Supreme Court Changes the Climate on Greenhouse Gas Suits

Yesterday, the U.S. Supreme Court issued its much-anticipated decision in American Electric Power Co. v. Connecticut, reviewing whether federal common law would support a claim that greenhouse gas emissions could give rise to a public nuisance claim that would warrant injunctive relief against future emissions. The Court concluded that the federal common law cannot support such a claim.

The plaintiffs, including eight states,[1] New York City, and three nonprofit land trusts, brought suit in the Southern District of New York against five electric power companies alleged to be the largest emitters of carbon dioxide in the United States. The complaint alleged that carbon dioxide emissions contributed to global warming and thereby constituted a nuisance under federal common law. The plaintiffs requested an injunction limiting emissions in the future. No monetary damages were sought. The district court dismissed the case, finding that the complaint presented a nonjusticiable political question. The Second Circuit reinstated the case, holding that the plaintiffs were not barred by the political-question doctrine and had stated a federal common law nuisance claim.

The Supreme Court, although equally divided,[2] first dealt with a preliminary issue, affirming that the plaintiffs had standing. In doing so, it relied without further discussion on its earlier decision in Massachusetts v. EPA, 549 U.S. 497 (2007). It then moved to the merits. The Court acknowledged that a federal common law for “subjects of national concern” exists and that this common law extends to environmental protection of air and water. But it bypassed answering whether that common law approach could extend to claims that carbon dioxide emissions are a nuisance, stating it was unnecessary to decide the issue because even if such a common law claim could theoretically exist, the Clean Air Act (CAA) has effectively “displaced” such federal common law claims.

In reaching its conclusion, the Court discussed several specific CAA features. First, it noted that in Massachusetts the Court had already concluded that carbon dioxide emissions are air pollutants subject to regulation under the CAA. Second, it concluded that the CAA “speaks directly” to carbon dioxide emissions from the defendants’ plants. In supporting this “speaks directly” conclusion, the Court focused on the Environmental Protection Agency’s (EPA’s) ability to regulate under CAA Section 111 stationary sources that “cause or contribute significantly to air pollution.” In addition, the Court noted that the CAA provides multiple avenues for EPA to enforce noncompliance with its regulations and that the CAA allows private parties to request EPA to set such industry rules, and that EPA’s response to such requests is subject to review in federal court.

Notably, the Court was clear that its displacement analysis did not depend on EPA exercising its regulatory authority and setting the emissions standards for carbon dioxide. The Court indicated that it is enough that EPA has been given the power to do so in the CAA. Thus, the Court expressly noted that if EPA declines to regulate carbon dioxide emissions under Section 111, the federal courts would still have no role in entertaining such nuisance suits, although the federal courts would have a role in reviewing EPA’s decision not to regulate. In dealing a substantial, and perhaps lethal, blow to such nuisance suits relying on federal common law, the Court nevertheless left unanswered whether such suits may remain viable under state law. The Court stated that it was a separate question whether the CAA preempts such state law claims.

The decision is a major win for those actually or potentially facing such federal common law nuisance suits. But in emphasizing the authority that the CAA apparently gives EPA to regulate greenhouse gas emissions, the decision will also affect the ability to challenge any EPA regulations issued in the future. In addition, by leaving open the possibility that state law claims may remain viable, yesterday’s decision will likely simply push such suits to be pled under state law. This will generate yet further litigation about whether the CAA is clear in preempting such state law claims, an analysis similar to, but with significant differences from, whether federal law claims are displaced.

“Particular Machine” not required: Ex Parte Dietz et al., Appeal 2009-008029, BPAI

Ex Parte Dietz answers the question, at least as far as this BPAI panel is concerned, as to what structure need be recited in a “software claim” to bring it within the “machine” category of patent eligible subject matter. What is notable perhaps in its absence is any reference to the need to recite any “particular machine,” as opposed to simply just a “server” or the like, in order to bring a claim into the realm of the patent eligibility. Ex Parte Dietz et al In Ex parte Dietz, the following claim 1 was rejected under Section 101 for failure to recite at least one hardware element.

1. In a World Wide Web (Web) communication network with user access via a plurality of data processor controlled interactive receiving display stations for displaying received hypertext Web documents, transmitted from source sites on the Web, including at least one display page containing text, images and a plurality of embedded hyperlinks, each hyperlink being user activatable to access and display a respective linked hypertext Web document from source sites on the web, a system for controlling access activity from activated hyperlinks and their respective Web document source sites comprising:

means for applying said prioritization in the determination of the order in which the web documents linked to activated embedded hyperlinks in said web document are to be accessed.

means at said source sites for prioritizing said plurality of embedded hyperlinks in a Web document; and

More specifically, the examiner found that claim 1 “may be directed to software per se since the ‘means … for prioritizing’ and ‘means for applying’ are not defined in the specification as exclusively hardware.” The Examiner accordingly found that “the use of the word ‘system’ do[es] not inherently mean that the claim is directed to a machine” and absent recitation of at least one hardware element, the claim is directed to non-statutory subject matter (Ans. 3 and 16).”

