Three Year Period of Silence Leads to Equitable Estoppel

Aspex Eyewear Inc. v. Clariti Eyewear, Inc., No. 2009-1147 (Fed. Cir., 2010)

In March 2003, Aspex sent Clariti a letter identifying 4 Aspex patents relating to magnetically attachable lenses and stating "[i]t is our understanding that some of the products sold by you may be covered by the claims of the above mentioned patents . . . It has been our policy and continues to be our strong intention to fully and vigorously enforce our rights under the exclusive license to these magnetic frame attachments . . . We look forward to your immediate reply to this very urgent and serious matter."

After a brief back-and-forth correspondence period, Clariti responded in June 2003 that "we believe that the products of Clariti Eyewear do not infringe any valid claims of the [] patents.”

No further contact was reported from Aspex until August 2006, where Aspex wrote that "[i]t has come to our attention that your company is manufacturing a product . . . [that] directly infringes our clients’ patent rights with regard to the ’747 patent. Specifically, your products are covered by claims of these patents, including but not limited to claims 10 and 12. A copy of the patent is enclosed for your reference."  When a resolution could not be reached, Aspex filed suit on March 2007.

Clariti moved to dismiss Aspex's infringement claims on equitable estoppel based on the three year period of silence, and the district court granted the motion.

In the context of patent infringement, the three elements of equitable estoppel that must be established are: (1) the patentee, through misleading conduct, led the alleged infringer to reasonably believe that the patentee did not intend to enforce its patent against the infringer; (2) the alleged infringer relied on that conduct; and (3) due to its reliance, the alleged infringer would be materially prejudiced if the patentee were permitted to proceed with its charge of infringement.

With regard to "misleading conduct", the Federal Circuit stated

[E]quitable relief is not a matter of precise formula. Aspex’s letters to Clariti of March 7 and 10, 2003 can fairly be understood as threats of suit for infringement, for Aspex stated its “understanding that some of the products sold by you may be covered by the claims of the above mentioned patents,” and Aspex’s “strong intention to fully and vigorously enforce our rights” in this “very urgent and serious matter.”  The ensuing silence is analogous to the silence in Scholle Corp. and in Wafer Shave [where equitable estoppel was found].

Aspex argues that its letters did not threaten suit, and highlights the equivocal nature of the statements that its patents “may” cover “some” of Clariti’s products. Aspex points to the letters’ request that Clariti divulge sales information and the source of the accused goods, arguing that this shows that Aspex would not file suit until it received such information. The district court viewed the correspondence as a whole, and concluded that it was reasonably viewed by Clariti as a threat of an infringement suit, and not mitigated by the words “may” and “some.”

With respect to the ’747 patent, the Aspex letter of March 10, 2003 was specific to this patent, but in response to Clariti’s request for the claims thought to be infringed, Aspex on May 12, 2003 identified only claims of the ’054 and ’811 patents. Whether this sequence is fairly viewed as a tacit withdrawal of the ’747 patent, or as misleading silence with respect to the ’747 patent, the result is the same, for it was reasonable for Clariti to infer that Aspex was not continuing the accusation of infringement as to the ’747 patent.

Regarding reliance and prejudice,

It was undisputed that Clariti took into account Aspex’s failure to pursue the ’747 patent while the parties discussed the [other] patents. Clariti’s president referred to the prior patent dispute between the parties, where Aspex did file an infringement suit. In that suit Clariti agreed to an injunction, and withdrew the accused products. Clariti’s president stated that Clariti would likely have done the same with the AirMag® products if Aspex had filed suit in 2003 rather than withdraw into silence. We agree with the district court that reliance on Aspex’s silence was shown.

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We also agree with the district court that Clariti’s development of its AirMag® business, in reliance on Aspex’s silence after its aggressive letters, represents a significant change in economic position and constitutes material prejudice sufficient to support equitable estoppel. Clariti need not show a total loss of value in order to show material prejudice. Prejudice may be shown by a change of economic position flowing from actions taken or not taken by the patentee.

Thus, "[t]he 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."

RADER DISSENT:

[Aspex's 2003 letter] merely informs Clariti of the patents, points to Aspex’s patent enforcement policy, and requests additional information from Clariti to permit Aspex to evaluate its position. Aspex made no outright “threats of litigation.” . . . Also, Aspex did not accuse specific Clariti products.

Licensing negotiations in which a patentee asserts infringement do not create estoppel . . . In this case, one could find that the letters from Aspex were simply requests for more information to facilitate an informed decision amongst the options of licensing, litigation, or abandonment of the infringement claim. In a case with little evidence beyond the actual letters sent by the parties, the district court should avoid premature conclusions that leap to the drastic punishment of barring all relief.

* * *

To my eyes, this record also lacks any material prejudice. Prejudice hinges on any changes in economic position that Clariti undertook during the period of delay due to the actions taken or not taken by Aspex.  Marketing products, which is all Clariti did here, generally does not require the same kind of investment as developing and manufacturing products . . . In this case, the record leaves many questions about economic prejudice because Clariti did not manufacture any products but simply marketed them.

[B]ecause of these lingering questions of fact, this case was not ripe for summary judgment. Affirming the grant of summary judgment expands the equitable estoppel doctrine beyond this court’s precedent with respect to both misleading conduct and material prejudice.