During the course of my career, there have been numerous advances in both medical and surgical care. In fact, some of my own research has been used to change the management of some disease entities and has been used by others to make new medical devices. When I was a resident, I was advised by several of my attendings to never “make up” a new operation unless absolutely necessary. I have followed this advice but there were some extreme occasions where I had to think outside the box to save a a patient. These new ideas led to some basic research and then, as warranted, clinical studies.
During the early parts of my career, it never dawned on me to patent any new application and/or device; I was glad that something new that I had worked on could be used to help others. However, many medical schools, recognizing there may be economic reasons to patent new ideas, began to form groups to lay claim to intellectual property emanating from their employee’s research. It turns out that patent law is now a pretty big deal in medicine.
In law school, I took a course dealing with intellectual property. The topics covered included Trademark, Copyright, and Patent law. My undergraduate training in biomedical engineering made for a good foundation for this type of law as I was able to understand the science and math that were the underpinnings for Patent Law.
As for Copyright, I was surprised to learn that you could claim an ownership interest for anything you may have written and published in a “tangible medium of expression.” However, you should still register your work in case you ever need to bring a lawsuit for infringement since a registration within five years of the publication is considered prima facie evidence that the work is yours.
We are all familiar with the recent lawsuits emanating from the various “dot coms” suing each other for patent infringement. The financial stakes in this litigation can be astronomical. Previously, the location of the suits was critical as it could sway the outcome one way or another. A recent Supreme Court decision has changed this “forum” issue in hopes of leading to more uniformity in decision-making and cut back on the strategy of “forum shopping” by the interested parties.
In TC Heartland v. Kraft Foods Group Brands, the United States Supreme Court held, that as applied to domestic corporations, the residence of the corporation will be the State of incorporation, for the purposes of the patent venue statute. In this case, the petitioner, TC Heartland was a company that was organized under Indiana law. They made flavored fruit drink mixes. The respondent, Kraft Foods, was a competitor in the same market and this company was incorporated under Delaware law even though its primary place of business was in Illinois.
The issue in Heartland v. Kraft was whether the plaintiff (Kraft) could bring a patent infringement lawsuit against another corporation in any district where the defendant corporation is subject to the court’s personal jurisdiction with respect to the civil action. There is a general venue statute, 28 U.S.C. section 1391(c), which states that , “[e]xcept as otherwise provided by law” and “[f]or all venue purposes,” a corporation “shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”
However, there is another law that deals specifically with patents. In 28 U.S.C. section 1400(b), “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” In a previous Supreme Court ruling (see below), the Court held that for purposes of section 1400(b), a domestic corporation “resides” only its State of incorporation.
In this case, Kraft sued TC Heartland for patent infringement and brought the case to the District Court of Delaware even though TC Heartland was not registered to conduct business in Delaware and had no meaningful local presence in that state. However, it did ship the allegedly infringing products to that state. Kraft felt it would be better to have the suit heard in Delaware rather than the home state of TC Heartland. Of course, Heartland preferred to have the case transferred to the Southern District of Indiana where it felt it would have a more favorable court.
Heartland argued that it did not reside in Delaware under the first clause of section 1400(b), and it also argued that it did not have a regular place of business in Delaware under the second clause of section 1400(b). The District Court rejected these arguments holding that the definition of “resides” will be that found in section 1391(c). Under this definition, Delaware could excercise personal jurisdiction over TC Heartland. On appeal, the Federal Circuit agreed with the District Court.
The Supreme Court agreed to hear the case as to the venue issue and ended up reversing the holding of the Court of Appeals. In a previous decision, the Supreme Court held that the word “reside[nce] in section 1400(b) has a particular meaning as applied to domestic corporations: for patent purposes, it refers only to the State of incorporation.” (Fourco Glass Co. v. Transmirra Products Corp., 353 U.D. 222, 226) In a complex legal argument, the Court stated that subsequent laws did not change the venue statute as it applied to patent infringement cases.
Heartland wins on the venue issue and it looks like the case will now be heard in the courts of Indiana; unless a settlement is reached beforehand. This holding will probably lead to more patent infringement cases being heard in Delaware where many corporations “reside” and where the courts are more favorable to the companies incorporated there. It should lead to fewer cases being heard in courts which have a history of being more favorable to plaintiffs such as in the Eastern District of Texas.
One issue that has not yet been addressed is whether the courts will adapt the “established place of business” clause to include the internet which is being used by many companies to conduct business especially in retail sales. If the internet is deemed to be an “established place of business,” then we are likely to see a return to forum shopping by plaintiffs in patent infringement cases.
by Darryl S. Weiman, M.D., J.D.
Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN
MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in www.healthcaredive.com on February 17, 2016.
Affirmative action in medical school and law school admissions decisions was deemed to be constitutional in the University of California v. Bakke and Grutter v. Bollinger Supreme Court decisions. However, there was a time limit mentioned in the Grutter decision.
With four new justices affirmed to the Supreme Court since Grutter, the time is ripe for a new look at the constitutionality of affirmative action in graduate and even undergraduate school admissions decisions.
In fact, the Supreme Court heard oral arguments in Fisher v. University of Texas on December 10, 2015 where affirmative action was once again the center of controversy.
A review of the jurisprudence of affirmative action on college and graduate admissions is timely and is especially pertinent to those of us who work in undergraduate and graduate medical education. In this article, we will review the Bakke case.
Introduction
The history of affirmative action in graduate and undergraduate school admissions has been characterized by heated debate. Proponents of affirmative action argue that it is necessary to ensure a diverse class make up which is essential in furthering the educational mission of colleges and graduate schools. Proponents also claim that affirmative action is necessary to overcome past practices which have discriminated against certain groups and kept them from realizing the benefits of a college or graduate school education.
The critics of affirmative action claim the policy is nothing more than reverse discrimination, which, in turn, punishes applicants who are not a member of the targeted groups. Critics also claim the policy of affirmative action violates the equal protection clauses of the Constitution and thus, is illegal.
In 1978, the Supreme Court addressed the issue of affirmative action in graduate school admissions in University of California Regents v. Bakke.[1]
The Bakke Case
In 1973, Allan Bakke, a white male, applied to the medical school of the University of California at Davis (UC Davis). Despite being a strong candidate, he was rejected. Bakke’s rating of 468 out of 500 on the UC Davis rating system was just below the 470 score needed for admission at the time his application was complete. However, at the time he was rejected, there were still four slots available in a special admissions program, which were available to minorities as a racial and ethnic quota. After his rejection, Bakke wrote a letter to Dr. George Lowrey, Associate Dean and Chairman of the Admissions Committee, claiming “…the special admissions program operated as a racial and ethnic quota.”[2]
When Bakke reapplied to Davis in 1974, his faculty interview by a quirk of fate was with Dr. Lowrey who found Bakke to be “rather limited in his approach” to the problems of the medical profession and found disturbing Bakke’s “very definite opinions which were based more on his personal viewpoints than upon a study of the total problem.”[3] Dr. Lowrey rated Bakke at a lower level and, as a result, Bakke was again rejected for admission by the school.
“In both years, applicants were admitted under the special program with grade point averages, MCAT scores, and benchmark scores significantly lower than Bakke’s.”[4] For example, in 1973, Bakke’s grade point average was 3.51 with MCAT scores of 96 (verbal), 94 (quantitative), 97 (science), and 72 (general information). This was compared to special admittees of 2.62, 46, 24, 35, and 33. In 1974, the special admittees GPA and scores were 2.42, 34, 30, 37, and 18.[5]
After his 1974 rejection, Bakke filed a lawsuit in the Superior Court of California alleging that the special admissions program of the Medical School caused him to be rejected on the basis of his race. Bakke claimed that his rights were violated under the Equal Protection Clause of the Fourteenth Amendment.[6] Bakke also claimed his rights were violated under the California Constitution (Art. I, 21) and 601 of Title VI of the Civil Rights Act of 1964, but for the purposes of this paper, the first claim is dispositive.
The trial court held that the special admissions program violated the Federal Constitution based on the finding that the special program was functioning as a racial quota whereby minority applicants were being rated only against each other and there were 16 spaces in the medical school class being reserved only for them.[7] However, the court denied Bakke’s request for an injunction to compel his admission to the school holding “…that he had failed to carry his burden of proving that he would have been admitted but for the existence of the special program.”[8]
Because he had been denied admission to the school, Bakke appealed.
UC Davis appealed from (1) the decision that its special affirmative action program was unlawful and (2) from the order preventing the school from using race in making its admission decisions. The Supreme Court of California took the case directly from the trial court “because of the importance of the issues involved.”[9]
The California Supreme Court ruled that the Equal Protection Clause of the Fourteenth Amendment had been violated holding that “no applicant may be rejected because of his race, in favor of another who is less qualified, as measured by standards applied without regard to race.”[10] This court also held that since Bakke had shown that the school had discriminated against him because of his race, the burden of proof was on the school to show that he would have not been admitted even if there were no special admissions program. Since the school conceded that it could not prove this issue, the California court directed the trial court to order Bakke’s admission to the Medical School. The United States Supreme Court granted certiorari.[11]
In an opinion authored by Mr. Justice Powell, the Court held that: (1) the special admissions program of UC Davis was unconstitutional, but (2) race may be used as one of several factors by which a school can make decisions on admissions, and (3) affirmed the decision to allow Bakke to be admitted to the school.[12]
According to the Court, the fatal flaw of the UC Davis special admissions program was the quota of 16 slots reserved for the minority students, which resulted in a violation of individual rights of those applicants who would not be allowed to compete for those slots based solely on their race. In its decision, the Court made clear that race could be used in a properly devised admissions program since racial diversity in the school’s case was a substantial state interest which would be legitimately served by taking race into account in the admissions process.
