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Click for PDF Decided May 13, 2019 Apple, Inc. v. Pepper, No. 17-204 Yesterday, the Supreme Court held 5-4 that iPhone users are “direct purchasers” from Apple when they purchase apps on Apple’s App Store, and thus have standing to sue Apple for alleged monopolistic overcharges under Section 2 of the Sherman Act, even though third-party app developers pay for the allegedly monopolized app-distribution services and set the prices for apps charged to iPhone users. Background: A group of iPhone users sued Apple for damages under Section 2 of the Sherman Act, alleging that Apple monopolized the retail market for the sale of apps and unlawfully used its monopoly power to charge consumers higher-than-competitive prices. According to plaintiffs, Apple requires them to purchase iPhone apps from developers exclusively through Apple’s App Store. Although app developers independently set the retail price of each app, Apple charges developers a yearly fee to place their apps in the App Store, along with a commission on each sale. The iPhone users alleged that this arrangement caused them to pay inflated prices for apps and sought antitrust damages from Apple. Under Illinois Brick Co. v. Illinois, 431 U.S. 720, 729 (1977), only direct purchasers, “and not others in the chain of manufacture or distribution,” can sue for damages under federal antitrust law. The district court dismissed the action under Illinois Brick, reasoning that the app developers were the direct purchasers of Apple’s app-distribution services because they paid the annual fees and commissions charged by Apple. The Ninth Circuit reversed, holding that the iPhone users could sue Apple for allegedly monopolizing and attempting to monopolize the sale of iPhone apps. Issue: “Whether consumers may sue anyone who delivers goods to them for antitrust damages, even when they seek damages based on prices set by third parties who would be the immediate victims of the alleged offense.” Court’s Holding: Yes. Illinois Brick does not bar plaintiffs’ claim for alleged monopoly overcharge damages because iPhone users are properly regarded as direct purchasers. “The [plaintiffs] pay the alleged overcharge directly to [defendant]. The absence of an intermediary is dispositive. Under Illinois Brick, the [plaintiffs] are direct purchasers … and are proper plaintiffs to maintain this antitrust suit.” Justice Kavanaugh, writing for the majority What It Means: The Court’s decision embraces a formal approach to antitrust standing in a claim arising under Section 2 of the Sherman Act that focuses on whether the plaintiff directly contracts with the alleged monopolist, irrespective of whether it directly bears the cost of the alleged monopolistic conduct. In doing so, the decision creates the risk that companies operating “electronic marketplaces” will be subject to suit by both the third-party sellers who pay to use the companies’ services and to end-consumers who purchase the third party’s products or services on the platform. The decision threatens to increase the cost and complexity of antitrust litigation, as courts may be required to engage in the complex task of apportioning antitrust damages among different levels of purchasers of a good or service. Justice Gorsuch, writing for a four-Justice dissent, highlighted some of the difficult questions lower courts must now address, including whether and to what extent third parties pass on alleged monopolistic charges, a question that will need to be addressed as to “all of the tens of thousands of developers who sold apps through the App Store at different prices and times over the course of years.” These increased litigation costs may have a negative financial impact on the e-commerce space as a whole. The Court was careful to note that it was not “assess[ing] the merits of the plaintiffs’ antitrust claims” or any “defenses Apple may have.” Having established standing, plaintiffs must now face the challenge of showing how a claim of charging “too much” overcomes Supreme Court precedent disapproving such claims. The Court’s decision raises the question whether it might overrule Illinois Brick in the future.  Although certain amici argued that the Court should do so here, the Court reasoned that “[i]n light of our ruling in favor of the plaintiffs in this case, we have no occasion to consider that argument.” Time will tell whether the Supreme Court’s formal approach to standing under Section 2 will carry over into substantive Section 1 analysis, e.g., requiring a reevaluation of principal-agent relationships that are not subject to Section 1 strictures under longstanding precedent. Gibson Dunn will be hosting a webcast on the current state of monopoly law and enforcement, including the impact of this decision, on May 23, 2019.  For more details, please click here.  As always, Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Theodore J. Boutrous, Jr. +1 213.229.7804 tboutrous@gibsondunn.com Related Practice: Antitrust and Competition Scott D. Hammond +1 202.887.3684 shammond@gibsondunn.com M. Sean Royall +1 214.698.3256 sroyall@gibsondunn.com Daniel G. Swanson +1 213.229.7430 dswanson@gibsondunn.com

