Stephen Colbert (courtesy of NPR) explains the meaning of backsies thus:

Mr. COLBERT: Backsies is the technical term for reneging on a previously settled agreement.

(Soundbite of laughter)

Mr. COLBERT: We've all done backsies, asking for the return of your Barbie doll or baseball card. In fact, 50 percent of all American marriages end in backsies.

Today Blawgletter learned that patent law doesn't like backsies either (okay, we learned that a Some Time Ago, but play along).

For on this day the Federal Circuit — that enforcer of inventions, that protector of patents, that 50+ percent reverser of Markman rulings — held that a patent holder went too far when it tried to "recapture" stuff it cast aside while trying to wheedle needle patents from the U.S. Patent and Trademark Office.

The holder's gambit came via its request to cancel and then reissue a patent on a design for a syringe that protects against needle sticks.  Under 35 U.S.C. § 251, you can use the reissue process to enlarge "the scope" of the original patent if you "through error without any deceptive intent" claimed "less than [you] had a right to claim in the patent".  You can ask for reissue up to "two years after the grant of the original patent."  Id.

But you can't claw back scope that you gave up the first time around.  In MBO Laboratories, Inc. v. Becton, Dickinson & Co., No. 08-1288 (Fed. Cir. Apr. 12, 2010), the court ruled that MBO broke the rule against backsies.  MBO had told the examiners in two patent prosecutions that its invention prevented needle sticks by retracting the needle instead of pushing a "guard body" over an unretracting needle.  "Because MBO surrendered a guard body that moved forward to cover a fixed needle and sought to reclaim relative movement in its reissue claims, MBO violated the rule against recapture."  Id. slip op. at 15.

The panel also noted that "[i]ndividuals, not corporations, create inventions".  Id. at 4 n.1; but see Citizens United v. Federal Election Commission, No. 08-205 (U.S. Jan. 21, 2010).

Justice John Paul Stevens, who has served on the U.S. Sureme Court since 1975, wrote President Barack Obama to tell him he will retire at the of the current term in June.  See The Washington Post, The Wall Street Journal, and The New York TImes articles.

President Gerald R. Ford appointed Justice Stevens, who turns 90 in 11 days.

The New Yorker last week printed a profile of the longest-serving justice now on the Court, calling it "After Stevens".  The item takes you through Justice Stevens's childhood, schooling, work as a practicing lawyer, and service on the Court.  It includes excerpts from a recent interview.  Blawgletter says check it out.

Justice Stevens's retirement gives President Barack Obama the chance to appoint a second justice to the Supreme Court.  The Senate last year approved his nomination of Justice Sonia Sotomayor, the former Second Circuit judge who replaced retiring Justice David Souter.  We will await President Obama's choice with interest.

A panel of the Seventh Circuit extended the court's status as the circuit that puts the most hurdles in the way of class certification under Rule 23 of the Federal Rules of Civil Procedure.  It held that district courts "must conclusively rule on any challenge to the expert's qualifications or submissions prior to ruling on a class certification motion.  Am. Honda Motor Co., Inc. v. Allen, No. 09-8052, slip op. at 6 (7th Cir. Apr. 6, 2010) (per curiam).

The appeal involved the question of whether an expert for the plaintiffs met the requirements of Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), and Rule 702 of the Federal Rules of Evidence.  

The expert opined that Honda motorcyles wobbled too much.  The district court doubted the reliability of the conclusion but chose not to strike it and instead granted a motion to certify a class of Honda owners.  

The Seventh Circuit ruled that the court couldn't demur on Honda's Daubert challenges before granting certification, that Daubert principles required exclusion of the wobbling motorcyle expert's views, and that the district court erred in overruling Honda's objections and in certifying a class.


The Federal Communications Commission sits at the cutting edge of just about everything — technological, commercial, litigational, competitional, sportal, social, moral.  Even our mouse proclaims its Commission blessing.

Exciting stuff, yes?

Today, the fussbudgets on the D. C. Circuit held that the 3-2 Commissioners in 2008 stepped over their bounds in whacking Comcast for what the court called "network management practices."  The biggest U.S. cable firm had thwarted certain of its Internet service users' hogging of Comcast's Internet bandwidth.  These subscribers sent and received billions of bits of data to and from each other, using "peer-to-peer" methods that bypass servers but may slow other users' more modest Internet forays.

