By Joel Leeman.
A recent lesson to patent owners is this: After you threaten a potential infringer with enforcement of your patent, be prepared either to keep the conversation going or to assert the patent in litigation. Silence can be dangerous after the initial contact.
In Aspex Eyewear v. Clariti Eyewear, the Federal Circuit reinforced the applicability of equitable estoppel to patent litigation. “Equitable estoppel” is a venerable legal concept that may apply when one party acts (or refrains from acting) and another party relies on that conduct. Simply put, estoppel prevents A from later asserting a claim against B if B takes certain action in reliance upon A’s conduct.
Aspex holds patents relating to magnetically attachable features, such as sunshades, for eyeglass frames. Here is the back-and-forth between Aspex and a competitor, Clariti, that led the court to conclude that Aspex had lost its right to enforce a patent against Clariti:
- When Aspex sued Clariti for patent infringement in 1999, Clariti promptly knuckled under and steered clear of magnetic eyewear for four years.
- When Clariti resumed marketing attachable lenses in 2003, Aspex stated in correspondence that some of Clariti’s products “may be covered” by one or the other of five Aspex patents, including the so-called ‘747 patent. The letters asked Clariti to confirm that it will stop selling frame attachments “in violation of our rights” and asserted Aspex’s “policy and . . . strong intention to fully and vigorously enforce our patents.”
- Clariti asked Aspex to identify the patents which supposedly cover Clariti’s products.
- Aspex promptly answered that claims of two of its patents covered frames sold by Clariti, but Aspex did not include the ‘747 patent among them.
- Clariti wrote back to say that it does not believe it infringed the two specified patents. It continued to market the accused products.
- Fully three years elapsed before Aspex made its next contact with Clariti, asserting that Clariti’s products infringed the ‘747 patent.
- Clariti refused to stop selling those products, and Aspex sued for infringement of the ‘747 patent.
Clariti asked the trial court to find the ‘747 patent unenforceable, and the judge agreed, because Aspex met all three elements of equitable estoppel that the Federal Circuit laid out in a seminal 1992 case:
- Through misleading conduct, Aspex led Clariti to believe that it did not intend to enforce its patent;
- Clariti relied on that conduct; and
- Because of that reliance, it would be unfair to subject Clariti to an infringement suit.
Specifically, the court held that Aspex’s correspondence in 2003 contained threats to sue Clariti for infringing specific patents, including the ‘747. When Aspex answered Clariti’s request for clarification by specifying two patents other than the ‘747, it was reasonable for Clariti to infer that Aspex had dropped the accusation of infringement as to the ‘747 patent. This satisfied element #1 of the equitable estoppel defense: the misleading conduct.
The court found meaningful Clariti’s testimony that, if Aspex had sued on the ‘747 patent in 2003, Clariti would have pulled the offending products–much as it did in response to Aspex’s 1999 lawsuit–because it had not yet invested heavily in marketing them. Because Aspex did not promptly sue, Clariti inferred that Aspex had in fact dropped the accusation. Thus, Clariti proved element #2: reliance on Aspex’s misleading conduct.
Due to Aspex’s prolonged silence, Clariti felt free to expand the marketing and sales of the eyeglass frames that Aspex had initially accused. This change in Clariti’s economic position meant that it would be unfair for Aspex to proceed with suit, thus checking off the third element of equitable estoppel.
In a dissenting opinion, Judge Rader made two points: First, Aspex’s letters did not constitute a threat of “immediate and vigorous enforcement of its patent rights” which can give rise to estoppel when followed by a long period of inaction. Instead, those letters could be seen as mere requests for information that would guide Aspex’s decision-making.
The majority has the better of Judge Rader on this issue. While it is true that Aspex wrote that Clariti’s products “may be covered” by Aspex’s patents, this soft phrase does not mitigate Aspex’s strident assertion of its “strong intention to fully and vigorously enforce our rights.” The threat of litigation was all too obvious from Aspex’s demand that Clariti confirm that it had stopped selling the accused frames.
The dissenting judge’s second point is more compelling: Since Clariti simply marketed products and did not manufacture them, its reliance on Aspex’s silence did not lead to the heavy investment that a manufacturer would make to expand its business. The evidence, says Judge Rader, did not show that Clariti incurred the level of marketing or hiring costs that would make Aspex’s suit unfair to maintain.
The validity of Judge Rader’s point only heightens the need to be wary of estoppel when letting accusations of infringement go stale. The result in this case demonstrates that equitable estoppel may be applied even where the infringer’s reliance involves only marginal additional investment in the infringing articles.
The majority opinion reveals considerable sympathy for companies that have litigation threats hanging over them. These companies have business plans that, in fairness, cannot be held hostage indefinitely by an indecisive patent owner. At some point, failure to pull the trigger results in self-inflicted injury: The patent owner loses the right to enforce his patent.