Hyatt v. Hirshfeld

• Decision Date: 01 June 2021
• Docket Number: 2018-2390, 2018-2391, 2018-2392, 2019-1038, 2019-1039, 2019-1049, 2019-1070
• Citation: 998 F.3d 1347
• Parties: Gilbert P. HYATT, Plaintiff-Cross-Appellant v. Andrew HIRSHFELD, Performing the Functions and Duties of the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

998 F.3d 1347

Gilbert P. HYATT, Plaintiff-Cross-Appellant

v.Andrew HIRSHFELD, Performing the Functions and Duties of the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant-Appellant

2018-2390, 2018-2391, 2018-2392, 2019-1038, 2019-1039, 2019-1049, 2019-1070

United States Court of Appeals, Federal Circuit.

Decided: June 1, 2021

Andrew M. Grossman, Baker & Hostetler LLP, Washington, DC, argued for plaintiff-cross-appellant. Also represented by Mark W. DeLaquil, Jason F. Hoffman.

Thomas W. Krause, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for defendant-appellant. Also represented by Robert McBride, Robert J. McManus, Molly R. Silfen.

Before Reyna, Wallach, and Hughes, Circuit Judges.

Reyna, Circuit Judge.

The United States Patent and Trademark Office appeals a judgment of the United States District Court for the District of Columbia. Patent applicant Gilbert P. Hyatt filed an action under 35 U.S.C. § 145 against the Patent and Trademark Office to obtain four patents. The Patent and Trademark Office asserted affirmative defenses of prosecution laches and invalidity for anticipation and lack of written description. The district court first held a trial on prosecution laches and subsequently held trials on anticipation and written description. Following a Rule 52(c) motion at the first trial, the district court decided that the Patent and Trademark Office failed to carry its burden of proving prosecution laches. Following the patentability trials, the district court decided that certain claims were not invalid for anticipation or lack of written description and ordered the Patent and Trademark Office to issue patents as to those claims.

We hold that prosecution laches is a defense available to the Patent and Trademark Office in an action to obtain a patent under 35 U.S.C. § 145. We further hold that the district court erred in concluding that the Patent and Trademark Office had failed to prove prosecution laches. Accordingly, consistent with the principles of fairness and due process, we vacate and remand the district court's decision on prosecution laches for further proceedings consistent with this opinion and to provide Hyatt the opportunity to present evidence on that issue. We hold the remainder of the case in abeyance, retaining jurisdiction over the anticipation and written description issues.

BACKGROUND

Submarine Patents

Prior to 1995, a patent's term was measured as 17 years from the date of issuance. See, e.g. , Gilead Scis., Inc. v. Natco Pharma Ltd. , 753 F.3d 1208, 1211 (Fed. Cir. 2014). The fact that patent term was keyed to the date of issuance, rather than the date of filing, incentivized certain patentees to delay prosecuting their patents by abandoning applications and filing continuing applications in their place. By doing so, patentees could obtain a patent at a financially desirable time when the accused product market had become suitably developed. See, e.g. , Thomas J. Kowalski & Pamela G. Salkeld, The Impact of GATT on the United States Patent and Trademark Office , 11 ST. JOHN'S J. LEGAL COMMENT . 455, 456 (1996) [hereinafter Kowalski] ("Under the old law, United States patent applications could theoretically remain pending indefinitely through use of the ‘continuation’ procedure of refiling."). This delay strategy has allowed some submarine patentees to specifically target competitors’ new products. Mark A. Lemley & Kimberly A. Moore, Ending Abuse of Patent Continuations , 84 B.U. L. REV. 63, 76–78 (2004) [hereinafter Lemley]; see also Steve Blount & Louis S. Zarfas, The Use of Delaying Tactics to Obtain Submarine Patents and Amend Around a Patent That a Competitor Has Designed Around , 81 J. PAT. & TRADEMARK OFF. SOC'Y 11, 13, 28–30 (1999) ; John W. Schlicher, 2 Patent Law, Legal and Economic Principles § 13:11 (2d ed. 2015) [hereinafter Schlicher]. Critics of this practice have argued that it harms industries by upsetting the expectations of product manufacturers who have invested in manufacturing facilities. See, e.g. , Lemley, 84 B.U. L. REV . at 80 ; see also Schlicher, 2 Patent Law, Legal and Economic Principles § 13:11. The ability to avoid publication of an application offers further opportunity for abuse because it deprives the public of timely disclosure, which is a central goal of the patent system. Lemley, 84 B.U. L. REV. at 73.

