author: Justice O’Connor

text:
    BONITO BOATS, INC. v. THUNDER CRAFT BOATS, INC.
    No. 87-1346.
    Argued December 5, 1988
    Decided February 21, 1989

      O’Connor, J., delivered the opinion for a unanimous Court.

      Tomas Morgan Russell argued the cause for petitioner. With him on the briefs were Granger Cook, Jr., and John S. Sehoene.

      Charles E. Lipsey, by appointment of the Court, 487 U. S. 1231, argued the cause as amicus curiae in support of the judgment below. With him on the brief was Donald R. Dunner.

       Briefs of amici curiae urging reversal were filed for Boston Whaler, Inc., by Geoffrey S. Steivart, James L. Quarles III, and William F. Lee; for Intellectual Property Owners, Inc., by Donald W. Banner and Herbert C. Wamsley; for the Marine Industries Association of South Florida et al. by Julius F. Parker, Jr., Jack M. Skelding, Jr., James W. York, Deputy Attorney General of Florida, and Robert A. Buttenvorth, Attorney General, pro se; and for the Orange County Patent Law Association et al. by Randall Glenn Wick and J. Thomas McCarthy.

      Briefs of amici curiae urging affirmance were filed for the Aftermarket Body Parts Association et al. by James F. Fitzpatrick, Melvin C. Garboiv, and Peter T. Grossi, Jr.; for the Certified Automobile Parts Association by Messrs. Garbow and Fitzpatrick; and for Xenetics Biomedical, Inc., by Edward S. Irons.

        Alex Devience, Jr., filed a brief for Imos Italia and Torino Industries, Ltd., as amicus curiae.

   Justice O’Connor

delivered the opinion of the Court.

We must decide today what limits the operation of the federal patent system places on the States’ ability to offer substantial protection to utilitarian and design ideas which the patent laws leave otherwise unprotected. In Interpart Corp. v. Italia, 777 F. 2d 678 (1985), the Court of Appeals for the Federal Circuit concluded that a California law prohibiting the use of the “direct molding process” to duplicate unpat-ented articles posed no threat to the policies behind the federal patent laws. In this case, the Florida Supreme Court came to a contrary conclusion. It struck down a Florida statute which prohibits the use of the direct molding process to duplicate unpatented boat hulls, finding that the protection offered by the Florida law conflicted with the balance struck by Congress in the federal patent statute between the encouragement of invention and free competition in unpatented ideas. 515 So. 2d 220 (1987). We granted certiorari to resolve the conflict, 486 U. S. 1004 (1988), and we now affirm the judgment of the Florida Supreme Court.

I

In September 1976, petitioner Bonito Boats, Inc. (Bonito), a Florida corporation, developed a hull design for a fiberglass recreational boat which it marketed under the trade name Bonito Boat Model 5VBR. App. 5. Designing the boat hull required substantial effort on the part of Bonito. A set of engineering drawings was prepared, from which a hardwood model was created. The hardwood model was then sprayed with fiberglass to create a mold, which then served to produce the finished fiberglass boats for sale. The 5VBR was placed on the market sometime in September 1976. There is no indication in the record that a patent application was ever filed for protection of the utilitarian or design aspects of the hull, or for the process by which the hull was manufactured. The 5VBR was favorably received by the boating public, and “a broad interstate market” developed for its sale. Ibid.

In May 1983, after the Bonito 5VBR had been available to the public for over six years, the Florida Legislature enacted Fla. Stat. §559.94 (1987). The statute makes “[i]t . . . unlawful for any person to use the direct molding process to duplicate for the purpose of sale any manufactured vessel hull or component part of a vessel made by another without the written permission of that other person.” § 559.94(2). The statute also makes it unlawful for a person to “knowingly sell a vessel hull or component part of a vessel duplicated in violation of subsection (2).” §559.94(3). Damages, injunctive relief, and attorney’s fees are made available to “[a]ny person who suffers injury or damage as the result of a violation” of the statute. §559.94(4). The statute was made applicable to vessel hulls or component parts duplicated through the use of direct molding after July 1, 1983. §559.94(5).

On December 21, 1984, Bonito filed this action in the Circuit Court of Orange County, Florida. The complaint alleged that respondent here, Thunder Craft Boats, Inc. (Thunder Craft), a Tennessee corporation, had violated the Florida statute by using the direct molding process to duplicate the Bonito 5VBR fiberglass hull, and had knowingly sold such duplicates in violation of the Florida statute. Bonito sought “a temporary and permanent injunction prohibiting [Thunder Craft] from continuing to unlawfully duplicate and sell Bonito Boat hulls or components,” as well as an accounting of profits, treble damages, punitive damages, and attorney’s fees. App. 6, 7. Respondent filed a motion to dismiss the complaint, arguing that under this Court’s decisions in Sears, Roebuck & Co. v. Stiffel Co., 376 U. S. 225 (1964), and Compco Corp. v. Day-Brite Lighting, Inc., 376 U. S. 234 (1964), the Florida statute conflicted with federal patent law and was therefore invalid under the Supremacy Clause of the Federal Constitution. App. 8-9. The trial court granted respondent’s motion, id,., at 10-11, and a divided Court of Appeals affirmed the dismissal of petitioner’s complaint. 487 So. 2d 395 (1986).

On appeal, a sharply divided Florida Supreme Court agreed with the lower courts’ conclusion that the Florida law impermissibly interfered with the scheme established by the federal patent laws. See 515 So. 2d 220 (1987). The majority read our decisions in Sears and Compco for the proposition that “when an article is introduced into the public domain, only a patent can eliminate the inherent risk of competition and then but for a limited time.” 516 So. 2d, at 222. Relying on the Federal Circuit’s decision in the Interpart case, the three dissenting judges argued that the Florida antidirect molding provision “does not prohibit the copying of an unpatented item. It prohibits one method of copying; the item remains in the public domain.” 515 So. 2d, at 223 (Shaw, J., dissenting).

HH ► — I

Article I, §8, cl. 8, of the Constitution gives Congress the ‘ power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. ” The Patent Clause itself reflects a balance between the need to encourage innovation and the avoidance of monopolies which stifle competition without any concomitant advance in the “Progress of Science and useful Arts.” As we have noted in the past, the Clause contains both a grant of power and certain limitations upon the exercise of that power. Congress may not create patent monopolies of unlimited duration, nor may it “authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available.” Graham v. John Deere Co. of Kansas City, 383 U. S. 1, 6 (1966).

From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy. Soon after the adoption of the Constitution, the First Congress enacted the Patent Act of 1790, which allowed the grant of a limited monopoly of 14 years to any applicant that “hath . . . invented or discovered any useful art, manufacture, ... or device, or any improvement therein not before known or used.” 1 Stat. 109, 110. In addition to novelty, the 1790 Act required that the invention be “sufficiently useful and important” to merit the 14-year right of exclusion. Ibid. Section 2 of the Act required that the patentee deposit with the Secretary of State, a specification and if possible a model of the new invention, “which specification shall be so particular, and said models so exact, as not only to distinguish the invention or discovery from other things before known and used, but also to enable a workman or other person skilled in the art or manufacture . . . to make, construct, or use the same, to the end that the public may have the full benefit thereof, after the expiration of the patent term.” Ibid.

The first Patent Act established an agency known by self-designation as the “Commissioners for the promotion of Useful Arts,” composed of the Secretary of State, the Secretary of the Department of War, and the Attorney General, any two of whom could grant a patent. Thomas Jefferson was the first Secretary of State, and the driving force behind early federal patent policy. For Jefferson, a central tenet of the patent system in a free market economy was that “a machine of which we were possessed, might be applied by every man to any use of which it is susceptible.” 13 Writings of Thomas Jefferson 335 (Memorial ed. 1904). He viewed a grant of patent rights in an idea already disclosed to the public as akin to an ex post facto law, “obstructing] others in the use of what they possessed before.” Id., at 326-327. Jefferson also played a large role in the drafting of our Nation’s second Patent Act, - which became law in 1793. The Patent Act of 1793 carried over the requirement that the subject of a patent application be “not known or used before the application.” Ch. 11, 1 Stat. 318, 319. A defense to an infringement action was created where “the thing, thus secured by patent, was not originally discovered by the patentee, but had been in use, or had been described in some public work anterior to the supposed discovery of the patentee.” Id., at 822. Thus, from the outset, federal patent law has been about the difficult business “of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.” 13 Writings of Thomas Jefferson, supra, at 335.

Today’s patent statute is remarkably similar to the law as known to Jefferson in 1793. Protection is offered to “[whoever .invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U. S. C. §101. Since 1842, Congress has also made protection available for “any new,-original and ornamental design for an article of manufacture.” 35 U. S. C. § 171. To qualify for protection, a design must present an aesthetically pleasing appearance that is not dictated by function alone, and must satisfy the other criteria of patentability. The novelty requirement of pat-entability is presently expressed in 35 U. S. C. §§ 102(a) and (b), which provide:

“A person shall be entitled to a patent unless —
“(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or
“(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country more than one year prior to the date of application for patent in the United States . . . .”

