The Week of May 9, 2021: On This Day In SCOTUS History
This week we will cover RBG’s first appearance in front of SCOTUS, marijuana distribution, trade secret vs patent laws, Congress changes a 4-factor injunction test, Benjamin Franklin’s “Join, or Die” cartoon, Standard Oil is dissolved, and discriminatory application of race neutral laws.
Cases are presented in chronological order. IRAC format used where possible.
Disclaimer: These cases have not been Shepardized. This article is not legal advice. Those seeking legal advice should consult an attorney. (I am an attorney, but I am not your attorney.)
1754, May 9
Benjamin Franklin Publishes “Join, or Die,” the First U.S. Newspaper Cartoon
Benjamin Franklin was serving in the Pennsylvania Assembly in the early 1750s when the French and Indian War was heating up over control of the Ohio valley. Franklin saw the necessity for cooperation between the colonies, not only to resist the French but also to get Indian support in the resistance.
Unfortunately, the colonies were fiercely independent. The new world at that time was divided between Proprietary colonies, governed by private families that owned most of the unsettled land, and Royal colonies which were directly ruled by the king and his ministers. The proprietary colonies were resistant to taxation. To complicate matters, the Penn colony prioritized getting more Indian land, and the Quaker colonies were pacifists.
The Indians, meanwhile, were angry over white settlers’ unfair and dishonest trade practices (surprise!), and the settler practice of selling rum to their people. To complicate matters, the French were also courting them.
The inventive Franklin sketched out a structure for colonial cooperation, including a distribution of delegates proportional to the amount each colony paid to the general treasury, a royally appointed governor, and rotating meeting sites. Meanwhile, a young George Washington had failed in his attempt to get the French to vacate the Ohio valley.
When word of Washington’s defeat reached Philadelphia, Franklin wrote an editorial in "The Pennsylvania Gazette," in which he blamed the French success on “the present disunited state of the British colonies.” Accompanying the article was a woodcut editorial cartoon of a snake cut into pieces with each piece labelled with the name of a colony. The caption was “Join, or Die.”
The cartoon would take on many forms and meanings over subsequent years, most of which Franklin did not endorse.
History provided by Walter Isaacson in Benjamin Franklin: An American Life.
1886, May 10
Discriminatory Application of a Racially Neutral Statute Is Unconstitutional
Yick Wo v. Hopkins,118 U.S. 356 (1886)
The City and County of San Francisco enacted an ordinance requiring a permit from the board of supervisors to operate a laundry in a wooden structure. Of the 320 laundries located in the city, 310 were constructed of wood and 240 were owned by Chinese subjects. All of the 240 Chinese laundries were denied, while all but one of the remaining non-Chinese owned laundries were granted permits.
Yick Wo was a laundry facility owned by Lee Yick. He had been denied a permit despite having been approved and licensed by the board of fire wardens. He continued to operate his laundry. He was subsequently fined, and, when he refused to pay the fine, he was jailed.
Issue:
Whether the discriminatory application of a racially neutral law is unconstitutional.
An addition question was whether the protections granted in the 14th Amendment of the Constitution extend to all persons within the United States regardless of race, color, or nationality.
Rule:
14th Amendment: Guarantees due process and equal protection under the law.
Analysis/Opinion (Justice Matthews):
“[The ordinance] confers upon the municipal authorities arbitrary power, at their own will, and without regard to discretion in the legal sense of the term, to give or withhold consent as to persons or places, without regard to the competency of the persons applying, or the propriety of the place selected, for the carrying on of the business.”
The fact that permits could be granted for laundries in wooden structures, even if only among white business owners, shows that the practice itself is not necessarily dangerous.
The alleged fire hazard claimed for laundry purposes would be just as true for cooking, or for warming the house; yet, there are no similar ordinances in these situations.
The necessary tendency, if not the specific purpose, of this ordinance, and of enforcing it in the manner indicated in the record, is to drive out of business all the numerous small laundries, especially those owned by Chinese, and give a monopoly of the business to the large institutions established and carried on by means of large associated Caucasian capital.
California argued that the 14th Amendment didn’t apply to the Chinese since they were not American citizens. However, the 14th Amendment clearly declares that a State shall not “deprive any person of life, liberty, or property without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." The Constitution clearly does not make a distinction.
Conclusion/Holding (Unanimous):
Racially discriminatory application of a racially neutral statute violates the Equal Protection Clause of the Fourteenth Amendment.
Personal Opinion & Commentary On The Embedded Video:
The word “arbitrary” refers to decisions that are made without a legal basis. The common misconception, that “arbitrary” means “without reason” is not true. Reasons can be found in patterns of behavior. The Californians were obviously targeting the Chinese. Systemic racism always has its reasons.
