Late last month, the Federal Circuit issued its opinion in Personalized Media Communications, LLC v. Apple, Inc., a case we have been following because it attracted an amicus brief. In this patent case, Personalized Media Communications challenged a district court’s decision to overturn a jury verdict based on the equitable doctrine of prosecution latches. In an opinion authored by Judge Reyna and joined by Judges Chen and Stark, the Federal Circuit affirmed the district court’s ruling.
Judge Reyna presented the facts of the case:
In 2015, Personalized Media Communications (“PMC”) sued Apple in the U.S. District Court for the Eastern District of Texas, alleging that Apple FairPlay1 infringed claim 13 (and related dependent claims) of U.S. Patent No. 8,191,091 (the “’091 patent”). J.A. 2–3 (FF 1, 5). The case went to trial, where a jury returned a unanimous verdict, finding that Apple infringed at least one of claims 13–16. J.A. 3 (FF 5). The jury awarded PMC over $308 million in reasonable-royalty damages. Id.
Thereafter, the district court held a bench trial on remaining issues and found the ’091 patent unenforceable based on prosecution laches. J.A. 1–3. Relying on our recent decision in Hyatt, the court determined that laches required a challenger to prove that the applicant’s delay was
unreasonable and inexcusable under the totality of the circumstances and that there was prejudice attributable to the delay. J.A. 28 (CL 4–7) (discussing Hyatt v. Hirshfeld, 998 F.3d 1347, 1359–62 (Fed. Cir. 2021)). Under this framework, the court found that PMC engaged in an unreasonable and unexplained delay amounting to an egregious abuse of the statutory patent system.
The court also found the length of the delay similar to Hyatt because “PMC waited eight to fourteen years to file its patent applications and at least sixteen years to present the asserted claims for examination.”
“The only notable distinction” the court found between Hyatt and this case was that “Mr. Hyatt acknowledged he lacked a ‘master plan’ for demarcating his applications” whereas PMC developed the “Consolidation Agreement” with the PTO. J.A. 34 (CL 23) . . . The court determined that the Consolidation Agreement alone does not operate to shift blame on the PTO.
The court concluded that “the only rational explanation for PMC’s approach to prosecution is a deliberate strategy of delay” and that “PMC’s actions were a conscious and egregious misuse of the statutory patent system.” J.A. 38 (CL 35). Thus, the court found that Apple met its
burden to prove the first element of laches.
The court then turned to prejudice. J.A. 38–41 (CL 36–47). The court explained that Apple had already begun developing the accused FairPlay system by 2003, the year that PMC first added the asserted technology to the ’091 patent’s predecessor. J.A. 39–40 (CL 38–43). Further, the ’091 patent issued in 2012—seven years after FairPlay had already matured into the version accused of infringement. J.A. 39 (CL 38). The court reasoned that the prosecution delays had to be understood in the context of PMC’s expressed desire to extend its patent rights as long as possible and conceal its inventions until infringement was deeply embedded into the industry. J.A. 40 (CL 45). This scheme contributed to the prejudice, which was underscored by the fact that a jury found that Apple’s FairPlay technology infringed the ’091 patent. J.A. 39 (CL 39). Thus, Apple established prejudice, and laches rendered the ’091 patent unenforceable.
PMC timely appeals the laches determination.
After providing this background, Judge Reyna first addressed PMC’s argument “that the district court erred in finding an unreasonable and inexcusable delay, such that the district court failed to consider the totality of the circumstances.” As to PMC’s contention that “‘its conduct looks nothing like Hyatt or the handful of other cases that have found prosecution laches,'” he first explained that given the equitable nature of the doctrine “PMC’s argument rests on a faulty premise: that PMC’s conduct has to look like ‘Hyatt or the handful of other [laches] cases.'” Regardless, he said, it turns out that “this case is very similar to Hyatt and prior cases, and, in some ways, involves even more egregious facts.” As for why, he explained that, “as the district court found, the record shows that PMC institutionalized its abuse of the patent system by expressly adopting and implementing dilatory prosecution strategies, specifically to ambush companies like Apple many years after PMC filed its applications.” As a result, Judge Reyna concluded, “the district court did not legally err” and it “correctly considered the totality of the circumstances and did not disregard or ignore relevant facts.”
Next, Judge Reyna addressed the second element of prosecution laches, the requirement “that the accused infringer suffered prejudice attributable to the delay.” He explained that “PMC incorrectly assumes that the district court did not find that PMC was still engaging in ‘conduct causing delays after 2003.'” And, he said, the record shows “that the district court did not err by determining that well after 2003 PMC was still implementing its express strategy of delay to ‘reserve [its] patent till the trade independently develops, and then pounce upon it for a full term.'” Moreover, Judge Reyna went on to reason, “[e]ven if the district court’s analysis had found that the period of PMC’s delay ended by 2003, the district court properly concluded that PMC’s delayed presentation of the decryption claim in 2003 prejudiced Apple because, as the court found, ‘[i]n so delaying, PMC prejudiced Apple, which had already begun investing in FairPlay’s development and continued to do so.'”
In short, in this case, the Federal Circuit held that the district court did not abuse its discretion in finding that Apple established laches, rendering the relevant patent enforceable. As a result of its analysis, the Federal Circuit affirmed the district court’s decision.