Is this the end of an era in patent law? Or just the dropping of the other shoe? Last week in Symbol Technologies, Inc. v. Lemelson Medical, Education and Research Foundation, LP, the Court of Appeals for the Federal Circuit (practically the court of last resort in patent matters, since the Supreme Court rarely takes a patent case) ruled that a number of machine vision patents of inventor Jerome Lemelson were unenforceable due to the patentee’s “unreasonable delay” in prosecuting the underlying patent applications before the U.S. Patent and Trademark Office. The ruling comes too late for various companies who had already paid millions of dollars to license these patents from Lemelson.
How much delay is “unreasonable”? Mr. Lemelson filed his original, allegedly “machine vision”-related application in the 1950s; received an initial patent for that work in 1963, and by dint of then-existing U.S. patent laws and the diligence of his patent counsel, was able to continue to file “continuation applications”, and continue to get patents and sue on them, nearly four decades later. As a result of such tactics, Mr. Lemelson, perhaps the greatest exponent of what became known as “submarine patents” (since the applications stayed below the surface, unasserted and unseen until they matured into patents many years later and then used to attack others) was able to garner an incredible amount of patent royalties. In fact, he extracted billions of dollars from U.S. and foreign corporations over the years, and along the way made his principal patent counsel, Jerry Hosier, one of the top-grossing law practices in the country. It took an act of Congress, finally, to change the patent laws that allowed for submarine patents.
Mr. Lemelson, who died in 1997, was granted more than 500 U.S. patents, making him (from a patent-count standpoint, anyway), one of the most prolific inventors in U.S. history. Some have compared him with Edison (that patent count again), but unlike Edison, most people would have difficulty recognizing his name or what any of his inventions were. Ask the dozens of companies he sued over the years for alleged patent infringement, and observers of developments in patent law, and they may tell you that Lemelson’s most significant (and lucrative) invention was how to game the U.S. patent system. The techniques Mr. Lemelson employed have been successfully emulated by many individual inventor/patent litigants seeking to extract money from corporations. They typically include the following:
- build and sell no products (that’s expensive and difficult), but file as many generic descriptions of arguably inventive ideas as possible as soon as possible (Mr. Lemelson’s version of “machine vision” is a prime example — the original 1950s patent application bears little resemblance to the products being sold by today’s machine vision equipment and software manufacturers, but provided an early priority date for later applications);
- continue filing continuation application after continuation application to keep the basic priority date alive, while remaining in stealth mode, taking steps to avoid the early issuance (and thus publication) of particular patents, all the while watching to see whether folks who actually make and sell products begin to make and sell products approaching the alleged reach of your many pending patent applications;
- when they do, file a further continuation with claims that seek to cover the products and activities of those target companies and their distributors/resellers/customers;
- once the opportunity is clear, seek to get that continuation application to issue as a patent as soon as possible, along with as many of the other applications as possible;
- once the patent(s) have issued, find patent litigation counsel who will take your case on a contingent-fee basis, so that you don’t need to shell out cash to fund the lawsuits you’re about to file;
- have your counsel write to manufacturers, and possibly distributors and customers (i.e., as many parties as possible along the chain), suggesting that they need to license your patents;
- using your contingent-fee patent litigation counsel, sue those who do not purchase licenses, including resellers and customers to increase pressure on the manufacturers, preferably blanketing entire industries with lawsuits;
- stick like glue through years of litigation, through depositions, hearings, trials, appeals, and post-appeal procedures, at all times making it clear that it will be cheaper for defendants to buy a license from you than spend millions of dollars to defend; and
- repeat steps 1-8 as many times as possible.
The more often you repeat the process, the greater the implied pressure on manufacturers and others, since you and your counsel will attain a reputation for tenacity. At that point, many will simply pay you to go away (“nuisance value” settlements) rather than defend. During the litigations, when one defendant settles, frequently others will fold as well, creating an attractive house-of-cards effect, so it can be useful to start low, with most-favored-nation royalty rates for early “adopters”, and then work your way up, saving the highest rates for those who fight the longest. It may also be useful to start with smaller companies, since they can be easier to intimidate. Or it may be useful to start with a large company while publicizing the appealing David vs. Goliath phenomenon of your patents vs. the defendant company’s obdurate refusal to do the right thing (“they stole my idea”, etc.).
At any rate, the Federal Circuit appears to have put an end to Mr. Lemelson’s machine vision campaign by ruling a 40-year delay (for some of the patents) unreasonable and the patents thus unenforceable. (Of course, an appeal to the U.S. Supreme Court would not be a surprise, but it would be surprising for the Supreme Court to take the case.) The ruling is welcome news to defendants Symbol Technologies, Inc., Cognex Corporation and perhaps even all the others who have already paid millions of dollars in royalties to “license” these patents so lately found unenforceable. But its effect otherwise will be fairly narrow, since the U.S. patent laws have already been changed to set a patent’s term at 20 years from filing of the application (subsuming continuation applications) rather than the previously applicable 17 years from issuance of the patent (which in submarine-land would be delayed as much as needed until the industry stepped into the danger zone). The change in statutory law rendered Lemelson-type submarine patents a thing of the past.
What’s more, courts (or at least the Federal Circuit) seem to be taking a harder look at patents brought before them, construing patent claims more narrowly, as in the recent and significant case of Phillips v. AWH, and requiring patentee/owners to adhere more closely to the statutory legal requirements for a valid patent, including “novelty”, “non-obviousness”, and “enablement” (sufficient detail in the patent’s description and drawings to enable one skilled in the relevant technology to practice the invention without “undue experimentation”). These requirements, if adhered to, tend to render it more difficult for strike-suit artists to enforce clearly inapplicable patents. (The Doctrine of Equivalents, however, continues to be the patentee/plaintiff’s friend, since it tends to expand patent claims beyond their literal scope, encompassing equivalents of the claimed subject matter.)
So it may be that the era of “submarine patents” was already drawing to a close, thanks to a change in the patent statute, but the Federal Circuit has now declared it officially dead.