The embedded video, narrated, in part, by Justice Kennedy, provides some valuable background and history to this case, but I take exception to Justice Kennedy’s much-to-forgiving characterizations. With all due respect . . .
He repeatedly couches the discrimination and brutality against the Chinese in gentle terms. The Chinese were “not too welcome” in California. Regarding the right to vote, “the Chinese didn’t have that advantage.” In defining the word “arbitrary,” he compares the U.S. favorably against Egypt and Brazil, without recognizing the difference between the bribes taken by individuals in their government, and the state-implemented systemic racism in the U.S.
He says that the principle of Yick Wo has never been questioned, yet this case was followed shortly by the concept of “separate but equal,” which runs contrary to the holding that racially discriminatory application of a racially neutral statute is unconstitutional.
Finally, he takes what strikes me as a paternalist attitude towards the Chinese. First, he repeatedly praises the Court for listening to the case of someone who “wasn’t even a citizen!” without acknowledging that the Naturalization Act of 1790 prohibited Chinese from becoming U.S. citizens to begin with. Then he wraps it all up by saying that “This is a gift that Yick Wo gave to us, and it’s a gift that we gave to him.” Acknowledging the rights of a Chinese immigrant was a gift that we gave to him? Allowing him access to the justice system was a gift that we gave to him? I am absolutely baffled by what he means here.
I don’t mean to pick on Justice Kennedy specifically. He is merely expressing the biases of a certain generation (born before WWII), and a certain demographic (White males) that has dominated the judiciary for half a century. Unfortunately, those biases have had a devastating impact on all variety of minority.
Having said that, the other speakers are excellent and the history is compelling.
1911, May 15
Standard Oil Co. Is Dissolved For Violating the Sherman Act
Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)
This case involves Standard Oil Company of New Jersey and 33 other corporations as well as John D. Rockefeller, and six other individuals. “The record is inordinately voluminous, consisting of twenty-three volumes of printed matter, aggregating about twelve thousand pages, containing a vast amount of confusing and conflicting testimony relating to innumerable, complex and varied business transactions, extending over a period of nearly forty years.”
Issue:
Whether the appellant’s business practices constitute a violation of the Sherman Act and, if so, what the penalty should be.
Rule:
Sherman Antitrust Act (in pertinent part): “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce, among the several States, or with foreign nations, is hereby declared to be illegal” and “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations.”
Analysis/Opinion (Chief Justice White):
The Chief Justice complains and apologizes frequently throughout the opinion about how difficult and complicated the case is, using phrases such as “without going into detail,” and “it suffices to say” to indicate a severe truncating of the facts.
The first part of the grievance involved combining the stocks of various companies into a single trust. “The unification of power and control over a commodity such as petroleum and its products by combining in one corporation the stocks of many other corporations aggregating a vast capital gives rise, of itself, to the prima facie presumption of an intent and purpose to dominate the industry connected with, and gain perpetual control of the movement of, that commodity and its products in the channels of interstate commerce in violation of the Anti-Trust Act of 1890, and that presumption is made conclusive by proof of specific acts such as those in the record of this case.”
The second part of the grievance can be grouped as follows: “rebates, preferences and other discriminatory practices in favor of the combination by railroad companies; restraint and monopolization by control of pipelines, and unfair practices against competing pipelines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price-cutting at the points where necessary to suppress competition; espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent; the division of the United States into districts and the limiting of the operations of the various subsidiary corporations as to such districts so that competition in the sale of petroleum products between such corporations had been entirely eliminated and destroyed, and, finally, reference was made to what was alleged to be the "enormous and unreasonable profits" earned by the Standard Oil Trust and the Standard Oil Company as a result of the alleged monopoly, which presumably was averred as a means of reflexly [sic] inferring the scope and power acquired by the alleged combination.”
The violations clearly fall within the interstate commerce reach of the Antitrust Act.
The remedy to be administered in case of a combination violating the Anti-Trust Act is two-fold: first, to forbid the continuance of the prohibited act, and second, to so dissolve the combination as to neutralize the force of the unlawful power.
“The constituents of an unlawful combination under the Anti-Trust Act should not be deprived of power to make normal and lawful contracts, but should be restrained from continuing or recreating the unlawful combination by any means whatever, and a dissolution of the offending combination should not deprive the constituents of the right to live under the law, but should compel them to obey it.”
Conclusion/Holding (8–1)
The Standard Oil Company conspired to restrain the trade and commerce in petroleum, and to monopolize the commerce in petroleum, in violation of the Sherman Act. The company was split and individual fines were assessed.