The panel ruled for Comcast on the ground that the FCC lacked statutory authority to compel Comcast and its like to lay off big bit consumers, in the name of "net neutrality".  Comcast Corp. v. Federal Communications Com'n, No. 08-1291 (D.C. Cir. Apr. 6, 2010).

The Ninth Circuit yesterday upheld a judgment that a software writer wrote software as an "employee" of JustMed, Inc., a start-up company that set out to make a "digital audio larynx", rather than as an "independent contractor".  The distinction made a difference because federal copyright law deems the works of an employee the property of the employer under the "works made for hire" part of the Copyright Act, 17 U.S.C. 201(b).  JustMed, Inc. v. Byce, No. 07-35861 (9th Cir. Apr. 5, 2010).  

The panel also grappled with whether the ownership fight between JustMed and Michael Byce invoked federal question jurisdiction (it did) and whether Byce misappropriated JustMed's trade secret rights in the software (he didn't).

Blawgletter has stated our guess that credit default swaps — which insure against bad things that might happen to bonds and other securities — promote fraud.  Inherently.  

CDSs indeed strike us as akin to (i.e., the same as) gambling, most of all for people who buy CDSs even though they lack an interest in the bonds/other securities whose ill fortune would trigger the duty of the CDS issuer/insurer to pay.  (Think of your neighbor's home aflame and a big check to you for the value of the now-toasty structure.)

Some suggest that CDSs in a way promote liquidity.  By which we suppose they mean that owners of bonds/other securities wouldn't buy the bonds/other securities unless they (the buyers) felt secure in owning the bonds/other securities.

But that goes only so far.  Just a few purchasers of CDSs may assert such an insurable interest.  A great many others must claim that they've done a good deed (enhancing liquidity) by asserting that they need protection/insurance against a drop in the value not of the bonds/other securities themselves but against a decline in the value of bonds/other securities in the same ballpark.  But for the insurance, we can imagine them saying, they'd have never purchased the bonds/other securities at all.

We don't buy it.  The hundreds of billions that speculators have pumped into the CDS market reflect as much as anything the idea that a faltering economy will lower all ships, including those vessels that issued the bonds/other securities whose ill fortune triggers the CDS owners' right to demand payment.

We like liquidity as much as the next person.  But, really, what good does a CDS do?  Add liquidity to a market that needs it, if at all, to permit speculation in the notion that bonds/other securities in general will fall?  Don't we offer S&P 500 and other market indexes that let people bet with the market as well as short sales and other devices that permit gambles against the market?  Do we really need synthetic/derivative ways to speculate?

Our aversion to CDSs gains more force when we note that the biggest banks, including several that the U.S. government bailed out, got 100 cents on their CDS dollar.  From the federal government.  Which you and I pay for.

No, we don't need CDSs that benefit investors who stand to gain if bad things happen.  Suffer them to go to Las Vegas and bet on the equivalent of Butler winning the NCAA tournament, we say.

We'd all feel more honest then.

Online vendors sell lots of Tiffany goods through eBay.  But some of the stuff that some of them hawk never knew the inside of a Tiffany store or warehouse.  They do commerce in fake Tiffany, Blawgletter means.

eBay makes money from such sales by charging fees for listing offers and, via its PayPal service, for processing payments.

This week, the Second Circuit pondered whether eBay's role in vending counterfeit Tiffany items ran afoul of trademark and false advertising laws.  The panel agreed with eBay that it hadn't infringed Tiffany trademarks, either directly or by way of dilution, due to the fact that eBay didn't know about the fakeness of particular pieces.  But it also held that Tiffany might have a point about eBay's own ads, which urged people to check out its sellers' "Tiffany" offerings.  "The law requires us to hold eBay accountable for the words that it chose insofar as they misled or confused consumers."  Tiffany (NJ) Inc. v. eBay Inc., No. 08-3947, slip op. at 43 (2d Cir. Mar. 30, 2010). 

Tiffany feels unhappy about the result.  It said:

"Obviously Tiffany is very disappointed by today's decision. As an e-commerce leader, eBay has a responsibility to protect consumers and promote trust in its marketplace," said Michael J. Kowalski, chairman and chief executive officer of Tiffany & Co. "eBay knew that counterfeit merchandise was being sold on its site – and eBay took no effective steps to stop it. eBay deliberately misled consumers for profit, and unfortunately, the court has justified its actions. The consumer is the real loser today."

