Pinkette Clothing, Inc. v. Cosmetic Warriors Ltd., Docket No. 17-55325

Trademark infringement: Copyright infringement: Patent infringement: Laches: Statute of limitations: Constructive notice:

The Lanham Act recognizes laches as a defense to a petition for cancellation of a trademark registration. 15 U.S.C. § 1069. Although such a petition may be filed “at any time,” § 1064 limits the grounds for cancellation after five years have passed from the date of registration—i.e., after the mark becomes incontestable. Id. § 1064. Relying on Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), and SCA Hygiene Products v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), CWL argues that laches cannot bar a cancellation claim if it is brought within the five-year period specified in § 1064.

We write principally to address what effect, if any, Petrella and SCA Hygiene had on applying laches to a trademark cancellation claim. In Petrella, the Supreme Court held that laches could not bar a copyright infringement claim brought within the Copyright Act’s three-year statute of limitations. 134 S. Ct. at 1967. And in SCA Hygiene, the Court held that laches could not bar a patent infringement claim brought within the Patent Act’s six-year statute of limitations. 137 S. Ct. at 959. We conclude that the principle at work in these cases—a concern over laches overriding a statute of limitations—does not apply here, where the Lanham Act has no statute of limitations and expressly makes laches a defense to cancellation.

(…) There was no opposition to Pinkette’s application, and Pinkette’s LUSH mark was registered in July 2010, thereby putting CWL on constructive notice of Pinkette’s claim to ownership. See 15 U.S.C. § 1072 (“Registration of a mark on the principal register . . . shall be constructive notice of the registrant’s claim of ownership thereof.”).

It was not until June 2015—approximately four years and eleven months after Pinkette’s registration issued—that CWL finally filed a petition with the Trademark Trial and Appeal Board (“TTAB”) to cancel Pinkette’s registration.

After CWL filed its cancellation petition, Pinkette filed this action in federal court, seeking a declaratory judgment that it did not infringe on CWL’s trademark rights, or alternatively that laches bars CWL from asserting its rights against Pinkette. CWL counterclaimed for trademark infringement and cancellation of Pinkette’s registration, among other claims. On the parties’ joint motion, proceedings before the TTAB were stayed pending resolution of this case.

Laches :

“We analyze the laches defense with a two-step process.” La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 878 (9th Cir. 2014). First, we assess the plaintiff’s delay by looking to whether the most analogous state statute of limitations has expired. Id. If the most analogous state statute of limitations expired before suit was filed, there is a strong presumption in favor of laches. Id. That presumption is reversed, however, if the most analogous state statute of limitations expired after suit was filed. Id.

Second, we assess the equity of applying laches using the E-Systems factors: (1) “strength and value of trademark rights asserted;” (2) “plaintiff’s diligence in enforcing mark;” (3) “harm to senior user if relief denied;” (4) “good faith ignorance by junior user;” (5) “competition between senior and junior users;” and (6) “extent of harm suffered by junior user because of senior user’s delay.” E-Sys., Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983). We review a district court’s application of laches for abuse of discretion. In re Beaty, 306 F.3d 914, 921 (9th Cir. 2002).

The most analogous state statute of limitations in this case is California’s four-year statute of limitations for trademark infringement actions. See Internet Specialties W., Inc. v. Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 990 n.2 (9^th Cir. 2009).

(…) The district court did not abuse its discretion in declining to apply the doctrine of unclean hands.

(…) The inevitable confusion doctrine is inapplicable.

(U.S. Court of Appeals for the Ninth Circuit, June 29, 2018, Pinkette Clothing, Inc. v. Cosmetic Warriors Ltd., Docket No. 17-55325, Judge Bybee)

Droit des marques, utilisation par un tiers, risque de confusion, action en annulation de l’enregistrement d’une marque, défense fondée sur la tardiveté à agir (« laches »), délai.

Dans le cadre d’une action en annulation de l’enregistrement d’une marque, le Lanham Act prévoit que la tardiveté à agir peut être invoquée par le défendeur. Cette action peut être ouverte à n’importe quel moment, mais 15 U.S.C. § 1064 limite les motifs d’annulation après un délai de cinq ans dès l’enregistrement. Après ce délai, la marque est qualifiée d’ « incontestable ».

En l’espèce, la partie demanderesse soutient que la doctrine de la tardiveté à agir ne peut pas être efficacement opposée à une action en annulation déposée avant l’expiration du délai de cinq ans précité. A tort, juge ici le 9è Circuit.

En effet, la Cour Suprême fédérale a jugé dans sa décision Petrella qu’une action en violation d’un copyright, déposée dans le délai légal de trois ans, ne pouvait pas être barrée par la défense de la tardiveté à agir. Et dans sa décision SCA Hygiene, la même Cour Suprême a jugé qu’une action en violation d’un brevet d’invention, déposée dans le délai légal de six ans, ne pouvait pas échouer par l’invocation de la défense de la tardiveté à agir. Ces deux décisions visent à empêcher que la doctrine de la tardiveté à agir ne chevauche des délais légaux. Or, en l’espèce, le Lanham Act ne fixe aucun délai (légal) au dépôt de l’action en annulation de l’enregistrement d’une marque. Le délai de cinq ans précité (15 U.S.C. § 1064) n’est pas un délai légal au sens strict.

(…) L’enregistrement d’une marque entraine « constructive notice », erga omnes, de la revendication de titularité de la marque (cf. 15 U.S.C. § 1072).

(…) En l’espèce, ce n’est que quatre ans et onze mois après l’enregistrement que la demanderesse a ouvert action devant le « Trademark Trial and Appeal Board » (TTAB). Puis la défenderesse a ouvert action en constatation devant la cour fédérale, concluant à ce qu’il plaise à la cour de dire et déclarer qu’elle n’avait pas porté atteinte au droit des marques, subsidiairement de juger que la doctrine de la tardiveté à agir barrait les allégations de la demanderesse. La procédure devant le TTAB a été suspendue d’un commun accord.

Suit une description de la théorie de la tardiveté à agir (« laches ») : ce moyen de défense suppose une analyse en deux temps : tout d’abord, le délai pendant lequel le demandeur aurait pu agir est comparé au délai légal prévu par la loi étatique qui se rapproche le plus de la difficulté à juger. Si l’action a été ouverte après une durée de temps supérieur au délai légal, la tardiveté à agir sera fortement présumée. Ensuite et enfin est évalué le caractère équitable ou non d’une application de la théorie de la tardiveté à agir. Les critères d’évaluation du caractère équitable sont la force des droits des marques invoqués, la diligence avec laquelle le demandeur a défendu sa marque, le dommage causé à l’usager antérieur si ses conclusions sont rejetées, l’ignorance de bonne foi par l’usager postérieur, les rapports de concurrence entre les usagers antérieur et postérieur, et l’étendue du dommage causé à l’usager postérieur du fait de la tardiveté à agir.

