In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, the US Supreme Court held that laches-- unreasonable delay plus prejudice-- cannot be raised as a defense against a claim for damages brought within the six-year limitations period of 35 USC 286, which provides "no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action."
Copyright © 2017 Robert Moll. All rights reserved.
Showing posts with label laches. Show all posts
Showing posts with label laches. Show all posts
Sunday, December 31, 2017
IP Watchdog: What Mattered in 2017: Industry Insiders Reflect Biggest Moments in IP
IP Watchdog: What Mattered in 2017: Industry Insiders Reflect Biggest Moments in IP does a nice job of using industry experts to highlight the key events in patent law in 2017.
Copyright © 2017 Robert Moll. All rights reserved.
Copyright © 2017 Robert Moll. All rights reserved.
Wednesday, September 23, 2015
Federal Circuit - Laches May Bar Damages for Patent Infringement Claims Brought With the Six-Year Limit of 35 USC 286
In SCA Hygiene Products v. First Quality Baby Products, the Federal Circuit held the defense of laches (unreasonable, prejudicial delay in commencing suit) may bar recovery of damages on a patent infringement claim brought within 35 USC §286's six-year limit after considering the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc. on laches in a copyright case.
The SCA court noted A.C. Aukerman Co. v. R.L. Chaides Construction Co. stated the following principles regarding the defense of laches:
1. Laches is cognizable under 35 U.S.C. § 282 (1988) as an equitable defense to a claim for patent infringement.
2. Where the defense of laches is established, the patentee’s claim for damages prior to suit may be barred.
3. Two elements underlie the defense of laches: (a) the patentee’s delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay.
4. A presumption of laches arises where a patentee delays bringing suit for more than six years after the date the patentee knew or should have known of the alleged infringer’s activity.
5. A presumption has the effect of shifting the burden of going forward with evidence, not the burden of persuasion.
The SCA court stated laches can prevent an injunction, but in such a case the infringer could be required to pay an ongoing royalty. The majority (6 to 5) issued a 60-page opinion that in the end states the US Patent Act of 1952 codified the case law which included the laches defense as one of the "unenforceability defenses."
Also see my related article: CAFC - SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC - Reviewing Laches and Equitable Estoppel.
Copyright © 2015 Robert Moll. All rights reserved.
The SCA court noted A.C. Aukerman Co. v. R.L. Chaides Construction Co. stated the following principles regarding the defense of laches:
1. Laches is cognizable under 35 U.S.C. § 282 (1988) as an equitable defense to a claim for patent infringement.
2. Where the defense of laches is established, the patentee’s claim for damages prior to suit may be barred.
3. Two elements underlie the defense of laches: (a) the patentee’s delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay.
4. A presumption of laches arises where a patentee delays bringing suit for more than six years after the date the patentee knew or should have known of the alleged infringer’s activity.
5. A presumption has the effect of shifting the burden of going forward with evidence, not the burden of persuasion.
The SCA court stated laches can prevent an injunction, but in such a case the infringer could be required to pay an ongoing royalty. The majority (6 to 5) issued a 60-page opinion that in the end states the US Patent Act of 1952 codified the case law which included the laches defense as one of the "unenforceability defenses."
Also see my related article: CAFC - SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC - Reviewing Laches and Equitable Estoppel.
Copyright © 2015 Robert Moll. All rights reserved.
Thursday, January 8, 2015
CAFC - SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC - Reviewing Laches and Equitable Estoppel
The Federal Circuit agreed to review en banc SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC to determine whether the Supreme Court's copyright laches decision in Petrella v. Metro-Goldwyn-Mayer affects the Federal Circuit's law for patent laches and equitable estoppel set forth A.C. Aukerman Co. v. R.L. Chaides Constr. Co.
In Petrella, the Supreme Court examined whether the defense of laches (unreasonable, prejudicial delay in commencing suit) may bar relief on a copyright infringement claim brought within 17 USC §507(b)'s three-year limit. The Court held that laches cannot be invoked to preclude adjudication of a claim for damages brought within the three-years, but copyright owner's delay in bringing the suit may be relevant to injunctive relief and in assessing profits of the infringer.
In contrast, the defense of patent laches says if (1) the patent owner unreasonably delays filing its patent infringement suit; and (2) the alleged infringer (defendant) was materially prejudiced by the delay, the patent owner may not recover damages prior to filing the suit, but may get an injunction. It is an equitable defense, and once the patent owner is aware or should have known of infringement, the clock is running. If, for example, the defendant can prove the delay is greater than six years, the patent owner has the burden to show the delay was not unreasonable.
The defense of equitable estoppel says if (1) the patent owner misleads defendant it will not enforce the patent; (2) the defendant relies on it; and (3) the defendant will be materially prejudiced by allowing the patent owner to enforce the patent, the patent owner may not recover any damages.
This case is important, because it may enhance (or detract from) defenses that can reduce or eliminate patent damages.
Copyright © 2015 Robert Moll. All rights reserved.
