Bilski v. Kappos (08-964), Doe v. Read (09-559) and Sears v. Upton (09-8854)

July 15, 2010 Supreme Court Update

Greetings, Court fans!

This is will be the last Update of the Term, covering: Bilski v. Kappos (08-964), in which the Court declined to adopt a bright line test for determining the patentability of processes, Doe v. Read (09-559), finding that the public disclosure of referendum petitions generally does not violate the First Amendment (though it might in a specific case), and Sears v. Upton (09-8854), a per curium decision overturning petitioner's death sentence on the basis of counsel's inadequate sentencing investigation. I also have a number of orders to report.

Bilski v. Kappos was perhaps the most eagerly-awaited patent law decision in decades. Many hoped the Court would provided clear guidance on the patentability test for "Information Age" inventions for the business world, often (focusing on human activities for collecting or responding to information). They did not get it. Instead, the Court agreed that the "machine-or-transformation test" was not the exclusive test for determining the patentability of processes and rejected the notion that business methods were per se unpatentable, but gave no real guidance on when processes may be patented.

Bilski applied for a patent claiming a method for hedging risk in the field of commodities trading. Claims detailing how to do business are commonly referred to as "business method" claims and Bilski's fit this mold. For decades, business methods were found to be outside the scope of 35 U.S.C. § 101, which allows for patent protection for any new and useful "process, machine, manufacture, or composition of matter" provided that it meets the other criteria for patentability (such as novelty). But in the late 1990s, the Federal Circuit reversed courses, concluding that business methods could qualify as potentially patentable processes under § 101 if they provided a "useful, concrete and tangible result." In the wake of the Federal Circuit's new test, a host of pretty silly patents were granted (for example, on the method to use color coded bracelets to designate dating status). The Federal Circuit used this case to reconsider its prior caselaw en banc. The majority found Bilski's claims unpatentable and concluded that in order to be patentable subject matter under § 101, a process must be tied to a machine or transform an article into a different state or thing (the "machine-or-transformation" test). The majority made clear that the machine-or-transformation test was the exclusive test for determining whether a process is patentable subject matter under § 101. One judge argued instead that business methods were per se unpatentable and that the court should adopt a "technological standard for patentability." Still another would have found Bilski's claims "an unpatentable abstract idea." Only one judge would have found Bilski's risk hedging method patentable subject matter under § 101.

Every Justice agreed with the result reached by the Federal Circuit, but none agreed that the machine-or-transformation test was the exclusive test for the patentability of processes. Justice Kennedy authored an opinion for the Court (in part) and an opinion for a plurality (in part), joined by the Chief, Thomas, Alito and Scalia (as to all but two parts of the decisions). The Court focused on the broad language of the patent statute, which expressly allows for the patentability of a "process" and defines a "process" as a "process, art or method. . ." While the machine-or-transformation test provides a useful clue as to patentability, it is not rooted in the language of the text and may exclude matter that falls within the subject matter patentable under the broad language of § 101. Further, given that "process" is explicitly defined to include a "method," and another federal statute implicitly acknowledges the existence of business method patents, the Court rejected the notion that § 101 categorically bars business method patents. But the Court made clear that its analysis was not intended to "suggest broad patentability of such claimed inventions." In sections of Kennedy's opinion not joined by Scalia, a plurality of the Court opined that the changing face of technology may require rethinking the standard of patentability for processes ("Section 101's terms suggest that new technologies may call for new inquiries.") and that a limiting principle might be found in the Court's prior precedents on the "unpatentability of abstract ideas." Joined once again by Scalia, Kennedy (now for the Court), held that Bilski's concept for hedging risk was just that – an unpatentable abstract idea. The Court's analysis of why that was so amounted to virtually an "I know it when I see it" approach, providing little guidance for practitioners (as the Justices concurring in the judgment pointed out, noting that the Court "never provides a satisfying account of what constitutes an unpatentable idea.").

