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IP Alert: Too Much Delay Causes Loss of Patent Rights – Redux

August 17, 2021

On August 5, in Personalized Media Communications v. Apple, the U.S. District Court for the Eastern District of Texas invalidated patents asserted by Personalized Media Communications (“PMC”) for reasons that resonate strongly with both the legal setting and facts of the Federal Circuit’s recent Hyatt decision, as reported here. In Hyatt, unreasonable delay during patent prosecution justified the USPTO’s rejection of certain pending patent applications. The district court, in Personalized Media, recognized the prosecution laches from Hyatt as a basis for invalidating patents during litigation, relying heavily upon the many notes of similarity between Hyatt’s and PMC’s respective behaviors while prosecuting their respective applications. Notably, the court held PMC’s patents to be unenforceable after PMC had already received a jury verdict against Apple for more than three hundred million dollars.

The district court’s opinion observed the many similarities between the facts related to PMC’s patents and those sought by Hyatt. PMC filed 328 patent applications during the “GATT Bubble,” i.e., the period shortly before the U.S. switched patent term from seventeen years from issuance to twenty years from filing of the earliest priority application. The court noted PMC’s filings were “a number not far behind” Hyatt’s 381 GATT Bubble applications.

PMC’s delay tactics were “for a comparable period” to the seven to eleven years it took for Hyatt to file his four applications and the ten to nineteen years it took him to present the pending claims.

PMC filed each of its applications with a single, admitted “placeholder” claim. The court found this practice similar to Hyatt’s practice of filing applications with “small claim sets, many of which were identical to each other.” PMC contemporaneously or subsequently amended its claims, sometimes to recite identical language.

PMC’s applications were similar to the “atypically long and complex” applications filed by Hyatt. For example, one of PMC’s applications contained 559 pages of text and 22 pages of figures.

PMC added large numbers of claims to its pending applications. PMC sought anywhere from 6,000 (estimate from PMC’s witness) to 20,000 claims (an examiner’s estimate) across two specifications, which the court likened to the 115,000 claims (including 45,000 independent claims) across Hyatt’s eleven specifications.

The court also noted that PMC’s applications were difficult for the USPTO to examine, like Hyatt’s. Issues related to the complexity, number, size, and overlap among PMC’s applications were exacerbated by the thousands of references in PMC’s information disclosures. The USPTO examiners noted that many of these references bore questionable relevance to the claimed inventions, and several were “abjectly irrelevant.”

To be sure, there were differences as well between PMC’s case and Hyatt’s. But the court discounted the USPTO’s ability to move prosecution forward in PMC’s applications, because “prosecution laches considers the applicant’s conduct.” Furthermore, the court noted that PMC’s later efforts to develop and implement a plan to move their patent applications along did not sufficiently mitigate against PMC’s earlier conduct in these regards.

As noted in Hyatt, “prosecution laches may render a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution that constitutes an egregious misuse of the statutory patent system under a totality of the circumstances.” In the context of the district court litigation in Personalized Media, the defendant had to demonstrate that PMC’s issued patents were unenforceable under prosecution laches under the clear and convincing evidence standard. The court concluded that the defendant met that standard:

PMC sought 30 to 50 years of patent protection, and it obtained exactly that. The ’091 patent itself issued 17 years after the filing date. Its claims will expire 34 years after the application was filed, 42 years after the 1987 specification, and 48 years after the 1981 parent application. Delays of this magnitude do not occur by accident and do not occur when an applicant reasonably pursues prosecution (emphasis added).

The Hyatt and Personalized Media decisions warn that prosecution gamesmanship that leads to unreasonable and unexplained delay may lead to a loss of patent rights for potentially legitimate inventions. For more information regarding this guidance, please contact Fitch Even partner Steven G. Parmelee, author of this alert.

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