US Federal Circuit Declines to Invalidate an Intentionally Abandoned Patent

In a case that will be of interest to patent professionals, Network Signatures v State Farm (Fed Cir 2013), the US Court of Appeals for the Federal Circuit (CAFC) declined to invalidate a patent that had been intentionally abandoned but then later revived. The US Navy decided that there was no known commercial interest in US patent no 5,511,122, and so decided not to pay the second maintenance fee by the deadline. As a result the patent became abandoned. However, soon after the abandonment, Network Signatures expressed interest in licensing the rights to the patent. At that point, the Navy revived the patent by filing a revival request in which they asserted that the abandonment was “unintentional”. Under USPTO policy, at least within the first year of abandonment, the USPTO accepts an assertion that abandonment was unintentional without any explanation. After Network Signatures obtained a licence to the revived patent, they filed many patent infringement lawsuits. It was clear that the Navy had intended to abandon the patent. It is also clear that this was contrary to USPTO written guidelines that meant that the abandonment should not have been considered to be “unintentional”. The District Court invalidated the patent on summary judgment based on inequitable conduct. However, a majority of the CAFC panel found that on matters such as this, which are unrelated to the substantive criteria for patentability, the decisions of the Director of the USPTO are entitled to deference, so that they held that the patent was not invalid on summary judgment for inequitable conduct. Judge Clevenger, in dissent, would have sent the matter back to the district court for a trial on the merits. This decision reinforces the CAFC decision in Aristocrat Technologies, Australia Pty Ltd v Int’l Game Tech, 2011 US Dist LEXIS 48693 (ND Cal, May 6, 2011), which concluded that “’improper revival’ is not a cognizable defense in an action involving the validity or infringement of a patent.” Summary by: Tom Feather