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The Courts
A D A H F G E T S IN J U N C T IO N IN P A T E N T IN F R IN G E M E N T
The ADA H ealth Foundation gained a prelim inary injunction against Bisco, Inc., to prevent the firm from infringing on an ADAHF paten t by selling AllBond and All-Bond 2 w ithout a license from the foundation. ADAHF, a not-for-profit corporation th a t sponsors dental research, does not m anufacture commercial dental products th a t result from its research, but licenses its patented technology to dental m anufacturers. The foundation receives royalties from these licensing arrangem ents and uses those funds for other dental research and public in terest activities. Dr. Rafael Bowen invented : the dentin bonding technology protected under paten t No. 4,659,751. Following the usual practice, he assigned the patent to the foundation, which in tu rn granted non-exclusive licenses perm itting several companies to m arket the invention to dentists in dental repair kits, generating nearly $1 million in royalties to date. Licensing agreem ents with the m arketing firms require the
foundation to protect the paten t and sue any party who significantly infringes it. Bisco, an Illinois corporation th a t researches, develops and m anufactures dental products for use by dentists, m arkets AllBond and All-Bond 2 dental restorative kits containing various chemical reagents used to promote bonding of dental restorative m aterials to various dental surfaces. Bisco sells these kits to dentists, a fact th a t ADAHF believes infringes its patent. Bisco reportedly rejected a foundation proposal th a t would have allowed the company to m arket the patented technol ogy, prom pting ADAHF to seek an injunction. The U.S. D istrict Court concluded th a t the foundation had satisfied its burden of proof and granted the injunction (N.D. 111., No. 91 C 8035, Ju n e 12, 1992). The foundation hopes a settlem ent can be reached. C A S E S H O W S C A U T IO N C R IT IC A L ON R E F E R R A L S
As a result of an appeals court ruling, a p atien t who fainted in
a Texas dental office during a third m olar extraction and reported severe pain afterw ard may have a case against the dentist who referred him for the procedure. Court records show th a t the patient had insisted th a t the extraction be performed under general anesthesia, claim ing he was “h ard to num b” w ith local anesthetics. The referring dentist reportedly assured the patient th a t the treatin g dentist would provide a general anesthetic and was qualified to do so. The p atien t testified th a t when he arrived for the extraction, he was told th a t the treatin g d entist had not been informed a general anesthetic was required. The tre a tin g dentist would not adm inister the anesthetic because the patient had not been prem ed icated. Moreover, the busy practice could not reschedule the p atien t for 30 days. The p atien t was then advised th a t the procedure could be undertaken w ith a local anesthetic. The p a tie n t agreed and tre a tm e n t proceeded. The p atien t told the court JADA, Vol. 123, September 1992
123
The patient told the court that pain experienced during the extraction w as so intense th at he fainted. And afterward, he reportedly couldn’t open his mouth, a condition that later required surgery. The patient sued both the referring and treating dentists, charging negligence, breach of im plied warranty and m isrepre sentations th at allegedly violated the state’s deceptive trade practices act. But the p atient failed to qualify his expert w itnesses, which precluded him from establishing th at the defend ants had been negligent. The court dism issed the negligence claim on sum m ary judgment. Beyond th e negligence claim, the patient argued that the dentists had breached a warranty th at their services would be performed in a “good and workm anlike manner.” The court noted that Texas h asn ’t recognized an implied warranty for “good and work m anlike” performance o f purely professional services, lim iting application of th is law to such operations as repair services. At the center o f a h ealth care transaction is professional judgm ent, w hich carries no im plied warranty. The court also dism issed this claim. T hat left only the claim of m isrepresentation under the sta te’s deceptive trade practices act. The court also dism issed th is claim against both the treating and referring dentist. On appeal, th is dism issal was upheld for the treating dentist who, th e court noted, had not been involved in m aking the original pledges to the patient. As for the referring dentist, th e appeals court said it found ample reason to believe 124
JADA, Vol. 123, September 1992
that th is dentist had misrepre sented several elem ents of treatm ent. W hat’s more, the appeals court said the referring dentist had not shown that the absence o f expert testim ony would necessarily prevent the patient from dem onstrating a relationship betw een the alleged m isrepresentation and dam ages sustained. The appeals court then re versed the lower court’s dism issal o f the m isrepresenta tion claim against the referring dentist. And th at portion of the case w as rem anded to the trial court for further proceedings (826 S.W.2d 214). WHAT TO DO IF YOU’RE NOT IN THE BOOK
