After reviewing the case briefs, answer the questions that follow in 500 words, or as throughly as possible.
CASE BRIEF 13.2 WarnerLambert Co. v. FTC 562 F.2d 749 (D.C. Cir. 1977); cert. den. 435 U.S. 950 (1978) FACTS: Listerine (made by WarnerLambert) was represented in ads as being beneficial in curing colds, cold symptoms, and sore throats. The FTC issued a complaint and after hearings ordered WarnerLambert to run corrective ads: “Contrary to prior advertising, Listerine will not help prevent colds or sore throats or lessen their severity.” WarnerLambert appealed. ISSUE ON APPEAL: Can the FTC require corrective advertising? DECISION: Yes, not as strict as language ordered; “contrary to” is not needed. Answers to Case Questions 1. What claims does the FTC question in the Listerine ads and why? The FTC says that Listerine’s claims that it cures or prevents colds and sore throats are false. 2. What proposals for corrective advertising are made in the order? “Contrary to prior ads . . . Listerine does not prevent colds or lessen their severity,” was proposed corrective advertising. 3.What happens to the preamble, "Contrary to prior advertising"? Court of appeal gets rid of “contrary to prior ads.” 4.What standard does the case establish for corrective ads once the FTC finds a company's ads have deceived the public? The court establishes differing levels of disclosures in the corrective ads depending on how egregious the violation is. The court draws a line at humiliation – only appropriate if the agency can show bad faith. CASE BRIEF 15.1 eBay, Inc. v. MercExchange, LLC 547 U.S. 388 (2006) FACTS: eBay and its subsidiary, half.com, operate popular Internet websites that allow private sellers to list goods they wish to sell at either an auction or a fixed price (its “Buy It Now” feature). MercExchange, LLC, sought to license its business-method patent to eBay, but no agreement was reached. MercExchange filed suit for infringement. The federal district court found that the patent was valid, that eBay had infringed the patent, and awarded $29.5 million in damages. However, the District Court denied MercExchange’s motion for permanent injunctions against patent infringement. MercExchange appealed. The Federal Circuit Court of Appeals reversed, and the U.S. Supreme Court granted certiorari. ISSUE ON APPEAL: What are the criteria for issuing a permanent injunction against the use of a patent? DECISION: Judgment against MercExchange’s position. The traditional four-factor test of equity applied by courts when considering whether to award permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent Act. That test requires a plaintiff to demonstrate that (1) it has suffered an irreparable injury, (2) remedies available at law are inadequate to compensate for that injury, (3) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted, and (4) the public interest would not be disserved by a permanent injunction. The decision to grant or deny such relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion. The Federal Circuit’s ruling was vacated and remanded to the district court to apply the four-factor test. A concurring opinion written by Justice Kennedy and joined by Justices Stevens, Souter, and Breyer stated that “an industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent.” Such may be considered under the four-factor test. Answers to Case Questions 1. Why is this type of patent different from the traditional product patents? This is not actually a product or manufacturing process. The patent is incidental to the main business function. These types of incidental patented processes were not understood at the time of the patent protection put into the U.S. Constitution and they require careful consideration on the impact on business operations and growth. 2. What are the risks in granting a permanent injunction in cases such as these? The risk is that business operations are hampered and commerce cannot move forward. 3. Why are the concurring judges raising the issue of undue leverage? The fear is that those who hold these patents will hold users hostage – they are not willing to allow use unless they can command fees that make it impractical or impossible for the users to employ the technology, something that has an effect on moving commerce forward. Patents were not intended to hold development hostage. They were intended to reward those who do develop something unique.