NEW ORLEANS - A Louisiana federal judge on Sept. 11 refused to remand a seaman's injury-related claims against his employer to state court, finding that the question of whether an arbitral award rendered by Philippine arbitrators was enforceable or was void based on public policy grounds should be decided in federal court (Lito Martinez Asignacion v. Rickmers Genoa Schiffahrts, No. 13-0607, E.D. La.; 2013 U.S. Dist. LEXIS 129797).
PHILADELPHIA - A prior publication policy exclusion prevents an insurer from having to defend or indemnify Urban Outfitters against an underlying advertising injury lawsuit, a Pennsylvania federal judge ruled Aug. 19 (The Hanover Insurance Co. v. Urban Outfitters, et al., No. 12-cv-3961, E.D. Pa.; 2013 U.S. Dist. LEXIS 116889).
ATLANTA - The 11th Circuit U.S. Court of Appeals on Aug. 7 affirmed a federal judge's decision to confirm and enforce an international arbitration award issued in favor of an insurer, finding that the arbitrator was not biased and that the award did not violate U.S. public policy (Federal Deposit Insurance Corp., as receiver for Republic Federal Bank, N.A. v. IIG Capital LLC, No. 12-10686, 11th Cir.; 2013 U.S. App. LEXIS 16268).
NEW YORK - A New York federal judge on Aug. 6 granted a Russian company's motion for summary judgment in relation to its petition to enforce a $95 million international arbitration award that was issued in a loan dispute in its favor, finding that a Russian oil producer's arguments that it did not receive proper notice of the arbitration and that the confirmation of the award violated public policy failed (Yukos Capital S.A.R.L. v. OAO Samaraneftegaz, No. 10- 6147, S.D. N.Y.).
PHOENIX - An Arizona federal judge on July 19 held that a policy's definition of "relative" related to underinsured motorist (UIM) coverage did not violate public policy, as defined by Arizona's Uninsured/Underinsured Motorist Act (UMA), because the act doe not "restrict the parties' right to agree on who is insured" (Sammy Abbass, et al. v. American Family Insurance Group, et al., No. 2:13-cv-00268, D. Ariz.; 2013 U.S. Dist. LEXIS 101994).
CINCINNATI - The Sixth Circuit U.S. Court of Appeals on April 30 affirmed a lower court's finding that an insurance policy's exclusion for coverage of "Public Officials' Errors and Omissions arising out of . . . breach of a contractual obligation" applies to preclude coverage for defense costs related to an underlying $5,975,000 settlement reached between the insured and a maintenance company (City of Warren, et al. v. International Insurance Company of Hannover Ltd., No. 12-2201, 6th Cir.; 2013 U.S. App. LEXIS 8942).
CHARLESTON, W.Va. - A West Virginia court on April 26 affirmed a ruling in favor of a cleaning company that was hired to restore a house damaged by sewer backup, finding that a disclaimer issued by the company excluding liability for mold growth was not unconscionable and did not violate public policy (Brandy Pingley, et al. v. Perfection Plus Turbo Dry LLC, No. 11-1605, W. Va. Sup. App.; 2013 W. Va. LEXIS 422).
DENVER - A Colorado federal judge on April 17 granted summary judgment in favor of a hotel, finding that a former employee failed to show that his engineering position was terminated after he made complaints about mold and in violation of his employment contract (Guy Defazio v. Starwood Hotels & Resorts Worldwide Inc., No. 11-cv-03357, D. Colo.; 2013 U.S. Dist. LEXIS 54977).
PASADENA, Calif. - The Ninth Circuit U.S. Court of Appeals on April 15 held that Section 554 of the California Insurance Code does not bar a professional liability insurer from enforcing its policy's no-voluntary payments provision, affirming a lower court's ruling in favor of the insurer in a breach of contract lawsuit brought by an independent public adjuster insured (Dietz International Public Adjusters of California Inc. v. Evanston Insurance Co., No. 11-56267, 9th Cir.; 2013 U.S. App. LEXIS 7491).
MIAMI - A Florida federal judge on April 3 granted a ship owner's motion to compel arbitration of a crewmember's injury-related claims under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, finding that his public policy arguments failed and that he was required to arbitrate the dispute in Panama (Javier Fredy Paucar v. MSC Crociere S.A., et al., No. 13-20235, S.D. Fla.; 2013 U.S. Dist. LEXIS 48312).
NEW ORLEANS - A Louisiana federal judge on March 7 denied an insurer's motion for new trial or to alter or amend her Jan. 3 judgment that a state parish government is entitled to coverage under excess public entity insurance policies for damages it caused in condemning and demolishing properties deemed unsafe after Hurricane Katrina (Lexington Insurance Company v. St. Bernard Parish Government, No. 11-1865, E.D. La.; 2013 U.S. Dist. LEXIS 31561).
