Monthly Archives: March 2015

The FTC: Cyber Security Savior or Data Dictator?

Author: Leanthony Edwards Jr., Associate Member, University of Cincinnati Law Review

Throughout the past few years, data privacy and cybersecurity have become hot topics within the U.S. legal system and the media. Last year, prominent U.S. corporations like Sony and Home Depot suffered major data breaches that caused significant financial and reputational harm for both the companies and consumers. In response to the increase in massive data breaches, President Obama featured cyber security issues prominently in the State of the Union address.[1] Although getting data security on the national agenda was an important breakthrough, the U.S. may suffer in the near future as a result of Congress’s failure to allocate appropriate resources toward devising a legitimate data security strategy. With dubious legislative authority, the Federal Trade Commission (FTC) has ordained itself the regulatory authority responsible for policing data security policies within the United States. This article highlights two lawsuits brought by the FTC that depict this most recent power grab and illustrate why the FTC’s assumption of this data security role is troublesome.

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Should There Be a Scienter Requirement for Designer Drugs?

Author: Chris Gant, Associate Member, University of Cincinnati Law Review

Advancements in chemistry and technology have lead to unprecedented innovation in the drug market. Some criminal-minded people have circumvented federal drug laws by creating so-called “designer drugs” like bath salts. The law’s treatment of those manufacturing and distributing designer drugs has led to a contentious circuit split. The split hinges on whether the government must prove that these “underground chemists” knew that they were dealing drugs analogous[1] to controlled substances in order to be convicted of a crime. The courts have interpreted the statute differently as to the scienter requirement applied to analogue substances. Of the circuits that have decided this issue, the majority, led by the Seventh Circuit, has concluded that the prosecution must prove that the defendant knew of the similarities between the controlled substance and the analogue. The minority, in contrast, has determined that the government only needs to prove that the substance was intended for human consumption. Given the plain language of the statute, the majority’s stance is the more reasonable, logical approach, and so should be adopted by the Supreme Court when it reviews this issue later this Term.

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Federal Circuit No Longer to Review Patent Claim Construction Entirely De Novo

Author: Jon Siderits, Associate Member, University of Cincinnati Law Review

On January 20, 2015, the Supreme Court announced its decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., and did away with the Federal Circuit’s longstanding application of a purely de novo standard when reviewing a district court’s construction of a patent claim.[1] Specifically, the Supreme Court held that the Federal Circuit must review the district court’s resolution of any subsidiary factual matters under a clear error standard of review, and only then may it resolve the ultimate legal question of claim construction de novo.[2]  Marking a significant shift in the role of the district court judge in claim construction, and realigning the appellate court’s role with the Federal Rules of Civil Procedure, the Teva decision ensures that the lower court’s construction will play a more dispositive, rather than disposable, part in patent infringement cases.

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Shirvell v. Department of Attorney General: Pickering on the Wrong Person?

Author: Stephen Doyle, Associate Member, University of Cincinnati Law Review

In Abrams v. U.S.,[1] Justice Holmes crafted the concept of the United States being an arena for political thought. Since Abrams was decided in 1919, the right of individuals to express their political thoughts has expanded to include almost all forms of speech.[2] However, in Shirvell v. Department of Attorney General, the Court of Appeals of Michigan was charged with determining how far the freedom of political speech truly reaches.[3] In Shirvell, a government official tasked with protecting U.S. citizens was fired and denied unemployment benefits due to his repeated derogation of homosexuals. Ultimately, the court correctly decided that the Department did not violate his First Amendment right by terminating his employment.