16 CFR Parts 801-803, Amendments to the Hart-Scott-Rodino Premerger Notification Rules

The Federal Trade Commission, with the concurrence of the Antitrust Division of the U.S. Department of Justice, has approved amendments to the Hart-Scott-Rodino Premerger Notification Rules and to the instructions for filling out the form that companies use to report a proposed merger, acquisition, or similar transaction under the Hart-Scott-Rodino Antitrust Improvements Act.

The Premerger Notification and Report Form (known also as the HSR Form) is designed to provide the FTC and the Antitrust Division of DOJ with the necessary information for an initial evaluation of the potential anticompetitive impact of proposed transactions.

The amendments simplify and clarify some language used in the Rules and the instructions, and they allow for the use of email in certain circumstances, such as in granting early termination. A notice in the Federal Register provides more information:

https://www.ftc.gov/system/files/documents/federal_register_notices/2018/06/p859910_commission_fr_notice_amending_hsr_rules_and_attachment.pdf


https://www.ftc.gov/news-events/press-releases/2018/06/ftc-doj-approve-procedural-changes-hsr-form

Premerger Notification, Early terminations

An important aspect of the FTC’s Premerger Notification Program is the granting of early terminations. Any person filing an HSR form may request that the waiting period be terminated before the statutory waiting period expires, allowing the parties to consummate their deal. Such a request for “early termination” (ET) is granted only if both the FTC and Department of Justice Antitrust Division complete their review and determine not to take any enforcement action during the waiting period.

The FTC publishes an online notification of early terminations that have been granted, which is updated almost every weekday.

In some instances, after an investigation involving a Request for Additional Information and Documentary Material (Second Request) has been issued, the investigating agency will determine that no further action is necessary and terminate the waiting period before full compliance with the Second Request is made. A grant of ET may also be made after the parties agree to a consent order with the investigating Agency, whether or not there was Second Request compliance.

The list of transactions that have been granted early termination is only a subset of the transactions filed each year. Generally, the fact that a filing has been made is confidential by statute. Only if one (or both) of the parties to the transaction has requested ET, and that request has been granted, will notice be made. If neither party requests early termination, or the request is not granted, the fact that a filing has been made will remain confidential.

FTC launches first Web API to make Early Terminations more accessible

By: Chris Noonan Sturm, Website Manager | Jun 25, 2018 5:42PM

Republished here.

https://www.ftc.gov/news-events/blogs/competition-matters/2018/06/ftc-launches-first-web-api-make-early-terminations?utm_source=govdelivery

https://www.ftc.gov/enforcement/premerger-notification-program/early-termination-notices

Ohio v. American Express Co., Docket 16-1454

Antitrust: Rule of reason: Vertical restraint:

Reduced output, Increased prices, Decreased quality:

Market power:

Horizontal restraints and market power:

To determine whether a restraint violates the rule of reason, the parties agree that a three-step, burden-shifting framework applies. Under this framework, the plaintiff has the initial burden to prove that the chal­lenged restraint has a substantial anticompetitive effect that harms consumers in the relevant market. See J. Kalinowski, Antitrust Laws and Trade Regulation§12.02[1] (2d ed. 2017) (Kalinowski); P. Areeda & H.Hovenkamp, Fundamentals of Antitrust Law §15.02[B] (4th ed. 2017) (Areeda & Hovenkamp); Capital Imaging Assoc., P. C. v. Mohawk Valley Medical Associates, Inc., 996 F. 2d 537, 543 (CA2 1993). If the plaintiff carries its burden, then the burden shifts to the defendant to show a procompetitive rationale for the restraint. See Kalinow­ski §12.02[1]; Areeda & Hovenkamp §15.02[B]; Capital Imaging Assoc., supra, at 543. If the defendant makes this showing, then the burden shifts back to the plaintiff to demonstrate that the procompetitive efficiencies could be reasonably achieved through less anticompetitive means. See Kalinowski §12.02[1]; Capital Imaging Assoc., supra, at 543.

Here, the parties ask us to decide whether the plaintiffs have carried their initial burden of proving that Amex’s antisteering provisions have an anticompetitive effect. The plaintiffs can make this showing directly or indirectly. Direct evidence of anticompetitive effects would be “‘proof of actual detrimental effects [on competition],’” FTC v. Indiana Federation of Dentists, 476 U. S. 447, 460 (1986), such as reduced output, increased prices, or decreased quality in the relevant market, see Kalinowski §12.02[2]; Craftsman Limousine, Inc. v. Ford Motor Co., 491 F. 3d 381, 390 (CA8 2007); Virginia Atlantic Airways Ltd. v. British Airways PLC, 257 F. 3d 256, 264 (CA2 2001). Indirect evidence would be proof of market power plus some evidence that the challenged restraint harms compe­tition. See Kalinowski §12.02[2]; Tops Markets, Inc. v. Quality Markets, Inc., 142 F. 3d 90, 97 (CA2 1998); Span­ish Broadcasting System of Fla. v. Clear Channel Commu­nications, Inc., 376 F. 3d 1065, 1073 (CA11 2004).

Because “legal presumptions that rest on formalistic distinctions rather than actual market realities are gener­ally disfavored in antitrust law,” Eastman Kodak Co. v. Image Technical Services, Inc., 504 U. S. 451, 466–467 (1992), courts usually cannot properly apply the rule of reason without an accurate definition of the relevant market. “Without a definition of the market there is no way to measure the defendant’s ability to lessen or de­stroy competition.” Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U. S. 172, 177 (1965); accord, Kalinowski §24.01[4][a]. Thus, the rele­vant market is defined as “the area of effective competi­tion.” Ibid. Typically this is the “arena within which significant substitution in consumption or production occurs.” Areeda & Hovenkamp §5.02; accord, Kalinow­ski §24.02[1]; United States v. Grinnell Corp., 384 U. S. 563, 571 (1966). But courts should “combine” different products or services into “a single market” when “that combination reflects commercial realities.” Id., at 572; see also Brown Shoe Co. v. United States, 370 U. S. 294, 336– 337 (1962) (pointing out that “the definition of the relevant market” must “‘correspond to the commercial realities’ of the industry”).

(…) Given that horizontal restraints involve agree­ments between competitors not to compete in some way, this Court concluded that it did not need to precisely define the relevant market to conclude that these agreements were anticompetitive (…) But vertical restraints are different (…) Vertical re­straints often pose no risk to competition unless the entity imposing them has market power, which cannot be evaluated unless the Court first defines the relevant market. (fn. 7 p. 11).

As an initial matter, the plaintiffs’ argument about merchant fees wrongly focuses on only one side of the two-sided credit-card market. As explained, the credit-card market must be defined to include both merchants and cardholders. Focusing on merchant fees alone misses the mark because the product that credit-card companies sell is transactions, not services to merchants, and the compet­itive effects of a restraint on transactions cannot be judged by looking at merchants alone. Evidence of a price in­crease on one side of a two-sided transaction platform cannot by itself demonstrate an anticompetitive exercise of market power. To demonstrate anticompetitive effects on the two-sided credit-card market as a whole, the plaintiffs must prove that Amex’s antisteering provisions increased the cost of credit-card transactions above a competitive level, reduced the number of credit-card transactions, or otherwise stifled competition in the credit-card market.

