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Implied waiver may result where patentee failed to disclose patent application to standard-setting organization

Implied waiver may result where patentee failed to disclose patent application to standard-setting organization

Core Wireless v. Apple was decided on August 16, 2018 on appeal from the Northern District of California. Both patents concern technology for wireless communication in a digital network. The jury found that defendant Apple infringed both plaintiff Core Wireless’s asserted claims. The district court then rejected Apple’s argument that one asserted patent was unenforceable due to implied waiver. Apple appealed.

The Federal Circuit affirmed the jury finding of infringement and of no invalidity as to one claim, reversed the judgment of infringement as to another claim, vacated the finding of no unenforceability as to one claim, and remanded.

The district court erred in ruling that an asserted patent was not unenforceable due to implied waiver. “Implied waiver occurs when the patentee’s conduct was so inconsistent with an intent to enforce its rights as to induce a reasonable belief that such right has been relinquished.” A patentee’s conduct may be inconsistent with an intent to enforce a patent where “(1) the patentee had a duty of disclosure to the standard setting organization, and (2) the patentee breached that duty.”

Apple’s theory of implied waiver was based on actions taken by Nokia, the original assignee of the asserted patent, during its participation with ETSI, a standards-setting organization. In 1997 and 1998, ETSI was developing technical proposals to address a particular problem in digital networks. Nokia submitted a proposal to ETSI. In November 2017, Nokia filed a Finnish patent application to which the asserted patent claims priority. In January 2018, Nokia’s proposal for the standard was rejected, and replaced by a competing proposal by another company. Four years later, Nokia disclosed the Finnish patent application, as well as the associated U.S. patent application. Apple argued that Nokia had an obligation to disclose its Finnish patent application to ETSI when submitting its proposal for revision of the standard, and that, in breaching that obligation, Nokia waived its right to enforce the asserted patent.

The district court concluded that “Nokia did not have a duty to disclose the Finnish application for two reasons: (1) Nokia’s proposal was rejected; and (2) the patent claims were not finalized until 2002.” Moreover, the district court “stated that “Apple presented no evidence that any ETSI member or other entity interpreted Nokia’s failure to disclose the patent in 1998 as evidence that Nokia relinquished its patent rights.”

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“None of those stated reasons supports the district court’s conclusion.” “ETSI’s intellectual property rights policy states that the disclosure requirement attaches to a member ‘submitting a technical proposal’ if that party has intellectual property that ‘might’ be essential ‘if that proposal is adopted.’” Moreover, “there was no testimony at trial that ETSI’s intellectual property rights policy exempted patent applications that had not yet matured into issued patents.” Rather, there was “unrebutted trial testimony made clear that the ETSI policy included patent applications, which are, by their nature, not yet final.” Lastly, “there is no requirement under the implied waiver doctrine that a third party must interpret the patentee’s conduct as constituting a waiver of its rights to enforce the patent; such analysis is more relevant to equitable estoppel.” Core Wireless “had a duty to disclose its patent no later than June 1998” when the standard was adopted; its later disclosure in 2002 was “clearly untimely and not sufficient to cure the earlier breach of its duty.”

The Federal Circuit remanded the decision. Because implied waiver may render an entire patent unenforceable, “the doctrine should only be applied in instances where the patentee’s misconduct resulted in an unfair benefit,” or in instances of “egregious misconduct.” Here, the district court “did not make findings regarding whether Nokia or Core Wireless inequitably benefited from Nokia’s failure to disclose, or whether Nokia’s conduct was sufficiently egregious to justify finding implied waiver without regard to any benefit that Nokia or Core Wireless may have obtained as a result of that misconduct.” On remand, the district court will address these issues.

 

Core Wireless Licensing S.A.R.L. v. Apple Inc., 899 F.3d 1356 (Fed. Cir. 2018)