“Hyatt’s counsel argued that [the] examples [provided in the suit] show that the conduct of the U.S. Patent and Trademark Office indicated that there was some unofficial policy or order not to issue patents to Hyatt.”
The extent to which the existence of a patent system will promote “the progress of science and useful arts, by securing for limited times to … inventors the exclusive rights to their … discoveries” depends on whether patent applications are examined in an unbiased manner and without undue delay. Some patent applicants and some patent practitioners have been fortunate and have generally observed reasonable timeliness and action by the U.S. Patent and Trademark Office (USPTO). Others have had a very different experience with the agency. Documents from a pending case at the Federal Court in the Eastern District of Virginia (EDVA) illustrate one of those circumstances. The story outlined in this case may help shape patent practitioners’ and applicants’ strategies with respect to monitoring for unreasonable examination behaviors and identifying strategies to confront any such situations—both with respect to individual patent applications and to policy-level approaches.
Gilbert Hyatt’s academic and professional experiences demonstrate an impressive aptitude in engineering. He has a B.S. in electrical engineering and an M.S. in computer engineering and has been an engineer at the Hughes Aircraft Company, Boeing and at Teledyne, Inc. Hyatt was a prominent aerospace consultant through the 1970s and 1980s and was successfully recruited in the early 1990s by billionaire Sheldon Adelson to develop virtual reality technology for theater shows.
However, Hyatt is perhaps most well-known in relation to his patent with priority claims dating back to 1970, titled “Single Chip Integrated Circuit Computer Architecture”. After years of appeals, in 1990, the USPTO granted the patent, which became the first patent to be granted on the microprocessor. Hyatt conceived the idea after quitting his job as an engineer at Teledyne Inc. and depleting his savings while working in his spare bedroom. During this time, he built and tested thousands of circuits with a primitive oscilloscope before arriving at suitable circuit-design configurations. Hyatt founded Micro Computer, Inc. in 1968, after having built an oversized prototype of the microprocessor. He received seed money from an investor, opened the company’s office, and 25 employees were hired. The intention was that the company would build small computers using the microprocessor technology to control machine tools in factories. However, those ambitions ended after multiple investors unsuccessfully tried to persuade Hyatt to give up patent rights to the technology if the company closed or was sold. Some of the patent claims of the microprocessor patent were withdrawn in 1996 after an extended interference litigation with Texas Instruments. However, the rest of the patent claims lived to a ripe old age of 17 years before expiring. Other Hyatt patents directed to the microprocessor, the personal computer, and various computer memory technologies were untouched by the interference litigation.
While significant, the 1990 microprocessor patent was only one of Hyatt’s hundreds of patent filings. Being a strong believer in the patent system, Hyatt filed many patent applications disclosing technology discoveries in various fields. Many (such as the aforementioned microprocessor patent granted in 1990) were filed before June 8, 1995, which means that a patent term of any patent issued thereupon is defined to be the greater of 20 years from the earliest effective filing date and 17 years from the patent grant (MPEP § 2701). Some of Hyatt’s patent applications were filed between June 8. 1995 and May 28, 2000. As a result of the General Agreement on Tariffs and Trade (GATT), any patent issuing from a “post-GATT” patent application (filed on or after June 8, 1995) would have a patent term that would extend to 20 years from the earliest effective filing date. The term may be further extended if issuance was delayed due to an interference or derivation proceeding, secrecy order, or appellate review by the Patent Trial and Appeal Board or a Federal Court (MPEP § 2720). However, for patent applications filed in this time period (June 8, 1995-May 28, 2000), patent term adjustments for other delays of the USPTO were/are unavailable. In 1975, Hyatt also passed the Patent Bar and became a patent agent, and he is a pro-se inventor for most of his patent applications.
As noted, Hyatt has filed hundreds of patent applications. Many are hundreds of pages long with many patent claims covering many inventive features. Most have extended patent priority chains. However, Hyatt paid for this complexity. The USPTO required payment of substantial extra claim fees, so the government fees for these patent applications were millions of dollars. And it was the USPTO that determined what these extra claim fees should be, which set them to a price that was sufficient to examine a more complex patent application. But Hyatt alleges that the USPTO has not been fairly examining his patent applications and instead has been acting in bad faith.
Mandamus Complaint Filed with The EDVA Court
Hyatt’s Mandamus Complaint alleges that problems began in the mid-1990s, when then-Commissioner Bruce Lehman launched a major campaign to crack down on “submarine patents”. Multiple USPTO officials (including Commissioner Lehman, former Deputy Commissioner Lawrence Goffney, former Group Director Gerald Goldberg, Supervisory Patent Examiner Richard Hjerpe and Examiner Jose Couso) allegedly verbally informed Hyatt that the USPTO would no longer issue patents to him. Four of his patent applications were drawn back into prosecution after being allowed to issue as a patent and after payment of the issue fee. The Complaint alleges that Hyatt’s patent applications “were ‘parked’ in ‘Phantom Art Units where no work was ever done” and that they were excluded from statistics relied upon by the Government Accountability Office and Inspector General of the Department of Commerce.
