Federal Circuit Issues Opinion Rendering Patent Claims Unenforceable Due to Prosecution Laches

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.