The Supreme Court Should Bring Sanity to Patent Law
By Senator Orrin Hatch
https://www.wired.com/2017/03/supreme-court-bring-sanity-patent-law/
Senator Orrin Hatch (@senorrinhatch) (R-Utah) is the chairman of the Senate Republican High-Tech Task Force and the former chairman and longest-serving member of the Senate Judiciary Committee.
THIS WEEK THE Supreme Court will hear argument in TC Heartland v. Kraft Foods. This critically important case involves the meaning of the patent venue statute and where plaintiffs who claim infringement may bring suit.
Fighting over where cases can be brought may sound like the sort of thing only lawyers would care about, but I assure you, this case has profound ramifications for all of us.
At issue in the case is whether a plaintiff claiming patent infringement can sue a defendant corporation only where the defendant is incorporated or has an established place of business, or whether a plaintiff can instead sue anywhere the defendant has ever sold the allegedly infringing item, or even just offered the item for sale. In today’s world of internet ecommerce and interlocking distribution chains, that can be literally anywhere.
To take TC Heartland as an example, the defendant corporation in the case, an Indiana-based manufacturer of zero-calorie sweeteners, was sued in Delaware even though it has no regular or established place of business in Delaware and is not even registered to do business in the state. Despite the defendant’s lack of connections, the court found that Delaware was a proper venue for the suit because a small percentage of the defendant’s sales—approximately 2 percent—were purchased by a customer in Arkansas and shipped to Delaware.
Savvy plaintiffs know that current rules allow them to bring suits virtually anywhere they want, so they seek out forums where they know judges are likely to give them an easier shake. One federal court in east Texas in particular has become infamous as a magnet for patent litigation because of its plaintiff-friendly rules and sympathetic juries.
In 2015, nearly 45 percent of all patent cases nationwide were filed in that one court. Nearly one-third of all patent cases nationwide were handled by a single judge on that court. This is forum-shopping in the extreme.
It’s easy to understand why plaintiffs favor the Eastern District of Texas so heavily. According to a 2017 study, the court’s procedures cause defendants to spend more money, earlier on, during a lawsuit. In addition, cases in the court are more likely than cases in other courts to go to a (costly) trial rather than being resolved in chambers. Finally, the court is less likely than other courts to pause litigation while parallel proceedings in the Patent and Trademark Office run their course, again raising costs for defendants. All of these traits make the Eastern District of Texas particularly attractive to plaintiffs seeking to extract settlements.
Small wonder, then, that some defendants have gone to extreme lengths to try to curry favor with the local populace, including by building an ice-skating rink in front of the courthouse and purchasing the champion steer at the local livestock auction.
Essentially, plaintiffs are gaming the system by having their cases heard in courts they know will be friendly to their cause, a practice commonly known as “forum shopping.” This would be unseemly enough on its own. But what makes the practice even worse is that many of the plaintiffs in these cases aren’t productive enterprises. They don’t actually invent anything, or make anything, or even sell anything. Rather, their entire business model is to purchase patent licenses and then turn around and sue anyone they can arguably claim may have infringed the patent in some small way. Their goal is not actually to stop the allegedly infringing activity, but to extort a settlement and then move on to the next lawsuit.
These entities, often called “patent trolls,” structure settlement offers to make settling much more advantageous to defendants than litigating, even when the infringement claim is clearly bogus. Litigating even a baseless claim can cost hundreds of thousands of dollars. Far easier (and cheaper) to settle for $50,000 or $100,000 to make the patent troll go away.
The result is a loss to society. Innovators spend millions of dollars defending themselves from wasteful lawsuits that they otherwise could have spent developing new products and services.
It should be clear to anyone reading this piece that this irrational system is clearly not what Congress intended for patent litigation. I’ve been involved in patent reform efforts long enough to know that Congress never meant to create a regime in which patent trolls can extort settlements from actual innovators by shopping around for plaintiff-friendly forums.
The purpose of venue is to ensure that cases are brought in a convenient location, one where the defendant has sufficient connections to make travel to and from that location reasonable.
The current patent venue regime defeats this purpose. It enables plaintiffs to target forums with plaintiff-friendly rules, where discovery begins early, judgment before trial is rare, and stays are frequently denied. These traits drive up litigation costs, incentivizing defendants to settle even frivolous claims rather than pursue them to trial.
It’s my hope that the Supreme Court will decide this week’s case in a way that conforms to Congress’s intent and puts an end to abusive forum-shopping. A decision is likely before the end of June. In the unfortunate event the Court upholds the current system, I stand ready to move legislation that will help bring sanity back to patent litigation.
