Amicus Curiae Brief — International Game Technology v. Aristocrat Technologies Australia Pty, Ltd. (No. 08-1051)

24 FILED

MAR 2 3 2009

No. 08-1051 OFF!

QFEICE OF THE CLERK

ES AR WEBI ae tt U.S.

IN THE

Supreme Court of the United States

INTERNATIONAL GAME TECHNOLOGY AND IGT,

Petitioners,

Vv.

ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LIMITED

AND ARISTOCRAT TECHNOLOGIES, INC.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR CISCO SYSTEMS, INC., DELL INC.,

GOOGLE INC., MICROSOFT CORPORATION,

NETGEAR, INC., AND SAP AMERICA, INC.

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

CHRISTOPHER J. MEADE WILLIAM F. LEE

ALAN E. SCHOENFELD DAVID B. BASSETT

WILMER CUTLER PICKERING MARK C. FLEMING

HALE AND DORR LLP Counsel of Record

399 Park Avenue WILMER CUTLER PICKERING

New York, NY 10022 HALE AND DORR LLP

(212) 230-8800 60 State Street

Boston, MA 02109

(617) 526-6000

Oi

QUESTION PRESENTED

Whether a patent infringement defendant may as-

sert as a defense the fact that the patent resulted from

an abandoned application that was not revived accord-

ing to the requirements prescribed by Congress.

TABLE OF CONTENTS

QUESTION PRESENTED

TABLE OF AUTHORITIES

INTEREST OF THE AMICI CURIAE

SUMMARY OF THE ARGUMENT

ARGUMENT

{. THE FEDERAL CIRCUIT’S DECISION IS

CONTRARY TO THE PATENT ACT

A. The Federal Circuit Disregarded Con-

gress’s Requirement Of Diligence In

FOIE iki nsstedinniciicDiasipnrciataninisioticiatieininctsei o

The Federal! Circuit’s Statement That

Applicants Lacked Any Incentive To

Violate The Abandonment And Re-

vival Provisions Was Both Inapposite

And Incorrect

1. The Federal Circuit should not ex-

cuse statutory violations based

only on its own inability to “dis-

cern” an “incentive” for noncompli-

Applicants have substantial incen-

tives to manipulate the system

It. THIS CASE IS OF SIGNIFICANT NATIONAI

CTT BIEN goo ivciesaxuceddcetén:shesccke

CONCLUSION

1V

TABLE OF AUTHORITIES

CASES

Atlantic Works v. Brady, 107 U.S. 192 (1883)

Brasseler, U.S.A. I, L.P. v. Stryker Sales

Corp., 267 F.3d 1370 (Fed. Cir. 2001)

Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d

1359 (Fed. Cir. 2007)

Creo Products, Inc. v. Presstek, Inc., 166 F.

Supp. 2d 944 (D. Del. 2001), aff'd, 305 F.3d

De Be ED coc sucaancnidvi dois cacas wskadetcaubacesicanukic 12

Day-Brite Lighting Inc. v. Missouri, 342 US.

421 (1952)

Dethmers Manufacturing Co. v. Automatic

Equipment Manufacturing Co., 272 F.3d

1365 (Fed. Cir. 2001)

ImscoVision Associates v. Disc Manufacturing

Inc., 42 U.S.P.0.20 1749 (D. Del. 1997)..............2.0:. 15

eBay Inc. v. MercE xchange, LLC, 547 U.S. 388

(2006)

Field Hybrids, LLC v. Toyota Motor Corp., No.

CIV.03-4121, 2005 WL 189710 (D. Minn.

i aaa aa AE NT )

Giese v. Pierce Chemical Co., 43 F. Supp. 2d 98

CR, I sn ctiscce nse nec vea din vitvnesartesavsanantisciaepicbhentes 12

Graham v. John Deere Co, 8838 U.S. 1 (1966) 2............5, 6

In re Fisher, 421 F.3d 1365 (Fed. Cir. 2005)

In re Longi, 759 F.2d 887 (Fed. Cir. 1985)...............0.c00 13

V

TABLE OF AUTHORITIES—Continued

Page(s)

In re Metoprolol Succinate Patent Litigation,

BSG FB TOT) COG. Cir. BOT) cccivccscccccessssessencssacoceees 13

Lawman Armor Corp. v. Simon, No. 04-CV-

72260, 2005 WL 1176973 (E.D. Mich. Mar.

29, 2005)

Mahn v. Harwood, 112 U.S. 354 (1884)... 9,13

McClurg v. Kingsland, 42 U.S. (1 How.) 202

Monroe v. Standard Oil Co., 452 U.S. 549

(1981)

New York University v. Autodesk, Inc., 466 F.

Supp. 2d 563 (S.D.N.Y. 2006)

Nupla Corp. v. IXL Manufacturing Co., 114

F.3d 191 (Fed. Cir. 1997)

Overland Motor Co. v. Packard Motor Car Co.,

274 U.S. 417 (1927)

Parker v. Flook, 37 U.S. 584 C1978) ......ccccocccccesccccccccsccess f

Pfizer, Inc. v. Teva Pharmaceuticals USA,

Inc., 518 F.3d 1253 (Fed. Cir. 2008).........ccses.cccceccose 13

Pratt & Whitney Co. v. United States, 345 F.2d

838 (Ct. Cl. 1965)......... [samba disdendcadenbodieupadimenatincas coins 10

Quantum Corp. v. Rodime, PLC, 65 F.3d 1577

(Fed. Cir. 1995)

Slimfold Manufacturing Co. v. Kinkead In-

dustries, Inc., 982 F.2d 1458 (Fed. Cir.