Your office orders a telephone listin g in th e local w hite or yellow pages. W hen the new directory arrives, you page through it to find your listing. It isn ’t there. Or the information is dead wrong. Your office counts on that listin g for a lot of patient visits. B ut now it won’t appear until the next edition is published, many m onths away. Though th is is not a regular occurrence, it does happen each year to a num ber of businesses and professional offices. In most cases, th ese offices will find that their recourse is lim ited. They will often find that their con tract restricts damages to the amount charged for the listing. Some state courts have held these lim its to be contrary to public policy and unenforceable (So.2d 170). But m any others lim it dam ages against telephone directory publishers under statutes, telephone tariffs (805 S.W.2d 825) and case law (580 So.2d 628). L im itations on damages,
however, are not generally favored by the courts. For these lim its to stick, they m ust be spelled out very clearly and precisely in the contract so that the other party—a dental office in this case—knows exactly w hat it is contracting away. In suing a directory company, m ost customers will claim breach of contract. A ttem pting to avoid contractual lim itations on recovery, these customers usually argue that the lim itations are unconscion able. A determ ination of unconscionability usually focuses on the relative positions of the parties, the adequacy of the bargaining position, the m ean ingful alternatives available to the custom er and the existence of unfair term s in the contract. In litigation, customers have argued that the lim itations were thrust on them because of unequal bargaining power and a lack of m eaningful available alternatives. The courts seem m ost likely to find the lim itations unreasonable when the telephone directory is the only one in the area. Dam ages in these cases are based on the lost revenue the business sustained as a result of not being listed in the telephone directory. These losses have to be proved with reasonable certainty and cannot be based on m ere speculation. Punitive dam ages generally are not allowed unless the customer can show th at the m istake was intentional. Some customers have tried alternatives to breach of con tract to impose liability—breach of warranty, negligence, gross negligence, fraud, intentional interference w ith business relationships and violations of state deceptive trade practices
acts. One custom er tried, unsuc cessfully, to sue the telephone company employee who allegedly m ade the m istake and the company’s parent corporation (805 S.W.2d 825). In most instances, the omission is simply a m istake. Somebody goofed. And there is no m isrepresentation (fraud) and no intentional act aim ed at interfering w ith business relationships. Gross negligence may be charged if a m istake is made, the custom er notifies the publisher and the publisher fails to m ake the correction in future editions of the directory. In such cases, the court may hold th a t th e contractual lim it on liability does not bar recov ery of dam ages (580 So.2d 628). It also has been held th a t the telephone company’s failure to publish a yellow pages adver tisem ent was a defect in performance of the advertising contract. This defect has been judged a breach of the tele phone company’s express w ar ranty to publish the advertising correctly. B ut the sam e court held th a t the contract provision lim iting the telephone company’s liability did not violate state policy against waiving consumer rights under its deceptive trad e practices act (811 S.W.2d 572). Another court found th a t a reasonable ta riff lim itation on the telephone company’s lia bility for errors and omissions in directory listings applied to a custom er’s claims under the deceptive practices act (805 S.W.2d 825). .
you're a good physician, but can you write? Most physicians today need more than knowledge of medicine and good clinical ability to be successful. One of the tools you need is the ability to write well: to be able to put together a report of research that's worth publishing, to write a grant proposal that's fundable, to prepare a paper or exhibit for presenta tion that's well received. We don't guarantee that you'll write a best seller or get a million-dollar grant, but we can guarantee that if you join us, you'll learn how to improve your writing, enhance the quality of your presentations, and keep up-to-date with developments in areas like desktop publishing. We're an organization founded by physicians 50 years ago, and we're over 3000 strong. Among our members are people like you, for whom writing has become an increasingly important part of life. Find out more about us. Send this coupon or call AMWA's national office at 301-493-0003. E x e c u tiv e D ir e c to r, A M W A
9650 R o c k v i l l e
P ik e
B e th e s d a , M D
20814
j
A M E R IC A N II T l M Hf
f i S
V
V
\
Please send information about AMWA to: N am e_______________________________________ Address
T h i s r e p o r t w a s p r e p a r e d b y R ic h a r d B e r r y , A D A g e n e r a l c o u n s e l.
Title (or specialty)-------------------------------------City______________________ State___
Z ip.