Click for PDF This edition of Gibson Dunn’s Federal Circuit Update summarizes key filings for certiorari or en banc review, as well as additional new Federal Circuit processes to address scheduling conflicts, for the period February through April 2019.  We also summarize recent Federal Circuit decisions concerning the patent eligibility of method of treatment claims, the impact of an inventor’s subjective views on the on-sale and prior use bars, and the constitutional and statutory standing requirements to appeal IPR decisions. Federal Circuit News Supreme Court: Decisions are pending from the Supreme Court for one patent case and one trademark case from the Federal Circuit.  In March, the Supreme Court also granted certiorari over an additional patent case from the Federal Circuit. Case Status Issue Amicus Briefs Filed Return Mail Inc. v. United States Postal Service, No. 17-1594 Argued on February 20, 2019. Whether the government is a “person” who may petition to institute review proceedings under the Leahy-Smith America Invents Act. 11 Iancu v. Brunetti, No. 18-302 Argued on April 15, 2019. Whether Section 2(a) of the Lanham Act’s prohibition on the federal registration of “immoral” or “scandalous” marks is facially invalid under the free speech clause of the First Amendment. 10 Iancu v. NantKwest Inc., No. 18-801 Petition for certiorari granted on March 4, 2019. Whether the phrase “[a]ll the expenses of the proceedings” in 35 U.S.C. § 145 encompasses the personnel expenses the PTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation. – Noteworthy Petitions for a Writ of Certiorari: Acorda Therapeutics, Inc. v. Roxane Labs., Inc. (No. 18-1280):  Question presented:  “whether objective indicia of nonobviousness may be partially or entirely discounted where the development of the invention was allegedly ‘blocked’ by the existence of a prior patent, and, if so, whether an ‘implicit finding’ that an invention was ‘blocked,’ without a finding of actual blocking, is sufficient to conclude that an infringer has met its burden of proof.”  Acorda is represented by Ted Olson, Thomas Hungar, Amir Tayrani, and Jessica Wagner of Gibson Dunn. Ariosa Diagnostics Inc. v. Illumina Inc. (No. 18-109):  Question presented:  “Do unclaimed disclosures in a published patent application and an earlier application it relies on for priority enter the public domain and thus become prior art as of the earlier application’s filing date, or, as the Federal Circuit held, does the prior art date of the disclosures depend on whether the published application also claims subject matter from the earlier application?” RPX Corp. v. ChanBond LLC (No. 17-1686):  Question presented:  “Can the Federal Circuit refuse to hear an appeal by a petitioner from an adverse final decision in a Patent Office inter partes review on the basis of lack of a patent-inflicted injury in fact when Congress has (i) statutorily created the right to have the Director of the Patent Office cancel patent claims when the petitioner has met its burden to show unpatentability of those claims, (ii) statutorily created the right for parties dissatisfied with a final decision of the Patent Office to appeal to the Federal Circuit, and (iii) statutorily created an estoppel prohibiting the petitioner from again challenging the patent claims?” HP Inc. v. Berkheimer (No. 18-415):  Question presented:  “whether patent eligibility is a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of the art at the time of the patent.”  On January 7, 2019, the Supreme Court invited the U.S. Solicitor General to file a brief expressing the views of the United States.  Mark Perry of Gibson Dunn continues to serve as co-counsel for HP in this matter. Hikma Pharmaceuticals USA Inc. v. Vanda Pharmaceuticals Inc. (No. 18-817):  Question presented:  “whether patents that claim a method of medically treating a patient automatically satisfy Section 101 of the Patent Act, even if they apply a natural law using only routine and conventional steps.”  On March 18, 2019, the Supreme Court invited the U.S. Solicitor General to express the views of the United States. Other Federal Circuit News On March 22, 2019, the New York Intellectual Property Law Association held the 97th Annual Dinner in Honor of the Federal Judiciary.  The Honorable Kathleen O’Malley of the Federal Circuit was honored with the 17th Annual Outstanding Public Service Award. The annual Federal Circuit Bench and Bar Conference will take place June 12–15, 2019, at the Broadmoor in Colorado Springs, CO. Federal Circuit Practice Update New Process for Notifying Counsel of Accepted Scheduling Conflicts: On December 10, 2019, the Federal Circuit announced revisions to its process for advising it of scheduling conflicts.  Those changes were summarized in our January 2019 newsletter. The Federal Circuit has now issued a follow-up announcement, discussing the new process for notifying counsel of accepted scheduling conflicts: The Federal Circuit will continue to review Responses to Notice to Advise of Scheduling Conflicts to determine whether conflicts are accepted. Only accepted conflict dates will be indicated on the public docket.  Submitted conflict dates that are not accepted will not be listed on the public docket. The non-acceptance of a submitted conflict date does not mean that oral argument necessarily will be scheduled on that date. The Federal Circuit’s notice can be found here. Key Case Summaries (February 2019–April 2019) Natural Alternatives Int’l, Inc. v. Creative Compounds, LLC, No. 18-1295 (Fed. Cir. Mar. 15, 2019): Claims to treatment methods using existing products in new ways are patent eligible. Natural Alternatives’ patents relate to the use of the amino acid beta-alanine as a supplement to increase muscle capacity.  The district court granted judgment on the pleadings that the claims are ineligible as directed to the natural law that ingesting beta-alanine (a natural substance) will increase the carnosine concentration in human tissue and thereby increase muscle capacity. The Federal Circuit (Moore, J., joined by Wallach, J.; Reyna, J., dissenting in part) reversed.  The majority reasoned that the claims not only “embody” the “discovery” that administering certain quantities of beta-alanine alters a human’s natural state, but also require that an infringer actually administer the dosage claimed in the manner claimed to provide the described benefits.  Citing Vanda Pharms. Inc. v. West-Ward Pharms. Int’l Ltd. (Fed. Cir. 2018)—addressed in our January 2019 Update and pending petition for writ of certiorari—the majority reasoned that, because the claims specify a compound and dosages, they go “far beyond merely stating a law of nature, and instead set[] forth a particular method of treatment,” rendering them patent eligible at step one of the Alice inquiry.  The decision thus continues the Federal Circuit’s recent practice of distinguishing claims written as “methods of treatment” (held patent eligible) from those worded in “diagnostic” terms (held ineligible in Mayo).  The majority also ruled that “factual impediments” exist in analyzing step two of the Alice inquiry, such that disputed questions of eligibility “may not be made on a motion for judgment on the pleadings.”  This is challenged in the pending HP Inc. v. Berkheimer certiorari petition prepared by Gibson Dunn (see above). Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc., Nos. 2017-1240, 1455-1887 (Fed. Cir. Mar. 28, 2019):  Claims to treatments relying on natural laws can be patent eligible. Two weeks after Natural Alternatives was decided, another Federal Circuit panel (Wallach, Clevenger, and Stoll, JJ.) continued the Court’s view that “methods of treatment” can avoid ineligibility under Mayo and Alice.  In Endo, the claims relied on the relationship between the body’s rate of clearing the metabolite creatine and the rate for clearing opioids.  The method required measuring a patient’s creatine clearance rate and then administering an opioid based on that rate.  Citing Vanda Pharmaceuticals, the panel reversed the district court’s finding of ineligibility.  As the panel reasoned, method of treatment claims like in Endo and Vanda can be distinguished from Mayo in that, while the claims in Mayo merely required “giving [a] drug to a patent with a certain disorder,” the claims in Endo and Vanda require giving a specific dose of the drug based on specific testing.  According to the panel, such claims are eligible because they are “directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome” whether or not steps are governed by natural laws. Barry v. Medtronic, Inc., No. 2017-2463 (Fed. Cir. Jan. 24, 2019):  An inventor’s subjective and unclaimed “intended purpose” for an invention can determine public use and on-sale bars. More than a year before filing, Dr. Barry successfully used his claimed surgical method on three patients.  He then saw each patent for follow-up appointments that he deemed necessary to determine if his method worked, with two of the appointments also falling outside the pre-AIA Section 102(b) grace period.  It was only after the third of these appointments, which was within the Section 102(b) grace period, that Dr. Barry felt confident that his invention functioned for its intended purpose.  Accordingly, the district court held that his earlier actions did not constitute invalidating public use or sales (i.e., that the invention was not “ready for patenting” earlier). The Federal Circuit majority (Taranto, J., joined by Moore, J.) affirmed that the invention was not “ready for patenting” before the critical date and that the surgeries fell in the experimental-use exception to “on sale” and “public use” bars.  The majority concluded that Dr. Barry did not reduce his invention to practice until the final postoperative follow-up because that follow up was “reasonably needed” to determine if the invention worked for its “intended purpose.” In dissent, Chief Judge Prost argued that the “ready for patenting” requirement that defines the statutory bars is distinct from “reduction to practice” and meant to answer whether the inventor could have obtained a patent.  According to the dissent, Dr. Barry’s method was ready to patent after the first two surgeries and follow-ups, if not after the first.  Dr. Barry charged his usual fee for the surgeries, and the patients were not told that the surgery was experimental.  The early surgeries worked, and no multiple surgery or follow up requirement or “purpose” was claimed. On April 29, 2019, Medtronic’s petition for panel rehearing and rehearing en banc was denied, leaving stand the panel majority decision that gives strong weight in determining Section 102 bars to the inventor’s subjective view of whether an invention works for its “intended purpose.” Mylan Pharms. Inc. v. Research Corp. Techs., Inc., Nos. 2017-2088, -2089, -2091 (Fed. Cir. Feb. 1, 2019):  Joined parties can appeal adverse IPR decision without initial petitioner. An initial Petitioner timely filed an IPR, but had not been threatened with infringement and thus lacked Article III standing to appeal.  Three days after the Board instituted the initial petition, three other companies filed for joinder under 35 U.S.C. § 315(c).  Each joining company had been sued for infringement more than a year earlier, and thus, absent joinder, their petitions were otherwise time barred.  After an adverse decision from the Board, the initial petitioner did not appeal, leaving only the joined parties to appeal.  The patentee objected that, absent the initial petitioner, the joined parties lacked standing and did not “fall within the zone of interests of 35 U.S.C. § 319”—i.e., absent the initial petitioner, their own petitions were allegedly time barred. The Federal Circuit (Lourie, Bryson, and Wallach, JJ.) disagreed.  As the panel explained, Section 315 allows entities to be joined “as a party” and Section 319 gives a “party” a right to appeal.  Thus, even absent the initial petitioner, the joined parties fell “within the zone of interests of § 319 and are not barred from appellate review.” Momenta Pharma v. Bristol-Myers Squibb Co., No. 2017-1694 (Fed. Cir. Feb. 7, 2019):  IPR petitioner lacked standing for appeal after it suspended plans for a competing product. Momenta petitioned for IPR of a patent covering the immunosuppressant Orencia.  At the time, Momenta was planning a biosimilar, which it had in clinical trials.  But by the time of appeal, Momenta had suspended its development plans after its competing product failed Phase 1 trials.  The Federal Circuit (Newman, Dyk, and Chen, JJ.) held that Momenta thus lacked the present “concrete and particularized” interest required for Article III standing.  The panel rejected the argument that the patent could impact future development, finding a generalized threat of harm fell short of an “impending” injury: “[T]he cessation of potential infringement means that Momenta no longer has the potential for injury, thereby mooting the inquiry.”  Taken with Mylan above, Momenta illustrates that, while statutory standing may be durable, constitutional standing for Article III courts must be preserved up to and through appeal. Upcoming Oral Argument Calendar For a list of upcoming arguments at the Federal Circuit, please click here. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Federal Circuit.  Please contact the Gibson Dunn lawyer with whom you usually work or the authors of this alert: Blaine H. Evanson – Orange County (+1 949-451-3805, bevanson@gibsondunn.com) Raymond A. LaMagna – Los Angeles (+1 213-229-7101, rlamagna@gibsondunn.com) Please also feel free to contact any of the following practice group co-chairs or any member of the firm’s Appellate and Constitutional Law or Intellectual Property practice groups: Appellate and Constitutional Law Group: Allyson N. Ho – Dallas (+1 214-698-3233, aho@gibsondunn.com) Mark A. Perry – Washington, D.C. (+1 202-887-3667, mperry@gibsondunn.com) Intellectual Property Group: Wayne Barsky – Los Angeles (+1 310-552-8500, wbarsky@gibsondunn.com) Josh Krevitt – New York (+1 212-351-4000, jkrevitt@gibsondunn.com) Mark Reiter – Dallas (+1 214-698-3100, mreiter@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, CA 90071 Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

