Friday, March 18, 2005

IS THIS LACHES OR ESTOPPEL (OR BOTH)? I noticed an interesting fact in an article describing the current legal woes of The company is currently embroiled in a patent lawsuit filed by Overture, now a part of Yahoo Inc (they certainly seem more aggressive nowadays, don't they?). The case is expected to go to trial next month.

Overture filed suit against in 2002 in U.S. District Court in Los Angeles, contending violated Overture's patent covering its pay-per-click bidding technology., of course, is fighting back. It has filed its own suit, saying Overture's patent was obtained improperly and is invalid.

What was interesting is that the article mentioned that first received a letter from Overture in 1989 about its patent. I wonder which patent they're referring to, since the information regarding the current suit lists only 1 patent that was filed in 1999 (typo perhaps?). Anyways, assuming there's another, earlier patent, that is over 15 years in delaying action according to my calculations. What was Overture doing during this time?

Under the doctrine of Laches (a French word meaning slackness or negligence - a "sin of omission"), a patent lawsuit may be seriously hampered if there is an unexcused failure of a patentee to take action in a timely manner against a patent infringer. The reason for this policy is that excessive delay may put the defendant at a disadvantage: key witnesses may be no longer available, documents disappear, and memories fade. When laches is found, the patentee is barred from collecting damages accruing prior to the filing of the suit, but is still able to obtain an injunction barring the defendant from further infringement of the patents-in-suit.

Once the laches defense has been raised by the defendant, the plaintiff may still offer evidence that the delay either was reasonable or not prejudicial to the defendant. Ultimately, the burden of proving laches rests with the defendant, who must prove that there was an unreasonable delay in bringing suit and that this delay prejudiced the defense. However, a rebuttable presumption of laches arises when the patentee waits more than six years from the time when he or she discovered (or reasonably should have discovered) the infringement to file a lawsuit.

Estoppel, on the other hand, arises when an action of a patentee causes an accused infringer to believe that the patentee has abandoned any claim against him or will not take action. It may result when the patentee threatens to take action and then fails to follow up.

Estoppel is based on the reasonable reliance of the accused on the patentee's action. For example, the infringer considers the case closed and makes further investments into the ongoing business.

Estoppel typically occurs when the patentee writes to the infringer, describing the alleged infringement and requesting that the infringer either "cease and desist" or take a license. The infringer then either ignores the letter or sends back the usual response that they aren't infringing, and they will consider the matter closed unless they hear back from the patentee. If the patentee then fails to follow up, the infringer - logically - considers the matter finished. As a consequence of estoppel, the plaintiff may be estopped, i.e. barred, from enforcing his patent against this particular defendant.

What's going on here?

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