(…) That Amex allocates prices between merchants and cardholders differently from Visa and MasterCard is simply not evidence that it wields market power to achieve anticompetitive ends.

(…) “Market power is the ability to raise price profitably by restricting output.” Areeda & Hovenkamp §5.01; accord, Kodak, 504 U. S., at 464; Business Electronics, 485 U. S., at 723. This Court will “not infer competitive injury from price and output data absent some evidence that tends to prove that output was restricted or prices were above a competitive level.” Brooke Group Ltd., 509 U. S., at 237. There is no such evidence in this case. The output of credit-card transactions grew dramatically from 2008 to 2013, increasing 30%. See 838 F. 3d, at 206. “Where . . . output is expanding at the same time prices are increas­ing, rising prices are equally consistent with growing product demand.” Brooke Group Ltd., supra, at 237.

The plaintiffs also failed to prove that Amex’s antisteer­ing provisions have stifled competition among credit-card companies. To the contrary, while these agreements have been in place, the credit-card market experienced expand­ing output and improved quality. Amex’s business model spurred Visa and MasterCard to offer new premium card categories with higher rewards. And it has increased the availability of card services, including free banking and card-payment services for low-income customers who otherwise would not be served. Indeed, between 1970 and 2001, the percentage of households with credit cards more than quadrupled, and the proportion of households in the bottom-income quintile with credit cards grew from just 2% to over 38%.

Nor have Amex’s antisteering provisions ended competi­tion between credit-card networks with respect to mer­chant fees. Instead, fierce competition between networks has constrained Amex’s ability to raise these fees and has, at times, forced Amex to lower them. For instance, when Amex raised its merchant prices between 2005 and 2010, some merchants chose to leave its network. 88 F. Supp. 3d, at 197. And when its remaining merchants com­plained, Amex stopped raising its merchant prices. Id., at 198. In another instance in the late 1980s and early 1990s, competition forced Amex to offer lower merchant fees to “everyday spend” merchants—supermarkets, gas stations, pharmacies, and the like—to persuade them to accept Amex.

In addition, Amex’s competitors have exploited its higher merchant fees to their advantage. By charging lower merchant fees, Visa, MasterCard, and Discover have achieved broader merchant acceptance—approximately 3 million more locations than Amex.

And to compete even further with Amex, Visa and MasterCard charge different merchant fees for different types of cards to maintain their comparatively lower mer­chant fees and broader acceptance. Over the long run, this competition has created a trend of declining merchant fees in the credit-card market. In fact, since the first credit card was introduced in the 1950s, merchant fees— including Amex’s merchant fees—have decreased by more than half.

(…) Cf. Leegin, 551 U. S., at 890–891 (recog­nizing that vertical restraints can prevent retailers from free riding and thus increase the availability of “tangible or intangible services or promotional efforts” that enhance competition and consumer welfare).

Perhaps most im­portantly, antisteering provisions do not prevent Visa, MasterCard, or Discover from competing against Amex by offering lower merchant fees or promoting their broader merchant acceptance.

In sum, the plaintiffs have not satisfied the first step of the rule of reason. They have not carried their burden of proving that Amex’s antisteering provisions have anti­competitive effects. Amex’s business model has spurred robust interbrand competition and has increased the quality and quantity of credit-card transactions. And it is “the promotion of interbrand competition,” after all, that “is . . . ‘the primary purpose of the antitrust laws.’”

Because Amex’s antisteering provisions do not unrea­sonably restrain trade, we affirm the judgment of the Court of Appeals.

(U.S.S.C., June 25, 2018, Ohio v. American Express Co., Docket 16-1454, J. Thomas)

Accords verticaux, application des trois étapes de la « Rule of reason » (seule la première des trois étapes est analysée en l’espèce, dans le contexte du marché des cartes de crédit). La preuve de la réalisation des conditions de la première étape incombe au demandeur : il doit démontrer que la conduite illicite porte de manière substantielle atteinte à la concurrence, et qu’elle occasionne un dommage aux consommateurs actifs au niveau du marché relevant. Si le demandeur y parvient, le fardeau de la preuve passe au défendeur, qui doit démontrer que sa conduite produit des effets favorables à la concurrence. Si le défendeur y parvient, le fardeau de la preuve passe à nouveau au demandeur, qui doit démontrer que ces effets favorables peuvent être obtenus par des moyens moins dommageables à la concurrence.

Au niveau de la première étape, l’atteinte à la concurrence peut consister en une diminution de l’offre, en une augmentation des prix, ou en une diminution de qualité (dans les limites du marché relevant) (preuves directes). Elle peut consister aussi en un pouvoir de marché, qu’il faut prouver, tout en apportant en plus des éléments de preuves démontrant que la conduite prétendument illicite porte atteinte à la concurrence. Le pouvoir de marché peut être défini comme la capacité d’augmenter les prix de manière profitable en réduisant l’offre.

Le marché relevant doit être concrètement défini. Il s’agit typiquement du marché qui permet une substitution significative.

La jurisprudence Leegin reconnaît que les accords verticaux peuvent prévenir le « free riding » des détaillants, entrainant ainsi une augmentation des services de promotion et de vente offerts par ces détaillants, cela au profit de la concurrence et des consommateurs.

Ohio v. American Express Co., Docket 16-1454

Antitrust: Economic analysis:

Two-sided platform: Uber: Credit-card market: Antisteering provisions:

Vertical restraints: Rule of reason: Relevant market: Markets for complementary products:

When a cardholder uses a credit card to buy something from a merchant, the transaction is facilitated by a credit-card network. The network provides separate but inter­related services to both cardholders and merchants. For cardholders, the network extends them credit, which allows them to make purchases without cash and to defer payment until later. Cardholders also can receive rewards based on the amount of money they spend, such as airline miles, points for travel, or cash back. For merchants, the network allows them to avoid the cost of processing trans­actions and offers them quick, guaranteed payment. This saves merchants the trouble and risk of extending credit to customers, and it increases the number and value of sales that they can make.

By providing these services to cardholders and mer­chants, credit-card companies bring these parties together, and therefore operate what economists call a “two-sided platform.” As the name implies, a two-sided platform offers different products or services to two different groups who both depend on the platform to intermediate between them. See Evans & Schmalensee, Markets With Two-Sided Platforms,  Issues in Competition L. & Pol’y 667 (2008) (Evans & Schmalensee); Evans & Noel, Defining Antitrust Markets When Firms Operate Two-Sided Plat­forms, 2005 Colum. Bus. L. Rev. 667, 668 (Evans & Noel); Filistrucchi, Geradin, Van Damme, & Affeldt, Market Definition in Two-Sided Markets: Theory and Practice, 10 J. Competition L. & Econ. 293, 296 (2014) (Filistrucchi). For credit cards, that interaction is a transaction. Thus, credit-card networks are a special type of two-sided plat­form known as a “transaction” platform. See id., at 301, 304, 307; Evans & Noel 676–678. The key feature of transaction platforms is that they cannot make a sale to one side of the platform without simultaneously making a sale to the other. See Klein, Lerner, Murphy, & Plache, Competition in Two-Sided Markets: The Antitrust Eco­nomics of Payment Card Interchange Fees, 73 Antitrust L. J. 571, 580, 583 (2006) (Klein). For example, no credit-card transaction can occur unless both the merchant and the cardholder simultaneously agree to use the same credit-card network. See Filistrucchi 301.