Sections 102(a) and (b) operate in tandem to exclude from consideration for patent protection knowledge that is already available to the public. They express a congressional determination that the creation of a monopoly in such information would not only serve no socially useful purpose, but would in fact injure the public by removing existing knowledge from public use. From the Patent Act of 1790 to the present day, the public sale of an unpatented article has acted as a complete bar to federal protection of the idea embodied in the article thus placed in public commerce.

In the case of Pennock v. Dialogue, 2 Pet. 1 (1829), Justice Story applied these principles under the patent law of 1800. The patentee had developed a new technique for the manufacture of rubber hose for the conveyance of air and fluids. The invention was reduced to practice in 1811, but letters patent were not sought and granted until 1818. In the interval, the patentee had licensed a third party to market the hose, and over 13,000 feet of the new product had been sold in the city of Philadelphia alone. The Court concluded that the patent was invalid due to the prior public sale, indicating that, “if [an inventor] suffers the thing he invented to go into public use, or to be publicly sold for use” “[h]is voluntary act or acquiescence in the public sale and use is an abandonment of his right. ” Id., at 23-24. The Court noted that under the common law of England, letters patent were unavailable for the protection of articles in public commerce at the time of the application, id., at 20, and that this same doctrine was immediately embodied in the first patent laws passed in this country. Id., at 21-22.

As the holding of Pennock makes clear, the federal patent scheme creates a limited opportunity to obtain a property right in an idea. Once an inventor has decided to lift the veil of secrecy from his work, he must choose the protection of a federal patent or the dedication of his idea to the public at large. As Judge Learned Hand once put it: “[I]t is a condition upon the inventor’s right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy or legal monopoly.” Metallizing Engineering Co. v. Kenyon Bearing &Auto Parts Co., 153 F. 2d 516, 520 (CA2), cert. denied, 328 U. S. 840 (1946).

In addition to the requirements of novelty and utility, the federal patent law has long required that an innovation not be anticipated by the prior art in the field. Even if a particular combination of elements is “novel” in the literal sense of the term, it will not qualify for federal patent protection if its contours are so traced by the existing technology in the field that the “improvement is the work of the skillful mechanic, not that of the inventor.” Hotchkiss v. Greenwood, 11 How. 248, 267 (1851). In 1952, Congress codified this judicially developed requirement in 35 U. S. C. § 103, which refuses protection to new developments where “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person of ordinary skill in the art to which said subject matter pertains.” The nonobviousness requirement extends the field of unpat-entable material beyond that which is known to the public under § 102, to include that which could readily be deduced from publicly available material by a person of ordinary skill in the pertinent field of endeavor. See Graham, 383 U. S., at 15. Taken together, the novelty and nonobviousness requirements express a congressional determination that the purposes behind the Patent Clause are best served by free competition and exploitation of either that which is already available to the public or that which may be readily discerned from publicly available material. See Aronson v. Quick Point Pencil Co., 440 U. S. 257, 262 (1979) (“[T]he stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the use of the public”).

The applicant whose invention satisfies the requirements of novelty, nonobviousness, and utility, and who is willing to reveal to the public the substance of his discovery and “the best mode ... of carrying out his invention,” 35 U. S. C. § 112, is granted “the right to exclude others from making, using, or selling the invention throughout the United States,” for a period of 17 years. 35 U. S. C. § 154. The federal patent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful, and non-obvious advances in technology and design in return for the exclusive right to practice the invention for a period of years. “[The inventor] may keep his invention secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed him for seventeen years, but upon expiration of that period, the knowledge of the invention inures to the people, who are thus enabled without restriction to practice it and profit by its use.” United States v. Dubilier Condenser Corp., 289 U. S. 178, 186-187 (1933).

The attractiveness of such a bargain, and its effectiveness in inducing creative effort and disclosure of the results of that effort, depend almost entirely on a backdrop of free competition in the exploitation of unpatented designs and innovations. The novelty and nonobviousness requirements of pat-entability embody a congressional understanding, implicit in the Patent Clause itself, that free exploitation of ideas will be the rule, to which the protection of a federal patent is the exception. Moreover, the ultimate goal of the patent system is to bring new designs and technologies into the public domain through disclosure. State law protection for techniques and designs whose disclosure has already been induced by market rewards may conflict with the very purpose of the patent laws by decreasing the range of ideas available as the building blocks of further innovation. The offer of federal protection from competitive exploitation of intellectual property would be rendered meaningless in a world where substantially similar state law protections were readily available. To a limited extent, the federal patent laws must determine not only what is protected, but also what is free for all to use. Cf. Arkansas Electric Cooperative Corp. v. Arkansas Public Service Comm’n, 461 U. S. 375, 384 (1983) (“[A] federal decision to forgo regulation in a given area may imply an authoritative federal determination that the area is best left zmregu-lated, and in that event would have as much pre-emptive force as a decision to regulate”) (emphasis in original).

Thus our past decisions have made clear that state regulation of intellectual property must yield to the extent that it clashes with the balance struck by Congress in our patent laws. The tension between the desire to freely exploit the full potential of our inventive resources and the need to create an incentive to deploy those resources is constant. Where it is clear how the patent laws strike that balance in a particular circumstance, that is not a judgment the States may second-guess. We have long held that after the expiration of a federal patent, the subject matter of the patent passes to the free use of the public as a matter of federal law. See Coats v. Merrick Thread Co., 149 U. S. 562, 572 (1893) (“[Plaintiffs’ right to the use of the embossed periphery expired with their patent, and the public had the same right to make use of it as if it had never been patented”); Kellogg Co. v. National Biscuit Co., 305 U. S. 111 (1938); Singer Mfg. Co. v. June Mfg. Co., 163 U. S. 169 (1896). Where the public has paid the congressionally mandated price for disclosure, the States may not render the exchange fruitless by offering patent-like protection to the subject matter of the expired patent. “It is self-evident that on the expiration of a patent the monopoly created by it ceases to exist, and the right to make the thing formerly covered by the patent becomes public property.” Singer, supra, at 185.

In our decisions in Sears, Roebuck & Co. v. Stiffel Co., 376 U. S. 225 (1964), and Compco Corp. v. Day-Brite Lighting, Inc., 376 U. S. 234 (1964), we found that publicly known design and utilitarian ideas which were unprotected by patent occupied much the same position as the subject matter of an expired patent. The Sears case involved a pole lamp originally designed by the plaintiff Stiffel, who had secured both design and mechanical patents on the lamp. Sears purchased unauthorized copies of the lamps, and was able to sell them at a retail price practically equivalent to the wholesale price of the original manufacturer. Sears, supra, at 226. Stiffel brought an action against Sears in Federal District Court, alleging infringement of the two federal patents and unfair competition under Illinois law. The District Court found that Stiffel’s patents were invalid due to anticipation in the prior art, but nonetheless enjoined Sears from further sales of the duplicate lamps based on a finding of consumer confusion under the Illinois law of unfair competition. The Court of Appeals affirmed, coming to the conclusion that the Illinois law of unfair competition prohibited product simulation even in the absence of evidence that the defendant took. some further action to induce confusion as to source.

This Court reversed, finding that the unlimited protection against copying which the Illinois law accorded an unpatentable item whose design had been fully disclosed through public sales conflicted with the federal policy embodied in the patent laws. The Court stated:

“In the present case the ‘pole lamp’ sold by Stiffel has been held not to be entitled to the protection of either a mechanical or a design patent. An unpatentable article, like an article on which the patent has expired, is in the public domain and may be made and sold by whoever chooses to do so. What Sears did was to copy Stiffel’s design and sell lamps almost identical to those sold by Stiffel. This it had every right to do under the federal patent laws.” 376 U. S., at 231.

A similar conclusion was reached in Compco, where the District Court had extended the protection of Illinois’ unfair competition law to the functional aspects of an unpatented fluorescent lighting system. The injunction against copying of an unpatented article, freely available to the public, imper-missibly “interfere[d] with the federal policy, found in Art. I, § 8, cl. 8, of the Constitution and in the implementing federal statutes, of allowing free access to copy whatever the federal patent and copyright laws leave in the public domain.” Compco, supra, at 237.

The pre-emptive sweep of our decisions in Sears and Compeo has been the subject of heated scholarly and judicial debate. See, e. g., Symposium, Product Simulation: A Right or a Wrong?, 64 Colum. L. Rev. 1178 (1964); Lear, Inc. v. Adkins, 395 U. S. 653, 676 (1969) (Black, J,, concurring in part and dissenting in part). Read at their highest level of generality, the two decisions could be taken to stand for the proposition that the States are completely disabled from offering any form of protection to articles or processes which fall within the broad scope of patentable subject matter. See id., at 677. Since the potentially patentable includes “anything under the sun that is made by man,” Diamond v. Chakrabarty, 447 U. S. 303, 309 (1980) (citation omitted), the broadest reading of Sears would prohibit the States from regulating the deceptive simulation of trade dress or the tor-tious appropriation of private information.

