Aristocrat Techs. v. Int'l. Game Tech. & IGT (N.D. Cal. 2011) (File Attachment: AristocratIneqCond.pdf (125 KB))
Patent attorneys regularly have hundreds of patent applications pending, each with their own due dates – far too many for anyone remember on their own. We keep track through docketing systems, paralegals, and attorney cross-checks. We are often overwhelmed – especially when firms change and staff leaves (as happened in this case). One of the comments to this post astutely introduced the old adage: "there but for the grace of God go I."
The Aussie slot-machine manufacturer Aristocrat missed its US national stage patent filing deadline by one day. The patent was saved when the USPTO granted Aristocrat's US attorney's petition to revive the abandoned application based on the claim that the "entire delay" in filing the appropriate papers was "unintentional." During infringement litigation against market leader IGT, the district court first held the patent invalid based on a defense of improper revival. In particular, the district court held that the USPTO lacked authority to revive national stage applications unless the abandonment met the much higher standard of being unavoidable. On appeal, the Federal Circuit reversed — holding that improper revival did not constitute a cognizable defense to allegations of infringement under 35 U.S.C. 282.
On remand, IGT shifted its focus to unenforceability — alleging that Aristocrat committed inequitable conduct in the revival of its abandoned application.
Late Filing and Hiding Abandonment from Client: The district court used one-hundred-twelve paragraphs to described the facts relating to the abandonment and revival. Here are a few key facts:
- January 10, 2000: On the day of the 30–month deadline, Aristocrat's US patent counsel (Shahan Islam) used US Express mail to file the necessary documents to enter US national stage examination. The USPTO received the documents the next day (January 11, 2000). However, according to the USPTO, Islam did not include sufficient evidence to prove the January 10, 2000 mailing date. And, Mr. Islam's firm did not retain the filing evidence in a locally held file.
- June 2001: The USPTO dismissed Islam's petition to correct the filing date and indicated that the application remained abandoned. Mr. Islam later testified that he did not remember receiving the June 2001 decision. The court found that Mr. Islam likely saw the decision shortly after it was mailed.
- November 2001: Aristocrat requested a status update on the application from Mr. Islam. (Up to that time, Aristocrat had been told nothing of the abandonment issues). In December 2001, Mr. Islam responded in an e-mail that "we have learned that the application won't be examined for at least another nine months(!) [or] so in view of the backlog." The e-mail did not indicate anything about the abandonment. Mr. Islam also forwarded his response to another attorney at his law firm saying "lets discuss."
- During this same time period, eight other Aristocrat applications being prosecuted by Mr. Islam also went abandoned based on failure to respond to PTO notices mailed in 2001.
- July 18, 2002: Mr. Islam (at this point with the KMZ firm) filed a petition for revival for unintentional abandonment — included a statement that "the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition under 37 CFR 1.137(b) was unintentional." In addition, Mr. Islam filed a preliminary amendment and petition for accelerated examination. In a letter to Aristocrat, Mr. Islam incorrectly (and apparently intentionally) stated that the amendment & petition to accelerate had been filed in January 2002. The letter did not mention the petition for revival.
- September 3, 2002: USPTO granted the petition to revive.
- 2003: KMZ attorneys informed Aristocrat of the abandonments & revivals.
Revival: The USPTO typically does not require documentation to revive under the unintentional delay standard. Rather, the office relies on the applicant's statements that the entire delay in filing a response was unintentional. Here, the USPTO did not require specific documentation.
Unintentional versus Not Intentional: In its analysis, the district court held that the facts did not provide clear and convincing evidence that Mr. Islam had intentionally delayed the petition filing. In particular, the court could find no motive for the delay. Instead, the delay appeared to be the result of Mr. Islam's ongoing negligence rather than intentional misbehavior. Negligence is the foundational non-intentional tort and therefore a finding of negligence does not suggest that the delay was intentional. In an odd logical analysis, Judge Whyte concluded that Islam's failure to notify Aristocrat of the abandonment "actually suggests that the delay was unintentional."
Mr. Islam did not want to disclose his errors [to Aristocrat] because he was likely embarrassed by his failure to act in accordance with his client's instruction. Had it been granted, Mr. Islam's Petition to Correct would have avoided abandonment altogether. Mr. Islam's deflections in December 2001 show that he was fully aware that Aristocrat wished to proceed with the '717 application. Mr. Islam's comments to Mr. Owen's regarding the PTO backlog at the time further avoided acknowledging any personal responsibility for delay but it may have been correct, especially considering that the '717 application remained in an abandoned state even after the PTO had officially revived it. Still further, Mr. Islam's incorrectly dated Second Preliminary Amendment is further evidence that Mr. Islam's chief motive was to hide his failures from Aristocrat. Once the June 2001 Decision was sent, a decision to deliberately delay reviving the '717 application would not have helped to hide his errors from Aristocrat.
Although Judge Whyte found "Mr. Islam's testimony was disturbingly vague and his lack of memory difficult to believe," the Judge agreed with the notion the delay was entirely explained by Mr. Islam's disorganization and the "out of control" state of his practice at the time. "Even if Mr. Islam failed to properly prosecute the '717 application, 'unintentional' delay does not require that the delay have occurred despite the exercise of due care and diligence (as does 'unavoidable' delay)."
After holding that the delay was not intentional, the court concluded that the statement regarding unintentional delay could not be a material misrepresentation and therefore that the defense of inequitable conduct could not stand.
Expert Opinion: Two leading patent law experts testified at the inequitable conduct hearing: Charles Van Horn for Aristocrat and Paul Gardner for IGT. While the court found the testimony helpful for explaining the prosecution of PCT applications, it found the experts' extensive legal conclusions filled with "blatant advocacy" to be "not helpful." Judge Whyte has been known to speak critically against expert testimony in patent cases.