Docket No. 2015-1298
REYNA, MAYER, CHEN
April 5, 2016
Brief Summary: DC decision that High Points suit was precluded by equitable estoppel affirmed.
Summary: High Point appealed from DC grant of SJ that equitable estoppel and laches preclude the suit. The opinion explains that “High Point’s predecessors-in-interest to the patents-in-suit helped Defendants builds a communications network through licensed and unlicensed activity for over a decade” (since 1997), that High Point acquired the rights to the four patents-in-suit from Avaya in 2008 (asserting them “[w]ithin three days of taking ownership”), and that “High Point is based in Luxemborg and does not practice the patents-in-suit.” The opinion explains that “[t]he record does not reflect that at any time prior to December 2008, High Point, Avaya, or Lucent raised any infringement concerns.” While High Point’s suit was pending, “Sprint continued to buid its network by, among other things, entering into a supply agreement with Alcatel-Lucent under terms similar to those entered into with Sprint’s prior vendors” and that “Alcatel-Lucent intervened as a defendant” in 2013. The Defendants moved for SJ in 2014 which was granted, the DC reasoning “that, by waiting and not asserting any patent rights, Lucent and then Avaya placed Sprint in detrimental reliance” which “caused Sprint economic and evidentiary prejudice.” High Point argued the equitable estoppel should not apply since “a patentee is not obligated to investigate the technical details of its competitor’s equipment and then match those specifications to its patent portfolio”, “commercial realities dictact that equitable estoppel should not apply when business transactions are complex and varied”, and the DC “ignored recent case law that required Sprint to demonstrate bad faith through the patentee’s course of conduct”. The FC panel found the DC did not abuse its discretion in making its decision under the Radio Sys. Elements (Radio Sys., FC 2013; “(1) the patentee, through misleading conduct (or silence), leads the alleged infringer to reasonably infer that the patentee does not intend to enforce its patent against the alleged infringer; (2) the alleged infringer relies on that conduct; and (3) the alleged infringer will be materially prejudiced if the patentee is allowed to proceed with its claim.”) It found “[t]he evidence in this case shows both silence and active conduct” including “licensing activity” that “covered the patents-in-suit” (although “[a]t varying points…those licenses lapsed or were no longer in effect prior to the lawsuit being filed”). The opinion explained that “[i]t is undisputed that the parties are sophisticated competitors that were aware of unlicensed activity occurring as early as 2001, activity that increased over time” (e.g., “Lucent-as the then-patentee- was on notice of [Sprint’s] unlicensed activity” in Puerto Rico. (SCA Hygeine, FC 2015)). It also explained that the FC has “never held that bad faith is the sine qua non of intent” (Aspex, FC 2010). And it agreed with the DC conclusion on detrimental reliance (“Sprint could have retrofitted the potentially infringing infrastructure with sufficient notice of possible infringement.”) It also found no error with the DC finding that the Defendants suffered prejudice from the delay. The DC decision was therefore affirmed.