By Mark Engstrom, J.D.
Owens-Illinois, Inc., the owner of a patent on a "Composite Fire Door," could not be held liable for asbestos-related injuries to individuals who had developed mesothelioma as a result of asbestos exposure, the U.S. Court of Appeals in Chicago has ruled. The plaintiffs, employees who worked at a plant where the fire doors were manufactured, sued Owens under a theory of negligence for its patent design, but the court found that the claims were frivolous because product liability could not attach to the "mere licensing" of a patent. The dismissal of the claims against Owens was therefore affirmed, and the plaintiffs were ordered to explain why their appeal was not frivolous under Rule 38 of the Federal Rules of Appellate Procedure. Public and private nuisance claims against Weyerhaeuser Company were similarly dismissed (Pecher v. Owens-Illinois, Inc., June 6, 2017, Manion, D.).
Fire door patent. In 1952, Owens-Illinois was awarded U.S. Patent No. 2,593,050 for a "Composite Fire Door." The useful innovation was a fire door that was "up-to-code and easy to produce." The patent claims described a fire door with a "core of inorganic, rigid, fire-proof, light weight material of a substantially uniform apparent density and consistency throughout." The claims did not mention the use of asbestos, but later versions of the patent described the core material as having a "conventional solid, foam, or honey-combed construction and the like, comprising magnesium oxychloride foam cement, expanded polyurethane, mineral wool mats or gypsum or hardboard honeycomb or egg-crate construction or boards of asbestos bound with cement." Although asbestos was included as an example, it was not an element of the patented subject matter.
Parties. The plaintiffs developed mesothelioma, allegedly as a result of asbestos exposure at the Marshfield, Wisconsin plant where they were employed and where the fire doors were manufactured. From the 1950s until 1978, the Marshfield plant made "at least some" fire doors that used asbestos as a thermal insulator. Thereafter, however, the factory did not use asbestos. In 1956, defendant Owens-Illinois signed a licensing agreement with Roddis Plywood, the company that owned and operated the plant. In 1960, defendant Weyerhaeuser Company purchased Roddis.
Appeal. Six of the plaintiffs raised claims against Owens-Illinois under a negligence theory based on patent design, and three of the plaintiffs raised claims against Weyerhaeuser for asbestos exposure outside of the plant (i.e., in their households or communities). The gravamen of the case was split into two separate parts: the claims against Weyerhaeuser and the claims against Owens.
Claims against Owens. The claims that the plaintiffs asserted against Owens on appeal were all related to the licensing of the fire-door patent to Weyerhaeuser. All six plaintiffs alleged that Owens should be liable for their asbestos-related injuries because Owens had designed the Marshfield plant fire doors that Weyerhaeuser had insulated with asbestos.
In the court’s view, the claims against Owens were "frivolous." Significantly, courts were unanimous in their findings that product liability could not attach to the "mere licensing" of a patent. In cases that attached tort liability to a non-manufacturing licensor of intellectual property, an additional factor for the attribution of liability was always present.
The plaintiffs argued that liability could attach to Owens because the Hatch-Waxman Act allowed manufacturers of branded drugs to be liable for the mislabeling of generic counterparts because the generic drug manufacturers were prohibited by law from altering the label in any way. In this way, the branded manufacturer could have "caused" the mislabeling by the generic drug manufacturer, even if the manufacturer of the branded drug played no role in the manufacture or distribution of the drug or its labels.
The Seventh Circuit rejected the plaintiffs’ argument because their theory would hold a patent licensor liable for injuries that were caused by nonessential features of the licensee’s final product. Holding a patent licensor liable for injuries they could not have "caused" raised serious due process concerns, the court explained. Moreover, there was no reason to believe that the plaintiffs’ theory of liability could be limited to situations in which the patentee and the licensee had a face-to-face relationship. Many research entities, for example, did not directly practice or directly license their patents; they simply licensed them to third parties who re-licensed them.
To the extent that the plaintiffs’ theory sounded in negligence—i.e., that by designing the fire door, Owens had exposed itself to liability whenever workers produced the door—it fared no better. Ultimately, the plaintiffs’ theory was not supported by "any decision anywhere." The production of ball bearings involved molten metal, for example, but the patentee of a process for creating ball bearings was not accountable for safety slips, even if those slips were readily foreseeable, merely because the patentee had patented or licensed a process that could result in an injury. The patent system was designed to facilitate innovation, the court explained; it was not a substitute for workers’ compensation.
Finally, the record indicated that all of the relevant claims against Owens had been dismissed with prejudice, by a joint stipulation of the parties, on the condition that Owens would bear its own costs. Nevertheless, the plaintiffs re-raised those claims on appeal, in clear contravention of the joint stipulation and Rule 41(a)(2) of the Federal Rules of Civil Procedure.
For those reasons, dismissal of the plaintiffs’ claims against Owens was warranted, and the plaintiffs’ counsel was ordered to show cause why that portion of the appeal was not frivolous under Appellate Rule 38.
Claims against Weyerhaeuser. The court noted that each of the Weyerhaeuser plaintiffs had worked "for years" at Weyerhaeuser, in close contact with asbestos. Accordingly, their claims appeared to be limited to the procedures established in Wisconsin’s Worker’s Compensation Act, which provided the "exclusive remedy against the employer" for work-related injuries. The plaintiffs argued that their claims were public and private nuisance claims because their asbestos-related injuries were incurred in their homes and communities, not on their jobs.
The Seventh Circuit disagreed. Ultimately, the plaintiffs failed to proffer sufficient evidence for a reasonable jury to conclude that "non-occupational asbestos exposure" was a substantial contributor to their injuries. In addition, the private nuisance claims were defective because a private nuisance was, under Wisconsin law, an interference with a real property interest, and the plaintiffs did not proffer individual proof of a current possessory interest in asbestos-tainted land. Instead, they merely argued that they had been harmed by ambient asbestos during their ordinary and unimpeded use and enjoyment of their property, something that could not have been discovered until their mesothelioma appeared many years later. For those reasons, and because the claims against Weyerhaeuser fell outside the relevant statute of limitations, dismissal of the public and private nuisance claims was warranted.
The case is Nos. 16-1799, 16-2376, 16-2377, 16-2378, 16-2379 and 16-2380.
Attorneys: Robert G. McCoy (Cascino Vaughan Law Offices) for Janet Pecher. Edward Casmere (Riley, Safer, Holmes & Cancila, LLP) for Owens-Illinois, Inc.
Companies: Owens-Illinois, Inc.; Weyerhaeuser Company
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