We are pleased to present the 41st edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight recent Supreme Court cases that address securities class actions, copyright law, and patent law, and other news that will have an impact on business and litigation. We hope you enjoy the newsletter.
In the News:
The U.S. Supreme Court affirms that plaintiffs asserting securities fraud claims may continue to rely upon a rebuttable presumption of reliance, preserving the existing requirements for class action relief. Under Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5, a plaintiff must prove a material misrepresentation or omission made by the defendant, as well as reliance. However, under the “fraud on the market” theory, courts have presumed reliance on the misrepresentation or omission, assuming that market prices for the security reflect all publicly available information, including the misrepresentations. This presumption was significant because it allowed class actions to proceed without the need for individualized evidence addressed to each plaintiff’s reliance on the misstatement or omissions at issue. In the case, Halliburton Co. v. Erica P. John Fund, Inc., class action defendant Halliburton invited the Court to reject the presumption of reliance and require individualized proof for each class member. The Supreme Court declined Halliburton’s invitation, which would have greatly curtailed class action relief in large-scale securities class actions.
Read more about the case here and access the Court’s opinion here.
The U.S. Supreme Court rules that an alternative television service provided by an internet upstart violates copyright laws, handing a major victory to cable service providers. The company, Aereo, Inc., provided television programing by capturing over-the-air broadcasts and transmitting them to subscribers using internet-connected devices. Broadcasters and producers challenged the company’s practices, asserting that its subscription service violated copyright laws. Under the Copyright Act, copyright owners are granted the exclusive right to “perform [a] copyrighted work publicly.” Amendments to the Copyright Act adopted in 1976 clarified that a “performance” of an audiovisual work includes transmission to the public share images and accompanying sound. Rejecting Aereo’s argument that only subscribers could be liable for copyright infringement, the Court held that both the broadcaster and viewer amount “performers” within the meaning of the Copyright Act. The Court’s decision casts doubt on the future of Aereo, which suspended its services.
Access the Court’s opinion here and read more about this development here.
The U.S. Supreme Court invalidates a patent addressed to computerized settlement of financial transactions, holding that abstract ideas may not be patented. The case, Alice Corporation v. CLS Bank International, concerned a patent held by Alice Corporation on its computer system for the settlement of financial transactions. Competitors sought to invalidate Alice Corporation’s patents, arguing that its patent was addressed to abstract concepts that could not be subject to patent protection. Under Section 101 of the Patent Act, patents may be issued on any “new and useful process, machine, manufacture or composition of matter,” but the Supreme Court has made clear that abstract ideas, laws of nature, and natural phenomena are not patentable. Holding that Alice Corporation’s patent was directed toward common commercial practices and abstract ideas, the Court affirmed a decision by U.S. Circuit Court of Appeals for the Federal Circuit invalidating the company’s patent.
Read more about this development here and access the case here.
A former minor league player-turned-lawyer brought a class action suit against Major League Baseball for violation of federal statutes regarding minimum wage and overtime.The player, Garrett Broshuis, serves as class counsel to former minor league players who had no service time in the major leagues. The suit alleges that only ten percent of minor league players make it to the major leagues, and that starting pay for minor leaguers over the three-month season ranges between $1,100 and $2,150 per month. Broshuis formerly pitched for a Class A-affiliate of the San Francisco Giants.
Read more about this development here.