CAFC Upholds Prosecution Laches Ruling Against Gil Hyatt

On Friday, August 29, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in Hyatt v. Stewart affirming the U.S. District Court for the District of Columbia’s ruling on remand that inventor Gil Hyatt’s efforts to obtain patent rights from four patent applications filed in 1995 were barred by prosecution laches. Ruling that the U.S. Patent and Trademark Office’s (USPTO’s) affirmative defense was available in Hyatt’s civil action to obtain patent rights under 35 U.S.C. § 145 under the law of the case, the Federal Circuit also rejected arguments that federal jurisdiction under Section 145 extended to the entirety of the Board’s decision, including parts of those rulings in which the Board reversed examiner rejections.

Unavailability of Prosecution Laches in Section 145 Suits Already Addressed in Hyatt I

In 2005 and 2009, Hyatt filed Section 145 lawsuits in D.C. district court seeking the reversal of decisions by the Board of Patent Appeals and Interferences (BPAI) affirming patent examiner rejections of four patent applications filed by Hyatt during the transitional period prior to the Uruguay Round for the General Agreement on Tariffs and Trade (GATT), which became effective in June 1995. While the USPTO’s argument that Hyatt engaged in unreasonable delay in prosecuting his patent applications was dismissed by the district court, the Federal Circuit found in Hyatt v. Hirshfeld (2021, Hyatt I) that the Office had satisfied its burden in proving prosecution laches, the same conclusion that the district court “[took] no pleasure” in reaching on remand after finding that “the complete trial record require[s] a singular result–judgment for the PTO.”

In his latest appeal, Hyatt argued that prosecution laches is not available in Section 145 proceedings because it is inconsistent both with the Patent Act of 1952 as confirmed by recent U.S. Supreme Court rulings in Petrella v. Metro-Goldwyn-Mayer (2014) and SCA Hygiene Products Aktiebolag v. First Quality Baby Products (2017). Whether Hyatt is correct about prosecution laches being inconsistent with the 1952 Patent Act, it is clear that the Supreme Court has unequivocally ruled in both Petrella and SCA that laches simply does not exist when there is a statutorily prescribed timeframe to act. In this case, as everyone familiar with the patent system knows well, there are both statutes and rules that give applicants a defined time within which to act. Therefore, it should have been easy for the Federal Circuit to rule in Hyatt’s favor and conclude that Petrella and SCA make prosecution laches a legal impossibility. Of course, that was not what the Federal Circuit ruled.

The Federal Circuit found that Hyatt raised these same arguments in Hyatt I, including that Petrella and SCA Hygiene foreclosed the application of prosecution laches in Section 145 actions. “[G]iven that we already considered and rejected Mr. Hyatt’s arguments, we will not address them again,” the Federal Circuit held. Or, in other words, the Federal Circuit might have ruled—Because a previous panel committed egregious error and ignored both Petralla and SCA we will not disturb that mistake and will instead force the Supreme Court to once again overrule us on the issue of laches.

More narrowly, Hyatt argued that his conduct between 1992 and 2002 was justified by a BPAI ruling from 1992 reversing an examiner’s rejection of Hyatt’s patent claims for prosecution laches. In light of that ruling, Hyatt contended that he had no reason to change such conduct until the Federal Circuit announced in 2002 that prosecution laches was available as a defense in district court proceedings in its Symbol Technologies v. Lemelson Medical ruling. However, the Federal Circuit found that Hyatt forfeited this argument by failing to raise it at the district court, adding that in more than 500 pages of post-trial briefing, Hyatt only mentioned the 1992 BPAI decision twice. “And in any event, the district court… ultimately determined that Mr. Hyatt’s prosecution delay was unreasonable,” the appellate court found.

It has become all too common for both patent examiners and courts to rule that a party has not sufficiently preserved an issue or argument, or in the case of patent applications that a specification does not provide support where there is clear and unambiguous support. We see with alarming frequency the requirement that parties and applicants must beat a horse dead or run the risk of a court or examiners saying—well you only mentioned it twice, which is practically not much, so we will pretend you didn’t say it at all and have no support.

