Supreme Court Opens Door on Unfair Competition Lawsuits

By Dennis Crouch

Lexmark Int’l v. Static Control (Supreme Court 2014)

In a unanimous opinion penned by Justice Scalia, the Supreme Court has ruled that standing in §1125(a) false-advertising claims are not limited to competitors. Rather, it can be sufficient that a plaintiff have a commercial injury “flowing directly from the deception wrought by the defendant’s advertising.” The standing decision here is not testing the Constitutional limits of judicial power under Article III but rather is one of statutory interpretation. In particular, the statute provides that a cause of action is available to “any person who believes that he or she is or is likely to be damaged by such act [of false advertising].” Although expanding the scope of potential plaintiffs, the court seemingly continued to hold the line against giving the statute its plain English interpretation that would allow consumer class actions.

False Patent Infringement Claims: Of interest to patent attorneys, the alleged false advertising claims here involve public allegations of patent infringement. The court writes.

First, Static Control alleged that Lexmark disparaged its business and products by asserting that Static Control’s business was illegal. See 697 F.3d 387 (6th Cir. 2012) (noting allegation that Lexmark “directly target[ed] Static Control” when it “falsely advertised that Static Control infringed Lexmark’s patents”).

Under the Supreme Court’s interpretation of the law, those statements (with the requisite intent and resulting harm) can be sufficient to create a cause of action for false advertising.

71 thoughts on “Supreme Court Opens Door on Unfair Competition Lawsuits

  1. OT, but Hal Wegner is fuming on the impact to Bio and the new stuff coming out the Office.

    His email attachment of a 117 page pdf includes additional Office training guides including this beaut:

    § 2105 – Superseded in part.
    This section is superseded to the extent that it suggests that mere “human intervention” necessarily results in eligible subject matter. To be eligible, “human intervention” must result in the claimed subject matter as a whole being significantly different than a judicial exception, as described in the Guidance. In other words, claimed subject matter, even if not naturally occurring, must be significantly different from natural products in order to be eligible.

    1. And this beaut:

      “Markedly Different” inquiry focuses on the structural characteristics of the product, not how it was made:
      Don’t have to use new techniques.
      – Don’t have to use laboratory or engineering techniques. (hmmm, non-technical…?)
      – Extent of effort required to make product is not relevant.

      1. “Markedly Different” inquiry focuses on the structural characteristics of the product, not how it was made:

        Uh … so? Of course it doesn’t make any difference how you prepare, e.g., your ineligible DNA molecule. Why would that matter? It didn’t matter in Myriad.

        It’s just like it doesn’t matter if it took you 100 years and ten gazillion dollars to discover that a pattern of fingernail length is related to an increased likelihood of cancer. You still can’t claim a method of looking at your fingernails and thinking that you’re more likely to get cancer than some guy next to you.

      2. Has Hal had anything to say of the committees that are forming at the board on functional claiming? It sounds ugly. Funny how all this ties into the fact that one group that will be able to get its way is large corporations.

      3. Apologies — the above comment was intended to be a response to Ned’s comment at 6.6.1.1.1.4 …. I’ve now copied it there.

    2. To be eligible, “human intervention” must result in the claimed subject matter as a whole being significantly different than a judicial exception, as described in the Guidance. In other words, claimed subject matter, even if not naturally occurring, must be significantly different from natural products in order to be eligible.

      Seems entirely consistent with Myriad. Myriad’s patented molecules were man-made, as recognize by the Supreme Court. They just weren’t different enough from the naturally occuring molecules to permit them to be patented. Mere “isolation” isn’t enough (a term that was not expressly construed by seemed to be given an enormously broad construction by the Court, and they made no effort in their opinion to distinguish between degrees of isolation). There needs to be more, presumably some form of covalent modification other than mere “extraction”, to avoid creating an impermissible roadblock to researchers by effectively monopolizing the naturally occuring molecule.

