Radio Systems Corp. v Lalor, 2012-1233 (Fed. Cir. Mar. 6, 2013)

Newman (dissenting-in-part), Moore, and Reyna.

In this declaratory action case, the Federal Circuit affirmed the application of the doctrine of equitable estoppel to block allegations of patent infringement where a patentee waited for over four years before pursuing charges of infringement.

As established in A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992) (en banc), the elements required to bar a patentee's suit under the doctrine of equitable estoppel are:

(1) the patentee, through misleading conduct (or silence), leads the alleged infringer to reasonably infer thgat 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 claims.

The court noted:

"The district court found that Bumper Boy unquestionably misled Innotek through its 2005 demand letter and sub- sequent silence for over four and a half years. The court also found that Innotek relied on this silence by significantly expanding its product line and by being acquired by Radio Systems. The court found that Innotek’s investment in new products constituted economic prejudice. The court concluded that equitable estoppel applied to Bumper Boy’s allegations against Innotek. The court further reasoned that equitable estoppel also barred Bumper Boy’s allegations against Radio Systems because it (1) wholly owns Innotek, (2) is headed by the same individual as Innotek, (3) purchased Innotek to incorpo- rate its designs and products into its own product lines, and (4) exerts substantial control over Innotek."

However, of the two patents at issue--both in the same patent family--the court held that the esquitable estoppel could only apply to the patent that had issued at the time of the 2005 demand letter. The court reasoned: "Regardless of whether the ’082 [later-issed] patent claims are supported by the subject matter in the ’014 [earlier-issued] patent—and therefore entitled to claim priority to its filing date—the patents contain claims of different scope. Quite simply, the ’082 patent claims could not have been asserted against Innotek or Radio Systems until those claims issued."

Regarding the limitations of equitable estoppel, Judge Newman disagreed, agruing:

"I would affirm the district court’s ruling that estoppel applies not only to the ’014 patent but also to the continuation-in-part ’082 patent. The subject matter of the ’082 claims in suit is disclosed and described in the ’014 patent, and these claims do not draw on any new matter. The new matter added in the ’082 patent relates to a stretchable insert in the collar, a feature absent from all of the ’082 claims in suit. The force of equitable estoppel cannot be escaped by including previously disclosed but unclaimed subject matter in a continuation-in-part patent."

The opinion can be found here.