Blawgletter®

$44.4 Million Trade Secrets Verdict Stands in Fifth Circuit

A Houston jury awarded Wellogix $94.4 million for Accenture's misappropriation of trade secrets in software that helped oil and gas companies track and manage costs of drilling wells. The judge cut the award to what Wellogix asked for -- $26.2 million in actual damages plus $18.2 million in punies. And today the Fifth Circuit affirmed. Wellogix, Inc. v. Accenture, L.L.P., No. 11-20816 (5th Cir. May 15, 2013).

The case might pass without remark except for the respect the panel showed for the jury's work on the case. In the opening paragraph, the court set the tone by quoting Supreme Court decisions from more than 60 years ago on the test for setting aside a verdict:

"Only when there is a complete absence of probative facts to support the conclusion reached does a reversible error appear." Lavender v. Kurn, 327 U.S. 645, 653 (1946).

"But juries are not bound by what seems inescapable logic to judges." Morissette v. United States, 342 U.S. 246, 276 (1952).

See Wellogix, slip op. at 1 & 2.

The panel went on to approve the jury's finding of misappropriation and its awards of actual and exemplary damages.

To which Blawgletter says "wow" and "way to go".

Reaping What You Sow Infringes Soybean Patent, Supreme Court Holds

Farmers plant seeds. Where do they get the seeds? Lots of places. Their own crops. Farmer Crawford up the road. Bean sellers. Monsanto. And so on.

What if the seeds use a technique that someone -- Monsanto, say -- has taken out a patent on? Can you use seeds from a crop that you or someone else grew with Monsanto seeds to make a new crop? Or would that infringe those nice Monsanto people's patent?

It would do the infringement thing. So a 9-0 Supreme Court held today in Bowman v. Monsanto Co., No. 11-796 (U.S. May 13, 2013).

Justice Kagan wrote for the Court. She noted that buying a product that uses a patentee's invention has never given the purchaser a right to make copies of the product. Sure, as a matter of patent law, the buyer can use the one he lawfully acquired any way he wants. He can run it, sell it, lend it, dress it in doll clothes, burn it, chop it into thousands of little pieces, worship it, bury it in his back yard, or say ugly things to it. We call that the "patent exhaustion" doctrine. But letting him copy it would give him a right that belongs only to the patent-holder.

Vernon Bowman, an Indiana farmer, had gotten some of Monsanto's Roundup Ready soybean seeds from a vendor (grain elevator) and used them to plant several crops. Monsanto sued him for patent infringement and won a judgment for $85,000. Farmer Bowman asked the Supreme Court to overturn the judgment, arguing that a mean old company like Monsanto shouldn't have the right to profit from generation after generation of Roundup Ready soybeans, over the 20 or so year life of the patent. Monsanto's entitlement to charge royalties, he urged, should end when it makes the first sale of the seeds, after which sale it will have exhausted its patent rights.

That approach didn't sell.

Neither did his "seeds-are-special argument: that soybeans naturally 'self-replicate or 'sprout' unless stored in a controlled manner,' and thus 'it was the planted soybean, not Bowman' himself, that made replicas of Monsanto's patented invention." Id. at 9. Deeming the point a "blame-the-bean defense", Justice Kagan observed that Bowman "devised and executed a novel way to harvest crops from Roundup Ready seeds without paying the usual premium" and grew "eight successive soybean crops" as a result. Id. "In all this, the bean surely figured. But it was Bowman, and not the bean, who controlled the reproduction (unto the eighth generation) of Monsanto's patented invention." Id. at 10.

The Court cautioned that its holding may not cover all things that make copies of themselves -- such as things whose self-replication "might occur outside the purchaser's control" or "might be a necessary but incidental step in using the item for another purpose", as in some computer software programs. Id.

Quote of the Day: Blawgletter

The wise thing for me to say . . . is that I don't have evidence to contradict it.