That the extrapolation of such a broad pre-emptive principle from Sears is inappropriate is clear from the balance struck in Sears itself. The Sears Court made it plain that the States “may protect businesses in the use of their trademarks, labels, or distinctive dress in the packaging of goods so as to prevent others, by imitating such markings, from misleading purchasers as to the source of the goods.” Sears, supra, at 232 (footnote omitted). Trade dress is, of course, potentially the subject matter of design patents. See W. T. Rogers Co. v. Keene, 778 F. 2d 334, 337 (CA7 1985). Yet our decision in Sears clearly indicates that the States may place limited regulations on the circumstances in which such designs are used in order to prevent consumer confusion as to source. Thus, while Sears speaks in absolutist terms, its conclusion that the States may place some conditions on the use of trade dress indicates an implicit recognition that all state regulation of potentially patentable but unpatented subject matter is not ipso facto pre-empted by the federal patent laws.

What was implicit in our decision in Sears, we have made explicit in our subsequent decisions concerning the scope of federal pre-emption of state regulation of the subject matter of patent. Thus, in Kewanee Oil Co. v. Bicron Corp., 416 U. S. 470 (1974), we held that state protection of trade secrets did not operate to frustrate the achievement of the congressional objectives served by the patent laws. Despite the fact that state law protection was available for ideas which clearly fell within the subject matter of patent, the Court concluded that the nature and degree of state protection did not conflict with the federal policies of encouragement of patentable invention and the prompt disclosure of such innovations.

Several factors were critical to this conclusion. First, because the public awareness of a trade secret is by definition limited, the Court noted that “the policy that matter once in the public domain must remain in the public domain is not incompatible with the existence of trade secret protection.” Id., at 484. Second, the Kewanee Court emphasized that “[tirade secret law provides far weaker protection in many respects than the patent law.” Id., at 489-490. This point was central to the Court’s conclusion that trade secret protection did not conflict with either the encouragement or disclosure policies of the federal patent law. The public at large remained free to discover and exploit the trade secret through reverse engineering of products in the public domain or by independent creation. Id., at 490. Thus, the possibility that trade secret protection would divert inventors from the creative effort necessary to satisfy the rigorous demands of patent protection was remote indeed. Ibid. Finally, certain aspects of trade secret law operated to protect non-economic interests outside the sphere of congressional concern in the patent laws. As the Court noted, “[A] most fundamental human right, that of privacy, is threatened when industrial espionage is condoned or is made profitable.” Id., at 487 (footnote omitted). There was no indication that Congress had considered this interest in the balance struck by the patent laws, or that state protection for it would interfere with the policies behind the patent system.

We have since reaffirmed the pragmatic approach which Kewanee takes to the pre-emption of state laws dealing with the protection of intellectual property. See Aronson, 440 U. S., at 262 (“State law is not displaced merely because the contract relates to intellectual property which may or may not be patentable; the states are free to regulate the use of such intellectual property in any manner not inconsistent with federal law”). At the same time, we have consistently reiterated the teaching of Sears and Compco that ideas once placed before the public without the protection of a valid patent are subject to appropriation without significant restraint. Aronson, supra, at 263.

At the heart of Sears and Compco is the conclusion that the efficient operation of the federal patent system depends upon substantially free trade in publicly known, unpatented design and utilitarian conceptions. In Sears, the state law offered “the equivalent of a patent monopoly,” 376 U. S., at 233, in the functional aspects of a product which had been placed in public commerce absent the protection of a valid patent. While, as noted above, our decisions since Sears have taken a decidedly less rigid view of the scope of federal pre-emption under the patent laws, e. g., Kewanee, supra, at 479-480, we believe that the Sears Court correctly concluded that the States may not offer patent-like protection to intellectual creations which would otherwise remain unprotected as a matter of federal law. Both the novelty and the nonobviousness requirements of federal patent law are grounded in the notion that concepts within the public grasp, or those so obvious that they readily could be, are the tools of creation available to all. They provide the baseline of free competition upon which the patent system’s incentive to creative effort depends. A state law that substantially interferes with the enjoyment of an unpatented utilitarian or design conception which has been freely disclosed by its author to the public at large impermissibly contravenes the ultimate goal of public disclosure and use which is the centerpiece of federal patent policy. Moreover, through the creation of patent-like rights, the States could essentially redirect inventive efforts away from the careful criteria of patentability developed by Congress over the last 200 years. We understand this to be the reasoning at the core of our decisions in Sears and Compco, and we reaffirm that reasoning today.

III

We believe that the Florida statute at issue m this case so substantially impedes the public use of the otherwise unprotected design and utilitarian ideas embodied in unpatented boat hulls as to run afoul of the teaching of our decisions in., Sears and Compco. It is readily apparent that the Florida* statute does not operate to prohibit “unfair competition” in the usual sense that the term is understood. The law of unfair competition has its roots in the common-law tort of deceit: its general concern is with protecting consumers from confusion as to source. While that concern may result in the creation of “quasi-property rights” in communicative symbols, the focus is on the protection of consumers, not the protection of producers as an incentive to product innovation. Judge Hand captured the distinction well in Crescent Tool Co. v. Kilborn & Bishop Co., 247 F. 299, 301 (CA2 1917), where he wrote:

“[T]he plaintiff has the right not to lose his customers through false representations that those are his wares which in fact are not, but he may not monopolize any design or pattern, however trifling. The defendant, on the other hand, may copy plaintiff’s goods slavishly down to the minutest detail: but he may not represent himself as the plaintiff in their sale.”

With some notable exceptions, including the interpretation of the Illinois law of unfair competition at issue in Sears and Compco, see Sears, supra, at 227-228, n. 2, the common-law tort of unfair competition has been limited to protection against copying of nonfunctional aspects of consumer products which have acquired secondary meaning such that they operate as a designation of source. See generally P. Kauf-mann, Passing Off and Misappropriation, in 9 International Review of Industrial Property and Copyright Law, Studies in Industrial Property and Copyright Law 100-109 (1986). The “protection” granted a particular design under the law of unfair competition is thus limited to one context where consumer confusion is likely to result; the design “idea” itself may be freely exploited in all other contexts.

In contrast to the operation of unfair competition law, the Florida statute is aimed directly at preventing the exploitation of the design and utilitarian conceptions embodied in the product itself. The sparse legislative history surrounding its enactment indicates that it was intended to create an inducement for the improvement of boat hull designs. See Tr. of Meeting of Transportation Committee, Florida House of Representatives, May 3, 1983, reprinted at App. 22 (“[T]here is no inducement for [a] quality boat manufacturer to improve these designs and secondly, if he does, it is immediately copied. This would prevent that and allow him recourse in circuit court”). To accomplish this goal, the Florida statute endows the original boat hull manufacturer with rights against the world, similar in scope and operation to the rights accorded a federal patentee. Like the patentee, the beneficiary of the Florida statute may prevent a competitor from “making” the product in what is evidently the most efficient manner available and from “selling” the product when it is produced in that fashion. Compare 35 U. S. C. §154. The Florida scheme offers this protection for an unlimited number of years to all boat hulls and their component parts, without regard to their ornamental or technological merit. Protection is available for subject matter for which patent protection has been denied or has expired, as well as for designs which have been freely revealed to the consuming public by their creators.

In this case, the Bonito 5VBR fiberglass hull has been freely exposed to the public for a period in excess of six years. For purposes of federal law, it stands in the same stead as an item for which a patent has expired or been denied: it is unpatented and unpatentable. See 35 U. S. C. § 102(b). Whether because of a determination of unpat-entability or other commercial concerns, petitioner chose to expose its hull design to the public in the marketplace, eschewing the bargain held out by the federal patent system of disclosure in exchange for exclusive use. Yet, the Florida statute allows petitioner to reassert a substantial property right in the idea, thereby constricting the spectrum of useful public knowledge. Moreover, it does so without the careful protections of high standards of innovation and limited monopoly contained in the federal scheme. We think it clear that such protection conflicts with the federal policy “that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent.” Lear, Inc. v. Adkins, 395 U. S., at 668.