GamblingCompliance named Gibson Dunn “Best Regulatory Lawyer/Law Firm of the Year (North America)” at its 2019 GamblingCompliance Global Regulatory Awards.  The award recognized the firm’s “exceptional legal service and guidance to clients within the sector.” The results were announced at its annual dinner on May 1, 2019. Gibson Dunn’s Betting and Gaming Practice is one of the most preeminent betting and gaming legal practices worldwide, representing the most prestigious and influential clients in the industry across Europe, Asia and the Americas. We believe that the Gibson Dunn global betting and gaming practice provides our clients with a unique offering – no other global law firm can offer an award-winning regulatory and compliance capability alongside a market-leading transactional practice in the betting and gaming sector in the United Kingdom, the United States, Europe and the Asia-Pacific Region.

In its 2019 edition, Chambers USA: America’s Leading Lawyers for Business awarded Gibson Dunn 79 first-tier rankings, of which 27 were firm practice group rankings and 52 were individual lawyer rankings. Overall, the firm earned 276 rankings – 80 firm practice group rankings and 196 individual lawyer rankings. Gibson Dunn earned top-tier rankings in the following practice group categories: National – Antitrust National – Antitrust: Cartel National – Appellate Law National – Corporate Crime & Investigations National – FCPA National – Outsourcing National – Real Estate National – Retail National – Securities: Regulation CA – Antitrust CA – Environment CA – IT & Outsourcing CA – Litigation: Appellate CA – Litigation: General Commercial CA – Litigation: Securities CA – Litigation: White-Collar Crime & Government Investigations CA – Real Estate: Southern California CO – Litigation: White-Collar Crime & Government Investigations CO – Natural Resources & Energy DC – Corporate/M&A & Private Equity DC – Labor & Employment DC – Litigation: General Commercial DC – Litigation: White-Collar Crime & Government Investigations NY – Litigation: General Commercial: The Elite NY – Media & Entertainment: Litigation NY – Technology & Outsourcing TX – Antitrust This year, 155 Gibson Dunn attorneys were identified as leading lawyers in their respective practice areas, with some ranked in more than one category. The following lawyers achieved top-tier rankings:  D. Jarrett Arp, Theodore Boutrous, Jessica Brown, Jeffrey Chapman, Linda Curtis, Michael Darden, William Dawson, Patrick Dennis, Mark Director, Scott Edelman, Miguel Estrada, Stephen Fackler, Sean Feller, Eric Feuerstein, Amy Forbes, Stephen Glover, Richard Grime, Daniel Kolkey, Brian Lane, Jonathan Layne, Karen Manos, Randy Mastro, Cromwell Montgomery, Daniel Mummery, Stephen Nordahl, Theodore Olson, Richard Parker, William Peters, Tomer Pinkusiewicz, Sean Royall, Eugene Scalia, Jesse Sharf, Orin Snyder, George Stamas, Beau Stark, Charles Stevens, Daniel Swanson, Steven Talley, Helgi Walker, Robert Walters, F. Joseph Warin and Debra Wong Yang.

Click for PDF Decided April 24, 2019 Lamps Plus, Inc. v. Varela, No. 17-988 Today, the Supreme Court held 5-4 that the Federal Arbitration Act (FAA) preempts state laws that require class arbitration where an arbitration agreement is ambiguous as to whether the parties consented to such a procedure. Background: In Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662 (2010), the Supreme Court held that a party may not be compelled to submit to class arbitration if the parties’ agreement does not clearly evidence that the party agreed to do so. Here, the parties disputed whether their agreement could be read to allow class arbitration. The defendant argued that the agreement required individual arbitration because it provided that the plaintiff must arbitrate claims or controversies that “I may have against the Company.” The plaintiff argued that the agreement was ambiguous because it provided that “arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings.” Agreeing with the plaintiff, the Ninth Circuit found the agreement ambiguous. And because the agreement was governed by California law, the Ninth Circuit applied the state-law principle that contractual ambiguities are resolved against the drafter to hold that the agreement should be interpreted to require the defendant to submit to class arbitration. Issue: Whether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration. Court’s Holding: Yes. The FAA preempts state laws that would “impose class arbitration in the absence of the parties’ consent,” and courts may not rely on state contract law to “infer from an ambiguous agreement that the parties have consented to arbitrate on a classwide basis.” “The [Federal Arbitration Act] requires more than ambiguity to ensure that the parties actually agreed to arbitrate on a classwide basis.” Chief Justice Roberts, writing for the majority What It Means: The Court’s opinion reaffirms Stolt-Nielsen’s observation that class arbitration is fundamentally different from bilateral arbitration, and that bilateral arbitration is the default mode of arbitrating under the FAA.  If parties wish to resolve disputes in arbitration on a classwide basis, their arbitration agreement must unambiguously so provide.  As the Court noted, “[l]ike silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice[] the principal advantage of arbitration’” by agreeing to classwide arbitration. The Court’s decision also makes clear that the FAA preempts state laws that conflict with the strong federal policy favoring bilateral arbitration.  Courts “may not rely on state contract principles to ‘reshape traditional individualized arbitration by mandating classwide arbitration procedures without the parties’ consent.’” The Court’s decision is a victory for defendants who are party to an arbitration agreement that is silent or ambiguous as to class arbitration.  The decision should help to ensure that defendants cannot be forced into unfair or inefficient class arbitration proceedings against their will. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practice: Class Actions Theodore J. Boutrous, Jr. +1 213.229.7804 tboutrous@gibsondunn.com Christopher Chorba +1 213.229.7396 cchorba@gibsondunn.com Theane Evangelis +1 213.229.7726 tevangelis@gibsondunn.com

The Legal 500 EMEA 2019 has recommended Gibson Dunn in 14 categories in Belgium, France, Germany and UAE.  The firm was recognized in Competition – EU and Global in Belgium; Administrative and Public Law, Dispute Resolution – Commercial Litigation Industry Focus – IT, Telecoms and the Internet, Insolvency, Insurance, Mergers and Acquisitions, and Tax in France; Antitrust, Compliance, Internal Investigations and Private Equity in Germany; and Corporate and M&A and Investment Funds in UAE. Chézard Ameer, Ahmed Baladi,  Jean-Pierre Farges and Dirk Oberbracht were all recognized as Leading Individuals. Jérôme Delaurière was listed as a “Next Generation Lawyer.”  

As the Supreme Court continues its 2018 Term, Gibson Dunn’s Supreme Court Round-Up is summarizing the issues presented in the cases on the Court’s docket and the opinions in the cases the Court has already decided.  The Court accepted 70 cases for argument this Term, and has heard arguments in 57 cases.  Gibson Dunn presented 3 oral arguments this Term, in addition to being involved in 12 cases as counsel for amici curiae.  The Court has granted certiorari in nine cases for the 2018 Term. Spearheaded by former Solicitor General Theodore B. Olson, the Supreme Court Round-Up keeps clients apprised of the Court’s most recent actions.  The Round-Up previews cases scheduled for argument, tracks the actions of the Office of the Solicitor General, and recaps recent opinions.  The Round-Up provides a concise, substantive analysis of the Court’s actions.  Its easy-to-use format allows the reader to identify what is on the Court’s docket at any given time, and to see what issues the Court will be taking up next.  The Round-Up is the ideal resource for busy practitioners seeking an in-depth, timely, and objective report on the Court’s actions. To view the Round-Up, click here. Gibson Dunn has a longstanding, high-profile presence before the Supreme Court of the United States, appearing numerous times in the past decade in a variety of cases.  During the Supreme Court’s 5 most recent Terms, 9 different Gibson Dunn partners have presented oral argument; the firm has argued a total of 20 cases in the Supreme Court during that period, including closely watched cases with far-reaching significance in the class action, intellectual property, separation of powers, and First Amendment fields.  Moreover, although the grant rate for certiorari petitions is below 1%, Gibson Dunn’s certiorari petitions have captured the Court’s attention:  Gibson Dunn has persuaded the Court to grant 25 certiorari petitions since 2006. *   *   *   * Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following attorneys in the firm’s Washington, D.C. office, or any member of the Appellate and Constitutional Law Practice Group. Theodore B. Olson (+1 202.955.8500, tolson@gibsondunn.com) Amir C. Tayrani (+1 202.887.3692, atayrani@gibsondunn.com) Brandon L. Boxler (+1 202.955.8575, bboxler@gibsondunn.com) Andrew G.I. Kilberg (+1 202.887.3759, akilberg@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