SAN FRANCISCO - The Ninth Circuit U.S. Court of Appeals on Dec. 11 heard oral arguments involving whether federal arbitration law preempts California's policy against arbitration of California unfair competition law (UCL) actions seeking public injunctive relief (Matthew C. Kilgore, et al. v. KeyBank National Association, et al., No. 09-16703, 9th Cir.).
WASHINGTON, D.C. - Less than a year after it returned to the Federal Circuit U.S. Court of Appeals a patent lawsuit over diagnostic test kits for determining hereditary risk of *** and ovarian cancer, the U.S. Supreme Court on Friday announced it will again take up the case (The Association for Molecular Pathology et al. v. Myriad Genetics Inc., No. 12-398, U.S. Sup.)
The high court granted a petition for certiorari submitted by the Association for Molecular Pathology, agreeing to address the question of whether human genes are patentable.
Products Of Nature
In a divided August 2012 ruling, the Federal Circuit reversed a determination by a judge in the U.S. District Court for the Southern District of New York that composition claims related to isolated DNA molecules are patent-ineligible products of nature and scientific principles pursuant to Section 101 of the Patent Act. At issue in the dispute are several patents owned by respondent Myriad Genetics Inc. for diagnostic tests for mutations along BRCA1 and BRCA2 - the genes responsible for most cases of hereditary *** and ovarian cancer. The association and several other national organizations of physicians and health professionals sued Myriad in 2009, alleging patent invalidity under Section 101 of the Patent Act. Specifically, the petitioners maintained that because the test kits cover products of nature, laws of nature and abstract ideas, they are patent ineligible; in addition, the petitioners asserted that the patents in suit preempt scientific inquiry and medical care to the detriment of patient health and scientific advancement.
In its initial ruling in the dispute, issued in July 2011, the Federal Circuit deemed one of the disputed patents - No. 5,747,282 - valid. After a motion for rehearing was denied, the association sought certiorari before the Supreme Court; in March 2012, the petition was granted but for the limited purpose of vacating and remanding in light of Mayo Collaborative Servs. v. Prometheus Labs., Inc. (132 S. Ct. 1289 ; See 12/19/11, Page 6). In that case, the Supreme Court found that processes claimed by patents that recite laws of nature are not themselves patentable absent the presence of "additional features" that "transform" natural correlations into patentable applications.
The Federal Circuit held oral arguments in the remanded dispute in July, and in August it again reversed the U.S. District Court for the Southern District of New York, reaffirming its earlier ruling upholding the validity of certain challenged composition claims and one method claim. Additionally, the appellate panel found that isolated DNA molecules are "not found in nature."
"They are obtained in the laboratory and are man-made, the product of human ingenuity," the panel majority said. "While they are prepared from products of nature, so is every other composition of matter. All new chemical or biological molecules, whether made by synthesis or decomposition, are made from natural materials. For example, virtually every medicine utilized by today's medical practitioners, and every manufactured plastic product, is either synthesized from natural materials (most often petroleum fractions) or derived from natural plant materials. But, as such, they are different from natural materials, even if they are ultimately derived from them. The same is true of isolated DNA molecules."
The association filed a second petition for certiorari which largely mirrored its first, arguing that Supreme Court review is needed to resolve vastly conflicting interpretations of the scope of Section 101 as it applies to compositions of matter and DNA. Additionally, the association noted that the instant dispute is the only dispute fully litigated before the Federal Circuit in which the only claim asserted arises under Section 101 and that longstanding Supreme Court precedent counsels that patents on isolated DNA are not valid.
Myriad responded on Oct. 31, telling the high court that "the Federal Circuit has twice correctly applied § 101 and this Court's decisions in" Mayo, Diamond v. Chakrabarty (447 U.S. 303 ) and MedImmune, Inc. v. Genentech, Inc. (549 U.S. 118 ; See 1/22/07, Page 5).
"The court's decision is also consistent with the policy goal of the Patent Act, the considered judgment of the PTO, and longstanding practice. Further, the issues presented are unique and fact-bound, and in order to even reach the § 101 issues, the Court would have to take up antecedent jurisdictional questions and preempt percolation in the Federal Circuit, the appellate court statutorily vested with unifying and clarifying U.S. patent law. The Court should deny the petition," Myriad added.
In granting certiorari, the Supreme Court indicated that it will address only the first question raised by the association - whether human genes are patentable. The association presented the high court with two additional questions that will not be presented during oral argument.