1991)

vi

TABLE OF AUTHORITIES—Continued

Page(s)

Sony Corp. of America v. Universal City Stu-

dios, inc., 464 U.S. 417 (1984)

Symbol Technologies, Inc. v. Lemelson Medi-

cal, Educational & Research Foundation,

422 FBG ASTS CHS], Cir. BOOB) .cccocccccoscosccceccess 9 10, 19

Thermalloy, Inc. v. Aavid Engineering, Inc.,

BEL FIG Gol COG. Cir. TBBT) ...ccccsccccssccecoscscsserescccsess 12

United States v. American Bell Telephone Co.,

167 U.S. 224 (1897)

United States ex rel. Bernardin v. Duell, 172

U.S. 576 (1899)

Warner-Jenkinson Co. v. Hilton Davis Chemi

er ee ee Oe Ts sunouncuassancoueceueons 5

Webster Electric Co. v. Splitdorf Electrical Co.,

PI oc nstasnes ocsisscniacanessandcinvsscnnuerenssene 9,14

Woodbridge v. United States, 263 U.S. 50 (1928)......9, 11

Woodbury Patent Planing-Machine Co. v

Keith, 101 U.S. 479 (1879) ae

STATUTES AND REGULATIONS

35 U.S.C.

NE 5A ie cic ctiskmnancietbasansecrassindanbasdesiioss earl

Sr SK SK Li SH LP

vil

TABLE OF AUTHORITIES—Continued

37 C.F.R. § 1.175

LEGISLATIVE MATERIALS

143 Cong. Rec. H1629 (daily ed. Apr. 17, 1997)............. Li

144 Cong. Ree. $8377 (daily ed. July 16, 1998)

OTHER AUTHORITIES

Bessen, James & Michael J. Meurer, Patent

| RRR INR eee etn MAIO CoA REED Ee PCS 19

Federal Trade Commission, 7'o Promote I[nno-

vation: The Proper Balance of Competition

and Patent Law and Policy (2004) ........:ccceceeceeeee lf

http://des.uspto.gov/Foia/DispatchA BServlet?c

ourtID=2%7E U.S.+Court+of+A ppeals+for

+the+Federal+Circuit&fiscal Y ear=fcaseN

o-&title=~&docTextSearch-&page-60

Lemley, Mark A., An Empirical Study of the

Twenty-Year Patent Term, 22 AIPLA Q.J.

369 (1994)

Long, Clarisa, /nformation Costs in Patent

and Copyright, 90 Va. L. Rev. 465 (2004)

Miller, Samuel C., III, Undue Delay in the

Prosecution of Patent Applications, 74 J.

Pat. & Trademark Off. Soc’y 729 (1992)................. 16

U.S. Patent & Trademark Office, Manual of

Patent Examining Procedure (2008)

IN THE

Supreme Court of the United States

No. 08-1051

INTEKNATIONAL GAME TECHNOLOGY AND IGT,

Petitioners,

ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LIMITED

AND ARISTOCRAT TECHNOLOGIES, INC.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR CISCO SYSTEMS, INC., DELL INC.,

GOOGLE INC., MICROSOFT CORPORATION,

NETGEAR, INC., AND SAP AMERICA, INC.

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

INTEREST OF THE AMICI CURIAE'

Amici are leading businesses in the information

technology, software, networking, computer, and

Internet industries. Amici hold thousands of patents

that have been prosecuted in compliance with the Pat

a ;

No counsel for any party authored this bnef in whole or in

part, and no pe ms or entities, other than amici, their members,

or their counse a monetary contribution to the preparation

or submission ef ‘fis brief. Counsel of record for each party re-

ceived timely notice of intent to file this brief. Letters from the

parties consenting to the filing of this brief are on file with the

Clerk.

2

ent Act, 35 U.S.C. §§ 101 et seg. Amici are also fre-

quent targets of infringement lawsuits based on pat-

ents of questionable validity, including patents result-

ing from applications that were abandoned and later

“revived.” Amici have a strong interest in ensuring

that patent monopolies are not extended beyond the

limits that Congress has prescribed and that abandoned

applications are not used to stifle legitimate competi-

tion and innovation.

Amici support the arguments made in the petition

for certiorari. In this brief, @micz present additional

reasons why the Federal Circuit’s decision conflicts

with the plain language of the Patent Act, the decisions

of this Court, and the salutary purposes of the patent

system.

SUMMARY OF THE ARGUMENT

Congress’s authority to impose limits on patent

rights is unquestioned, and “[nJo court can disregard

any statutory provisions in respect to [patent] matters

on the ground that in its judgment they are unwise or

prejudicial to the interests of the public.” United

States v. American Bell Tel. Co., 167 U.S. 224, 247

(1897). The Constitution grants Congress plenary

power over matters of patent law. In light of this ex-

press authority and of Congress’s superior ability to

make patent policy in response to changing industrial

circumstances, the federal courts must adhere to Con-

gress’s policy judgments as implemented in the patent

law. In this case, the Federal Circuit disregarded Con-

gress’s limitations on the patent monopoly instead of

applying them. If left unchecked, that decision will ex-

acerbate the already serious problem of costly in

fringement litigation against U.S. industry based on

patents that should never have issued.

Congress has long required patent applicants to

prosecute their applications diligently. That require-

ment is implemented through statutory deadlines that,

if not met, lead to abandonment of the application,

which cannot be cured except (as relevant here) if the

applicant proves that the delay was “unavoidable.” 35

U.S.C. §§ 183, 371(d). Here, the district court found

that Respondents abandoned their application and

failed to meet the statutory standard for revival. The

Federal Circuit overlooked those violations because, it

held, an infringement defendant cannot challenge the

patent-in-suit due to abandonment and improper re-

vival.