Disdain Toward Hyatt: In the early 2000s, the USPTO established a new art unit that the agency refers to as “the Hyatt Unit”, which only examines Hyatt’s patent applications. Richard Hjerpe was the Supervisory Patent Examiner of this art unit. At a time at which he was supervising all of Hyatt’s patent applications, Hjerpe sent the following email to multiple USPTO officials, including the current and former Group Director and now-current Deputy Commissioner for Patent Operations, regarding Hyatt’s litigation against the California Franchise Tax Board:
Yuk, Yuk, Yuk… Gilbert trying to defend himself in the US Supreme Court??…there is some humor in here somewhere…maybe justice will prevail after all! I have a new-found respect for the wonderful state of California and tax collectors everywhere!
The Complaint asserts that this email reflects the “disdain” that Hjerpe had towards Hyatt and that Hjerpe believed that the sentiment was shared by the recipients of the email.
Extensive Inaction: Multiple examples of substantial and unusual USPTO delays of action are asserted in the Complaint. For example, after U.S. Application Number 07/763,395 was allowed and its issue fee was paid, the agency withdrew it from issue in April 1997. Following this withdrawal, the agency took no further action on the patent application for 16 additional years, despite Hyatt petitioning for action. This patent application is still pending 22 years after it was allowed to issue, and the issue fee was paid. Similarly, the USPTO withdrew U.S. Application Number 08/433,307 from patent issuance in May 1997 and took no action on the patent application until 2013, despite Hyatt’s petitioning for action.
SAWS: For decades, the USPTO operated the Sensitive Application Warning System (SAWS program). A patent application could be flagged as a SAWS application if it met any of hundreds of vague and broad criteria. For example, two criteria included “applications with pioneering scope” and patent applications “which if issued would potentially generate extensive media coverage” embarrassing to the USPTO. Other criteria included “submarine” patent applications and long-pending patent applications filed before June 8, 1995. Once a patent application was entered into the SAWS program, an examiner him/herself could not allow the patent application for issuance. Rather, a proposed allowance would need to be approved by multiple senior USPTO officials. Previous studies found that, on average, SAWS applications were found to be associated with lower allowance rates, higher rejection counts and longer prosecution. Hyatt’s Complaint asserts that then USPTO Deputy Commissioner Joseph Rolla indicated that all of Hyatt’s patent applications were subject to the SAWS program or to equivalent restrictions. Though the agency officially closed the SAWS program in 2015, the Complaint asserts that the SAWS program or its equivalent is still in operation.
Vexatious Rejections: The Complaint further alleges that Hyatt’s patent applications are being “buried … in vexatious rejections and objections so as to delay prosecution, delay final agency action subject to judicial review and prevent their issuance”. To support this allegation, the Complaint quotes Federal Circuit judge Kimberly Moore in her dissenting opinion in Hyatt v. Doll (576 F.3d 1246, 1289 (Fed. Cir. 2009)): “An average of 21 rejections per claim is hardly proportional. Mr. Hyatt was forced to appeal 45 independent issues to the [USPTO] Board [of Appeals] when the average [for all other appeals] is two …. Mr. Hyatt prevailed on 92% of all the examiner’s rejections at the Board level.”
Blocking Appeals: Hyatt has filed Appeal Briefs for many of his patent applications. However, before the Patent Trial and Appeal Board (PTAB) can assume jurisdiction over an appeal, the USPTO must file an Examiner’s Answer to the Appeal Brief. MPEP § 1207.02 indicates that an Examiner’s Answer is to be issued within two months from the Appeal Brief. The Complaint asserts that the USPTO has refused to issue Examiner’s Answers for more than 80 of Hyatt’s appeals between 2000 and 2013. For example, the Complaint indicates that an Appeal Brief for U.S. Application Number 08/463,118 was filed in 2004. Hyatt petitioned in 2007 and 2009 for an Examiner’s Answer to be issued, yet no Examiner’s Answer was ever issued, nor did the USPTO ever decide the petitions. As another example, patent applications 05/134,958 and 05/135,040 were filed in 1971 (this is not a typo, they were filed more than 45 years ago). The Complaint asserts that the USPTO’s records and Hyatt’s records indicate that Hyatt responded to a November 1989 final Office Action by filing a Notice of Appeal and Appeal Brief in 1990 and that nearly three decades later, an Examiner’s Answer had yet to be issued.
Suspensions of Action: The USPTO can issue “suspensions” to pause examination of a patent application. MPEP § 709 indicates that suspensions are to be avoided if possible and that if a suspension is initiated, it “should be terminated immediately once the reason for initiating the suspension no longer exists”. The Complaint states: “[F]our of Mr. Hyatt’s patent applications were suspended more than ten times apiece, more than 180 were suspended seven to nine times, and more than 120 were suspended five or six times. … [B]etween 2007 and 2012 alone, the PTO issued 2,200 suspensions—amounting to 1,100 years of aggregate delay—on Mr. Hyatt’s patent applications.”