1973, May 14
“All I ask of our brethren is that they take their feet off our necks.”
Frontiero v. Richardson, 411 U.S. 677 (1973)
A female lieutenant in the Air Force requested increased benefits or allowance for her husband as a dependent, in the same way that male servicemen receive dependent benefits for their wives. The Air Force required that she present proof that her husband was dependent for over one-half of their support, a requirement that did not exist for the male officers with wives. She was denied.
Issue:
Whether the difference in treatment between servicemembers based on gender constitutes an unconstitutional discrimination against servicewomen in violation of the Due Process Clause of the Fifth Amendment.
Rule:
5th Amendment, in pertinent part, says that no person shall be deprived of life, liberty, or property, without due process of law.
Analysis/Opinion (Justice Brennan):
Under 'traditional' equal protection analysis, a legislative classification must be sustained unless it is 'patently arbitrary' and bears no rational relationship to a legitimate governmental interest. However, classifications based on sex, race, alienage, and national origin are inherently suspect and must be subjected to close judicial scrutiny.
The discriminatory impact of the statutes is twofold: Procedurally, a female member is required to demonstrate her spouse's dependency; Substantively, a male member who does not provide more than one-half of his wife's support receives benefits, while a similarly situated female member is denied such benefits.
The government claims “administrative convenience” and a "considerable saving of administrative expense and manpower" as a rational basis for the policy. However, to satisfy the demands of strict judicial scrutiny, the Government would need to grant increased benefits only to those members whose wives actually met the dependency requirement, and subject those claims to a costly hearing process, rather than the simple affidavits currently required of male servicemembers. The Government's claims of costs savings, under these circumstances, is suspect.
Conclusion/Holding (8-1):
Any statutory scheme which draws a sharp line between the sexes solely for the purpose of achieving administrative convenience necessarily commands dissimilar treatment for men and women who are similarly situated and therefore involves the very kind of arbitrary legislative choice forbidden by the Constitution.
Note:
The appellant was ably represented by Joseph J. Levin, Jr., of the Southern Poverty Law Center; but this case is best known for the first ever appearance of the ACLU women’s rights advocate Ruth Bader Ginsberg in front of the Supreme Court. This embedded oral arguments includes Ginsberg’s appearance where she famously quotes the abolitionist and equal rights advocate Sarah Grimke. “She spoke, not elegantly but with unmistakable clarity. She said, ‘I ask no favor for my sex. All I ask of our brethren is that they take their feet off our necks.’”
1974, May 13
State Trade Secret Laws Are Not Preempted By Federal Patent Law
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974)
Petitioner, over a period of years, developed a process of growing and encapsulating synthetic crystals for industrial purposes. Former employees, who had signed nondisclosure agreements while at petitioner company, were hired by a competitor who, subsequently, was able to perform the same synthetic crystal process. Respondent was subsequently subject to a permanent injunction under the state’s trade secret law.
Issue:
Whether state trade secret law is preempted by federal patent law.
Rule:
The definition of trade secret under Ohio law is that “[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers." This necessary element of secrecy is not lost, however, if the holder of the trade secret reveals the trade secret to another "in confidence, and under an implied obligation not to use or disclose it." The law also protects disclosure by improper means. It does not, however, prohibit discovery by fair and honest means, or by reverse engineering.
A patent, on the other hand, under federal patent law, is limited to a "process, machine, manufacture, or composition of matter, or . . . improvement thereof," which fulfills the three conditions of novelty, utility and non-obviousness. If an invention meets the rigorous statutory tests for the issuance of a patent, the patent is granted, for a period of 17 years, giving what has been described as the "right of exclusion."
Analysis/Opinion (Chief Justice Burger):
Trade secret law protects items which would not be proper subjects for consideration for patent protection. States are free to provide protection for their own citizens so long as they do not conflict with federal laws.
Trade secret law is weaker than patent law and thus could not usurp it. Trade secret law does not forbid the discovery of the trade secret by fair and honest means, such as independent creation or even reverse engineering. Patent law, on the other hand, operates "against the world," forbidding any use of the invention for whatever purpose for a significant length of time. Since novelty is not required, the passing on of trade secrets through theft or breach of confidence would be difficult to prove in discovery.
The policy that matter once in the public domain must remain in the public domain is not incompatible with the existence of trade secret protection. By definition, a trade secret has not been placed in the public domain.
Society itself faces no risk from trade secret law to the stated goal of encouraging invention, especially as it pertains to scientific or technological progress, since the ripeness-of-time concept of invention demonstrates that discoveries tend to happen when the time is right, and that multiple independent parties tend to make the same discovery at the same time.
