Welcome to the Reuters.com BETA. Read our Editor's note on how we're helping professionals make smart decisions.
Skip to main content

Apple's escape from $308 mln verdict pings still-lurking 'submarine' patents

4 minute read

Apple company logos are reflected on the glass window outside an Apple store in Shanghai, China January 3, 2019. REUTERS/Aly Song - RC1D8453E5F0

  • Personalized Media Communications won jury verdict on Apple infringement
  • Pre-1995 patent purposely delayed to extend start date
  • Court barred PMC from enforcing unreasonably delayed patent

The company and law firm names shown above are generated automatically based on the text of the article. We are improving this feature as we continue to test and develop in beta. We welcome feedback, which you can provide using the feedback tab on the right of the page.

(Reuters) - Apple won a reprieve last week from a $308 million jury award in East Texas federal court for allegedly infringing a digital rights management (DRM) patent owned by Personalized Media Communications, in a ruling by U.S. District Judge Rodney Gilstrap that torpedoed a rare "submarine" patent.

The submarine strategy, involving protracted delays for maximal payoff, was mostly used before 1995, the year when the law changed to base the length of patent protection on when an application was filed instead of when the patent was issued. At that time, the PTO also didn't publish pending patent applications, and applicants could delay a patent from being issued until a market developed relating to the invention — when the "submarine" would emerge.

Submarine patents are already rare in 2021, and becoming rarer as 1995 recedes into the rearview.

"Truthfully, I think most practitioners believed that submarine patents really didn't exist anymore," said Blair Jacobs, a patent litigator with McKool Smith.

In this case, in 2012 PMC was issued "patent claims that it first sought in 2003 as part of a 1995 application based on a 1987 disclosure that itself was a continuation-in-part of a 1981 parent application," Gilstrap said. PMC sued Apple in 2015, alleging its FairPlay technology developed in the early 2000s infringed the DRM patent.

In his decision last week, Gilstrap cited a June ruling by the U.S. Court of Appeals for the Federal Circuit — which he called a nearly identical case on the same issue — to find PMC's patent was unenforceable. The Federal Circuit said the doctrine of prosecution laches renders a patent unenforceable if it was issued after an "unreasonable and unexplained delay in prosecution that constitutes an egregious misuse" of the patent system.

Testimony from inventor and PMC founder John Harvey indicated that its applications had been filed "as late as the law allowed" to extend the company's patent protection from its normal term — which at the time was 17 years — to "at least 30 to 50 years" and "keep its patent portfolio hidden until after the claimed subject matter became widely adopted in the industry," Gilstrap said. He called PMC's strategy a "conscious and egregious misuse of the statutory patent system."

"Delays of this magnitude do not occur by accident and do not occur when an applicant reasonably pursues their patents," Gilstrap said.

Not all long-delayed patents are submarine patents, and Jacobs said he hoped the decision doesn't create a "target for folks who are doing ordinary things" in "unique circumstances where an application needs to be long and complex."

"Hopefully this doesn't create a defense that would render those patents, which were lawfully obtained, more challengeable and therefore less valuable," Jacobs said.

Brent Babcock, a patent partner with Loeb & Loeb who has represented Amazon against PMC at the Patent Trial and Appeal Board, said PMC's tactics were "abusive" attempts to "utilize a giant loophole in the system."

"My guess is that patent attorneys who are doing this — if they are still doing this — are going to be more careful about what they say when they're asked in depositions about how they handled the case," Babcock said.

PMC attorney Doug Kline of Goodwin Procter said the company disagrees with the ruling and plans to appeal.

The case is Personalized Media Communications LLC v. Apple Inc, U.S. District Court for the Eastern District of Texas, No. 2:15-cv-01366.

For PMC: Douglas Kline of Goodwin Procter, Calvin Capshaw of Capshaw DeRieux

For Apple: Sean McEldowney of Kirkland & Ellis, Melissa Smith of Gillam & Smith

Read more:

Apple wins court ruling throwing out $308.5 million patent verdict

U.S. jury tells Apple to pay $308.5 million for patent infringement

Fed Circ gives PTO chance to escape prolific inventor’s claims

Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com

More from Reuters