Subject:
Day 12 Self Study Course:
summarized by Tatsuo Yabe
Chapter 12:
Text Pages 639 to 672
(continued)
Unenforceability is different from a holding of invalidity
although the result may be the same (the patentee cannot enforce his patent).
However, whether permanently unenforceable or for a period of time, or
unenforceable against all infringers or against only the defendant depends upon
the patentee’s action.
D. Laches
and Equitable Estoppel
A.C. Aukerman Co. v. R.L. Chaides Construction Co. (Fed
Cir. 1992)
Facts:
Assignee of USP3793133 and USP4014633: Aukerman
Method and device for forming concrete highway barriers
that separate highway surface of different elevations.
Licensee: Gomaco Corporation
(Required to notify Aukerman of the purchasers who
purchased Gamaco’s adjustable slip-forms.)
Purchaser of Gomaco: Chaides
Upon notification from Gomaco, on
Chaides responded in late April with a handwritten note on
the Aukerman’s
8 years have passed without any
communications between Aukerman and Chaides.
During the time period, Chaides increased its business of forming
asymmetrical highway barrier walls and made a second adjustable mold for pouring
step wall (Aukerman’s alleged infringing product).
Because of another licensee Baumgartner’s notice in 1987
that Chaides was a substantial competitor in
No reply was received from Chaides, on
The district court ruled in favor of Chaides by granting
SJ motion, saying that Aukerman’s delay of more than 6 years in suing Chaides
shifted the burden to Aukerman to prove that its delay was reasonable and was
not prejudicial to Chaides. Regarding
equitable estoppel, the court put the burden on Chaides to establish this
defense, and then held that Aukerman’s silence for nearly 10 years after
making an initial protest was sufficiently misleading to constitute bad faith.
The court went on to say that Chaides had detrimentally relied on Aukerman’s
silence in deciding to forgo bankruptcy and to bid low on highway contracts.
Summary
Fed Cir took this case in banc to clarify and apply
principles of laches and E.E (equitable estoppel).
Regarding laches and E.E., Fed Cir hold:
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Laches |
E.E. (equitable estoppel) |
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1. Statute providing basis for the defense |
Cognizable under 35USC282 as an equitable defense to a
claim for patent infringement. The Supreme Court invoked the maxim: “Courts of
equity, it has often been said, will not assist one who slept upon his
rights, and shows excuse for his laches in asserting them”.
Lane & Bodley
As a defense to a claim of patent infringement, laches was well
established at the time of re-codification of the patent laws in 1952
(Section 286). The section 286 should be interpreted to bar the defense
of laches and provide, in effect, a guarantee of 6 years damages
regardless of equitable considerations arising from delay in assertion of
one’s rights. |
Cognizable under 35USC282 as an equitable defense to a
claim for patent infringement. |
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2. Consequences of successfully establishing the defense |
the patentee’s claim for damages prior to suit may be
gone; |
the patentee’s claim may be entirely barred. |
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3. Elements for establishing the defense |
(a) the
patentee’s delay in bringing suit was unreasonable and inexcusable; and * no fixed length of time, but rather depends upon the
circumstance. (b) the alleged infringer suffered material prejudice because of the delay. The
district court should consider these factors and all other circumstances
to determine whether equity should intercede to bar pre-filing damages. ** Material prejudices to adverse parties include (b1)
economic and (b2) evidentiary. Where economic
prejudice may be established by the loss of monetary investments (not
just due to the litigation) and/or the change in the economic position of
the alleged infringer during the period of delay. Where evidentiary
prejudice may be proved by Def’s inability to present a full &
fair defense due to the loss of records, the death of Ws, or the
unreliability of memories of long past events, resulting undermining the
court’s ability to judge the facts. A court must also consider and weigh any justification
offered by P for its delay. P’s
recognizable excuse include (not exhaustive): other litigation;
negotiations with the accused infringer; possibly poverty and illness
under limited circumstances; wartime conditions; extent of infringement
and dispute over ownership. Moreover, a court also takes into consideration conducts
and culpability (i.e., intentional copying) of Def, which would change
the equities significantly in P’s favor. |
(a)
the patentee, through
misleading conduct, leads the alleged infringer to reasonably infer that
the patentee does not intend to enforce its patent against the alleged
infringer. “Conduct” may
include specific statements, action, inactions, or silence where there was
an obligation to speak. (b)
The alleged infringer
relies on that “conduct”. (c)
Due to its reliance,
the alleged infringer will be materially prejudiced if the patentee is
allowed to proceed with its claim. In other authorities, elements (b) and (c) are
oftentimes combined into a single “detrimental reliance” requirement. Regarding an element (a), P’s conduct must have
supported an inference that P did not intend to press an infringement
claim against D. Thus, it is
clear that for EE, D must be aware of the P and/or P’s patent.