During arguments, UC Davis had four reasons to justify the special admissions program. These were (1) “[to reduce] the historic deficit of traditionally disfavored minorities in medical schools and in the medical profession;” (2) countering the effects of societal discrimination; (3) increasing the number of physicians who will practice in communities currently underserved; and (4) obtaining the educational benefits that flow from an ethnically diverse student body.[13]
As far as the Supreme Court was concerned, the first justification immediately failed. “Preferring members of any one group for no reason other than race or ethnic origin is discrimination for its own sake. This the Constitution forbids.”[14]
Historically, any system designed to favor any particular group at the expense of others who were innocent of any perceived victimization of the favored group required certain findings. The Court made clear that UC Davis was in no position to make such findings. Justice Powell stated:
We have never approved a classification that aids persons perceived as members of relatively victimized groups at the expense of other innocent individuals in the absence of judicial, legislative, or administrative findings of constitutional or statutory violations.[15]
Only after such findings would the State’s interest be substantial enough to justify preferential treatment of the injured parties at the expense of so called innocent parties. Also, the remedy chosen would have to be one which works the least possible harm to those who were now being discriminated against.[16] The role of UC Davis was in education of medical students, not in correcting perceived societal wrongs.[17]
The Court, however, did concede that attainment of ethnic diversity in the student body was a constitutionally permissible goal for an institution of higher learning.[18] “Academic freedom, though not a specifically enumerated constitutional right, long has been viewed as a special concern of the First Amendment. The freedom of a university to make its own judgments as to education includes the selection of its student body.”[19]
The Court felt that genuine diversity would not be attained with the UC Davis program which looked only at race and ethnicity. As an example of an admissions program which was tailored for diversity that would meet constitutional muster, the Court cited the Harvard College program.
“[At Harvard, w]hen the Committee on Admissions reviews the large middle group of applicants who are “admissible” and deemed capable of doing good work in their courses, the race of an applicant may tip the balance in his favor just as geographic origin or a life spent on a farm may tip the balance in other candidates’ cases. A farm boy from Idaho can bring something to Harvard College that a Bostonian cannot offer. Similarly, a black student can usually bring something that a white person cannot offer. [The] awareness [of the necessity of including more than a token number of black students] does not mean that the Committee sets a minimum number of blacks or of people from west of the Mississippi who are to be admitted…[20]
According to the Court, this system allows race to be used as a factor in the decision making process since it is not the sole criterion in deciding who will get that admissions slot. There would be no unequal treatment under the Fourteenth Amendment with this system. As Justice Powell noted in his opinion,
“[A] great deal of learning occurs informally. It occurs through interactions among students of both sexes; of different races, religions, and backgrounds who come from cities and rural areas, from various states and countries; who have a wide variety of interests, talents, and perspectives; and who are able, directly or indirectly, to learn from their differences and to stimulate one another to reexamine even their most deeply held assumptions about themselves and their world.”[21]
The Bakke decision has been the law since 1978. It is interesting to note what Supreme Court Justices have said about Bakke in subsequent decisions and writings. In a commentary, current Supreme Court Justice Scalia said “Justice Powell’s opinion [is] ‘the law of the land.’” 1979 Wash. U.L.Q. 147,148 (1979). Justice Stevens concurred in an opinion written by Justice Brennan, which cited Bakke whereby “a diverse student body contributing to a ‘robust exchange of ideas’ is a ‘constitutionally permissible goal’ on which race-conscious university admissions programs may be predicated.” Metro Broadcasting, Inc. v. FCC, 497 U.S. 547, 568 (1990).
Justice O’Connor in Johnson v. Transp. Agency, 480 E.S. 616, 656 (1987) concurring “approv[ed] gender-conscious promotion where defendant ‘tried to look at the whole picture, the combination of [her] qualifications and [plaintiff’s] qualifications, their test scores, their experience, their background, [and] affirmative action matters.”