Click for PDF Decided March 27, 2019 Lorenzo v. SEC, No. 17-1077 Today, the Supreme Court held 6-2 that an individual who knowingly disseminates false statements, even if the individual did not “make” the statements under SEC Rule 10b-5(b), can be held liable under other subdivisions of Rule 10b-5 and related securities laws. Background: Francis Lorenzo sent emails to prospective investors containing false statements about the sale of securities.  He sent the emails at the direction of his boss, who wrote their content.  Under Janus Capital v. First Derivative Traders, 564 U.S. 135 (2011), Lorenzo could not be held liable for making false statements under Rule 10b-5(b) because he was not the “maker” of the statements—his boss retained “ultimate authority” over their content.  Id. at 142.  The SEC nonetheless charged Lorenzo with violating other parts of Rule 10b-5 and related statutes.  For example, the SEC alleged that Lorenzo had “employ[ed] any device, scheme, or artifice to defraud” under Rule 10b-5(a), and also had “engage[d] in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person” under Rule 10b-5(c).  The D.C. Circuit rejected Lorenzo’s contention that, because he was not the “maker” of the misstatements, he could not be held liable under Rule 10b-5(a) and (c) and related statutes. Issue:  Whether someone who is not a “maker” of a misstatement under Rule 10b-5(b) can nevertheless be held liable for dissemination of misstatements under other subsections of Rule 10b-5 and related securities laws. Court’s Holding:  Yes.  The prohibitions of fraudulent schemes and fraudulent practices in Rule 10b-5(a) and (c), as well as related prohibitions in securities laws, are broad enough to encompass the knowing dissemination of false or misleading statements directly to investors with the intent to defraud, even if the person who disseminates them did not “make” them under Rule 10b-5(b). “[W]e conclude that . . . dissemination of false or misleading statements with intent to defraud can fall within the scope of subsections (a) and (c) of Rule 10b-5 . . . even if the disseminator did not ‘make’ the statements and consequently falls outside subsection (b) of the Rule.” Justice Breyer, writing for the majority What It Means: The Court read the language of Rule 10b-5 broadly, relying on dictionary definitions to hold that an individual need not “make” false statements in order to be liable for “employ[ing]” a scheme to defraud under Rule 10b-5(a) or for “engag[ing]” in an act that operates as a fraud under Rule 10b-5(c) based on the individual’s knowing dissemination of false statements with intent to deceive. The Court declined to read the subdivisions of Rule 10b-5 as mutually exclusive, reasoning that their prohibitions involve “considerable overlap” to ensure coverage for multiple forms of fraud. The Court suggested some limits to its broad reading of Rule 10b-5, observing that “liability would typically be inappropriate” for individuals “tangentially involved” in disseminating false statements, such as “a mailroom clerk.” The Court reaffirmed its precedent holding that private suits are not permitted against secondary violators of Section 10(b), 15 U.S.C. § 78j(b).  For example, private plaintiffs cannot sue defendants for undisclosed actions that investors could not have relied upon.  Therefore, the Court’s ruling should be limited to claims involving the dissemination of false information directly to investors. The Court did not address what intent (scienter) is required to establish violations of Rule 10b-5 and related securities laws, as Lorenzo did not challenge the D.C. Circuit’s holding that he had the requisite scienter.  The Court also reaffirmed that the SEC, “unlike private parties, need not show reliance in its enforcement actions.” The decision may result in the SEC and private plaintiffs increasingly relying on provisions other than Rule 10b-5(b) when alleging violations of the securities laws. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practice: Securities Litigation Brian M. Lutz +1 415.393.8379 blutz@gibsondunn.com Robert F. Serio +1 212.351.3917 rserio@gibsondunn.com Meryl L. Young +1 949.451.4229 myoung@gibsondunn.com

Click for PDF Decided March 20, 2019 Frank v. Gaos, No. 17-961  The Supreme Court determined that questions concerning plaintiffs’ standing to challenge Google’s alleged violations of user privacy prevented the Court from deciding whether cy pres-only class action settlements are fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e). Background: Plaintiffs, on behalf of a putative class of 129 million users of Google’s search engine, alleged that Google violated users’ privacy under the Stored Communications Act, 18 U.S.C. § 2701 et seq., by disclosing the search terms they used to third-party websites. The parties agreed to an $8.5 million class action settlement consisting of $2 million in attorneys’ fees and costs and $6.5 million distributed as a cy pres award to various institutions studying internet privacy and information sharing. Under the proposed settlement, class members would receive no money. The district court approved the settlement, concluding that it would not be feasible to distribute the $6.5 million portion of the settlement to class members. The Ninth Circuit affirmed. Issue:  Whether a class action settlement is fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e) when class members receive no direct, monetary relief and instead all of the settlement funds are distributed to cy pres beneficiaries. Court’s Holding:  The lower courts should decide in the first instance whether any named plaintiff has Article III standing. “Resolution of the standing question should take place in the District Court or the Ninth Circuit in the first instance. We therefore vacate and remand for further proceedings.” Per Curiam What It Means: Although the Supreme Court granted certiorari to decide an important question concerning cy pres awards, the Court, in response to an argument raised by the Solicitor General in an amicus brief, ordered supplemental briefing on whether any named plaintiff had Article III standing. The Court ultimately accepted the Solicitor General’s view that the case should be remanded for the lower courts to address that question in the first instance—thus demonstrating the effect that an amicus brief can have on the outcome of a case. In the lower courts, the plaintiffs alleged that they had Article III standing because Google, by disclosing their search terms, allegedly violated their rights under the Stored Communications Act to be free from unlawful disclosure of certain communications. But the Supreme Court questioned whether those allegations established Article III standing in light of Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), which recognized that the alleged violation of a statutory right does not automatically satisfy Article III’s injury-in-fact requirement. Justice Thomas dissented. As in his concurring opinion in Spokeo, Justice Thomas reiterated that “a plaintiff seeking to vindicate a private right need only allege an invasion of that right to establish standing.” He would have held that the named plaintiffs had standing based on the alleged violation of Google’s private duties owed to them under state and federal law. Justice Thomas also would have reversed the class certification and class settlement orders and held that the absent class members’ interests were not adequately represented because only the named plaintiffs and class counsel received significant benefits, and the lack of relief for absent class members rendered the settlement unfair and unreasonable under Rule 23(e). Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practice: Class Actions Theodore J. Boutrous, Jr. +1 213.229.7804 tboutrous@gibsondunn.com Christopher Chorba +1 213.229.7396 cchorba@gibsondunn.com Theane Evangelis +1 213.229.7726 tevangelis@gibsondunn.com