Justice Stevens, joined by Justices Ginsburg, Breyer and Sotomayor concurred only in the judgment. They agreed that the machine-or-transformation test should not be the exclusive test. They would, however, find that business methods are not patentable at all based on longstanding history and precedent (which I will not endeavor to repeat) demonstrating that business methods were considered per se unpatentable. Justice Breyer wrote a separate concurrence in the judgment (joined in most part by Scalia) to highlight the areas of agreement between those in the majority and those concurring only in the judgment. In Breyer's view, all of the Justices agreed on three key points: (1) although "the text of § 101 is broad, it is not without limit"; (2) the machine-or-transformation test is not the exclusive test for patentability, but is "an important example of how a court can determine patentability under § 101"; and (3) the Court's rejection of the machine-or-transformation test as the sole test for patentability of processes is in no way an endorsement of the Federal Circuit's prior test allowing any process that produces a "useful, concrete, and tangible result" to be patentable (a test numerous members of the Court appeared to perceive as too loose). "In sum, it is [Breyer's] view that, in reemphasizing that the ‘machine-or-transformation' test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize that test's usefulness nor to suggest that many patentable processes lie beyond its reach."

Next, in Doe v. Read, eight Justices agreed that a State law requiring public disclosure of referendum petitions is not generally invalid under the First Amendment. Washington's Public Record Act ("PRA") authorizes private parties to obtain copies of government documents. Washington construed the PRA to require disclosure of referendum petitions, which contain the names and addresses of those signing the petition. After Washington passed a law extending certain benefits to same-sex couples, certain individuals signed a referendum petition to put the law up to a popular vote. (The law ultimately passed by a narrow margin.) Respondent-intervenors invoked the PRA to obtain copies of the referendum petition, so that they could post the names of those supporting the petition in a searchable format on-line. In response, certain of the petition signers and the petition sponsor objected, arguing that public disclosure would violate their First Amendment rights. They argued both that (1) the disclosure of referendum petitions in general violates the First Amendment in light of the potential for harassment of petition signers, which may diminish participation, and (2) that the disclosure of this particular highly-controversial referendum petition would violate the First Amendment in light of the documented harassment of individuals who have supported efforts to overturn other laws protective of same-sex relationships. The district court concluded that the PRA "violates the First Amendment as applied to referendum petitions" and therefore did not reach the more narrow as-applied challenge. The Ninth Circuit reversed.

In a rare good day for the Ninth Circuit, the Court affirmed, in an opinion by the Chief, who was joined by Justices Kennedy, Ginsburg, Breyer, Alito and Sotomayor. While the Court found that petition signing is expressive activity covered by the First Amendment, the Court also noted that signing a petition is a core part of a state's legislative process and that states have substantial latitude to implement their own voting systems. In addition, the PRA does not prohibit any speech, it is merely a disclosure requirement. While disclosure may burden speech, it is not subject to the same standard of scrutiny as a restriction on speech. Disclosure requirements pass muster so long as they have a "substantial relation" to a "'sufficiently important' government interest." This standard requires weighing the strength of the government's interest against the actual burden on speech. Washington's stated interests were: (1) protecting the integrity of its electoral process by allowing individuals to detect fraudulent or duplicative signatures in referendum petitions; and (2) an informational interest in allowing voters to know who supported the referendum petition. Without addressing the latter interest, the Court found the State's integrity rationale a valid government interest that was not outweighed by the burden on First Amendment rights, at least not with respect to all referendum petitions (which was the only question properly before the Court). The Court could think of lots of uncontroversial referendum petitions, where disclosure would be unlikely to have any impact on the willingness of individuals to sign the petition. Therefore, the Court rejected the broader challenge to the PRA as applied to all referendum petitions. (Justices Scalia and Stevens also agreed with this result.) The case is far from over, however. On remand, the district court will consider the petition signers' more narrow argument – i.e., that the PRA violates their First Amendment rights as applied to this referendum petition because disclosure would likely lead to their harassment. The Court suggested (citing prior caselaw) that they will prevail below if they can establish that there is a reasonable probability that disclosure of the referendum petition will subject them to threats, harassment or reprisals.