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Gorsuch’s Foes Embarrass the Senate
Democrats’ attacks on his past decisions are so formulaic that they read like a recipe.
By Orrin G. Hatch
https://www.wsj.com/articles/gorsuchs-foes-embarrass-the-senate-1490559162
During last week’s confirmation hearing for Judge Neil Gorsuch, a number of my Senate colleagues heard from teachers who were using the occasion as an educational tool. Indeed, Supreme Court confirmation hearings can be a civics lesson for the nation. They offer unparalleled insight into the Constitution and the proper role of judges in our system of government.
I have participated in 14 of these hearings during my four decades on the Senate Judiciary Committee. The nominees are typically highly talented lawyers and judges. The Senate’s role is to probe their qualifications and judicial philosophies. At its best, it is a process removed from the pettiness of partisan politics.
I take this duty seriously. Although I am a committed conservative, I have voted for the Supreme Court nominees of both parties—even those whom I myself might not have chosen—as long as I have been assured of their fitness for office. I helped shepherd through President Clinton’s nominees, Ruth Bader Ginsburg and Stephen Breyer. Both had shown themselves to be honorable, capable jurists with reputations for careful, nonideological work on federal appeals courts.
What sort of civics lesson were the American people treated to last week? Judge Gorsuch’s performance was outstanding. Enduring more than 20 hours of questioning over two days, he displayed an impressive command of the law and an intellect befitting someone with his stellar credentials. He showed that he understands the proper role of a judge in our system: to apply, not make, the law. Throughout, his demeanor was serious, thoughtful and humble. These qualities have defined his judicial service for the last decade and will serve him well on the Supreme Court.
In stark contrast was the astonishing treatment Judge Gorsuch received from many of my Democratic colleagues. Whatever their motivation—be it the outcome of President Obama’s lame-duck nomination during last year’s election, an unwillingness to accept the November results, or the desire for judges to push a liberal political agenda—they have apparently decided to wage a desperate, scorched-earth campaign to derail this nomination, no matter the damage they inflict along the way. We are now watching the confirmation process through the funhouse mirror.
Consider the Democrats’ demand that Judge Gorsuch answer politically charged hypotheticals about future cases. For decades, Supreme Court nominees of both parties have rightly refused to comply with such demands. To offer an advisory opinion is inconsistent with the Constitution, which gives judges the authority to make a decision only within the legal and factual context of an actual case. Judges should be neutral arbiters, and asking them to prejudice themselves raises serious due process concerns for future litigants, who deserve the opportunity to make their arguments in full.
When Judge Gorsuch politely explained his inability to answer such questions—often while giving an extensive rationale for demurring—he was lambasted by some of my Democratic colleagues. Yet these senators have gladly embraced the very same answer from nominees in the past. It is hard not to interpret their attacks as hypocrisy.
Consider also the way some of my colleagues misrepresented Judge Gorsuch’s record. Their attempts were so formulaic that they read like a recipe: First, cherry-pick one of the judge’s opinions in which a sympathetic victim lost. Next, gloss over the legal issues that informed his decision in the case. Then, fail to mention that his opinion were often joined by colleagues appointed by Presidents Clinton and Obama. After that, ignore the many times that Judge Gorsuch ruled in favor of similar litigants. End with a wild assertion about how Judge Gorsuch must be biased against “the little guy.”
We should call these phony attacks what they are: intentional attempts to mischaracterize Judge Gorsuch’s record. Any fair analysis can lead only to the conclusion that he reaches the result commanded by the best reading of the law, free from any political agenda. As Judge Gorsuch rightfully put it, quoting Justice Scalia: “If you’re going to be a good and faithful judge, you have to resign yourself to the fact that you’re not always going to like the conclusions you reach. If you like them all the time, you’re probably doing something wrong.”
In Judge Gorsuch, the country has a Supreme Court nominee as fine as I could ever imagine. But instead of the best traditions of the advice-and-consent process, which many of us have tried to live up to, what is he treated to? Hypocritical attacks on the very judicial independence that Democrats claim to prize; misleading characterizations of his record; and now, a promise to filibuster his nomination.
In essence, Judge Gorsuch gets the kind of treatment that leads him to regret putting his family through what ought to be a dignified process. This madness needs to stop. End the dishonest attacks and scorched-earth tactics. Instead, we should have a debate worthy of “the world’s greatest deliberative body,” and confirm this outstanding nominee.
Mr. Hatch, a Utah Republican, is president pro tempore of the U.S. Senate and a member of the Judiciary Committee.