Click for PDF Decided March 4, 2019 Rimini Street, Inc. v. Oracle USA, Inc., No. 17-1625  Today, the Supreme Court unanimously held that a provision in the Copyright Act authorizing a prevailing party to recover “full costs” entitles that party to recover only those categories of costs enumerated in 28 U.S.C. §§ 1821 and 1920, and not all litigation expenses. Background: While the so-called “American rule” generally provides that each party in litigation must bear its own costs, federal law sets out six discrete and exclusive categories of costs which a court may, in its discretion, award a prevailing party.  28 U.S.C. §§ 1821, 1920.  Those categories include clerk and marshal fees, transcript fees, fees for printing and witnesses, certain fees for exemplification and copies, designated docket fees, and fees for court-appointed experts and interpreters.  Section 505 of the Copyright Act states, “In any civil action under [the Copyright Act], the court in its discretion may allow the recovery of full costs by or against any party . . . . [T]he court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” 17 U.S.C. § 505. Oracle sued Rimini Street for infringing its copyright and prevailed in part. The district court awarded Oracle nearly $5 million in costs and nearly $12.8 million in additional expenses, including expert witness fees, jury consultant fees, and other expenditures not enumerated in Sections 1821 and 1920. The Ninth Circuit affirmed the award of these additional litigation expenses, holding that the phrase “full costs” in the Copyright Act authorizes an award of costs beyond those categories set forth in Sections 1821 and 1920. Issue:  Whether the Copyright Act provision permitting an award of “full costs” to the prevailing party authorizes an award of expert witness fees, e-discovery expenses, jury consulting fees, and other litigation expenses not authorized as costs under 28 U.S.C. §§ 1821 and 1920. Court’s Holding:  No. The term “full costs” in Section 505 of the Copyright Act refers to the specific categories of costs defined in 28 U.S.C. §§ 1821 and 1920, and a prevailing party may not recover litigation expenses outside those categories. “[T]he term ‘costs’ refers to the costs generally available under the federal costs statute—§§ 1821 and 1920. ‘Full costs’ are all the costs generally available under that statute.” Justice Kavanaugh, writing for the unanimous Court Gibson Dunn represented the winning parties: Rimini Street, Inc. and Seth Ravin What It Means: The Court’s opinion reaffirms that “costs” is a term of art that encompasses only the specific categories of costs enumerated in 28 U.S.C. §§ 1821 and 1920. A statute will not be interpreted as expanding the categories of recoverable costs unless Congress expressly so provides. A statutory provision authorizing the recovery of “full costs” does not expressly expand the categories of recoverable costs beyond those enumerated in 28 U.S.C. §§ 1821 and 1920.  “Full” is an adjective that describes the quantity or amount of the noun “costs,” and so the term “full costs” does not change the meaning of “costs”—the categories of expenses set forth in Sections 1821 and 1920—but instead simply permits an award of all costs otherwise recoverable under those provisions. The Court rejected Oracle’s argument that there was any historical justification for interpreting the term “full costs” to expand the categories of recoverable expenses. As Gibson Dunn successfully argued, none of the more than 800 copyright decisions awarding costs between 1831 and 1976 (when the Copyright Act was amended) awarded expenses other than those specified by state or federal law. The Court’s decision will prevent parties in Copyright Act cases from inflating their recoveries with broad, unbounded awards of litigation expenses, such as expert witness fees, e-discovery expenses, and jury consulting fees. Parties will instead be limited to recovering the specific categories of expenses explicitly authorized by Congress in Sections 1821 and 1920, along with attorneys’ fees. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Caitlin J. Halligan +1 212.351.3909 challigan@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practice: Intellectual Property Wayne Barsky +1 310.552.8500 wbarsky@gibsondunn.com Josh Krevitt +1 212.351.4000 jkrevitt@gibsondunn.com Mark Reiter +1 214.698.3100 mreiter@gibsondunn.com

Click for PDF Decided March 4, 2019 BNSF Railway Co. v. Loos, No. 17-1042 Today, the Supreme Court held 7-2 that payments for lost wages due to on-the-job injuries are a form of taxable “compensation” under the Railroad Retirement Tax Act (“RRTA”). Background: A railroad employee sued the railroad for work-related injuries and won a jury award that included $30,000 for lost wages.  The railroad moved to withhold from that amount $3,765 to cover the employee’s share of taxes under the RRTA, which taxes railroad employee “compensation” in order to fund retirement benefits for railroad employees.  26 U.S.C. § 3231(e)(1).  The district court denied the railroad’s motion and the Eighth Circuit affirmed, reasoning that an award for lost wages does not qualify as taxable “compensation” under the statute because “compensation” means “any form of money remuneration paid . . . for services rendered,” id., which does not include payments for services the employee would have rendered but for the injury. Issue:  Whether payments to railroad employees for lost wages due to on-the-job injuries are taxable “compensation” under the RRTA. Court’s Holding: Yes.  The term “compensation” under the RRTA includes not only payments for active service, but also payments for a period of absence from active service that stems from the “employer-employee relationship.”  Social Sec. Bd. v. Nierotko, 327 U.S. 358, 366 (1946). “[W]e hold that ‘compensation’ for RRTA purposes includes an employer’s payments to an employee for active service and for periods of absence from active service. It is immaterial whether the employer chooses to make the payment or is legally required to do so.” Justice Ginsburg, writing for the majority What It Means: The Court’s decision allows railroads to withhold RRTA taxes from payments they make to injured employees for lost wages. As a result of this required withholding of taxes, injured railroad employees will not receive more money from payments for lost wages than they would have received from payments for actual services rendered. The Court harmonized two statutes governing railroad employee retirement benefits:  (1) the Railroad Retirement Act, which determines benefits payable to railroad employees; and (2) the RRTA, which taxes employee “compensation” to pay for those benefits.  The Railroad Retirement Act defines “compensation” to include payment “for time lost as an employee,” 45 U.S.C. § 231(h)(1), and that same term in the RRTA now also encompass lost wages. The decision is the second time in the last two Terms that the Court construed the RRTA.  In Wisconsin Central Ltd. v. United States, 585 U.S. __ (2018), Gibson Dunn successfully argued that stock options were not “compensation” under the RRTA because they are not “money remuneration” within the meaning of the statute. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Caitlin J. Halligan +1 212.351.3909 challigan@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practice: Tax Benjamin H. Rippeon +1 202.955.8265 brippeon@gibsondunn.com

Click for PDF Decided March 4, 2019 Fourth Estate Public Benefit Corp. v. Wall-Street.com, No. 17-571  Today, the Supreme Court held 9-0 that the Copyright Act requires copyright owners to wait until the Copyright Office has approved or denied an application for registration before bringing an infringement action. Background: The Copyright Act allows the owner of a copyright claim to register the claim with the Copyright Office.  Section 411(a) of the Act provides that a suit for copyright infringement may not be filed “until preregistration or registration of the copyright claim has been made” or “refused.”  Petitioner Fourth Estate, a news organization, filed applications with the Copyright Office to register copyright claims for articles written by its journalists.  Before the Copyright Office acted on the applications, Fourth Estate sued Wall-street.com for copyright infringement for displaying the articles on its website without a license.  Wall-street.com moved to dismiss the suit as premature, arguing that Section 411(a) barred Fourth Estate from suing for infringement until the Copyright Office approved or denied its application for copyright registration. Issue:  Has a copyright claim been “regist[ered]” with the Copyright Office, so that the copyright owner can commence an infringement suit, when the copyright owner delivers the required application, deposit, and fee to the Copyright Office, or only once the Copyright Office acts on that application. Court’s Holding: A copyright claim is not “regist[ered]” with the Copyright Office, and the copyright owner may not file an infringement suit, until the Copyright Office has processed the application. “If infringement occurs before a copyright owner applies for registration, that owner may eventually recover damages for the past infringement, as well as the infringer’s profits. . . . She must simply apply for registration and receive the Copyright Office’s decision on her application before instituting suit.” Justice Ginsburg, writing for the unanimous Court What It Means: The Court acknowledged that waiting for the Copyright Office to process an application to register a copyright claim could take “many months,” delaying enforcement and allowing infringement to continue during the delay.  The Court attributed these delays to “staffing and budgetary shortages that Congress can alleviate, but courts cannot cure.” The Court nevertheless emphasized that copyright owners may obtain monetary relief to remedy any infringement that occurs before registration is complete.  That relief could include actual damages or the infringer’s profits.  But the Court did not address the effect of its decision on the more typical remedy, statutory damages.  Section 412 of the Copyright Act limits the availability of that remedy when infringement occurs before the copyright holder registers its copyright claim. To avoid delay, copyright owners now have a greater incentive to seek registration earlier, rather than waiting until litigation is imminent.  Copyright owners can also pay an $800 special-handling fee to expedite processing of their application for registration.  In addition, the Copyright Act provides carve-outs that allow owners of certain works “especially susceptible to prepublication infringement”—including movies, musical compositions, and live broadcasts—to sue for infringement before the Copyright Office has acted on an application. Prior to the decision, some circuits had allowed copyright owners to commence infringement suits while an application for registration was pending, without waiting for the Copyright Office to process the application.  The decision leaves uncertain the effect of the Court’s ruling on currently pending infringement suits in those circuits that would have been considered timely when filed. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Caitlin J. Halligan +1 212.351.3909 challigan@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practice: Intellectual Property Wayne Barsky +1 310.552.8500 wbarsky@gibsondunn.com Josh Krevitt +1 212.351.4000 jkrevitt@gibsondunn.com Mark Reiter +1 214.698.3100 mreiter@gibsondunn.com Related Practice: Media, Entertainment and Technology Scott A. Edelman +1 310.557.8061 sedelman@gibsondunn.com Kevin Masuda +1 213.229.7872 kmasuda@gibsondunn.com Orin Snyder +1 212.351.2400 osnyder@gibsondunn.com

