An age-old axiom regarding conflict states that the best defence is a good offence. For Asian companies this axiom may have particular relevance when facing an allegation of patent infringement in the US under what is referred to as a "submarine" patent. Submarine patents are patents for inventions that, while the patent application is pending, are unknown, sometimes for decades. Prior to legislation that went into effect in 2000, this was possible because a unique feature of the US patent process kept information about an invention secret until a patent was actually granted, after which it "surfaced" and took by legal surprise any company that had in the meantime begun manufacturing and marketing a product incorporating the patented technology.
Savvy inventors and their patent practitioners used the US patent prosecution process to string out issuance of a patent until manufacturing companies independently developed and successfully marketed new products that implemented the technology disclosed in the pending application. Based on a study of these newly existing products, the long-delayed patent application would be revised and allowed to issue with claims broad enough to cover the products. Unfortunately, despite significant changes to the confidentiality provisions of the Patent Law and other changes such as those regarding patent terms, submarine patents even now surface in litigations or negotiations and lead to billions of dollars being paid by companies.
Fortunately for such companies, a Nevada District Court recently handed down a decision that may allow companies to use the age-old axiom against the "submarine" patent threat. On January 23 2004, the Nevada District Court issued a decision holding that 14 patents asserted by Lemelson Medical, Education & Research Foundation (Lemelson) were invalid and unenforceable (Symbol Technologies Inc. & Cognex Corporation vs Lemelson Medical, 2004 WL 161331 (D. Nevada)). The court concluded that the Lemelson patents, commonly known as the "machine vision" and "auto-id" patents, are unenforceable under the equitable doctrine of prosecution laches.
The basic theory of the defence of prosecution laches is that a patent can be held unenforceable because of an unusually long and unexplained delay between the filing of the original application and the issuance of the corresponding patent. An earlier Federal Circuit decision in 2002 had addressed whether the equitable doctrine of laches could act to bar enforcement of patents granted after an unreasonable delay in the Patent Office. In that case, the Federal Circuit, relying on the 1923, 1924 and 1938 Woodbridge, Webster and Crown Cork decisions of the US Supreme Court, confirmed the existence of a "prosecution laches" defence in patent law (Symbol Technologies, Inc. vs Lemelson Medical, 277 F.3d 1361 (Fed. Cir. 2002)). A review of the Supreme Court cases shows that to find a defence of prosecution laches valid, a court would have to weigh not only public policy considerations, but also i) whether there was an unreasonable and unexplained delay in the prosecution of the patent claims, and ii) whether a showing that prejudice would occur to the alleged infringer, by a loss of intervening rights, economic harm or in some other evidentiary way, had been proved. Since the 2002 Federal Circuit decision, a number of different district courts have been attempting to lay the ground rules for determining exactly what situational fact patterns result in prosecution laches.
Having both confirmed and applied the equitable defence of prosecution laches, the courts will now have an opportunity to better define this legal defence through its application to a variety of fact patterns. The Nevada District Court recognized that the Lemelson patents were an extreme example, stating "if the defence of prosecution laches does not apply under the totality of circumstances presented here, the court can envision very few circumstances under which it would". It will thus be for future courts to decide on a case-by-case basis the situational boundaries, that is the exact fact patterns and amount of prosecution delay, that result in prosecution laches.
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