David Ingram, "Q&A: Plaintiffs' Lawyer Barry Barnett on the Comcast class action", Thomson Reuters News & Insight, May 13, 2013 (referring to "the academic study spotlighted in The New York Times that found that this Supreme Court is the most pro-business in modern history").

Bonus:    Lee Epstein, William M. Landes, and Richard A. Posner, "How Business Fares in the Supreme Court", 97 Minn. L. Rev. ___ (2013).

Second Bonus:    "It's not all skittles and beer."

Quote of the Day: Richard Clifton

Abraham Lincoln told a story about a lawyer who tried to establish that a calf had five legs by calling its tail a leg. But the calf had only four legs, Lincoln observed, because calling a tail a leg does not make it so. Before us is a case about a lawyer who tried to estalish that a company owned a copyright by drafting a contract calling the company the copyright owner, even though the company lacked the rights associated with copyright ownership. Heeding Lincoln's wisdom, and the requirements of the Copyright Act, we conclude that merely calling someone a copyright owner does not make it so.

Righthaven LLC v. Hoehn, No. 11-16751, slip op. at 34 (9th Cir. May 9, 2013) (Clifton, J.).

Forget It, Jake. It's Kabletown.

At the end of the one of the Best Movies Ever, Evelyn Mulwray (Faye Dunaway) drives with her young daughter towards safety down a Los Angeles street. Will they escape? Yes, we think they just might!

A Los Angeles police lieutenant (Perry Lopez) steps onto the pavement. He aims his pistol and fires. Mulwray's car glides into a wall. The horn blares. It keeps blaring, as Mulwray's lifeless body presses against the steering wheel.

A look of crazy anguish pierces the face of Jake Gittes (Jack Nicholson), a private detective who has fallen in love with his client Mulwray. One of Jake's associates grabs him. He faces his boss and says:

"Forget it, Jake. It's Chinatown."

That pretty much sums up what Adam Liptak writes today in the Sunday NYT, on the front page of the Business section, about the rulings in business cases by the Roberts Court. Liptak titles his piece "Friend of the Corporation" (in the print version) and "Corporations Find a Friend in the Supreme Court" (online), and he opens it thus:

Not long after 10 a.m. on March 27, a restless audience waited for the Supreme Court to hear arguments in the second of two historic cases involving same-sex marriage. First, however, Justice Antonin Scalia attended to another matter. He announced that the court was throwing out an antitrust class action that subscribers brought against Comcast, the nation's largest cable company.

Almost no one in the courtroom paid attention, despite Justice Scalia's characteristically animated delivery, and the next day's news coverage was dominated by accounts of the arguments on same-sex marriage. That was no surprise: the Supreme Court's business decisions are almost always overshadowed by cases on controversial social issues.

But the business docket reflects something truly distinctive about the court led by Chief Justice John G. Roberts Jr. While the current court's decisions, over all, are only slightly more cnservative than those from the courts led by Chief Justices Warren E. Burger and William H. Rehnquist, according to political scientists who study the court, its business rulings are another matter. They have been, a new study finds, far friendlier to business than those of any court since at least World War II.

Liptak goes on to tell about the study, which appears in the Minnesota Law Review, by Wiliam M. Landes and Richard A. Posner, as well as "a despairing overview", in the New York University Law Review, by Arthur R. Miller.

Blawgletter says check it out.

You'll note that the case Liptak uses to kick off the article, Comcast Corp. v. Behrend, No. 11-864, holds a special place in our heart. We argued it to the Court last November, and in our giddiness afterwards dared to hope the Court would concede what became obvious during the argument -- that Their Honors had made a mistake in thinking, when they took the case, that it properly raised a question of admissibility of expert opinion evidence under the Daubert line of decisions.

The majority instead posed and answered a different question, one that it seems to have formulated after the briefing concluded. That explains the dissenters' view that the majority had engaged (per Liptak) in "unseemly judicial gamesmanship" by "refram[ing] the legal issue in the case so that they could rule for Comcast."

It's Kabletown.