Latest Federal Court Cases, 01/23/23
Our Case of the Week focuses on the doctrine of prosecution laches. Following a bench trial on the issue held shortly after the Federal Circuit’s decision in Hyatt v. Hirshfeld, 998 F.3d 1347 (Fed. Cir. 2021), the district court found Personalized Media Communications’ patent unenforceable under the doctrine. In a lengthy decision authored by Judge Reyna and joined by Judge Chen, the Federal Circuit affirmed.
Our write-up of the Hyatt case, found here, is helpful context. As we explained there:
In 1995, the United States sought to address the problem of submarine patents by agreeing to change the term of U.S. patents from 17 years following the date of issuance to 20 years from the date of application from which the patent claims priority. This was effectuated through a treaty: the Uruguay Round of the General Agreement on Tariff and Trade (“GATT”), and then enacted into law as the Uruguay Round Agreements Act. Applications filed prior to June 8, 1995, would be given a 17-year term from the date of issuance; applications filed thereafter would be given a 20-year term from the date of the application. As the change came into effect, there was “a patent application gold rush in the spring of 1995, often referred to as the ‘GATT Bubble.’” For example, in the nine days before the change, over 50,000 applications (one quarter of the entire year’s projected filings) were filed.
Gilbert Hyatt is one of the inventors whose name surfaces throughout that history. He is the named inventor on 399 patent applications, 381 of which he filed during the GATT Bubble.
The appeal concerned four of those applications, all of which claimed priority to applications originally filed in the 1970s and 1980s. “Hyatt’s GATT Bubble applications … are atypically long and complex.” Two of them had 576 pages of text and 65 pages of figures. Over the next eight years, “Hyatt filed a series of amendments in his applications that grew the number of claims to a total of approximately 115,000, including approximately 45,000 independent claims.” The four patents at issue contained an average of 398 claims per application. Thus, many of the claims were added “between 12 and 28 years after their alleged priority dates.”
PMC was among others who filed GATT-Bubble applications, followed by extensive delays in prosecution. Whereas Hyatt had filed 381 GATT-Bubble applications, PMC had filed 382. All of PMC’s applications derived from two earlier applications. Similar to Hyatt, PMC’s applications “were atypically long and complex, containing over 500 pages of text and over 22 pages of figures.” PMC also “filed each of its applications with a single claim, then subsequently amended the claims, sometimes to recite identical language across different applications.” Like in Hyatt, PMC, over time, “greatly increased the total number of claims,” in the range of 6,000 to 20,000 claims.
PMC also had significant delays in the prosecution, and “waited eight to fourteen years to file its patent applications and at least sixteen years to present the asserted claims for examination.” All of this made it “virtually impossible or the PTO to conduct double patenting, priority, or written description analyses.” There were also documents from PMC’s production that suggested a deliberate effort at creating submarine patents, to emerge into developed markets after “technology becomes so deeply embedded in commercial products that design around is not an option to infringers.”
PMC eventually sued Apple for infringing one of PMC’s patents through Apple’s use of FairPlay—technology that was developed in 2003, the year that PMC first added the asserted technology to the patent-in-suit’s predecessor. But the patent did not issue until 2012. After a jury awarded PMC $308 million in an infringement trial, the district court held a bench trial on prosecution laches. It ultimately found the prosecution delays likely derived from PMC’s stated interest of extending patent rights as long as possible to conceal its inventions until the technology was deeply embedded in the industry. The court thus found prejudice, and laches rendered the patent unenforceable.
PMC appealed, and the Federal Circuit affirmed after concluding the district court did not abuse discretion in finding the doctrine met here. PMC first argued that the district court erred because its conduct “looks nothing like Hyatt.” The Federal Circuit opined that this was “factually incorrect,” as “this case is very similar to Hyatt . . . and, in some ways, involves even more egregious facts because . . . the record shows that PMC institutionalized its abuse of the patent system by expressly adopting and implementing dilatory prosecution strategies, specifically to ambush companies like Apple.”
PMC also argued that its compliance with an agreement reached with the PTO to address its patent applications precluded a finding of laches. The Federal Circuit disagreed because, like in Hyatt, it was PMC’s abuse that required extraordinary measures by the PTO to address the applications. PMC raised two additional arguments, each of which were also rejected by the Court, which ultimately found that the district court did not err, and that it “correctly considered the totality of the circumstances and did not disregard or ignore relevant facts.”
Third, PMC argued that the district court improperly disregarded the reasons for the prosecution’s length. The Federal Circuit panel again disagreed.
The Court also agreed with the district court’s analysis concerning prejudice, and ultimately affirmed.
Judge Stark issued a 15-page dissenting opinion. He agreed with the district court concerning PMC’s unreasonable delay, but would have held that Apple failed to establish prejudice, opining that Apple needed to, but failed to, satisfy the legal standard for intervening rights.
The opinion can be found here.
By Nika Aldrich
ALSO THIS WEEK
LKQ Corporation v. GM Global Technology Operations LLC, Appeal No. 22-1253 (Fed. Cir. Jan. 20, 2023)
LKQ Corporation v. GM Global Technology Operations LLC, Appeal No. 21-2348 (Fed. Cir. Jan. 20, 2023)
We do not often write up non-precedential decisions, but we make special note of a much-anticipated decision concerning design patents that issued this week. In these two cases, the Court addressed the obviousness standard applicable to design patents, and specifically whether In re Rosen, 673 F.2d 388 (C.C.P.A. 1982), was overruled implicitly by KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007).
Rosen held that a design patent obviousness analysis must start from a primary “reference, a something in existence, the design characteristics of which are basically the same as the claimed design.” That primary reference is now referred to throughout the design patent community as a “Rosen reference.” In 2007, the Supreme Court issued its decision in KSR, which held that the Federal Circuit was too restrictive and inflexible in its obviousness approach for utility patents by requiring identification of a “teaching, suggestion, or motivation” in the prior art to combine the asserted references. The Supreme Court held that an obviousness analysis should be holistic, not a mechanical approach. At issue in LKQ was whether the requirement to identify a Rosen reference is the type of mechanical, inflexible approach that was rejected by the Supreme Court in KSR.
In two non-precedential, per curiam decisions, the Court held that Rosen remains good law. The panel spent much longer assessing whether the Rosen argument was waived than it did analyzing the merits, ultimately holding that it was bound to follow Rosen “without a clear directive from the Supreme Court.” Judge Lourie issued a separate opinion further elaborating his views, including a lengthy discussion about how utility patents and design patents are “distinct types of patents” with different subject matter, claims, claim scope, tests, and requirements. Judge Lourie quoted an article suggesting that KSR has limited application to design patents.
Judge Stark concurred in the judgment, but believed the Rosen argument had been waived.
By Nika Aldrich
This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.
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