That the Florida statute does not remove all means of reproduction and sale does not eliminate the conflict with the federal scheme. See Kellogg, 305 U. S., at 122. In essence, the Florida law prohibits the entire public from engaging in a form of reverse engineering of a product in the public domain. This is clearly one of the rights vested in the federal patent holder, but has never been a part of state protection under the law of unfair competition or trade secrets. See Kewanee, 416 U. S., at 476 (“A trade secret law, however, does not offer protection against discovery by . . . so-called reverse engineering, that is by starting with the known product and working backward to divine the process which aided in its development or manufacture”); see also Chicago Lock Co. v. Fanberg, 676 F. 2d 400, 405 (CA9 1982) (“A lock purchaser’s own reverse-engineering of his own lock, and subsequent publication of the serial number-key code correlation, is an example of the independent invention and reverse engineering expressly allowed by trade secret doctrine”). The duplication of boat hulls and their component parts may be an essential part of innovation in the field of hydrodynamic design. Variations as to size and combination of various elements may lead to significant advances in the field. Reverse engineering of chemical and mechanical articles in the public domain often leads to significant advances in technology. If Florida may prohibit this particular method of study and recomposition of an unpatented article, we fail to see the principle that would prohibit a State from banning the use of chromatography in the reconstitution of unpatented chemical compounds, or the use of robotics in the duplication of machinery in the public domain.

Moreover, as we noted in Keivanee, the competitive reality of reverse engineering may act as a spur to the inventor, creating an incentive to develop inventions that meet the rigorous requirements of patentability. 416 U. S., at 489-490. of property in ideas, and the great power such property has to cause harm to the competitive policies which underlay the federal patent laws, the demarcation of broad zones of public and private right is “the type of regulation that demands a uniform national rule.” Ray v. Atlantic Richfield Co., 435 U. S. 151, 179 (1978). Absent such a federal rule, each State could afford patent-like protection to particularly favored home industries, effectively insulating them from competition from outside the State.

Petitioner and its supporting amici place great weight on the contrary decision of the Court of Appeals for the Federal Circuit in Interpart Corp. v. Italia. In upholding the application of the California “antidirect molding” statute to the duplication of unpatented automobile mirrors, the Federal Circuit stated: “The statute prevents unscrupulous competitors from obtaining a product and using it as the ‘plug’ for making a mold. The statute does not prohibit copying the design of the product in any other way; the latter if in the public domain, is free for anyone to make, use or sell.” 777 F. 2d, at 685. The court went on to indicate that “the patent laws ‘say nothing about the right to copy or the right to use, they speak only in terms of the right to exclude.’” Ibid., quoting Mine Safety Appliances Co. v. Electric Storage Battery Co., 56 C. C. P. A. (Pat.) 863, 864, n. 2, 405 F. 2d 901, 902, n. 2 (1969).

We find this reasoning defective in several respects. The Federal Circuit apparently viewed the direct molding statute at issue in Interpart as a mere regulation of the use of chattels. Yet, the very purpose of antidirect molding statutes is to “reward” the “inventor” by offering substantial protection against public exploitation of his or her idea embodied in the product. Such statutes would be an exercise in futility if they did not have precisely the effect of substantially limiting the ability of the public to exploit an otherwise unprotected idea. As amicus points out, the direct molding process itself has been in use since the early 1950’s. See Brief for Charles E. Lipsey as Amicus Curiae 3, n. 2. Indeed, U. S. Patent No. 3,419,646, issued to Robert L. Smith in 1968, explictly discloses and claims a method for the direct molding of boat hulls. The specifications of the Smith Patent indicate that “[i]t is a major object of the present invention to provide a method for making large molded boat hull molds at very low cost, once a prototype hull has been provided.” App. to Brief for Charles E. Lipsey as Amicus Curiae 15a. In fact, it appears that Bonito employed a similar process in the creation of its own production mold. See supra, at 144. It is difficult to conceive of a more effective method of creating substantial property rights in an intellectual creation than to eliminate the most efficient method for its exploitation. Sears and Compco protect more than the right of the public to contemplate the abstract beauty of an otherwise unprotected intellectual creation — they assure its efficient reduction to practice and sale in the marketplace.

Appending the conclusionary label “unscrupulous” to such competitive behavior merely endorses a policy judgment which the patent laws do not leave the States free to make. Where an item in general circulation is unprotected by patent, “[Reproduction of a functional attribute is legitimate competitive activity.” Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U. S. 844, 863 (1982) (White, J., concurring in result). See also Bailey v. Logan Square Typographers, Inc., 441 F. 2d 47, 51 (CA7 1971) (Stevens, J.) (“[T]hat which is published may be freely copied as a matter of federal right”).

Finally, we are somewhat troubled by the Interpart court’s reference to the Mine Safety case for the proposition that the patent laws say “nothing about the right to copy or the right to use.” As noted above, the federal standards for pat-entability, at a minimum, express the congressional determination that patent-like protection is unwarranted as to certain classes of intellectual property. The States are simply not free in this regard to offer equivalent protections to ideas ■which Congress has determined should belong to all. For almost 100 years it has been well established that in the case of an expired patent, the federal patent laws do create a federal right to “copy and to use.” Sears and Compco extended that rule to potentially patentable ideas which are fully exposed to the public. The Interpart court’s assertion to the contrary is puzzling and flies in the face of the same court’s decisions applying the teaching of Sears and Compco in other contexts. See Power Controls Corp. v. Hybrinetics, Inc., 806 F. 2d 234, 240 (CA Fed. 1986) (“It is well established . . . that an action for unfair competition cannot be based upon a functional design”); Gemveto Jewelry Co. v. Jeff Cooper Inc., 800 F. 2d 256, 259 (CA Fed. 1986) (vacating injunction against copying of jewelry designs issued under state law of unfair competition “in view of the Sears and Compco decisions which hold that copying of the article itself that is unprotected by the federal patent and copyright laws cannot be protected by state law”).

Our decisions since Sears and Compco have made it clear that the Patent and Copyright Clauses do not, by their own force or by negative implication, deprive the States of the power to adopt rules for the promotion of intellectual creation within their own jurisdictions. See Aronson, 440 U. S., at 262; Goldstein v. California, 412 U. S. 546, 552-561 (1973); Kewanee, 416 U. S., at 478-479. Thus, where “Congress determines that neither federal protection nor freedom from restraint is required by the national interest,” Goldstein, supra, at 559, the States remain free to promote originality and creativity in their own domains.

Nor does the fact that a particular item lies within the subject matter of the federal patent laws necessarily preclude the States from offering limited protection which does not im-permissibly interfere with the federal patent scheme. As Sears itself makes clear, States may place limited regulations on the use of unpatented designs in order to prevent consumer confusion as to source. In Kewanee, we found that state protection of trade secrets, as applied to both patentable and unpatentable subject matter, did not conflict with the federal patent laws. In both situations, state protection was not aimed exclusively at the promotion of invention itself, and the state restrictions on the use of unpatented ideas were limited to those necessary to promote goals outside the contemplation of the federal patent scheme. Both the law of unfair competition and state trade secret law have coexisted harmoniously with federal patent protection for almost 200 years, and Congress has given no indication that their operation is inconsistent with the operation of the federal patent laws. See Florida Lime & Avocado Growers, Inc. v. Paul, 373 U. S. 132, 144 (1963); United States v. Bass, 404 U. S. 336, 349 (1971).

Indeed, there are affirmative indications from Congress that both the law of unfair competition and trade secret protection are consistent with the balance struck by the patent laws. Section 43(a) of the Lanham Act, 60 Stat. 441, 15 U. S. C. § 1125(a), creates a federal remedy for making “a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same . . . .” Congress has thus given federal recognition to many of the concerns that underlie the state tort of unfair competition, and the application of Sears and Compco to nonfunctional aspects of a product which have been shown to identify source must take account of competing federal policies in this regard. Similarly, as Justice Marshall noted in his concurring opinion in Kewanee: “State trade secret laws and the federal patent laws have co-existed for many, many, years. During this time, Congress has repeatedly demonstrated its full awareness of the existence of the trade secret system, without any indication of disapproval. Indeed, Congress has in a number of instances given explicit federal protection to trade secret information provided to federal agencies.” Kewanee, supra, at 494 (concurring in result) (citation omitted). The case for federal pre-emption is particularly weak where Congress has indicated its awareness of the operation of state law in a field of federal interest, and has nonetheless decided to “stand by both concepts and to tolerate whatever tension there [is] between them.” Silkwood v. Kerr-McGee Corp., 464 U. S. 238, 256 (1984). The same cannot be said of the Florida statute at issue here, which offers protection beyond that available under the law of unfair competition or trade secret, without any showing of consumer confusion, or breach of trust or secrecy.

The Florida statute is aimed directly at the promotion of intellectual creation by substantially restricting the public’s ability to exploit ideas that the patent system mandates shall be free for all to use. Like the interpretation of Illinois unfair competition law in Sears and Compco, the Florida statute represents a break with the tradition of peaceful co-' existence between state market regulation and federal patent policy. The Florida law substantially restricts the public’s ability to exploit an unpatented design in general circulation, raising the specter of state-created monopolies in a host of useful shapes and processes for which patent protection has been denied or is otherwise unobtainable. It thus enters a field of regulation which the patent laws have reserved to Congress. The patent statute’s careful balance between public right and private monopoly to promote certain creative activity is a “scheme of federal regulation ... so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.” Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230 (1947).

