LEGAL TRENDS

Patents Now Harder To Get and Harder To Defend

By Fred A. Simpson

In one of the most important rulings by the U. S. Supreme Court in a number of years on the subject of patents, the high court raised the bar for obtaining patents on new products that combine elements of pre-existing inventions. KSR International Co. v. Teleflex, Inc., __S.Ct.__, 2007 WL 1237837, 82 U.S.P.Q.2d 1385, U.S., April 30, 2007 (No.04-1350).
At issue was KSR’s adjustable auto and truck gas pedal involving a sensor and a means to communicate the pedal’s position to the engine’s throttle. A rival company claimed the device infringed on its patent for a similar device and demanded royalties. KRS refused to pay on grounds that the rival’s patent had combined pre-existing elements in an “obvious” manner and was therefore invalid. KRS won in the district court but was overturned by the U.S. Court of Appeals for the Federal Circuit which has exclusive jurisdiction over patent appeals.
The U.S. Supreme Court found in favor of KRS, listing several specific errors and “fundamental misunderstandings” in how the Federal Circuit analyzed the case, such as considering what a pedal designer writing on a blank slate would have done to solve the problem of the gas pedal and the sensor. But the slate was not blank, according to the Supreme Court’s opinion, and the rival’s patent was essentially an upgrading of existing technology.
One of the ways to resolve questions of obviousness has been the “teaching, suggestion, or motivation” (“TSM”) test employed by the Federal Circuit. Flaws in the Federal Circuit’s analysis related to that test were listed as these:

1. holding that courts and patent examiners should look only to the problem the patentee was trying to solve.
2. assuming that a person of ordinary skill in the art attempting to solve a problem will be led only to those prior art elements designed to solve the same problem.
3. concluding that a patent claim cannot be proved obvious merely by showing that a combination of elements was obvious to try.
4. drawing the wrong conclusion from the possibility that courts and patent examiners may have fallen prey to hindsight.

To be eligible for patenting, an invention must be novel, useful and not “obvious” to a person of “ordinary skill.” However, the high court rejected the rigid and mechanical way of applying a common legal test that requires a person who challenges a patent as “obvious” to identify a reason that would have prompted someone to combine two or more previous inventions, such as published articles suggesting that type of combination, making it difficult to attack a patent on grounds of being “obvious” and often requiring an expensive jury trial rather than a judicial decision by summary judgment.
The simpler inquiry should be whether “there existed at the time of the invention a known problem for which there was an obvious solution.” Because most inventions combine elements that were previously known, the high court’s approach to deciding what sort of combination is so “obvious” that it is ineligible for patent protection will have broad application, making it harder to both obtain patents and to defend them.
The U.S. Supreme Court concluded that the ultimate judgment of “obviousness” is a legal determination, and that summary judgment is appropriate where the prior art’s content, the patent claim’s scope, and the level of ordinary skill in the art are not in material dispute, and where the claim’s obviousness is apparent.

Fred A. Simpson is a partner in the Litigation Section of Jackson Walker L.L.P.’s Houston office, and is an associate editor of The Houston Lawyer.

Venue – Plaintiffs Don’t Always Get Their Choice

By Jessica Zavadil

In the mandamus proceeding styled In re Texas Dept. of Transp., __ S.W.3d. __, 2007 WL 704584, 50 Tex. Sup. Ct. J. 546 (Tex. Mar 09, 2007) (per curiam) (orig. proceeding), the Texas Department of Transportation (the Department) and Gillespie County each sought mandamus to direct a probate court to transfer venue of a personal injury lawsuit from Travis County to Gillespie County. The fact pattern: on the evening of January 16, 2004, Courtney Foreman drowned while a passenger in a vehicle that slid off the roadway through a gap between the guardrail and the adjacent embankment into the Pedernales River in Gillespie County. Courtney’s parents sued the Department, Gillespie County, and the vehicle’s driver, among others, in Travis County probate court. Claims against the Department and Gillespie County, brought under the Texas Tort Claims Act (TTCA), were categorized as: negligence, gross negligence, premises defect, and special defect or injury-by-traffic-control-device.
The parents sued in Travis County alleging that part of the cause of action arose in Travis County due to the fact that the Department, its bridge division, and other defendants maintained offices in Travis County and performed, at least in part, their contract and job duties in Travis County. It was alleged that the negligent performance of these duties in Travis County resulted in the defective roadway where the accident occurred.
The Department and Gillespie County moved to transfer venue to Gillespie County (where the accident occurred). The Department asserted that Gillespie County is the proper venue because the only claims that could be “properly pled” against it were claims for which sovereign immunity is waived by the TTCA, which in this case were the premises defect and special defect claims. Gillespie County agreed with the Department’s position. The motions to transfer were denied, as was the mandamus relief sought in the court of appeals.
The defendants then petitioned for mandamus in the Supreme Court of Texas. The higher court concluded that the Foremans properly pled only a cause of action for premises or special defect as to the roadway and the bridge. The Foremans did not properly plead a contemporaneous-activity negligence cause of action which would have included, as a part of the cause of action, alleged negligent actions or omissions taking place in Travis County. In essence, the Foremans properly plead premise and special defect causes of action, but did not properly plead any negligent activity causes of action. The court therefore held that, because the Foreman’s claims were for premises or special defects liability and not for negligent activity, Gillespie County (where the accident occurred) was the proper venue for this lawsuit. The Supreme Court of Texas conditionally granted mandamus relief per curiam, and directed the probate court to transfer venue of the underlying cause to Gillespie County.

