Docket No. 2013-1564
REYNA, WALLACH, HUGHES
September 17, 2014
Update: see Sept. 18, 2015 en banc decision
Brief Summary: FC panel affirmed DC finding of laches (more than six years delay without reasonable excuse) but reversed as to equitable estoppel as questions remained regarding “reliance” by FQ on SCA’s inaction.
Summary: SCA appealed DC dismissal of its suit regarding US 6,375,646, relating to adult incontinence products, because its claims were barred by laches (SCA delay of more than six years to file suit) and equitable estoppel. While the FC affirmed the laches decision, it reversed on equitable estoppel. SCA first contacted First Quality (FQ) in letter claiming the FQ infringed the ‘646 patent. FQ wrote back explaining that it believed the patent was invalid in view of a prior art patent. Four more “brief letters” were exchanged but none mentioned the ‘646 patent (addressed different patents, different products). In 2004, SCA filed an ex parte request for reexamination of the ‘646 patent with respect to the prior art and did not notifiy FQ. Between 2006-2009, FQ was expanding its adult incontinence products business. SCA claims it begin in 2007 to prepare for litigation with FQ but did not contact the company until it filed suit in August 2010 (six years and nine months after first contact). The opinion explained that “[d]elays exceeding six years give rise to a presumption that the delay is unreasonable, inexcusable, and prejudicial” which shifts the evidentiary burden to the patentee unless it can be shown the delay was “excusable or not unreasonable” (Wanlass, FC 1998). The FC panel concluded SCA could not show its delay was reasonable and that FQ would be “economically prejudiced” if SCA were allowed to continue because it continued to expand its business during the delay (evidentiary prejudice not relevant here). Equitable estoppel only “arise[s] where an accused infringer shows by a preponderance of evidence that (1) a patentee, acting on the basis of accurate facts, communicated something in a misleading way, by words, conduct, or omission, to an alleged infringer, (2) on which the accused infringer relied, (3) such that he would be materially prejudiced if the patentee is allowed to assert a claim that is inconsistent with his earlier communication” (“When found, equitable estoppel acts as a complete bar to a patentee’s infringement claim.”) The opinion clarified that laches and equitable estoppel are distinct (“…a court may not presume the underlying elements of equitable estoppel are present, regardless of how much time has passed.”) The FC panel agreed with SCA that its silence after the first two letters could not support SJ regarding equitable estoppel (misleading communication or inference “must be only possible inference from the evidence”). It also distinguished “between prejudice that results from a patentee’s alleged misrepresentation and prejudice caused by reliance upon it” (Asics, FC 1992). Only prejudice “result[ing] from” is required for laches but “reliance” is required to show equitable estoppel. The FC panel concluded that genuine issues of material fact remainted regarding equitable estoppel and it therefore reversed the DC grant of SJ on this point.