The BPAI reversed the examiner, essentially finding that the “World Wide Web communication network” and the “source site” both include physical structure and serve as structural limitations:

“Appellants’ “system” claim recites a World Wide Web communication network. Claim 1 also recites source sites. Interpreting “source site” broadly, but reasonably in light of the specification and as one of ordinary skill in the art would have defined the term at the time of invention, we conclude “source site” encompasses hardware – such as a server as shown in Fig. 2 (See In re Am. Acad. of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004); See also, FF1 and FF 2). A “machine is a ‘concrete thing, consisting of parts, or of certain devices and combination of devices.’ This ‘includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.” Ferguson, 558 F.3d at 1364 (quoting Nuijten, 500F.3d at 1355). Thus, a close review of Appellants’ claims shows that they do recite physical structure – the source sites and World Wide Web communication network and such recitations serve as structural limitations. Even if we were to presume the recited “means” are software based, the system still recites that embedded hyperlinks are prioritized by the means at the source sites and the various information supplied by the source sites are used to apply the prioritization. Thus, we conclude that claim 1 recites a machine and accordingly, that claim 1 is directed to statutory subject matter.”

A different result, however, was reached with respect to the following claim 17:

17. A World Wide Web (Web) hypertext document including at least one display page containing text, images and a plurality of embedded hyperlinks, each hyperlink being user activatable to access and display a respective linked hypertext Web document from source sites on the Web further including: a hypertext markup language tag associated with each embedded hyperlink indicating the priority of each hyperlink in the determination of the order in which the Web documents linked to the activated embedded hyperlinks in said Web document are to be accessed.

In the case of claim 17, the BPAI upheld the examiner’s rejection under Section 101, finding that the claim recited only a hypertext document with no functionality, and further was not a data structure tied to a non-transitory, tangible computer readable medium. Accordingly, the BPAI found that claim 17 recited a document that lacked any physical structure and further was not a process or a composition of matter. The BPAI explained:

“Claim 17 recites a hypertext document. The document does not have any physical structure and thus, does not fall within the machine category of statutory subject matter. Nor does the document fall within the process or composition of matter categories. Specifically, no “act or series of acts” is recited (See Nuijten, 500 F.3d at 1355) and the claims do not recite a composition “of two or more substances” or “composite articles” that are the result “of chemical union, or of mechanical mixture . . . whether they be gases, fluids, powders or solids.” (See id. at 1357 (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980).) Although one might argue that the claims are directed toward an article of manufacture, we conclude they are not. “Articles” of “manufacture” are “tangible articles or commodities” “result[ing] from the process of manufacture.” (See Nuijten, 500 F.3d at 1356 (citing Chakrabarty, 447 U.S. at 308); Bayer AG v. Housey Pharms., Inc., 340 F.3d 1367, 1373 (Fed. Cir. 2003).) A claim that recites no more than software, logic or a data structure (i.e., an abstract idea) – with no structural tie or functional interrelationship to an article of manufacture, machine, process or composition of matter – does not fall within any statutory category and is not patentable subject matter (Warmerdam, 33 F.3d at 1361; see Nuijten, 500 F.3d at 1357). The scope of such a claim is not limited to any particular practical application. In particular, data structures in the abstract, i.e., not claimed as embodied in a non-transitory tangible computer-readable medium are descriptive material per se and are not statutory subject matter because they are not capable of causing functional change in a computer (In re Warmerdam, 33 F.3d 1354, Appeal 2009-008029 Application 10/713,726 1361 (Fed. Cir. 1994); cf. In re Lowry, 32 F.3d 1579, 1583-84 (Fed. Cir.1994); accord MPEP § 2106.01 (2007)). Claim 17 recites a hypertext document—data. Claim 17 does not recite any functionality. Claim 17 merely describes a function that the data (the hyperlink) may have – that it is user activatable. In addition, the hyperlink document is not directed to a data structure in a non-transitory tangible computer-readable medium. Therefore, we conclude since claim 17 merely recites data, claim 17 recites an abstract idea. Accordingly, claim 17 is directed toward non-statutory subject matter.