In Petrella, the Supreme Court examined whether the defense of laches (unreasonable, prejudicial delay in commencing suit) may bar relief on a copyright infringement claim brought within 17 USC §507(b)'s three-year limit. The Court held that laches cannot be invoked to preclude adjudication of a claim for damages brought within the three-years, but copyright owner's delay in bringing the suit may be relevant to injunctive relief and in assessing profits of the infringer.
In contrast, the defense of patent laches says if (1) the patent owner unreasonably delays filing its patent infringement suit; and (2) the alleged infringer (defendant) was materially prejudiced by the delay, the patent owner may not recover damages prior to filing the suit, but may get an injunction. It is an equitable defense, and once the patent owner is aware or should have known of infringement, the clock is running. If, for example, the defendant can prove the delay is greater than six years, the patent owner has the burden to show the delay was not unreasonable.
The defense of equitable estoppel says if (1) the patent owner misleads defendant it will not enforce the patent; (2) the defendant relies on it; and (3) the defendant will be materially prejudiced by allowing the patent owner to enforce the patent, the patent owner may not recover any damages.
This case is important, because it may enhance (or detract from) defenses that can reduce or eliminate patent damages.
Copyright © 2015 Robert Moll. All rights reserved.
Saturday, July 27, 2013
USPTO Confirms Validity of U.S. Patent No. 6,314,420, Which Vringo Asserts Against Google
On July 24, 2013, the USPTO issued a Notice of Intent to Issue Ex Parte Reexamination Certificate confirming the validity of all claims of U.S. Patent No. 6,314,420 (the '420 patent) that were challenged by Google. Despite the great results many are getting sometimes ex parte reexamination may not work as expected and could bolster the validity of the challenged patent.
For details see Vringo announces that USPTO confirms validity of the '420 patent asserted in litigation with AOL, Google, et al.
If you want to see the reexamination papers, please click on USPTO PAIR, select the control number button, and enter the control number: 90/009,991.
Some tend to place considerable importance on such reexamination decisions. In USPTO Checkmates Google Over Vringo Patents Seeking Alpha claims Google is in trouble. Really did it lose it's rights to appeal? What is at stake? You say a billion dollars? You may remember the jury upheld the validity of the '420 patent as well as another US Patent No. 6,775,664, and awarded the former owner I/P Engine $30.5 million based on a reasonable royalty of 3.5%. Why the relatively high royalty rate but modest damages given Google's scale? I discussed this in Vringo v. Google - Laches Dashing Expectations - From $493M to $31M. Let me say if unreasonable delay in bringing a patent infringement suit prejudices a defendant, a court can rule no damages accrued before the suit was filed.
Seeking Alpha claims Larry Page settled with Yahoo on the Adword related patents in 2004, but somehow bought the wrong patents. This is a silly argument. Most think Google was smart to license the Yahoo patents right before its IPO. Based on this ex parte reexamination decision, Seeking Alpha suggests Google should quickly buyout Vringo at $5-7/share before others realize Vringo is worth way more. It's funny, you disclose you are long and you will say quite a bit to "help out" your hope. Vringo's shares may have jumped this week because of the USPTO notice, but I expect the shares may settle back down as investors realize this ex parte reexamination decision hasn't resolved this dispute.
Copyright © 2013 Robert Moll. All rights reserved.
For details see Vringo announces that USPTO confirms validity of the '420 patent asserted in litigation with AOL, Google, et al.
If you want to see the reexamination papers, please click on USPTO PAIR, select the control number button, and enter the control number: 90/009,991.
Some tend to place considerable importance on such reexamination decisions. In USPTO Checkmates Google Over Vringo Patents Seeking Alpha claims Google is in trouble. Really did it lose it's rights to appeal? What is at stake? You say a billion dollars? You may remember the jury upheld the validity of the '420 patent as well as another US Patent No. 6,775,664, and awarded the former owner I/P Engine $30.5 million based on a reasonable royalty of 3.5%. Why the relatively high royalty rate but modest damages given Google's scale? I discussed this in Vringo v. Google - Laches Dashing Expectations - From $493M to $31M. Let me say if unreasonable delay in bringing a patent infringement suit prejudices a defendant, a court can rule no damages accrued before the suit was filed.
Seeking Alpha claims Larry Page settled with Yahoo on the Adword related patents in 2004, but somehow bought the wrong patents. This is a silly argument. Most think Google was smart to license the Yahoo patents right before its IPO. Based on this ex parte reexamination decision, Seeking Alpha suggests Google should quickly buyout Vringo at $5-7/share before others realize Vringo is worth way more. It's funny, you disclose you are long and you will say quite a bit to "help out" your hope. Vringo's shares may have jumped this week because of the USPTO notice, but I expect the shares may settle back down as investors realize this ex parte reexamination decision hasn't resolved this dispute.
Copyright © 2013 Robert Moll. All rights reserved.
Sunday, November 18, 2012
Vringo v. Google - Laches Dashing Expectations - From $493M to $31M?
