New Test For Business Methods Patents

In an en banc decision by the U.S. Court of Appeals for the Federal Circuit Court, the federal court formally rejected the prevailing test for business-method-patent eligibility, under 35 U.S.C.§ 101, that had been set forth in its 1998 State Street Bank & Trust Co. decision, and has implemented a new test in the case of In Re Bilski.

(For the full court opinion click here: In%20Re%20Bilski.pdf )

In anticipation by the patent bar, the court of appelas moved away from the prevailing test to the U.S. Supreme Court’s Nixon- and Reagan-era patent law historical precedence as modified by holding that patentable BMP or Business Methods Patents, subject matter must either (1) be tied to a particular machine or apparatus or (2) transform a particular article into a different state or thing.

What this means is that the court appeals is ultimtely deferring to the U.S. Supreme Court by stating in its opinion that "...the Supreme Court may ultimately decided to alter or even set aside this test to accomodate emerging technologies...however, and certainly for the present...that the machine or transformation test, properly applied is the governing test for determining patent elegibility of a process under Section 101 of 35 U.S.C. (United States Code).

In Re Chu vs. Hong - Fraud on Community Divorce Estate

A spouse who gives away community property to friends or relatives when divorce is imminent has defrauded the community estate. Such was the case of Chu vs. Hong, a case which came out of Tarrant County; 2nd district (02-04-00279 CV, 185 S.W.3d 507, 10-20-05).

Factual Background

While visiting her relatives in Korea in 1996, Chong Hui Hong (“Hong”) met and then married Gyu Chul Kim (“Gyu”). She then returned to Texas, Gyu soon followed, and in 1997 they bought a donut shop in Mansfield, Texas. Marital problems arose the next year, and Hong filed criminal assault charges against Gyu and withdrew an application for his green card. At about the same time, they both signed a contract to sell the donut shop for $180,000 to another couple, Myong Nam Kim and Kyon S. Kim (“the Kims”).When the contract’s closing date came and went with no action, the Kims stopped payment on their $20,000 downpayment check. Hong and Gyu then sent a letter (drafted by Hong but signed only by Gyu as “Seller”) demanding payment of the $20,000 and threatening criminal charges. In response, the Kims retained attorney William Chu, who demanded performance of the sales contract within four days and threatened civil litigation.A few days later, Gyu appeared alone at Chu’s office and agreed to close the sale. In the bill of sale (which Chu drafted), Gyu represented he was the “lawful owner in every respect” of the shop and had full authority to sell it. The Kims paid him $180,000: $90,000 in cash and checks, $46,668.29 by promissory note, and the rest by assuming a note Gyu and Hong still owed on their purchase of the shop. The Kims subsequently paid off both notes.Sometime after the closing, Gyu wired the money he received from the sale to his parents in Korea. He then filed for divorce from Hong. Hong responded with a counterclaim for defrauding the community of the proceeds from the shop sale, and added a suit against the Kims and their attorney Chu for conversion and conspiracy. When his criminal assault case came to trial, Gyu was convicted and deported from the United States.The divorce and fraud cases were tried five years later. Chu represented both himself and the Kims; Gyu appeared only by attorney and his deposition. A jury answered all questions favorable to Hong. In its final judgment, the trial court granted a divorce, declared the shop sale void and ordered the Kims to turn the premises and equipment over to Hong, allowed Hong and Gyu to each keep the marital property currently in their possession, and assessed no damages against Gyu other than attorney’s fees of $65,000. The trial court assessed the same attorney’s fees jointly against the other defendants, along with $247,000 for lost profits and interest, and punitive damages against the Kims for $20,000 and against their attorney Chu for $1,500,000. The Kims filed for bankruptcy, so only Chu appealed. In a divided opinion, the court of appeals affirmed.

The Supreme Court disagreed. In such cases, a trial court can order the spouse to return the property or take the fraud into account in making a just-and-right division.

TxDOT vs. York

In a per curiam decision delivered on Dec. 5, 2008, the Texas Supreme Court reversed a jury verdict for spouse in wrongful death of motorist on holding that loose gravel on road is not a special defect as a matter of law. The suit was under the Texas Tort Claims Act exception to sovereign immunity by statutory waiver of immunity to suit and liability of dangerous road conditions, special defect, premises defect, and actual knowledge of hazard. The court opined that the jury charge did not contain a premise defect instruction, so the jury did not have an opportunity to determine liability under that stricter licensee standard. The record reflected, according to the Texas Supreme Court, conflicting testimony as to whether TxDOT had actual knowledge of the loose gravel, and whether York did not have actual knowledge of it. Therefore, the question of whether TxDOT satisfied the licensee standard of care should go to the fact finder. See Tex. Dep’t of Parks and Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004) ; Keetch v. Kroger Co., 845 S.W.2d 262, 266 (Tex. 1992) (“Proof that the premises owner or occupier created a condition which poses an unreasonable risk of harm may constitute circumstantial evidence that the owner or occupier knew of the condition.”. The higher court reversed the court of appeals’ judgment and remanded the case for a new trial applying the premise defect standard. For the text of the full court opinion, follow this link: http://www.supreme.courts.state.tx.us/historical/2008/dec/070743.htm