The Federal Circuit’s decision dismissed Con-

gress’s deadlines as “minor” and “procedural.” Pet.

App. lla. But as this Court has held, prosecution dead-

hnes,and revival standards reflect Congress’s judgment

regarding the level of diligence required of parties who

pursue a patent monopoly. The Iederal Circuit’s deci-

sion improperly expands that monopoly.

The decision also untenably exalts judicial assess-

ments over Congress’s determination of what consti-

tutes undue delay in patent prosecution. The judicial

doctrine of “prosecution laches” allows invalidation of a

patent-in-suit if the court believes that the applicant

engaged in an unreasonable delay. There is no reason

Lo forbid a similar defense where Congress, rather than

a court, has determined that the applicant’s delay was

unreasonable and unjustifiable.

The Federal Circuit based its decision on the asser-

tion that it could “discern” no “legitimate incentive” for

an applicant to seek unlawful revival of an abandoned

application. Pet. App. 13a. But the court’s inability to

“discern” incentives is no basis for second-guessing

Congress’s judgment. The court ignored significant 2/

legitimate incentives for a party to abandon an applica-

tion and then, to further its financial! interests, reviving

it by circumventing the requirements of the Act and

using the resulting patent to sue industries that have

matured since the original application was abandoned.

The Federal Circuit’s decision will encourage appli-

cants to manipulate the system and will deprive in-

fringement defendants of a necessary defense against

improperly issued patents, thereby hampering innova-

tion and competition.

Hundreds of patents issue each year from aban-

doned applications that are later revived under a stan

dard that, as the district court held, violates the Patent

Act. The Federal Circuit’s decision condones such vio-

lations by placing them beyond correction. The deci-

sion may also imperil other infringement defenses for

which the Federal Circuit might not “discern” sufficient

policy justification. The Court should grant certiorari

and reverse the judgment below.

ARGUMENT

THE FEDERAL CIRCUIT’S DECISION IS CONTRARY TO THE

PATENT ACT

Innovative technology companies too often face in

fringement suits based on patents that, under the plain

language of the Patent Act, should never have issued.

The Federal Cireuit’s ruling allows such lawsuits to

proceed, to the significant detriment of progress and

innovation and contrary to Congress’s express limita

tions on the patent monopoly. The Court should grant

eertiorari and reaffirm that Congress’s policy judg

ments, as reflected in the statutory abandonment and

revival provisions, are to be given effect, not disre

garded by courts.

A. The Federal Circuit Disregarded Congress’s Re-

quirement Of Diligence In Prosecution

Where Congress has spoken on matters of patent

law, courts must implement Congress’s policy judg-

ment, not their own. The power of Congress to legis-

late in patent matters is limited only by the terms of

the Constitution. McClurg v. Kingsland, 42 U.S. (1

How.) 202, 206 (1848). “Within the limits of the consti-

tutional grant, the Congress may, of course, implement

the stated purpose of the Framers by selecting the pol-

icy which in its judgment best effectuates the constitu-

tional aim.” Graham v. John Deere Co., 3838 U.S. 1, 6

(1966).

In making patent policy, “[Clongress may provide

such instrumentalities in respect of securing to inven-

tors the exclusive right to their discoveries as in its

judgment will be best calculated to effect that object.”

United States ex rel. Bernardin v. Duell, 172 U.S. 576,

583 (1899). As this Court has repeatedly acknowl-

edged, Congress is best situated to effect the “difficult

balance between the interests of authors and inventors

in the control and exploitation of their writings and dis-

coveries on the one hand, and society’s competing in-

terest in the free flow of ideas, information, and com-

merce on the other hand.” Sony Corp. of Am. v. Uni-

versal City Studios, Inc., 464 U.S. 417, 429 (1984); see

also Parker v. Fook, 437 U.S. 584, 595 (1978) (“Diffi-

cult questions of policy concerning the kinds of pro-

yrams that may be appropriate for patent protection

and the form and duration of such protection can be an-

swered by Congress on the basis of current empirical

data not equally available to this tribunal.”). Accord

ingly, this Court has held, “policy arguments” in the

area of patent law are “best addressed to Congress, not

this Court.” Warner-Jenkinson Co. v. Hilton Dardis

6

Chemical Co., 520 U.S. 17, 28 (1997); see also In re

Fisher, 421 F.3d 1365, 13878 (Fed. Cir. 2005) (dismissing

arguments as “public policy considerations which are

more appropriately directed to Congress as the legisla-

tive branch of government”). The courts’ role is limited

to “giv[ing] effect to the constitutional standard by ap-

propriate application, in each case, of the statutory

scheme of the Congress.” Graham, 383 U.S. at 6.

The Federal Circuit disregarded Congress’s com-

mand, made plain in 35 U.S.C. 8§ 188 and 371(d), that

parties seeking to obtain a patent exercise diligence in

prosecuting applications. The Federal Circuit held that

applicants who clearly—and even deliberately—

abandoned their applications, yet later procured their

revival in violation of the statute, not only would obtain

patents but would have their violations overlooked in

later infringement litigation. The Federal Circuit’s de-

cision improperly expands the patent monopoly.

Congress has long required an applicant to meet

specific deadlines in order to earn a patent. In 1870,

Congress provided that, if an applicant failed to prose

cute its application within two years of any Patent Of-

fice action, the application “shall be regarded as aban

doned ... unless shown to the satisfaction of the com-

missioner that such delay was unavoidable.” Patent

Act of 1870, § 32, 16 Stat. 198, 202. Congress reduced

the response period to one year in 1897 and to six

months in 1927. See Overland Motor Co. v. Packard

Motor Car Co., 274 U.S. 417, 422-423 (1927) (discussing

the Act’s history).

