The economic fallout from the COVID-19 pandemic and the sudden and worldwide shuttering of large and small businesses may be felt for a long time. One of the resulting issues is the applicability of a force majeure clause, or common-law impossibility, frustration of purpose, or commercial impracticability excuses for contract performance and obligations. Force majeure clauses come into effect when events occurring beyond the control of the parties prevent performance of contract obligations. Some contracts include specific force majeure events that will excuse performance at this time, such as a pandemic (the World Health Organization declared a pandemic on March 11, 2020) or when governmental or administrative action is taken that disrupts or precludes performance under a contract.Read More
Business Law Legal Research Blog
In Return Mail, Inc. v. USPS, 139 S. Ct. 1853 (2019), the U.S. Supreme Court held that a federal agency is not considered a "person" for purposes of seeking review of the validity of a patent under the Leahy-Smith America Invents Act of 2011 ("AIA"), 35 U.S.C. §§ 1 et seq. The AIA, enacted on September 16, 2011, changed the patent system from a first-to-invent to a first-inventor-to-file system. The transition to a first-to-file system took place over a period of approximately 18 months.
The AIA also created the Patent Trial and Appeal Board and established three types of administrative review proceedings before the Board. See 35 U.S.C. § 6. The reviews include an "inter partes review," a "post-grant review," and a "covered-business-method" ("CBM") review. See id. §§ 311, 321.Read More
Courts are reluctant to enforce prepetition automatic stay waivers, but will not rule out the possibility of enforcement. Often found as a clause in a forbearance agreement, prepetition automatic stay waivers are therefore not per se unenforceable, notwithstanding the fact that their close relative, prepetition waivers of bankruptcy filings, are per se unenforceable. See In re Simpson, Case No. 17-10442, 2018 WL 1940378 (Bankr. D. Vt. Apr. 23, 2018). Generally, courts will hold that the debtor must carry the burden of proving that such contractual waivers should not be enforced. In re A. Hirsch Realty, LLC, 583 B.R. 583 (Bankr. D. Mass. 2018).
Anne Hemenway, Senior Attorney, National Legal Research Group
In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), the United States Supreme Court held that the defense of laches is not proper in a patent infringement case when suit is brought within the six-year statute of limitations period for patent infringement cases, set forth in 35 U.S.C. § 286. This decision abrogated decisions in numerous federal circuit courts which allowed the laches defense.
Under federal law, damages are limited in patent infringement cases by the statute of limitations set forth in § 286 to cover only infringement that occurred within the six-year period prior to the filing of the complaint. This six-year period is counted backward from the filing of the complaint, not forward to the time of the patent infringement event.
A laches defense is considered to be an equitable defense used to limit damages when a suit is filed after an unwarranted delay. In SCA Hygiene Products Aktiebolag, First Quality Baby Products argued that the Federal Circuit properly recognized that the laches defense was necessary, notwithstanding § 286, to protect alleged infringers who are prejudiced by a patent owner's unnecessary delay in bringing suit. Because the Patent Act had a statutory limit to the award of damages, the Supreme Court held that a laches defense would override this statutory limit imposed by Congress.
A personal service contract, such as one between an artist and a manager or between a recording group and a record company, may be rejected or assumed under the U.S. Bankruptcy Code. Generally, such management or promotional agreements are considered to be executory contracts under 11 U.S.C. § 365(a). An executory contract under § 365 is not specifically defined, but the term commonly refers to a contract that has performance due from both the debtor and the contracting party. In re Gen. Datacomm Indus., 407 F.3d 616 (3d Cir. 2005). Professor Vern Countryman's definition in Executory Contracts in Bankruptcy: Part I, 57 Minn. L. Rev. 439, 460 (1973), is considered to be the definitive definition of an executory contract.
A trustee or debtor-in-possession has a right to assume or reject executory contracts under § 365 within the time frames set forth in § 365(d), but the agreement remains in effect pending the actual act of assumption or rejection. In re Nat'l Steel Corp., 316 B.R. 287 (Bankr. N.D. Ill. 2004). If a personal service contract is rejected, it is considered breached under § 365(g) as of the date immediately preceding the date the bankruptcy petition was filed.Read More