Magistrate Judge Thynge recently issued an opinion in Inline Connection Corporation v. Earthlink, C.A. No. 02-272-MPT (D. Del. Feb. 5, 2010). The opinion addressed several issues (see full opinion below); one interesting issue involved the law regarding a "practicing the prior art" defense.
In this case, the jury found that the patent was both invalid and not infringed. Id. at 11. The patentee sought to rescue their patent via a motion for judgment as a matter of law (JMOL) that the patent was not invalid, because the defendant's expert had failed to "identify each claim element, state the witnesses' interpretation of the claim element, and explain in detail how each claim element is disclosed in the prior art reference," as required by Koito Mfg. Co., Ltd. v. Turn-Key-Tech, LLC, 381 F.3d 1142, 1152 (Fed. Cir. 2004). Id. at 21. The Court agreed.
Defendant Earthlink then tried to put on a "'practicing the prior art' defense," arguing that "its [product] is “materially identical” [to the prior art] and, thus, 'if [its product] were found to infringe, then the patent claims that are at issue would have to be invalid,'" but the Court disagreed. The Court pointed out that "[t]he Federal Circuit [has] stated that 'this court has made clear that there is no ‘practicing the prior art’ defense to literal infringement," Koito at 1153, and that all of the other cases cited by Earthlink for its "practicing the prior art" defense involved situations where the accused product was the prior art - i.e., it was invented or on sale before the priority date. Thus, the Court granted the JMOL motion.
This shows that you should not rely on a pure "practicing the prior art" defense, despite its apparent logic (after all, how can a patentee have patented something that existed in the prior art?), unless your actual product is the prior art.