The recent Vringo v. Google patent infringement case illustrates an issue that may arise for prospective licensors and licensees. In a nutshell, Vringo purchased U.S. Patent No. 6,314,420 and U.S. Patent No. 6,775,664 from Lycos, filed a lawsuit in September 2011 claiming Google's system of advertising infringed the patents, and stated it expect to recover $493 million. At the end of trial, the jury held the patents infringed and not invalid, but only awarded $31 million against Google et al. based on a 3.5% royalty rate on a 20% increase attributable to the invention.
Why didn't Vringo receive $493 million? You might think it wasn't realistic and mere saber rattling to encourage Google to settle before trial. But as I looked further, I learned Vringo assumed it would get damages for infringement from 2005 to 2011, since U.S. patent law permits damages up to six year prior to the filing of the lawsuit (i.e., September 2011).
During this trial, there was a fair amount of trading going on. On the last day of a two-week trial, Mr. Dan Ravicher disclosed he was shorting Vringo (VRNG) in Vringo vs. Google: Outcome Probabilities. In his opinion, Vringo had not established Google was aware of the patents and had failed to elicit sufficient jury sympathy to support damages of $493 million. He estimated the net present value to Vringo was $95 million.
Vringo's facts would not generate much jury sympathy. Vringo had not invented anything and had bought the patents from a search engine company that Google had passed long ago. Its press releases saying Google's revenue would go to zero and Vringo would make billions sounded of hubris. Vringo trial slides were cartoon-like. Vringo told the jury Google's SmartAdServingSystem ("Google's SmartASS") infringed the patents. For some of the slides see Mr. Mullin's article: Google infringes old Lycos patents, must pay $30 million.
Much more than lack of jury sympathy, laches reduced Vringo's damages. Under the equitable doctrine of laches defense: (1) if a patent owner unreasonably and inexcusably delays filing an infringement suit, and (2) the alleged infringer has been materially prejudiced by the delay, a patent owner cannot recover damages that occurred before the complaint was filed. The statute says Vringo could get damages up to six years prior to filing the complaint, but a judge can rule in equity to supplement statutory law to achieve a fair result.
The Vringo lawsuit had laches written all over it from the beginning. The '420 patent issued 11 years ago, November 6, 2001, and the '664 patent issued over eight years ago, August 10, 2004. Even six years of delay raises a rebuttal presumption of laches. It's true a patent owner may "burst" the presumption by producing evidence sufficient to raise an issue the delay was reasonable or excusable under the circumstances, but Vringo was unable to do it. Thus, laches precluded recovery before the complaint was filed in September 2011. A six year period of infringement was reduced to one year. I guess the judge wasn't sympathetic.
Whenever a patent is enforced near the end of its term, you must consider laches. For more about laches, I suggest the Federal Circuit's case A.C. Aukerman Co. v. R.L Chaides Construction and cases citing Aukerman.
Copyright © 2012 Robert Moll. All rights reserved.
Why didn't Vringo receive $493 million? You might think it wasn't realistic and mere saber rattling to encourage Google to settle before trial. But as I looked further, I learned Vringo assumed it would get damages for infringement from 2005 to 2011, since U.S. patent law permits damages up to six year prior to the filing of the lawsuit (i.e., September 2011).
During this trial, there was a fair amount of trading going on. On the last day of a two-week trial, Mr. Dan Ravicher disclosed he was shorting Vringo (VRNG) in Vringo vs. Google: Outcome Probabilities. In his opinion, Vringo had not established Google was aware of the patents and had failed to elicit sufficient jury sympathy to support damages of $493 million. He estimated the net present value to Vringo was $95 million.
Vringo's facts would not generate much jury sympathy. Vringo had not invented anything and had bought the patents from a search engine company that Google had passed long ago. Its press releases saying Google's revenue would go to zero and Vringo would make billions sounded of hubris. Vringo trial slides were cartoon-like. Vringo told the jury Google's SmartAdServingSystem ("Google's SmartASS") infringed the patents. For some of the slides see Mr. Mullin's article: Google infringes old Lycos patents, must pay $30 million.
Much more than lack of jury sympathy, laches reduced Vringo's damages. Under the equitable doctrine of laches defense: (1) if a patent owner unreasonably and inexcusably delays filing an infringement suit, and (2) the alleged infringer has been materially prejudiced by the delay, a patent owner cannot recover damages that occurred before the complaint was filed. The statute says Vringo could get damages up to six years prior to filing the complaint, but a judge can rule in equity to supplement statutory law to achieve a fair result.
The Vringo lawsuit had laches written all over it from the beginning. The '420 patent issued 11 years ago, November 6, 2001, and the '664 patent issued over eight years ago, August 10, 2004. Even six years of delay raises a rebuttal presumption of laches. It's true a patent owner may "burst" the presumption by producing evidence sufficient to raise an issue the delay was reasonable or excusable under the circumstances, but Vringo was unable to do it. Thus, laches precluded recovery before the complaint was filed in September 2011. A six year period of infringement was reduced to one year. I guess the judge wasn't sympathetic.
Whenever a patent is enforced near the end of its term, you must consider laches. For more about laches, I suggest the Federal Circuit's case A.C. Aukerman Co. v. R.L Chaides Construction and cases citing Aukerman.
Copyright © 2012 Robert Moll. All rights reserved.
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