Benchmark Litigation recognized Gibson Dunn as Appellate Firm of the Year and Labor & Employment Management Firm of the Year at its 2019 United States Awards dinner. The awards recognize the country’s most distinguished litigators and firms for their work in the last year.  Benchmark Litigation also recognized Lawson v. Grubhub as one of the labor & employment impact cases of the year. The awards were presented on February 28, 2019 in New York and March 14, 2019 in San Francisco.

Click for PDF Decided February 26, 2019 Nutraceutical Corp. v. Lambert, No. 17-1094 Today, the Supreme Court held 9-0 that Federal Rule of Civil Procedure 23(f)’s 14-day deadline for filing a petition for permission to appeal an order granting or denying class certification is not subject to equitable tolling. Background: Federal Rule of Civil Procedure 23(f) imposes a 14-day deadline to petition for permission to appeal from an order granting or denying class certification. After a district court decertified a class, plaintiff was granted 20 days in which to file a motion for reconsideration.  Plaintiff timely filed the motion 20 days after issuance of the decertification order, which the court denied three months later. Plaintiff then filed a Rule 23(f) petition for permission to appeal 14 days after the denial of reconsideration. The Ninth Circuit granted the petition, holding that Rule 23(f)’s deadline was not jurisdictional and that equitable circumstances may warrant tolling the Rule 23(f) deadline, including where a plaintiff timely informs the district court of his intention to file a reconsideration motion before the Rule 23(f) deadline has lapsed. Issue: Whether Federal Rule of Civil Procedure 23(f)’s 14-day deadline to file a petition for permission to appeal an order granting or denying class-action certification is subject to equitable tolling. Court’s Holding: No.  Rule 23(f)’s 14-day deadline is not subject to equitable tolling. “The Rules . . . express a clear intent to compel rigorous enforcement of Rule 23(f)’s deadline, even where good cause for equitable tolling might otherwise exist.” Justice Sotomayor, writing for the unanimous Court What It Means: The Court’s ruling means that a court may not forgive a party’s failure to file a petition for permission to appeal within Rule 23(f)’s 14-day window.  Although this case arose in the context of a plaintiff’s petition for permission to appeal an order denying class certification, it applies with equal force to petitions filed by defendants seeking to appeal orders granting class certification.  It is therefore imperative that petitions for permission to appeal are filed within Rule 23(f)’s 14-day window. The Court focused on the text of Federal Rule of Appellate Procedure 5(a)(2), which provides that a petition for permission to appeal “must be filed within the time specified,” and Federal Rule of Appellate Procedure 26(b), which states that a court of appeals “may not extend the time to file . . . a petition for permission to appeal.” The Court’s decision makes clear that whether other rules are subject to equitable tolling will depend on whether the pertinent rule or rules “show a clear intent to preclude tolling,” and not on whether the rule is jurisdictional in nature. Two questions remain open after the Court’s decision.  First, the Court did not address whether a motion for reconsideration filed before Rule 23(f)’s 14-day deadline has elapsed may reset the clock.  Second, the Court did not consider whether an order denying reconsideration may itself be appealable under Rule 23(f). Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Caitlin J. Halligan +1 212.351.3909 challigan@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practice: Class Actions Theodore J. Boutrous, Jr. +1 213.229.7804 tboutrous@gibsondunn.com Christopher Chorba +1 213.229.7396 cchorba@gibsondunn.com Theane Evangelis +1 213.229.7726 tevangelis@gibsondunn.com

Washington, DC partner Helgi Walker was elected to the American Academy of Appellate Lawyers. The organization was founded to recognize outstanding appellate lawyers and promote the improvement of appellate advocacy and the administration of the appellate courts. Membership in the Academy is by invitation only. Membership is limited to 500 members in the United States. New members were announced in February 2019. Helgi is a Co-Chair of the firm’s Administrative Law and Regulatory Practice Group and is a member of the Appellate and Constitutional Law Group. She focuses on appellate, regulatory and complex litigation matters. She has extensive experience in appellate challenges to agency rulemakings, particularly in the telecommunications space, and in other high-stakes commercial litigation. By appointment of the U.S. Court of Appeals for the D.C. Circuit, Helgi serves as the Chair of the Court’s Advisory Committee on Procedures. She also serves on the Board of Directors for the Historical Society of the D.C. Circuit.

Law360 named Gibson Dunn one of its four Sports Groups of the Year [PDF] for 2018. The practice group was recognized for “locking down two multimillion-dollar stadium deals, helping NFL players fight back against various league decisions and clearing the way for legal sports betting.” The firm’s Sports practice was profiled on February 20, 2019. Gibson Dunn’s Sports Law Practice Group advises clients on the most complex sports industry matters, from the purchase and sale of U.S. and non-U.S. professional teams to precedent-setting litigation. The firm’s global sports practice represents a wide range of clients in matters relating to professional and amateur sports, including individual teams, sports facilities, athletic associations, athletes, financial institutions, television networks, sponsors and municipalities. The Gibson Dunn global betting and gaming practice is one of the most preeminent betting and gaming legal practices worldwide, representing the most prestigious and influential clients in the industry across Europe, Asia and the Americas. We believe that the Gibson Dunn global betting and gaming practice provides our clients with a unique offering – no other global law firm can offer an award-winning regulatory and compliance capability alongside a market-leading transactional practice in the betting and gaming sector in the United Kingdom, the United States, Europe and the Asia-Pacific Region.

Click for PDF Decided February 20, 2019 Timbs v. Indiana, No. 17-1091  The Supreme Court held 9-0 that the Eighth Amendment’s prohibition of excessive fines applies to the States. Background: After Tyson Timbs pled guilty to dealing in a controlled substance and conspiracy to commit theft, an Indiana state trial court considered Indiana’s request for civil forfeiture of his Land Rover, which he used to transport heroin.  The trial court denied the request, reasoning that forfeiture of the vehicle would be grossly disproportionate to Timbs’s offense, and thus impermissible under the Eighth Amendment’s Excessive Fines Clause, because Timbs had recently purchased the vehicle for $42,000—far more than the maximum $10,000 fine assessable against him for the drug conviction.  The Indiana Supreme Court reversed, concluding that the Excessive Fines Clause applies to only the federal government, not the States. Issue: Does the Eighth Amendment’s Excessive Fines Clause apply to the States? Court’s Holding: Yes.  The Excessive Fines Clause is “fundamental to our scheme of ordered liberty” or “deeply rooted in this Nation’s history and tradition,” McDonald v. Chicago, 561 U.S. 742, 767 (2010), and therefore applies to the States under the Fourteenth Amendment’s Due Process Clause. “[T]he historical and logical case for concluding that the Fourteenth Amendment incorporates the Excessive Fines Clause is overwhelming.” Justice Ginsburg, writing for the unanimous Court What It Means: The Court ruled that the Constitution’s prohibition of excessive fines applies to state and local governments, limiting their abilities to impose fines and seize property for forfeiture. The opinion imposes a new constitutional constraint on more than thirty States that have not already incorporated the Excessive Fines Clause (e.g., Michigan, New York, and Virginia), limiting their ability to levy fines and forfeitures, which are often key sources of revenue for state and local governments. The Court did not address when a fine is impermissibly “excessive” under the Eighth Amendment.  It noted, however, that the lineage of the Excessive Fines Clause traces back to the Magna Carta, which generally required economic sanctions to be proportionate to the underlying wrong. The opinion gives defendants in suits brought by state and local governments a potential new defense to excessive fines and penalties. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Caitlin J. Halligan +1 212.351.3909 challigan@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Related Practices: Anti-Money Laundering, Forfeiture, White Collar Defense, and Investigations Joel M. Cohen +1 212.351.2664 jcohen@gibsondunn.com Charles J. Stevens +1 415.393.8391 cstevens@gibsondunn.com F. Joseph Warin +1 202.887.3609 fwarin@gibsondunn.com Stephanie Brooker +1 202.887.3502 sbrooker@gibsondunn.com M. Kendall Day +1 202.955.8220 kday@gibsondunn.com