Additionally, D must know or reasonably be able to infer that P has
known of the D’s activities for some time. Regarding an element (b), it is not a requirement of
laches, but is essential to EE. D
must show that it substantially relied on the misleading conduct of P in
connection with taking some action. Reliance is not the same as prejudice
(‘harm or injuries’) because D can build a plant (‘economic
prejudice’) without knowledge of the patent or without reliance on P’s
act. Regarding an element (c), D must establish that it would
be materially prejudiced if P is now allowed to proceed.
As with laches, the prejudice may be a change of economic position
or loss of evidence. |
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4.Presumption |
arises where a patentee delays bringing suit for more
than 6 years after the
date the patentee knew (*a) or should have known (*b)
of the alleged infringer’s activity. à see (a)
& (b) Note 7 below. In Panduit Corp. v. All States Plastic Mfg (Fed Cir
1984), Fed Cir explains that presumption arises out of considerations
of fairness, public policy, and probability.
Borrowed the 6 Yr damage limitation period set forth in the section
286 for the time period for giving rise to a Rebuttable presumption of
laches. The 6 Yrs damages limitation under 286 counts backward
from the date of suit. Whereas, the 6 Yr for laches begins with a P’s
knowledge of infringement and counts forward. Note that the establishment of the factors of undue
delay and prejudice does not mandate recognition of a laches defense in
every case but those established factors are taken into consideration by
the trial judge to exercise sound discretion. |
No presumption. Because the laches factors (unreasonable and inexcusable
delay and prejudice) are not elements of EE.
Also, because the relief granted in estoppel is broader than in
laches, meaning that the whole suit may be barred so that D should carry a
burden to establish the EE defense based on proof, not a presumption. Even where all 3 elements of EE are established, the
court exercise its discretion to determine whether to allow the defense of
EE to bar the suit taking into consideration any other evidence and facts
regarding the equities of the parties. |
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5. Effects of Presumption |
A presumption has the effect of shifting the burden of
going forward with evidence, not the burden of persuasion. After much scholarly debate, Rule 301 embodies what is
known as the “bursting bubble”
theory of presumptions. Under
this theory, a presumption is not merely Rebuttable but completely
vanishes upon the introduction of evidence sufficient to support a finding
of nonexistence of the presumed fact. Once a presumption of laches arises, P may offer proof
directed to rebutting the laches factors. Such evidence may include
showing either P’s delay was reasonable and/or that D’s suffered no
prejudice. P needs to present an evidence that raises a genuine
issue regarding the reasonableness of the delay to overcome the
presumption P may eliminate the presumption by offering evidence
showing that no additional prejudice occurred in the 6 year time period
(D’s defenses remains substantially available as before and D’s
economic prejudice has not occurred). Elimination of the presumption does not necessarily mean
that P precludes the possibility of a laches defense; however, it does
mean that the presumption plays no role in the ultimate decision.
Even if unable to overcome the presumption, P may be
able to preclude application of the laches defense with proof that the D
was itself guilty of misdeeds towards P (“the maxim, “He who seeks equity must do equity.”)
At all times, D bears the ultimate burden of persuasion
of the affirmative defense of laches. |
No presumption. |
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6. STD of review by district court |
By sound discretion of the trial judge |
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7. Review STD by Fed Cir. |
The District judge’s decision is to be reviewed by Fed
Cir under the “abuse of
discretion STD”. |
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Application of Doctrine/Theory to the Facts of this Case |
Because the district court shifted the ultimate burden
of persuasion to the patentee (Aukerman) to negate the prima facie defense
of laches, the district court’s grant of SJ on the laches defense must
be reversed. Ø
The
district court placed the “burden” on the patentee “of showing that
the delay was not unreasonable and inexcusable.”