The modern Act retains this requirement: an applhi-

cant must “prosecute the application within six months

after any action therein,” or else the application will be

“regarded as abandoned ... unless it be shown to the

7

satisfaction of the Director that such delay was un-

avoidable.” 35 U.S.C. § 138. Congress adopted a simi-

lar provision—also applicable here—for applications

pursuant to the Patent Cooperation Treaty, requiring

that certain steps (including payment of a “national

stage fee”) be taken “by the date of commencement of

the national stage” and that failure to comply “shall be

regarded as abandonment of the application ... unless it

be shown to the satisfaction of the Director that such

delay was unavoidable.” /d. § 371(d).

As this Court has observed, Congress’s determina-

tion that applications not prosecuted within specified

time periods are deemed abandoned, as well as the lim-

ited situations tn which abandoned applications may be

revived, “show{] the intention of Congress to require

diligence in prosecuting the claims to an exclusive [pat-

ent] right.” Woodbury Patent Planing-Mach. Co. v.

Keith, 101 U.S. 479, 485 (1879). Section 188 and related

sections fix “the measure of reasonable promptness” in

patent prosecution. Overland Motor, 274 US. at 424.

An applicant must accordingly be “vigilant and active

in complying with the statutory conditions.” Wood-

bury, 101 U.S. at 4&5.

In this infringement action, the district court held

that Respondents failed to comply with the deadlines in

Sections 133 and 371(d). Pet. App. 49a-54a. Although

the Patent and Trademark Office (PTO) purported to

“revive” the application, the district court held that the

revival violated the Patent Act, because the PTO had

not required Respondents to show that their delay was

“unavoidable”: instead, the PTO allowed revival based

merely on Respondents’ declaration that the delay was

“unintentional.” /d. at 54a (citing 35 U.S.C. §§ 138,

371(d)). The Federal Circuit did not disturb the district

8

court’s conclusion that the PTO’s revival of the applica-

e - ° ° 7

tion was an abuse of discretion.*

Instead, the Federal Circuit held that, even assum-

ing that the application was abandoned and not lawfully

revivable, Respondents’ failure to comply with Sections

133 and 371(d) was of no consequence because “im-

proper revival may not be asserted as a defense in an

action involving the validity or infringement of a pat-

ent.” Pet. App. 10a. In so ruling, the Federal Circuit

referenced the risk that “any prosecution irregularity

or procedural lapse, however minor,” could become a

basis for an invalidity argument. /d. at lla.

The Federal Circuit erred in its apparent belief

that Congress’s deadlines for patent prosecution and

standards for revival are “minor” issues that courts

may freely disregard. Whether characterized as “pro-

cedural” or not, Sections 183 and 3871(d) implement

Congress’s judgment as to what “measure of reason-

able promptness” is required of parties who pursue a

patent monopoly. Overland Motor, 274 U.S. at 424. As

this Court has stated, that subject matter is “entirely

within the control of Congress” (7d. at 423), and “[nJlo

court can disregard any statutory provisions in respect

to these matters on the ground that in its judgment

they are unwise or prejudicial to the interests of the

~ Because the Federal Circuit did not address the PTO’s deci-

sion to revive the patent application even though the delay was not

shown to be “unavoidable,” amict do not address the issue. We

note, however, that the district court’s conclusion that the PTO

abused its discretion in applying an “unintentional” standard for

revival is consistent with both the plain language of Sections 133

and 371(d) and Congress’s decision to leave the “unavoidable”

standard unchanged since 1870. See Pet. App. 32a-1la.

9

public” (United States v. American Bell Telephone Co.,

167 U.S. 224, 247 (1897)). At least four district courts

have recognized that an infringement defendant may

assert abandonment and improper revival as a de-

fense.°

The Federal Circuit’s decision produces the unten-

able result that a defendant may rely on a court’s

judgment that an applicant’s delay in prosecution was

excessive, but not on Congress’s judgment as ex-

pressed in the statute. Both this Court and the Federal

Circuit have recognized that an infringement defendant

may assert that the patent-in-suit is unenforceable be-

cause the applicant inexcusably delayed in prosecution,

even if the applicant complied with all statutory re-

quirements. This defense, known as “prosecution la-

ches,” is directed to “an abuse of statutory provisions

that results, as a matter of equity, in ‘an unreasonable

and unexplained delay in prosecution.’” Pet. App. 10a-

lla n. 4 (quoting Sy:bol Techs., Inc. v. Lemelson Med.,

Educ. & Research Found., 422 F.3d 1378, 1385 (Fed.

Cir. 2005))."

” See Pet. App. 54a; New York Univ. v. Autodesk, Inc., 466 F.

Supp. 2d 563, 565 (S.D.N.Y. 2006); Lawman Armor Corp. v.

Simon, No. 04-CV-72260, 2005 WL 1176978, at *6 (F.D. Mich. Mar.

29, 2005); Field Hybrids, LLC v. Toyota Motor Corp., No. CIV. 03-

4121, 2005 WL 189710, at *5 (D. Minn. Jan. 27, 2005).

