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[bandjwet]

We have been selling a device for 6 years in the area of electronics. Another firm, which  has a patent on a similar product has now made a claim that one of the claims of the their invention is being violated by our design. We informed the patent holder prior to the release of our product 6 years ago about our design and how we did not think it violated their IP. Low an behold 6 years later they now are coming back and making a claim.

The question is there any legal precedence which helps bolster our case of pre-informing the patent holder and by the passage of time where the patent holder accepted our device by not acting on any of their claims?

(What changed in this time period was that we were able to deliver faster and make customized designs in-house vs the patent holder having to go outside for the same)

[OMG IP]

Patents are enforceable for ~20 years for a reason.

[JimIvey]

The question is there any legal precedence which helps bolster our case of pre-informing the patent holder and by the passage of time where the patent holder accepted our device by not acting on any of their claims?

Yeah, it's called laches (pronounced "latches").  It's the equivalent of "use it or lose it" for legal rights.  There's also a statute of limitations, arbitrary hard limits on what you can sue for.  They're different, but somewhat similar.

The statute of limitations for filing a patent infringement suit is 6 years, I think.  So, the timing of the suit is probably no accident.  I believe you can sue for patent infringement beyond the 6 years, but only for patent infringement within the preceding 6 years.

Laches is based more on fairness.  If the patent owner knew about your activity the whole time and seemed to indicate that he had no problem with it, you might prevail on the notion that she implicitly gave you license to do what you're doing.  For example, you can't do a rope-a-dope, encouraging an infringer to go really big and fill the marketplace with your invention and then sue for a reasonable royalty for all that infringement.

There's also laches if the patent owner kept her idea as a secret for many years and then filed a patent application when others started making infringing things, but that's not really at play here.

Regards.

[bleedingpen]

Yeah, it's called laches (pronounced "latches").  It's the equivalent of "use it or lose it" for legal rights.  There's also a statute of limitations, arbitrary hard limits on what you can sue for.  They're different, but somewhat similar.

And laches is largely a loser's defense.  The patent infringement damages SOL is conveniently six years.

The question is there any legal precedence which helps bolster our case of pre-informing the patent holder and by the passage of time where the patent holder accepted our device by not acting on any of their claims?

Your best bet is to have an infringement/invalidity opinion conducted by a competent patent attorney.  There are tons of good reasons why someone would look the other way for a period of time and then charge you with a claim of patent infringement. 

[OMG IP]

Jim,

Isn't laches an affirmative defense?

In the OP, it basically said "we are doing 'x' because we do not infringe on your IP/patent"?

What if there is proof that any lapse in time is a result of original influence/reliance from that statement?  In other words, "The defendant gaves us their word, in writing [admissible], that they did not and would not infringe our patent" etc....

To apply laches is to admit infringement but for a legal defense, isn't it?  Since laches is based on equity, it would seem some there's some unclean hands here.

Just curious...

Not a litigator.

[JimIvey]

Isn't laches an affirmative defense?  ...  To apply laches is to admit infringement but for a legal defense, isn't it? 

I'm not a litigator either.  I believe it is an affirmative defense.  However, I believe that it can be argued in the alternative.  For example, your patent is invalid, we don't infringe, and even if it's not invalid and we do infringe, you're guilty of laches.

So, I wouldn't say you'd have to admit infringement but only lose the argument that you don't infringe.

I was just trying to think of ways a long delay in bringing suit could help a defendant.  I'm not really all that familiar with laches in patents other than prosecutorial laches -- delays in filing and delays in allowing the claims to issue.  I think it would apply somehow as a general principle of law.

Regards.

[OMG IP]

Isn't laches an affirmative defense?  ...  To apply laches is to admit infringement but for a legal defense, isn't it? 

I'm not a litigator either.  I believe it is an affirmative defense.  However, I believe that it can be argued in the alternative.  For example, your patent is invalid, we don't infringe, and even if it's not invalid and we do infringe, you're guilty of laches.

So, I wouldn't say you'd have to admit infringement but only lose the argument that you don't infringe.

I was just trying to think of ways a long delay in bringing suit could help a defendant.  I'm not really all that familiar with laches in patents other than prosecutorial laches -- delays in filing and delays in allowing the claims to issue.  I think it would apply somehow as a general principle of law.

Regards.

Ah, gotcha.  Just curious.  I am kind of going through some laches stuff with a trademark matter -- not necessarily in a litigous venue, but an assessment of it.  The courts very much look at the equities of the situation, and there's no clear case where it may or may not apply.  Always fact dependent (imagine that).

[petethebody]

I believe [latches] is an affirmative defense.  However, I believe that it can be argued in the alternative.  For example, your patent is invalid, we don't infringe, and even if it's not invalid and we do infringe, you're guilty of laches.