Two-sided platforms differ from traditional markets in important ways. Most relevant here, two-sided platforms often exhibit what economists call “indirect network ef­fects.” Evans & Schmalensee 667. Indirect network ef­fects exist where the value of the two-sided platform to one group of participants depends on how many members of a different group participate. D. Evans & R. Schmalensee, Matchmakers: The New Economics of Multisided Plat­forms 25 (2016). In other words, the value of the services that a two-sided platform provides increases as the num­ber of participants on both sides of the platform increases. A credit card, for example, is more valuable to cardholders when more merchants accept it, and is more valuable to merchants when more cardholders use it. See Evans & Noel 686–687; Klein 580, 584. To ensure sufficient partic­ipation, two-sided platforms must be sensitive to the prices that they charge each side. See Evans & Schma­lensee 675; Evans & Noel 680; Muris, Payment Card Regulation and the (Mis)Application of the Economics of Two-Sided Markets, 2005 Colum. Bus. L. Rev. 515, 532– 533 (Muris); Rochet & Tirole, Platform Competition in Two-Sided Markets,  J. Eur. Econ. Assn. 990, 1013 (2003). Raising the price on side A risks losing participa­tion on that side, which decreases the value of the plat­form to side B. If participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. See Evans & Schmalensee 675; Evans & Noel 680–681. Two-sided platforms therefore must take these indirect net­work effects into account before making a change in price on either side.

(…) The optimal price might require charging the side with more elastic demand a below-cost (or even negative) price. See Muris 519, 550; Klein 579; Evans & Schmalensee 675; Evans & Noel 681. With credit cards, for example, networks often charge cardholders a lower fee than merchants because cardholders are more price sensitive.

(…) To maintain the loyalty of its cardholders, Amex must continually invest in its rewards program. But, to fund those invest­ments, Amex must charge merchants higher fees than its rivals. Even though Amex’s investments benefit mer­chants by encouraging cardholders to spend more money, merchants would prefer not to pay the higher fees. One way that merchants try to avoid them, while still enticing Amex’s cardholders to shop at their stores, is by dissuad­ing cardholders from using Amex at the point of sale. This practice is known as “steering.”

Amex has prohibited steering since the 1950s by placing antisteering provisions in its contracts with merchants. These antisteering provisions prohibit merchants from implying a preference for non-Amex cards; dissuading customers from using Amex cards; persuading customers to use other cards; imposing any special restrictions, conditions, disadvantages, or fees on Amex cards; or pro­moting other cards more than Amex. The antisteering provisions do not, however, prevent merchants from steer­ing customers toward debit cards, checks, or cash.

(…) The Court of Appeals for the Second Circuit reversed. United States v. American Express Co., 838 F. 3d 179, 184 (2016). It concluded that the credit-card market is one market, not two. Id., at 196–200. Evaluating the credit-card market as a whole, the Second Circuit concluded that Amex’s antisteering provisions were not anticompetitive and did not violate §1. See id., at 200–206.

We granted certiorari, 583 U. S. ___ (2017), and now affirm.

In this case, both sides correctly acknowledge that Amex’s antisteering provisions are vertical restraints— i.e., restraints “imposed by agreement between firms at different levels of distribution.” Business Electronics, at 730. The parties also correctly acknowledge that, like nearly every other vertical restraint, the anti-steering provisions should be assessed under the rule of reason. See Leegin, at 882; State Oil, at 19; Business Electronics, at 726; Continental T. V., Inc. v. GTE Sylvania Inc., 433 U. S. 36, 57 (1977).

(…) The rele­vant market is defined as “the area of effective competi­tion.” Typically this is the “arena within which significant substitution in consumption or production occurs.”

(…) But courts should “combine” different products or services into “a single market” when “that combination reflects commercial realities.” (…) See also Brown Shoe Co. v. United States, 370 U. S. 294, 336– 337 (1962) (pointing out that “the definition of the relevant market” must “‘correspond to the commercial realities’ of the industry”).

(…) As explained, credit-card networks are two-sided plat­forms. Due to indirect network effects, two-sided plat­forms cannot raise prices on one side without risking a feedback loop of declining demand. See Evans & Schma­lensee 674–675; Evans & Noel 680–681.

And the fact that two-sided platforms charge one side a price that is below or above cost reflects differences in the two sides’ demand elasticity, not market power or anticompetitive pricing. See Klein 574, 595, 598, 626. Price increases on one side of the platform likewise do not suggest anticompetitive effects without some evidence that they have increased the overall cost of the platform’s services. See id., at 575, 594, 626. Thus, courts must include both sides of the platform—merchants and cardholders—when defining the credit-card market.

(…) Newspapers that sell advertisements, for example, arguably operate a two-sided platform be­cause the value of an advertisement increases as more people read the newspaper. Klein 579. But in the newspaper-advertisement market, the indirect networks effects operate in only one direction; newspaper readers are largely indifferent to the amount of advertis­ing that a newspaper contains. See Filistrucchi 321, 323, and n. 99; Klein 583. Because of these weak indirect network effects, the market for newspaper advertising behaves much like a one-sided market and should be analyzed as such. See Filistrucchi 321; Times-Picayune Publishing Co. v. United States, 345 U. S. 594, 610 (1953).

Contrary to the dissent’s assertion, post, at 11–12, merchant ser­vices and cardholder services are not complements. See Filistrucchi 297 (“A two-sided market is different from markets for complemen­tary products, in which both products are bought by the same buyers, who, in their buying decisions, can therefore be expected to take into account both prices”). As already explained, credit-card companies are best understood as supplying only one product—transactions—which is jointly consumed by a cardholder and a merchant. See Klein 580. Merchant services and cardholder services are both inputs to this single product. See ibid.

(…) To demonstrate anticompetitive effects on the two-sided credit-card market as a whole, the plaintiffs must prove that Amex’s antisteering provisions increased the cost of credit-card transactions above a competitive level, reduced the number of credit-card transactions, or otherwise stifled competition in the credit-card market.

In sum, the plaintiffs have not satisfied the first step of the rule of reason. They have not carried their burden of proving that Amex’s antisteering provisions have anti­competitive effects. Amex’s business model has spurred robust interbrand competition and has increased the quality and quantity of credit-card transactions. And it is “the promotion of interbrand competition,” after all, that “is . . . ‘the primary purpose of the antitrust laws.’”

