Prosecution Laches—Another Arrow In The Quiver For Challenging Patents

The Supreme Court recently declined to review Personalized Media Communications, LLC v. Apple Inc., where a divided panel of the Federal Circuit upheld the district court’s finding that a PMC patent is unenforceable due to prosecution laches. The district court had found “an inequitable scheme to extend … patent rights” involving 328 pre-GATT patent applications and culminating in the patent at issue being granted 17 years after it was filed with an expiration date at least forty years from its priority date.

The doctrine of prosecution laches is fact-specific, and the facts at issue in PMC are unusual, but Apple’s success in raising this defense may encourage others to more closely scrutinize the course of prosecution of an asserted patent. Indeed, in an opinion issued October 6, 2023, in Sonos, Inc. v. Google LLC, the U.S. District Court for the Northern District of California found prosecution laches where the subject matter of the asserted Sonos patents was presented/prosecuted in parallel fifth-generation continuation applications filed 13 years after the earliest priority date.

The Doctrine of Prosecution Laches

The doctrine of prosecution laches holds that a patent applicant can forfeit the right to a patent based on “an egregious misuse of the statutory patent system.” As set forth in the Federal Circuit’s 2021 decision in Hyatt v. Hirshfeld, the defense of prosecution laches requires proving two elements:

1. The patentee’s delay in prosecution must be unreasonable and inexcusable under the totality of circumstances, and
2. The accused infringer must have suffered prejudice attributable to the delay.

The second prong can be met if the accused infringer “invested in, worked on, or used the claimed technology during the period of delay.”

PMC’s Prosecution Conduct

Like the prosecution conduct at issue in Hyatt, PMC’s prosecution conduct began with filing over 300 patent applications shortly before the U.S. adopted a twenty-year patent term (referred to in the Federal Circuit opinion as “GATT-Bubble applications”). With regard to these patent applications, the court noted:

• PMC’s applications were “atypically long and complex,” containing over 500 pages of text and over 22 pages of figures.
• PMC filed each of its applications with a single claim, then subsequently amended the claims, sometimes to recite identical language across different applications.
• PMC greatly increased the total number of pending claims across the applications, reaching 6,000 to 20,000 claims.
• PMC waited eight to 14 years to file its patent applications and at least 16 years to present the subject matter of the asserted claims for examination.
• PMC’s prosecution conduct made it virtually impossible for the USPTO to conduct double patenting, priority, or written description analyses.
• PMC made vast prior art disclosures, which included references having little-to-no relevance.
• Examiners made statements in office actions describing PMC’s prosecution strategy and conduct as improper.

Unique to this case, PMC entered a “Consolidation Agreement” with the USPTO regarding management of the examination process. As described in the Federal Circuit opinion, PMC agreed to group its applications into 56 subject-matter categories. Within each category, PMC was to designate “A” applications and “B” applications, with the USPTO prioritizing “A” applications and prosecution of “B” applications being stayed until the corresponding “A” application issued. The Federal Circuit found that this application examination scheme “in effect, gave PMC an additional bite at the apple to extend out prosecution of its many claims without the cost of having to file a continuation application.”

Regarding the patent at issue, the court noted (among other things):

• U.S. Patent No. 8,191,091 stemmed from U.S. Patent Application No. 08/485,507, filed June 7, 1995 (the last day an application could be filed to obtain a patent with a 17-year term), with a priority claim reaching back to 1981.
• In 2002, PMC designated the ’507 application as a “B” application corresponding to U.S. Patent Application No. 08/474,145, such that prosecution of the ’507 application was suspended.
• In 2003, examination of the PMC applications was suspending pending resolution of 11 reexamination proceedings.
• In 2011, PMC presented claims in the ’507 application that had been rejected in the ’145 application, but they were allowed in the ’507 application and the ’091 patent granted May 29, 2012.

While not discussed in the opinion, I note that after the ’507 application was filed in 1995, an office action was issued in 1996, and after a response was filed, the USPTO issued a notice suspending prosecution in 1997 “to allow the Office to consider the complex issues surrounding the numerous related applications.” Prosecution resumed in 1998 and continued through 2021. A notice dated June 18, 2022, indicates that prosecution was being suspended under the Consolidation Agreement.

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Reyna and joined by Judge Chen. Judge Stark filed a dissenting opinion agreeing with the majority that PMC’s “delay in prosecuting its patent was unreasonable and inexcusable,” but explaining his view that Apple had failed to show prejudice “during the period of delay,” because PMC’s conduct after 2000 was not unreasonable or inexcusable.

On the issue of delay, the majority essentially agreed with the district court’s findings, and did not accept any of PMC’s arguments that other aspects of “the totality of the circumstances” weighed in its favor. For example, the majority disagreed that PMC’s compliance with the Consolidated Agreement refuted any “unreasonable and inexcusable delay,” finding instead that the agreement itself “supported PMC’s campaign for drawn-out prosecution.” The majority also rejected PMC’s arguments pointing out USPTO delays, agreeing with the district court that the agency was grappling with “issues PMC intentionally created.” The majority also agreed with the district court that PMC’s 16-year “delay” in presenting the claimed subject matter could be “sufficient to trigger prosecution laches.”

In his dissenting opinion, Judge Stark explained that because Apple had not “invested in, worked on, or used the claimed technology” until 2000, in order for Apple to prevail in its defense it “must prove that PMC was engaged in unreasonable and inexcusable prosecution delay in or after January 2000.” In contrast, Judge Stark noted that the district court had focused on PMC’s conduct from 1987 to 1995. According to Judge Stark, the district court only cited three post-2000 actions by PMC:

• A three-month extension of time taken for a response filed in 2002
• Claim amendments presented in 2003 first presenting the claimed subject matter
• Claim amendments presented in 2011 re-presenting the claimed subject matter

Judge Stark’s opinion explains why, in his view, none of these actions reflected unreasonable or inexcusable prosecution delay. Summarizing his discomfort with the majority opinion, Judge Stark notes:

“Today’s holding, which allows Apple to prevail on laches by proving it suffered prejudice in and around 2003, due to the ongoing impact of prosecution delays PMC caused primarily between 1987 and 1995, implies that PMC was doomed to procure unenforceable patents regardless of how well it conducted itself after 1995, and no matter how egregious Apple’s infringement might be.”

Egregious Conduct or Persistent Prosecution?

Because the doctrine of prosecution laches is fact-specific and the facts at issue in PMC are so unusual, this case may not hold many lessons for typical applicants. If the decision in Sonos, Inc. v. Google LLC is appealed, a Federal Circuit decision in that case could provide additional guidance on where the line is drawn between egregious conduct that amounts to abuse of the patent system and persistent prosecution in pursuit of patent rights to which one is entitled.