Monday, May 24, 2010

Equitable estoppel issues in Aspex v. Clariti

The CAFC concludes:

The elements of equitable estoppel were established
without material factual dispute, and the district court did
not abuse its discretion in weighing the equities. We affirm
the district court’s ruling that Aspex is equitably estopped
from suing Clariti for infringement of the ’747 patent.

The points made by Judge Rader in dissent [below] are of
interest on the equitable estoppel issue.

But no attorney fees under 285 for Clariti:

Defeat of a litigation position, even on summary
judgment, does not warrant an automatic finding that the
suit was objectively baseless; all of the circumstances must
be considered. The district court did not clearly err in
ruling that the act of bringing this suit, under the circum-
stances that existed, did not produce an exceptional case in
terms of fees.

On inequitable conduct:

Clariti argues that the inventor of the ’747 patent, David
Chao, and his assignee, co-defendant Contour Optik, Inc.,
knew of a material reference and intentionally withheld it
from the Patent and Trademark Office. The reference is a
patent application filed by Julie Madison of Manhattan
Design Studio. The Madison application was filed on April
18, 1997, ten days before Chao filed the ’747 application,
and it issued as U.S. Patent No. 6,149,269 (“the ’269 pat-
ent”) shortly after the ’747 patent issued. Mr. Chao testified
that he became aware of the Madison application while it
was pending, in late 1996 or early 1997, and was “very
upset” because he had given some technical drawings to Ms.
Madison and he believed that she had used these drawings
in her patent application. Neither Mr. Chao nor his as-
signee Contour Optik brought the Madison application to
the attention of the PTO during prosecution of the ’747
application. Clariti later requested reexamination of the
issued ’747 patent on the basis of Ms. Madison’s issued ’269
patent, and the ’747 claims were confirmed after Mr. Chao
“swore behind” the Madison application.

Judge Rader dissented:

“Silence alone will not create an estoppel unless there
was a clear duty to speak or somehow the patentee’s contin-
ued silence reinforces the defendant’s inference from the
plaintiff’s known acquiescence that the defendant will be
unmolested. . . . [O]n summary judgment, such inference
must be the only possible inference from the evidence.” A.C.
Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020,
1043–44 (Fed. Cir. 1992) (en banc) (internal citations omit-
ted) (emphasis in original). In Aukerman, this court held
that because the district court could draw different infer-
ences from the correspondence between the parties, the
district court clearly and impermissibly drew an unfavor-
able inference against the patentee in granting summary
judgment. Id.; see also Hemstreet v. Computer Entry Sys.
Corp., 972 F.2d 1290, 1295 (Fed. Cir. 1992) (holding that
“mere silence must be accompanied by some other factor
which indicates that the silence was sufficiently misleading
as to amount to bad faith” (emphasis in original)). The
patentee’s silence “must be combined with other facts re-
specting the relationship or contacts between the parties to
give rise to the necessary inference that the claim against
the defendant is abandoned.” Aukerman, 960 F.2d at 1042.
This court held that even an invitation to sue made by the
defendant did not create a clear duty to speak for the pat-
entee. See id. at 1026–27.
In this case, Aspex sent Clariti a letter that does not
create the clear duty required by Aukerman.


This court mistakenly relies on Scholle Corp. v. Black-
hawk Molding Co., 133 F.3d 1469 (Fed. Cir. 1998) and
Wafer Shave, Inc. v. The Gillette Co., 857 F. Supp. 112 (D.
Mass. 1993), aff’d, 26 F.3d 140 (Fed. Cir. 1994) to establish
misleading conduct. In Scholle, the accused infringer made
a design-around product during litigation in an effort to
avoid future infringement. 133 F.3d at 1470. The defen-
dant presented samples of the design-around product to the
patentee and informed the patentee that it would consider
the design-around product non-infringing unless the pat-
entee advised it otherwise. The patentee gave no response
to the defendant’s inquiry. Id. Following the defendant’s
inquiry, the parties had numerous discussions regarding the
patent and even a possible merger. Id. at 1471. The pat-
entee knew of the defendant’s position in the market and
the rapidly growing sales of the design-around product. Id.
In those years of discussions, the patentee never suggested
that it might consider the design-around product to infringe
its patent. Id. Years later, the patentee sued the defendant
for infringement by the design-around product. Id. at 1471–
72. In Scholle, this court found that the discussions that the
parties had over the years was “cooperative behavior [that],
in light of [the patentee’s] previous threats to sue, created a
reasonable inference that [the patentee] considered the
[product] a non-infringing design-around product and did
not intend to sue.” Id. at 1472. In other words, the “course
of dealing” and “extensive contact” between the parties
coupled with the patente at 1472, 1473.

Judge Rader also stated:

Marketing products, which is all Clariti did here, gener-
ally does not require the same kind of investment as devel-
oping and manufacturing products.

If IPBiz is not mistaken, in the pharma area, a lot MORE
money is spent in marketing products, than in developing and
manufacturing products.


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