Over the next 20 years, debate continued. Since the Fourteenth Amendment was involved, strict scrutiny needed to be applied if it was to be ignored.[22] Was diversity of the student body a compelling enough State interest to allow a narrowly tailored race-based action whereby an individual’s race could be used to decide whether or not he would be admitted to graduate school? Was Justice Powell’s decision just dictum, or was it to be the law of the land?
In subsequent decisions, disagreement occurred as to whether or not diversity of the student body was truly a compelling state interest. In Hopwood v. Texas, [23] the Court of Appeals held that diversity of the student body is not a compelling state interest. The Hopwood Court concluded “that any consideration of race or ethnicity by the law school for the purpose of achieving a diverse student body is not a compelling interest under the Fourteenth Amendment. Justice Powell’s argument in Bakke garnered only his own vote and has never represented the view of a majority of the Court in Bakke or any other case.”[24]
Within the general principles of the Fourteenth Amendment, the use of race in admissions for diversity in higher education contradicts, rather than furthers, the aims of equal protection. Diversity fosters, rather than minimizes, the use of race. It treats minorities as a group, rather than individuals. It may further remedial purposes but, just as likely, may promote improper racial stereotypes, thus fueling racial hostility.[25]
However, in Smith v. University of Washington Law School,[26]the Court of Appeals held that diversity was a compelling State interest. The Smith Court held that “the Fourteenth Amendment permits University admissions programs which consider race for other than remedial purposes, and educational diversity is a compelling governmental interest that meets the demands of strict scrutiny of race-conscious measures.”[27]
Interestingly, before the Smith Court made its decision, the Washington State legislature passed Initiative Measure 200 which stated, “[t]he state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.”[28]
With the passage of this new legislation, the Law School voluntarily changed its admissions policy so that race was no longer a considered factor.
Since there was disagreement among appellate courts on this important question, the Supreme Court decided to better resolve the issues in the case of Barbara Grutter.
In my next article, the Grutter case will be discussed.
[1]University of California v. Bakke, 438 U.S. 265 (1978).
[6] Section 1 of the Fourteenth Amendment states “. . . No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
[7] There was a total of 100 slots for the first year class. Sixteen slots were reserved for minority students in the special admissions program although minority students were also allowed to compete for the other 84 slots. The non-minority students were limited to competing for only the 84 slots.
[17] In this regard, UC Davis’ selection of Negroes, Mexican-Americans, American Indians and Asians as the groups eligible for its special admissions program was difficult to justify especially in light of the fact that many Asians were eligible for admission under the regular admissions process. Id.
[21]Id. at Justice Powell quoting from Professor Gurin, President of Princeton University
[22]Korematsu v. United States, 323 U.S. 214 (1944). In Korematsu, pressing public necessity was the standard used to justify racial discrimination. This was the first case to purport that strict scrutiny would be the standard used to justify any governmental discrimination based on race. Id.
One of the linchpins of the Affordable Care Act (Obamacare) is to have everyone in the United States get Health Care Insurance. The way that the law instructed that this be done was to have the States set up Exchanges; access to the exchanges would allow each person to shop, preferably on-line, for an insurance policy that would best meet their needs. Accessing the exchange website would allow the people to compare the types of coverage, the premiums they would be responsible for, and the deductibles available. It would be one stop shopping for health insurance. This is a great idea on its face.
Since the requirements of health insurance were powers relegated to the states, each state would be in the best position to decide which policies would meet that particular state’s requirements.
Under the law, if the state decided that the cost for setting up the exchange was too high or for whatever other reason, they could choose to have the Federal government come in and set up an exchange for them. The Federal government preferred to have the States set up the exchanges but they could not force the states to do so as that would violate rules of Federalism and the separation of powers. The Administration had to come up with a way to get the states to “buy in” and they decided to do this by making tax credits available to the people of the States that set up their own, non-federal, exchange.
These tax credits were critical for the law to succeed because without them, the costs of meeting the requirements of coverage would exceed eight percent of the income of many people which would allow those people to claim exemption from coverage. Since many of these people were healthy and would not generate much health care costs, insurance carriers really needed them to participate in order for business to be viable.
The reason that the premiums had to be high was the ACA’s requirements for “guaranteed issue” and “community rating.” The “guaranteed issue requirement” meant that insurers could not deny any person coverage due to a pre-existing medical condition. The “community rating” requirement prevented the insurance carriers from charging higher premiums for those with a pre-existing medical condition. It was probably the “guaranteed issue” and “community rating” issues that led to the failure of “Romney care” in Massachusetts and the commercial insurance market in New York, but that’s another story.
