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Intellectual Property,
Constitutional Law,
Appellate Practice,

May 26, 2017

CFPB's Constitutionality; EDTX Patent Monopoly No More

An en banc D.C. Circuit weighs the Consumer Financial Protection Bureau's constitutionality, explains Mike Calhoun (Center for Responsible Lending); Ben Davidson (Davidson Law Group) discusses how SCOTUS' re-endorsement of narrow patent venue rules shifts the IP litigation landscape in favor of defendants


Today's show regards a U.S. Supreme Court ruling in the area of patent law, and another case involving consumer protections that very likely may meet high court review in the near future.

First, we'll hear from Ben Davidson (Davidson Law Group), about TC Heartland v. Kraft Foods, a SCOTUS ruling from Monday that re-endorsed a narrow and special approach to venue in patent cases, which meaningfully shifts the IP law playing field in favor of corporate defendants. Prior to this ruling, the prevailing belief (endorsed by the Federal Circuit in a 1990 case) was that corporate defendants could be sued for patent infringement anywhere personal jurisdiction applied to them. But that conflicted with 1957 U.S. Supreme Court precedent holding that such defendants, for the most part, could only be sued where they're incorporated. Intervening Congressional amendments to the U.S. Code chapter containing the relevant statutes made uncertain whether that 1957 case was still good law. Turns out, as an unanimous court ruled Monday, it is. Corporate defendants may only be sued where they're incorporated (or, under a different part of the statute, where they have an established place of business). The ruling upsets the current trend wherein patent plaintiffs often haul defendants into far-flung courts - mainly the Eastern District of Texas - a practice many say was abused by patent "trolls" attempting to game the legal system through forum shopping.

Then we'll hear from Mike Calhoun, of the Center for Responsible Lending, about a D.C. Circuit en banc appeal regarding the constitutionality of the Consumer Financial Protection Bureau, created as part of the Dodd-Frank Act after the 2008 financial crisis, and meant to police and prevent predatory and abusive lending practices, but which critics claim stymies businesses in the financial sector. One lender, PHH Corporation, now asserts that the CFPB's structure, wherein one director who can only be fired by the President for cause (not at will) heads the bureau, is unconstitutional. A 2-1 panel agreed in October, and now the full court heard arguments this week, in a case that seems very possibility en route to the country's high court.

Don't forget CLE credit is available for podcast listeners; find a link to a short true/false test below.


Brian Cardile

Daily Journal Staff Writer

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