Jim is right, latches is a defense that you can argue in the alternative to non-infringement.  I am stepping out on a limb here, but I believe it is actually what is called an "equitable defense", which means that, even if you lose on validity and infringement, the court can still refrain from enforcing the patent.

The Federal Circuit Bar Association Model Jury Instruction for laches (B.5.2), which is representative of other jury instructions on point, provides for delay in bringing suit as a basis for barring recovery by a patentee:

“[Alleged infringer] contends that [patent holder] is not entitled to recover damages for acts that occurred before it filed a lawsuit because: (1) [patent holder] delayed filing the lawsuit for an unreasonably long and inexcusable period of time, and (2) [alleged infringer] has been or will be prejudiced in a significant way due to [patent holder]’s delay in filing the lawsuit.”

So, in order to win a defense of laches, the alleged infringer must prove in court: “(a) the patentee's delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay.”  The Federal Circuit actually once held that six years of delay creates a presumption of laches, eliminating the requirement for the infringer to show prejudice.  A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 22 USPQ2d 1321 (Fed. Cir. 1992). 

However, I don't know if you can move to dismiss the complaint based on laches.  So, that may mean that a laches defense can only be raised at trial, or at earliest, summary judgment, which occurs after months or years of discovery. 

[JimIvey]

So, in order to win a defense of laches, the alleged infringer must prove in court: “(a) the patentee's delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay.”  The Federal Circuit actually once held that six years of delay creates a presumption of laches, eliminating the requirement for the infringer to show prejudice.  A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 22 USPQ2d 1321 (Fed. Cir. 1992). 

Perhaps a subtle point, but the "eliminating the requirement for the infringer to show prejudice" made me go back and make sure that I didn't misread an "or" as an "and", but the conjunction between (a) and (b) is an "and", suggesting you'd still have to show prejudice.

Is there some sort of trade-off between reasonableness of delay and the showing of prejudice required?

Regards.

[petethebody]

So, in order to win a defense of laches, the alleged infringer must prove in court: “(a) the patentee's delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay.”  The Federal Circuit actually once held that six years of delay creates a presumption of laches, eliminating the requirement for the infringer to show prejudice.  A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 22 USPQ2d 1321 (Fed. Cir. 1992). 

Perhaps a subtle point, but the "eliminating the requirement for the infringer to show prejudice" made me go back and make sure that I didn't misread an "or" as an "and", but the conjunction between (a) and (b) is an "and", suggesting you'd still have to show prejudice.

Is there some sort of trade-off between reasonableness of delay and the showing of prejudice required?

Regards.

So, in theory, if the patentee waited 6 years and presented no evidence, the infringer would win because she created a presumption of laches.  In theory.  However, in practice the patentee would concoct some excuse as for the delay.  So, after the infringer establishes the delay has been 6 years, the court deems that the second element of the infringer's defense to be met.  Then, the burden would be on the patentee to explain the excuse, and whether it was reasonable, with doubts resolved in favor of the alleged infringer. 

I would imagine, generally, there is a trade off between delay and prejudice.  The less delay, the less prejudice.  However, the inquiry of the first element is reasonableness of the patentee's delay.  While this will generally involve comparisons between other lawsuits and what is customary, it will also evaluate what was going on in the patentee's life - death, war, illness, bankruptcy, licensing of the patents, etc.

This shifting burden thing is all very complicated and academic.  The bottom line is that these rules are based on old Federal Circuit law in a very underdeveloped area of law.  They are unpredictable because they truly seek to know whether something is "fair" or "reasonable" in the totality of the circumstances; and reasonable people often disagree.  Moreover, this defense requires costly discovery to explain the delay.  Notwithstanding the voluminous gray area and prolonged inquiry, it is still the law that: if the delay has been more than 6 years, the jury will only look to see whether the patentee's delay was reasonable. 

 

[OMG IP]

I believe [latches] is an affirmative defense.  However, I believe that it can be argued in the alternative.  For example, your patent is invalid, we don't infringe, and even if it's not invalid and we do infringe, you're guilty of laches.

Jim is right, latches is a defense that you can argue in the alternative to non-infringement.  I am stepping out on a limb here, but I believe it is actually what is called an "equitable defense", which means that, even if you lose on validity and infringement, the court can still refrain from enforcing the patent.

The Federal Circuit Bar Association Model Jury Instruction for laches (B.5.2), which is representative of other jury instructions on point, provides for delay in bringing suit as a basis for barring recovery by a patentee:

“[Alleged infringer] contends that [patent holder] is not entitled to recover damages for acts that occurred before it filed a lawsuit because: (1) [patent holder] delayed filing the lawsuit for an unreasonably long and inexcusable period of time, and (2) [alleged infringer] has been or will be prejudiced in a significant way due to [patent holder]’s delay in filing the lawsuit.”

