Federal Circuit Recognizes Prosecution Laches as Defense to Patent Infringement
January 2002
In a 2-1 opinion issued on January 24, 2002, the U.S. Court of Appeals for the Federal Circuit for the first time affirmatively recognized "prosecution laches" as a defense to patent infringement and remanded the case for consideration of the defense. Symbol Technologies, Inc. et al. v. Lemelson Medical, Education & Research Foundation, L.P., No. 00-1583 (Fed. Cir. Jan. 24, 2002). While the opinion is sure to draw considerable attention from the patent bar due to the well-known patent portfolio involved in the case, the impact the decision will have on the future course of patent litigation is not clear.
The Majority Holding
Symbol involved patents issued in the name of Jerome Lemelson and held by the Lemelson Medical, Education & Research Foundation (Lemelson Foundation). Mr. Lemelson was arguably the 20th century’s most infamous inventor. Having received more than 500 U.S. patents on a wide variety of subject matters, Mr. Lemelson gained notoriety in the late 1980s for asserting his patents against many of the giants in the technology industry. It has been publicly reported that hundreds of companies have taken licenses under Mr. Lemelson’s patents. Following Mr. Lemelson’s death in 1997, the Lemelson Foundation continued to assert Mr. Lemelson’s patents against companies in various industries.
The instant lawsuit was the result of a dispute between the Lemelson Foundation and the eight named plaintiffs (collectively referred to as Symbol or plaintiffs). The lawsuit involved 16 Lemelson patents, generally relating to machine vision and automatic identification technology. Each of the patents involved claimed priority, at least in part, to two applications filed in 1954 and 1956 and issued from a decades-long prosecution lineage involving divisional, continuation and/or continuation-in-part applications.
The plaintiffs in this case manufactured bar code scanners and related products. In response to being notified that their customers had received letters in 1998 from the Lemelson Foundation indicating that the use of the plaintiffs’ products infringed certain Lemelson patents, Symbol brought an action for declaratory judgment that the patents at issue were invalid, unenforceable and not infringed by its products.
One of Symbol’s causes of action was based on the theory of "prosecution laches," that is, the Lemelson Foundation should be equitably barred from asserting infringement by Symbol’s products because Mr. Lemelson "unreasonably delayed" the prosecution of the patents at issue in the U.S. Patent and Trademark Office (PTO). The Lemelson Foundation argued in district court that with respect to this cause of action, Symbol had failed to state a claim upon which relief could be granted. The district court agreed and dismissed the prosecution laches claim, and Symbol’s appeal to the Federal Circuit followed.
The Federal Circuit reversed the district court, clarifying any confusion in prior case law by stating that prosecution laches is a valid defense to an infringement action. The court discussed the long history of the doctrine, dating back to two U.S. Supreme Court cases decided in the 1920s. In the first case, Woodbridge v. United States, 263 U.S. 50 (1923), Woodbridge had requested a one-year delay of the issuance of his patent by the PTO in accordance with a statute then in place. However, when the PTO mistakenly failed to issue his patent one year later, Woodbridge waited more than eight additional years before requesting that his patent be issued and further requested an amendment to his specification and claims, apparently to cover innovations that had occurred in the intervening nine years. Although the PTO did issue his patent in amended form, the Supreme Court held that Woodbridge’s delay of nine years (when the statute only provided for a one-year delay) was unreasonable and constituted an unfair disadvantage to others that worked in the same field during those years without notice of Woodbridge’s claims. Accordingly, Woodbridge had forfeited his rights to his patent.
In the second Supreme Court case, Webster Electric Co. v. Splitdorf Electrical Co., 264 U.S. 463 (1924), the original application for the patent in suit was filed in February 1910. In 1915, the applicant filed a divisional application, copying claims of two previously issued patents (respectively issued in 1913 and 1915) in order to provoke an interference. In 1916, the original application issued as a patent. However, priority in the interference was decided against the applicant. After losing the interference, the applicant amended the application to add new claims in 1918, which apparently were similar to the claims in the original application but with a broader scope and a second patent issued later that year on those newly added claims.