Congress has considered extending various forms of limited protection to industrial design either through the copyright laws or by relaxing the restrictions on the availability of design patents. See generally Brown, Design Protection: An Overview, 34 UCLA L. Rev. 1341 (1987). Congress explicitly refused to take this step in the copyright laws, see 17 U. S. C. § 101; H. R. Rep. No. 94-1476, p. 55 (1976), and despite sustained criticism for a number of years, it has declined to alter the patent protections presently available for industrial design. See Report of the President’s Commission on the Patent System, S. Doc. No. 5, 90th Cong., 1st Sess., 20-21 (1967); Lindgren, The Sanctity of the Design Patent: Illusion or Reality?, 10 Okla. City L. Rev. 195 (1985). It is for Congress to determine if the present system of design and utility patents is ineffectual in promoting the useful arts in the context of industrial design. By offering patent-like protection for ideas deemed unprotected under the present federal scheme, the Florida statute conflicts with the “strong federal policy favoring free competition in ideas which do not merit patent protection.” Lear, Inc., 395 U. S., at 656. We therefore agree with the majority of the Florida Supreme Court that the Florida statute is preempted by the Supremacy Clause, and the judgment of that court is hereby affirmed.

It is so ordered.

       In some respects, the protection accorded by the Florida statute resembles that of a so-called “product-by-process” patent. Such a claim “is one in which the product is defined at least in part in terms of the method or process by which it is made.” D. Chisum, Patents §8.05, p. 8-67 (1988). As long as the end product of the process is adequately defined and novel and nonobvious, a patent in the process may support a patent in the resulting product. See U. S. Patent and Trademark Office, Manual of Patent Examining Procedure § 706.03(e) (5th rev. ed. 1986) (“An article may be claimed by a process of making it provided it is definite”). The Florida statute at issue here grants boat hull manufacturers substantial control over the use of a particular process and the sale of an article created by that process without regard to the novelty or nonobviousness of either the end product or the process by which it was created. Under federal law, this type of protection would be unavailable to petitioner absent satisfaction of the requirements of patentability. See In re Thorpe, 777 F. 2d 695, 697 (CA Fed. 1985) (product-by-process patent properly denied where end result was indistinguishable from prior art).


source: Caselaw Access Project

author: Justice Kennedy

license: Public Domain

text:
    OSTERNECK et al. v. ERNST & WHINNEY
    No. 87-1201.
    Argued November 29, 1988
    Decided February 21, 1989

      Kennedy, J., delivered the opinion for a unanimous Court.

      Laurie Webb Daniel argued the cause for petitioners. With her on the briefs were Harold T. Daniel, Jr., Keith M. Wiener, and Paul Webb, Jr.

      Gordon Lee Garrett, Jr., argued the cause for respondent. With him on the brief was William B. B. Smith.

   Justice Kennedy

delivered the opinion of the Court.

Federal Rule of Appellate Procedure 4(a)(4) provides that if any party files a timely motion “under Rule 59 [of the Federal Rules of Civil Procedure] to alter or amend the judgment,” a notice of appeal filed before the disposition of that motion “shall have no effect.” In this case, we decide whether a motion for discretionary prejudgment interest filed after the entry of judgment constitutes a Rule 59 motion to alter or amend the judgment and renders ineffective any notice of appeal filed before a ruling on that motion. If we decide the question in the affirmative, we are asked to decide whether this case nevertheless falls within the so-called “unique circumstances” exception to the timely appeal requirement announced in Thompson v. INS, 375 U. S. 384 (1964) (per curiam).

I

The history of this case is complex but can be stated in a summary way. In September 1969, the Cavalier Bag Company merged into E. T. Barwick Industries, Inc. (Barwick Industries). The Osternecks, owners of Cavalier and petitioners here, approved the merger and exchanged their stock in Cavalier for stock in Barwick Industries. In approving the transaction, petitioners allegedly relied on financial statements of Barwick Industries prepared by Ernst & Whinney, an independent certified public accounting firm and the respondent here.

Sometime later, petitioners concluded that Barwick Industries’ financial statements for two years preceding the merger misrepresented the company’s actual financial condition. In 1975, petitioners filed this action alleging violations of §§ 10(b) and 20 of the Securities Exchange Act of 1934, ch. 404, 48 Stat. 891, 899, as amended, 15 U. S. C. §§ 78j(b), 78t (1982 ed. and Supp. IV), Rule 10b-5 thereunder, 17 CFR §240.10b-5 (1975), and Georgia common law. Petitioners named as defendants, among others, Barwick Industries, respondent Ernst & Whinney, and certain directors and officers of Barwick Industries (E. T. Barwick, B. A. Talley, and M. E. Kellar).

After nearly 10 years of pretrial proceedings, the ease finally went to trial in 1984. The jury returned a verdict against Barwick Industries, M. E. Kellar, and B. A. Talley in the amount of $2,632,234 in compensatory damages for violations of the federal securities laws and Georgia common law. The jury found in favor of E. T. Barwick and respondent Ernst & Whinney.

Immediately after the jury verdict was announced, petitioners moved orally for prejudgment interest on the damages assessed against Barwick Industries, M. E. Kellar, and B. A. Talley. The District Judge, not wishing to hear argument on petitioners’ motion at that point, directed petitioners to submit their motion for prejudgment interest in writing within 10 days. He stated:

“The judgment will be entered on this particular verdict as soon as possible, then if prejudgment interest is granted it will be — the judgment can be amended.” App. 5.

The judgment was filed and entered on the same day, January 30, 1985. Id., at 6-7. On February 11, 1985, petitioners, as directed, filed a written motion for prejudgment interest. Id., at 8-9.

During March 1985, the various parties filed notices of appeal and cross-appeal challenging the January 30 judgment. Of particular importance here, on March 1, 1985, while their motion for prejudgment interest was still pending, petitioners filed a notice of appeal from the January 30, 1985, judgment in favor of E. T. Barwick and respondent Ernst & Whinney. Id., at 34.

The District Court did not rule on petitioners’ motion for prejudgment interest until July 1, 1985. On that date, the court entered an order stating that the final judgment shall be “AMENDED” to reflect an “additional award of [$945,512.85 in] prejudgment interest on the federal securities claim.” Id., at 44. On July 9, 1985, the District Court filed a document captioned “AMENDED JUDGMENT,” stating that the January 30,1985, judgment “is hereby amended by adding thereto . . . [the] award of prejudgment interest,” but shall “remain the same in every other respect.” Id., at 45. After the amended judgment had been entered, petitioners filed one additional notice of appeal on July 31, 1985, captioned as a cross-appeal against M. E. Kellar, B. A. Talley, E. T. Bar-wick, and Barwick Industries. Id., at 46-47. But, and this is the vital fact for purposes of this case, the notice failed to include respondent Ernst & Whinney as a party to the appeal.

The Court of Appeals dismissed petitioners’ appeal as to Ernst & Whinney for lack of jurisdiction, finding that no effective notice had been filed. Osterneck v. E. T. Barwick Industries, Inc., 825 F. 2d 1521 (CA11 1987). The Court of Appeals concluded that petitioners’ February 11, 1985, motion for prejudgment interest was a motion to alter or amend the judgment under Rule 59(e), which rendered ineffective under Federal Rule of Appellate Procedure 4(a)(4) the March 1, 1985, notice of appeal filed before the disposition of the prejudgment interest motion. 825 F. 2d, at 1525-1527. The Court of Appeals rejected petitioners’ contention, based on our decision in White v. New Hampshire Dept. of Employment Security, 455 U. S. 445 (1982), that their motion for prejudgment interest was not a motion to alter or amend the judgment under Rule 59(e) because it merely addressed an issue collateral to the main cause of action. 825 F. 2d, at 1526. The Court of Appeals also rejected petitioners’ contention that our decision in Thompson v. INS, 375 U. S. 384 (1964) (per curiam), required that it hear their appeal because they had relied upon several actions of the District Court which indicated that the January 30, 1985, judgment' was final and appealable notwithstanding the pending motion for prejudgment interest. 825 F. 2d, at 1527-1528.

Petitioners sought review here, and we granted certiorari, 486 U. S. 1042 (1988), to resolve a conflict in the Courts of Appeals over whether a motion for prejudgment interest filed after the entry of judgment constitutes a Rule 59(e) motion to alter or amend the judgment. Cf. Jenkins v. Whittaker Corp., 785 F. 2d 720 (CA9 1986). We also agreed to consider, if necessary, whether the Court of Appeals erred in not entertaining petitioners’ appeal under the reasoning of Thompson, supra. We now affirm.

II

Rule 59(e) of the Federal Rules of Civil Procedure provides that a motion to “alter or amend the judgment” shall be served within 10 days of the entry of judgment. Rule 4(a)(4) of the Federal Rules of Appellate Procedure provides that a notice of appeal filed while a timely Rule 59(e) motion is pending has no effect. Together, these Rules work to implement the finality requirement of 28 U. S. C. § 1291 by preventing the filing of an effective notice of appeal until the District Court has had an opportunity to dispose of all motions that seek to amend or alter what otherwise might appear to be a final judgment.