’ See also Overland Motor, 274 U.S. at 424 (recognizing de

fense of “abandonment by laches” in an infringement case); Web-

ster Elec. Co. v. Splitdorf Elec. Co., 264 U.S. 463, 465 (1924) (hold-

ing a patent invalid because of “unreasonable delay and neglect on

the part of the applicant and his assignee’); Woodbridge v. United

States, 263 U.S. 50, 55 (1923) (affirming judgment that applicant

“forfeited or abandoned his right to a patent by tus delay and la-

ches.”); Mahn v. Harwood, 112 U.S. 354, 362 (1884) (where the

10

There is no basis for recognizing a laches defense

based on judicial notions of “unreasonable and unex-

plained delay” in prosecution, yet barring a defense

based on statutory provisions directed to the same con-

cern. Such a situation would promote judicial determi-

nations of unreasonable delay over Congress’s own. A

fortiori, a party must be able to assert noncompliance

with the abandonment and revival statutes as a defense

in an infringement suit.

The Federal Circuit’s decision is particularly prob-

lematic because it forbids defendants from arguing that

a revival was improper even if the applicant deliber-

ately abandoned the application. Revival following in-

tentional abandonment is hardly unlikely, given that

the PTO permits revival merely upon a declaration that

the delay was “unintentional,” without requiring appli-

cants to provide any information or evidence support-

ing the declaration except in the rare situation that the

PTO notices “a question whether the delay was unin-

tentional.” PTO, Manuai of Patent Examining Proce-

dure § 711.02 (2008) (“MPEP”). Accordingly, the Fed-

eral Circuit’s decision allows unscrupulous applicants to

abandon applications intentionally without conse-

quence. Prosecution laches provides a defense in just

that circumstance; indeed, it is available even when the

delay is not intentional. See Symbol, 422 F.3d at 1382.

holder of a reissue patent has engaged in laches, “he loses all right

to a reissue ...and the court, seeing this, has a right, and it is its

duty, to declare the reissue pro tanto void, in any suit fouled

upon it” (second emphasis added)); see also Pratt & Whitney Co. v

United States, 345 F.2d &38, 844 (Ct. Cl. 1965) (holding patent

claims “invalid due to laches”

1]

There is no reason to bar an analogous defense based

5

on the statute itself.

B. The Federal Circuit’s Statement That Applicants

Lacked Any Incentive To Violate The Abandon-

ment And Revival Provisions Was Both Inappo-

site And Incorrect

The Federal Circuit appeared to hold that an in-

fringement defendant may only assert an applicant’s

statutory violations if the court can “discern” any “le-

gitimate incentive” for a patent applicant to disobey the

statutory provisions at issue. Pet. App. 18a. The

court’s own discernment of an applicant’s incentive is

not a proper basis for excusing statutory violations.

And even if it were, the Federal Circuit overlooked the

significant incentives for applicants to manipulate the

patent system to the disadvantage of the public and of

competitors acting in good faith.

> Because a patent’s term formerly ran from the date of issu-

ance, this Court’s early prosecution laches cases expressed a con

cern that the applicant, by delaying prosecution, delayed the be-

ginning of its monopoly period. See, e.g., Woodbridge, 263 U.S. at

56. This concern does not arise under the modern Patent Act, be-

cause a patent’s duration generally begins to run from the date the

application is filed. See Pet. App. 13a. But the Federal Circuit’s

reaffirmation of prosecution laches in Symbol confirms that the

change in patent term does not remove the importance of ‘“dili

gence in prosecuting the claims to an exclusive right.” Woodbury,

101 U.S. at 485. As discussed in Part I.B below, there are many

good reasons why Congress has maintained the Act’s strict aban-

donment deadlines and limited revival standards. Moreover, it is

not for the PTO or the Federal Circuit to decide that. delays in pat-

ent prosecution may be excused on grounds other than those spect-

fied by the legislature. Now, as before, “the matter is entirely

within the control of Congress.” Overland Motor, 274 U.S. at 423.

12

The Federal Circuit should not excuse statu-

tory violations based only on its inability to

“discern” an “incentive” for noncompliance

The Federal Circuit devoted much of its opinion to

its conclusion that noncompliance with Sections 133 and

371(d) did not fall within the infringement defenses

enumerated in 35 U.S.C. § 282. Pet. App. 6a-l38a. That

inquiry did not end the matter because—as the court

acknowledged—the list of defenses in Section 282 is not

exhaustive. See id. at 12a; Quantum Corp. v. Rodime,

PLC, 65 F.3d 1577, 1583 (Fed. Cir. 1995) (“Section 282

does not state that the list of invalidity defenses con-

tained therein are the only ones available; the statute

merely says ‘(t]he following shall be defenses.’ The ex-

press words of section 282 therefore allow for the exis-

tence of other invalidity defenses.”). Indeed, the Fed-

eral Circuit has recognized that infringement defen-

dants may assert as a defense the violation of statutes

and rules not listed in Section 282.°

°In Quantum, the Federal Circuit allowed an infringement

defendant to assert invalidity because the patentee expanded the

scope of its claims during reexamination contrary to 35 U.S.C.

§ 305, even though “section 282 does not specifically mention sec-

tion 305 as an invalidity defense in a patent infringement suit.” 65

F.3d at 1583; see also Thermalloy, Inc. v. Aavid Eng’g, Inc., 121

I.3d 691, 694 (Fed. Cir. 1997); Creo Prods., Inc. v. Presstek, Inc.,

166 F. Supp. 2d 944, 963-964 (D. Del. 2001), affd, 305 F.3d 1337

(Fed. Cir. 2002); Giese v. Pierce Chem. Co., 43 F. Supp. 2d 98, 102-

103 (D. Mass. 1999). And in Dethmers Manufacturing Co. v.

Automatic Equipment Manufacturing Co., 272 F.3d 1365, 1370

(Fed. Cir. 2001), the court confirmed that infringement defendants

may argue invalidity based on a patentee’s failure to comply with

37 C.F.R. § 1.175, which requires a patentee to submit a reissue

declaration specifying each difference between the original and

reissue claims, but which ts not listed as a defense in Section 282

See also Nupla Corp. v. 1XL Mtg. Co., 114 F.3d 191, 194 (Fed. Cir.