This was a greater burden than overcoming the presumption by the
patentee. The patentee bears
the burden only to come forward with sufficient evidence to raise a
genuine factual issue regarding the reasonableness of its conduct after
D’s showing of delay in excess of 6 years. Ø
The
district court erred in resolving the issue of whether D’s infringing
activities changed sufficiently to disrupt the laches period.
This fact could not be inferred against P in such a manner that P
should have known these changed circumstances. Ø
[Other
comments] -
There
are peculiar and special reasons why patent holder should not be barred
from enforcing his right under the patent because of his delay
commencement of infringement suit. -
Frequently,
the patentee’s financial situation prevents the institution of suits. -
Patentee
cannot be fully cognizant of all infringements occurring in the -
The
validity issue of patent may be in dispute so that in a doubtful case the
commercial success of the patented goods is determinative of the validity
issue. -
Thus,
there is justification in patent suits for withholding damages for
infringements committed prior to the commencement of the suit when a
laches defense is established. -
“Injunctive
relief” is still available even a laches defense is established. |
The elements supporting EE were in genuine dispute so
that the district court’s granting SJ motion was not correct. Ø
Whether
P’s conduct was misleading to D in that Chaides reasonably inferred from
Aukerman’s conduct that it would not be sued in using Aukerman’s
invention. -
Silence
alone will not create an estoppel unless there was a clear duty to speak
or P’s continued silence reinforces D’s inference of non-enforcement
of patents by P. -
The
longer the delay, the stronger the inference becomes. -
A
party must generally notify an accused infringer about other litigation
for it to impact the defense of EE. Because
knowing other litigation, enforcement of P’s rights, to D would work
against the inference of non-enforcement of patent rights by P. Ø
Regarding
culpable conduct by Chaides having built a “copy” of the mold,
Aukerman produced no evidence demonstrating “how the copy infringed the
patents”. However, in this phase of litigation, Aukerman does not owe
the burden of proving that the copy infringed because the phase was the
motion for SJ of EE. Under
this assignment of burdens, Chaides’ testimony regarding the “copy”
of the infringing device, if construed in the light favorable to Aukerman,
could amount to an admission of infringement, which at least raises an
issue of fact. -
For
purpose of SJ, Chaides’ copying should have been deemed misconduct to be
weighed into the court’s decision, but it was not. Ø
Fed
Cir concludes that SJ, holding that Aukerman was equitably estopped from
assertion of infringement against Chaides, was improperly granted and is
reversed. Thus, the issue is
remanded for trial. |
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Quantum of Proof
In civil litigations, a STD for prove is by preponderous evidence.
However, where a particular claim is disfavored on policy grounds (e.g., fraud or undue influence, the terms of a lost will, reformation or modification of a written contact), a STD for prove is by clear and convincing evidence.
For the specific statutory provision (i.e., a patent is presumed valid), a STD for prove is typically by clear and convincing evidence.
However, for establishing the facts relating to laches issue, a STD for prove is by preponderous evidence.
The same is true for E.E. (equitable estoppel).
Notes:
1.
-- Obviously, Chaides back in late 1970 was still such a small infringer, thus it did not make sense paying attorneys fee and commencing the litigation against Chaides. However, as time goes by, when Baumgartner (another licensee of Aukerman) informed that Chaides was substantial competitor in 1987, Aukerman realized that it is feasible to sue Chaides.
2. Laches Factors
i) P's delay in bringing suit was unreasonable; and ii) D suffered material prejudice because of the delay.
3. Presumption of laches
- Possible justification for delay by P include:
1. P was involved in another litigation;
2. negotiations with the accused;
3. poverty or illness;
4. wartime conditions;
5. extent of infringement;
6. there is a dispute over ownership.
