February 26, 2021
On February 19, in John Bean Technologies Corp. v. Morris & Associates, Inc., the Federal Circuit affirmed a finding that accused infringer Morris was entitled to continue making, offering for sale, and selling its accused product based upon the equitable doctrine of intervening rights.
Equitable intervening rights is an affirmative defense that arises from 35 U.S.C. § 252, which provides, in relevant part:
The court . . . may provide for the continued manufacture, use, offer for sale, or sale of the thing made . . . of which substantial preparation was made before the grant of the reissue . . . to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue (emphasis added).
The defense is premised on the concept that the public has the right to rely upon the scope of a patent’s claims as originally issued. If a defendant makes investments based upon that original claim scope, only to later have its activities covered by a claim that was substantively or substantially altered during a reissue or reexamination, a court may, in equity, grant the infringer the right to continue its otherwise infringing activities. In deciding whether to grant equitable intervening rights, a court may consider factors such as whether the infringer made substantial preparations or investments before the new claims issued, whether the infringer made profits sufficient to recoup its investment, and other equities such as the relative degrees of good or bad faith of the parties.
In the case at hand, John Bean received its patent in 2002. Within weeks of its issuance, Morris sent correspondence to John Bean alleging that the patent never should have issued and was instead invalid in light of the prior art. John Bean never responded and Morris proceeded to develop and sell a product that became its biggest seller, eventually accounting for over two-thirds of its business.
Eleven years after the patent first issued, John Bean requested that the USPTO reexamine the patent. After the USPTO issued a reexamination certificate, and despite never responding to Morris’s letter alleging invalidity of the original patent, John Bean filed a patent infringement suit against Morris alleging willful infringement of the new claims.
The district court granted Morris’s motion for summary judgment for equitable intervening rights and the Federal Circuit affirmed. The court rejected John Bean’s argument that because Morris had recouped its monetary investment in the time period before the new claims issued, the equitable remedy should not be available to it. Interpreting the language of section 252 regarding “protection of investments” as a matter of first impression, the court noted that the statute is not limited to monetary investments. The Federal Circuit quoted with approval the district court’s finding that Morris’s investment was more than just a financial one—Morris’s conversion of nearly two-thirds of its business to selling the accused product was an investment also entitled to protection under the statute. Requiring Morris to eliminate that substantial part of its business merely because John Bean decided to reexamine and enforce its patent over a decade later would be an inequitable result.
The Federal Circuit’s focus on the length of delay is noteworthy given that in a prior related appeal, it had reversed the district court’s grant of summary judgment based on Morris’s affirmative defense of equitable estoppel. But in doing so, the Federal Circuit also suggested that equitable intervening rights may be a proper remedy to prevent John Bean from asserting its rights after an unreasonable delay. On this appeal, the court confirmed that it would not shy away from applying equitable remedies where the facts merit it, such as when an accused infringer has substantially changed its business plan in the intervening time frame, or when the patent owner delays an excessive amount of time in initiating the reexamination and subsequent enforcement of its patent rights.
For more information regarding this decision, please contact Fitch Even partner Nikki Little, author of this alert.
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