Legislature established the Industrial Welfare Commission (IWC) a century ago to regulate and protect the working conditions of women and minors. (Martinez v. Combs (2010) 49 Cal.4th 35, 54–55.) The IWC carried out that mission by adopting a series of wage orders, quasi-legislative enactments establishing minimum wages, maximum work hours, and conditions of labor. (Kilby v. CVS Pharmacy, Inc. (2016) 63 Cal.4th 1, 10; accord, Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026.) As a result, wage and hour claims are today governed by two complementary and occasionally overlapping sources of authority: the provisions of the Labor Code, enacted by the Legislature, and a series of 18 wage orders, adopted by the IWC. (Brinker Restaurant Corp., at p. 1026.)

Our role in interpreting the IWC wage orders and reconciling them with the Labor Code is settled: The IWC‘s wage orders are to be accorded the same dignity as statutes. They are presumptively valid legislative regulations of the employment relationship, regulations that must be given independent effect separate and apart from any statutory enactments. To the extent a wage order and a statute overlap, we will seek to harmonize them, as we would with any two statutes. (Brinker Restaurant Corp. v. Superior Court, supra, 53 Cal.4th at p. 1027.)

In 1976, (…) the Legislature expanded the IWC‘s jurisdiction to include adult men (see California Hotel & Motel Assn. v. Industrial Welfare Com. (1979) 25 Cal.3d 200, 207).

(Cal. S.C., May 8, 2017, Mendoza v. Nordstrom, Inc., S224611).

Le droit du travail californien a sa source principale dans le Code du travail, mais, surtout s'agissant des questions d'heures de travail et de temps de travail, il s'agit de consulter également les ordonnances rendues par l'Industrial Welfare Commission, qui ont pour ainsi dire la même valeur que les lois au sens formel promulguées par le législateur de l'état. Ces ordonnances régissaient d'abord les conditions de travail des femmes et des mineurs. Depuis 1976, elles s'appliquent également aux hommes majeurs.