JADA, Vol. 123, September 1992
125
The ADA H ealth Foundation gained a prelim inary injunction against Bisco, Inc., to prevent the firm from infringing on an ADAHF paten t by selling AllBond and All-Bond 2 w ithout a license from the foundation. ADAHF, a not-for-profit corporation th a t sponsors dental research, does not m anufacture commercial dental products th a t result from its research, but licenses its patented technology to dental m anufacturers. The foundation receives royalties from these licensing arrangem ents and uses those funds for other dental research and public in terest activities. Dr. Rafael Bowen invented : the dentin bonding technology protected under paten t No. 4,659,751. Following the usual practice, he assigned the patent to the foundation, which in tu rn granted non-exclusive licenses perm itting several companies to m arket the invention to dentists in dental repair kits, generating nearly $1 million in royalties to date. Licensing agreem ents with the m arketing firms require the
foundation to protect the paten t and sue any party who significantly infringes it. Bisco, an Illinois corporation th a t researches, develops and m anufactures dental products for use by dentists, m arkets AllBond and All-Bond 2 dental restorative kits containing various chemical reagents used to promote bonding of dental restorative m aterials to various dental surfaces. Bisco sells these kits to dentists, a fact th a t ADAHF believes infringes its patent. Bisco reportedly rejected a foundation proposal th a t would have allowed the company to m arket the patented technol ogy, prom pting ADAHF to seek an injunction. The U.S. D istrict Court concluded th a t the foundation had satisfied its burden of proof and granted the injunction (N.D. 111., No. 91 C 8035, Ju n e 12, 1992). The foundation hopes a settlem ent can be reached. C A S E S H O W S C A U T IO N C R IT IC A L ON R E F E R R A L S
As a result of an appeals court ruling, a p atien t who fainted in
a Texas dental office during a third m olar extraction and reported severe pain afterw ard may have a case against the dentist who referred him for the procedure. Court records show th a t the patient had insisted th a t the extraction be performed under general anesthesia, claim ing he was “h ard to num b” w ith local anesthetics. The referring dentist reportedly assured the patient th a t the treatin g dentist would provide a general anesthetic and was qualified to do so. The p atien t testified th a t when he arrived for the extraction, he was told th a t the treatin g d entist had not been informed a general anesthetic was required. The tre a tin g dentist would not adm inister the anesthetic because the patient had not been prem ed icated. Moreover, the busy practice could not reschedule the p atien t for 30 days. The p atien t was then advised th a t the procedure could be undertaken w ith a local anesthetic. The p a tie n t agreed and tre a tm e n t proceeded. The p atien t told the court JADA, Vol. 123, September 1992
123
The patient told the court that pain experienced during the extraction w as so intense th at he fainted. And afterward, he reportedly couldn’t open his mouth, a condition that later required surgery. The patient sued both the referring and treating dentists, charging negligence, breach of im plied warranty and m isrepre sentations th at allegedly violated the state’s deceptive trade practices act. But the p atient failed to qualify his expert w itnesses, which precluded him from establishing th at the defend ants had been negligent. The court dism issed the negligence claim on sum m ary judgment. Beyond th e negligence claim, the patient argued that the dentists had breached a warranty th at their services would be performed in a “good and workm anlike manner.” The court noted that Texas h asn ’t recognized an implied warranty for “good and work m anlike” performance o f purely professional services, lim iting application of th is law to such operations as repair services. At the center o f a h ealth care transaction is professional judgm ent, w hich carries no im plied warranty. The court also dism issed this claim. T hat left only the claim of m isrepresentation under the sta te’s deceptive trade practices act. The court also dism issed th is claim against both the treating and referring dentist. On appeal, th is dism issal was upheld for the treating dentist who, th e court noted, had not been involved in m aking the original pledges to the patient. As for the referring dentist, th e appeals court said it found ample reason to believe 124
JADA, Vol. 123, September 1992
that th is dentist had misrepre sented several elem ents of treatm ent. W hat’s more, the appeals court said the referring dentist had not shown that the absence o f expert testim ony would necessarily prevent the patient from dem onstrating a relationship betw een the alleged m isrepresentation and dam ages sustained. The appeals court then re versed the lower court’s dism issal o f the m isrepresenta tion claim against the referring dentist. And th at portion of the case w as rem anded to the trial court for further proceedings (826 S.W.2d 214). WHAT TO DO IF YOU’RE NOT IN THE BOOK