      We know that deleting or replacing a single base in a 1000 nucleotide naturally occuring sequence is apparently enough to pass the eligibility hurdle created in Myriad. Why? It was deemed significant, even if the molecule encodes the same protein after the change is made (a point that wasn’t addressed expressly by the Court but 8 of the 9 pretended to understand the basics, at least). Why? Because “cDNA”. That’s really all Myriad gave us to go on. And even that was very poorly articulated.

      1. I think that your jump to ‘just because cDNA’ as the Court did not give a green light to all cDNA.

        Nice to see you not get in a hissy with ‘effective.’

        1. the Court did not give a green light to all cDNA

          Indeed, they didn’t. So-called “cDNA” is eligible, except when it isn’t (e.g., when the nucleotide sequence of the so-called ‘cDNA’ happens to be identical to some contiguous sequence of nucleotides found in nature or in the prior art <– the actual test for the ineligibility of polynucleotides).

          In spite of the fact that the term 'cDNA' implies no inherent structural differences relative to the term 'DNA' (both terms merely describe a DNA molecule) the Supreme Court chose to use that term (and a rather important caveat in a footnote) rather than simply come out and say what they meant.

            1. Your ‘actual test’ is actually wrong.

              Are you actually going to tell everyone why you believe it’s “wrong”, or do we just get your usual Patent Jeebus shtick?

          1. It’s actually wrong for reasons already provided in the comments: there is no “identical” requirement.

            I never said that there was an “identical requirement.” What do you mean by “requirement” anyway? Requirement for what exactly?

            Here’s an even better thought: try articulating the test used in Myriad and applying it to any one of the very mundane hypotheticals I’ve provided in this thread. That way we’ll have a reason to believe that you have a clue. Right now you seem to be simply trolling for the sake of trolling.

            1. Wow. I used the same word that you did! Therefore … what?

              You used the phrase “identical requirement.” Those were your words, not mine.

              You said there is no “identical requirement.” I asked you to explain what you meant by that. Now you refuse to do so. So all we are left with you telling someone they are wrong but failing to explain why.

              Seems like trolling to me. Are you incapable of articulating for everyone in plain English exactly what you believe is the test for eligibility of a claimed polynucleotide? Just spit it out. Ask a friend to help you with the English if it’s such a severe problem for you.

            2. Now you refuse to do so.

              Not true at all Malcolm – see my post at 6.2.1.2.1.2.

              It’s a simple sentence – are you having trouble with it in all of your glorious English as a first language skills?

              /eyeroll

    3. I think Gene has it right that we are headed to a registration system. It looks to me like the PTO is setting it up so that a person is going to decide subjectively whether or not you deserve a patent and there will be no basis to argue with them.

      So, what is going to happen is a giant sieve with the examination process really meaningless…

        1. Better to go ask Gene. As for me, ’cause O’Bummer is stacking the Fed. Cir. and the PTO with judges and a “director.” That is all he needs to kill the patent system and he knows it. Let’s not forget that liberals are responsible for the removal of controls on financial institutions, free trade, and China being admitted to the WTO. Without those three things, we as a nation would be doing great.

          Now, the liberal geniuses are going to kill the patent system in private. No public debate. No Congress. Just O’Bummer stacking the PTO judges, PTO director, and fed. cir. judges.

          1. “Now, the liberal geniuses are going to kill the patent system in private. No public debate.”

            Oh sure, eliminating some garbage is sure going to “kill the patent system”.

            Seriously NWPA, do you even understand what “the sky is falling” means?

            1. Must you follow me around and comment on everything I post, 6?

              I swear you are so much like Dennis the Menace. You seem to have good intentions, but you have absolutely no clue what you are talking about.

            2. “You seem to have good intentions, but you have absolutely no clue what you are talking about.”

              Gramps it isn’t hard to tell when you’re making your newest call for everyone to fear the sky falling. You do it all the time.

      1. With what the PTAB is doing, it looks like we already have a straight registration system. We just have not realized it before.