Jessica Zavadil is the briefing attorney for Justice Kem Thompson Frost at the Fourteenth Court of Appeals.

ADA Requires Employers to Make ‘Reasonable’ Medical Judgments

By Michael J. Muskat

A recent nder the Americans with Disabilities Act, employers are not required to accommodate disabled employees if employers can demonstrate that employees are unable to perform their basic job functions or that employees pose safety threats, based on employers’ use of “reasonable medical judgment.” However, a Fifth Circuit decision styled EEOC v. E.I. DuPont de Nemours, Case No. 05-30712 (March 1, 2007). highlights the dangers that even sophisticated employers face when they rely on opinions of company physicians while ignoring persuasive contrary medical evidence. The $1 million punitive damages award in DuPont is also a grim reminder that inflammatory remarks about an employee’s perceived disabilities can create tremendous employer liability.
The DuPont employee was a secretary in a chemical plant. After the secretary encountered difficulty walking, DuPont required her to undergo a “functional capacity evaluation” designed by company physicians to determine whether she could evacuate the plant in an emergency, such ability to evacuate being claimed as an essential job function. Based on that evaluation, DuPont determined that the secretary could not evacuate during an emergency and terminated her employment. In so doing, DuPont disregarded the fact that the employee subsequently demonstrated that she could walk the evacuation route without assistance.
The EEOC sued DuPont for disability discrimination and received a favorable jury verdict, including a $1 million award of punitive damages (later reduced to $300,000). On appeal, DuPont argued that the verdict should be reversed because the medical evaluation by Du Pont physicians determined that the employee could not perform basic functions of her job and that she posed a “direct threat” due to her inability to evacuate the plant during an emergency. Although the Fifth Circuit agreed that “safety measures are extremely important in such workplaces,” the court found that the EEOC presented sufficient evidence that the employer’s medical evaluation was wrong – specifically, the employee did demonstrate that she in fact could evacuate the plant by herself. The employee therefore could perform the basic functions of her job and did not pose a safety threat to herself or others. The Fifth Circuit has now twice rejected a company’s reliance on the opinions of company doctors in the face of persuasive medical evidence to the contrary. (The other case was Rodriguez v. ConAgra Grocery Prods. Co., 436 F.3d 468 (5th Cir. 2006), involving a diabetic employee.)
The Fifth Circuit also upheld the jury’s award of punitive damages, even though the jury found no damages for emotional distress nor mental anguish. The appellate court’s upholding was so largely because of a supervisor’s comment that “he no longer wanted to see [the employee’s] ‘crippled crooked self, going down the hall hugging the walls.’”
The bottom line for employers is that, when employers determine that employees cannot perform their basic job functions or pose a safety threat, medical evidence relied on by employers must be sufficiently persuasive to overcome contrary evidence brought by employees or their medical experts. In other words, it may not be enough simply to rely on opinions of company physicians, EAP counselors, or medical treatises. Employers also should not downplay the risk created by inflammatory remarks about employees, which, as demonstrated by the recent Du Pont case, may lead to substantial jury verdicts.

Mike Muskat is a founding member of Muskat, Martinez & Mahony, LLP, Houston, dedicated to representing employers in labor and employment matters.

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