No Equitable Estoppel Where Parties Never Communicated

Posted on February 17, 2010 by R. David Donoghue

Integrated Cards, L.L.C. v. McKillip Indus., Inc. d/b/a USA/Docufinish, No. 06 C 2071 (N.D. Ill. Nov. 19, 2009) (Kendall, J.). 

Judge Kendall, following a bench trial, held that pre-suit damages were barred by laches, but that the claims were not barred by equitable estoppel, in this patent case involving integrated labels.  Laches was presumed because plaintiff and its founder/predecessor entities were aware of defendant's alleged infringement for more than six years before filing.  And defendant was prejudiced by plaintiff's delay because defendant purchased more than $1M in machines for producing the allegedly infringing integrated labels.  Laches, therefore, barred pre-suit damages.

Equitable estoppel, however, did not apply and bar all damages because plaintiff never suggested to defendant that plaintiff would not sue.  There was no evidence that plaintiff or its predecessors ever threatened litigation or otherwise misled defendant into believing it would not get sued.  And when litigation has not been threatened, courts typically will not estop patentee's suit.  Plaintiff's suit, therefore, was not equitably estopped.

*  Click here for more on this case in the Blog's archives. 

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Laches Summary Judgment Denied and Bench Trial Set

Posted on September 10, 2008 by R. David Donoghue

Integrated Cards, L.L.C. v. McKillip Industries, Inc., No. 06 C 2071, 2008 WL 3286981 (N.D. Ill. Aug. 8, 2008) (Kendall, J.).

Judge Kendall denied defendant’s motion for summary judgment of laches and equitable estoppel, and set a bench trial on the two defenses. Plaintiff charged defendant with infringing its patent covering a card (such as an ID card) integrated with a letter – Illinois attorneys get their ARDC cards in a similar form.

Defendant made and sold versions of the accused product for at least nine to ten years. Defendants argued that plaintiffs had actual constructive knowledge of the accused product beginning in 1998 or 1999, longer than the six years before the filing date required for a presumption of laches pursuant to 35 U.S.C. § 282. That presumption would have shifted the burden of proof from defendants to plaintiffs.

Defendants alleged plaintiffs’ knowledge was based upon various conversations, working relationships and trade show attendance. But the Court held that plaintiffs raised material questions of fact as to each communication or trade show. The Court did, however, note that it had doubts about some of plaintiffs’ testimony explaining their lack of knowledge from trade shows. But on summary judgment, the Court would not make credibility determinations against plaintiffs, the non-moving party.

Because the Court did not grant summary judgment as to the presumption of laches, defendants retained the burden of proof. And the Court held that because of defendants’ burden and because the parties disputed whether defendants were prejudiced by plaintiffs’ alleged delay in filing suit, summary judgment was not appropriate.

The Court also denied summary judgment of equitable estoppel, relying upon its laches reasoning. And the Court set a bench trial on laches and inequitable conduct to be held before the liability trial.

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Answer Cannot be Amended to Add a Defense Originally Available

Posted on July 26, 2007 by R. David Donoghue

Meyer Intellectual Props. Ltd. V. Bodum, Inc., No. 06 C 6329, Slip Op. (N.D. Ill. Jul. 24, 2007) (Shadur, J.).*

Judge Shadur denied defendant’s motion to amend its answer adding an equitable estoppel defense. The Court noted that amendments were usually “generously” allowed, but defendant provided no justification for not including equitable estoppel in its original answer. Defendant argued that it required investigation to discover its equitable estoppel defense, but the Court noted that the information defendant relied upon was in defendant’s possession. So, there was no reason that defendant could not have conducted its investigation before filing its answer.

 

*  A copy of the Opinion is available here.

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