The petitioners are represented by Christopher A. Hansen, Steven R. Shapiro, Sandra S. Park, Aden J. Fine and Lenora M. Lapidus of American Civil Liberties Union Foundation in New York and Daniel B. Ravicher and Sabrina Y. Hassan of Public Patent Foundation, Benjamin N. Cardozo School of Law, in New York. Gregory A. Castanias and Jennifer L. Swize of Jones Day in Washington and Brian M. Poissant and Laura A. Coruzzi of Jones Day in New York represent Myriad.
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WASHINGTON, D.C. - The U.S. Supreme Court today heard oral arguments regarding whether the state-action doctrine applied to immunize a merger between two Georgia hospitals from the Federal Trade Commission's challenge that the transaction substantially lessened competition or tended to create a monopoly (Federal Trade Commission v. Phoebe Putney Health System, Inc., et al., No. 11-1160, U.S. Sup.; See November 2012).Arguing for the FTC, Assistant to the U.S. Solicitor General Benjamin J. Horwich said that the 11th Circuit U.S. Court of Appeals erred in ruling that the state-action doctrine immunized a merger between Phoebe Putney Memorial Hospital, which is a wholly owned subsidiary of Phoebe Putney Health Systems Inc. (PPHS), and Palmyra Park Hospital Inc. The Hospital Authority of Albany/Dougherty County approved the acquisition.
Horwich argued that by granting hospital authorities a corporate power to acquire property in the Hospital Authorities Law, the Georgia Legislature did not "clearly articulate . . . and affirmatively express . . . an intent to displace competition" and, therefore, the state-action doctrine did not provide a defense to the antitrust lawsuit.
Justice Sonia Sotomayor questioned whether "the grant of powers in this case would permit the hospital authorities, the corporation, to set prices for their services that are below the competitive prices in order to serve the needy?" In response to Justice Antonin Scalia's question whether an entity may be "a state actor for some anticompetitive purposes and not for others," Horwich responded that the Supreme Court has held just that.
Horwich said there is a distinction between pricing decisions and mergers. Chief Justice John G. Roberts Jr. commented that "when this law was passed giving them the power to acquire hospitals, wasn't it the case that there would likely be only on other hospital or two, so that any acquisition of another hospital would have the merger consequences that this one had?"
Horwich commented that "[t]he point of this law is to grant counties the opportunity to participate in this market by providing care to indigents. This is not a law about public utility regulation."
Representing the respondents, Seth P. Waxman of Wilmer Cutler Pickering Hale and Dorr in Washington argued that the Hospital Authorities Law created local public authorities to "exercise public and essential government functions to provide hospital care for residents, especially residents who cannot pay" and that "the powers that the legislature has given hospital authorities are not by any means general corporate powers. They are broader than what a corporation may have in certain respects and much narrower in other respects."
Justice Elena Kagan described the position of several states that filed an amicus brief in the case as saying that "to construe these very normal powers that we would give to a state entity in order to allow it to operate as a permission to violate the antitrust laws is not at all consistent with our own intentions."
Waxman responded that "[t]hese special purpose authorities do not simply have general corporate powers. They have a mandate. There is a Georgia constitutional amendment that coincided with the enactment of the Hospital Authorities Law that derogated the State's duty to provide indigent care to its -- hospital care to its citizens."
Waxman argued that the state indicated that it made a choice to allow hospital authorities to make anti-competitive purchases by "the context of the law."
In rebuttal, Horwich said, "States always have some purpose in mind when they set up some sub-State entity. The question isn't whether there is particular ends the State is trying to pursue. The question here is whether the State intended to pursue those ends through the particular means of displacing competition, here, displacing competition in the market for paid health care services."
In its Dec. 9, 2011, opinion, the 11th Circuit found that the state "authorized the Authority's acquisition of Palmyra and, in doing so, clearly articulated a policy to displace competition." The appeals panel concluded that the "anticompetitive consequences were a foreseeable result of the statute authorizing the Authority's conduct."
Through the Hospital Authorities Law, "the Georgia legislature granted powers of impressive breadth to the hospital authorities," including the powers to "operate projects," including hospitals, to "construct, reconstruct, improve, alter, and repair projects," to "establish rates and charges for the services and use of the facilities of the authority," to "sue and be sued," to "exchange, transfer, assign, pledge, mortgage, or dispose of any real or personal property or interest therein" and to "borrow money for any corporate purpose," the 11th Circuit said.
