The Fifth Circuit has affirmed a denial of all attorney fees under the Fair Debt Collection Practices Act based on the “outrageous facts” and the conduct of the plaintiff’s attorneys.

Continue Reading Fifth Circuit Denies Attorney Fees Where Attorneys Created Claim for Purpose of Generating Excessive Fee Request

Each calendar year, the Supreme Court of Texas agrees to hear and decide somewhere around 80 petitions for review.   This is only a fraction of the petitions for review that come knocking on the court’s door.   When the court grants a petition for review the odds are very strong that the court is going to reverse the court of appeals judgment.  Overall reversal rates range between 75% to 85% for the years 2014 through 2017, with the average reversal rate for all four years being 82.2%.

Continue Reading The Texas Supreme Court’s Docket, Part 2

For well over a decade, the Supreme Court of Texas has been presented with more than 1000 different matters each fiscal year.  These matters consist of petitions for review, petitions for writs of mandamus, certified questions, petitions for habeas corpus, direct appeals, and a handful of other miscellaneous items.  The bulk of the court’s docket consists of petitions for review, which are either denied or granted.

Continue Reading The Texas Supreme Court’s Docket, Part 1

A “sham affidavit” has been described as referring to an affidavit in which an affiant offers sworn testimony that contradicts the affiant’s prior, sworn testimony on a material point and the affiant gives no explanation in the affidavit for the change in the testimony.  The scenario of the “sham affidavit” arises with great frequency in Texas summary judgment practice.   Because many district courts and intermediate appellate courts refuse to give credence to such an affidavit, many motions for summary judgment have been granted and upheld.

Continue Reading Does Texas follow the “sham affidavit” doctrine?

The Federal Circuit has held that “virtual” business operations are insufficient to establish patent venue.  And it rejected the widely discussed four-factor approach to patent venue adopted by the Eastern District of Texas, which until recently was the nation’s busiest patent venue.

Continue Reading “Virtual” Business Operations Don’t Establish Venue for Patent Cases

The answer to this question may depend upon the circumstances.  As reflected in one recent Dallas Court of Appeals opinion, minutes mattered in order for the lawyer to ensure compliance with her obligation not to engage in conduct that might disrupt pending appellate proceedings.  This opinion could serve as a good law school exam question.

Continue Reading How soon must an attorney notify his client of a court filing?

The Supreme Court has held that class action tolling under American Pipe does not toll the time within which a suit must be filed under a statute of repose.

In American Pipe the Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class.”  American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554 (1974).  The open question was whether class tolling would also apply to statutes of repose.

In California Public Employees’ Retirement System v. ANZ Securities, No. 16–373 (June 26, 2017), a putative class action was filed under Section 11 of the Securities Act of 1933 concerning securities offerings of Lehman Brothers Holdings.  Section 13 of the Securities Act contains a three-year statute of repose.  More than three years after the securities were offered, the petitioner filed an individual action alleging identical violations.  After a proposed settlement was reached in the putative class action, the petitioner opted out of the class.  The respondents moved to dismiss the individual suit as untimely but the petitioner argued that American Pipe tolled limitations during the pendency of the putative class action.

The Supreme Court disagreed.  It reasoned that American Pipe was based on “the judicial power to promote equity, rather than to interpret and enforce statutory provisions.”  Whereas the statute at issue in American Pipe was a traditional statute of limitations, Section 13 of the Securities Act was held to be a true statute of repose whose purpose is to “create ‘an absolute bar on a defendant’s temporal liability.’”  In light of their purpose, the court held that statutes of repose “override customary tolling rules arising from the equitable powers of courts” and are not subject to tolling without legislative direction.

The court therefore affirmed the dismissal of the individual suit over the vigorous opposition of a four-justice dissent, which would have held that American Pipe tolling applies to statutes of repose.  Justice Gorsuch participated in the opinion and was in the majority.

California Public Employees’ Retirement System v. ANZ Securities, No. 16–373 (June 26, 2017)

Just a week after reversing the Federal Circuit’s longstanding interpretation of patent venue in TC Heartland LLC v. Kraft Foods Group, No. 16-341 (May 22, 2017), the Supreme Court again reversed the Federal Circuit, this time with respect to patent exhaustion.

U.S. patent laws entitle a patent holder to prevent others from making, selling, or importing the patented invention “without authority” from the patentee.  35 U. S. C. §§ 154(a), 271(a).  However, patent rights end or exhaust once a patented product is sold.  A purchaser may freely reuse or resell the product without infringing on the patent.  The Supreme Court has now held that a patentee cannot retain patent controls after a sale by prohibiting buyers from reusing or reselling the patented items.  It also held that products sold overseas exhaust patent rights and preclude a patentee from claiming infringement when the products are later imported and resold in the U.S. without the patentee’s authority.

Lexmark sells patented toner cartridges for laser printers.  Remanufacturers like Impression Products buy empty Lexmark cartridges in the U.S. and overseas, refill them, and sell them at lower prices than Lexmark charges.  Lexmark tried to prevent customers from selling used cartridges through a Return Program in which it sold cartridges at a discount in exchange for an agreement that the buyer would not reuse or resell the cartridges.  Lexmark sued Impression Products and others claiming that they were infringing Lexmark’s patents by refilling Return Program cartridges, and by importing and filling overseas-sold cartridges.

Lexmark argued that its patent rights had not exhausted because it had not authorized reuse and resale of Return Program cartridges, nor given authority to import cartridges sold overseas at lower prices because they did not carry patent protection until they were brought into the U.S.  Impression Products argued that all patent rights as to cartridges that had once been sold were exhausted.

The Federal Circuit, sitting en banc, held for Lexmark as to both issues.  Lexmark Intn’l, Inc. v. Impression Products, Inc., 816 F. 2d 721 (Fed. Cir. 2016).  It held that, unlike an ordinary sale, Lexmark’s Return Program sales were restricted and thus resales were “without authority.”  As to cartridges sold abroad, the circuit held that patent exhaustion did not arise because the sales were made where American patent laws do not apply.  It reasoned that the patentee did not receive the rewards allowed by the patent laws from selling in an American market.

The Supreme Court disagreed.  It held that once an item is sold, the patentee has “enjoyed all the rights secured” by the patent law and has no further right to restrain the use of the product through that law.  The Court traced the doctrine to the common-law rule against restraints on alienation, citing Lord Coke’s writings from the 17th century.  The Court disagreed with the Federal Circuit’s belief that the exhaustion doctrine was merely an interpretation of the patent law’s prohibition on selling a patented product “without authority.”  Instead, exhaustion is a limit on the scope of the patentee’s own rights under the patent laws.  Thus, even if Lexmark’s contracts with its customers were enforceable under contract law, they did not allow Lexmark to retain patent rights items it had sold.

The Court further held that sales outside the United States exhaust all rights under the patent laws, analogizing to the “first sale doctrine” from copyright law.  That doctrine provides that once a copyright owner sells a copy of its work, it loses the power to restrict resales even if the first sale was made abroad.  Applying patent exhaustion to foreign sales was just as straightforward because nothing in the Patent Act indicates that the “borderless common law principle” of exhaustion should be limited to domestic sales.

The decision was 7-1 with Justice Gorsuch not participating.  Justice Ginsburg concurred as to the domestic sales but dissented as to international exhaustion.

Impression Products, Inc. vs. Lexmark International, Inc., No. 15-1189 (May 30, 2017)

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