The court’s contrary decision regarding Sections

133 and 371(d) rested largely on its statement that “we

discern no legitimate incentive for a patent applicant to

intentionally abandon its application, much less to at-

tempt to persuade the PTO to improperly revive it.”

Pet. App. 18a. Accordingly, the Federal Circuit ap-

peared to conclude that a defendant’s ability to assert

that the applicant violated the Patent Act turned not on

anything Congress provided, but rather on the court’s

assessment of the need for recognizing the defense, in-

cluding whether the court “discern[{ed}” that applicants

had a “legitimate incentive” to violate the asserted

statutory provisions.

With all due respect to the Federal Circuit, its in-

ability to identify a reason why a patent applicant

might intentionally not comply with Sections 133 and

371(d) is not a basis to deny an infringement defendant

the opportunity to raise such a violation as a defense.

Congress’s abandonment and revival standards are

binding on courts and parties alike, and noncompliance

with them should lead a court to declare the patent in-

valid “in any suit founded upon it.” Mahn v. Harwood,

112 U.S. 354, 362 (1884); cf. Day-Brite Lighting Inc. v.

Missouri, 342 U.S. 421, 423 (1952) (court does “not sit

1997). Likewise, the Federal Circuit has recognized “nonobvious-

ness-type double patenting”—-also known as “nonstatutory double

patenting” —us a defense to infringement. See, e.g., Pfizer, Inc. v.

Teva Pharms. USA, Inc., 518 F.3d 1353, 1368 (Fed. Cir. 2008); J»

re Metoprolol Succinate Patent Litig., 494 F.3d 1011, 1019-1020

(Fed. Cir. 2007). As the court explained in 1985, nonstatutory dou-

ble patenting “is a judicially created doctrine grounded in public

policy (a policy reflected in the patent statute) rather than based

purely on the precise terms of the statute.” Jn re Longi, 759 F.2d

R87 &92 (Fed. Cir. 1985).

14

as a superlegislature to weigh the wisdom of legislation

nor to decide whether the policy which it expresses of-

fends the public welfare’’).

Patents provide an exceptional monopoly power

under U.S. law, and there is every reason to construe

Congress’s limits on that power strictly. It is not for

the Federal Circuit, nor any other court, to determine

that some of Congress’s limitations may simply be dis-

regarded without consequence. See Webster Elec. Co.

v. Splitdorf Elec. Co., 264 U.S. 468, 466 (1924) (noting

that it is “important that the law shall not be so loosely

construed and enforced as to subvert its limitations,

and bring about an undue extension of the patent mo-

nopoly against private and public rights”).

2. Applicants have substantial incentives to

manipulate the system

Even if it were proper for the Federal Circuit to

assess the applicant’s “incentive” for circumventing the

abandonment and revival provisions, the Federal Cir-

cuit’s assessment of that incentive was mistaken. The

PTO maintains a practice of reviving applications if the

applicant declares that the delay was “unintentional’”—

a relaxed standard that the district court found was

contrary to Sections 133 and 371(d), which require “un-

avoidable” delay. While there may be “no legitimate

incentive” to abandon an application and then seek to

revive it under the PTO’s lax “unintentional!” standard

(Pet. App. 13a), there are plenty of z/legitimate motiva-

tions that will lead applicants to manipulate the patent

system for their own financial gain and to the detriment

of the public interest and fair competition.

Prosecuting a patent application can be costly and

time-consuming, with no guarantee that the resulting

patent will ever prove valuable. Abandoning the appli-

15

‘ation with the possibility of revival, however, is essen-

tially costless. Under the decision below, an applicant

can file an application, abandon it, and then lie in wait

to determine whether an industry will later develop

valuable products that fall within the application’s

claims. If no such products emerge, then the applicant

has saved the costs of patent prosecution. If valuable

products do emerge, then the applicant can revive the

application and file suit against companies in that in-

dustry immediately following issuance. Those compa-

nies will then be forced to spend resources litigating a

patent that, if Sections 1383 and 371(d) were properly

enforced, would be valueless.’

Defending a patent case—even a meritless one

can cost millions of dollars that would otherwise be

used to fund research and development (R&D) and cre-

ate jobs. Instead of developing and marketing innova-

tive products, engineers must spend time evaluating

asserted patents, sitting for depositions, and testifying

in distant jurisdictions. See Federal Trade Comm’n, To

Promote Innovation: The Proper Balance of Competi-

’ This scenario mirrors the well-known phenomenon of sub-

merine patents. Such patents “remain ‘submerged’ during a long

ex parte examination process and then ‘surface’ upon the grant of

the patent,” allowing the patentee to “demand high royalties from

non-patent holders who invested and used the technology not

knowing that patent would later be granted.” DiscoVision Assocs.

v. Dise Mfg., Inc., 42 U.S.P.Q.2d 1749, 1756 n.11 (D. Del. 1997).

Submarine patents have resulted in the payment of millions of dol-

lars in royalties by innocent infringers. See, e.g., 144 Cong. Ree.

58377, S8379 (daily ed. July 16, 1998) (Sen. Leahy) (reporting that

Hewlett-Packard paid millions of dollars in royalties to submarine

patentee); 143 Cong. Rec. H1629, H1642 (daily ed. Apr. 17, 1997)

(Rep. Conyers) (describing $70 million payment for rights under

patent that surfaced after twenty vears)

16

tion and Patent Law and Policy, ch. 3, at 2 (2004) (de-

scribing the “costly nature of litigation to invalidate

patents, both in terms of dollars and resources diverted

from R&D”). This risk is particularly acute in fast-

paced industries characterized by “rapid innovation.”

