Zombie Patents: Stronger Than Ever

Client Advisory

May 14, 2014

Until recently, a patent which expired for failure to pay a maintenance fee could only be revived as unintentionally abandoned within 24 months of the date the maintenance fee was due. While a petition to revive an unavoidably abandoned patent could be made at any time after the patent’s expiration, the “unavoidable” standard was almost impossible to meet.

Recent changes to Title 35 of the U.S. Code effected by the Patent Law Treaties Implementation Act of 2012, Pub. L. No. 112-211, 126 Stat. 1527, eliminate the unavoidable standard and remove the 24-month time limit to reinstate an unintentionally abandoned patent. Now, any patent which has expired for failure to pay a maintenance fee can be revived, at any time, upon a statement that the delay in paying the maintenance fee was unintentional. 35 U.S.C. § 41(c)(1). Similarly, any patent application that has gone abandoned for an unintentional failure to file a timely response can be revived at any time. 35 U.S.C. § 27; 37 C.F.R. 1.137.

These changes could have significant consequences for entities which practice an invention claimed in what was thought to be an abandoned patent or patent application.

In conjunction with Federal Circuit decisions holding that erroneous revival of a patent is not an invalidity or unenforceability defense, the elimination of the two-year period raises the possibility that patents which expired for failure to pay maintenance fees – zombie patents – could come back to haunt companies in litigation.

Statutory Changes Enlarge the Risk

The Patent Law Treaties Implementation Act of 2012 became effective on December 18, 2013 and amends Title 35 of the United States Code to implement two patent treaties: the Hague Agreement Concerning International Registration of Industrial Designs and the Patent Law Treaty. Notable changes implemented by the PLT Act include extending by two months the 12-month period, if the delay was unintentional, for filing a non-provisional application that claims priority to a provisional application, and for claiming priority to a foreign application. This article discusses a third notable change – an expanded right to revive a patent expired for failure to pay a maintenance fee at any time after its expiration, if the payment of the fee was unintentionally delayed.

Generally, no evidence of unintentional delay is required beyond a simple statement by the applicant or its representative. If the Director accepts late payment of a maintenance fee, the patent will be considered as not having expired at the end of the grace period, subject to the pre-existing intervening rights provision of 35 U.S.C. § 41(c)(2).

Federal Circuit Decisions Make Zombie Patents Harder To Kill

In Aristocrat Technologies Australia PTY Limited v. International Game Technologies, 543 F.3d 657 (Fed. Cir. 2008), the Federal Circuit held that the PTO’s “improper revival” of an abandoned patent application was not available as an invalidity defense in an infringement action. There, Aristocrat filed a PCT application in Australia and was required to pay the fee for the U.S. national stage of the PCT application by January 10, 2000. The PTO however, received the fee on January 11, one day late, and consequently mailed a notice of abandonment to Aristocrat. Aristocrat filed a petition under 37 C.F.R. § 1.137(b) attempting to revive the application and claimed that the delay in paying the national stage filing fee was “unintentional.” The PTO granted the petition. Aristocrat resumed prosecution of its patent application, which resulted in U.S. Patent No. 7,056,215 (the “‘215 patent”).

Aristocrat brought an action against International Game Technology (“IGT”) alleging infringement of the ‘215 patent. IGT moved for summary judgment, arguing that the ‘215 patent was invalid because the PTO revived the patent application based on Aristocrat’s showing that its delay was “unintentional,” whereas revival was permitted only where the delay was “unavoidable.” The district court agreed, determining that the PTO improperly revived the patent application by using the incorrect standard, and found the ‘215 patent invalid.

The Federal Circuit rejected IGT’s argument that “improper revival” could be raised as an invalidity defense. The Federal Circuit opinion focused on § 282, which enumerates defenses available in an action involving the validity or infringement of a patent. According to the court, §§ 133 or 371, which served as the bases of IGT’s “improper revival” argument, are not included within the defenses enumerated in § 282. Consequently, the court held that “improper revival may not be asserted as a defense in an action involving the validity or infringement of a patent.” 543 F.3d at 663. The court also distinguished “improper revival” from redressable inequitable conduct, such as “affirmative misrepresentations of material fact, or submission of false material information, coupled with an intent to deceive.” The Supreme Court denied IGT’s petition for a writ of certiorari.