A

White v. New Hampshire Dept. of Employment Security, supra, at 451, set the general framework for determining whether a postjudgment motion constitutes a Rule 59(e) motion to alter or amend the judgment. In that case, we held that a request for attorney’s fees under 42 U. S. C. § 1988 was not a Rule 59(e) motion. We stated in White that a postjudgment motion will be considered a Rule 59(e) motion where it involves “reconsideration of matters properly encompassed in a decision on the merits.” 455 U. S., at 451, citing Browder v. Director, Illinois Dept. of Corrections, 434 U. S. 257 (1978). We concluded that a request for attorney’s fees did not fit this description because it raised legal issues “collateral to the main cause of action,” 455 U. S., at 451, requiring an inquiry that was wholly “separate from the decision on the merits,” id., at 451-452. We noted, moreover, that because attorney’s fees under § 1988 are not considered compensation for the injury giving rise to the cause of action, their award was “uniquely separable” from the underlying merits of the controversy. Id., at 452.

We revisited the question of what constitutes a Rule 59(e) motion last Term. In Buchanan v. Stanships, Inc., 485 U. S. 265 (1988), we considered whether a motion for the allowance of costs under Federal Rule of Civil Procedure 54(d) was a motion to alter or amend the judgment. In concluding that it was not, we relied on the fact that Federal Rule of Civil Procedure 58 draws a “sharp distinction” between a district court’s judgment on the merits and an award of costs. 485 U. S., at 268. Moreover, we observed that, as with the attorney's fees in White, a motion for costs filed under Rule 54(d) “raises issues wholly collateral to the judgment in the main cause of action.” 485 U. S., at 268.

In Budinich v. Becton Dickinson & Co., 486 U. S. 196 (1988), the issue was not whether a particular kind of motion constitutes a Rule 59(e) motion,, but rather the related question whether a judgment is final under 28 U. S. C. § 1291 when a motion for attorney’s fees remains to be resolved. We acknowledged in Budinich that our earlier- decision in White, holding that a request for attorney’s fees under § 1988 was not a Rule 59(e) motion, “all but” answered the finality question. We went on to reiterate that, as a general matter, a request for attorney’s fees is not part of the merits of the underlying action because such fees are not part of the compensation for the plaintiff’s injury but traditionally have been regarded as an element of costs awarded to the prevailing party. 486 U. S., at 199-201.

Under these precedents, the Court of Appeals was correct to conclude that a postjudgment motion for discretionary prejudgment interest constitutes a motion to alter or amend the judgment under Rule 59(e). First, we have repeatedly stated that prejudgment interest “is an element of [plaintiff’s] complete compensation.” West Virginia v. United States, 479 U. S. 305, 310, and n. 2 (1987); see General Motors Corp. v. Devex Corp., 461 U. S. 648, 655-656, and n. 10 (1983). Thus, unlike attorney’s fees, which at common l’aw were regarded as an element of costs and therefore not part of the merits judgment, see Budinich, supra, at 200-201, prejudgment interest traditionally has been considered part of the compensation due plaintiff.

Second, unlike a request for attorney’s fees or a motion for costs,, a motion for discretionary prejjudgment interest does not “raiste] issues wholly collateral' to. the judgment in the main cause of action,” Buchanan, supra, at 268; see White, 455 U. S., at 451, nor does it require an inquiry wholly “separate from the decision on the merits,” id., at 451-452. In deciding if and how much prejudgment interest should be granted, a district court must examine — or in the case of a postjudgment motion, reexamine — matters encompassed within the merits of the underlying action. For example, in a federal securities action such as this case, a district court will consider a number of factors, including whether prejudgment interest is necessary to compensate the plaintiff fully for his injuries, the degree of personal wrongdoing on the part of the defendant, the availability of alternative investment opportunities to the plaintiff, whether the plaintiff delayed in bringing or prosecuting the action, and other fundamental considerations of fairness. See Norte & Co. v. Huffines, 416 F. 2d 1189, 1191-1192 (CA2 1969), cert. denied sub nom. Muscat v. Norte & Co., 397 U. S. 989 (1970); City National Bank v. American Commonwealth Financial Corp., 608 F. Supp. 941, 943 (WDNC 1985); Fox v. Kane-Miller Corp., 398 F. Supp. 609, 651 (Md. 1975); see also generally Blau v. Lehman, 368 U. S. 403, 414 (1962) (“[IJnterest is not recovered according to a rigid theory of compensation for money withheld, but is given in response to considerations of fairness”). These considerations are intertwined in a significant way with the merits of the plaintiff’s primary case as well as the extent of his damages. Thus, we conclude that a postjudgment motion for discretionary prejudgment interest involves the kind of reconsideration of matters encompassed within the merits of a judgment to which Rule 59(e) was intended to apply.

Our conclusion that a postjudgment motion for discretionary prejudgment interest is a Rule 59(e) motion also helps further the important goal of avoiding piecemeal appellate review of judgments. Cf. United States v. Hollywood Motor Car Co., 458 U. S. 263, 265 (1982) (“[T]he policy of Congress embodied in [28 U. S. C. § 1291] is inimical to piecemeal appellate review of trial court decisions”). Because Federal Rule of Appellate Procedure 4(a)(4) renders' ineffective any notice of appeal filed while a Rule 59(e) motion is pending, the decision whether a particular pending motion falls under Rule 59(e) will of necessity determine whether an otherwise final judgment is appealable. By preventing appellate review before a postjudgment motion for prejudgment interest is resolved, the rule we adopt today gives added assurance that an appellate court will have the benefit of the district court’s plenary findings with regard to factual and legal issues sub-' sumed in the decision to grant discretionary prejudgment interest, such as the wrongfulness of the defendant’s conduct and the plaintiff’s full damages, as well as other matters of equity bearing on the merits of the litigation. Such information may well be useful to a complete understanding of the district court’s findings on liability and damages. We do not anticipate that our holding will result in undue delays in the entry of a final judgment. Any evidence relating to the question of prejudgment interest should be available at the time that the other issues in the case are tried, and the district court should be able to dispose of a motion for prejudgment interest within a reasonable time after the entry of verdict.

Ill

Petitioners contend that even if their March 1, 1985, notice of appeal was rendered ineffective by the filing of their motion for prejudgment interest, the Court of Appeals nevertheless should have heard their appeal based on the rationale of Thompson v. INS, 375 U. S. 384 (1964). In that case, the petitioner filed with the District Court a motion for a new trial within 10 days of receiving notice of the entry of judgment, but 12 days after the judgment was entered. Although this motion was in fact untimely, the District Court specifically declared that it had been filed ‘“in ample time.’” Id., at 385. In reliance on this statement, the petitioner in Thompson did not file an appeal from the District Court’s original judgment,, but rather filed a timely appeal from the later denial of his motion for a new trial. Because it found that petitioner’s motion for a new trial was not timely filed, the Court of Appeals dismissed his appeal. In light of these “unique circumstances,” we reversed. Id., at 387. Because petitioner had filed his notice of appeal in reliance on the specific statement of the District Court that his motion for a new trial was timely, we felt that fairness required that the Court of Appeals excuse his untimely appeal. See ibid.

Petitioners contend that the rationale of Thompson is applicable here because certain statements made by the District Court, as well as certain actions taken by the District Court, the District Court Clerk, and the Court of Appeals, led them to believe that their notice of appeal was timely. After reviewing these claims, the Court of Appeals declined to apply the Thompson exception, concluding:

“At no time has the district court or this court ever affirmatively represented to the Osternecks that their appeal was timely filed, nor did the Osternecks ever seek such assurance from either court.” 825 F. 2d, at 1528.

After reviewing the record, we conclude that the Court of Appeals was correct in declining to apply our reasoning in Thompson to excuse petitioners’ failure to file an effective notice of appeal. By its terms, Thompson applies only where a party has performed an act which, if properly done, would postpone the deadline for filing his appeal and has received specific assurance by a judicial officer that this act has been properly done. That is not the case here.

The judgment of the Court of Appeals is affirmed.

It is so ordered.

       The Court of Appeals also found that petitioners’ July 31, 1985, notice of cross-appeal was ineffective as to the judgment in favor of respondent because respondent was not named in that notice. 825 F. 2d, at 1528-1529. Petitioners have not sought review of that ruling in this Court.

       We do not intend here to specify what factors a district court must consider when deciding under federal law whether to grant prejudgment interest. We offer this list of factors, taken from lower court cases, merely to demonstrate that the inquiry involves issues intertwined to a significant extent with the merits of the underlying controversy.