The Role of Federal Judges in the Modern Administrative State
By Orrin G. Hatch
http://www.regblog.org/2017/03/27/hatch-role-federal-judges-modern-administrative-state/
As the most senior member and former Chairman of the Senate Judiciary Committee, I have assessed the qualifications of more than 1,800 nominees to the federal bench. In my 40 years of service in the Senate, I have generally evaluated each nominee based on two criteria: whether the nominee has the qualifications and experience necessary to serve as a federal judge, and whether the nominee understands a judge’s proper role under the U.S. Constitution.
In my experience, presidents rarely nominate unqualified candidates to the federal judiciary. Thus, the confirmation process tends to focus on the second criterion: judicial philosophy. As my colleagues and I consider President Donald Trump’s first Supreme Court nominee, Judge Neil Gorsuch, it is also an appropriate time to elaborate on the scope of our inquiry into a judge’s philosophy, in light of the alarming rise of the modern administrative state.
Let us begin with first principles. The Constitution gives each branch distinct roles: Article I empowers Congress to make the laws. Article II specifies that the President executes and enforces those laws. And under Article III, the courts interpret those laws and the Constitution. The branches may act only according to the powers the Constitution grants them, with the remaining powers and rights reserved to the states and to the people.
Under Article III of the Constitution, it is the duty of the judicial branch to construe and apply our laws. As Chief Justice Marshall famously explained in Marbury v. Madison, “it is emphatically the province and duty of the judicial department to say what the law is.” Under our constitutional separation of powers, it is not the role of federal judges to rewrite laws by imposing their own policy preferences. Nor is it their role to look beyond the law in consideration of their personal views and feelings. And it is also not their role to choose winners and losers based on subjective beliefs that favor one group or type of litigant over another. To borrow from Alexander Hamilton in Federalist 78, the judiciary must remain the “least dangerous” branch.
Over the years, presidents, members of Congress, and judges have attempted to describe the proper role of the “least dangerous” branch in a variety of ways. For instance, for many years we have relied on a distinction between judicial restraint and judicial activism. We have analogized judging to umpiring as opposed to playing the game. We have spoken in terms of judicial independence and impartiality, contrasting the judicial branch with its political peer branches.
In his opinions and other writings, Judge Gorsuch has described this appropriate role for the judiciary, noting that “judges seek to interpret texts as reasonable affected parties might have done rather than rewrite texts to suit their own policy preferences.” Judge Gorsuch’s philosophy has been the traditional yardstick that many on my side of the aisle employ in assessing whether a judicial nominee understands the judiciary’s proper role under the Constitution.
Over the last eight years in particular, however, a proper understanding of the judiciary’s limited role under our constitutional separation of powers has taken on new importance. Events over the last eight years have made clear how judges must not only confine themselves to interpreting the law faithfully, but how they must also rigorously ensure that the other branches of government do not exceed their constitutional authority. That imperative has been amplified greatly by the exponential and perilous growth of the modern administrative state.
For more than a century, the federal government has gravitated toward this vision of bureaucratic “expert” governance. As a practical matter, agency rulemaking has increasingly supplanted the legislative process as the primary means of making the policies that affect our lives. To put this into perspective, by some estimates, federal regulations now impose a burden of $1.885 trillion dollars annually on our economy—an estimated amount that, if close to reality, would equal roughly $15,000 per household per year and represent more than the entire nation’s corporate and individual income tax load combined.
This bureaucratic sprawl accelerated dramatically under the Obama Administration. First, the passage of massive new laws such as Obamacare (or the “Affordable Care” Act) and Dodd-Frank greatly expanded the bureaucracy’s power and its insulation from political control. Moreover, President Barack Obama’s very public abandonment of attempts aimed at fostering cooperation with a Republican-majority Congress—instead turning toward his so-called pen-and-phone strategy—have aggressively pushed the bounds of presidential authority, often past the breaking point.
This steady march toward administrative governance naturally is in tension with the Constitution’s arrangement of powers. After all, one of the central precepts of the Constitution is that the preservation of liberty depends on the separation of powers among branches that are capable of checking each other’s excesses. As James Madison explained in Federalist 47, “the accumulation of all powers, legislative, executive, and judiciary, in the same hands . . . may justly be pronounced the very definition of tyranny.”
In such a way, the modern administrative state has severely undermined the separation of powers that the Framers of the Constitution had envisioned. In the words of Chief Justice Roberts, “the administrative state ‘wields vast power and touches almost every aspect of daily life,’” such that “the Framers could hardly have envisioned today’s ‘vast and varied federal bureaucracy’ and the authority administrative agencies now hold over our economic, social, and political activities.”
