Opinion ID: 774874
Heading Depth: 3
Heading Rank: 3

Heading: Equitable Estoppel and Laches

Text: 52 Three elements must be established to bar a patentee's suit by means of equitable estoppel: 1) the patentee, through misleading conduct, leads the alleged infringer to reasonably infer that the patentee does not intend to enforce its patent against the alleged infringer, 2) the alleged infringer relies on that conduct, and 3) due to its reliance, the alleged infringer will be materially prejudiced if the patentee is allowed to proceed with its claim. Scholle Corp. v. Blackhawk Molding Co., Inc., 133 F.3d 1469, 1473, 45 USPQ2d 1468, 1470-71 (Fed. Cir. 1998). 53 Laches requires proof that the patentee unreasonably and inexcusably delayed filing suit and that the delay resulted in material prejudice to the defendant. Wanlass v. Gen. Elec. Co., 148 F.3d 1334, 1337, 46 USPQ2d 1915, 1917 (Fed. Cir. 1998). The length of time that may be deemed unreasonable has no fixed boundaries, but rather depends on the circumstances of the case. A.C. Aukerman, 960 F.2d at 1030, 22 USPQ2d at 1330. A presumption of laches arises if the patentee delays bringing suit for more than six years after actual or constructive knowledge of the defendant's infringing activity. Id. at 1035-36, 22 USPQ2d at 1332. 54 The district court determined that even if Ecolab's inaction could support an inference that it had decided not to enforce the parties' settlement agreement, and that Envirochem relied on Ecolab's misleading conduct, it could not demonstrate that it would be materially prejudiced if Ecolab were permitted to pursue its infringement action. In addition, the court noted that because prejudice is an element that must be proved in equitable estoppel and laches, Envirochem could not prevail on either defense. 55 The court found that Envirochem had failed to present evidence regarding economic prejudice, i.e., a change in the economic position of Envirochem during the period of delay that would not have occurred had Ecolab sued earlier. According to the court, the hiring of new employees, modification of equipment, and engagement in sales and marketing activities related to the new cast are damages normally associated with a finding of infringement and do not constitute the type of damages necessary for a finding of economic prejudice. The court noted that Envirochem's firm belief from the outset that its product was noninfringing, coupled with its conduct after being contacted by Ecolab, led the court to the conclusion that the foregoing economic decisions were merely business decisions to capitalize on a market opportunity. 56 The court also found that the record does not show, and Envirochem does not allege, that it suffered defense prejudice; i.e., that Envirochem would be unable to present a full and fair defense on the merits in view of Ecolab's delay. Envirochem has not convinced us that the district court abused its discretion in any way in declining to find equitable estoppel or laches.