        1. Erik, I don’t know what you mean about what the PTAB is doing. But if one reads the briefs in Alice, you can see the PTO opened the floodgates after Alappat, State Street Bank and Beauregard. WRT computer-implemented inventions, we do have a registration system. Every one of these patents probably is invalid for one reason or another, yet, according to the briefs, they account for fully one-half of all patents issuing today.

          1. “WRT computer-implemented inventions, we do have a registration system. Every one of these patents probably is invalid for one reason or another, yet, according to the briefs, they account for fully one-half of all patents issuing today.”

            And it’s good for no one but trolls.

            The most bewildering thing isn’t the PTO’s confusion on §101 jurisprudence. That confusion is only reasonable given conflicting judicial guidance. What never fails to astonish is the casual abandonment of §103 as if it were a blank page in the law books. Just read the patents in Alice or Wildtangent. If you’re a programmer, try reading the patents in Motorola v. Microsoft or Apple v. Samsung or NTP v. RIM or i4i or Eolas or the various shopping cart patents tried against Newegg. It shouldn’t take §101 metaphysics to throw out obviously obvious applications under §103.

            Instead you see expensive reviews often throwing out such patents, but not often enough to make it safe to depend on reviews when a license is cheap enough. It’s a good world to be a troll in.

      2. “I think Gene has it right that we are headed to a registration system.”

        If not for the oh, I don’t know, people practicing in the useful arts then maybe we would be. As is, nah brosef. People in the useful arts still overwhelmingly desire examination.

        “PTO is setting it up so that a person is going to decide subjectively whether or not you deserve a patent and there will be no basis to argue with them.”

        Really? How’s that? I’m ready for a lol. Lay it on me brosefus.

        1. 6,

          You have not discussed what your little psych book says about your delusion issues and your need to make up definitions (like what belongs in the Useful Arts). Are you having difficulties with your examination of yourself?

          1. “Are you having difficulties with your examination of yourself?”

            I wouldn’t say I’m having difficulties with something I’m not currently doing. But let me wild guess, you’re about to try control me into doing it right? Hopefully my preemptively warning you of your own likely subsequent behavior will empower you to stop yourself.

            1. 6,

              I do not know what you mean by “try control me into doing it right?

              Are you trying to control something with language like that? You might want to check into it. You do not even need any empowering from me (but you do seem to have another control issue in your thinking that I need to be empowered from you).

            2. “I do not know what you mean by “try control me into doing it right?””

              I know you don’t. You’re still new to this whole “control” concept so what I said is going to be hugely complicated for you. But hey, your horizons are expanding slowly but surely.

              “Are you trying to control something with language like that?”

              Nah re re.

              “:You might want to check into it.”

              K I did re re.

              “(but you do seem to have another control issue in your thinking that I need to be empowered from you).”

              /facepalm.

            3. You clearly are having difficulties in your understanding of others, 6. Not sure why you feel the need to do a facepalm though. You may want to take a deep breath and relax a little.

      1. How is obama’s action plan with patents consistent with that author’s opinion of obama being the biggest enemy of the free press?

        There isn’t much to comment on is why I didn’t comment. It appears to just be more random retardation from an old man that can’t retire and let the youngens be. And because I didn’t read the article previous to your asking why I didn’t comment.

    4. anon, I don’t know what Hal is trying to say, but I really object to the PTO test as well. The PTO has to show structural identity to prove its case. All the applicant has to do in face of a 101 rejection would be to show that even one molecule of the claimed composition is different.

      Markedly different structure makes no sense. What is this “degree” issue?

        1. And, anon, just why did Myriad talk about identity of structure then — the structure claimed was in nature, the cDNA not?

          1. Ned, that is just it – the structure claimed – and denied – was NOT the structure in nature as it had clipped ends not as in nature.

            1. Consider: I claim an “isolated DNA molecule comprising SEQ X”. Administration of this molecule cures leukemia in small children.