The Supreme Court held that the claims added in the second patent were unenforceable on the grounds of laches. During the years between the filing of the original application in 1910 and the filing of the new claims in 1918, the subject matter of the applications was publicly disclosed and in general use, and the applicant had exercised unreasonable delay and neglect in bringing forward claims that were broader than those sought in the original application. In Symbol, the Federal Circuit majority (Judges Mayer and Clevenger) characterized the Webster decision as based on the Supreme Court’s finding of an "unreasonable eight-year delay" in drafting the new claims. The majority continued to explain that the Supreme Court later ratified prosecution laches as a defense to allegations of infringement of claims added in divisional and continuing applications in circumstances in which intervening public rights would be prejudiced, citing Crown Cork & Seal Co. v. Ferdinand Gutmann Co., 304 U.S. 159 (1938) and Gen. Talking Pictures Corp. v. W. Elec. Co., 304 U.S. 175 (1938).
On appeal, the Lemelson Foundation argued that prosecution laches is not a valid defense. First, it argued that Webster was limited to interference actions. Second, the Lemelson Foundation argued that the Patent Act of 1952, providing statutory guidelines for continuation and divisional applications, precluded the application of prosecution laches. Third, it argued that two non-precedential Federal Circuit opinions should be binding on the court to require a finding that laches is precluded.
The majority disagreed, summarily dispensing with the first and third arguments. With respect to the first, the court noted that there was no support for finding that Webster was limited to cases involving only interferences. With respect to the third, the court stated that there is no explicit constitutional prohibition on non-precedential opinions, whereas there has long been support for the view that non-precedential cases, particularly when they do not "contribute . . . significantly to the body of law" cut back on what could be an overwhelming number of repetitive case law. Accordingly, the court declined to consider two non-precedential Federal Circuit decisions (Bott v. Four Star Corp., 1988 WL 54107 (Fed. Cir. May 26, 1988) and Ricoh Co. v. Nashua Corp., 1999 WL 88969 (Fed. Cir. Feb. 18, 1999)) that declined to apply prosecution laches and questioned the continued viability of the defense. In declining to consider the non-precedential opinions, the Federal Circuit expressly refuted the Eighth Circuit’s decision to the contrary in Anastasoff v. U.S., 223 F.3d 898 (8th Cir. 2000).
Regarding the second argument, the majority concluded that the legislative history and commentary from the authors of the 1952 Patent Act suggested no intent on the part of Congress to abrogate the defense of prosecution laches. In particular, the court noted that prior to 1952, continuation practice was governed by common law and was a creature of PTO practice and case law, rather than statute. Thus, continuation practice was in existence when the Supreme Court decided Webster and Crown Cork and, accordingly, the defense of prosecution laches and the continuation practice coexisted.
As to the 1952 Patent Act itself, the majority held that the defenses to patent infringement were codified in Section 282 of the new act. According to the majority, item 1 of 35 U.S.C. § 282, which specifies the defenses of "noninfringement, absence of liability for infringement, and unenforceability" includes equitable defenses such as laches, estoppel and unclean hands, citing P.J. Federico, Commentary on the New Patent Act, 75 J. Pat. & Trademark Off. Soc’y 161, 215 (1993). The court thus held that it was apparent that the drafters of the 1952 Patent Act thought that the defense of laches would be available. Moreover, the court was able to cite at least one case since 1952 that had recognized the defense of prosecution laches. See Pratt & Whitney Co. v. U.S., 345 F.2d 843-44 (Ct. Cl. 1965).
Judge Newman’s Dissent
Judge Newman dissented from the Federal Circuit’s majority holding in Symbol. She believed that the majority had wrongly intervened in equity to regulate what Congress had not by creating a new ground on which to challenge patents that had fully complied with all statutory requirements. This was, in Judge Newman’s opinion, directly contrary to the rule that when statutory provisions exist they may be relied on without equitable penalty. With the enactment of 35 U.S.C. §§ 120 and 121, governing continuations, Judge Newman believed that the imposition of new limits on the continuation practice was for Congress to decide, citing In re Henriksen, 399 F.2d 253, 261 (CCPA 1968).
Judge Newman hinted at the extreme nature of the facts that were presently before the court by stating, "I have no doubt that compliance with statutory law can lead to inequity in individual cases." Nonetheless, she was not convinced that the possibility of inequity in select cases was enough to require judicial intervention "unless one is prepared to abandon the rule of law in favor of subjective judicial preferences, when there is a statute it must prevail." Finally, Judge Newman noted that while it was certainly true that equitable defenses are available in patent infringement actions, 35 U.S.C. § 282, "the issue here is not the defense of laches to the tort of infringement; it is whether a statutorily authorized action nonetheless can render the patent permanently unenforceable… . Lest authorized acts of patent prosecution be forever tainted by the potential defense that they should have been done sooner than the statute required, we should adhere to the statute." See U.S. v. American Bell Tel. Co., 167 U.S. 224, 250 (1897) (an inventor is not "under a sort of moral obligation to see that the public acquires the right to the free use of that invention as soon as is conveniently possible").