Because Amex’s antisteering provisions do not unrea­sonably restrain trade, we affirm the judgment of the Court of Appeals.

(U.S.S.C., June 25, 2018, Ohio v. American Express Co., Docket 16-1454, J. Thomas)

Considérations économiques liées au fonctionnement d’un système « two-sided platform ».

Ici le marché considéré est celui des cartes de crédit (considérées comme ne formant qu’un seul marché).

La question posée est celle de la compatibilité avec le droit des cartels de la clause contractuelle que Amex insère dans ses contrats avec les commerçants pour leur interdire de dissuader leurs clients de payer avec le système Amex (qui peut coûter plus cher aux commerçants que les systèmes concurrents, pour financer de cette manière des services plus avantageux aux consommateurs utilisateurs d’Amex, dans le but de faire dépenser davantage ces consommateurs). La Cour juge ici que cette clause contractuelle ne porte pas atteinte au droit des cartels, même bien au contraire. Elle favorise la concurrence intermarques et augmente le nombre et la qualité des transactions par cartes de crédit.

Carpenter v. United States, Docket 16-402

Fourth Amendment: Search: Warrant: Probable cause: Cell phones: GPS: Corporate records: FTC:

Cell phones perform their wide and growing variety of functions by con­tinuously connecting to a set of radio antennas called “cell sites.” Each time a phone connects to a cell site, it generates a time-stamped record known as cell-site location information (CSLI). Wireless carri­ers collect and store this information for their own business purposes.

The Government’s acquisition of Carpenter’s cell-site records was a Fourth Amendment search.

The Fourth Amendment protects not only property interests but certain expectations of privacy as well. Katz v. United States, 389 U. S. 347, 351. Thus, when an individual “seeks to preserve some­thing as private,” and his expectation of privacy is “one that society is prepared to recognize as reasonable,” official intrusion into that sphere generally qualifies as a search and requires a warrant sup­ported by probable cause. Smith v. Maryland, 442 U. S. 735, 740.

(…) In United States v. Knotts, 460 U. S. 276 (1983), we considered the Government’s use of a “beeper” to aid in tracking a vehicle through traffic. Police officers in that case planted a beeper in a container of chloroform before it was pur­chased by one of Knotts’s co-conspirators. The officers (with intermittent aerial assistance) then followed the automobile carrying the container from Minneapolis to Knotts’s cabin in Wisconsin, relying on the beeper’s signal to help keep the vehicle in view. The Court concluded that the “augmented” visual surveillance did not constitute a search because “a person traveling in an automobile on public thoroughfares has no reasonable expectation of privacy in his movements from one place to another.” Id., at 281, 282. Since the movements of the vehicle and its final destination had been “voluntarily conveyed to anyone who wanted to look,” Knotts could not assert a privacy interest in the information obtained. Id., at 281.

(…) In Riley, the Court recognized the “immense storage capacity” of modern cell phones in holding that police officers must generally obtain a warrant before searching the contents of a phone. 573 U. S., at ___ (slip op., at 17).

(…) United States v. Jones, 565 U. S. 400 (five Jus­tices concluding that privacy concerns would be raised by GPS track­ing) (…) longer term GPS monitoring of even a vehicle traveling on public streets constitutes a search. Jones, 565 U. S., at 430.

(…) A person’s expectation of privacy in infor­mation voluntarily turned over to third parties. See United States v. Miller, 425 U. S. 435 (no expectation of privacy in financial records held by a bank), and Smith, 442 U. S. 735 (no expectation of privacy in records of dialed telephone numbers conveyed to telephone compa­ny).

(…) And even though the Government will generally need a warrant to access CSLI, case-specific exceptions—e.g., exigent circumstances—may support a warrantless search.

(…) Having found that the acquisition of Carpenter’s CSLI was a search, we also conclude that the Government must generally obtain a warrant supported by probable cause before acquiring such records. Although the “ultimate measure of the constitutionality of a governmental search is ‘reasonableness,’” our cases establish that warrantless searches are typically unreasonable where “a search is undertaken by law enforcement officials to discover evi­dence of criminal wrongdoing.” Vernonia School Dist. 47J v. Acton, 515 U. S. 646, 652–653 (1995). Thus, “in the absence of a warrant, a search is reasonable only if it falls within a specific exception to the warrant requirement.” Riley, 573 U. S., at ___ (slip op., at 5).

(…) This Court has never held that the Government may subpoena third parties for records in which the suspect has a reasonable expectation of privacy. Almost all of the examples JUSTICE ALITO cites (…) contem­plated requests for evidence implicating diminished privacy interests or for a corporation’s own books (See United States v. Dionisio, 410 U. S. 1, 14 (1973) (“No person can have a reasonable expectation that others will not know the sound of his voice”); Donovan v. Lone Steer, Inc., 464 U. S. 408, 411, 415 (1984) (payroll and sales records); California Bankers Assn. v. Shultz, 416 U. S. 21, 67 (1974) (Bank Secrecy Act reporting requirements); See v. Seattle, 387 U. S. 541, 544 (1967) (financial books and records); United States v. Powell, 379 U. S. 48, 49, 57 (1964) (corporate tax records); McPhaul v. United States, 364 U. S. 372, 374, 382 (1960) (books and records of an organization); United States v. Morton Salt Co., 338 U. S. 632, 634, 651–653 (1950) (Federal Trade Commission reporting re­quirement); Oklahoma Press Publishing Co. v. Walling, 327 U. S. 186, 189, 204–208 (1946) (payroll records); Hale v. Henkel, 201 U. S. 43, 45, 75 (1906) (corporate books and papers).

(…) This is certainly not to say that all orders compelling the production of documents will require a showing of proba­ble cause. The Government will be able to use subpoenas to acquire records in the overwhelming majority of inves­tigations. We hold only that a warrant is required in the rare case where the suspect has a legitimate privacy in­terest in records held by a third party.

(U.S.S.C., June 22, 2018, Carpenter v. United States, Docket 16-402, C.J. Roberts)

Mises en œuvre sans « warrant », les mesures officielles de « search and seizure » au sens du Quatrième Amendement sont constitutionnelles si elles sont raisonnables.

Cependant, dans les investigations pénales, les « searches » sans « warrant » seront usuellement dépourvues du caractère raisonnable, sauf si elles peuvent être classées dans une exception spécifique à l’exigence du « warrant ».

En l’espèce, la Cour juge que la saisie par l’autorité pénale des données de géolocalisation fournies par les antennes de téléphonie mobile exige l’obtention préalable d’un « warrant » supporté par une « probable cause ». Dans ses jurisprudences Riley et Jones, elle avait déjà jugé qu’il en allait de même s’agissant de la saisie du contenu d’un téléphone portable et des données GPS respectivement.

Le Quatrième Amendement ne protège pas seulement des droits de propriété, mais aussi certaines expectatives de respect de la sphère privée. Ainsi, quand une personne entend conserver la nature privée d’une occurrence, et que cette expectative de respect de la vie privée est considérée comme raisonnable dans la société, une intrusion officielle sera usuellement considérée comme une « search », exigeant l’obtention préalable d’un « warrant » supporté par une « probable cause ».