              Later it is discovered that a stretch of contiguous polynucleotides with SEQ ID X exists in the genome of a microbe living in the intestines of a Saudi Arabian bat. Is my claim eligible for patenting? Answer: no. Straightforward application of Myriad. Now let’s say I substitute one nucleotide in that sequence so it’s no longer identical to the contiguous sequence found in nature. The change doesn’t change the functionality of the sequence in any way, either for my purposes or for the natural organism’s purposes. Eligible for patenting? Why or why not?

              I claim “an isolated polypeptide consisting of the amino acid sequence of SEQ ID X” (32 amino acid). It cures leukemia in small children. It was identified from a pool of 30,000 chemically synthesized polypeptides.

              Later it turns out that an identical contiguous sequence is found in a much larger (500 amino acid) protein in the membrane of a microbe living in the intestines of a Saudi Arabian bat. Is my claim eligible for patenting? The only structural difference between my claimed protein and “natural” peptide is that my polypeptide has “clipped ends” relative to the polypeptide found in the larger protein. Eligible for patenting? Why or why not?

            2. the structure claimed – and denied – was NOT the structure in nature as it had clipped ends not as in nature

              Ned is plainly referring to the structure indicated by the polynucleotide sequence(s) recited in the claim. That’s the key difference between certain so-called “cDNA” molecules and the naturally occuring DNA: the cDNA sequences aren’t identical to any contiguous sequences found in nature (the natural sequences include exons).

              Most claims to such new molecules are not limited to molecules with “clipped ends”, by the way. Nor did the Supreme Court appear to require that they should be in order to be deemed eligible. It’s the recited sequence and its structural identity (clipped ends or not) to a sequence found in nature that controls. One major open question is, other than a change to the sequence, what other modifications will suffice to drag an “isolated naturally occuring polynucleotide” into eligibilty? Will any modification suffice, and how generally may such modifications be claimed?

            3. I wrote: the cDNA sequences aren’t identical to any contiguous sequences found in nature (the natural sequences include exons).

              *except when they are, of course! ;) Forgot the obligatory footnote.

              Also, I mistakenly wrote “exons” above — apologies. I meant “introns,” of course.

            4. anon, I am sure the reason Myriad lost was the functional way of claiming that it used — that effectively claimed only the active structure of the DNA.

              I believe, and so does MM, that if the claim were structural and the structure did not exist in nature, there would have been no 101 problems.

              Lourie’s opinion that did not prevail was based on a construction of what was claimed, converting the functional definition into a structural, and then finding the structure new.

              The Supreme’s construction was different, and that is why they reversed Lourie.

            5. Ned: I believe, and so does MM, that if the claim were structural and the structure did not exist in nature, there would have been no 101 problems.

              Dude. First, unless you’re simply directly copying an unambiguous statement of mine and its necessary context, don’t ascribe your beliefs to me.

              Second, when you speak of “structure” in this context you need to be crystal clear that you are referring to the primary structure of the claimed polynucleotide, i.e., the recited sequence of nucleotides. That’s what matters here.

              As I wrote elsewhere in the thread, Myriad’s claims were structural. They covered a lot of different structures, but those structures were unambiguous as structures and immediately discernable as structures (thanks to the simple, direct relationships we refer to as the “genetic code” — apparently the Supreme Court did manage to get this far in its attempt to understand the technology).

              And none of Myriad’s claims read on any naturally-occurring composition (according to the Supreme Court) so we know that Myriad’s claimed molecules were structurally distinct from such compositions. Unfortunately for Myriad (given the outcome of the case), Myriad’s claims covered polynucleotides with recited sequences that are identical to contiguous sequences found in the human genome. That’s not a coincidence of course. That was by design. And that’s “why” Myriad’s claims were deemed ineligible. At least, that’s the only coherent reason that one is left with after reading Thomas’ incredibly poorly written decision.

            6. MM, I wrote a very good reply to your last post on this topic, but it was hung up and still may be hung up awaiting moderation.

              I will not rewrite that post as I am offended by the fact that our conversation was interrupted.

              Ask Dennis what I said if you want to know.

            7. not rewrite that post as I am offended by the fact that our conversation was interrupted.

