Radio Systems Corp. v. Lalor
By Craig Fratrik – Edited by Kathleen McGuinness
Radio Systems Corp. v. Lalor, No. 2012-1233, 2013 WL 811757 (Fed. Cir. Mar. 6, 2013)
The Court of Appeals for the Federal Circuit affirmed in part, reversed in part, and remanded the decision of the Western District of Washington, which had ruled that Tom Lalor and Bumper Boy (“Bumper Boy”) were barred under equitable estoppel from bringing certain patent infringement claims and that none of Radio Systems’ other designs were infringing.
Agreeing with the lower court, the Federal Circuit held that Bumper Boy’s four years of silence after sending a letter claiming infringement prevented them from bringing claims based on the patent referred to in the letter. However, in a divided opinion, the court reversed the lower courts and held that equitable estoppel would not apply to a continuation-in-part patent that Bumper Boy received after it sent its initial letter.
Writing for the Law Technology & Arts Blog, Aaron Orheim provides a good overview of the case. At Patently-O, Dennis Crouch considers how the decision might have changed with different facts and how patentees might change their behavior.
In 2004, Bumper Boy received a patent on improvements to electronic dog collars. In 2005, they sent Innotek a demand letter stating that one of their collars infringed on the 2004 patent. Innotek replied that the patent was invalid. Bumper Boy took no further action until 2009. In 2007, Bumper Boy was issued another patent, which was a continuation-in-part of the 2004 patent. In 2006, Innotek was purchased by Radio Systems.
The lower court held that three of Innotek’s collar designs did not infringe on Bumper Boy’s patents. Regarding the fourth design, the lower court held that Bumper Boy was barred under equitable estoppel from bringing claims under either patent. Although the 2007 patent issued after the 2005 letter, the court applied equitable estoppel to the 2007 patent because it was a continuation-in-part of the first patent, and the claims at issue did not introduce anything new from the 2004 patent.
The court affirmed the lower court with regard to the noninfringement of three designs and the equitable estoppel of the 2004 patent claims, finding that the three necessary elements for equitable estoppel were met: misleading conduct (or silence), reliance, and material prejudice. Radio Systems Corp. at 8, 11. It affirmed that Radio Systems was Innotek’s successor-in-interest with established privity, allowing Radio Systems to exercise equitable estoppel as well. Id. at 11. Regarding the 2007 patent, however, the court held that estoppel was not appropriate, since the first action taken by Bumper Boy regarding that patent was the notice in 2009, and so there was no misleading silence. Id. at 11–12.
Finally, the court did not allow Radio Systems to argue for invalidity of the 2007 patent on appeal, because a finding of invalidity would be broader than the lower court’s finding of noninfringement. Id. at 12–13. Thus, the court remanded the case for consideration of the 2007 infringement. Id. at 13–14.
Judge Newman dissented, reasoning that the claims at issue do not relate to the difference between the 2007 patent and the 2004 patent. Id. (Newman, J., concurring in part and dissenting in part). Therefore, she would have affirmed the lower court and extended the estoppel to the 2007 claim. Id. at 2. Judge Newman would also have allowed Radio Systems to raise invalidity on appeal, implying that it would not have expanded the relief granted. Id. at 2–3.
This decision makes clear that equitable estoppel cannot be applied to subsequent patents that are issued to the estopped party. It also emphasizes the need to bring actions against potential infringers in a timely manner once notice has been given. As Crouch mentions, there is a tension between the way the law tends to look at equitable estoppel in relation to individual patents and the way businesses tend to consider patents as part of a larger portfolio.
Craig Fratrik is a 1L at Harvard Law School.