In a more recent decision, Network Signatures, Inc. v. State Farm Mutual Automobile Insurance Co., 731 F.3d 1239 (Fed. Cir. 2013), the Federal Circuit reversed a lower court’s ruling that found an internet security patent was unenforceable based on a questionable petition to revive a patent for unintentional delay in paying a maintenance fee. The patent at issue, U.S. Patent No. 5,511,122 (the “‘122 patent”) is owned by the U.S. Navy. Two weeks after the patent lapsed for failure to pay the 7.5-year maintenance fee, however, Network Signatures, Inc. (“NSI”) contacted the Navy’s IP department and expressed interest in licensing the patent. Shortly thereafter, the Navy’s patent attorney petitioned the PTO to accept payment of an unintentionally delayed maintenance fee using the PTO’s standard form. The PTO approved the delayed payment and the Navy subsequently licensed the ‘122 patent to NSI.

Years later, NSI filed suit against State Farm for infringement. State Farm moved for summary judgment of unenforceability of the ‘122 patent on the ground that the delayed payment of the maintenance fee was not “unintentional” and the Navy attorney committed inequitable conduct in withholding from the PTO the circumstances behind the delayed payment petition. The district court agreed and found the ‘122 patent unenforceable due to inequitable conduct.

The Federal Circuit reversed and remanded, concluding that State Farm had not met the high threshold required to establish inequitable conduct. The Court held that the Navy’s patent attorney’s “compliance with the standard [Patent and Trademark Office] procedure … does not provide clear and convincing evidence of withholding of material information with the intent to deceive the director.” 731 F.3d at 1243. “On matters unrelated to the substantive criteria of patentability,” the court opined, “it is almost surely preferable for a reviewing court not to involve itself in the minutiae of Patent Office proceedings and to second-guess the Patent Office on procedural issues at every turn.” Id. 

Zombie Patents and Intervening Rights

The Act’s elimination of the 24-month period within which to revive unintentionally abandoned patents, combined with the case law decisions discussed above, creates additional risks for companies which, believing an abandoned patent is in the public domain, begin to practice the invention claimed in the patent.

The intervening rights statute is very fact-specific. It provides that a revived patent shall not “abridge or affect the right of any person . . . who made, purchased, offered to sell, or used anything protected by the patent within the United States, or imported anything protected by the patent into the United States” after the patent was abandoned but before it was revived, to continue using, selling, or offering for sale the item protected by the patent. 35 U.S.C. § 412(c)(2). The statute empowers a court to “provide for the continued manufacture, use, offer for sale, or sale of the thing made . . . [or for] which substantial preparation was made” after abandonment but before revival, “to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced” after abandonment but before revival of the patent. Id. A court also may “provide for continued practice of any process that is practiced, or for the practice of which substantial preparation was made.” Id.

While intervening rights offer some protection, those rights exist as a defense to infringement, can only be granted by a court, and do not necessarily ensure that a company’s investment of resources will be protected completely. See, e.g., Fonar Corp. v. G.E. Co., 107 F.3d 1543 (Fed. Cir. 1997) (intervening rights “protect the rights of one who began using or who took steps to begin use of a patent which expired for failure to pay a maintenance fee,” and so offer no protection to a party who infringes a patent before it lapses); see also Allied Tube and Conduit Corp. v. John Maneely Co., 125 F. Supp. 2d 987 (D. Ariz. 2000) (Applying analogous intervening rights provision of 35 U.S.C. § 252 and stating that “[a]bsolute intervening rights extend only to goods already made at the time the reissue patent is granted.”). Even if a court permits the continued manufacture and sale of a product developed during the intervening rights period, it may condition that sale on payment of a royalty or impose restrictions on improved products.

Companies that decide to practice an invention claimed in a patent that has expired for failure to pay a maintenance fee would be well-advised to consider the risk that the patent could be brought back to life and haunt it in litigation after the company has made a significant investment in practicing the patent’s claimed invention.

For more information concerning the matters discussed in this publication, please contact the authors John M. Griem, Jr. (212-238-8659, or Theodore Y. McDonough (212-238-8788,, or your regular CL&M attorney.

Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2020 Carter Ledyard & Milburn LLP.
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