Conclusion/Holding (6-2):
The federal patent policy of encouraging invention is not disturbed by the existence of another form of incentive to invent. Ohio’s trade secret law is not preempted by the federal patent laws.
2001, May 14
There Is No Medical Necessity Exception for Marijuana.
United States v. Oakland Cannabis Buyers' Cooperative, 532 U.S. 483 (2001)
A cooperative was formed to distribute marijuana to qualified patients for medical purposes. They were charged with violating the Controlled Substance Act which prohibits distributing, manufacturing, and processing with the intent to distribute or manufacture a controlled substance.
The District Court enjoined the Cooperative’s activities and found them in contempt when they didn’t abide. The Ninth Circuit reversed on the grounds that medical necessity is a legally cognizable defense and that the District Court should have weighed the public interest and factors such as the serious harm in depriving patients.
Issue:
Whether there is a medical necessity exception for marijuana under the Controlled Substance Act.
Rule:
Marijuana is classified as a schedule I controlled substance. There is only one exception to the prohibition for schedule I substances: Government-approved research projects.
Analysis/Opinion (Justice Thomas):
A defense cannot succeed when the legislature itself has already written a contrary determination into law. Congress determined marijuana to be a schedule I drug without exceptions for medical necessity.
“This Court is unwilling to view that omission as an accident and is unable, in any event, to override a legislative determination manifest in the statute.”
Courts in equity cannot ignore Congress’ judgment expressed in legislation.
Conclusion/Holding (8-0):
There is no medical necessity defense to a charge under the Controlled Substances Act.
Note: This case dealt specifically with the rights of a medical coop, or other entity, to distribute, manufacture, and process a substance with the intent to distribute or manufacture as stated in the Act. It did not address whether there was a medical exception for individual use.
2006, May 15
SCOTUS Scolds Appellate for Not Applying Traditional 4-Factor Test
eBay Inc. v. MercExchange, L. L. C., 547 U.S. 388 (2006) May 15
Issue:
A subsidiary of Ebay, the web site for private sellers, used an electronic market platform that had already been patented by respondent. Respondent MercExchange, L. L. C., tried to license its patent to Ebay, but the agreement fell through. Respondent subsequently sued Ebay for patent infringement.
Jury found that respondent’s patent was valid and ordered petitioner Ebay to pay. Respondent then moved for permanent injunctive relief. The District Court granted the injunction but the Court of Appeals reversed, applying its “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”
Rule:
The four-factor test for permanent injunctive relief requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Analysis/Opinion (Justice Thomas):
Nothing in the Patent Act indicates that Congress intended a departure from the well-established four-factor test traditionally used for permanent injunction.
True, patent and copyright holders possess “the right to exclude others from using his property,” but the creation of a right is distinct from the provision of remedies for violations of that right. In fact, the Patent Act expressly provides that injunctions “may” issue “in accordance with the principles of equity.”
“Although the District Court recited the traditional four-factor test, it appeared to adopt certain expansive principles suggesting that injunctive relief could not issue in a broad swath of cases. Most notably, it concluded that a “plaintiff's willingness to license its patents” and “its lack of commercial activity in practicing the patents” would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue. But traditional equitable principles do not permit such broad classifications….”
In reversing the District Court, the Court of Appeals departed in the opposite direction from the four-factor test. The court articulated a “general rule,” unique to patent disputes, “that a permanent injunction will issue once infringement and validity have been adjudged.” The court further indicated that injunctions should be denied only in the “unusual” case, under “exceptional circumstances” and “in rare instances . . . to protect the public interest.”
Conclusion/Holding: (8-0):
The traditional four-factor test applied by courts of equity when considering whether to award permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent Act.
“Because we conclude that neither court below correctly applied the traditional four-factor framework that governs the award of injunctive relief, we vacate the judgment of the Court of Appeals, so that the District Court may apply that framework in the first instance. In doing so, we take no position on whether permanent injunctive relief should or should not issue in this particular case, or indeed in any number of other disputes arising under the Patent Act. We hold only that the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards.”
Update — The Trademark Modernization Act of 2020:
On December 27, 2020, Congress passed the Trademark Modernization Act of 2020, to be implemented December 27, 2021. Among other things, the Act clarifies the analysis necessary when considering a permanent injunction for trademark infringement, and, in so doing, addresses the circuit split that gave rise to this case. Section 226 of the Act amends the 1946 Act by inserting the following: “A plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction or upon a finding of likelihood of success on the merits for a violation identified in this subsection in the case of a motion for a preliminary injunction or temporary restraining order.” (I have updated the Wikipedia page for this case accordingly.)
MAHALO MUCHO!!!
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