While the Symbol case is undoubtedly a major victory for those companies facing a licensing demand from the Lemelson Foundation, the effect of the decision in the present case and in patent litigation in general, is hard to predict. The majority in Symbol provided little, if any, guidance as what constitutes a prima facie case of prosecution laches. Judge Newman was clearly concerned by this lack of analysis in the majority opinion when she stated that "the consequences of this new cause of action of ‘prosecution laches’ have not been explored, for this court is presented only with the concerns of those charged with infringing these Lemelson patents. However, the consequences are not limited to this case, but will open legally granted patents to a new source of satellite litigation of unforeseen scope, for the continuation practice is ubiquitous in patent prosecution."
Regardless of the outcome of the remand, the disappointed party will undoubtedly appeal the decision to the Federal Circuit. Therefore, it may be years before the Federal Circuit decides what must be proven in order to establish a successful prosecution laches defense.
Also, given Judge Newman’s stature at the Federal Circuit and her reliance on Supreme Court precedent in her dissent, there is a distinct possibility that, should the Lemelson Foundation petition for a re-hearing en banc, the Federal Circuit will agree to consider the question of "prosecution laches" en banc.
However, at the moment Symbol is controlling law. Therefore, a party facing a claim of patent infringement should carefully review the prosecution history of the patent(s) in question, specifically with an eye towards the amount of time that had lapsed since the original filing of the patent application to the issuance of the patents. If the accused products entered the market after the filing of the original application but before the patentee added claims to the application that later issued and were asserted against the accused products, there is at least the possibility of a viable prosecution laches defense.
Nonetheless, it appears that the mere passage of time alone will not result in prosecution laches. Consider the Supreme Court’s decisions in Woodbridge and Webster. In Woodbridge, the patentee did nothing for nine years. Such a situation simply will not occur in modern patent continuation practice. Instead, throughout the pendency of various applications, a patent applicant normally will be responding to office actions, arguing for the patentability of the claims in question, appealing decisions to the U.S. Board of Patent Appeals and Interferences¾ all affirmative acts directed towards obtaining allowable claims. As all laches defenses are equitable in nature and thus determined on a case-by-case basis, Woodbridge does not appear to provide an accused infringer with a particularly strong factual precedent on which to rely.
The Webster case is more promising. The facts there showed that the subject matter of the claims was in general use from the filing of the original patent application in 1910 to the time the patentee finally added claims directed to the subject matter in 1918. The Supreme Court held that it was unreasonable for the patentee to simply stand by for eight years and await developments. While Webster provided that a two-year delay was prima facie unreasonable, that portion of Webster was later repudiated in Crown Cork. On that point, the Crown Cork and General Talking Pictures cases from the Supreme Court required the presence of intervening adverse rights for at least two years prior to the filing of continuation applications in order for there to be a potentially viable defense of prosecution laches.
The Federal Circuit cited the Pratt & Whitney case for a post-1952 application of prosecution laches. There, the patent in question was based on an application filed in 1943, and the accused product became publicly available in 1946. The patentee did not present any claims in the pending applications that arguably covered the accused product until 1951. The U.S. Court of Claims, citing Webster, held that this five-year delay, for which the patentee offered no satisfactory explanation, supported a defense of prosecution laches.
The following possible elements to prosecution laches may be gleaned from the above cases. First, there must be intervening adverse rights in order for prosecution laches to apply. Second, the patentee must have delayed at least two years from the public availability of the subject matter in question before adding claims to a pending patent application that allegedly cover the publicly available subject matter. Third, the patentee must not be able to offer a satisfactory explanation for the delay. It is anticipated that this third factor will be subject to many arguments from patentees. The scope of these arguments, and analyzing which are successful, will likely keep court watchers entertained for years to come.
The Symbol case, at least for the time being, has established prosecution laches as a potentially viable defense to a charge of patent infringement. The prosecution history of the patent in question should be examined closely to determine if the above three factors may exist. If at least the first two factors discussed above appear to be met from the prosecution history and the publicly available facts, then a defense of prosecution laches should be affirmatively plead in response to any complaint, or as was done in Symbol, in a declaratory judgment action to try to eliminate a persistent cloud over the activities of the accused party.