The Daily Journal recognized six Gibson Dunn wins in its annual feature on the top verdicts in California for 2018.  The publication named In re: Korean Ramen Antitrust Litigation, Bahamas Surgery Center v. Kimberly-Clark, Lawson v. GrubHub among its top 20 Defense Results and O’Connor v. Uber and Sabadia et al. v. Holland & Knight LLP among its Top 5 Appellate Reversals. The feature was published in the February 20, 2019 issue.

Click for PDF Spearheaded by Daniel M. Kolkey, a former Associate Justice on the California Court of Appeal, Third Appellate District, and former Counsel to the Governor of California, Gibson Dunn’s California Appellate Practice Group has prepared the attached California Supreme Court Winter 2019 Round-Up, which previews upcoming cases and summarizes select opinions issued by the Court.  This edition includes opinions handed down from May through December 2018, organized by subject.  Each entry contains a description of the case, as well as a substantive analysis of the Court’s decision.  The Round-Up provides a resource for busy practitioners seeking an in-depth, timely, and objective report on the California Supreme Court’s actions. To view the Round-Up, click here. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the California Supreme Court, or in state or federal appellate courts in California.  Please feel free to contact the following lawyers in California, or any member of the Appellate and Constitutional Law Practice Group. Theodore J. Boutrous, Jr. – Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Daniel M. Kolkey – San Francisco (+1 415-393-8420, dkolkey@gibsondunn.com) Julian W. Poon – Los Angeles (+1 213-229-7758, jpoon@gibsondunn.com) Theane Evangelis – Los Angeles (+1 213-229-7726, tevangelis@gibsondunn.com) Kirsten Galler – Los Angeles (+1 213-229-7681, kgaller@gibsondunn.com) Michael Holecek – Los Angeles (+1 213-229-7018, mholecek@gibsondunn.com) Jennafer M. Tryck – Orange County (+1 949-451-4089, jtryck@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