Dans une affaire antérieure, la Cour avait jugé que la pose par la police d’un « beeper » sur un véhicule automobile ne supposait pas l’obtention d’un « warrant ». En effet, en se déplaçant aux yeux du public, le conducteur du véhicule ne pouvait concevoir aucune expectative de respect de sa sphère privée portant sur son lieu de départ et sur son lieu de destination.

Aucune expectative de cette sorte non plus s’agissant de certains documents volontairement remis à des tiers, tels des documents financiers en mains d’une banque, les rapports remis à la FTC, la liste des numéros de téléphone composés détenue par la compagnie de téléphone. Même s’ils ne sont pas remis à des tiers, aucune expectative non plus s’agissant de nombreux documents d’entreprise comme des documents comptables, fiscaux, de salaire, de vente.

WesternGeco LLC v. ION Geophysical Corp.

Export: Jurisdiction: Presumption against extraterritoriality: Patent infringement: Lost foreign profits:

Under the Patent Act, a company can be liable for pa­tent infringement if it ships components of a patented invention overseas to be assembled there. See 35 U. S. C. §271(f)(2). A patent owner who proves infringement under this provision is entitled to recover damages. §284.The question in this case is whether these statutes allow the patent owner to recover for lost foreign profits. We hold that they do.

(Section 271(f)(1) addresses the act of exporting a substantial portion of an invention’s components: “Whoever without authority supplies or causes to be supplied in or from the United States all or a substan­tial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the com­bination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”)

Section 271(f)(2), the provision at issue here, addresses the act of exporting components that are specially adapted for an invention: “Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or es­pecially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”

Courts presume that federal statutes “apply only within the territorial jurisdiction of the United States.” Foley Bros., Inc. v. Filardo, 336 U. S. 281, 285 (1949). This principle, commonly called the presumption against extra­territoriality, has deep roots.

This Court has established a two-step framework for deciding questions of extraterritoriality. The first step asks “whether the presumption against extraterritoriality has been rebutted.” RJR Nabisco, Inc. v. European Com­munity, 579 U. S. ___, ___ (2016) (slip op., at 9). It can be rebutted only if the text provides a “clear indication of an extraterritorial application.” Morrison v. National Aus­tralia Bank Ltd., 561 U. S. 247, 255 (2010). If the pre­sumption against extraterritoriality has not been rebut­ted, the second step of our framework asks “whether the case involves a domestic application of the statute.” RJR Nabisco, 579 U. S., at ___ (slip op., at 9). Courts make this determination by identifying “the statute’s ‘focus’” and asking whether the conduct relevant to that focus occurred in United States territory. Ibid. If it did, then the case involves a permissible domestic application of the statute. See ibid.

We resolve this case at step two. While “it will usually be preferable” to begin with step one, courts have the discretion to begin at step two “in appropriate cases.”

The focus of a statute is “the object of its solicitude,” which can include the conduct it “seeks to ‘regulate,’” as well as the parties and interests it “seeks to ‘protect’” or vindicate. Morrison, supra, at 267 (quoting Superintendent of Ins. of N. Y. v. Bankers Life & Casualty Co., 404 U. S. 6, 12, 10 (1971)). “If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application” of the statute, “even if other conduct occurred abroad.” RJR Nabisco, 579 U. S., at ___ (slip op., at 9). But if the rele­vant conduct occurred in another country, “then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U. S. territory.” Ibid.

We begin with §284. It provides a general damages remedy for the various types of patent infringe­ment identified in the Patent Act. The portion of §284 at issue here states that “the court shall award the claimant damages adequate to compensate for the infringement.” We conclude that “the infringement” is the focus of this statute. As this Court has explained, the “overriding purpose” of §284 is to “afford patent owners complete compensation” for infringements.

But that observation does not fully resolve this case, as the Patent Act identifies several ways that a patent can be infringed. See §271. To determine the focus of §284 in a given case, we must look to the type of infringement that occurred. We thus turn to §271(f)(2), which was the basis for WesternGeco’s infringement claim and the lost-profits damages that it received.

Section 271(f)(2) focuses on domestic conduct. It pro­vides that a company “shall be liable as an infringer” if it “supplies” certain components of a patented invention “in or from the United States” with the intent that they “will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.” The conduct that §271(f)(2) regulates—i.e., its focus—is the domestic act of “supplying in or from the United States.” As this Court has acknowledged, §271(f) vindicates domestic interests: It “was a direct response to a gap in our patent law,” Microsoft Corp., 550 U. S., at 457, and “reaches compo­nents that are manufactured in the United States but assembled overseas,” Life Technologies, 580 U. S., at ___ (slip op., at 11). As the Federal Circuit explained, §271(f)(2) protects against “domestic entities who export components . . . from the United States.” 791 F. 3d, at 1351.

(Because the Federal Circuit did not address §271(f)(1), (…) we limit our analysis to §271(f)(2).)

(…) Thus, the lost-profits damages that were awarded to WesternGeco were a domestic application of §284.

(…) Specifically, a patent owner is entitled to recover “‘the difference between its pecuniary condition after the infringement, and what its condition would have been if the infringement had not occurred.’” Aro Mfg. Co., at 507. This recovery can include lost profits. See Yale Lock Mfg. Co. v. Sargent, 117 U. S. 536, 552–553 (1886). And, as we hold today, it can include lost foreign profits when the patent owner proves infringement under §271(f)(2).

(…) In reaching this holding, we do not address the extent to which other doctrines, such as proximate cause, could limit or preclude damages in particular cases.

(U.S.S.C., June 22, 2018, WesternGeco LLC v. ION Geophysical Corp., Docket 16-1011, J. Thomas)

Exportation de composants à partir des Etats-Unis, montage du produit à l’étranger, vente du produit et réalisation d’un profit à l’étranger. Si le montage avait eu lieu aux Etats-Unis, le brevet d’invention d’un tiers domicilié aux Etats-Unis aurait été violé.

La question est de savoir si ce tiers titulaire du brevet peut agir devant une cour fédérale en violation de son brevet contre l’exportateur, et conclure au paiement de son manque à gagner résultant des profits ainsi réalisés à l’étranger. La Cour répond par l’affirmative.

La loi fédérale applicable : 35 U.S.C. §271(f)(2), soit une disposition de la loi fédérale sur les brevets d’invention. Elle prévoit qu’une entreprise peut être responsable de la violation d’un brevet si elle exporte à l’étranger des composants d’une invention brevetée pour assemblage à l’étranger. La Section 284 de la loi dispose que le titulaire du brevet peut conclure à l’octroi de dommages-intérêts. La question est de savoir si cette disposition permet au titulaire du brevet d’obtenir paiement de son manque à gagner du fait des profits réalisés à l’étranger. La Cour répond donc par l’affirmative.

Le principe de base est celui de la présomption contre l’application extraterritoriale du droit fédéral.