On the other hand, claim 18 which recites that the web document of claim 17 is at a source Web site was found to statutory under Section 101, as reciting a data structure with structural elements:

“More than mere abstraction, data structures are specific electrical or magnetic structural elements in a memory. In In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994), the data structures provide tangible benefits: data stored in accordance with the claimed data structures are more easily accessed, stored, and erased. The opinion further notes that, unlike prior art data structures, Lowry’s data structures simultaneously represent complex data accurately and enable powerful nested operations. In short, Lowry’s data structures were found to be physical entities that provide increased efficiency in computer operation. They are not analogous to printed matter (id. at 1584). The additional recitation of the document at the source Web site moves the data into a physical structure or machine. The embedded hyperlink is user-activatable to access and display a linked hypertext Web document from source sites. Thus, the recited hypertext document is a physical entity that provides the access and display to the linked hypertext Web document from other source sites with an indicated priority. Thus, unlike claim 17 which merely recites data (which could be on paper), this claim recites a data structure including structural elements. Accordingly, claim 18 is directed toward statutory subject matter.”

The remaining 101 rejection related to whether or not the Applicant’s claim 21, which was directed to a computer program stored on a computer readable medium. This rejection was upheld, but only due to the fact that the claim had not been limited to non-transitory signals and therefore read on a signal, as prohibited by In re Nuijten, 500 F.3d 1346, 1356-57 (Fed. Cir. 2007).

Pennsylvania Abolishes Joint Liability with Enactment of Fair Share Act

On June 28, Pennsylvania Governor Tom Corbett signed the Fair Share Act (the Act) (2011 Pa. S.B. 1131) into law. The Act amends Pennsylvania’s long-standing practice of joint and several liability to a several liability model that permits a jury to award damages based on a percentage of fault. A prior iteration of the Act was signed into law in 2002 but was found to violate the Pennsylvania Constitution on procedural grounds.

Under current Pennsylvania law, joint and several liability requires a defendant that is found responsible for any portion of a plaintiff’s injury to be responsible for 100% of the damages owed to the plaintiff, regardless of the apportionment of fault. Under the Act, a defendant that is found less than 60% liable will only be responsible for its proportionate share of the total. Conversely, a defendant that is found to be liable for 60% or more of the damages will be jointly and severally liable for the total damages owed to the plaintiff. If joint and several liability applies, a defendant that has paid more than its proportionate share of damages may seek to recover contributions from co-defendants. The Act contains exceptions permitting joint liability to continue to be imposed for intentional misrepresentations, intentional torts, certain environmental contamination claims, and certain violations of the Liquor Code.

With respect to apportionment of fault, the Act limits the population of potentially responsible nonparties that a jury may consider. The Act permits a jury to consider nonparties that entered into a settlement agreement with the plaintiff. Although judgment cannot be entered against a settling party, the jury is permitted to find the settled party responsible for a percentage of the damages. The Act does not permit a jury to apportion fault to employers who are immune from tort liability pursuant to the Workers’ Compensation Act.

Pennsylvania will now join the overwhelming majority of states that recognize some form of apportionment of fault.

Auto-Classification Review Technologies: What Every Attorney Needs to Know

A Leap in Automated Document Classification Technologies Proves to Tame the Document Review Beast – But Here’s What You Need to Know

“Watson,” a computer using machine learning and other techniques, recently made international news when it dominated Jeopardy legends for three consecutive nights, prompting IBM’s general counsel to suggest that machine learning techniques might prove useful in finding information important to litigation.

The application of linguistic analysis technologies and machine learning to improve the way large volumes of information are assessed has been around for more than a decade. For example, probabilistic latent semantic analysis (PLSA), a text-based modeling technique to predict relevance based on a subset of human-assessed documents, has been commercially applied to patent searches, business intelligence tools, online advertising optimization, and even automated essay grading.[1] And predictive coding, another machine learning technique, has been used for distinguishing SPAM from non-SPAM emails, for example. [2]

Machine Learning in E-Discovery

Such techniques are increasingly being applied in e-discovery, as attorneys’ machine learning approaches help curb the growing cost of document review. Most auto-classification tools take a manual sampling and review process and automate workflow so attorneys can get to important documents faster, with less junk to look at along the way.

For example, automated document classification technologies based on PLSA, combine attorneys’ expertise with computerized review technology and technical expertise to prioritize, or “rank,” documents for review. Attorneys review a sample of the document collection, designating them as relevant or not. Based on results, the technology “learns” how to rank documents based on their likelihood of being relevant. In this iterative process, the software progressively improves accuracy and consistency of its scoring and then ranks the entire collection. Attorneys are presented with groups of prioritized documents, and can quickly access those most likely to be relevant and prioritize (or, in some cases, eliminate) review accordingly.

When machines do the heavy lifting, review is faster and cheaper, and accuracy and consistency enhanced. A recent survey of legal professionals, conducted by Xerox Litigation Services and Acritas Research, found that 72 percent who use automated document classification solutions achieved significant time savings. Another 64 percent said it was more cost-effective than manual review, and over half cited improvements in review consistency, accuracy, and budget planning.[3]

Auto-Classification Technologies Cannot Replace Humans

Given the advantages of machine learning techniques, a whole class of do-it-yourself push button auto-classification software, referred to by some as “predictive coding,” has cropped up over the past few years.