Though there was substantial agreement about the proper outcome of this case, that did not stop the Justices from feeling compelled to write many separate opinions, mostly opining on the issue not before them – the narrower as-applied challenge. Justice Alito, for example, wrote a solo separate concurrence, in which he argued that the burden to prevail on an as-applied challenge should not be high and there should be a mechanism for prompt judicial determination of as-applied challenges so that petition circulators can get advance guidance on whether the names and information of petition signers will be subject to disclosure. Under Alito's standard, it is pretty clear that he would grant the as-applied challenge here. In contrast, Justice Sotomayor wrote a concurring opinion, joined by Justices Stevens and Ginsburg, arguing that the State's interest in controlling its election process is substantial and the burden on expressive activity from disclosing referendum petitions is "always modest," so it is "difficult to see how any incremental disincentive to sign a petition would tip the constitutional balance" even with respect to a controversial petition. Sotomayor would apparently grant as-applied relief only where a state applied its disclosure law selectively in a way that discriminated based on content or viewpoint or "in the rare instance in which disclosure poses a reasonable probability of serious and widespread harassment that the State is unwilling or unable to control." Justice Stevens, joined by Justice Breyer, concurred in part and in the judgment. Given the fact that the disclosure of a referendum petition does not prohibit any expression and signing a referendum petition is not an act of interactive communication, he felt the petition signers First Amendment interests were weak and Washington's interest in deterring and detecting petition fraud was well-established. Therefore, he would find disclosure constitutional in "the vast majority, if not all" instances. While Stevens did not entirely foreclose the possibility that a showing of unconstitutionality could be made in a particular case, he would "demand strong evidence before concluding that an indirect and speculative chain of events imposes a substantial burden on speech." Justice Scalia concurred only in the judgment. In Scalia's view, the petition signers in effect were arguing for constitutional protection of "anonymous speech." Given the "Nation's longstanding traditions of legislating and voting in public," he would find no "right to anonymity in the performance of an act with governmental effect." Since petition signing is a legislative act, he would not find it protected by the First Amendment at all. Scalia also took issue with the desirability of anonymity: "Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed. For my part, I do no look forward to a society which, thanks to the Supreme Court, campaigns anonymously . . . and even exercises the direct democracy of initiative and referendum hidden from public scrutiny and protected from the accountability of criticism." Justice Thomas, alone in dissent, argued that citizen participation in our electoral processes is essential to the functioning of our democracy and "necessarily entails political speech and association." Thomas would find that disclosure of referendum petitions "severely burdens" First Amendment rights and chills citizen participation. Therefore, he would conclude that disclosure of referendum petitions is unconstitutional since Washington's stated interest in preserving its electoral process can always be achieved by less restrictive means.

If you were counting, it looks (to me at least) like there are 5 votes (right now) to reject the narrower as-applied challenge (Stevens, Ginsburg, Breyer, Sotomayor and Scalia) and 2 votes (Thomas and Alito) to accept it. It will be interesting to see how the departure of Stevens may affect the result if the case comes back up after remand.

Finally, in a per curiam opinion, the Court overturned the death sentence of Demarcus Ali Sears in Sears v. Upton based on the constitutionally inadequate investigation by his sentencing counsel. Sears apparently suffers from substantial frontal lobe brain damage attributable to falls as a child and alcohol abuse in his teens. He performed very poorly in several measures of cognitive functioning. There was also some evidence that Sears was abused as a child. Unfortunately, Sear's counsel, who spent less then one day conducting a mitigation investigation, did not present any of this evidence. He instead painted a picture of Sears' life as privileged in every way, his childhood happy, his family life positive, and argued that the jury should be lenient because Sear's conduct was out of character and because Sear's family and friends would suffer if he were sentenced to death. This strategy backfire and was used by the prosecution to show that Sears, unlike other criminals, simply had no excuse for his bad behavior. The state postconviction trial court concluded that Sear's counsel's investigation was constitutionally deficient, but because Sear's counsel did present a mitigation theory (albeit not a great one), the court concluded that Sear's could not demonstrate prejudice – that is, a reasonable probability that the result would have been different if a different mitigation theory had been pursued.