Submarine patents have also added to the administrative burdens on the U.S. Patent and Trademark Office ("PTO"). Long chains of applications increase patent examiners’ caseloads, which have long tended to be large. See, e.g. , Eugene R. Quinn, Jr., The Proliferation of Electronic Commerce Patents: Don't Blame the PTO , 28 RUTGERS COMPUTER & TECH. L.J. 121, 123 (2002) (stating that "patent examiners are simply too overworked" to weed out "patents that ought not see the light of day"); John R. Thomas, The Question Concerning Patent Law and Pioneer Inventions , 10 HIGH TECH. L.J. 35, 100 (1995) (stating that examiners are "notoriously overworked"). Aware of this reality, some submarine patentees have employed the strategy of "wearing down" patent examiners over time and thereby obtaining a broader patent scope than warranted. See, e.g. , Lemley, 84 B.U. L. REV. at 74–75.

During negotiations of the Agreement on Trade-Related Aspects of Intellectual Property ("TRIPS Agreement") at the Uruguay Round of the General Agreement on Tariff and Trade ("GATT"), the U.S. sought to address the problem of submarine patents by agreeing to change the term of U.S. patents from 17 years following the date of issuance to 20 years following the filing date of the application or an earlier non-provisional application to which the subject application claims priority. TRIPS Agreement art. 33, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197, https://www.wto.org/english/docs_e/legal_e/27-trips.pdf. Congress then enacted this change in patent term into law. Uruguay Round Agreements Act, Pub. L. No. 103-465, § 532, 108 Stat. 4809, 4984 (1994) (amending 35 U.S.C. § 154 to provide a patent term of 20 years); see also Supernus Pharms., Inc. v. Iancu , 913 F.3d 1351, 1353 (Fed. Cir. 2019).

The U.S.’s change in patent term, which would become effective on June 8, 1995, triggered a patent application gold rush in the spring of 1995 often referred to as the "GATT Bubble." See Hyatt v. Iancu , 332 F. Supp. 3d 113, 122 (D.D.C. 2018) (" Iancu "); Kowalski, 11 ST. JOHN'S J. LEGAL COMMENT . at 456–57. Applicants filed a large number of applications in the short period before the change in patent term.

For example, in the nine days leading to June 8, 1995, the PTO reported that it received and processed over 50,000 applications—one-quarter of the entire year's projected filings. PTO Applications , 50 PAT., TRADEMARK & COPYRIGHT J. 253 (July 13, 1995). The influx from the GATT Bubble was so large that the PTO hired hundreds of patent examiners in 1995 and 1996 to process it. See Kowalski, 11 ST. JOHN'S J. LEGAL COMMENT . at 457.

Hyatt's Applications

As relevant to this appeal, Gilbert P. Hyatt is the named inventor on 399 patent applications, 381 of which he filed during the GATT Bubble. See Iancu , 332 F. Supp. 3d at 118 ; J.A. 31859. Hyatt bulk-filed the 381 applications, each one being a photocopy of one of 11 earlier parent applications. See, e.g. , J.A. 29444, 31859, 29407, 18944; Iancu , 332 F. Supp. 3d at 118. When filed, the applications contained small claim sets, many of which were identical to each other. See, e.g. , J.A. 29444, 29406–07.

This appeal specifically involves four of Hyatt's GATT Bubble applications: U.S. Patent Application No. 08/457,211 (" ’211 application"), U.S. Patent Application No. 08/456,398 ("’398 application"), U.S. Patent Application No. 08/472,062 ("’062 application"), and U.S. Patent Application No. 08/431,639 ("’639 application"). These four applications relate to various computer technologies¹ and claim priority to applications filed in the 1970s and 1980s, which pre-date the applications by a range of 12 to 25 years.²

Hyatt's GATT Bubble applications, including the four at issue here, are atypically long and complex. According to PTO data, a typical patent application contains about 20 to 30 pages. Iancu , 332 F. Supp. 3d at 124. In contrast, the ’211 and ’398 applications have 576 pages of text and 65 pages of figures; the ’062 patent includes 238 pages of text and 40 pages of figures; and the ’639 application includes 518 pages of text and 46 pages of figures. Id.

On October 24, 1995, about five months after Hyatt filed his GATT Bubble applications, PTO group Director Nicholas Godici met with Hyatt to discuss the applications. Director Godici asked Hyatt, and Hyatt agreed, to focus each application's claims on distinct subject matter. Id. at 128. Neither party memorialized the agreement at the time, but neither party disputes that it occurred. Id. ; J.A. 41516, 29348 ll. 3–14.

Between that meeting and 2003, Hyatt filed a series of amendments in his applications that grew the number of claims to a total of approximately 115,000, including approximately 45,000 independent claims. See, e.g. , J.A. 38154, 38161–62, 29555, 29444; Iancu , 332 F. Supp. 3d at 124. Hyatt's GATT Bubble applications therefore eventually contained, on average, 300 claims per application, which far exceeded the average number of claims in applications pending before the PTO. See Iancu , 332 F. Supp. 3d at 124. The four specific applications at issue here included a total of 1,592 claims, i.e., an average of 398 claims per application. See id.

Mr. Hyatt's claim amendments adding hundreds of claims per application on average meant that Hyatt had presented claims for examination between 12 and 28 years after their alleged priority dates. Specifically, Mr. Hyatt waited from 25 to 28 years to present...