But is technology alone enough to achieve accurate, consistent, and defensible results?

It’s becoming widely understood by attorneys and the courts alike that not only must the proper expertise, audit trail, and measurement be present; the process itself must be repeatable and yield consistent results. In fact, studies conducted by Text REtrieval Conference (TREC) Legal show that document review processes that employ a combination of computer and human input are superior.[4]

Beyond Do-It-Yourself Software: What to Look for in Automated Document Classification Technology

So when evaluating auto-classification technologies, what should legal teams look for? Below are key questions to consider:

  1. Are the software, process, and workflow transparent? Make sure you are working with a vendor who can explain their process, technology, and expertise they bring to the project – in detail.
  2. Are the right legal and subject matter experts involved? It is important that senior attorneys or subject matter experts be involved throughout the process to review documents and help “train” the technology.
  3. Are the appropriate technical experts involved? Relying on software implementation by your IT staff, or a vendor that hosts the software for you, is not sufficient. Technical experts, including statisticians and linguists, can drive the technology and process, and ensure statistically sound sampling, measurement of output, and improved results by developing additional models. A good team will also design and assign attorney workflow.
  4. How does the technology “learn” and improve? The process must be iterative, and the software must be able to adapt to additional expert review insights to improve output.
  5. How does the technology identify discrepancies in attorney assessments? Look for a process that identifies ambiguities in how expert reviewers assessed a specific document. Technical experts should be able to route these documents back to the reviewers to confirm or alter judgments on the documents and improve QC.
  6. Is there a robust audit trail?Experts should provide detailed records of key project parameters and inputs, decisions, and results throughout the process that show consistency when the same inputs and procedures are adopted.
  7. How are results validated? Statistically valid measurements, such as precision and recall, should be generated at every stage of the process for ongoing QC and final QA.

With rapid advancements in auto-classification technologies in e-discovery, the future of document review is clear. What’s becoming more clear is how and why appropriate human experts are critical in the process to ensure more accurate, consistent, and defensible results.

Social Media and the National Labor Relations Board

Recent statistics suggest that employer discipline of employees for off-the-job tweets, blogs and Facebook postings is on the rise. Employers have justifiable concerns regarding loss of confidential information, as well as poor public exposure, as a result of the online rants and raves of workers.  However, the National Labor Relations Board, which applies to both union and non-union employers, has provided some cover for employees who cannot resist telling their friends and the world what they think of their employer.

In Hispanics United of Buffalo, Inc., a Regional Director for the NLRB issued a complaint against a non-profit organization for firing five employees after they posted critical comments about working conditions on one of the employee’s Facebook pages. The postings pertained to employee complaints about workloads and staffing levels. The employer attempted to characterize the termination decision as based upon unprotected harassment of a fellow employee who was the subject of an initial Facebook posting. That posting had then drawn the responses from the five employees in question who defended their work and blamed productivity issues on staffing shortfalls. However, the postings were deemed “concerted activity” for the mutual aid and protection of workers and the terminations therefore found unlawful by the Board’s general counsel.

On April 21, the Office of General Counsel for the Board issued a memorandum in another case in which the employee’s use of social media was found not to be protected under the National Labor Relations Act. In Lee Enterprises, Inc., a public safety reporter claimed he was fired in violation of the Act based upon protected tweets on a work-related Twitter account. The newspaper had encouraged its reporters to use Twitter and other social network tools to get information to the public who might not otherwise read newspapers in order to encourage them to go to the newspaper’s website. A reporter soon became an over-enthusiastic tweeter and his tweets poked fun at his own newspaper, as well as television reporting. He also provided offensive commentary about the downturn in homicides in Tucson with tweets such as: “What?!?!?  No overnight homicide?  WTF?  You’re slacking Tucson.”

The reporter was terminated for disregarding “professional courtesy and conduct expectations.” He filed an unfair labor practice charge alleging that he could not be terminated for engaging in protected activity. General Counsel determined that the Twitter postings at issue did not involve protected concerted activity since the postings “did not relate to the terms and conditions of his employment or seek to involve other employees and issues related to employment.”

The reporter also argued that certain supervisory statements that the reporter would not be allowed to tweet about anything work related were also violative of the Act. However, the General Counsel determined these statements, while overbroad and violative of federal labor law, neither led to the termination nor constituted new “work rules” since they were not shared with other employees.

A lesson in both cases is that employer social media policies and enforcement cannot reach postings related to the terms and conditions of employment, especially if other employees are involved in the posting. This places employers in an extremely difficult position since employee disclosure of confidential data on social media sites is often inextricably interwoven with colorable employment concerns. However, at a minimum, any written policies for both union and non-union employers should be narrowly drawn to exclude this protected activity. In addition, if subject to a union agreement, employers may need to bargain with the union before implementing any changes in their social media policies.