Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Personalized Media Communications, LLC v. Apple Inc., No. 2021-2275 (January 20, 2023), affirming a district court’s finding of patent unenforceability based on prosecution laches, which nullified a $308 million jury verdict.
Personalized Media Communications (“PMC”) sued Apple alleging that Apple’s FairPlay technology infringed one of PMC’s patents. A Texas jury decided that Apple infringed and awarded $308 million in damages. However, subsequently, a bench trial was held on Apple’s equitable defense that the patent was unenforceable. Specifically, Apple argued that the PMC patent was unenforceable due to prosecution laches. Prosecution laches may arise where a patentee’s conduct constitutes an egregious misuse of the patent system. “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.” As to PMC’s delays during prosecution, the district court focused on the following: PMC’s delay of eight to fourteen years to file its patent applications; that hundreds of patent applications were filed in a short period of time; a delay of at least sixteen years to present the asserted claims for examination; and “vast” prior art disclosures (many having little relevance) that made prosecution “virtually impossible.” Regarding Apple’s prejudice, the district court found that Apple had begun development of FairPlay in the same year that PMC first added the technology to its patent application, which did not issue until seven years after FairPlay existed. In addition, the district court found that PMC had intentionally delayed the issuance of its patents so that “‘[o]nce infringement becomes wide-spread in an industry, the patented technology becomes so deeply embedded in commercial products that design around is not an option to infringers.’” The district court concluded that PMC’s patent was unenforceable due to prosecution laches. PMC appealed.
The Federal Circuit affirmed. The panel majority held the district court applied the correct law and that its factual findings were not clearly erroneous. Judge Stark dissented. Agreeing that PMC’s prosecution delays were both unreasonable and inexcusable, the dissent concluded that “Apple [] failed to prove that PMC unreasonably and inexcusably delayed prosecution in or after” the time Apple developed FairPlay.