Click for PDF This edition of Gibson Dunn’s Federal Circuit Update summarizes the Supreme Court’s on-sale bar decision as well as key filings for certiorari or en banc review.  The Update lists the Federal Circuit’s new guidelines to address scheduling conflicts.  We also summarize recent Federal Circuit decisions confirming the scope of required IPR review, deciding the impact of term changes on obvious-type double patenting, and reflecting differences in how infringement letters can give rise to personal jurisdiction for declaratory judgment claims. Federal Circuit News Supreme Court: Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc. (No. 17-1229):  On January 22, 2019, the Supreme Court unanimously affirmed the Federal Circuit’s decision that a commercial sale to a third party may trigger the “on-sale bar” under 35 U.S.C. § 102(a), even if that third party is required to keep the sale confidential.  The Supreme Court explained that its pre-AIA precedent did not require a sale to be public for purposes of the bar.  Writing for the Court, Justice Thomas explained: “we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.”  The AIA’s addition of the phrase “or otherwise available to the public” was insufficient to support a different conclusion. Helsinn stands to particularly impact companies where inventors need to raise capital before an invention, although sufficiently complete for a patent application, is ready to be commercialized.  Biotechnology and life sciences firms, for example, may need to consider earlier filings at the research and development stage or strategically review how capital acquisition is structured.  A summary of the decision from our Appellate and Constitutional Law Practice can be found here. There is one additional patent case from the Federal Circuit scheduled to be heard in 2019, and one trademark case for which certiorari was granted. Case Status Issue Amicus Briefs Filed Return Mail Inc. v. United States Postal Service, No. 17-1594 Argument scheduled February 19, 2019. Whether the government is a “person” who may petition to institute review proceedings under the Leahy-Smith America Invents Act 9 Iancu v. Brunetti, No. 18-302 Certiorari granted January 4, 2019. Whether Section 2(a) of the Lanham Act’s prohibition on registration of “immoral” or “scandalous” marks is facially invalid under the free speech clause of the First Amendment – Noteworthy Petitions for a Writ of Certiorari: HP Inc. v. Berkheimer (No. 18-415):  On September 28, 2018, HP filed for certiorari, presenting the question of “whether patent eligibility is a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of the art at the time of the patent.”  HP argued that, based on Supreme Court precedent, including Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), patent eligibility is a question of law for the court. As we earlier reported, the Federal Circuit (Moore, Taranto, Stoll, JJ.) held that step two of the Alice patent-eligibility analysis—whether claims involve well-known, routine, or conventional activities—presents a question of fact.  Accordingly, the panel vacated in part and remanded a grant of summary judgment under Section 101, holding that a genuine issue of material fact existed.  HP petitioned for rehearing en banc, which the Federal Circuit denied.  Judge Reyna dissented from that denial, arguing that the decision is a “change in” the Federal Circuit’s law and “counter to guidance from the Supreme Court” in Alice.  As a practical matter, the decision limits accused infringers ability to obtain a dismissal on subject matter grounds before trial. Several amici have filed to support HP’s petition, including the Electronic Frontier Foundation, T-Mobile USA, Inc. and Sprint Spectrum L.P.  On January 7, 2019, the Supreme Court invited the Solicitor General to file a brief expressing the views of the United States on this issue. Mark Perry of Gibson Dunn serves as co-counsel for HP in this matter.  Mark, as well as Gibson Dunn attorneys Helgi Walker, Brian Buroker, and Alex Harris, also successfully represented CLS Bank in the Supreme Court Alice case. Hikma Pharmaceuticals USA Inc. v. Vanda Pharmaceuticals Inc. (No. 18-817):  On December 27, 2018, Hikma filed for certiorari, seeking review of “whether patents that claim a method of medically treating a patient automatically satisfy Section 101 … even if they apply a natural law using only routine and conventional steps.”  Hikma argues that the Federal Circuit’s decision “sharply breaks” from and “effectively overrules” Supreme Court precedent in Alice and Mayo. The Federal Circuit panel majority (Lourie, Hughes, JJ.) held that a method of treating schizophrenia with iloperidone, with dosage based on a patient’s genotype, is patent-eligible.  According to the ruling, the method “makes iloperidone safer” and requires a doctor to administer the drug in set amounts based on testing.  The claims are thus “directed to a specific method . . . using a specific compound at specific doses to achieve a specific outcome.” Chief Judge Prost dissented, arguing the claims were no more than an “optimization” of an existing treatment and that the specific dosage required added “nothing inventive . . . beyond [a] natural law.”  Adding to Judge Prost’s criticism, Hikma argues that, so long as claims are now drafted as methods of treatment, the Federal Circuit’s ruling no longer requires claims directed to natural laws to contain other inventive elements as Mayo dictates, with the PTO now using the challenged ruling to instruct examiners that “it is not necessary for ‘method of treatment’ claims that practically apply natural relationships to include nonroutine or unconventional steps.” Noteworthy Petitions for En Banc Review: Eli Lilly has petitioned for en banc review from the decision in Erfindergemeinschaft UroPep Gb v. Eli Lilly and Co. (No. 17-2603).  The petition asks as one of its two questions: Does a single-step therapeutic method claim violate the “written description” and “enablement” requirements of 35 U.S.C. § 112 under longstanding precedent of this Court and the Supreme Court where: a)      the sole limitation in the claim’s single step that potentially imparts patentability to the claim merely recites a function to be performed, b)      the claim preempts all future ways that might be discovered to perform the function recited in the claim, and c)      the specification fails to identify which, if any, of the embodiments disclosed in the specification actually perform the function to which the claim is directed. This petition could allow the Federal Circuit to clarify written description and enablement requirements for methods of medical treatment, particularly in light of decisions such as Mayo and Alice.  Coupled with the certiorari petition from Hikma, it also reflects further challenge to the Federal Circuit’s upholding method of treatment claims, albeit in the context of Section 112.  The Washington Legal Foundation and Eisai Co. have filed amicus briefs in support of Eli Lilly. Federal Circuit Practice Update Revision to Process for Advising of Scheduling Conflicts: On December 10, 2018, the Federal Circuit revised its process for advising it of scheduling conflicts: The court will only consider scheduling conflicts by arguing counsel; non-arguing counsel and client conflicts will no longer be considered when scheduling argument. Arguing counsel must provide an explanation, including a showing of good cause, for any submitted scheduling conflict. Arguing counsel will be limited to submitting only ten total days of unavailability during the six consecutive court weeks identified in the Notice to Advise of Scheduling Conflicts. The Federal Circuit also stated that “[c]onflicts submitted without a sufficient showing of good cause will not be considered by the court when scheduling argument.”  The Federal Circuit’s notice can be found here. Key Case Summaries (December 2018 – January 2019) AC Technologies S.A. v. Amazon.com Inc., No. 18-1433 (Fed. Cir. Jan. 9, 2019):  If the Board institutes an IPR, it must address all grounds of unpatentability raised by the petitioner. Amazon petitioned for review of one of AC’s patents relating to a data management system.  Although Amazon only identified one piece of prior art, it asserted three grounds depending on how a key term was construed.  The Board instituted the IPR on the basis of one construction.  Later, the Board construed the claim differently, finding that Amazon had failed to show invalidity on two of its three grounds.  Amazon moved for reconsideration, noting that the Board did not address its third ground.  The patentee argued that the third ground had never been instituted, but the Board evaluated it and invalidated the challenged claims on that basis. The Federal Circuit (Stoll, J.) affirmed, rejecting the patentee’s argument that the Board erred by addressing a ground of invalidity that was not expressly part of its institution decision.  The panel explained that the Board either institutes review, or does not, and it must render a final decision addressing all challenged claims.  Likewise, “if the Board institutes an IPR, it must similarly address all grounds of unpatentability raised by the petitioner” (emphasis added). Novartis AG v. Ezra Ventures LLC, No. 2017-2284 (Fed. Cir. Dec. 7, 2018) and Novartis Pharms. Corp. v. Breckenridge Pharm. Inc., Nos. 2017-2173, -2175, -2176, -2178, -2179, -2180, -2182, -2183, -2184 (Fed. Cir. Dec. 7, 2018): Term extensions do not give rise to obviousness-type double patenting (Novartis represented successfully by Gibson Dunn in Ezra). Obviousness-type double patenting (ODP) is a judicial doctrine that prevents patentees from obtaining sequential patents on the same invention, or obvious variants, that extend exclusivity beyond the original patent term.  In the two Novartis cases, the Federal Circuit addressed how to apply ODP if an earlier-filed patent obtains a later expiration than a later-filed patent due to a term extension or due to the term change in the 1995 Uruguay Round Agreements Act (URAA). In Ezra, the Federal Circuit considered ODP in the context of Section 156, which can extend term up to five years when an invention could not be commercialized without approval from a regulatory agency, such as the FDA.  Novartis’s first patent was to expire in 2014, and a second, related patent to expire in 2017.  But, based on an extension, the first patent’s term was extended to 2019—after expiration of the second, later-filed patent.  Ezra argued that the first patent was invalid or should be at least terminally disclaimed to the expiration of the later-filed patent. The Federal Circuit (Chen, J.) rejected Ezra’s positions.  According to the panel, Section 156 allows a patentee to choose one patent to extend, and “[a]s long as the requirements for a patent term extension recited in § 156(a) are met, the Director of the Patent and Trademark Office ‘shall’ grant a [patent term extension] on the patent of the patentee’s choice.”  ODP does not invalidate a patent with a validly-obtained patent term extension because holding otherwise “would mean a judge-made doctrine would cut off a statutorily-authorized time extension.” Breckenridge considered ODP in light of the 1995 change in patent term from 17 years after issuance to 20 years from the earliest effective filing date.  Novartis had two patents that both claimed the same priority date.  Because of the URAA’s change in term, the first, earlier-filed patent, a pre-URAA patent, was to expire later than the second post-URAA patent. The Federal Circuit (Chen, J.) held that the URAA change did not give rise to ODP.  Novartis had not tried to extend its patent term.  Rather, the difference was created by the URAA—indeed, it “truncated” the term of Novartis’s second-filed patent.  The panel held that a change in law “should not truncate the term statutorily assigned” to the first patent, and that holding otherwise “would abrogate Novartis’s right to enjoy one full patent term on its invention.” Jack Henry & Assoc., Inc. v. Plano Encryption Techs. LLC, No. 16-2700 (Fed. Cir. Dec. 7, 2018): Infringement letters can establish personal jurisdiction and venue in a declaratory action. Jack Henry brought a declaratory action against Plano in the Northern District of Texas.  Plano had sent enforcement letters to Jack Henry (which did business in the district) identifying Plano’s patents, stating its belief that infringement was occurring, and offering a license.  Thus, minimum contacts were met—the issue was whether exercising jurisdiction would be reasonable and fair.  The district court held that Plano’s contacts should not subject it to jurisdiction. The Federal Circuit (Newman, J., joined by Wallach and Stoll, JJ.) reversed, rejecting the view that infringement letters alone cannot provide a basis for personal jurisdiction in a declaratory action.  The panel noted that Plano did not contend that jurisdiction in the district would be inconvenient.  Plano was also subject to general jurisdiction in Texas and was registered to do business throughout the state.  Under these facts, personal jurisdiction and venue were satisfied. Maxchief Investments v. Wok & Pan, Indus., No. 18-1121 (Fed. Cir. Nov. 29, 2018): Infringement letters do not establish jurisdiction just because they are directed to the forum. Maxchief brought a declaratory judgment action against Wok & Pan in the Eastern District of Tennessee.  Wok & Pan had sent infringement notices to Maxchief’s attorney in the district, although Maxchief itself was a Kansas company that did not operate in Tennessee.  Maxchief also argued that a separate suit by Wok in California, which sought a broad injunction impacting Maxchief’s products, would have “effects” in Tennessee as one of its distributors operated there.  But the district court dismissed the suit, holding Maxchief failed to allege the minimum contacts. The Federal Circuit (Dyk, J., joined by Reyna, J., and Hughes, J.) affirmed, holding that personal jurisdiction based on enforcement activity requires intentional conduct “directed at the forum.”  “[I]t is not enough that Wok’s lawsuit might have ‘effects’ in Tennessee.”  As to infringement letters, the panel deemed the contact to be with Maxfield in Kansas, notwithstanding that the letter was sent to a lawyer in Tennessee.  Taken with Jack Henry above, this illustrates the fact-dependent nature of the personal jurisdiction inquiry for declaratory judgment actions. Upcoming Oral Argument Calendar For a list of upcoming arguments at the Federal Circuit, please click here. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Federal Circuit.  Please contact the Gibson Dunn lawyer with whom you usually work or the authors of this alert: Blaine H. Evanson – Orange County (+1 949-451-3805, bevanson@gibsondunn.com) Raymond A. LaMagna – Los Angeles (+1 213-229-7101, rlamagna@gibsondunn.com) Please also feel free to contact any of the following practice group co-chairs or any member of the firm’s Appellate and Constitutional Law or Intellectual Property practice groups: Appellate and Constitutional Law Group: Caitlin J. Halligan – New York (+1 212-351-4000, challigan@gibsondunn.com) Mark A. Perry – Washington, D.C. (+1 202-887-3667, mperry@gibsondunn.com) Intellectual Property Group: Wayne Barsky – Los Angeles (+1 310-552-8500, wbarsky@gibsondunn.com) Josh Krevitt – New York (+1 212-351-4000, jkrevitt@gibsondunn.com) Mark Reiter – Dallas (+1 214-698-3100, >mreiter@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.