- Evidence of D's copying P's invention would support the P (patentee). TWM Mfg. Co. v. Dura Corp. (6th Cir. 1979)
4. Equitable Estoppel Factors
An accused infringer succeeds on his claim of equitable estoppel if he proves:
1. misleading conduct or communication by P which leads the infringer (D) to reasonably infer that it will not enforce the patent against the infringer.
2. the infringer relies on the patentee's conduct; and
3. the infringer would be materially prejudiced.
If successful on D's claim of equitable defense, P (patentee) can never bring suit against this infringer. The suit s barred. Unlike unenforceability for inequitable conduct, with E.E. (equitable estoppel), the P (patentee) is only estopped from suing this particular infringer. The P (patentee) can still bring an infringement suit against other infringers.
5. Material prejudice – economy or evidentiary
- Evidentially prejudice can be proven by showing a loss of records, death of witnesses, or faded memory.
- Economic prejudice can be proven by demonstrating loss of investments such as D built a plant.
--> This factor is treated the same for laches and E.E.
6. Difference between laches and E.Estoppel
- When laches is established, damages prior to the suit are barred whereas E.E. is established P's entire claim is barred.
- For E.E., there is no presumption after 6 years to suit from knowing the infringing act by D.
- For E.E., there is no requirement for passage of unreasonably long period of time before bringing suit;
7. Actual knowledge v. Constructive knowledge:
Wanlass v. GE (Fed Cir 1998)
Wanlass owned a patent for a single-phase run capacitor
electrical motor and offered GE a license. GE
declined the license offer. Wanlass
tested a few GE products between 1977 and 1982 but found no infringement.
Wanlass did not test another GE product after 1982 until 1992.
The court says that constructive knowledge of the
infringement may be imputed to the patentee even where he has no actual
knowledge of the infringement if the activities of Def are sufficiently
prevalent in the inventor’s field of endeavor.
The Fed Cir (majority opinion authored by Chief Judge Mayer and joined by
Judge Michel) held that Wanlass’s claim was barred by laches since it was
unreasonable for him to have conducted no investigations over a 10-year period
to identify alleged infringers.
Judge Rader dissented the majority opinion, arguing that
the majority opinion created a duty for the patent holder to police the market.
In 1986, GE changed to an allegedly infringing motor design and Wanlass
did not discover it until 1992 and he filed a lawsuit against GE in 1995. The
court found that Wanlass unreasonably delayed bringing suit although to the
extent he had no way detect GE had changed to the infringing design (to discover
a change would require Wanlass to disassemble appliances to access the motor and
dismantle the motor to discover the internal changes).
Nonetheless, this court imposes on Wanlass (a small businessman and
inventor) the costly and unreasonable burden of periodically checking and
re-checking every product in this crowded market to detect infringement.
In Hall v. Aqua Queen Mfg (Fed Cir 1996), the accused
devices were widely advertised in trade journals and at trade shows and Hall
(patentee) himself was the head of a trade organization; he attended many of
these shows and spoke with the management of the accused infringers.
In contrast, Wanlass had no indications of widespread infringement to
raise his suspicions. Because the
majority opinion announces new legal rules and offers so little guidance,
patentees can only look to the fact of this case.
… For inventions like
Wanlass’s, that have broad application, this new requirement is a significant
burden.
Interestingly, only 10 days later, the Fed Cir had another
occasion to address Mr. Wanlass’s failure to promptly sue a different Def.
In this case, Wanlass v. Fedders Corp (Fed Cir 1998) - Wanlass II, with virtually
identical facts, the same panel of judges found that Wanlass did not have a duty
to test the Fedders products. Judge
Michel wrote the majority opinion, joined by Judge Rader and Chief Judge Mayer
dissented. Chief Judge Mayer
dissented arguing that it was unreasonable for the patentee not to investigate
or test any potentially infringing products for a 10 year period.
How can you reconcile these two conflicting opinions?
The only difference seems to be that the communication between Wanlass
and GE was not present in the Fedders case. Thus, it could be said that in
Wanlass I, Wanlass was on notice that GE was a potential infringer and therefore
he had a continuing duty to test GE products.
8. Skip it.
9. How long a delay is too long?
No specific number of days, months of delay to trigger laches.
