Hyatt v. Vidal

GILBERT P. HYATT, Plaintiff, v. KATHERINE K. VIDAL, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant.

Civil Action Nos. 05-2310, 09-1864, 09-1869, 09-1872

United States District Court, District of Columbia

December 23, 2022

MEMORANDUM OPINION

Royce C. Lamberth United States District Judge

This opinion concerns the complex principles underlying equitable defenses-when used by and against the government-as well as the strange circumstance of applying the Federal Rules of Civil Procedure to a trial that began in 2017 but will continue in 2023. The cases at issue arise from four of the many lawsuits brought by inventor Gilbert P. Hyatt against the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (the official and the office collectively the “PTO”). These actions seek the issuance of patents connected to four applications that were denied by the PTO.

In 2017, this Court held a bench trial where the PTO presented evidence on the affirmative defense of “prosecution laches.” That equitable doctrine allows the PTO to resist issuing a patent when the applicant has abused the patent examination system. The PTO presented its case-in-chief first, after which this Court concluded that it had not met its burden of proof and entered judgment for Hyatt without hearing additional evidence on prosecution laches. Hyatt v. Iancu 332 F.Supp.3d 113 (D.D.C. 2018) (“Hyatt I”). The Federal Circuit subsequently vacated in part and held that the PTO had met its burden. Hyatt v Hirshfeld, 998 F.3d 1347 (Fed. Cir. 2021) (“Hyatt II”). It then remanded the case for this Court to conduct further proceedings.

Having stopped the bench trial before Hyatt had a chance to present his case, this Court must provide Hyatt that opportunity. The Federal Circuit has made clear that he now bears the burden of proof. Hyatt II, 998 F.3d at 1370-72. And, with an eye toward Hyatt's likely proof, the PTO now moves in limine to exclude evidence “regarding Defendant's unclean hands, laches, and administrative delay” as well as the testimony of four of Hyatt's proposed witnesses. Def.'s Mot., ECF No. 296.^[1]

Upon consideration of the briefing, the applicable law, and the record, this Court will GRANT IN PART AND DENY IN PART the PTO's motion. The Court will bar Hyatt from introducing evidence to prove that the unclean hands doctrine, which is unavailable to him, should apply to the PTO. However, the Court will allow Hyatt to introduce evidence about PTO conduct for other relevant purposes and allow him to call his four proposed witnesses.

I. BACKGROUND

This Court, and the Federal Circuit, have already voluminously explained the background of this case. See Hyatt I 332 F.Supp.3d at 117-20; Hyatt II, 998 F.3d at 1351-60. Therefore, the Court will only briefly review the most important parts of the factual and procedural history in order to set the stage for resolution of the PTO's motion in limine.

A. The GATT Bubble

“Prior to 1995, a patent's term was measured as 17 years from the date of issuance.” Hyatt II, 998 F.3d at 1351. That all changed in 1994 when the United States signed the Agreement on Trade-Related Aspects of Intellectual Property (“TRIPS Agreement”) at the Uruguay Round of the General Agreement on Tariff and Trade (“GATT”). Id. at 1352. Under the new regime, a patent's term would be measured as 20 years from the date of filing. Id. The impetus for the change? “Submarine patents.” Id. at 1351-52. That is, patents resulting from “certain patentees [] delay[ing] prosecuting their patents.” Id. They are termed submarine patents because, while an application is pending, the underlying patent is metaphorically “submerged.” See id. When a patent then issues, it has, to continue the metaphor, suddenly surfaced and surprised the relevant product market. See id. “By doing so, patentees could obtain a patent at a financially desirable time when the accused product market had become suitably developed.” Id. This practice created significant administrative burdens for the PTO and threatened to harm industry expectations. Id. at 1352.

When Congress implemented TRIPS in 1994, it set June 8, 1995, as the date for the switchover of the patent term regime. Id. This impending shift led to a massive increase in patent applications in the days leading up to the switch from date of filing to date of issuance. Id. “[I]n the nine days leading to June 8, 1995, the PTO reported that it received and processed over 50,000 applications-one-quarter of the entire year's projected filings.” Id. at 1353. This avalanche of applications is known as the “GATT Bubble.” Id.