In Texas governmental agencies are immune or have sovereign immunity from private lawsuits. One exception to this is under the Texas Tort Claims Act, wherein a lawsuit is allowed against a governmental agency such as in this case, which is the Texas Department of Transportation. However, unlike general civil common law suits, such Texas tort claims act litigation are statutorily capped as to the maximum amount of damages recoverable.

There is a similar parallel federal statute under the Federal Tort Claims Act.

Jury Awards $142k in Workplace Negligence Case

In a recent case of workplace injury in Dallas County, a jury awarded $142,301 to a laborer whose hand was crushed in a backhoe accident on the workplace. The facts were that in 2005, Ambrocio Barcenas-Gomez, then 57, worked at Best Scrap Metal, a Dallas scrap yard. While Mr. Gomez was loading equipment onto a backhoe the grapple closed on his right hand, crushing it. Mr. Gomez underwent surgery to repair the fractures, however his injuries are permanent and he cannot open his hand completely and has minimal gripping strength, which prevents him from returning to work as a laborer. Gomez blamed Best Scrap Metal, citing poor safety procedures and poor equipment maintenance. In direct examination during trial, the backhoe operator testified that the backhoe had malfunctioned several times before the incident. The Defendant scrap metal company denied any negligence and argued that it was not liable for Gomez's injuries because he was an independent contractor.

In Texas before negligence can be found in the workplace, certain facts have to be present.

The factual elements include:

(1) The defendant owed a legal duty to the plaintiff,

(2) The defendant breached that duty, and

(3) The breach was a proximate cause of the plaintiff's personal injury or property damages.

See, D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex.2002). Moreover, the existence of a duty owed is a threshold consideration for a negligence claim. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995), and is a question of law for the court. See, Texas Home Management., Inc. v. Peavy, 89 S.W.2d 30, 33 (Tex.2002). If there is no duty, liability for negligence cannot exist. Thapar v. Zezulka, 994 S.W.2d 635, 637 (Tex. 1999). There is a general common law duty for everyone to exercise reasonable care to avoid foreseeable injury to others. See El Chico Corp. v. Poole, 732 S.W.2d 306, 311 (Tex.1987). In the Gomez case, the jury determined that the scrap metal company had a general common law duty to avoid the foreseeable injury.

National Data Fact:

Nonfatal injuries in the workplace accounted for roughly 4,002,700 injuries in 2007 according to the Bureau of Labor Statistics: http://www.bls.gov/iif/

Child Support Contempt Notice Requirement

In an supplemental opinion on rehearing, the Texas Supreme Court ruled on Dec. 19, 2008 that entitlement to notice of intent to revoke suspension of commitment in contempt case is required. In Texas, an obligor can be found in contempt for failure to pay child support. In the Zandi case, the respondent was originally found in contempt but that such order was suspended, then revoked in a compliance hearing without a second notice.

The facts of the case were as follows:

The trial court held relator Reza Zandi in contempt for 23 violations of a child support order, assessed criminal punishment of 175 days per violation to run concurrently, and ordered civil commitment until he paid $90,447.14 arrearage plus interest. But the court suspended the commitment on four conditions: that Zandi (1) pay Kathleen Marie Richardson, the mother of their two children a lump sum of $25,000, (2) make monthly payments of $1,091.29 on the arrearage, (3) continue monthly child support payments of $1,627.00, and (4) appear in court every six months “for review and status hearing.” In the first status hearing, Richardson moved to revoke Zandi’s commitment suspension because he had paid only $700 in current child support for the six months since the contempt order. Zandi objected that Richardson had not filed a written motion to revoke suspension. The court nevertheless revoked suspension. The court of appeals denied Zandi’s petition for habeas corpus. The Texas Supreme Court, ordered Zandi released on a $500 bond.

In its ruling, the Texas Supreme Court reasoned that the purpose of notice is to apprise the respondent of the allegations he faces and provide him time to prepare to respond. In other words, if the respondent appears at the compliance (status) hearing and the movant alleges noncompliance and requests revocation, the trial court must conduct a subsequent or second hearing. The trial court cannot revoke the suspension of commitment or impose sentence without affording the respondent a subsequent hearing, thereby satisfying the due process “hearing” requirement.