United States: Supreme Court Docket Report - January 15, 2016

Last Updated: January 15 2016
Article by Brian D. Netter

Today, the Supreme Court granted certiorari in four cases of interest to the business community:

Patent Act—Inter Partes Review of Patent Validity

Cuozzo Speed Techs., LLC v. Lee, No. 15-446

In 2011, Congress enacted the Leahy-Smith America Invents Act, which created a new adjudicatory process for challenges to the validity of patents. Under the new process, a person other than the patent owner may petition the Patent Trial and Appeal Board of the Patent Trademark Office (the Board) to review the validity of a patent by instituting an adversarial proceeding known as "in partes review" (IPR). 35 U.S.C. §§ 311–314. The statute provides that the Board's decision whether to institute IPR "shall be final and nonappealable." Id. § 314(d). In Cuozzo Speed Techs., LLC v. Lee, No. 15-446, the Supreme Court granted review to consider two important questions concerning the IPR process. First, the Court will consider whether the Board's decision to institute IPR is judicially unreviewable even when the Board has exceeded its statutory authority. Second, the Court will decide whether the Board should construe the claim in an issued patent according to its plain and ordinary meaning, as a federal court would do, or whether it may employ a claim construction standard that gives patents their broadest reasonable interpretation, as the Federal Circuit held was appropriate.

Class Actions—Appellate Jurisdiction to Review Denial of Class Certification After Stipulated Dismissal

Microsoft Corp. v. Baker, No. 15-457

The Supreme Court has granted review in this case to decide whether the named plaintiffs' stipulated dismissal of their individual claims with prejudice after the denial of class certification creates appellate jurisdiction to review the class certification question. Plaintiffs filed a putative class action against Microsoft claiming defects in the Xbox 360 gaming console. After the district court granted Microsoft's motion to strike the class allegations, the plaintiffs petitioned for an interlocutory appeal, which was denied. The parties subsequently stipulated to dismiss the case with prejudice, and plaintiffs appealed to the Ninth Circuit. Microsoft contended that the appeal should be dismissed because the voluntary dismissal with prejudice did not create appellate jurisdiction. The Ninth Circuit disagreed, holding that a stipulated dismissal without a settlement "retains sufficient adversity to sustain an appeal." The Second Circuit has adopted the same view, but five other circuits have held that an appellate court lacks jurisdiction to review a denial of class certification where the plaintiffs have voluntarily dismissed their claims with prejudice. The Supreme Court will now resolve this disagreement.

Copyright Act—Availability of Attorney's Fees to a Prevailing Party

Kirtsaeng v. John Wiley & Sons, Inc., No. 15-375

The Copyright Act provides that a "court may . . . award a reasonable attorney's fee to the prevailing party" in a copyright case. 17 U.S.C. § 505. Today the Supreme Court granted certiorari to determine the standard for awarding such fees. In Kirtsaeng v. John Wiley & Sons, Inc., petitioner Kirtsaeng successfully defended a lawsuit for copyright infringement based on its sale of textbooks. The Second Circuit held, however, that Kirtsaeng was not entitled to attorney's fees, placing "substantial weight" on the fact that the plaintiff's claims were not "objectively unreasonable." In its petition, Kirtsaeng argued that this standard was different from that of the Ninth and Eleventh Circuits, which award attorney's fees when the prevailing party's successful claim or defense advances the purposes of the Copyright Act; and that of the Fifth and Seventh Circuits, which employ a presumption in favor of attorney's fees for a prevailing party. The Supreme Court granted review to resolve this disagreement.

Fair Labor Standards Act—Overtime Pay for "Service Advisors" at Car Dealerships

Encino Motorcars, LLC v. Navarro, No. 15-415

The Fair Labor Standards Act ("FLSA") requires overtime pay for certain employees when they work more than 40 hours per week. It exempts from this rule "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles." 29 U.S.C. § 213(b)(1)(A). The plaintiffs, a group of "service advisors" at a car dealership whose primary job responsibilities involve identifying service needs and selling service solutions to the dealership's customers, sued the dealership under FLSA for withheld overtime pay. The district court dismissed the suit, concluding that a service advisor is a "salesman . . . engaged in selling or servicing automobiles" under the FLSA exception. The Ninth Circuit reversed, deferring to a Department of Labor interpretative regulation stating that service advisors are not exempt because they do not personally service automobiles—a ruling that conflicted with the rules of the Fourth and Fifth Circuits. The Supreme Court granted certiorari to decide whether service advisors at car dealerships are exempt from FLSA's overtime-pay requirements.

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