Caselaw

Law made one case at a time

Stephen Kimble patented a toy that lets a child play Spider-Man by shooting foam string from the palm of the hand. To settle his lawsuit, Marvel bought the patent for a lump sum plus a 3% royalty on future sales, with no end date. Neither side knew of Brulotte v. Thys Co., a 1964 Supreme Court decision holding that a patent holder cannot charge royalties for use of an invention after the patent expires. Marvel later stumbled on it, and the courts let Marvel stop paying when the patent ran out. How could an old opinion cut off a promise in a signed contract, and which part of an opinion carries that force? The brief you write in the activity depends on both answers.

Brulotte is caselaw, the law judges make in written opinions that resolve real disputes. Statutes and regulations are written in advance, in general terms, for situations no one has seen yet. Caselaw builds up one decision at a time as courts apply those terms to specific facts. That makes the opinions the place where a business learns how far a statute actually reaches. The How to Read a Case guide by J. Novkov (opens in a new tab) sets out the questions to ask of any opinion, starting with which court decided it and when. In the activity you read a full opinion from Google Scholar (opens in a new tab) before you write a word about it.

An opinion is also an argument. The court explains why it reached its result, and along the way it says a good deal the result did not require. Reading one well means taking it apart. You separate what the court decided from what it merely said, and what binds from what only persuades.

Why one case binds the next

Marvel asked a federal district court to declare that it could stop paying, and the court agreed. The Ninth Circuit affirmed, while calling the Brulotte rule “counterintuitive.” It applied the rule anyway, because a court of appeals must follow the Supreme Court’s decisions even when it doubts them. That obligation is precedent and stare decisis at work. A court follows the earlier decisions of the courts above it when a later case raises the same question, and stare decisis means “to stand by things decided.”

No court sits above the Supreme Court, so it could have overruled Brulotte. It declined, over a dissent by three justices, in Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015) (opens in a new tab). Justice Kagan wrote that respecting stare decisis “means sticking to some wrong decisions.” Two of the Court’s reasons carried special weight. Brulotte interpreted a statute, so Congress could change the rule, and Congress had passed up several chances. And the rule governs patents and licensing contracts, where parties rely most heavily on settled law to arrange their affairs.

Precedent binds only inside its own hierarchy of courts. Cornell’s Wex entry on stare decisis (opens in a new tab) draws the line you will use most often: binding authority, which a court must follow, and persuasive authority, which it may weigh and decline. A decision of the Georgia Supreme Court, however well reasoned, can only persuade a Florida judge. Inside Florida, the searches in the activity mostly return decisions of the district courts of appeal, and Pardo v. State, 596 So. 2d 665 (Fla. 1992) (opens in a new tab) sets their weight. A trial judge follows the district court for the judge’s own district when it has decided the point. If it has not, a decision from any other district binds instead. Between the district courts themselves, a sister district’s opinion only persuades.

That predictability is what lets a business plan around caselaw. The Kimble opinion even showed licensing parties how to live with Brulotte: a licensee may spread payments for use during the patent’s term across the years after it ends. A lawyer who drafts a patent license today still writes around the 1964 rule, because the Court chose to keep it.

The holding is the part that binds

Not every sentence in an opinion carries that force. An opinion contains a holding and dicta, and only the holding binds. The holding is the court’s answer to the legal question the case presented, the ruling it needed to decide the dispute. Cornell’s Wex entry on holding (opens in a new tab) gives the short definition. Dicta (opens in a new tab) is everything else, the remarks and hypotheticals the decision did not require, and Wex notes that a dissenting opinion is generally treated as dicta too.

Suppose a court holds that a landlord’s phone call did not give the written notice a lease required. Then it adds that an email would not have counted either. The first statement is the holding. No email was ever sent, so the second is dicta, and a later court facing a real email may weigh it but is free to decide the question fresh. Treat that second sentence as the rule of the case and your brief misstates the law.

You cannot find the holding without knowing the question, and the question comes from the procedural history. Take Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (opens in a new tab). Two subscribers sued the regional telephone companies for a proposed class of phone and internet customers. They claimed the companies had agreed not to compete with one another, and they sued under section 1 of the Sherman Act, which forbids agreements in restraint of trade. The district court dismissed the complaint for failing to state a claim. The Second Circuit reversed, and the Supreme Court then reversed the Second Circuit.

So what did the Supreme Court decide? Not whether the companies conspired. The case came to the Court on a motion to dismiss, which asks only whether the complaint alleges enough to go forward. The holding answers that narrower question. A section 1 complaint must allege facts that, taken as true, suggest the companies actually agreed; similar behavior plus a bare accusation of conspiracy falls short. Read the case as a finding that no conspiracy existed and you misstate it.

What a higher court does with the case

Twombly closes with its disposition: the Second Circuit’s judgment is reversed, and the case is remanded for further proceedings. Kimble closes by affirming, which left the Ninth Circuit’s decision in place. Affirm, reverse, and remand are the three usual outcomes of an appeal, and one opinion can mix them, affirming on one claim while reversing on another. Find this line first when you read your case. It sits near the end of the majority opinion, and it tells you what happened to the decision below.

An appeal is not a second trial. Novkov’s guide puts the division simply: the trial court sets the facts, and appellate judges rule on legal questions, though they still decide what those facts mean. The U.S. Courts page on appeals (opens in a new tab) shows the federal version of the contest. The losing side argues in its brief that the trial court made an error, and the other side argues that it made none, or none that changed the outcome. That is why a reversal usually follows a legal mistake, and why your brief has to say which mistake the court found.

Courts hold one more power, and it reaches the other branches. Judicial review lets a court measure what a legislature or an official did against the Constitution and set aside what fails. In Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) (opens in a new tab), the target was an Arizona official’s order. It barred a farming company from trucking unpacked cantaloupes from its ranch in Parker, Arizona, to its packing sheds 31 miles away in Blythe, California. Obeying meant building an Arizona packing plant the company did not need, at a cost of about $200,000. A federal court enjoined the order as an unlawful burden on interstate commerce, and the Supreme Court affirmed: Arizona’s slim interest could not justify that cost.

Most opinions you read will never reach a constitutional question. Yours may turn on a contract or a tort under ordinary state law. Judicial review still explains why a court’s ruling can override what a legislature or an official has done.

From reading to briefing

If you use the pre-set searches, your opinion will come from a Florida court, and it will be far less famous than Kimble or Twombly. Read it the same way. Find the disposition first, near the end, where the court affirms, reverses, or remands. Then trace the procedural history back to the trial court, and ask what question that path put in front of the appellate court. Begin with the Judicial Role Guide in the Caselaw activity, and let the Opinion Decoder walk you through your case in order. Check every line it gives you against the opinion. The brief is yours only if the reading is.