Author: Ronald Mann

The Court’s decision yesterday in CompuCredit Corporation v. Greenwood reversed the Ninth Circuit in yet another in the one-sided line of cases involving the enforceability of pre-dispute arbitration agreements.  The decision involves arbitration of claims that involve an obscure statute, the Credit Repair Organizations Act (CROA), but an all-too-familiar product: the so-called “harvester” credit card largely outlawed by Section 105 of the CARD Act of 2009.  CompuCredit is best known in consumer credit circles as the target of a 2008 FDIC enforcement action documenting the features of these cards, which typically come with a low credit limit and high up-front fees.  The card at issue here had a credit limit of $300 and first-year fees of $257, leaving an available credit limit of only $43.  Collectively, those features are likely to push the effective interest rate on purchases with the card far above one hundred percent per year.  So CompuCredit is no stranger to dissatisfied customers.

Monday’s oral argument suggests that the Court is not at all certain where it will come out in Kappos v. Hyatt, with the Justices tossing out a wide variety of inconsistent trial balloons.  But the course that seems least likely is to adopt the bright-line rule pressed by the government.  The case involves the procedures a district court follows in a case under Patent Act Section 145, a little-used provision that allows a rejected applicant to file a new action in federal district court challenging the PTO’s denial.

One of the most common problems the Court has faced since the creation of the Federal Circuit has been deciding what standard courts should use to assess the decisions of the Patent and Trademark Office (PTO) when it issues, or refuses to issue, a patent.  So, the Court held in 1999 in Dickinson v. Zurko that Administrative Procedure Act review applies when a rejected applicant seeks direct review in the Federal Circuit.  Last Term in Microsoft v. i4i, the Court reaffirmed long-standing rules that grant a strong presumption of validity when alleged infringers challenge patents in federal district court.  On January 9, in Kappos v. Hyatt, the Court considers yet another such problem – the standard to be applied under Patent Act Section 145, a little-used provision that allows a rejected applicant to file a new action in federal district court challenging the PTO’s denial.

Generic and branded pharmaceutical manufacturers squared off again this week in Caraco Pharmaceutical Laboratories v. Novo Nordisk.  Anybody who had dismissed the case as an obscure patent case was disabused of that notion by the incisive tone of the Justices’ questions. The question here involves a generic manufacturer’s efforts to sell a drug for a particular use that is approved by the FDA but not covered by the branded manufacturer’s patent.  The specific problem involves the interface between the FDA and the Patent and Trademark Office (PTO).  Despite the importance of patents to the pharmaceutical industry, the FDA traditionally has taken a hands-off approach to matters involving the interpretation or assessment of patents.   Thus, generally speaking, the role of patents in the FDA process for approving generics is that the branded manufacturer files a list of its patents and a summary of their scope with the FDA.  If the branded manufacturer has filed patents claimed to cover the drug, a generic manufacturer that nevertheless wants to sell the drug must certify either that the patent does not extend to the drug or that the patent does not extend to “an approved method of using the drug.”

The Justices considered a classic puzzle in statutory construction this week when they heard arguments in Hall v. United States.  The case presents two diametrically opposed perspectives, each of which is based on the internal coherence of their own dedicated titles of the United States Code: petitioners Lynwood and Brenda Hall rest on the primacy of Title 11 (the Bankruptcy Code), while the Solicitor General asserts the primacy of Title 26 (the Internal Revenue Code).

The Supreme Court hears arguments next week in its first patent case of the year, Caraco Pharmaceutical Labs v. Novo Nordisk.  Like last Term’s Pliva, Inc. v. Mensing, this case presents the Court with one of the many places in which generic and branded pharmaceuticals face off at the FDA.  The question here involves efforts of a generic manufacturer to sell a drug for a particular use that is approved by the FDA but not covered by the branded manufacturer’s patent.  The Federal Circuit ruled for the branded manufacturer; despite the absence of a conflict (the issue as a practical matter can come up only in the Federal Circuit), the Court called for the view of the Acting Solicitor General and granted review in accordance with his recommendation.

Yesterday’s oral argument in Mims v. Arrow Financial Services, LLC started with a surreal detour from the basic jurisdictional principles examined by the courts below and the parties in their briefs.  At issue in the case is whether the provision in the federal Telephone Consumer Protection Act (the “TCPA”) creating a private cause of action that “may” be brought in state court implicitly divests federal courts of jurisdiction. Instead of considering the requirements for an action “arising under” federal law for purposes of the general jurisdictional statute, the Court was directly concerned with clogging up federal courts with cases better suited to state small claims court.  Chief Justice Roberts in particular was preoccupied with the notion that Congress’s creation of a “state cause of action” seems to imply that there is no “federal cause of action,” and thus that the cases can be brought only in state court – whatever the jurisdictional regime might be.

The Justices get a textbook statutory construction puzzle next week when they hear arguments on November 29 in Hall v. United States.  The case presents two diametrically opposed perspectives, each of which is based on the internal coherence of their own dedicated titles of the United States Code: petitioner Hall rests on the primacy of Title 11 (the Bankruptcy Code), while the Solicitor General asserts the primacy of Title 26 (the Internal Revenue Code).

So many of the great Justices have had their moments trying to develop language that explains when cases do, and do not, “arise under” federal law. From Marshall in Osborn v. Bank of the United States, to Holmes in American Well Works v. Layne & Bowler Co., to Cardozo in Gully v. First National Bank in Meridian, so many have tried, but few who would study the subject would think the Court has ever made the matter clear.

The Court showed little interest in retreating from its vigorous support of arbitration on Tuesday, when it heard arguments in CompuCredit Corporation v. Greenwood.  Greenwood involves an obscure statute, the Credit Repair Organizations Act (CROA), but an all-too-familiar product: the so-called “harvester” credit card largely outlawed by Section 105 of the CARD Act of 2009.  CompuCredit is best known in consumer credit circles as the target of a 2008 FDIC enforcement action documenting the features of these cards, which typically come with a low credit limit (somewhere between three and five hundred dollars) and high up-front fees (typically more than one hundred dollars).  Collectively, those features are likely to push the effective interest rate on purchases with the card far above one hundred percent per year.  So CompuCredit is no stranger to dissatisfied customers.