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Agency May Deny Patents if Inventors Delay Process, Court Says

June 1, 2021, 5:47 PM

Serial inventor Gilbert P. Hyatt may have forfeited his right to four patents by delaying his applications at the patent office for decades, the Federal Circuit ruled.

The U.S. Court of Appeals for the Federal Circuit threw out a trial court finding that Hyatt should get the patents on computer technology from applications filed in 1995. The lower court improperly rejected the U.S. Patent and Trademark Office’s defense that Hyatt had unreasonably delayed his applications, the U.S. Court of Appeals for the Federal Circuit said in a precedential opinion.

The appeals court had never considered whether the agency can assert prosecution laches as a defense in a civil action brought by a patent applicant. Prosecution laches is an affirmative defense that may be used to bar an applicant from obtaining a patent if he unreasonably delayed prosecution in a way that constitutes an egregious misuse of the patent system.

The Federal Circuit held the agency may use the defense when applicants appeal rejections under 35 U.S.C. § 145.

“In our view it would make little sense for the PTO to have the authority to use prosecution laches as a basis for denying a patent, but to lack the authority to defend against issuance of a patent in a § 145 action on the same basis,” the court said.

‘Submarining’ Applications

Hyatt sought to get ahead of change in patent law by filing 381 applications in 1995 before the calculation of a patent’s term went from 17 years from the date of issue to 20 years from the date of application.

Keying the term to the date of issuance had incentivized “submarining,” where inventors would delay prosecution of their applications until a market for infringing products was well-established.

The change in the law “triggered a patent application gold rush in the spring of 1995,” the Federal Circuit said.

The appeal involved four of Hyatt’s applications relating to various computer technologies that are “atypically long and complex,” the court said. Hyatt waited 12 to 28 years to present claims for examination after their alleged priority dates.

Hyatt sued the patent office in the U.S. District Court for the District of Columbia to obtain the four patents after the applications were rejected.

The agency argued that Hyatt’s suit was barred by prosecution laches because he engaged in a pattern of delay in prosecuting the nearly 400 applications.

The trial court found the patent office had failed to prove prosecution laches and upheld certain claims of the patents. It ordered the agency to issue patents as to those claims, finding the delays had been the agency’s fault.

The Federal Circuit vacated the holding that prosecution laches doesn’t apply, saying the trial court focused too much on the agency’s slowness in processing Hyatt’s applications. rather than Hyatt’s own conduct.

“We believe the conclusion is inescapable that the PTO satisfied its burden of proving that Hyatt engaged in unreasonable and unexplainable delay, as prosecution laches requires,” it said.

The patent office estimated it would take over 500 years to process Hyatt’s applications, during which time it could complete over 40,000 typical applications, the court said.

The Federal Circuit sent the case back to the trial court to allow Hyatt to explain why his delay wasn’t unreasonable and unexplained.

Judge Jimmie V. Reyna wrote the opinion, joined by Judges Evan J. Wallach and Todd M. Hughes.

Baker & Hostetler LLP represented Hyatt.

The case is Hyatt v. Hirshfeld, Fed. Cir., No. 18-2390, 6/1/21.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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