To be sure, Congress undoubtedly must play its role in restoring the proper separation of powers between the branches. To that end, as lawmakers, we must resume our role as actual, involved decision-makers over the major policy issues facing our country, rather than delegating broad, unbounded policymaking authority to federal agencies. We must also rein in federal agencies through the legislative reauthorization and appropriations processes, as well as better perform our oversight responsibilities over the regulatory state. And last but not least, we must empower courts to play a more significant role in protecting the public liberty from regulatory overreach.
In the previous Congress, I introduced widely supported legislation—the Separation of Powers Restoration Act—aimed at restoring the judiciary’s proper role vis-à-vis the administrative state. The legislation is straightforward: It would amend the Administrative Procedure Act to clarify that courts should review de novo all questions of law—that is, that courts should neither defer to federal agency interpretations of constitutional or statutory provisions, nor to such interpretations of agency-promulgated rules.
As I explained more fully in an essay last year, the Supreme Court has embraced a number of objectionable doctrines that require courts to defer to federal agency interpretations of law. The Chevron doctrine, first and foremost, commands courts to defer to agencies’ interpretations of ambiguous statutes they administer, so long as those interpretations are reasonable. A second, and perhaps even worse doctrine, is Auer deference—or Seminole Rock deference—which commands courts to defer to agencies’ interpretations of their own regulations, so long as those interpretations are not plainly erroneous. Both deference doctrines, I have argued, displace the judiciary’s constitutional role to say what the law is. The Separation of Powers Restoration Act would eliminate the regulatory state’s dangerous role as an authoritative interpreter of law and would return that power to the judiciary.
How does this escalation of administrative governance affect my view of the proper role of the judiciary? Simply put, courts must faithfully interpret the law and the Constitution, which includes ensuring that the executive branch is confined to its proper role under Article II. Federal agencies should not legislate, nor should they be the authoritative interpreters of laws. Instead, they must be confined to executing the laws as written by Congress and interpreted by the judiciary.
When considering judicial nominees, we must assess whether they understand this role of judges in reining in the administrative state. For example, would they take seriously their responsibility to review agency actions, in order to ensure that the agency has engaged in reasoned decisionmaking? Would they review closely the legal interpretations advanced by federal agencies under that same obligation to “say what the law is”? In light of the expansion of the modern administrative state, this is the standard by which we should assess nominees to the federal bench.
This is a standard that Judge Gorsuch easily meets. Indeed, as I had explained in greater detail on SCOTUSblog last month, Judge Gorsuch’s opinions and other writings epitomize this understanding of the role of a federal judge in the modern administrative state. By way of illustration, in expressing his constitutional concerns with Chevron deference, Judge Gorsuch reasoned, “It was to avoid dangers like these, dangers the founders had studied and seen realized in their own time, that they pursued the separation of powers. A government of diffused powers, they knew, is a government less capable of invading the liberties of the people.”
At his confirmation hearing last week, Judge Gorsuch and I discussed Chevron deference at length. He articulated his concerns that Chevron deference is in tension with the text of Section 706 of the Administrative Procedure Act and raises constitutional due process, equal protection, and separation-of-powers concerns. He further explained, “I have raised some questions that arise in a case that I actually had to deal with and how it would impact people, real people, if agencies can change the meaning of the law back and forth every four years, depending upon the outcome of an election.”
Beyond discussing the proper rule of a federal judge, Judge Gorsuch has also explained his obligation to respect the proper role of each branch of the federal government. For example, when confronted with a federal agency’s attempt to make a law that it would then enforce, Judge Gorsuch asserted, “If the separation of powers means anything, it must mean that the prosecutor isn’t allowed to define the crimes he gets to enforce.”
Similarly, when asked to assess a federal agency’s interpretation of two statutes—Obamacare and the Religious Freedom Restoration Act (RFRA)—Judge Gorsuch ruled against the agency because “Congress structured RFRA to override other legal mandates, including its own statutes, if and when they encroach on religious liberty,” and because the government in that case could not point to any “explicit exclusion” in Obamacare’s “dictates.”
In sum, if confirmed as a Justice of the Supreme Court, Judge Gorsuch would be a fierce defender of the proper separation of powers between the branches of government. We need more federal judges who will not permit, as Judge Gorsuch has aptly put it, “executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design.”
The three branches must work together to restore these constitutional separation of powers. The President has indicated his willingness to further this aim by nominating Judge Gorsuch. I have no doubt Judge Gorsuch would do his part on the Supreme Court. And I hope that the President will continue to nominate—and we will continue to confirm—Justices and judges who similarly understand the judiciary’s proper role under the Constitution.