"Most important in this case, however, is the Georgia legislature's grant of the power to 'acquire by purchase, lease, or otherwise . . . projects,' . . . which, again, include hospitals, . . . and the power to 'lease . . . for operation by others any project.' . . . This grant makes clear that the Authority is authorized to acquire and lease Palmyra. Moreover, in granting the power to acquire hospitals, the legislature must have anticipated that such acquisitions would produce anticompetitive effects. Foreseeably, acquisitions could consolidate ownership of competing hospitals, eliminating competition between them," the appeals court said.
The FTC is also represented by Solicitor General Donald B. Verrilli Jr., Deputy Solicitor General Malcolm L. Stewart, Deputy Assistant Attorney General Renata B. Hesse of the U.S. Department of Justice and General Counsel Willard K. Tom, Deputy General Counsel for Litigation John F. Daly and Attorneys Imad D. Abyad and Michele Arington of the FTC. All are in Washington.
The respondents are also represented by Edward C. DuMont and Daniel P. Kearney Jr. of Wilmer Cutler in Washington and Alan E. Schoenfeld of Wilmer Cutler in New York. The Hospital Authority is also represented by James E. Reynolds Jr. of Perry & Walters in Albany, Ga. PPMH and Palmyra are also represented by Thomas S. Chambless of PPHS in Albany.
NEW YORK - A federal judge in New York on Nov. 9 granted preliminary approval to the $7.25 billion class action settlement between merchants and Visa, MasterCard and a large number of banks that the proposed class alleges fixed the prices of interchange fees paid by merchants when customers use Visa and MasterCard credit cards, despite objections by 10 of the 19 named plaintiffs and other merchants and trade associations (In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation [All Cases], No. 05-MD-1720, E.D. N.Y.; See October 2012).
Also on Nov. 9, U.S. Judge John Gleeson of the Eastern District of New York denied objector Home Depot U.S.A. Inc.'s motion for certification for an interlocutory appeal.
In their Oct. 19 motion for preliminary approval of the settlement, the merchants asserted that the settlement would be "the largest private damage recovery in United States antitrust history" and would "continue a series of reforms that restructure the payment card industry, making it more competitive." The proposed class representatives that sought preliminary approval of the settlement include Photos Etc. Corp., Traditions Ltd., Capital Audio Electronics Inc., CHS Inc., Crystal Rock LLC, Discount Optics Inc., Leon's Transmission Service Inc., Parkway Corp. and Payless ShoeSource Inc.
Terms Of Settlement
The settlement provides for a $6.05 billion fund, an eight-month reduction in interchange fees worth $1.2 billion and modifications of the Visa and MasterCard rules. Visa Inc., Visa U.S.A Inc. and Visa International Service Association (collectively, Visa) will pay two-thirds of the cash settlement amount, approximately $4 billion, and MasterCard Inc. and MasterCard International Inc. (collectively, MasterCard) and the banks will pay approximately $2 billion. The banks are issuing banks - banks that issue MasterCard-branded payment cards to customers - and acquiring banks - banks that acquire payment transactions from merchants and act as a liaison between the merchant and the issuing banks.
Visa and MasterCard agreed to reduce interchange fees for eight months.
The settlement agreement also permits the merchants to impose a surcharge on credit card purchases, subject to a cap and a clear disclosure of the surcharging practices.
The bank defendants are Bank of America N.A., BA Merchant Services, Bank of America Corp. and MBNA America Bank N.A. (collectively, Bank of America); Barclays Bank plc, Barclays Bank Delaware and Barclays Financial Corp. (collectively, Barclays); Capital One Bank (USA) N.A., Capital One F.S.B. and Capital One Financial Corp. (collectively, Capital One); Chase Bank USA N.A., Chase Manhattan Bank USA N.A., Chase Paymentech Solutions LLC, JPMorgan Chase Bank N.A., JPMorgan Chase & Co., Bank One Corp., Bank One Delaware N.A. and Washington Mutual Bank (collectively, JP Morgan Chase & Co.); Citibank (South Dakota) N.A., Citibank N.A., Citigroup Inc. and Citicorp (collectively, Citibank); Fifth Third Bancorp; First National Bank of Omaha; HSBC Finance Corp. and HSBC North America Holdings Inc. (collectively, HSBC); National City Corp. and National City Bank of Kentucky (collectively, National City); SunTrust Banks Inc. and SunTrust Bank (collectively SunTrust); Texas Independent Bancshares Inc.; and Wachovia Bank N.A., Wachovia Corp., Wells Fargo Bank N.A. and Wells Fargo & Co. (collectively, Wachovia).
The Federal Rule of Civil Procedure 23(b)(2) and 23(b)(3) classes are defined as merchants "that have accepted Visa-Branded Cards and/or MasterCard-Branded Cards in the United States at any time from January 1, 2004 to the Settlement Preliminary Approval Date."