La présomption peut être renversée seulement si le texte de la loi fédérale donne l’indication claire d’une application extraterritoriale. Si la présomption ne peut pas être renversée, la loi fédérale peut tout de même s’appliquer si le cas d’espèce implique une « application domestique » de la loi. A cet égard s’agit-il d’identifier le « focus » de la loi, puis d’examiner si la conduite spécifiquement liée à ce « focus » s’est produite aux Etats-Unis.

In casu, le « focus » de la loi, soit son objet, ou encore la conduite que la loi cherche à régler, est la violation d’un brevet, l’objectif de la loi étant de permettre au titulaire du brevet d’obtenir pleine compensation. La section 271(f)(2) précise le type de violation, soit l’exportation, depuis le sol des Etats-Unis, de composants. La conduite visée par cette disposition légale est donc l’acte, domestique, d’exporter. Ainsi, le paiement au titulaire du brevet de son manque à gagner déduit des profits réalisés à l’étranger s’analyse en une application domestique de la Section 284. Concrètement, ce titulaire peut obtenir paiement de la différence entre sa situation économique après la violation et sa situation économique telle qu’elle aurait été en l’absence de violation. La perte de gain est comprise dans ce calcul. Et la présente affaire juge que la perte de gain réalisée à l’étranger l’est également.

Sales Tax, Remote Seller & E-Commerce

Tax: Sales Tax: E-commerce: Remote seller:

For Streamlined member states and other states:

https://www.streamlinedsalestax.org/index.php?page=Wayfair

State Website and Contact Information:

https://www.streamlinedsalestax.org/index.php?page=State-Websites

California Revenue Page:

https://www.taxes.ca.gov/

California Sales Tax Page:

https://www.taxes.ca.gov/Sales_and_Use_Tax/Forms.shtml

South Dakota v. Wayfair, Inc., Docket No. 17-494

Sales of goods: Tax: Sales tax: Use tax: Commerce clause: Interstate commerce: E-commerce: Streamlined Sales and Use Tax Agreement: Stare decisis: Fortas, J.: Gorsuch, J.:

When a consumer purchases goods or services, the consumer’s State often imposes a sales tax. This case requires the Court to determine when an out-of-state seller can be required to collect and remit that tax. All concede that taxing the sales in question here is lawful. The question is whether the out-of-state seller can be held responsible for its payment, and this turns on a proper interpretation of the Commerce Clause, U. S. Const., Art. I, §8, cl. 3.

In two earlier cases the Court held that an out-of-state seller’s liability to collect and remit the tax to the consumer’s State depended on whether the seller had a physical presence in that State, but that mere shipment of goods into the consumer’s State, following an order from a catalog, did not satisfy the physical presence requirement. National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967); Quill Corp. v. North Dakota, 504 U. S. 298 (1992). The Court granted certiorari here to reconsider the scope and validity of the physical presence rule mandated by those cases.

Under this Court’s decisions in Bellas Hess and Quill, South Dakota may not require a business to collect its sales tax if the business lacks a physical presence in the State. Without that physical presence, South Dakota instead must rely on its residents to pay the use tax owed on their purchases from out-of-state sellers. “The impracticability of this collection from the multitude of individual purchasers is obvious.” National Geographic Soc. v. California Bd. of Equalization, 430 U. S. 551, 555 (1977). And consumer compliance rates are notoriously low.

(…) This Court’s doctrine has developed further with time. Modern precedents rest upon two primary principles that mark the boundaries of a State’s authority to regulate interstate commerce. First, state regulations may not discriminate against interstate commerce; and second, States may not impose undue burdens on interstate commerce. State laws that discriminate against interstate commerce face “a virtually per se rule of invalidity.” Granholm v. Heald, 544 U. S. 460, 476 (2005). State laws that “regulate even-handedly to effectuate a legitimate local public interest . . . will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc., 397 U. S. 137, 142 (1970). Although subject to exceptions and variations, see, e.g., Hughes v. Alexandria Scrap Corp., 426 U. S. 794 (1976); Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U. S. 573 (1986), these two principles guide the courts in adjudicating cases challenging state laws under the Commerce Clause.

These principles also animate the Court’s Commerce Clause precedents addressing the validity of state taxes. The Court explained the now-accepted framework for state taxation in Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977). The Court held that a State “may tax exclusively interstate commerce so long as the tax does not create any effect forbidden by the Commerce Clause.” Id., at 285. After all, “interstate commerce may be required to pay its fair share of state taxes.” D. H. Holmes Co. v. McNamara, 486 U. S. 24, 31 (1988). The Court will sustain a tax so long as it (1) applies to an activity with a substantial nexus with the taxing State, (2) is fairly apportioned, (3) does not discriminate against interstate commerce, and (4) is fairly related to the services the State provides. See Complete Auto, supra, at 279.

Before Complete Auto, the Court had addressed a challenge to an Illinois tax that required out-of-state retailers to collect and remit taxes on sales made to consumers who purchased goods for use within Illinois. Bellas Hess, 386 U. S., at 754–755. The Court held that a mail-order company “whose only connection with customers in the State is by common carrier or the United States mail” lacked the requisite minimum contacts with the State required by both the Due Process Clause and the Commerce Clause. Id., at 758. Unless the retailer maintained a physical presence such as “retail outlets, solicitors, or property within a State,” the State lacked the power to require that retailer to collect a local use tax. Ibid. The dissent disagreed: “There should be no doubt that this large-scale, systematic, continuous solicitation and exploitation of the Illinois consumer market is a sufficient ‘nexus’ to require Bellas Hess to collect from Illinois customers and to remit the use tax.” Id., at 761–762 (opinion of Fortas, J., joined by Black and Douglas, JJ.).

In 1992, the Court reexamined the physical presence rule in Quill. That case presented a challenge to North Dakota’s “attempt to require an out-of-state mail-order house that has neither outlets nor sales representatives in the State to collect and pay a use tax on goods purchased for use within the State.” 504 U. S., at 301. Despite the fact that Bellas Hess linked due process and the Commerce Clause together, the Court in Quill overruled the due process holding, but not the Commerce Clause holding; and it thus reaffirmed the physical presence rule. 504 U. S., at 307–308, 317–318.

The physical presence rule has “been the target of criticism over many years from many quarters.” Direct Mar­keting Assn. v. Brohl, 814 F. 3d 1129, 1148, 1150–1151 (CA10 2016) (Gorsuch, J., concurring). Quill, it has been said, was “premised on assumptions that are unfounded” and “riddled with internal inconsistencies.” Rothfeld, Quill: Confusing the Commerce Clause, 56 Tax Notes 487, 488 (1992). Quill created an inefficient “online sales tax loophole” that gives out-of-state businesses an advantage. A. Laffer & D. Arduin, Pro-Growth Tax Reform and E-Fairness 1, 4 (July 2013). And “while nexus rules are clearly necessary,” the Court “should focus on rules that are appropriate to the twenty-first century, not the nineteenth.” Hellerstein, Deconstructing the Debate Over State Taxation of Electronic Commerce, 13 Harv. J. L. & Tech. 549, 553 (2000). Each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States. These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause.

