Federal Circuit Issues Opinion Rendering Patent Claims Unenforceable Due To Prosecution Laches – Patent

In a January 20, 2023 opinion in Personalized Media Communications, LLC v.
Apple Inc., 21-2275 the Federal Circuit Court of Appeals
upheld an Eastern District of Texas District Court ruling finding
plaintiff’s PMC’s patent unenforceable due to prosecution
laches.

Immediately prior to changes in U.S. law that changed the term
of a U.S. patent from 17 years from the date of issuance to 20
years from the application’s priority date, the plaintiff PMC
filed 328 applications, referred to as GATT-Bubble applications. A
purpose of these filings was to have a large number of applications
for which the Applicant could extend the prosecution to apply
against later developed technology. Although the law allows pending
applications to be amended to cover later developed technology,
Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473, 1479
(Fed. Cir. 1998), the district court found that PMC’s
patents were unenforceable due to prosecution laches.

At trial, a jury had awarded PMC over $308 million in reasonable
royalties against Apple. In a separate bench trial, the district
court found PMC’s ‘091 patent unenforceable based on
prosecution laches. J.A. 1–3. Relying on the Federal
Circuit’s opinion in Hyatt v. Hirshfeld, 998 F.3d
1347, 1359–62 (Fed. Cir. 2021), the district court determined
that PMC engaged in an unreasonable and unexplained delay amounting
to an egregious abuse of the statutory patent system. The Federal
Circuit upheld this determination.

The Federal Circuit held that Prosecution laches requires
proving two elements:

1. The patentee’s delay in prosecution must be unreasonable
   and inexcusable under the totality of circumstances.




2. The accused infringer must have suffered prejudice attributable
   to the delay.

Concerning delay, the district court faulted PMC for waiting
until 2003 – 16 years after the priority date of the ‘091
patent and nearly eight years after PMC filed its 328 GATT-bubble
applications – to include the subject encryption and
decryption limitations to the claims. The Federal Circuit upheld
the district court’s conclusion that “the only rational
explanation for PMC’s approach to prosecution is a deliberate
strategy of delay” and that “PMC’s actions were a
conscious and egregious misuse of the statutory patent
system.”

Concerning prejudice, the court held that an accused infringer
can establish prejudice by proving that it “invested in,
worked on, or used the claimed technology during the period of
delay.” The district court considered whether PMC’s period
of delay overlapped with Apple’s investment in its technology.
The district court determined that, well after 2003, PMC was still
implementing its express strategy of delay to “reserve [its]
patent till the trade independently develops, and then [] pounce
upon it for a full term.” Thus, the court agreed with Apple
that Apple had been prejudiced by the PMC delay. This finding was
also affirmed by the Court of Appeals.

Although the facts of this case are directed to pre-GATT
filings, the analysis concerning unreasonable delay and prejudice
could be applicable to prosecution of post-GATT filings.

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