              What a blatant attempt at a Crybaby Veto.

              Ned, news to you: this is a public forum. You may find it annoying that I attempt to hold your feet to the law and to the facts when a discussion of such a critical law affecting the public is underway. Your being annoyed, and your taking umbrage is strictly a “you” problem. Malcolm’s “First Amendment” bleats necessarily cut in both directions. Just as he would likely tell you that he has a First Amendment right to state his ‘opinion,’ no matter how that opinion is mired in spin , or would be sanctioned in a court of law, I have my equal right to state my ‘opinion’ as to the errors in law and fact that are being used in the spin game.

              While it is fully in your rights not to post, please leave out the ‘threat” and attempted denial of opposing views (which are well grounded in facts and law), as the only thing that this type of action does is announce that you have no response based in the law or in the facts. You would be much better off spending your time trying to understand the Nazomi case.

          2. The kind of test these cretins are looking for is a bozo to sit there and make findings of fact with a balancing test that is impossible to contest. Pretty obvious what they are up to.

      1. All the applicant has to do in face of a 101 rejection would be to show that even one molecule of the claimed composition is different.

        Consider “an isolated DNA vector comprising a polynucleotide of sequence X operatively linked to a promoter”. Sequence X was prepared synthetically in the lab and identified by its remarkable cancer-curing properties. Unfortunately, it was later discovered that sequence X is also found in nature in the genome of a microbe which lives in the malpighian tubules of a South African beetle, so the polynucleotide by itself is ineligible for patenting.

        The claimed molecule, however, is a DNA vector, including a promoter attached to the polynucleotide (both vectors and promoters are well-known and old, of course, as are their uses for replicating and/or expressing proteins from recombinant polynucleotides). Is it enough to show that the “natural” polynucleotide is not directly attached to a promoter in the microbial genome? Or does the applicant need to disclaim the sequences surrounding the polynucleotide in its natural environment?

        Similarly, if I can show that the polynucleotide sequence in the genome of the microbe inside the beetle is modified with five methyl groups, can I disclaim that pattern of modification and get a claim to the identical, isolated polynucleotide sequence?

        Somebody has to make a decision about this stuff. Of course that “somebody” is somebody at the USPTO. It can’t be the case that the PTO is supposed to simply throw up its hands and let the Supreme Court decide in each instance whether a particular modification is more or less “significant” than, say, making a single conservative nucleotide substitution in a 1000 base polynucleotide (apparently eligible, unless the Myriad opinion is way more subtle than it appears at first glance). The Office has a duty to protect the public from ineligible junk, based on its interpretation of the Supreme Court’s opinions. That’s why the USPTO employs lawyers.

        1. MM, had Myriad claimed the isolated DNA structurally, and not functionally as it did, including any end-molecules that are required by the process of isolation, they would have had no problem, as that structure according to Lourie is structurally different from any found in nature.

          1. had Myriad claimed the isolated DNA structurally, and not functionally as it did,

            Myriad’s molecules were structurally claimed. Nobody needed to know anything about any “functionality” to determine whether a molecule infringed Myriad’s claims. All you needed to do was look at the structure.

            Remember: the genetic code is finite and practically universal. As result, the structure of a polynucleotide that encodes, e.g., leucine, is immediately discernable and finite. It’s not remotely similar to the “structure” of, e.g., pits on a disc that encode “format Grandma’s bank transactions if input received from an out of state mobile device”.

            any end-molecules that are required by the process of isolation

            For the billionth time, the process by which a polynucleotide is synthesized is completely irrelevant for eligibility purposes. It’s the structure that matters. None of the entities Myriad was hoping to sue with their composition claims obtained their infringing molecules by “clipping them” out of chromosomes. They were all chemically synthesized. I’m sure that Myriad itself uses chemical synthesis make its polynucleotides, once they’ve decided which polynucleotides are interesting to them.

            according to Lourie

            Lourie didn’t write Myriad. That was Clarence Thomas.

            1. MM, IIRC, the Myriad claims were of a form

              “Isolated DNA that has property X.”