Individual plaintiffs are Ahold U.S.A. Inc., Albertson's Inc., BI-LO LLC, Bruno's Supermarkets Inc., Delhaize America Inc., Eckerd Corp., The Great Atlantic & Pacific Tea Co., H.E. Butt Grocery Co., Hy-Vee Inc., The Kroger Co., Maxi Drug Inc., Meijer Inc., Meijer Stores Limited Partnership, Pathmark Stores Inc., Publix Supermarkets Inc., QVC Inc., Raley's, Rite Aid Corp., Safeway Inc., Supervalu Inc., Wakefern Food Corp. and Walgreen Co.
Objecting Named Plaintiffs
On Nov. 2, 10 of the 19 named plaintiffs filed objections to the motion for preliminary approval. The opposition described itself as "represent[ing] trillions in retail sales and a substantial portion of the putative class." The opposition's "massive and diverse breadth is a powerful signal that something is obviously wrong with this settlement. Fundamentally, these merchants and their representatives object to the settlement because it will neither introduce transparency nor give merchants the ability to inject competition in a market that has not functioned competitively for decades. And the release, given its scope, will make the competitive problems in the marketplace worse for merchants, not better," the objecting named plaintiffs said.
The objecting named plaintiffs are Coborn's Inc., D'Agostino Supermarkets Inc., Jetro Holdings Inc. and Jetro Cash & Carry Enterprises LLC, Affiliated Foods Midwest Cooperative Inc., National Association of Convenience Stores, National Association of Truck Stop Operators, National Community Pharmacists Association, National Cooperative Grocers Association, National Grocers Association and the National Restaurant Association.
The objecting named plaintiffs argued that "due to restrictions in the settlement, the vast majority of the putative class - including all merchants that accept Visa and MasterCard transactions in any of the ten states that prohibit surcharging and merchants that accept American Express - cannot take advantage of the limited ability to surcharge Visa and MasterCard credit card transactions that the settlement purports to provide. Moreover, the no-surcharging rules will still apply to Visa and MasterCard debit transactions, and thus the majority of Visa and MasterCard transactions will not be subject to the 'relief.'"
In addition, the objecting named plaintiffs contend that the Federal Rule of Civil Procedure 23 "(b)(2) release . . . is a thinly disguised attempt by Visa and MasterCard and the bank defendants to improperly get immunity from merchant claims going forward, immediately and forever. By its express terms, the release purports to cover all of Visa's and MasterCard's rules, and related conduct, up to the date of preliminary approval, and 'substantially similar' future rules and future conduct going forward forever. The factual predicates of this case could not possibly have covered the thousands of pages in Visa's and MasterCard's massive rulebooks, and all conduct related to those rules. . . . Such a release is void against public policy and violates the identical factual predicate doctrine."
Moreover, "[t]he settlement improperly sacrifices the interests of generations of future merchants, particularly merchants that start accepting Visa and MasterCard after 2021," the objecting named plaintiffs said.
Objections also were filed by putative class members. In addition, ATM Industry Association and PayPal Inc. filed amicus curiae briefs opposing the settlement, contending that the class definitions and release covered parties not intended to be covered by the action.
Similarly, American Express Co., American Express Travel Related Services Co. Inc., Travel Impressions Ltd. and American Express Publishing Corp. (collectively, American Express) filed an opposition to the proposed settlement on Nov. 2, stating that the "release could be improperly invoked by Visa, MasterCard, and other MDL 1720 defendants to try to block legitimate actual and potential claims held by American Express that are not shared by the class representatives themselves-including American Express' unique claims as a competitor of Visa and MasterCard."
The litigation began in 2005, when putative class actions were brought by merchants against the defendants. The merchants asserted that because the board of directors of MasterCard and Visa set the interchange fees the issuing banks paid the acquiring banks and the banks controlled the board of directors, the banks dictated the amount charged as interchange fees.
Visa and MasterCard announced their initial public offerings (IPOs), wherein they redeemed and reclassified the stock held by their member banks and then transferred new shares to the banks.
The merchants then argued that the agreements leading up to the IPOs violated federal antitrust law and state fraudulent conveyance law. The merchants asserted that the purported transformations from joint ventures to "single entities" would insulate internal actions from antitrust laws.
The merchants alleged that the defendants adopted interchange rules and rates, other network rules and corporate reorganizations that constituted unlawful price fixing, unreasonable restraints of trade, monopolization, lessening of competition and fraudulent conveyances, in violation of the Sherman Act, the Clayton Act, California's Cartwright Act and the New York Uniform Fraudulent Conveyance Act.
The settlement was reached while both the class plaintiffs' and the defendants' motions for summary judgment were pending.
