Eastern District Of Texas Finds Patent Unenforceable Due To Prosecution Laches
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  • Eastern District Of Texas Finds Patent Unenforceable Due To Prosecution Laches

    On August 5, 2021, Judge Gilstrap of the U.S. District Court for the Eastern District of Texas issued a Memorandum Opinion and Order Supported by Findings of Fact and Conclusions of Law regarding defendant Apple’s counterclaim for prosecution laches.  Personalized Media Communications, LLC v. Apple, Inc., No. 2:15-cv-01366-JRG, slip op. (E.D. Tex. Aug. 5, 2021).  Judge Gilstrap found and declared the asserted patent unenforceable under the doctrine of prosecution laches.  In doing so, Judge Gilstrap overturned a $308.5 million jury verdict.

    Prosecution laches is an equitable affirmative defense to patent infringement.  As the Federal Circuit has recently held, if prosecution laches is found, it 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.”  Hyatt v. Hirshfeld, 998 F.3d 1347, 1360 (Fed. Cir. 2021).  According to the Federal Circuit, the doctrine “places an additional, equitable restriction on patent prosecution conduct beyond those imposed by statute or PTO regulation,” id. at 1366, and requires a showing of two elements: (1) that the patentee’s delay in prosecution was unreasonable and inexcusable under the totality of the circumstances and (2) that the accused infringer or the public suffered prejudice attributable to the delay, id. at 1362.

    The prosecution-laches defense has taken center stage recently in cases involving continuation patents filed during the GATT “bubble,” i.e., shortly before the statutory patent term transitioned in 1995 from 17 years from issuance to 20 years from the original priority filing.  So, for example, under the pre-GATT scheme, a continuation patent would have a 17-year term from issuance, regardless of when the original parent was filed.  In the post-GATT world, that same continuation patent would only have a 20-year term from the date of the original parent’s filing.  This difference led to several patent applicants “bulk-filing” hundreds (and even thousands) of continuation applications just before the transition, with the goal of taking advantage of the extended pre-GATT term.

    PMC—the plaintiff here—was one such bulk filer.  As the Court found, PMC “bulk-filed” 381 “placeholder” continuation applications with lengthy specifications and a small subset of identical claims just before the transition to ensure that it was able to take advantage of the 17-year-from-issuance term.  (The original parent applications of which the placeholders were continuations were filed in 1981 and 1987 and up until its last-minute bulk filing, PMC had filed only a handful of related applications in total.)  After filing and over time, PMC canceled the placeholder claims and replaced them with thousands of new claims.

    Critical to the Court’s analysis was that PMC’s approach was part of its stated plan to take advantage of the pre-GATT term to prosecute applications serially and obtain patent protection for 30 to 50 years.  As the Court found, if PMC “cared only about obtaining patent protection on all of its inventions independently (as it contended at trial), it could have filed its applications after the GATT deadline (after proper diligence) with minimal difference,” and “[c]onversely, pre-GATT patents provide no advantage over post-GATT patents unless the issue dates are correspondingly later.”  Thus, per the Court, delay is inherent to PMC’s scheme.

    As to prejudice, the Court found that Apple was prejudiced by the scheme because PMC was able to obtain patents with extended dates that covered accused Apple technology that Apple began developing in 2003 (i.e., during PMC’s delay in prosecution).  Had PMC filed sooner, its patents would have expired and thus Apple would not have been found liable for infringement.

    This is the latest decision addressing the GATT bubble cases.  And, given that it wiped out a substantial jury verdict, it is surely not the last word on the issue.