B. Gilbert Hyatt's Patent Applications

The plaintiff here “is the named inventor on 399 patent applications, 381 of which he filed during the GATT Bubble.” Id. “Hyatt's GATT Bubble applications, including the four at issue here, are atypically long and complex,” involving hundreds of pages of text and dozens of pages of figures, compared to the typical application of “20 to 30 pages.” Id. “On October 24, 1995, about five months after Hyatt filed his GATT Bubble applications, PTO group Director Nicholas Godici [informally] met with Hyatt . . . and Hyatt agreed[] to focus each application's claims on distinct subject matter.” Id. “Between that meeting and 2003, Hyatt filed a series of amendments in his applications that grew the number of claims to a total of approximately 115,000, including approximately 45,000 independent claims.” Id.

From 2003 to 2012, examination of the applications was stayed due to Hyatt's challenges to various PTO decisions and procedures. Id. at 1354 & n.3. In 2013, the PTO began examining the applications again and “the PTO created an art unit, comprised originally of 12 experienced examiners, dedicated to examining Hyatt's applications.” Id. at 1354. The PTO made a variety of choices to facilitate that examination process, including notifying Hyatt regarding certain “Requirements” that would streamline prosecution of his applications. Id. at 1354-55.

The four cases at issue here, however, deal with only four of those applications- specifically, the ‘639 application, ‘211 application, ‘398 application, and ‘062 application. Id. at 1353. Each of the four “‘applications' claims were finally rejected and reviewed on appeal by the Board of Patent Appeals and Interferences [] which affirmed rejections of certain claims in each application.” Id. at 1355. No application was rejected during that process on the grounds of prosecution laches. Id.

C. History of this Lawsuit

In November 2005, Hyatt filed an action in this Court seeking to obtain a patent for one of those applications. Id. In September 2009, he filed three more lawsuits seeking patents for three additional rejected applications. Id.

In 2016, the PTO moved to dismiss all the cases on the grounds of prosecution laches. Id. at 1356. Prosecution laches “is an equitable affirmative defense” which “may ‘render a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution that constitutes an egregious misuse of the statutory patent system under a totality of the circumstances.'” Id. at 1359-60 (quoting Cancer Rsch. Tech. Ltd. v. Barr Lab'ys, Inc., 625 F.3d 724, 728 (Fed. Cir. 2010)). Under the PTO's theory, Hyatt “engaged in a ‘pattern of delay in prosecuting his nearly 400 patent applications from 1969 through the present day.'” Id. at 1356 (citation omitted). After Hyatt responded to the government's motion, this Court treated the motions to dismiss as motions for summary judgment, determined that there were genuine issues of material fact, and sat for a consolidated bench trial on whether prosecution laches barred patents in all four cases. Id.

Because prosecution laches is an affirmative defense, the parties agreed to have the PTO present its case-in-chief first. Hyatt I, 332 F.Supp.3d at 118. This order would allow the Court to determine whether the PTO had even established a prima facie case before requiring Hyatt to present his case. “During the five trial days beginning October 6, 2017, during which the PTO presented its case in chief, the PTO presented the testimony of three witnesses: Robert A. Clarke, Gregory Morse, and Stephen Kunin, its expert witness. The parties also introduced a number of exhibits.” Id. During the trial, this Court granted a motion by the PTO barring evidence of the equitable doctrine of unclean hands with a promise to “revisit [the ruling] when and if we get to the defendant's case.” ECF No. 296-2. That time never arrived.

At the end of PTO's case-in-chief, Hyatt moved for the Court to enter judgment under Federal Rule of Civil Procedure 52(c), which allows a court to enter judgment against a party fully heard “on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.” Fed.R.Civ.P. 52(c); see Hyatt I, 332 F.Supp.3d at 119. This Court then concluded that “the PTO failed to prove unreasonable and unexplained delay that supports a finding of prosecution laches” and granted Hyatt's motion. Hyatt I, 332 F.Supp.3d at 119.^[2]

On appeal, the Federal Circuit vacated in part the Court's judgment on prosecution laches. Hyatt II, 998 F.3d at 1372. It concluded that the Court erred in granting the Rule 52(c) motion because the PTO carried its burden to demonstrate that there was an unreasonable and inexcusable delay as well as that there was prejudice because of the delay. Id. at 1371-72. The Circuit then “remand[ed] to the district court for the limited purpose of affording Hyatt the opportunity to present evidence on the issue of prosecutio...