Many years ago (now fourteen to be exact), I wrote about the twin defenses of laches and equitable estoppel, as well as why patent owners should worry if they procrastinate in filing a patent infringement suit after threatening a potential infringer. See Guttag, “Laches and Estoppel: The Patentee Who Procrastinates in Filing Suit May Be Lost,” AIPLA Quarterly Journal, Vol. 31, No. 1 (Winter 2003). But just this week, SCOTUS rendered at least half of my 2003 article moot by holding that laches cannot be invoked as a defense against a claim for damages in a patent infringement action. SCA Hygiene Products Aktiebolag v. First Quality Baby Products LLC. In doing so, SCOTUS also overturned a quarter of a century of Federal Circuit precedent known as the Aukerman presumption that a six-year delay in filing suit after the patent owner knew or should have known of the alleged act of infringement would create a presumption that laches had occurred.
But what about laches’ “evil cousin” known as equitable estoppel (sometimes and hereafter referred to simply as “estoppel”)? Consider also that the defense of estoppel, if successfully asserted, is (or was) a complete bar to any recovery by the patent owner, including the denial of an injunction (i.e., equitable relief) against further infringement. Did SCOTUS’ ruling in SCA Hygiene Products also render that defense moot, as well as the remainder of my 2003 article, as well as a my 2010 IPWatchdog article I wrote on the Federal Circuit case of Aspex Eyewear Inc. v Clariti Eyewear, Inc.? See Guttag, Time Bomb: CAFC Says Threat + Waiting 3 Years = Estoppel.
The remaining vitality of estoppel as a defense against patent infringement after SCA Hygiene Products is also not a hypothetical question. Indeed, the issue of estoppel remains very much “alive and well” in SCA Hygiene Products. Besides laches, the accused infringer in SCA Hygiene Products, First Quality Baby Products, had moved (not surprisingly) for summary judgment based upon an estoppel defense, which was also granted by the district court. Also not too surprisingly, that portion of the ruling by the district court was reversed and remanded by the Federal Circuit panel on the ground that there were “genuine issues of material fact” to be resolved. The Federal Circuit majority in its en banc ruling also reinstated and preserved the Federal Circuit panel’s reversal and remand of the district court’s grant of summary judgment on the estoppel defense. Finally, in footnote 2, SCOTUS’ decision in SCA Hygiene Products expressly states: “We do not address the Federal Circuit’s reversal of the District Court’s equitable estoppel holding.”
So now the district court (or possibly the Federal Circuit if decides not to “pass the buck” on the first and possibly the third question I pose) in SCA Hygiene Products will have to consider not one but potentially three questions:
- Does estoppel remain viable as defense to a patent infringement action after SCA Hygiene Products?;
- If estoppel remains a viable defense, do the relevant facts show that estoppel has, in fact, occurred, i.e., the patent owner, SCA Hygiene Products, through “misleading conduct,” led the accused infringer, First Quality Baby Products, to reasonably infer that the patent owner did not intend to enforce its patent against the accused infringer, as well as the accused infringer “detrimentally” relying upon this “misleading conduct”?; and finally
- If estoppel is factually shown to have occurred, is the patent owner’s patent infringement action barred completely by the estoppel, or only from being granted an injunction (i.e., an injunction being an equitable remedy, versus damages being the legal remedy)?
Needless to say the answer to each of these three questions remains in doubt. It is also a given that whatever the district court rules on any of these three questions it will be appealed once again to the Federal Circuit. It is also entirely possible that whatever the Federal Circuit says (on remand from SCOTUS or on appeal from the district court) about these three questions (by panel decision or potentially en banc) will once again land in the lap of SCOTUS on a petition for certiorari. The only certainty we have is that the continuing vitality of estoppel as a defense, as well as what impact it might have if it remains “alive and well” as a defense remains completely uncertain. So stay tuned for the next several years or so as we watch in wonder (and likely frustration) to see if the “evil cousin” of laches joins its fate, or remains a potentially deadly defense for procrastinating patent owners to worry about.
*© 2017 Eric W. Guttag