Instead, only requirement is that the delay is "unreasonable".
- holding that 3 Yrs delay was unreasonable because the delay was inexcusable and D suffered prejudice from the delay.
Odetics v. Storage Tech (E.D.Va. 1996)
- holding that a 58 month delay to find an attorney willing to handle the matter on contingent fee basis, even though the company could have afforded the most expensive trial attorney in Chicago created an unjustified delay.
Naxon Telesign v. Bunker Ramo USPQ 920 (N.D. Ill. 1981)
E.
Prosecution Laches
Ø
For
the application filed prior to
Ø
For
the application filed on or after
Ø
Most
applications are now published 18 months after the earliest priority date sought
by the patentee, excluding provisional patent application.
Ø
A
patentee can avoid an 18 month publication by a petition of non-publication
under the condition that no counterpart foreign application is to be filed.
Ø
However,
if the applicant changes his/her mind to decide to file a foreign application,
then the applicant must notify USPTO within 45 days of filing the foreign
application.
Symbol
Tech. Inc. v. Lemelson Med. Educ. & Research Found., LP (Fed Cir 2005)
Lemelson is the assignee of the patents in questions,
generally relating to a machine vision and a bar code technology.
In December 1954, Lemelson filed a first patent
application. And in 1956, he filed a
second application, which matured to USP3081379 in 1963.
Before the issuance of USP’379, he filed a first CIP in 1963 from the
1954 and 1956 applications, adding Dwgs and texts and combining both 1954 &
1956 applications. In 1972, he filed
a second CIP (called ‘a common specification’) that basically became the
basis for additional 16 patent applications filed between 1977 and 1993.
Symbol’s customers began receiving letters from Lemelson
notifying the possible infringement. Symbol
therefore had to indemnify these customers if the patents were valid and
infringed. Thus, Symbol filed a DJ
action against Lemelson, seeking a judgment that … the patents were
unenforceable for prosecution laches.
The district court concluded that there was a sufficient
case or controversy, but it dismissed Symbol’s prosecution laches claim.
Symbol filed an interlocutory appeal to Fed Cir under 28
U.S.C. 1292(b). Then, Fed Cir
reversed the district court’s judgment, holding that Symbol’s defense of
prosecution laches was legally viable to determine the relevant fact.
Upon remand, the district court issued a decision in Jan
2004, holding that Lemelson’s patents were unenforceable due to prosecution
laches among other things. The
district court also applied to the Doctrine of Prosecution Laches because Symbol
had presented “strong evidence” … of intervening private and public
rights.
-----------------------------------------------
Fed Cir agrees with Symbol that the laches standard does
not require “intentional” delay but only that which is “unreasonable and
unexplained”. The Fed Cir did not
set forth any firm guidelines for application of doctrine of laches.
However, in 1923, the Supreme Court, in
Although there are legitimate reasons for re-filing a
patent application, such as divisional applications on various aspects of the
invention described in the original specification or continuation applications
including rejected claims in order to present the unexpected advantages of the
invention when obtaining such evidence takes a substantial period of time,
re-filing an application solely containing previously-allowed claims for the
business purpose of delaying their issuance can be considered an abuse of the
patent system.
Here in this case, the Lemelson’s patents in question,
an 18 to 39 year-time period had elapsed between the filing and issuance.
In this exceptional case, the public suffers in a great deal because
the public including Symbol have invested in the technology described in the
delayed patents for unreasonably long period of time.
Fed Cir held that all of the claims of patents in question are
unenforceable under the doctrine of prosecution laches.
Notes:
1. No presumption (rebuttable presumption) for the application of prosecution laches like the litigation laches.
The average prosecution time was 2.47 years in a period from 1976 to 2000. Only 1.38% of more than
two million patents tool 8 years or longer in prosecution.
2. Only 0.72% during the period from 1982 to 2000 are based on the filing of 4 ore more CAs.
3. The new package rule directed by a former PTO director, Mr. Dudas, was rescinded by a new PTO director Me. Kappos.
Problems (Text Pgs 670 to 671)
1.
2.
3.
I encourage you to work on these problems, especially Problems 1 and 3, and discuss these Problems with your study buddy.