       We do not believe the result should be different where prejudgment interest is available as a matter of right. It could be argued that where a party is entitled to prejudgment interest as a matter of right, a reexamination of issues relevant to the underlying merits is not necessary, and therefore the motion should be deemed collateral in the sense we have used that term. However, mandatory prejudgment interest, no less than discretionary prejudgment interest, serves to “remedy the injury giving rise to the [underlying] action,” Budinich v. Becton Dickinson & Co., 486 U. S. 196, 200 (1988), and in that sense is part of the merits of the district court’s decision. Moreover, as we said last Term in Budinich: “[W]hat is of importance here is not preservation of conceptual consistency in the status of a particular [type of motion] as ‘merits’ or ‘nonmerits,’ but rather preservation of operational consistency and predictability in the overall application of the [finality requirement] of § 1291.” Ibid. “Courts and litigants are best served by the bright-line rule, which accords with traditional understanding,” ibid., that a motion for prejudgment interest implicates the merits of the district court’s judgment.


author: Per Curiam. Justice Brennan,

text:
    In re McDONALD
    No. 88-5890.
    Decided February 21, 1989
   Per Curiam.

Pro se petitioner Jessie McDonald requests that this Court issue a writ of habeas corpus pursuant to 28 U. S. C. § 2241(a). He also requests that he be permitted to proceed in forma pauperis under this Court’s Rule 46. We deny petitioner leave to proceed in forma pauperis. He is allowed until March 14, 1989, within which to pay the docketing fee required by Rule 45(a) and to submit a petition in compliance with this Court’s Rule 33. We also direct the Clerk not to accept any further petitions from petitioner for extraordinary writs pursuant to 28 U. S. C. §§ 1651(a), 2241, and 2254(a), unless he pays the docketing fee required by Rule 45(a) and submits his petition in compliance with Rule 33. We explain below our reasons for taking this step.

Petitioner is no stranger to us. Since 1971, he has made 73 separate filings with the Court, not including this petition, which is his eighth so far this Term. These include 4 appeals, 33 petitions for certiorari, 19 petitions for extraordinary writs, 7 applications for stays and other injunctive relief, and 10 petitions for rehearing. Without recorded dissent, the Court has denied all of his appeals and denied all of his various petitions and motions. We have never previously denied him leave to proceed informa pauperis.

The instant petition for a writ of habeas corpus arises from petitioner’s 1974 state conviction for obtaining title to a 1972 Ford LTD automobile under false pretenses, for which he was sentenced to three years’ imprisonment. Petitioner appealed to the Tennessee Court of Criminal Appeals, which reversed his conviction on the ground that there was no evidence that the alleged victim relied on petitioner’s false statements. In January 1976, the Supreme Court of Tennessee reinstated his conviction. State v. McDonald, 534 S. W. 2d 650. We denied certiorari, 425 U. S. 955, and rehearing, 425 U. S. 1000 (1976).

In the 13 years since his conviction became final, petitioner has filed numerous petitions and motions for relief in this Court and in the Tennessee courts, all of which have been rejected. In the instant petition, for example, he requests that the Court “set aside” his conviction and direct the State to “expunge” the conviction “from all public records.” He is not presently incarcerated. He contends that his constitutional rights were violated by the State’s failure to prove that the property to which he obtained title under false pretenses was valued at over $100, as required by the statute under which he was convicted. Petitioner has put forward this same argument — unsuccessfully—in at least four prior filings with the Court, including a petition for mandamus, which was filed 13 days before the instant petition and was not disposed of by the Court until more than a month after this petition was filed.

Title 28 U. S. C. § 1915 provides that “[a]ny court of the United States may authorize the commencement, prosecution or defense of any suit, action or proceeding, civil or criminal, or appeal therein, without prepayment of fees and costs or security therefor.” (Emphasis added.) As permitted under this statute, we have adopted Rule 46.1, which provides that “[a] party desiring to proceed in this Court in forma pauperis shall file a motion for leave to so proceed, together with his affidavit in the form prescribed in Fed. Rules App. Proc., Form 4 . . . setting forth with particularity facts showing that he comes within the statutory requirements.” Each year, we permit the vast majority of persons who wish to proceed informa pauperis to do so; last Term, we afforded the privilege of proceeding informa pauperis to about 2,300 persons. Paupers have been an important — and valued-part of the Court’s docket, see, e. g., Gideon v. Wainwright, 372 U. S. 335 (1963), and remain so.

But paupers filing pro se petitions are not subject to the financial considerations — filing fees and attorney’s fees — that deter other litigants from filing frivolous petitions. Every paper filed with the Clerk of this Court, no matter how repetitious or frivolous, requires some portion of the institution’s limited resources. A part of the Court’s responsibility is to see that these resources are allocated in a way that promotes the interests of justice. The continual processing of petitioner’s frivolous requests for extraordinary writs does not promote that end. Although we have not done so previously, lower courts have issued orders intended to curb serious abuses by persons proceeding informa pauperis Our order here prevents petitioner from proceeding in forma pauperis when seeking extraordinary writs from the Court. It is perhaps worth noting that we have not granted the sort of extraordinary writ relentlessly sought by petitioner to any litigant — paid or in forma pauperis — for at least a decade. We have emphasized that extraordinary writs are, not surprisingly, “drastic and extraordinary remedies,” to be “reserved for really extraordinary causes,” in which “appeal is clearly an inadequate remedy.” Ex parte Fahey, 332 U. S. 258, 259, 260 (1947).

Petitioner remains free under the present order to file in forma pauperis requests for relief other than an extraordinary writ, if he qualifies under this Court’s Rule 46 and does not similarly abuse that privilege.

It is so ordered.

Justice Brennan,

with whom Justice Marshall, Justice Blackmun, and Justice Stevens join,

dissenting.

In the first such act in its almost 200-year history, the Court today bars its door to a litigant prospectively. Jessie McDonald may well have abused his right to file petitions in this Court without payment of the docketing fee; the Court’s order documents that fact. I do not agree, however, that he poses such a threat to the orderly administration of justice that we should embark on the unprecedented and dangerous course the Court charts today.

The Court’s denial not just of McDonald’s present petition but also of his right to file for extraordinary writs in forma pauperis in the future is, first of all, of questionable legality. The federal courts are authorized by 28 U. S. C. § 1915 to permit filings in forma pauperis. The statute is written permissively, but it establishes a comprehensive scheme for the administration of informa pauperis filings. Nothing in it suggests we have any authority to accept informa paupe-ris pleadings from some litigants but not from others on the basis of how many times they have previously sought our review. Indeed, if anything, the statutory language forecloses the action the Court takes today. Section 1915(d) explains the circumstances in which an in forma pauperis pleading may be dismissed as follows: a court “may dismiss the case if the allegation of poverty is untrue, or if satisfied that the action is frivolous or malicious.” (Emphasis added.) This language suggests an individualized assessment of frivolousness or maliciousness that the Court’s prospective order precludes. As one lower court has put it, a court’s discretion to dismiss informa pauperis cases summarily “is limited ... in every case by the language of the statute itself which restricts its application to complaints found to be frivolous or malicious.” Sills v. Bureau of Prisons, 245 U. S. App. D. C. 389, 391, 761 F. 2d 792, 794 (1985) (emphasis added). Needless to say, the future petitions McDonald is barred from filing have not been “found to be” frivolous. Even a very strong and well-founded belief that McDonald’s future filings will be frivolous cannot render a before-the-fact disposition compatible with the individualized determination § 1915 contemplates.

This Court’s Rule 46 governs our practice in cases filed in forma pauperis. No more than § 1915 does it grant us authority to disqualify a litigant from future use of in forma pauperis status. Indeed, Rule 46.4 would seem to forbid such a practice, for it specifies that when the filing requirements described by Rule 46 are complied with, the Clerk “will file” the litigant’s papers “and place the case on the docket.” Today we order the Clerk to refuse to do just that. Of course we are free to amend our own rules should we see the need to do so, but until we do we are bound by them.

Even if the legality of our action in ordering the Clerk to refuse future petitions for extraordinary writs in forma pauperis from this litigant were beyond doubt, I would still oppose it as unwise, potentially dangerous, and a departure from the traditional principle that the door to this courthouse is open to all.

The Court’s order purports to be motivated by this litigant’s disproportionate consumption of the Court’s time and resources. Yet if his filings are truly as repetitious as it appears, it hardly takes much time to identify them as such. I find it difficult to see how the amount of time and resources required to deal properly with McDonald’s petitions could be so great as to justify the step we now take. Indeed, the time that has been consumed in the preparation of the present order barring the door to Mr. McDonald far exceeds that which would have been necessary to process his petitions for the next several years at least. I continue to find puzzling the Court’s fervor in ensuring that rights granted to the poor are not abused, even when so doing actually increases the drain on our limited resources. Cf. Brown v. Herald Co., 464 U. S. 928 (1983) (Brennan, J., dissenting). Today’s order makes sense as an efficiency measure only if it is merely the prelude to similar orders in regard to other litigants, or perhaps to a generalized rule limiting the number of petitions informa pauperis an individual may file. Therein lies its danger.