The Court found two errors in the state court's analysis. First, the state court placed too much reliance on the assumed reasonableness of counsel's mitigation theory given that the theory was arrived at based on a deficient investigation. Thus, this was not a tactical choice situation (in which some deference might be afforded counsel's judgment) because counsel didn't know enough to make an informed choice. Second, the state court assumed that prejudice could only be found where little or no mitigation evidence was presented. That is simply not the law. While the job of deciding how different mitigation evidence would affect the jury is indeed a hard one, the state court was required to "speculate" as to the effect of the new evidence. It could not simply throw up its hands and conclude that since one mitigation theory was presented, it was too hard to determine how another would have changed the game. While the Court certainly insinuated that Sears might meet the standard for showing prejudice, it left it to the state court to reanalyze the evidence and make that determination in the first instance. Justice Scalia, joined by Justice Thomas dissented. The dissenters would find that the state court properly stated the applicable legal standard, found that counsel's mitigation theory was reasonable, and found that Sears simply failed to meet his burden of establishing that a different theory would have made a difference, particularly given the weaknesses the dissenters saw in the evidence supporting the alternate mitigation theory.

The Court added a number of additional cases to next Term's docket:

Thompson v. North American Stainless (09-291) asks whether "section 704(a) [of Title VII, which forbids an employer from retaliating against an employee because he or she engages in certain protected activity] forbid[s] an employer from retaliating for such activity by inflicting reprisals on a third party, such as a spouse, family member or fiancé. . . ." and if so, "may that prohibition be enforced in a civil action brought by the third party victim?"

Chamber of Commerce v. Candelaria (09-115) presents three questions for review relating to Arizona's controversial new immigration law: "(1) Whether an Arizona statute that imposes sanctions on employees who hire unauthorized aliens is invalid under a federal statute that expressly ‘preempt[s] any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens.' 8 U.S.C. § 1324a(h)(2). (2) Whether the Arizona statute, which requires all employers to participate in a federal electronic employment verification system, is preempted by a federal law that specifically makes the system voluntary. 8 U.S.C. § 1324a note. (3) Whether the Arizona statute is impliedly preempted because it undermines the ‘comprehensive scheme' that Congress created to regulate the employment of aliens."

Janus Capital Group v. First Derivative Traders (09-525) asks the Court to decide whether "a service provider can be held primarily liable in a private securities fraud action for ‘helping' or ‘participating in' another company's misstatements" and whether a "service provider can be held primarily liable in a private securities fraud action for statements that were not directly and contemporaneously attributed to the service provider."

Henderson v. Shinseki (09-1036), presents a single question for review: "[W]hether the time limit in [38 U.S.C. § 7266(a), which establishes a 120 day time limit for a veteran to challenge a final agency decision denying the veteran's claim for disability benefits] constitutes a statute of limitations subject to the doctrine of equitable tolling, or whether the time limit is jurisdictional and therefore bars application of that doctrine."

Milner v. Department of Navy (09-1163), asks the following question: "Whether 5 U.S.C. § 552(b)(2), which allows a government agency to keep secret only documents related solely to the internal personnel rules and practices of an agency, must be strictly construed to preclude the ‘High 2' expansion created by some circuits but rejected by others."

CIGNA Corp. v. Amara (09-804), will require the Court to consider "Whether a showing of ‘likely harm' is sufficient to entitle participants in or beneficiaries of an ERISA plan to recover benefits based on an alleged inconsistency between the explanation of benefits in the Summary Plan Description or similar disclosure and the terms of the plan itself."

Pepper v. United States (09-1191) presents three issues of interest to criminal practitioners: (1) "Whether a federal district judge can consider a defendant's post-setencing rehabilitation as a permissible factor supporting a sentencing variance under 18 U.S.C. § 3553(a) after Gall v. United States?" (2) "Whether as a sentencing consideration under 18 U.S.C. § 3553(a), post-sentencing rehabilitation should be treated the same as post-offense rehabilitation?" (3) When a district court judge is removed from resentencing a defendant after remand and a new judge is assigned, is the new judge obligated under the doctrine of the ‘law of the case' to follow sentencing findings issued by the original judge that had been previously affirmed on appeal?"

The Court also asked the SG to weigh in on Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc. (09-1159), which asks the Court to determine whether the Bayh-Dole Act permits a private university to retroactively void an inventor's contractual assignment of his rights in an invention because that invention was developed in part with federal funds.

With that, I am signing off for the Term (absent any truly extraordinary issue that might arise during the recess). Thank you again for another exciting year following the Court with me.


From the Appellate and Complex Legal Issues Practice Group at Wiggin and Dana
For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400