Current Updates and Legal Developments—Summer 2018

SUPREME COURT AFFIRMS CONSTITUTIONALITY OF AIA PATENT REVIEW PROCESS

A PROVISION IN THE AMERICA INVENTS ACT (AIA) allowing for pre-trial review of existing patents does not violate Article III or the Seventh Amendment of the U.S. Constitution, the U.S. Supreme Court has held.

In Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 2018 U.S. LEXIS 2630 (April 24, 2018), the high court affirmed, 7-2, a decision of the U.S. Court of Appeals for the Federal Circuit upholding a decision by the U.S. Patent and Trademarks Appeal Board (PTAB) of the U.S. Patent and Trademark Office (PTO) invalidating several claims of a patent held by Oil States Energy Services LLC.

Oil States filed an infringement action against a competitor, Greene’s Energy Group. Greene’s responded with an allegation of patent invalidity and sought review by the PTAB under Section 311 of the AIA, which allows any party other than the patent owner to seek inter partes review of an existing patent. The PTAB found several claims of the Oil States patent invalid. The Federal Circuit affirmed, and the Supreme Court granted Oil States’ petition for writ of certiorari.

Before the high court, Oil States argued that the AIA review process allows a government panel to extinguish property rights in violation of Article III and the Seventh Amendment. In response, Greene’s contended that patents constitute public rights subject to review by a non-Article III tribunal.

In an opinion by Justice Clarence Thomas, the Supreme Court said, “This Court has recognized, and the parties do not dispute, that the decision to grant a patent is a matter involving public rights— specifically, the grant of a public franchise. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration. Thus, the PTO can do so without violating Article III.”

Based on that reasoning, the court also dismissed the Seventh Amendment challenge, citing its own precedents holding that “when Congress properly assigns a matter to adjudication in a non-Article III tribunal, ‘the Seventh Amendment poses no independent bar to the adjudication of that action by a nonjury factfinder.’”

Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Samuel Alito, Sonia Sotomayor and Elena Kagan joined in the majority opinion. Justice Neil Gorsuch filed a dissenting opinion, in which Chief Justice John Roberts joined.

- Lexis Practice Attorney Team

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U.S., UK GOVERNMENT AGENCIES WARN OF RUSSIAN CYBER EXPLOITATION

THE U.S. DEPARTMENT OF HOMELAND SECURITY, the Federal Bureau of Investigation (FBI), and the United Kingdom’s National Cyber Security Centre issued a warning in joint Technical Alert TA-18-106A, https://www.us-cert.gov/ncas/ alerts/TA18-106A, about the “worldwide cyber exploitation of network infrastructure devices (e.g., router, switch, firewall, Network-based Intrusion Detection System (NIDS) devices) by Russian state-sponsored cyber actors.”

According to the technical alert, targets are “primarily government and private-sector organizations, critical infrastructure providers, and the internet service providers (ISPs) supporting these sectors.” The report contains technical details on the tactics, techniques, and procedures used by Russian state-sponsored cyber actors to compromise victims.

The agencies said the FBI has “high confidence that Russian statesponsored cyber actors are using compromised routers to conduct man-in-the-middle attacks to support espionage, extract intellectual property, maintain persistent access to victim networks, and potentially lay a foundation for future offensive operations.”

- Pratt’s Bank Law & Regulatory Report, Volume 52, No. 5

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FDIC MOVES TO ELECTRONIC FINGERPRINTING FOR BACKGROUND CHECKS

THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)is moving to electronic fingerprinting to facilitate background checks performed in connection with applications and notices submitted to the FDIC, including applications for federal deposit insurance, notices of acquisition of control, requests for participation in the banking industry by individuals with certain criminal convictions, and notices to replace board members or senior management in certain institutions.

During the second quarter of 2018, the FDIC will begin using electronic fingerprinting technology to capture individuals’ fingerprints and transmit them to the FBI. Individuals will be able to be fingerprinted at more than 1,000 collection sites, across all 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands.

The FDIC said the new fingerprinting technology automatically rates the quality of the fingerprints, thereby significantly reducing poor quality fingerprint samples.

The new process applies to all FDIC-insured institutions.

- Pratt’s Bank Law & Regulatory Report, Volume 52, No. 5

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RESEARCH PATH: Finance > Financial Services Regulation > Financial Institution Activities > Articles

HUD, DOJ TARGET SEXUAL HARASSMENT IN HOUSING

THE U.S. DEPARTMENT OF HOUSING AND URBAN Development (HUD) and Department of Justice (DOJ) announced the nationwide rollout of an initiative aimed at increasing awareness and reporting of sexual harassment in housing. The initiative includes an interagency task force to combat sexual harassment in housing, an outreach toolkit, and a public awareness campaign.

“All discrimination stains the very fabric of our nation, but HUD is especially focused on protecting the right of everyone to feel safe and secure in their homes, free from unwanted sexual harassment,” said HUD Secretary Ben Carson. “No person should have to tolerate unwanted sexual advances in order to keep a roof over his or her head.”

“Sexual harassment in housing is illegal, immoral, and unacceptable,” said Attorney General Jeff Sessions. “It is all too common today, as too many landlords, managers, and their employees attempt to prey on vulnerable women. We will not hesitate to pursue these predators and enforce the law. An enforcement initiative launched in October 2017 has already led to relief for 15 victims.”

HUD highlighted three major components in the initiative:

• A new HUD-DOJ Task Force to Combat Sexual Harassment in Housing focusing on five key areas: continued data sharing and analysis, joint development of training, evaluation of public housing complaint mechanisms, coordination of public outreach and press strategy, and review of federal policies
• An outreach toolkit providing templates, guidance, and checklists based on pilot program feedback
• A public awareness campaign with three major components: a partnership package with relevant stakeholders, launch of a social media campaign, and public service announcements run by the Executive Office of U.S. Attorneys

- Pratt’s Bank Law & Regulatory Report, Volume 52, No. 5

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RESEARCH PATH: Finance > Financial Services Regulation > Financial Institution Activities > Articles

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