Co-lead counsel for the class plaintiffs are K. Craig Wildfang, Martin R. Lueck, Thomas J. Undlin and Ryan W. Marth of Robins, Kaplan, Miller & Ciresi in Minneapolis, H. Laddie Montague Jr., Merrill G. Davidoff, Bart D. Cohen and Michael J. Kane of Berger & Montague in Philadelphia and Patrick J. Coughlin, Bonny E. Sweeney, David W. Mitchell and Alexandra S. Bernay of Robbins Geller Rudman & Dowd in San Diego.
The objecting named plaintiffs are represented by Jeffrey I. Shinder, Kevin E. Coughlin, A. Owen Glist and Daniel J. Vitelli of Constantine Cannon in New York and W. Stephen Cannon and Todd Anderson of the firm's Washington, D.C., office.
Liaison counsel for individual plaintiffs is Richard Alan Arnold of Kenny Nachwalter P.A. in Miami.
Home Depot is represented by Stephen R. Neuwirth, Deborah K. Brown and Steig D. Olson of Quinn Emanuel Urquhart & Sullivan in New York. American Express is represented by Donald L. Flexner, Philip C. Korologos, Eric J. Brenner and John F. LaSalle of Boies, Schiller & Flexner in New York and David Boies of the firm's Armonk, N.Y., office. Amicus ATMIA is represented by Anthony J. Staltari of Manatt, Phelps & Phillips in New York and Benjamin G. Shatz of Manatt Phelps in Los Angeles. Amicus PayPal is represented by Francis M. Curran of McCormick & O'Brien in New York.
Visa is represented by Robert J. Vizas of Arnold & Porter in San Francisco, Robert C. Mason of the firm's New York office and Mark R. Merley and Matthew A. Eisenstein of the firm's Washington office.
MasterCard is represented by Keila D. Ravelo, Wesley R. Powell and Matthew Frimuth of Willkie Farr & Gallagher in New York and Kenneth A. Gallo of Paul, Weiss, Rifkind, Wharton & Garrison in Washington and Andrew C. Finch and Gary R. Carney of Paul Weiss in New York.
Bank of America is represented by Mark P. Ladner and Michael B. Miller of Morrison & Foerster in New York. Barclay's is represented by Wayne D. Collins and Lisl J. Dunlop of Shearman & Sterling in New York. Capital One is represented by Andrew J. Frackman of O'Melveny & Myers in New York. JP Morgan Chase is represented by Peter E. Greene and Peter S. Julian of Skadden, Arps, Slate, Meagher & Flom in New York and Michael Y. Scudder of Skadden Arps in Chicago. Citibank is represented by David F. Graham and Eric H. Grush of Sidley Austin in Chicago and Benjamin R. Nagin of Sidley Austin in New York.
Fifth Third Bancorp is represented by Richard L. Creighton, Joseph M. Callow Jr. and Drew M. Hicks of Keating Muething & Klekamp in Cincinnati. First National Bank of Omaha is represented by John P. Passarelli and James M. Sulentic of Kutak Rock in Omaha, Neb. HSBC is represented by David S. Lesser of Wilmer Cutler Pickering Hale and Dorr in New York and Ali M. Stoeppelwerth and Perry A. Lange of Wilmer Cutler in Washington. National City is represented by John M. Majoras and Joseph W. Clark of Jones Day in Washington. Texas Independent is represented by Jonathan B. Orleans and Adam S. Mocciolo of Pullman & Comley in Bridgeport, Conn. Sun Trust is represented by Teresa T. Bonder, Valarie C. Williams and Kara F. Kenedy of Alston & Bird in Atlanta. Wachovia is represented by Robert P. LoBue and Norman W. Kee of Patterson Belknap Webb & Tyler in New York.
SEATTLE - A Washington federal judge on Oct. 18 granted a petition to confirm an international arbitration award issued in favor of Canadian corporations in a dispute over a purchase agreement for the rights associated with certain fire retardant chemicals, finding that a group of American companies failed to show that the arbitrator's award showed manifest disregard for the law or went against public policy (Global Building Products Ltd., et al. v. Chemco Inc., No. 12-1017, W.D. Wash.; 2012 U.S. Dist. LEXIS 150317).
HOUSTON - An insurer has no duty to defend or reimburse an insured city or its public officials because the underlying claims that are based on the city's refusal to approve a permit for development are precluded by the policy's inverse condemnation or eminent domain exclusion, a Texas federal judge said Oct. 12 (The City of College Station, Texas, v. Star Insurance Co., No. 11-2023, S.D. Texas; 2012 U.S. Dist. LEXIS 147295).
