Whether you are a patent owner or someone exploiting, or desiring to exploit, a technology patented by another, there are two legal principles that are important to keep in mind: laches and equitable estoppel.
Scenario 1: XYZ Corporation owns a patent directed to a widget. ABC Corporation starts making and selling widgets, actions of which XYZ is aware. Time goes by, and XYZ does nothing to assert its patent rights against ABC. Then, suddenly, ABC receives notice from XYZ of an infringement action.
Laches is an equitable defense under which an accused infringer asserts that a patent owner has failed to assert its patent rights in a timely manner. Such a defense is similar to a statute of limitations, but is not entirely analogous. There is no time limit set by law, but there is a presumption that a delay of more than 6 years is unreasonable.
In asserting laches, a defendant must prove that the patent owner delayed in filing an infringement action for an “unreasonable amount of time” after it became aware of the infringement. The defendant must also provide that the unreasonable delay caused material prejudice or injury to the defendant.
In order to overcome the laches defense, the plaintiff must prove that at least one of the two circumstances above is untrue. For example, the plaintiff may be able to demonstrate that there was a reasonable excuse for the delay, such as other patent litigation, licensing negotiations with the defendant, lack of funds, or ownership dispute. However, even if this strategy is successful, the damages that are awarded may be limited.
Scenario 2: XYZ Corporation owns a patent directed to a widget. ABC Corporation starts making and selling widgets, actions of which XYZ is aware. ABC is led to believe that XYZ does not intend to enforce their patent by certain conduct on XYZ’s part.
Equitable estoppel is based in the patent owner’s conduct and the alleged infringer’s resulting reasonable belief based upon that conduct. There are three significant elements that are pertinent in the context of patent infringement: (1) The patent owner exhibits misleading conduct based upon which the alleged infringer reasonably infers that the patent owner does not intend to assert its patent rights. (2) The alleged infringer relies on the misleading conduct of the patent owner. (3) The alleged infringer will be materially prejudiced if the patent owner is allowed to proceed with an infringement action.
The common thread of the doctrines of laches and equitable estoppel is that patent owners have a duty to police their patent rights. The consequences of negligently ignoring potentially infringing actions can be a loss of those patent rights, to the detriment of the patent owner and the benefit of potential infringers.
