On June 1, in Hyatt v. Hirshfeld, the Federal Circuit upheld the USPTO’s decision to reject a patent application for prosecution laches, based on delay by the applicant. The decision details behaviors that, while likely difficult to fully emulate, are perhaps to be avoided.
Prosecution Laches—You Snooze, You Lose
Prosecution laches is an equitable defense against a charge of patent infringement. Under this defense, the holder of a valid patent may nevertheless be barred from enforcing that patent if there exists an unreasonable and unexplained delay in prosecuting the patent claim, and the alleged infringer has suffered prejudice as a result.
The Federal Circuit’s decision begins with a discussion of so-called “submarine patents.” This colloquial expression refers to the practice of delaying (perhaps by decades) the issuance of a patent until the market that it covers has matured. By the passage of time, the subject matter of the patent may have slipped into common usage. Issuing such a patent and unleashing it into such a target-rich environment is criticized by some to be an abuse of the patent system.
Submarine patents were of particular concern prior to 1995 when patents had a term of 17 years from their date of issuance. By aggressively filing continuation applications that claimed priority to an earlier application, a patent with a 17-year lifespan could issue years or even decades after the earliest application was submitted to the patent office. Under that regime, submarine patents were sometimes technically and legally available. In 1995, however, U.S. law changed the term of a patent to be 20 years from the date of the initial priority filing. This caused even continuation patents to have a lifespan measured by the initial filing date of the earliest application.
Mr. Hyatt’s Applications
In the nine days before the law changed, on June 8, 1995, over 50,000 patent applications were filed by inventors who wanted the old rules to apply to their applications. Gilbert Hyatt filed 381 of those applications. The Hyatt decision involved four of those applications that claimed priority back to applications filed in the 1970s and 1980s. Each of Mr. Hyatt’s 381 applications was a photocopy of one of 11 of his earlier-filed applications, with most presenting only a very short set of claims, many of which were identical to one another. The Federal Circuit characterized these filings as “placeholders.”
Whether or not Hyatt harbored any notions of playing the submarine game, according to the facts set forth by the court he certainly created a complicated situation for the USPTO. While a typical patent application runs from 20 to 30 pages, Hyatt’s four applications ran from 278 pages to 641 pages. Hyatt later filed amendments that raised the number of claims to about 115,000. About 45,000 of those claims were independent claims.
Although Hyatt’s approach clearly emphasized volume, no rules or regulations specifically limit the number of claims that one may present. The court acknowledged that Hyatt paid something in the neighborhood of $7 million in fees to the USPTO to cover his possibly profligate strategy. Those fees served, for example, to permit the USPTO to create an examination unit of 12 experienced examiners dedicated to examining Hyatt’s applications.
But the challenges and ramifications of Hyatt’s approach went deeper than mere volume. Hyatt presented claims for examination that ranged between 12 and 28 years following their alleged priority dates, and the applications tended to claim priority to multiple earlier applications. Other problems included issues regarding whether Hyatt’s materials adequately supported the presented claims. Between the voluminous complexity of his applications and the interweaving of their respective claims to priority, the USPTO estimated it would take 532 years of examiner time to process Hyatt’s applications.
To break the logjam, the USPTO instructed Hyatt to “(i) select no more than 600 total claims to pursue for each of the 11 specifications; (ii) identify the priority date and support for that date with respect to each chosen claim; and (iii) submit a clean copy of the claims.” According to the Federal Circuit, Hyatt did not provide a satisfactory response.
The District Court Case
Eventually Hyatt pursued administrative appeals to challenge findings of obviousness and lack of written description, achieving occasional small successes. Apparently dissatisfied, in 2005 Hyatt filed a section 145 action in the U.S. District Court for the District of Columbia seeking issuance of one of the four applications, later adding the other three applications in 2009.
The USPTO filed a motion to dismiss each case on prosecution laches grounds. The USPTO based this motion on many of the foregoing facts and more of similar ilk. The court denied the motion, concluding that genuine issues of material fact existed. At trial, the USPTO presented evidence and testimony to establish the facts related above and more. One witness, for example, testified that Hyatt had not been forthcoming about priority dates and that this had been a persistent issue across the entire family of applications. Another witness testified:
unreasonable and un-explainable delay also resulted from Hyatt’s pattern of conduct during prosecution, including (i) dramatically increasing, i.e., unduly multiplying, the number of claims; (ii) rewriting, i.e., shifting, claims in large portions or in their entirety; (iii) presenting numerous duplicate or patentably indistinct claims across applications without informing the PTO; and (iv) failing to identify written description support for claims [citations omitted].
The trial court concluded that the USPTO had itself failed to take the actions necessary to advance the prosecution of Hyatt’s applications and accordingly denied the application of prosecution laches.
The Federal Circuit’s Decision
On appeal, the Federal Circuit strongly disagreed with the trial court’s reasoning and result. In particular, the Federal Circuit found that the trial court failed to properly consider the totality of the circumstances. This included repeatedly discounting or ignoring evidence showing the facts discussed above, which established that Hyatt’s conduct caused unreasonable and unexplained delay. The Federal Circuit also noted that the USPTO’s delay cannot excuse an applicant’s own delay. The court opined, “Hyatt adopted an approach to prosecution that all but guaranteed indefinite prosecution delay. . . . All of the above patterns of prosecution conduct created a perfect storm that overwhelmed the PTO.”
Applying prosecution laches requires a finding of prejudice. The Federal Circuit specifically held that “where a patent applicant has committed a clear abuse of the PTO’s patent examination system, the applicant’s abuse and its effects meet the prejudice requirement of prosecution laches.”
The court remanded this matter back to the trial court to permit Hyatt an opportunity to present, by a preponderance of the evidence, a legitimate, affirmative reason for his delay. Perhaps tilting the table a bit, the court pointedly expressed the thought that “We can divine no reason in the record currently before the court that would suffice, but Hyatt is entitled as a matter of fairness to present evidence and be heard on this issue.” Yikes.
Present-day applicants or patent practitioners are unlikely to find themselves in a largely similar situation to Mr. Hyatt’s. That said, this decision serves as a sobering reminder that prosecution gamesmanship that causes significant delay may lead to a loss of the opportunity to patent otherwise legitimate inventions. It is also very much worth understanding that the sword of prosecution laches may be wielded by the USPTO during the pendency of a patent application.