April 5, 2016

Equitable Estoppel Stops NPE From Asserting Patents that its Assignor Failed to Assert

By Bryan K. Wheelock, Principal

In High Point SARL v. Sprint Nextel Corporation, [2015-1298] (April 5, 2016), the Federal Circuit affirmed summary judgment that equitable estoppel and laches preclude prosecution of High Point’s claims for infringement of United States Patent Nos. 5,195,090, 5,195,091, 5,305,308, and 5,184,347.  High Point is an NPE that acquired the patents from successors of AT&T and Lucent.

The Federal Circuit held that the district court did not abuse its discretion in determining that equitable estoppel precludes High Point from bringing this case against Defendants. The Court said that three elements must be established for equitable estoppel to bar a patentee’s suit:

  1. the patentee, through misleading conduct (or
    silence), 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. the alleged infringer will be materially prejudiced if
    the patentee is allowed to proceed with its claim.

The Federal Circuit concluded that High Point’s predecessors’ misleading course of conduct caused Sprint to reasonably infer that they would not assert the patents-in-suit while Sprint purchased unlicensed infrastructure to build its network. The Court said that misleading conduct occurs when the alleged infringer is aware of the patentee or its patents, and knows or can reasonably infer that the patentee has own of the allegedly infringing activities for some time.  The Federal Circuit said that the evidence showed both silence and active conduct.

The Federal Circuit also agreed with the district court that Sprint detrimentally relied upon the inaction of High Point’s predecessors.

Finally, the Federal Circuit agreed with the district court that Sprint were prejudiced by the delay, both economically because of continued investment in the accused technology, and through loss of evidence over time.

The effect of equitable estoppel is “a license to use the invention that extends throughout the life of the patent.”