Personalized Media Communications, LLC v. Apple Inc.
Docket No. 2021-2275 (https://cafc.uscourts.gov/opinions-orders/21-2275.OPINION.1-20-2023_2066571.pdf)
REYNA, CHEN, STARK
January 20, 2023
Brief Summary: DC decision of prosecution laches (unreasonable and inexcusable delay by PMC and prejudice to Apple) affirmed.
Summary: Personalized Media Communications (“PMC”) appealed DC finding that US 8,191,091 is unenforceable based on prosecution laches (“an equitable affirmative defense dating back to the early 1900s”), finding PMC “successfully employed an inequitable scheme to extend its patent rights.” PMC alleged that Apple’s FairPlay digital rights management software that uses decryption keys to prevent copying songs from iTunes. The DC jury initially returned a unanimous verdict finding Apple infringed the patent and awarding PMC over $308 million in damages. The DC then held a bench trial and rendered its unenforceability judgment relying on the FC’s 2021 Hyatt decision regarding “GATT-Bubble applications” (applications filed before the change in patent term from 17 years from issuance to 20 years from filing) (Hyatt v. Hirshfeld, 998 F.3d 1347, 1359–62 (Fed. Cir. 2021)). Like Hyatt (which filed 381 GATT-Bubble applications “where each application was a photocopy of one of 11 earlier patent applications”), PMC filed 328 GATT-Bubble applications that derive from two earlier applications that, “[s]imilar to Hyatt”, “were ‘atypically long and complex,’” included a single claim that was later amended to “the range of 6,000 to 20,000 claims.” The DC also found PMC’s prosecution delay to be similar to Hyatt as PMC waited 8-14 years to file its applications and at least 16 years “to present the asserted claims for examination”, making “it virtually impossible for the PTO to conduct double patenting, priority, or written description analyses”, and made “vast prior art disclosure[s], which included references having little-to-no relevance”. The PTO did suspend prosecution of PMC’s applications but only after “prosecution had been pending for ‘nearly ten years’”. Unlike in Hyatt, “PMC developed the ‘Consolidation Agreement’ with the PTO” with “A” and “B” applications, where A applications were prioritized, which the DC found not to “operate to shift the blame on the PTO” and to be a “business-driven, unreasonable prosecution strategy”. The DC also considered prejudice against Apple which “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”, and that “the ’091 patent issued in 2012—seven years after FairPlay had already matured into the version accused of infringement” (e.g., PMC “conceal[ed] its inventions until infringement was deeply embedded into the industry”). The FC panel found the DC did not abuse its discretion in its determination. The FC panel explained that “[l]aches is an equitable and flexible doctrine that requires considering the totality of the circumstances”, that this case “involves even more egregious facts” than Hyatt, the Consolidation Agreement led to a “drawn-out prosecution”, “a delay by the PTO cannot excuse the appellant’s own delay”, the number of applications is relevant, PMCs amendments were unreasonably delayed, and the DC’s factual findings were not an abuse of discretion. The FC panel also concluded the DC correctly found PMC’s strategy was in place “well after 2003” when FairPlay was being developed by Apple and that this prejudiced Apple (citing Victor Talking Mach. Co. v. Thomas A. Edison, Inc., 229 F. 999, 1000–01 (2d Cir. 1916)). Judge Stark dissented, agreeing that PMC’s delay in prosecution was unreasonable and inexcusable, but disagreeing that Apple did not have “to show that is suffered prejudice” (citing, e.g., Cancer Rsch. Tech. Ltd. v. Barr Labs., Inc., 625 F.3d 724, 728-29 (Fed. Cir. 2010); the 2021 Hyatt decision; PPC Broadband, Inc. v. Corning Optical Commc’ns RF, LLC, 815 F.3d 734, 740 (Fed. Cir. 2016); and In re Zletz, 893 F.2d 319, 321 (Fed. Cir. 1989)).