Ignoring Special Status: A patent application that has been pending more than five years is deemed “special” for expedited action and is to be handled out of turn (MPEP § 1704). The Complaint indicates that Hyatt filed over one thousand petitions for action on his patent applications and numerous requests for status updates. The USPTO allegedly dismissed the petitions rather than denying them. (Denials are subject to judicial review under MPEP § 1002.02). Allegedly, in 184 of the agency’s responses, the USPTO “stated that the applications were already entitled to priority in examination because they were ‘special’ under PTO policy, dismissed the petitions as moot, and promised that the examiner would be told that Mr. Hyatt’s patent applications are ‘appropriate for expedited action’.” The Complaint asserts that examiners were never so informed, such that the responses included willful misrepresentations and that the USPTO delayed many more years before acting on these patent applications on the merits.
Judge Ellis of the Federal Court in the EDVA decided to hear Hyatt’s case against the USPTO based upon the agency’s alleged “bad faith” treatment of him. More specifically, the issue at hand focuses on whether the USPTO has any official or unofficial order or policy (which could include, in the words of Judge Ellis “a secret sort of agreement” or “in effect, a conspiracy not to give [Mr. Hyatt] any patents”) indicating that patents are not to be issued to Hyatt. An evidentiary hearing was held on June 20, 2019, and multiple USPTO personnel were called as witnesses.
Gregory Morse was one of these witnesses. He has been the examiner of Art Unit 2615 (“the Hyatt Unit”) since March 2013. Morse was asked to review the prosecution histories and/or provide testimonies corresponding to several of Hyatt’s patent applications and to explain USPTO delays.
With respect to U.S. Application Number 08/599,450, the USPTO issued no substantive action between February 25, 2002 and July 6, 2018, amounting to over 16 years of agency inaction. Due to the post-GATT and pre-patent-term-adjustment filing date, the patent application ceased to have any potential patent term on or about January 19, 2016. Morse explained: “I actually lost track of it” and did not know why the examiner had not acted on it. With respect to U.S. Application Number 08/762,606, the USPTO issued no substantive action between March 3, 2004 and June 15, 2016, amounting to over 12 years of agency inaction. Morse could not explain why there was no action during his time of supervision.
Three of Hyatt’s patent applications (U.S. Application Numbers 08/471,799, 08/470,897 and 08/470,075) were reviewed by the USPTO Board of Patent Appeals and Interferences (now the Patent Trial and Appeal Board). For each of these three patent applications and with respect to at least some of the pending claims, the Board reversed each and every corresponding rejection. The Board decision and any reconsideration decision for these matters were issued between May 2005 and November 2007, yet the USPTO has yet to issue any allowance or office action. Thus, the agency has refrained from issuing any office action or allowance on these patent applications for 12-14 years, despite the fact that the examiners’ rejections were already reviewed and reversed by the Board. Morse acknowledged that the Board decisions for these matters were in favor of Hyatt and that the USPTO Manuel for Patent Examining Procedures indicates that, if the Board decision is clearly in favor of the applicant, that the patent application is to be issued. Hyatt’s counsel then asked: “What, is it, if anything, about the ‘799, ‘897, and ‘075 patent applications that has made it difficult for the [USPTO] to mail an office action on them in the six years since you’ve been the head of the Hyatt Unit?” Morse responded: “I don’t know”.
Morse and Judge Ellis indicated that Hyatt’s patent applications are more complicated than most, and that this added complexity likely contributed to at least some of the agency delay. However, as noted above, he had paid substantial USPTO fees as a result of this increased complexity. Further, the testimony also indicated that Hyatt seemed to have been complying with agency requests for facilitating simpler examination by substantially reducing claim sets to be examined and identifying support for claims.
Hyatt’s counsel argued that these examples show that the conduct of the USPTO indicated that there was some unofficial policy or order not to issue patents to Hyatt.
Judge Ellis has been consistent in his messages to the USPTO counsel and other USPTO officials and witnesses appearing in his courtroom that Hyatt’s applications must be promptly examined. During the June 20 Hearing, Judge Ellis conveyed the same sentiment. At that hearing , referring to examining Hyatt’s patent applications in a timely and unbiased manner, Judge Ellis told the USPTO to “get it done” 11 times. Judge Ellis ordered the USPTO to provide “a list of all actions it has taken to examine Hyatt’s patent applications between June 3, 2019 and July 26, 2019. He further explained:
“We’re here today on something [for which] we shouldn’t be here. No one doubts that this man has filed applications that are, in a bizarre way, way beyond anything you see. … But he filed it. And he wants it examined, and the law permits him to have it to have it examined. … [M]y strong advice to you is[:] Do it; get it done.”