Quill is flawed on its own terms. First, the physical presence rule is not a necessary interpretation of the requirement that a state tax must be “applied to an activity with a substantial nexus with the taxing State.” Com­plete Auto, 430 U. S., at 279. Second, Quill creates rather than resolves market distortions. And third, Quill imposes the sort of arbitrary, formalistic distinction that the Court’s modern Commerce Clause precedents disavow.

(…) For example, a company with a website accessible in South Dakota may be said to have a physical presence in the State via the customers’ computers. A website may leave cookies saved to the customers’ hard drives, or customers may download the company’s app onto their phones. Or a company may lease data storage that is permanently, or even occasionally, located in South Dakota. Cf. United States v. Microsoft Corp., 584 U. S. ___ (2018) (per curiam).

(…) The physical presence rule as defined and enforced in Bellas Hess and Quill is not just a technical legal problem—it is an extraordinary imposition by the Judiciary on States’ authority to collect taxes and perform critical public functions. Forty-one States, two Territories, and the District of Columbia now ask this Court to reject the test formulated in Quill.

(…) Yet the physical presence rule undermines that necessary confidence by giving some online retailers an arbitrary advantage over their competitors who collect state sales taxes.

(…) “Although we approach the reconsideration of our decisions with the utmost caution, stare decisis is not an inexorable command.” Pearson v. Callahan, 555 U. S. 223, 233 (2009) (quoting State Oil Co. v. Khan, 522 U. S. 3, 20 (1997)). Here, stare decisis can no longer support the Court’s prohibition of a valid exercise of the States’ sovereign power.

(…) Further, the real world implementation of Commerce Clause doctrines now makes it manifest that the physical presence rule as defined by Quill must give way to the “far-reaching systemic and structural changes in the economy” and “many other societal dimensions” caused by the Cyber Age. Direct Marketing, 575 U. S., at ___ (KENNEDY, J., concurring) (slip op., at 3). Though Quill was wrong on its own terms when it was decided in 1992, since then the Internet revolution has made its earlier error all the more egregious and harmful.

(…) For these reasons, the Court concludes that the physical presence rule of Quill is unsound and incorrect. The Court’s decisions in Quill Corp. v. North Dakota, 504 U. S. 298 (1992), and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), should be, and now are, overruled.

In the absence of Quill and Bellas Hess, the first prong of the Complete Auto test simply asks whether the tax applies to an activity with a substantial nexus with the taxing State. 430 U. S., at 279. “Such a nexus is established when the taxpayer [or collector] ‘avails itself of the substantial privilege of carrying on business’ in that jurisdiction.” Polar Tankers, Inc. v. City of Valdez, 557 U. S. 1, 11 (2009). Here, the nexus is clearly sufficient based on both the economic and virtual contacts respondents have with the State. The Act applies only to sellers that deliver more than $100,000 of goods or services into South Dakota or engage in 200 or more separate transactions for the delivery of goods and services into the State on an annual basis. S. B. 106, §1. This quantity of business could not have occurred unless the seller availed itself of the substantial privilege of carrying on business in South Dakota. And respondents are large, national companies that undoubtedly maintain an extensive virtual presence. Thus, the substantial nexus requirement of Complete Auto is satisfied in this case.

The question remains whether some other principle in the Court’s Commerce Clause doctrine might invalidate the Act. Because the Quill physical presence rule was an obvious barrier to the Act’s validity, these issues have not yet been litigated or briefed, and so the Court need not resolve them here. That said, South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. S. B. 106, §5. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability. Any remaining claims regarding the application of the Commerce Clause in the absence of Quill and Bellas Hess may be addressed in the first instance on remand.

(U.S.S.C., June 21, 2018, South Dakota v. Wayfair, Inc., Docket No. 17-494, J. Kennedy)

A la lumière de la « Commerce Clause », U. S. Const., Art. I, §8, cl. 3, un état, domicile de l’acheteur, peut-il exiger d’un vendeur sis en un autre état de percevoir et de régler la taxe de vente ?

Dans deux décisions précédentes (Bellas Hess et Quill), la Cour a répondu par l’affirmative, mais à la condition que le vendeur dispose d’une présence physique dans l’état de l’acheteur. La simple expédition des biens, après un achat sur catalogue, ne satisfaisait pas à la condition de la présence physique.

Sans présence physique du vendeur sur son sol, l’état de l’acheteur devait récupérer la « sales tax » auprès de chaque acheteur individuel, un système qualifié d’impraticable.

Dans sa décision « Complete Auto » rendue en 1977, la Cour a jugé qu’un état était compétent pour taxer le commerce entre états (et lui seul), à condition de ne pas créer d’effets interdits par la « Commerce Clause ». De la sorte, une telle taxe doit s’appliquer à une activité en lien substantiel avec l’état de perception, doit être répartie équitablement entre les débiteurs, ne doit pas discriminer le commerce entre états à l’avantage du commerce local, et doit être équitablement liée aux services apportés par l’état de perception.

La jurisprudence Bellas Hess et Quill a fait l’objet de nombreuses critiques, auxquelles se sont joints les Juges Fortas et Gorsuch dans diverses opinions. Elle a été vue comme créant un avantage concurrentiel en faveur du commerce électronique provenant d’un autre état que celui de l’acheteur. Ces critiques soutiennent que la règle de la présence physique résulte d’une interprétation incorrecte de la Commerce Clause.

Par exemple, une entreprise qui maintient un site Internet peut être qualifiée d’entreprise avec présence physique dans un autre état que celui de son siège, par le biais des ordinateurs des clients.

En conséquence, Bellas Hess et Quill sont ici reconsidérés, et « overruled », ce que n’empêche pas le principe « stare decisis ». Reste donc essentiellement applicable le premier élément du test posé par la décision Complete Auto, à savoir la condition que la taxe soit imposée à une activité présentant un lien substantiel avec l’état qui taxe. Un tel lien est établi quand le débiteur de la taxe profite des conditions que l’état met à sa disposition pour permettre son activité commerciale. En l’espèce, ce lien est clairement suffisant considérant les contacts économiques et virtuels avec l’état de l’acheteur : la loi qui prévoit la taxe ne s’applique qu’aux vendeurs qui délivrent plus de 100'000 dollars dans l’état de l’acheteur, ou qui participent à plus de 200 transactions individuelles par année dans dit état.

(L’espèce mentionne encore le « Streamlined Sales and Use Tax Agreement », adopté par plus de 20 états. Ce système standardise les taxes pour réduire les coûts administratifs. Il ne requiert au niveau de l’état qu’une seule administration fiscale, prévoit des définitions uniformes de produits et services, et prévoit d’autres règles de simplification).

L’affaire est renvoyée à l’autorité inférieure pour déterminer si d’autres principes découlant de la Commerce Clause sont susceptibles d’annuler la loi qui prévoit la taxe litigieuse.