The Court’s order itself seems to indicate that further measures, at least in regard to this litigant, may be forthcoming. It notes that McDonald remains free to file in forma pauperis for relief other than extraordinary writs, if he “does not similarly abuse that privilege.” Ante, at 185. But if we have found his 19 petitions for extraordinary writs abusive, how long will it be until we conclude that his 33 petitions for certiorari are similarly abusive and bar that door to him as well? I am at a loss to say why, logically, the Court’s order is limited to extraordinary writs, and I can only conclude that this order will serve as precedent for similar actions in the future, both as to this litigant and to others.

I doubt — although I am not certain — that any of the petitions Jessie McDonald is now prevented from filing would ultimately have been found meritorious. I am most concerned, however, that if, as I fear, we continue on the course we chart today, we will end by closing our doors to a litigant with a meritorious claim. It is rare, but it does happen on occasion that we grant review and even decide in favor of a litigant who previously had presented multiple unsuccessful petitions on the same issue. See, e. g., Chessman v. Teets, 354 U. S. 156 (1957); see id., at 173-177 (Douglas, J., dissenting).

This Court annually receives hundreds of petitions, most but not all of them filed in forma pauperis, which raise no colorable legal claim whatever, much less a question worthy of the Court’s review. Many come from individuals whose mental or emotional stability appears questionable. It does not take us long to identify these petitions as frivolous and to reject them. A certain expenditure of resources is required, but it is not great in relation to our work as a whole. To rid itself of a small portion of this annoyance, the Court now needlessly departs from its generous tradition and improvidently sets sail on a journey whose landing point is uncertain. We have long boasted that our door is open to all. We can no longer.

For the reasons stated in Brown v. Herald Co., supra, I would deny the petition for a writ of habeas corpus without reaching the merits of the motion to proceed in forma pauperis. For the reasons stated above, I dissent from the Court’s order directing the Clerk not to accept future petitions in forma pauperis for extraordinary writs from this petitioner.

        See McDonald v. Alabama, 479 U. S. 1061 (1987); In re McDonald, 466 U. S. 957 (1984); McDonald v. Tennessee, 432 U. S. 901 (1977); McDonald v. Purity Dairies Employees Federal Credit Union, 431 U. S. 961 (1977).

       See McDonald v. Tobey, 488 U. S. 971 (1988); McDonald v. Metropolitan Government of Nashville and Davidson County, 481 U. S. 1053 (1987); McDonald v. Tennessee, 475 U. S. 1088 (1986); McDonald v. Tennessee, 474 U. S. 951 (1985); McDonald v. Leech, 467 U. S. 1208 (1984); McDonald v. Humphries, 461 U. S. 946 (1983); McDonald v. Metropolitan Government of Nashville and Davidson County, 461 U. S. 934 (1983); McDonald v. Draper, 459 U. S. 1112 (1983); McDonald v. Thompson, 456 U. S. 981 (1982); McDonald v. Metropolitan Government of Nashville and Davidson County, 455 U. S. 957 (1982); McDonald v. Tennessee, 454 U. S. 1088 (1981); McDonald v. Draper, 452 U. S. 965 (1981); McDonald v. Tennessee, 450 U. S. 983 (1981); McDonald v. Draper, 450 U. S. 983 (1981); McDonald v. Metropolitan Airport Authority, 450 U. S. 1002 (1981); McDonald v. Metropolitan Government of Nashville and Davidson County, 450 U. S. 933 (1981); McDonald v. United States District Court, 444 U. S. 900 (1979); McDonald v. Birch, 444 U. S. 875 (1979); McDonald v. United States District Court and McDonald v. Yellow Freight Systems, Inc., 444 U. S. 875 (1979); McDonald v. Thompson, 436 U. S. 911 (1978); McDonald v. Tennessee, 434 U. S. 866 (1977); McDonald v. Davidson County Election Comm’n, 431 U. S. 958 (1977); McDonald v. Tennessee, 431 U. S. 933 (1977); McDonald v. Tennessee, 429 U. S. 1064 (1977); McDonald v. Tennessee, 425 U. S. 955 (1976); McDonald v. Tennessee, 423 U. S. 991 (1975); McDonald v. Tennessee, 416 U. S. 975 (1974); McDonald v. Tennessee, 415 U. S. 961 (1974); McDonald v. Wellons, 414 U. S. 1074 (1973); McDonald v. Metro Traffic and Parking Comm’n, 409 U. S. 1117 (1973); McDonald v. Wellons, 405 U. S. 928 (1972); McDonald v. Metropolitan Traffic and Parking Comm’n, 404 U. S. 843 (1971).

        In re McDonald, 488 U. S. 940 (1988) (mandamus and/or prohibition); In re McDonald, 488 U. S. 940 (1988) (mandamus and/or prohibition); In re McDonald, 488 U. S. 940 (1988) (mandamus and/or prohibition); In re McDonald, 488 U. S. 813 (1988) (common law certiorari); In re McDonald, 488 U. S. 813 (1988) (common law certiorari); In re McDonald, 488 U. S. 813 (1988) (common law certiorari); In re McDonald, 485 U. S. 986 (1988) (mandamus); In re McDonald, 484 U. S. 812 (1987) (common law certio-rari); In re McDonald, 484 U. S. 812 (1987) (habeas corpus); In re McDonald, 484 U. S. 812 (1987) (common law certiorari and habeas corpus); In re

        McDonald, 479 U. S. 809 (1986) (habeas corpus); In re McDonald, 470 U. S. 1082 (1985) (habeas corpus); In re McDonald, 464 U. S. 811 (1983) (mandamus and/or prohibition); McDonald v. Leathers, 439 U. S. 815 (1978) (leave to file petition for writ of mandamus); McDonald v. Thompson, 434 U. S. 812 (1977) (leave to file petition for writ of habeas corpus); McDonald v. Tennessee, 430 U. S. 963 (1977) (motion to consolidate and for leave to file petition for writ of habeas corpus); McDonald v. Thompson, 429 U. S. 1088 (1977) (leave to file petition for writ of habeas corpus and other relief); McDonald v. United States Court of Appeals, 420 U. S. 922 (1975) (leave to file petition for writ of mandamus); McDonald v. Mott, 410 U. S. 907 (1973) (leave to file petition for writ of mandamus and other relief).

       See McDonald v. Metropolitan Government, 487 U. S. 1230 (1988) (stay); McDonald v. Metropolitan Government of Nashville and Davidson County, 481 U. S. 1010 (1987) (stay); McDonald v. Alexander, 458 U. S. 1124 (1982) (injunction); McDonald v. Draper, 451 U. S. 978 (1981) (stay); McDonald v. Thompson, 432 U. S. 903 (1977) (application for supersedeas bond); McDonald v. Tennessee, 429 U. S. 1012 (1976) (stay and other relief); McDonald v. Tennessee, 415 U. S. 971 (1974) (stay).

       See McDonald v. Alabama, 480 U. S. 912 (1987); In re McDonald, 479 U. S. 956 (1986); McDonald v. Tennessee, 475 U. S. 1151 (1986); In re McDonald, 471 U. S. 1062 (1985); McDonald v. Leech, 467 U. S. 1257 (1984); McDonald v. Draper, 459 U. S. 1229 (1983); McDonald v. Thompson, 457 U. S. 1126 (1982); McDonald v. Draper, 451 U. S. 933 (1981); McDonald v. Tennessee, 425 U. S. 1000 (1976); McDonald v. Tennessee, 417 U. S. 927 (1974).

       In the affidavit in support of his present motion to. proceed informa pauperis, petitioner states that he earns approximately $300 per month, is self-employed, and has less than $25 in his checking or savings account. He states that he has no dependents.

       See In re McDonald, 488 U. S. 940 (1988) (petition for mandamus and/or prohibition); In re McDonald, 484 U. S. 812 (1987) (petition for common law certiorari or habeas corpus); McDonald v. Tennessee, 475 U. S. 1088, rehearing denied, 475 U. S. 1151 (1986) (petition for certiorari); In re McDonald, 479 U. S. 809 (1986) (petition for habeas corpus).

       See, e. g., Procup v. Strickland, 792 F. 2d 1069 (CA11 1986); Peck v. Hoff, 660 F. 2d 371 (CA8 1981); Green v. Carlson, 649 F. 2d 285 (CA5 1981); cf. In re Martin-Trigona, 737 F. 2d 1254, 1261 (CA2 1984) (“Federal courts have both the inherent power and constitutional obligation to protect their jurisdiction from conduct which impairs their ability to carry out Article III functions”).

       Petitioner has repeatedly ignored the letter and spirit of this Court’s Rule 26, which provides in part that, “[t]o justify the granting of [an extraordinary writ], it must be shown that the writ will be in aid of the Court’s appellate jurisdiction, that there are present exceptional circumstances warranting the exercise of the Court’s discretionary powers, and that adequate relief cannot be had in any other form or from any other court.”