Lemley, An Empirical Study of the Twenty-Year Pat

ent Term, 22 AIPLA Q.J. 369, 378 (1994).

These are not theoretical concerns, but real threats

that companies face today from opportunistic entities

who have no interest in practicing their patents. See,

e.g., eBay Inc. v. MercE xchange, LLC, 547 U.S. 388,

396 (2006) (Kennedy, J., concurring) (“An industry has

developed in which firms use patents not as a basis for

producing and selling goods but, instead, primarily for

obtaining licensing fees.”). Under the Federal Circuit’s

rule, non-practicing entities will continue to acquire

abandoned patent applications, revive them under the

PTO’s unlawfully lenient standard, and launch in

fringement suits against companies developing prod-

ucts for the U.S. market.

Non-practicing entities are not troubled by a re

duction in the exclusivity period caused by delayed

patent prosecution; the benefit of holding the product

market hostage and extracting a damages award or

settlement in the near term more than compensates.

Indeed, patents that issue after an extended prosecu-

tion period give rise to proportionately more litigation

because there is a ready-made population of possible

infringers, whose products and services were devel-

oped and commercialized while the application was

abandoned. See Miller, Undue Delay in the Prosecu-

tron of Patent Applications, 74 J. Pat. & Trademark

Off. Soe’y 729, 729-736 (1992). This Court has long rec-

ognized the risk of opportunistic patentees using the

patent system for their own gain and to the detriment

17

of advancement. See Atlantic Works v. Brady, 107 U.S.

192, 200 (1883) (noting that the “design” of patent laws

is thwarted by upholding patents in circumstances that

would tend to “create[] a class of speculative schemers

who make it their business to watch the advancing

wave of improvement, and gather its foam in the form

of patented monopolies, which enable them to lay a

heavy tax upon the industry of the country, without

contributing anything to the real advancement of the

art. It embarrasses the honest pursuit of business with

fears and apprehensions of concealed liens and un-

known liabilities to lawsuits and vexatious accountings

for profits made in good faith.”’).

Amici, like many innovative companies, have been

the targets of infringement litigation by parties who

take advantage of the PTO’s practice (held unlawful by

the district court below) of reviving abandoned applica-

tions merely upon a declaration of “unintentional” de-

lay. However, under the Federal Circuit’s decision, de

fendants are unfairly barred from asserting the plain

tiffs abandonment as a defense. The only recourse is

an inequitable conduct claim, which will succeed only if

the defendant can prove, by clear and convincing evi-

dence, that the applicant “made an affirmative misrep-

resentation of material fact, failed to disclose material

information, or submitted false material information”

and “intended to deceive the [PTO].” Cargill, Ine. v.

Canbra Foods, Ltd., 476 F.3d 1359, 13868 (Fed. Cir.

2007). Innocent third parties should not be forced to

prove inequitable conduct when the applicant’s failure

to exercise the diligence required by Congress is evi-

dent by recourse to objective facts. Rather, once the

defendant establishes abandonment, the burden should

be on the patentholder to establish that the revival met

the statutory standard. Cf, Long, /nformation Costs in

18

Patent and Copyright, 90 Va. L. Rev. 465, 468 (2004)

(“Intellectual property owners, for their part, will know

more about their intellectual goods than will nonown-

8

ers.”’).

In addition to encouraging noncompliance with

statutory requirements, the Federal Circuit’s rule im-

pedes progress and competition by making it impossi-

ble for a company seeking to develop a product to know

whether it may proceed in safety. Under the scheme

Congress crafted, companies should be able to deter-

mine, by monitoring the status of published patent ap

plications in the relevant field, whether an application

has been abandoned and whether the application is un

revivable or revivable only for “unavoidable” delay. In

that circumstance, a company could rely on that fact in

deciding whether to proceed with product develop

ment.

The Federal Circuit’s decision upsets that reliance.

[t permits the P’lO to revive applications contrary to

statute and bars any effort by a company to challenge

that action in a later infringement suit. As a result, re-

sponsible patent counsel might be unable to “green

light” a new product arguably covered by an abandoned

* As noted above, the PTO will only require supporting in

formation or evidence if “there is: a question whether the delay was

unintentional.” MPEP § 711.02. As a result, the prosecution his

tory will typically not contain any records that an accused in

fringer might use to support allegations of inequitable conduct

stemming from prosecution delay. In this case, for example, Re

spondents provided no evidence explaining why they did not file

the national stage fee or the reviva! petition on time. Pet. App

244-25a. Obtaining such evidence in discovery is no doubt the ex

ception, not the rule. See Brasseler, U.S.A. 7, LP. v. Struker Sales

Corp., 267 F.3d 1370, 1377 (Fed. Cir. 2001)

19

application, because the risk would always remain that

the applicant could obtain a “revival” that could never

be challenged. See, e.g., Bessen & Meurer, Patent

Failure 8 (2008) (“The expected costs of inadvertent

infringement imposes a disincentive on technology in-

vestors. Potential innovators consider not only the re-

ward that they might reap from owning patents, but

also the risk of being sued for infringing upon the pat-

ents of others. Clearly, if the risk of inadvertent in-

fringement is too great, the net incentives provided by

the patent system will be negative, and patents will fail

as a property system.”); Long, supra, 90 Va. L. Rev. at

468 (developers should have “at least enough informa-

tion to determine where the boundaries or protection

lie so as to fulfill their legai duties of avoiding infringe-

ment”); Symbol, 422 F.3d at 1386 (holding patent unen-

forceable for prosecution laches due to “the adverse ef

fect on businesses that were unable to determine what

was patented from what was not patented”).