The Supreme Court of Texas today upheld a $1.48 million verdict and judgment for a man who sustained a skull fracture and brain damage in a bar-room melee between Sigma Chi fraternity brothers and members of a wedding party.  The 6-3 majority ruled that the owners of the Grandstand Bar in the Del Lago resort on Lake Conroe owed the man a duty to protect him after 90 minutes of cursing, shouting, and shoving between the two groups.  Del Lago Partners, Inc. v. Smith, No. 06-1022 (Tex. Apr. 2, 2010).

Alcohol played a role.

Justice Willett wrote the Court's opinion.  Chief Justice Jefferson and Justices Green, Guzman, Medina, and O'Neill agreed with him. 

Justice Hecht wrote a dissent, in which Justice Johnson joined.  Justice Johnson dissented separately, as did Justice Wainwright.  Justice Hecht also joined in the Johnson dissent.

The U.S. Supreme Court today reversed a Second Circuit ruling that upheld the right of New York to bar class actions seeking penalties under Empire State law.  The decision failed to net a majority, and as a result you'll need to study closely the concurrence and dissent to see what the Court actually said.  Shady Grove Orthopedic Assocs. P.A. v. Allstate Ins. Co., No. 08-1008 (U.S. Mar. 31, 2010).

Blawgletter said just before oral argument in Shady Grove and Jones v. Harris Assocs., which the Court decided yesterday (post here), that the cases struck us "as leading indicators of how far the Court will go this Term in cutting back civil claims."

Civil plaintiffs won both cases.  Dare we hope?

Last November, on the day the U.S. Supreme Court heard argument in an Investment Company Act case over fees that mutual funds pay their advisers, Blawgletter wrote:

Supremes Listen to Fee Fight

The U.S. Supreme Court today heard what "fiduciary" means for an investment adviser when it charges mutual funds more than institutional investors pay for similar services.  See Transcript, Jones v. Harris Assocs. L.P., No 08-586 (U.S. Nov. 2, 2009).  Briefs here.

Blawgletter predicts a close decision — probably by one vote – in favor of mutual fund investors, who claim the adviser breached its fiduciary duty under section 36(b) of the Investment Company Act.

The system for setting fees looks odd to us.  Mutual funds come into the world through the will of a Fidelity, a Templeton, a Vanguard, or some other outfit that aims to make money by selling its investment advice.  The money-making part comes in the form of adviser fees, which the creator/sponsor more or less negotiates with mutual fund offspring.  An independent board must okay the pay. 

But can the board, however independent, guard against too-high fees ex post facto?  In 1970, Congress feared not.  It said "the investment adviser . . . shall be deemed to have a fiduciary duty with respect to the receipt of compensation for services".  15 U.S.C. 80a-35(b).  Congress also created a cause of action to recover excessive fees.  And it provided that the board's clearing of the fees didn't end the inquiry but that the okay “shall be given such consideration by the court as is deemed appropriate under all the circumstances".  `15 U.S.C. 80a-35(b)(2).

The Justices grappled with the idea of a "fiduciary" duty that an independent board mediates but that a court may then review afresh.  Two of them — Chief Justice Roberts and Justice Scalia – vocally doubted the practicability of having judges second-guess board decisions.

Five others spoke more charitably about the excessive fee claim.  The petitioners, who lost in the district court and the Seventh Circuit, pointed out that the fees at issue far exceeded the fees that the same adviser charged its more savvy institutional investors for the same kinds of services.  Justices Breyer, GInsburg, Kennedy, Sotomayor, and Stevens seemed to want to give "fiduciary" more meaning than the courts below did.

Today the Court, 9-0, held that the Seventh Circuit applied too easy a test for judging whether an investment adviser met its duty as a "fiduciary" in negotiating its fee for advice to a mutual fund.  Jones v. Harris Assocs. L.P., No 08-586 (U.S. Mar. 30, 2010).  The Court adopted a flexible definition of fiduciary duty and rejected the Seventh Circuit's approach that apotheosized the notion that the "market" adequately protects mutual fund shareholders against abuses.  Justice Sam Alito wrote the Court's opinion, which remanded the case for proceedings consistent with the opinion.