              The Court held that “claim 1 asserts a patent claim on the DNA code that tells a cell to produce the string of BRCA1 amino acids listed in SEQ ID NO:2.” Myriad, at 2113.

              I think this is functional within the meaning of Perkins Glue.

              I also think this functional definition was critical to the court’s analysis.

              Also, the “legal” basis for the holding is the statute itself.

              “So do Myriad’s. Myriad found the location of the BRCA1 and BRCA2 genes, but that discovery, by itself, does not render the BRCA genes “new … composition[s] of matter,” § 101, that are patent eligible.”

              “New.” The lack of newness was the statutory basis for the holding. It was also the asserted statutory basis for the holdings in Benson and Flook. See, Flook at fn. 15.

              I wonder just how the PTO is going to assert that a particular composition is “old,” albeit, previously unknown, if it does not compare the structure of the claimed composition with the structure of the composition found in nature.

            2. “Isolated DNA that has property X.”

              Some of Myriad’s composition claims had that form. Not all of them.

              The specific “property” you refer to was, in most cases, the very special “property” of coding for a specified protein sequence in vivo. The claim form you describe is very typical in biotechnology: it’s simply a shorthand way to describe all the polynucleotide structures — instantly discernable structures to any middle school student who has the code in front of him — that code for a given protein. It’s no less structural than describing a moity in a chemical claim as a “heavy metal” or a “lanthanide” by reference to the Periodic Table.

              I wonder just how the PTO is going to assert that a particular composition is “old,” albeit, previously unknown, if it does not compare the structure of the claimed composition with the structure of the composition found in nature.

              What makes you think the PTO is going to proceed in any other way than the manner you have described?

              The big question is: what does it mean to be “found in nature”? e.g., is a mutant sequence in a bacteria “natural” if it can be shown that it was “accidentally” caused by a man-made compound that has leaked out of a nuclear power plant or a plastic manufacturers smokestack?

            3. it’s simply a shorthand way to describe all the polynucleotide structures

              LOL – very similar to the person having ordinary skill in the software arts with the term “configured to.’

              :-)

            4. very similar to the person having ordinary skill in the software arts with the term “configured to.’

              It’s completely different for the reasons I gave in my comment. We’ve been over this many times. Because you’re an idi0t and a path0l0gical liar, however, it’s pointless to rehash the basic facts again here.

            5. LOL

              It’s completely different for the reasons I gave in my comment.

              For someone who screams up and down that they never even said it, you now want to say that when you did say it, that there was additional context….

              Are you 1ieing now? Or were you 1ieing all those times you claim that you never said it to begin with?

              Massive Malcolm FAIL.

            6. For someone who screams up and down that they never even said it

              Huh? Said what? Screaming up and down? What?

              You really need to get your medication adjusted. Talk to your psychiatrist, or ask your mom to help you find a new one.

  2. Lexmark? I didn’t know they were a troll.

    But doesn’t this case apply to trolls in general?

      1. …and you happen to ‘just’ be a small guy, and ‘damages’ and…

        oh wait, patent infringement still includes ‘use’ right? and patent infringement is still a strict liability type of offense, right?

        Never mind (said in the best Emily Litella tones).

    1. Sounds like Gillman might need to be reported to the ethics board…

      Other than that, I am not sure I see what you are trying to get at. Does this not diminish your position in our ongoing discussion on inventor/owner issues? As I had pointed out to you, Chisum very much indicates that state law covers ownership issues. Have you had a chance yet to peruse his chapter 22 (if I recall correctly)?

  3. “Although expanding the scope of potential plaintiffs, the court seemingly continued to hold the line against giving the statute its plain English interpretation that would allow consumer class actions.”

    So much for “strict construction” and all that other blather hypocrites like J. Scalia like to pontificate on and on about.

  4. ” Although expanding the scope of potential plaintiffs, the court seemingly continued to hold the line against giving the statute its plain English interpretation that would allow consumer class actions.”

    So lame.

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