Without the tax credits along with the requirements of “guaranteed issue” and “community rating” it was foreseeable that many healthy individuals would face premiums that would exceed eight percent of their income whereby they would be exempt from buying health insurance or if they did not meet the eight percent level, they would opt out of the Affordable Care Act insurance requirements and pay the tax penalty (much less than the offered premiums) instead. These healthy people could buy the insurance after they became sick and they would suffer no penalties for waiting. This is another example of people acting rationally.
Surprising to the Obama Administration, many of the States decided to opt out of setting up their own exchanges. There was a very real concern that many people in those states, not being eligible for the tax credits, would not buy health insurance and they would not be penalized since the premiums they would have to pay amounted to more than eight percent of their income. If these predominately health people would not participate, the insurance carriers would likely go bankrupt and have to withdraw from participating in the ACA. This could have led to a death spiral for the whole Affordable Care Act.
Under direction from the White House, the Internal Revenue Service (IRS) decided to make tax credits available to all who used the exchanges, even the exchanges set up by the Federal government.
The Petitioners in this Supreme Court case were citizens of Virginia, a state with a Federal Exchange. The Petitioners did not want to purchase health insurance and if they were not eligible for tax credits their premiums would have fallen above the eight percent threshold of their income and, thus, would have been exempt from the law’s coverage requirement. However, with the IRS rule, they would have been eligible for the tax credits and would have to buy insurance or be subject to the IRS tax penalty.
The District Court which heard the case held that the Act made tax credits available to those enrolled in a Federal Exchange. The Court of Appeals for the Fourth Circuit affirmed. The Fourth Circuit wrote that the Act was “ambiguous and subject to at least two different interpretations.” They chose to defer to the IRS’s interpretation.
At the same time that the Fourth Circuit was issuing its holding, the Court of Appeals for the District of Columbia Circuit ruled against the IRS Rule, holding that the ACA “unambiguously restricts” the tax credits to State Exchanges. This Circuit did not believe that the Federal Exchange was a State Exchange.
When two different circuits come down with two different holdings of the law, it is not unusual for the Supreme Court to grant certiorari and they did.
The legal issue of the case was whether the Act’s tax credits would be allowed in States that have a Federal Exchange. The Supreme Court held that they would be allowed. The Court, in dicta, wrote “an Exchange established by the State…is properly viewed as ambiguous. The phrase may be limited in its reach to State Exchanges. But it is also possible that the phrase refers to all Exchanges—both State and Federal—at least for the purposes of tax credits.”
The Court went on to say that “[t]hose credits are necessary for the Federal Exchanges to function like their State Exchange counterparts and to avoid the type of calamitous result that Congress plainly meant to avoid.” It seems like the Court was saving the Affordable Care Act from itself.
In a blistering dissent, Justice Scalia, made it clear that a Federal Exchange was not the same as a State Exchange and the tax credits were purposely kept out of the States which opted for a Federal Exchange. The Secretary of Health and Human Services, the person responsible for setting up the Federal Exchanges was not a “State” and thus, citizens of those states should not have been eligible for the tax credits.
Historically, the Court does not like to salvage poorly written laws. They will interpret what is before them and then expect Congress to do its job by making the necessary repairs. The Supreme Court decided to make the credits available to everyone to make the insurance affordable to all. They seemed to be doing what Congress should have been responsible for.
In the United States, under our Constitution, any changes in the law should have come through the Congress. However, in light of the fact that the Congress was now controlled by the Republicans, it is unlikely that the necessary changes needed to save the law would not have been passed; the ACA was in dire straits and the Obama administration recognized this.
King v. Burwell brought to light a significant problem with the Affordable Care Act. In an effort to save an unartfully crafted law, the Obama administration changed the law to allow the Internal Revenue Service to spend billions of dollars on tax credits for those using Federal Exchanges. Changing the law is not a power vested in the Executive branch under the Constitution of the United States. All spending rules must emanate from the United States Congress.
In what looks like an effort to avoid a Constitutional crisis, and the disintegration of the Affordable Care Act, the Supreme Court ruled that any Exchange, including one set up by the Federal government, was really a State exchange. This power to re-write the law is, again, not a power vested in the Supreme Court. However, once the Supreme Court makes a decision, that decision is final.
It is said that the Supreme Court is not last because it is right, it is right because it is last. There must be finality in the law or we will have a society in disarray. The issue on tax-credits and the origination of the Exchanges under the ACA is over! At least for now.
[1] King v. Burwell, 576 U.S._(2015).
ABOUT THE AUTHOR: Darryl Weiman is a featured expert in www.healthcaredive.com on February 17, 2016.
by Darryl S. Weiman, M.D., J.D.
