Federal Circuit Summary

Before Reyna, Bryson, and Hughes.  Appeal from the Northern District of California.

Summary: Breach of a duty of disclosure to a standards-setting organization may constitute implied waiver, thus rendering a patent unenforceable, if the proposed standard covers a technology claimed in the patent.  However, implied waiver only renders a patent unenforceable if the patentee’s misconduct results in an unfair benefit or the patentee otherwise engages in egregious misconduct. 

Core Wireless sued Apple for patent infringement. Apple argued that one of the asserted patents, the ’151 patent, was unenforceable due to implied waiver. The ’151 patent is directed to a novel synchronization feature in telecommunications. The inventor on the ’151 patent, who worked for the patent applicant, prepared an invention report, which included a proposal to the European Telecommunications Standards Institute (“ETSI”) to modify a standard to use the novel synchronization feature. Contemporaneous with submitting the proposal to the ETSI, the patent applicant filed a Finnish patent application, to which the ’151 patent claims priority, covering the synchronization feature. The proposal was rejected in favor of a standard proposed by the applicant’s competitor. Apple argued that the patent applicant, of whom Core Wireless is the successor-in-interest, waived its right to enforce the ’151 patent by breaching its obligation to disclose the patent application to the ETSI.  The district court rejected this theory of implied waiver, finding the ’151 patent not unenforceable.

The Federal Circuit vacated the district court’s decision and remanded the case.  A participant in a standards-setting organization may waive its right to assert infringement claims against products that practice the standard.  Specifically, implied waiver can be shown where a patentee breaches a duty of disclosure to the standards-setting organization. Implied waiver, like inequitable conduct, should only be applied where the misconduct results in an “unfair benefit.” However, as with inequitable conduct, implied waiver includes the same exception to the materiality requirement in cases of egregious misconduct. The Federal Circuit found the district court’s determination that the patent applicant had no obligation to disclose the patent application to the ETSI was unsupported by evidence.  The Federal Circuit thus vacated the district court’s holding of no unenforceability and remanded for the district court to consider whether the patent applicant benefited from the failure to disclose or whether the applicant’s conduct was sufficiently egregious to justify a finding of implied waiver.