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Cops and Coffers: Eric Holder’s Policy Change on Civil Forfeiture

Author: Jon Kelly, Associate Member, University of Cincinnati Law Review

Civil forfeiture is one of the stranger aspects of the policing power exercised by federal and state governments. In short, civil forfeiture allows governments to seize and take ownership of property believed to be associated with criminal activity—either when the property helps facilitate a crime or when the property is considered a likely proceed of criminal activity.[1] However, stories of police officers seizing thousands of dollars in property from citizens without ever bringing criminal charges has brought the controversial policy under scrutiny.[2] Attorney General Eric Holder’s recent revocation of the federal government’s “equitable sharing” policy on civil forfeiture and Senator Rand Paul’s reintroduction of the FAIR Act on January 26, 2015 to the United States Senate invites a discussion about the necessity of civil forfeiture in America and what reforms are necessary to correct the unseemly nature of civil forfeiture.[3] Given the pre-existence of criminal forfeiture, the problems created by the current incentives to officers, and the questionable justifications for the practice, civil forfeiture should be abolished or at least relegated to the fringes of law enforcement where it was first conceived.

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The Formal Notice Requirement Behind Rule 11 Sanctions: Why an Informal Threat Should Not Be Treated as a Binding Promise

Author: Collin L. Ryan, Associate Member, University of Cincinnati Law Review

Talk is cheap, put your money where your mouth is, et cetera—all idioms that reflect a common underlying theme that in order for one’s statements to be taken seriously, one must take a formal action threatening stern consequences. Anything less, and others will think the statements insignificant. In a recent decision from the Sixth Circuit Court of Appeals in Penn LLC v. Prosper Bus. Dev. Corp., the court found that the same theme applies to civil procedure—that for purposes of Rule 11 sanctions, an informal warning letter is insufficient, and formal service of a motion is required.[1] While other circuit courts have reached similar conclusions,[2] the Seventh Circuit disagrees, holding that strict compliance with the formalities of the sanctions process is not required.[3] However, in consideration of the court’s textual arguments, policy rationale, and practical implications, the reasoning of the Sixth Circuit is more persuasive, and other jurisdictions should not follow the Seventh Circuit’s interpretation of Rule 11.

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Murking Dirks: Personal Benefits in Insider Trading Violations

Author: Dan Stroh, Associate Member, University of Cincinnati Law Review

The phrase “insider trading” does not have a positive connotation. Despite the lack of an express provision prohibiting trading on insider information, insider trading has long been prosecuted under anti-fraud provisions found in securities law regulations.[1] A recent focus by the U.S. Attorney for the Southern District of New York, Preet Bharara, coupled with the conviction of a billionaire hedge fund manager, has brought renewed attention to this area of law.[2] Mr. Bharara’s presence in the press, combined with his record in policing insider trading, have so far been largely successful in policing conduct harmful to the general public.[3]

A recent ruling by the Second Circuit, however, threatens to undermine much of the work done by Mr. Bharara’s office. In United States v. Newman, a judge reversed the insider trading convictions of two traders with prejudice, declaring the guilty verdict unsupportable and barring the United States from retrying the defendants.[4] By departing from prior case law interpreting certain elements of fraudulent insider trading, the court put an abrupt stop to many of the prosecutions of insider trading, which has reverberated throughout the legal community. Because the decision affects not only the ability of the government to prosecute insider trading in the future but also threatens to undercut much of the work done by Mr. Bharara, whether this decision will stand as is or be reheard will have a significant impact on the landscape of securities law.[5]

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Design Patents: How Close Is Too Close? Vacillating Court Decisions Provide Little Guidance, as Shown in Apple v. Samsung

Author: Ashley Clever, Contributing Member, University of Cincinnati Law Review

When marketing a new product, a business will often need to protect both the functionality and the overall design of a product to prevent competitors from producing an identical copy. While a utility patent covers a product’s functional features—how it works and what it does, a design patent can product a product’s aesthetic features—its design and how it looks.[1] Design patents however, provide notoriously little protection and are often construed only to cover the exact design. The Federal Circuit Court of Appeals has provided very little guidance in defining what a design patent protects, with even minute changes in design or ornamentation sometimes enough to overcome a patented design.[2] The recent case of Apple v. Samsung depicts the vacillating decisions in the court’s determination of what does or does not constitute design patent infringement.[3] These fluctuating court decisions create unnecessary confusion in determining the proper scope of design patent protection, leaving inventors as well as competitors with increasing uncertainty.

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