Likewise, the inability of businesses to rely on pub-

licly available information precludes the ability to “de-

sign around” a patent, which the Federal Cireuit has

long recognized as one of the engines of innovation. See

Slimfold Mfg. Co. v. Kinkead Indus., Inc., 982 F.2d

1453, 1457 (Fed. Cir. 1991) (“Designing around patents

is, in fact, one of the ways in which the patent system

works to the advantage of the public in promoting pro

gress in the useful arts, its constitutional purpose.”). If

a patent application has been abandoned but may be

freely revived, companies cannot predict whether the

claims in any ultimately issued patent might remain in

the same form or might be modified or broadened. De-

signing around in such a situation is very difficult. See

Ressen & Meurer, supra, at 14 (“Since infringement

lawsuits are usually filed against firms exploiting new

20

technologies, development of a new technology exposes

the innovator to risk of inadvertent infringement if

patent boundaries are hidden, unclear or unpredict-

able.”).

The Federal Circuit expressed concern that defen-

dants would raise “every minor transgression they

could comb from the file wrapper.” Pet. App. lla.

Leaving aside the unsupported characterization of Sec-

tions 133 and 371(d) as “minor,” the mere fact that a de-

fense might be abused in some cases is not a reason to

foreclose the defense altogether. In many cases—

including, as the district court found, in this case—the

defense will be meritorious. If the Federal Circuit’s

concern materializes, Congress can always amend the

statute to ease the standard for overcoming abandon-

ment. Until it does so, however, the courts should en-

force Congress’s limitations on the patent right as they

stand. See, e.g., Monroe v. Standard Oil Co., 452 U.S.

549, 565 (1981) (“If Congress desires to amend [the

law], it is free to do so. But we must deal with the law

as it js.”’).

ll. THIS CASE IS OF SIGNIFICANT NATIONAL IMPOR

TANCE

The implications of the Federal Circuit’s decision

are not limited to cases involving abandonment and im-

proper revival. The Federal Circuit has recognized

several other infringement defenses not falling within

35 U.S.C. § 282. See supra note 6. The decision below

puts such defenses in question, as their continuing

availability now turns on the Federal Circuit’s dis-

cernment of any “legitimate incentive” for a patent ap-

plicant to flout Congress’s express commands.

Moreover, this case presents an issue that could po

tentially affect numerous existing and future patents.

21

At least four districts have addressed this issue since

2005, each finding a patent invalid due to failure to

comply with Congress’s abandonment and revival pro-

visions. See supra note 3.

The PTO itself has recognized the importance of

this case. The Director of the PTO filed an amicus

brief in the Federal Circuit, which is a rare occurrence:

according to the PTO website, the Director has not

filed an amicus brief in any other Federal Circuit case

in the last three years.’ The Director stated that ap-

proximately 73,000 abandoned patent applications had

been revived under the “unintentional” standard in the

past 25 years, with about 56% of those issuing as pat-

ents. PTO Amicus CA Br. 2. This does not include

“patents that claim priority to an application revived

under this standard.” Jd. On average, therefore, at

least 1600 patents issue each year as a result of aban-

doned applications that the PTO later revives as “unin-

tentionally” abandoned. While not all such revivals will

be contrary to the statute,” the application of the

PTO’s unlawful policy in even a fraction of those cases

creates significant risks that U.S. industry is being tar-

geted under patents that should never have issued. See

id. (stating that “the number of potentially affected pat-

ents is quite large’’).

” See http://des.uspto.gov/Foia/DispatehA BServlet ?court 1 D=

=2%7EU.S.+Court+of+ Appeals+for+the+Federal+ Circuit & fiscal Y

ear=&caseNo=& tithle=&dovTextSearch=& page=60.

' Some of the revivals might fall under provisions that allow

revival for merely “unintentional” delay. See, e.g., 35 USC.

$§ 111(a)4, (b)(3)(C), 122(b)(2)(B)ii). Some might also have met

the statutory “unavoidable” standard, had the PTO applied it.

22

The fact that a large number of patents may be the

product of erroneous revival is not a reason for this

Court to avoid addressing the question presented,

which is whether the defense is cognizable at all. Not

all revived patents would necessarily become vulner-

able as a result. Many will not even be asserted in in-

fringement litigation. To the extent Congress per-

ceives that enforcing its statutory requirements pro-

duces undesirable results, it has ample tools at its dis-

posal to take appropriate action.

Notably, the PTO did not support the Federal Cir-

cuit’s holding that noncompliance with abandonment

and revival provisions could not be raised as a defense

at all. The PTO took no position on that issue, arguing

only that its expansion of the possible grounds for re-

vival of an abandoned patent application—from “un-

avoidable” delay to “unintentional” delay—was a per-

missible interpretation of the statute. See PTO Amicus

CA Br. at Part VI.A. As noted above, the Court must

presume—as the Federal Circuit did—that the statute

forecloses the PTO’s interpretation. On that basis, the

Court should grant certiorari and reverse the judgment

of the Federai Cireuit.

23

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

CHRISTOPHER J. MEADE WILLIAM F. LEE

ALAN E. SCHOENFELD DAVID B. BASSETT

WILMER CUTLER PICKERING MARK C. FLEMING

HALE AND DORR LLP Counsel of Record

399 Park Avenue WILMER CUTLER PICKERING

New York, NY 10022 HALE AND DORR LLP

(242) 230-8800 60 State Street

Boston, MA 02109

(617) 526-6000

MARCH 2009