Your office orders a telephone listin g in th e local w hite or yellow pages. W hen the new directory arrives, you page through it to find your listing. It isn ’t there. Or the information is dead wrong. Your office counts on that listin g for a lot of patient visits. B ut now it won’t appear until the next edition is published, many m onths away. Though th is is not a regular occurrence, it does happen each year to a num ber of businesses and professional offices. In most cases, th ese offices will find that their recourse is lim ited. They will often find that their con tract restricts damages to the amount charged for the listing. Some state courts have held these lim its to be contrary to public policy and unenforceable (So.2d 170). But m any others lim it dam ages against telephone directory publishers under statutes, telephone tariffs (805 S.W.2d 825) and case law (580 So.2d 628). L im itations on damages,
however, are not generally favored by the courts. For these lim its to stick, they m ust be spelled out very clearly and precisely in the contract so that the other party—a dental office in this case—knows exactly w hat it is contracting away. In suing a directory company, m ost customers will claim breach of contract. A ttem pting to avoid contractual lim itations on recovery, these customers usually argue that the lim itations are unconscion able. A determ ination of unconscionability usually focuses on the relative positions of the parties, the adequacy of the bargaining position, the m ean ingful alternatives available to the custom er and the existence of unfair term s in the contract. In litigation, customers have argued that the lim itations were thrust on them because of unequal bargaining power and a lack of m eaningful available alternatives. The courts seem m ost likely to find the lim itations unreasonable when the telephone directory is the only one in the area. Dam ages in these cases are based on the lost revenue the business sustained as a result of not being listed in the telephone directory. These losses have to be proved with reasonable certainty and cannot be based on m ere speculation. Punitive dam ages generally are not allowed unless the customer can show th at the m istake was intentional. Some customers have tried alternatives to breach of con tract to impose liability—breach of warranty, negligence, gross negligence, fraud, intentional interference w ith business relationships and violations of state deceptive trade practices
acts. One custom er tried, unsuc cessfully, to sue the telephone company employee who allegedly m ade the m istake and the company’s parent corporation (805 S.W.2d 825). In most instances, the omission is simply a m istake. Somebody goofed. And there is no m isrepresentation (fraud) and no intentional act aim ed at interfering w ith business relationships. Gross negligence may be charged if a m istake is made, the custom er notifies the publisher and the publisher fails to m ake the correction in future editions of the directory. In such cases, the court may hold th a t th e contractual lim it on liability does not bar recov ery of dam ages (580 So.2d 628). It also has been held th a t the telephone company’s failure to publish a yellow pages adver tisem ent was a defect in performance of the advertising contract. This defect has been judged a breach of the tele phone company’s express w ar ranty to publish the advertising correctly. B ut the sam e court held th a t the contract provision lim iting the telephone company’s liability did not violate state policy against waiving consumer rights under its deceptive trad e practices act (811 S.W.2d 572). Another court found th a t a reasonable ta riff lim itation on the telephone company’s lia bility for errors and omissions in directory listings applied to a custom er’s claims under the deceptive practices act (805 S.W.2d 825). .
you're a good physician, but can you write? Most physicians today need more than knowledge of medicine and good clinical ability to be successful. One of the tools you need is the ability to write well: to be able to put together a report of research that's worth publishing, to write a grant proposal that's fundable, to prepare a paper or exhibit for presenta tion that's well received. We don't guarantee that you'll write a best seller or get a million-dollar grant, but we can guarantee that if you join us, you'll learn how to improve your writing, enhance the quality of your presentations, and keep up-to-date with developments in areas like desktop publishing. We're an organization founded by physicians 50 years ago, and we're over 3000 strong. Among our members are people like you, for whom writing has become an increasingly important part of life. Find out more about us. Send this coupon or call AMWA's national office at 301-493-0003. E x e c u tiv e D ir e c to r, A M W A
9650 R o c k v i l l e
P ik e
B e th e s d a , M D
20814
j
A M E R IC A N II T l M Hf
f i S
V
V
\
Please send information about AMWA to: N am e_______________________________________ Address
T h i s r e p o r t w a s p r e p a r e d b y R ic h a r d B e r r y , A D A g e n e r a l c o u n s e l.
Title (or specialty)-------------------------------------City______________________ State___
Z ip.
JADA, Vol. 123, September 1992
125