Opinion ID: 6944934
Heading Depth: 2
Heading Rank: 4

Heading: Lapse of the ’966 Patent

Text: GE argues that both the royalty and the lost profits awards must be vacated because Fonar may not recover damages attributable to the period in which the ’966 patent was lapsed for lack of a timely maintenance fee payment. It argues that 35 U.S.C. § 41(c)(2) provides rights analogous to intervening rights under reissue patents, and that, under that section, GE had an absolute right to sell MRI machines free of infringement during the time period that the ’966 patent lapsed. Fonar responds that GE did not acquire “intervening rights” to infringe the ’966 patent during the relevant time period. According to Fonar, GE’s interpretation of section 41(c) is contrary to its language and legislative history; the provision expressly states that upon acceptance of a late maintenance fee the patent shall be considered as not having expired. Fonar argues that the legislative history indicates that the provision applies only to those who first began using or first took steps to begin using a patent that had expired for failure to pay a maintenance fee and that it does not apply to GE, which had infringed the patent since 1992 and did not first begin infringing during the lapse period. The applicable statutory provision states in relevant part that No patent, the term of which has been maintained as a resült of the acceptance of a payment of a maintenance fee under this subsection, shall abridge or affect the right of any person or his successors in business who made, purchased or used after the six-month grace period but prior to the acceptance of a maintenance fee under this subsection anything protected by the patent, to continue the use of, or to sell to others to be used or sold, the specific thing so made, purchased, or used. 35 U.S.C. § 41(e)(2) (1994). This provision was intended to protect the rights of those who, in reliance on the lapse, first began using the claimed invention or who first took steps to begin using it during the lapse period. In particular, the legislative history states that A provision is included to 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 which was subsequently reestablished by acceptance of the late payment. The intervening rights provision in section 41(c)(2) is similar to the intervening rights provision, in 35 U.S.C. 252 concerning reissued patents. H. Rep. No. 97-542, at 8 (1982), reprinted in 1982 U.S.C.C.A.N. 772. We interpret the language “who made, purchased or used” to mean “who first began to make, purchase, or use anything protected by the patent during the lapse period.” It does not immunize discreet products made, used, or sold as part of a continuing commercial effort begun before the lapse. It is undisputed that GE began infringing the ’966 patent before it lapsed; it thus did not engage in the type of activity that the statute was intended to protect. Furthermore, the preceding statutory provision states that “[i]f the Commissioner accepts payment of a maintenance fee after the six-month grace period, the patent shall be considered as not having expired at the end of the grace period.” 35 U.S.C. § 41(c)(1) (1994). Thus, a patent is retroactively rendered enforceable during the lapse time period when the Commissioner accepts a late payment. Accordingly, GE was not entitled to the protection of section 41(c)(2); the district court did not err in denying GE’s motion for JMOL concerning the damages attributable to the lapse period.