Last Week in the Federal Circuit (June 7-11): Prosecution Laches—Following the Letter of the Law May Not Always Be Enough

If last week’s post on prosecution disclaimer left you hoping for more decisions about the patent application process, you're in luck. This week we're covering another case about patent prosecution and the somewhat rare doctrine of prosecution laches. Below we provide our usualy weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions:  7

Non-precedential opinions: 5

Rule 36: 3

Longest pending case from argument:  Anania v. McDonough, No. 20-1086 (185 days)

Shortest pending case from argument (non-Rule 36):  Cameron v. McDonough, No. 20-1839 (33 days)

Case of the week:  Hyatt v. Hirshfeld, Nos. 2018-2390, -2391, -2392, 2019-1038, -1039, -1049, -1070 (June 1, 2021)

Panel:  Judges Reyna, Wallach, and Hughes, with Judge Reyna writing the opinion

You should read this case if:  you are a patent prosecutor or are curious about the latest chapter in a long-running dispute between the Patent Office and a serial patent applicant

Our case this week features independent inventor, Gilbert Hyatt, who filed an astonishing 381 patent applications during the “GATT Bubble” before the PTO’s June 8, 1995 transition from patent terms of 17 years from issuance to 20 years from filing. The applications largely relate to microchip and integrated circuit technology and are continuations of applications that date back to the 1970s and ’80s. Most are still pending. Any patents that issue will remain valid for 17 years from issuance, even though the original applications are decades old. The PTO calculated that processing Hyatt’s applications would require “532 years of examiner time,” or the equivalent of about “40,000 typical applications.”

After the PTO rejected four Hyatt applications, Hyatt filed suit under 35 U.S.C. § 145, which allows applicants to seek a court order requiring the PTO to issue the patents. The PTO moved to dismiss based on prosecution laches, a defense the PTO had never before asserted in a district court case on pending applications. According to the PTO, Hyatt engaged in a pattern of delay during prosecution, filing overly long and complex applications, and repeatedly amending claims to shift their scope and create duplications. The district court sided with Hyatt, however, finding that substantial blame for the delay rested with the PTO and that prosecution laches did not bar issuance of the applications. The court ultimately ordered the PTO to issue many of Hyatt’s claims.

On appeal, the Federal Circuit reached several important holdings about prosecution laches. As a preliminary matter, it held that prosecution laches can be a defense in a Section 145 action. And it held that the defense was available even if the Patent Office never rejected the claims for laches during examination.

The Court explained that prosecution laches can “‘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.’”  The Court held that the district court had failed to assess the totality of the circumstances in deciding whether that standard was met. For example, the district court should have considered evidence tending to show Hyatt’s “pattern of conduct across an enormous body of similar applications” beyond the four at issue. The Federal Circuit also found that the district court overemphasized alleged PTO delays and underemphasized Hyatt’s behavior in prosecution:

It is not the case that an applicant may prosecute his patents however he or she wishes within the statute and PTO regulation, because the doctrine of prosecution laches places an additional, equitable restriction on patent prosecution conduct beyond those imposed by statute or PTO regulation. An applicant must therefore not only comply with the statutory requirements and PTO regulations but must also prosecute its applications in an equitable way that avoids unreasonable, unexplained delay that prejudices others.

Further, the PTO’s conduct may be considered in the totality of circumstances, but its delay “cannot excuse the applicant’s own delay” in prosecution.

The Federal Circuit also refined the standard for applying prosecution laches in a Section 145 action: it determined that, like in infringement actions, the PTO has an obligation to show prejudice in order for prosecution laches to apply. The Federal Circuit further concluded, however, that prejudice is presumptively met by a prosecution delay of six years or more. And finally, the Federal Circuit held that “clear abuse of the PTO’s patent examination system” constitutes prejudice. “Clear abuse” occurs when the applicant “unduly increases the administrative burden on the PTO.”

Given these conclusions, the Federal Circuit determined that the PTO sufficiently met its initial burden with respect to prosecution laches. The burden thus shifted to Hyatt to prove that he did not, in fact, engage in unreasonable or unexplainable delay. The Court remanded for the district court to consider evidence and decide that issue in the first instance.