And for the court to dismissively say that the district court ruled prosecution delay was unreasonable after refusing to acknowledge that prosecution laches does not exist because of Supreme Court rulings in Petrella and SCA is the type of circular logic that should be a bridge too far for even the Federal Circuit.

Party Invoking Federal Jurisdiction Needs More Than Bare Allegations of Dissatisfaction

Moving on to Hyatt’s cross-appeals that were stayed by the Federal Circuit from Hyatt I, the Federal Circuit affirmed the district court’s finding that there was no case or controversy as to parts of three BPAI decisions that reversed examiner rejections of Hyatt’s patent claims. Although Congressional statutes may give rise to Article III standing where injury wouldn’t otherwise exist as recognized by U.S. Supreme Court rulings like Linda R. S. v. Richard D. (1973), the Federal Circuit held that Hyatt failed to establish the court’s jurisdiction over the BPAI’s reversals.

While Hyatt’s bare allegations of dissatisfaction with the BPAI’s decisions established Article III standing at the pleading stage, jurisdictional challenges at later stages require the party invoking federal jurisdiction to show more than allegations of nonobvious harms according to Supreme Court precedent on standing from Lujan v. Defenders of Wildlife (1992). “Here, there is no ‘more,’” the Federal Circuit found, noting Hyatt presented no evidence of harm stemming from the BPAI’s reversals. Hyatt argued on appeal that statutory standing under Section 145 extends to the entire decision of the Board without differentiation between claims, but the appellate court rejected this argument, holding that Section 145 does not override threshold requirements for Article III standing as to each pending claim the applicant submits to the district court.

The Hyatt Saga is Likely to Continue

Gil Hyatt’s efforts to obtain patent rights on his GATT bubble applications, and the resistance he has faced, are well-known and heavily litigated. It is known that many Hyatt patent applications were caught up in the Sensitive Application Warning System (SAWS), which was an inexplicable blackhole at the Office for at least 15-years, with applications caught in SAWS never issuing. Ultimately, in 2015 the Office ended the SAWS program, but the program resurfaced during the Biden Administration—SAWS II running from approximately November 2021 until it was discovered by and ended by Acting USPTO Director Coke Stewart this spring.

Regardless of this most recent ruling by the Federal Circuit, and regardless of whether Hyatt seeks rehearing or en banc review, both which would certainly be futile, we can expect that he will petition the Supreme Court for certiorari. Just several years ago, in April 2022, Hyatt petitioned the Supreme Court, challenging the Federal Circuit’s Rule 36 summary affirmance of the district court’s dismissal of Hyatt’s claims that the USPTO violated the Administrative Procedures Act (APA) by implementing a “no-patents-for-Hyatt” rule from the mid-1990s into the 2010s. While that petition was denied by the Supreme Court, thanks to several declarations submitted by former USPTO employees in underlying proceedings, we rather conclusively know that the USPTO did, in fact, have a “no-patents-for-Hyatt” rule, and they did refuse to issue many of Hyatt’s patent claims, not surprising given Hyatt’s applications were caught by the SAWS trap.

Despite still having patent applications pending at the Office, Hyatt has not received a patent for more than generation. AlthoughHyatt is undoubtedly a magnet for controversy, he is also the victim of real hatred. The reason for that hatred is unclear, but if this can happen to an extremely successful inventor like Hyatt what can the Office and patent system do to the average Joe?

Hyatt is extremely wealthy and has been willing to use his considerable wealth to fight arbitrary and capricious behavior by the USPTO, and a Federal Circuit that simply refuses to listen to the Supreme Court. The final chapter has not likely been written yet. Stay tuned.

UPDATED September 1 at 12:27pm ET. An earlier draft version of this article was prematurely published and omitted the contributions of author Gene Quinn.

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