IP News

Unreasonable Delay Results in Holding that Lemelson Patents are Unenforceable

In Symbol Techs, Inc. v. Lemelson Med. Educ., 2004 U.S. Dist. LEXIS 1499 (D. Nev. 2004), the district court held that Lemelson's patents were unenforceable due to prosecution laches, where a patentee's right to claims can be forfeited if issued after an unreasonable delay in prosecution. The forfeit is possible even if a patentee complies with all of the statutes and rules. Patents invented by the late Jerome Lemelson are notorious for their length of prosecution time. In fact, Lemelson holds the top 13 positions for the longest patent prosecution time. The Lemelson patents at issue in the Symbol case were based on two applications filed in 1954 and 1956. Through continuation applications, filing delays and other prosecution delays, ranging in some cases from 18 to 39 years, the specification in the original application was modified to encompass practices used by the public. As a result, when the patents finally issued, Lemelson claimed that most of the practices in the bar code industry that previously had been freely practiced, infringed his patents. The court held that the delays in the prosecution were prejudicial to those in the industry, unexplained and unreasonable, and held that even though no laws were broken, the patents were unenforceable.

FTC Dismisses Rambus Antitrust Suit

On Feb. 18, 2004, Judge Steven McGuire dismissed the government's antitrust suit patents in the Federal Trade Commission (FTC) involving Rambus' memory chip. The case centered on charges that Rambus had defrauded an organization that set standards for memory chips by not disclosing that it had filed patent applications covering Rambus' recommendations to the organization. The recommendations were passed and when Rambus' patents issued, instantly 90% of the 4 billion memory chips sold each year were alleged to infringe Rambus' patents. Rambus has actively been pursuing licenses, which could be worth as much as $3 billion a year, especially since the Federal Circuit upheld the patents as enforceable and refuted the inequitable conduct charges levied against Rambus. The FTC began its antitrust investigation and suit in June 2003, soon after the Federal Circuit decision. After a 3-month hearing, the FTC administrative judge ruled that the government “failed to sustain its burden of proving Rambus committed fraud,” and dismissed the case. The government has indicated that it plans to appeal the decision to the full five-judge Commission.

Court Holds that Property Right Under the Fifth Amendment Applies to Patents

In a decision that could have broad implications for government contract bidders with patented processes, the Court of Federal Claims held that patent holders possess a property right in their patents under the Fifth Amendment. The court held that the property right is separate and apart from the federal patent statutes. In Zoltek Corp., v. United States, 58 Fed. Cl. 688 (Fed. Cl. 2003), Zoltek sued the government for allegedly importing fiber sheets made with Zoltek's patented process for use in government fighter planes. The government countered that since the claimed process had been performed in Japan, that Zoltek's patent infringement claim should be denied. The court acknowledged that the patent statutes would not protect the process if performed in a foreign country, but that the patentee had a protectable property right under the Fifth Amendment. The court held that the government might be liable for depriving a person of property without paying compensation, which could constitute a takings claim under the Fifth Amendment, and denied summary judgment. “The government will not avoid liability by using the patented process overseas if the products produced from that patented process are used or imported in the United States.”

GlaxoSmithKline Settles Relafen Antitrust Suit

On Feb. 6, 2004, GlaxoSmithKline (“Glaxo”) agreed to pay $175 million to settle a class action lawsuit brought on behalf of direct purchasers, including pharmaceutical wholesalers regarding the antitrust suit for the anti-inflammatory agent, Relafen. Glaxo's patent for Relafen was previously held unenforceable due to inequitable conduct. The subsequent antitrust suits alleged that Glaxo violated antitrust law by blocking cheaper generic forms of the drug. Glaxo has already settled antitrust suits brought by generic drug manufacturers, but the suit brought by indirect purchasers, such as consumers, is still active with trial set for June 2004.

Unreasonable Delay Results in Holding that Lemelson Patents are Unenforceable

In Symbol Techs, Inc. v. Lemelson Med. Educ., 2004 U.S. Dist. LEXIS 1499 (D. Nev. 2004), the district court held that Lemelson's patents were unenforceable due to prosecution laches, where a patentee's right to claims can be forfeited if issued after an unreasonable delay in prosecution. The forfeit is possible even if a patentee complies with all of the statutes and rules. Patents invented by the late Jerome Lemelson are notorious for their length of prosecution time. In fact, Lemelson holds the top 13 positions for the longest patent prosecution time. The Lemelson patents at issue in the Symbol case were based on two applications filed in 1954 and 1956. Through continuation applications, filing delays and other prosecution delays, ranging in some cases from 18 to 39 years, the specification in the original application was modified to encompass practices used by the public. As a result, when the patents finally issued, Lemelson claimed that most of the practices in the bar code industry that previously had been freely practiced, infringed his patents. The court held that the delays in the prosecution were prejudicial to those in the industry, unexplained and unreasonable, and held that even though no laws were broken, the patents were unenforceable.

FTC Dismisses Rambus Antitrust Suit

On Feb. 18, 2004, Judge Steven McGuire dismissed the government's antitrust suit patents in the Federal Trade Commission (FTC) involving Rambus' memory chip. The case centered on charges that Rambus had defrauded an organization that set standards for memory chips by not disclosing that it had filed patent applications covering Rambus' recommendations to the organization. The recommendations were passed and when Rambus' patents issued, instantly 90% of the 4 billion memory chips sold each year were alleged to infringe Rambus' patents. Rambus has actively been pursuing licenses, which could be worth as much as $3 billion a year, especially since the Federal Circuit upheld the patents as enforceable and refuted the inequitable conduct charges levied against Rambus. The FTC began its antitrust investigation and suit in June 2003, soon after the Federal Circuit decision. After a 3-month hearing, the FTC administrative judge ruled that the government “failed to sustain its burden of proving Rambus committed fraud,” and dismissed the case. The government has indicated that it plans to appeal the decision to the full five-judge Commission.

Court Holds that Property Right Under the Fifth Amendment Applies to Patents

In a decision that could have broad implications for government contract bidders with patented processes, the Court of Federal Claims held that patent holders possess a property right in their patents under the Fifth Amendment. The court held that the property right is separate and apart from the federal patent statutes. In Zoltek Corp., v. United States, 58 Fed. Cl. 688 (Fed. Cl. 2003), Zoltek sued the government for allegedly importing fiber sheets made with Zoltek's patented process for use in government fighter planes. The government countered that since the claimed process had been performed in Japan, that Zoltek's patent infringement claim should be denied. The court acknowledged that the patent statutes would not protect the process if performed in a foreign country, but that the patentee had a protectable property right under the Fifth Amendment. The court held that the government might be liable for depriving a person of property without paying compensation, which could constitute a takings claim under the Fifth Amendment, and denied summary judgment. “The government will not avoid liability by using the patented process overseas if the products produced from that patented process are used or imported in the United States.”

GlaxoSmithKline Settles Relafen Antitrust Suit

On Feb. 6, 2004, GlaxoSmithKline (“Glaxo”) agreed to pay $175 million to settle a class action lawsuit brought on behalf of direct purchasers, including pharmaceutical wholesalers regarding the antitrust suit for the anti-inflammatory agent, Relafen. Glaxo's patent for Relafen was previously held unenforceable due to inequitable conduct. The subsequent antitrust suits alleged that Glaxo violated antitrust law by blocking cheaper generic forms of the drug. Glaxo has already settled antitrust suits brought by generic drug manufacturers, but the suit brought by indirect purchasers, such as consumers, is still active with trial set for June 2004.