In the appeal from the remand decision of the Nevada district court on the issue of prosecution laches, the U.S. Court of Appeals for the Federal Circuit has upheld the district court’s decision, holding the Lemelson patents unenforceable under the doctrine of prosecution laches. Symbol Technologies, Inc. v. Lemelson Foundation, LP, Case No. 04-1451 (Fed. Cir. Sept. 5, 2005) (Lourie, J.). This case, involving 14 patents relating to machine vision and automatic bar code identification technology, has been the subject of years of litigation and has generated more than $1 billion dollars in royalties and settlements. Its implications are likely to be far-reaching.
Symbol I
Symbol and its co-plaintiffs design, manufacture and sell bar code scanners and related machine vision products, including laser and charged coupled device (CCD) bar code readers. In 1998, Symbol’s customers began receiving letters from Lemelson stating that the use of the plaintiff’s products infringed various Lemelson patents. Symbol filed a declaratory judgment action against Lemelson seeking, among other things, a judgment that the patents were unenforceable for prosecution laches.
After the district court dismissed Symbol’s prosecution laches claim, Symbol filed an interlocutory appeal, and the Federal Circuit reversed the district court, rejecting Lemelson’s arguments that the defense of prosecution laches was limited to claims arising out of interference proceedings and that the passage of the 1952 Patent Act, with its provisions for filing continuation and continuation-in-part applications, foreclosed the application of laches. Rather, the Federal Circuit held Symbol’s defense of prosecution laches was legally viable and remanded the case to the district court (Symbol I).
On remand, the district court, applying the totality of the circumstances test announced in Symbol I, held Lemelson’s patents were unenforceable due to prosecution laches noting "unreasonable delay alone is sufficient to apply prosecution laches, without the requirement that Lemelson intended to gain some advantage by the delay." However, in applying the doctrine of prosecution laches, the district court also found Symbol had presented "strong evidence . . . of intervening private and public rights" and that "Lemelson’s 18 to 39 year delay in filing and prosecuting the asserted claims under the fourteen patents-in-suit . . . was unreasonable and unjustified and that the doctrine of prosecution laches renders the asserted claims unenforceable." Lemelson appealed.
Symbol II
The Federal Circuit, explaining the doctrine of prosecution laches is an equitable defense reviewed under the abuse of discretion standard, held the district court did not abuse its discretion in holding Lemelson’s patents unenforceable under the doctrine of prosecution laches.
The Federal Circuit distanced itself from the district court’s "unreasonable delay alone" is enough statements, noting:
[T]here are legitimate grounds for refiling a patent application which should not normally be grounds for a holding of laches, and the doctrine should be used sparingly lest statutory provisions be unjustifiably vitiated. The doctrine should be applied only in egregious cases of misuse of the statutory patent system.
However, applying the "totality of the circumstances test" and considering the prosecution history of Lemelson’s related patents and the accumulated delay, Judge Lourie explained that Lemelson went astray by "refiling an application solely containing previously allowed claims for the business purpose of delaying their issuance." The Court found the "multiple examples of repetitive refilings . . . demonstrate a pattern of unjustifiably delayed prosecution [that] may be held to constitute laches."
Referring to the 18- to 39-year time period between the filing and issuance of the patents in suit, the Court noted "[t]hat period of time is not what is contemplated by the patent statute when it provides for continuation and continuation-in-part applications. Patent applications should normally be permitted to issue when they have been allowed and the statutory requirements complied with."
The Federal Circuit also noted the supportive findings of the district court that Lemelson "recognized the adverse effect on businesses that were unable to determine what was patented from what was not", and that "the Lemelson patents occupied the ‘top thirteen positions’ for the longest prosecutions from 1914 to 2001." Thus, the Federal Circuit echoed the district court’s conclusion that "[i]f the defense of prosecution laches does not apply under the totality of circumstances here, the Court can envision very few circumstances under which it would."
Practice Note: Based on this ruling, the travails of the Lemelson Foundation appear to be just beginning. Over the years, it is estimated that the Lemelson Foundation has signed up 1,000 licensees, many of whom may now file suit attempting to cancel agreements or to recover previously paid royalties.
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