So, in order to win a defense of laches, the alleged infringer must prove in court: “(a) the patentee's delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay.”  The Federal Circuit actually once held that six years of delay creates a presumption of laches, eliminating the requirement for the infringer to show prejudice.  A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 22 USPQ2d 1321 (Fed. Cir. 1992).  

However, I don't know if you can move to dismiss the complaint based on laches.  So, that may mean that a laches defense can only be raised at trial, or at earliest, summary judgment, which occurs after months or years of discovery.  

Well, from my post, I was not inquirig as to whether you could or couldn't assert laches... Instead, it's whether some pre-existing factors could be used to, for lack of a better description, nulify laches.   In other words, if I express to someone that I will not infringe their patent, and then I turn around and infringe their patent, why should I get an equitable defense becuase they didn't run out and sue me right away.  It would seem to me in this case laches would run into a big problem with such a thing, if pre-existing factors were proven.

[bleedingpen]

However, in practice the patentee would concoct some excuse as for the delay.

Yep, and you would lose on a laches defense.  Presumptions are rebuttable by the patentee and the burden of proof on a two prong analysis shifts back to the accused infringer. 

Equitable estoppel might be a better defense.

To establish sufficiently an equitable estoppel defense, the alleged infringer has the burden of proving (1) that the patentee has already
communicated to the alleged infringer either by its words, silence, or conduct that it would not enforce its patent rights against
said alleged infringer; (2) that the alleged infringer has relied on this communication; and (3) that the alleged infringer, because of its reliance,
would be materially prejudiced if the court allows the patentee to proceed with its claim. Although laches has a rebuttable presumption
based on a lapse of time, no such presumption exists for equitable estoppel. Instead, conduct, rather than time, triggers an
estoppel defense. Consequently, the defendant at all times carries the burden of proving the elements of equitable estoppel by a preponderance
of the evidence regardless of any delay.

http://llr.lls.edu/volumes/v32-issue3/burson.pdf

I was once litigating a case in which the patentee once told the accused infringer that they did not in fact infringe on the patents.  After substantive review of the laches and equitable estoppel defenses and their likelihood of success, we didn't even bother spending significant time trying to advance those defenses. 

[bleedingpen]

However, in practice the patentee would concoct some excuse as for the delay.

Yep, and you would lose on a laches defense.  Presumptions are rebuttable by the patentee and the burden of proof on a two prong analysis shifts back to the accused infringer. 

Equitable estoppel might be a better defense.

To establish sufficiently an equitable estoppel defense, the alleged infringer has the burden of proving (1) that the patentee has already
communicated to the alleged infringer either by its words, silence, or conduct that it would not enforce its patent rights against
said alleged infringer; (2) that the alleged infringer has relied on this communication; and (3) that the alleged infringer, because of its reliance,
would be materially prejudiced if the court allows the patentee to proceed with its claim. Although laches has a rebuttable presumption
based on a lapse of time, no such presumption exists for equitable estoppel. Instead, conduct, rather than time, triggers an
estoppel defense. Consequently, the defendant at all times carries the burden of proving the elements of equitable estoppel by a preponderance
of the evidence regardless of any delay.

http://llr.lls.edu/volumes/v32-issue3/burson.pdf

I was once litigating a case in which the patentee had told the accused infringer that they did not in fact infringe on the patents.  After substantive review of the laches and equitable estoppel defenses and their likelihood of success, we didn't even bother spending significant time trying to advance those defenses. 

[NJ Patent1]

I agree with essentialy all of the above.  Laches is an affirmative equitable defense, but can also be argued alone in a motion for S/J.  If the case is strong, defendant can save some litigation $.  Different litigators take different views on when to argue the point. 

[2ndcareer]

"The question is there any legal precedence which helps bolster our case of pre-informing the patent holder and by the passage of time where the patent holder accepted our device by not acting on any of their claims?"


YES, your pre-informing the patent holder is 1 piece of evidence that the patent holder knew about your potential infringement, and his clock starts running.

Laches is a good defense theory.  (Note, your pre-informing the patent holder that you do not believe you are infringing his patent, is NOT a promise not to violate his patent.  It's simply your opinion on validity of his claim.  This should not be considered his excuse for his "delay", because he should not have relied upon your opinion of non-infringement as a "promise".  In other words, it's his own fault for not carefully reviewing your opinion.  It's not like you are his attorney, there is no expectation that he would rely upon your opinion).


The theory of laches (and unreasonable delay) can be supported by various evidence on your side, for example, if your product goes back beyond the 6 year period, it may be very difficult for you to find witnesses to support your defenses (such as if your original designer of product is no longer working for you, and cannot be located easily, and/or his notes are no longer kept).

These evidence can be used by you to show that you would suffer burden and prejudice, and unable to adequately defend your case,  BECAUSE the patent holder delayed unreasonably in bringing the suit 6 years late.