Banned ItemsIn 2016, despite contracts that mandate one-on-one arbitrations, consumers will likely gain the right to bring claims against banks, credit card issuers, and other lenders in class actions. The new rule, which the Consumer Financial Protection Bureau announced on October 7, 2015 it will probably issue next year, will partially reverse a string of recent Supreme Court decisions that made class-banning arbitration clauses broadly enforceable.

The action by the Bureau will vastly raise the stakes for disputes involving practices affecting large numbers of consumer finance customers. Continue Reading Banning Bans on (Some) Class Cases

In 2010, when it passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress created the Consumer Financial Protection Bureau as a watchdog for consumers who buy financial products and services. The CFPB’s mission included looking at the effect of arbitration clauses in consumer contracts and proposing rules to regulate them if appropriate.

On October 7, the CFPB issued an Outline of Proposals Under Consideration and Alternatives Considered. In the next post (on Monday, October 12) I will offer an overview of what the agency says it has in mind and how new CFPB rules could reverse some of the negative impact of recent Supreme Court rulings on consumer class actions. Please stand by.

 

 

LuxotticaConcepcion in question

Last week, the Ninth Circuit found a way around the U.S. Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). The panel held, 2-1, that a qui tam-like claim differs enough from a state-law class action claim to take it beyond Concepcion‘s preemptive reach.

The ruling means, in the Ninth Circuit, that Concepcion will not allow defendants to use arbitration clauses to defeat claims that private plaintiffs bring on behalf of the state and that defendants may therefore face individual cases, in court or arbitration, that put far more than the individuals’ claims at stake. Continue Reading Qui Tam-Like Claim Eludes Arbitration Act Oblivion — For Now

LuxotticaThe U.S. Supreme Court has chipped away at class actions, making them both harder to qualify for class treatment and easier prey to clauses that bar class actions in court or in arbitration. For many years, thanks largely to rulings by the California Supreme Court, the Ninth Circuit swam against the tide. But more recently it seemed to weary of the effort. This week it showed signs of catching a new wind.

I’ll talk about the decision — Sakkab v. Luxxotica Retail N. Am., Inc., No. 13-55184 (9th Cir. Sept. 28, 2015) — in my next post.

You can send photos and other things via multimedia messaging service
MMS = multimedia messaging service

Summit sued Samsung for infringing a patent on “Web-Based Media Submission Tool”. It alleged that Samsung smartphones infringed the patent by enabling users to send pictures through the web/Internet via multimedia messaging service (MMS). A jury awarded Summit $15 million — a little more than half of what it asked for — and the district court entered judgment on the verdict. The Federal Circuit affirmed. Summit 6, LLC v. Samsung Electronics Co., Ltd., 13-1648 (Fed. Cir. Sept. 21, 2015).

The panel’s decision highlights the importance of making complex damages calculations simple.

Summit’s model met the test. It used the following steps:

  • What did Samsung charge for the camera in its smart phones? $14.15. “To arrive at this estimate, Mr. Benoit used Samsung’s annual reports, internal cost and revenue spreadsheets, and interrogatory responses to determine that the camera component accounted for 6.2% of the phone’s overall production cost.” Id. at 20.
  • What percentage of people who used Samsung smartphones did so in an infringing way (by sending photos via MMS, multimedia messaging service)? 20.8 percent. “To do this, he relied on surveys commissioned by Samsung in the ordinary course of its business and on another survey he found on his own.” Id.
  • What profit margin did Samsung earn on its smart phone sales? 19.11 percent. The expert used “Samsung’s annual reports to estimate its profit margins and capital asset contributions”. Id. at 21.
  • What profit resulted to Samsung for each smart phone from the infringing use? $.56 ($14.15 x .208 x .1911). Id.
  • In a hypothetical negotiation of a reasonable royalty, how would Samsung and the patent owner agree to split the $.56 per smart phone profit? 50-50 ($.28 to Summit). The expert “testified that because neither party had a stronger negotiating position, the parties would have split the $0.56 evenly” and “cited three academic articles and the Nash Bargaining Solution to support his theory”. Id.

The estimate of a reasonable royalty equal to $.28 per device yielded a total of $29 million. Apparently, Samsung sold 103.6 million infringing smartphone during the damages period). Id. at 22.

That seems pretty simple, right? It contains a lot of complexity but presents the steps in a logical and straightforward way.

As Steve Jobs said: “You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

DelayEn banc court sidesteps high court

In Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 1974 (2014) (post here), the Supreme Court ruled that the defense of laches — unreasonable delay in bringing suit — does not preclude recovery of damages for copyright infringement during the usual statute of limitations period (three years under the Copyright Act). Does the same rule apply to patent cases?

The en banc Federal Circuit held last week, by the smallest of margins (6-5), that Petrella does not govern cases under patent law. Defendants may thus cite a patent holder’s delay in filing a lawsuit as a ground for reducing or barring damages within the six-year pre-suit period that patent law generally allows. Continue Reading Laches Can Limit Patent Damages, En Banc Federal Circuit Rules

The Macondo spill also spawned securities fraud claims
The Macondo spill also spawned securities fraud claims

Modest decision

In Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), a 5-4 majority — over an extraordinary joint dissent by Justices Ginsburg and Breyer — had to work hard to make a modest ruling. The Court held that plaintiffs seeking class treatment under Rule 23(b)(3) sometimes may have to plausibly link their theory of liability (the misconduct that caused damages) to the theory of class-wide damages (the estimate of the damages flowing from the misconduct) in order to obtain class certification.

I say emphatically that the Court did not hold that any plaintiff class seeking certification under Rule 23(b)(3) must prove damages on a class-wide basis. It said only that if a class cannot obtain class certification without establishing class-wide damages, then by golly it must show that it can establish class-wide damages.

I should know; I briefed and argued the case for the plaintiff class. Continue Reading Fifth Circuit Misapplies Comcast, Affirms Class Anyway

Time to InventThe shock of the new

A lot turns on who invents a thing first. Billions maybe.

Patent law requires newness. The mandate can cause patent death even in the case of almost-but-not-quite “prior art”. If the older stuff “anticipates” the new thing, it renders the invention unpatentable.

A recent decision by the Federal Circuit highlights the anticipation question.  Continue Reading In Patent Law, Weeks Count