MIAMI - A Florida federal judge on Oct. 2 granted a cruise line's motion to compel arbitration of a seaman's injury-related claims, finding that the worker failed to show that an arbitration clause in his employment contract was against public policy (Aleixo Estibeiro v. Carnival Corp., No. 12-22713, S.D. Fla.; 2012 U.S. Dist. LEXIS 143058).
WASHINGTON, D.C. - The U.S. Supreme Court on Oct. 1 denied review of a union's petition asking the court to consider whether the Sixth Circuit U.S. Court of Appeals erred by ruling that a collective bargaining agreement (CBA) provision that requires the union to indemnify the employer for liability for withdrawal from a multiemployer pension plan does not violate public policy because the fiduciary is still liable (General Drivers, Warehousemen and Helpers, Local Union No. 89 v. Shelter Distribution, Inc., No. 11-1521, U.S. Sup.). View related prior history, 2012 U.S. App. LEXIS 5501.
NEW YORK - After finding that an international arbitration award was not contrary to New York public policy, the Second Circuit U.S. Court of Appeals on Sept. 6 affirmed a federal court's decision to confirm the award (Agility Public Warehousing Co. K.S.C., et al. v. Supreme Foodservice GMBH, No. 11-5201-cv, 2nd Cir.; 2012 U.S. App. LEXIS 18698).
CHICAGO - The Seventh Circuit U.S. Court of Appeals on Sept. 5 affirmed a federal court's dismissal of a Fair Debt Collection Practices Act (FDCPA) suit, agreeing with the underlying decision that the assignment of claims against a collection agency to the plaintiff violated Illinois public policy because he had been buying claims for the purpose of litigating them and using the assignments to practice law without a license (Michael Todd v. Franklin Collection Service Inc. No. 1103818, 7th Cir.; 2012 U.S. App. LEXIS 18634).
ST. LOUIS - The Eighth Circuit U.S. Court of Appeals on Aug. 27 determined that a district court erred in failing to consider whether the State of Missouri's public policy against the enforcement of mandatory arbitration provisions is sufficient to invalidate a forum selection clause in an insurer's policy (Union Electric Co. d/b/a Ameren Corp. v. Energy Insurance Mutual Ltd., No. 11-1315, 8th Cir.; 2012 U.S. App. LEXIS 18100).
WASHINGTON, D.C. - In a divided ruling, the Federal Circuit U.S. Court of Appeals today reversed a New York federal judge's determination that composition claims related to isolated DNA molecules are patent-ineligible products of nature and scientific principles pursuant to Section 101 of the Patent Act, 35 U.S.C.S. § 101, (The Association for Molecular Pathology, et al. v. U.S. Patent and Trademark Office and Myriad Genetics Inc., No. 10-1406, Fed. Cir.). View related prior history, 2012 U.S. App. LEXIS 8678.
The panel of Circuit Judges Alan D. Lourie, Kimberly A. Moore and William C. Bryson, acting on remand from the U.S. Supreme Court, heard oral arguments in the dispute less than one month ago.
"The district court in effect created a categorical rule excluding isolated genes from patent eligibility. But the Supreme Court has more than once cautioned that courts 'should not read into the patent laws limitations and conditions which the legislature has not expressed and has repeatedly rejected new categorical exclusions from § 101's scope,'" the Federal Circuit wrote, citing Bilski v. Kappos (130 S. Ct. 3218, 3225 ).
"Contrary to the conclusions of the district court and the suggestions of Plaintiffs and some amici, § 101 applies equally to all putative inventions, and isolated DNA is not and should not be considered a special case for purposes of patent eligibility under existing law," the appellate panel added.
Diagnostic Test Kits
The panel in July 2011 found that Myriad Genetics Inc.'s U.S. patent No. 5,747,282 - which covers diagnostic test kits for mutations along the BRCA1 and BRCA2 genes - is valid, over objections by the Association for Molecular Pathology, which Myriad had accused of infringement in 2009 before U.S. Judge Robert W. Sweet of the Southern District of New York. The association then appealed the findings to the Supreme Court, which, in the interim, decided Mayo Collaborative Services v. Prometheus Laboratories Inc. (No. 10-1150, U.S. Sup.). In that case, Supreme Court found that processes claimed by a patent reciting laws of nature are not themselves patentable absent the presence of "additional features" that "transform" natural correlations into patentable applications.
After the decision, the Supreme Court granted the association's petition for certiorari for the limited purpose of vacating and remanding the dispute for reconsideration in light of Mayo. The Federal Circuit in April announced that oral arguments would be held July 20.
Turning first to Myriad's composition claims, the appellate panel reversed Judge Sweet, instead finding that isolated DNA molecules "are not found in nature."
"They are obtained in the laboratory and are man-made, the product of human ingenuity. While they are prepared from products of nature, so is every other composition of matter. All new chemical or biological molecules, whether made by synthesis or decomposition, are made from natural materials. For example, virtually every medicine utilized by today's medical practitioners, and every manufactured plastic product, is either synthesized from natural materials (most often petroleum fractions) or derived from natural plant materials. But, as such, they are different from natural materials, even if they are ultimately derived from them. The same is true of isolated DNA molecules," the Federal Circuit held.
While the parties, including the U.S. government, were unable to agree on whether and to what degree isolated DNA molecules fall within the exception for products of nature, the Federal Circuit was less uncertain.
"The challenged claims . . . whether limited to cDNAs [complementary DNA] or not, are directed to patent-eligible subject matter under § 101," the Federal Circuit wrote, because under the test espoused in Diamond v. Chakrabarty (447 U.S. 303 ), "the claims cover molecules that are markedly different - have a distinctive chemical structure and identity - from those found in nature."
"Under the statutory rubric of § 101, isolated DNA is a tangible, man-made composition of matter defined and distinguished by its objectively discernible chemical structure. Whether its unusual status as a chemical entity that conveys genetic information warrants singular treatment under the patent laws as the district court did is a policy question that we are not entitled to address," the appellate panel added.
Not Naturally Occurring
Similarly, Judge Sweet's disposition of Myriad's method claim 20 relating to the screening of potential cancer therapeutics via changes in cell growth rates of novel, man-made transformed cells is also subject to reversal, according to the Federal Circuit. Noting that all parties agreed that transformed cells arise from human effort, the appellate panel rejected the association's claim that the claimed method preempts the basic scientific principle that a slower growth rate in the presence of a potential therapeutic compound suggests that the compound is a cancer therapeutic and that such a claim is indistinguishable from what the Supreme Court held ineligible in Mayo.
"Claim 20 recites a method that comprises the steps of (1) growing host cells transformed with an altered BRCA1 gene in the presence or absence of a potential cancer therapeutic, (2) determining the growth rate of the host cells with or without the potential therapeutic, and (3) comparing the growth rate of the host cells. Claim 20 thus recites a screening method premised on the use of 'transformed' host cells. Those cells, like the patent-eligible cells in Chakrabarty, are not naturally occurring. Rather, they are derived by altering a cell to include a foreign gene, resulting in a man-made, transformed cell with enhanced function and utility. The claim thus includes more than the abstract mental step of looking at two numbers and 'comparing' two host cells' growth rates," the Federal Circuit wrote.
With regard to method claims relating to the comparison of certain DNA sequences, however, the appellate panel cited Mayo and reaffirmed both Judge Sweet and the Federal Circuit's since-vacated 2011 ruling, finding that the methods claim only patent-ineligible abstract mental processes.
Judge Moore authored a concurrence, in which she joined the majority's holdings with regard to issues of standing and the patentability of Myriad's method claims. In a dissent, Judge Bryson also indicated his agreement with regard to the method claim but criticized the majority's findings as they relate to isolated DNA.
"In my view, those claims are not directed to patentable subject matter, and the court's decision, if sustained, will likely have broad consequences, such as preempting methods for whole-genome sequencing, even though Myriad's contribution to the field is not remotely consonant with such effects.
"The essence of Myriad's argument in this case is to say that it has not patented a human gene, but something quite different - an isolated human gene, which differs from a native gene because the process of extracting it results in changes in its molecular structure (although not in its genetic code). We are therefore required to decide whether the process of isolating genetic material from a human DNA molecule makes the isolated genetic material a patentable invention. The court concludes that it does; I conclude that it does not," Judge Bryson wrote.
The association is represented by Christopher Hansen, Steven R. Shapiro, Sandra S. Park, Aden J. Fine and Lenora M. Lapidus of the American Civil Liberties Union Foundation in New York and Daniel B. Ravicher and Sabrina Y. Hassan of Public Patent Foundation, Benjamin N. Cardozo School of Law in New York. Myriad is represented by Gregory Castanias of Jones Day in Washington.
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ATLANTA - The 11th Circuit U.S. Court of Appeals on July 12 rejected a cruise line worker's arguments that an arbitration clause in his employment contract was invalid as against public policy, affirming a Florida federal court's decision to compel arbitration of his injury-related claims against a cruise line (Kenneth Fernandes v. Carnival Corporation, d.b.a. Carnival Cruise Lines, No. 09-15675, 11th Cir.; 2012 U.S. App. LEXIS 14270).
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