Yesterday, March 6, 2013, in Radio Systems Corp. v. Lalor, No. 2012-1233, the Federal Circuit (Newman, Moore, and Reyna) held that equitable estoppel barred infringement claims for one patent against an alleged infringer’s successor-in-interest, but did not bar infringement claims for a related patent that issued after the misleading conduct began. The court also held that “invalidity cannot be an alternative ground for affirming a judgment of noninfringement absent a cross-appeal.” This case provides incremental insight into both equitable estoppel and appellate procedure.
In February 2005, Lalor and Bumper Boy, Inc. (collectively, “Bumper Boy”) sent a demand letter to Innotek, accusing Innotek’s UltraSmart electronic dog collar of violating Bumper Boy’s U.S. Patent No. 6,830,014. Innotek responded in April 2005, claiming that the patent was invalid based on prior art. Bumper Boy did not respond and remained silent for about four-and-a-half years. In December 2005, Bumper Boy filed a continuation-in-part of the ’014 Patent that issued in September 2007 as U.S. Patent No. 7,267,082. Meanwhile, in September 2006, Innotek was acquired by Radio Systems. In November 2009, Bumper Boy sent a demand letter to Radio Systems accusing infringement of both the ‘014 and ‘082 Patents by the UltraSmart electronic dog collar and other products.
Radio Systems filed this declaratory judgment action against the patentee Bumper Boy. The district court granted summary judgment on the issue of infringement based upon claim construction for several of the accused Radio Systems products, and upon equitable estoppel grounds for the UltraSmart electronic dog collar. Bumper Boy appealed.
The Federal Circuit affirmed much of the noninfringement decision, agreeing with the district court’s claim construction-based decision. The Federal Circuit also agreed that equitable estoppel barred Bumper Boy from enforcing the ’014 patent against Innotek’s UltraSmart collar due to: the four-and-a-half-year silence following the 2005 demand letter was misleading, Innotek’s relied on that silence in expanding its product line and selling ownership of Innotek to Radio Systems, and material economic prejudice would arise in enforcing patents now after Innotek’s substantial investment in new products. The Federal Circuit also confirmed that equitable estoppel protects successors-in-interest of alleged infringers where privity has been established—e.g., Radio Systems’ acquisition of Innotek.
The Federal Circuit, however, reversed the district court’s decision to equitably estop enforcement of the ’082 patent (the continuation-in-part), holding that “[r]egardless of whether the ’082 patent claims are supported by the subject matter in the ’014 patent—and therefore entitled to claim priority to its filing date—the patents contain claims of a different scope. Quite simply, the ’082 patent claims could not have been asserted against Innotek or Radio Systems until those claims issued.”
The Federal Circuit also granted Bumper Boy’s motion to strike on appeal Radio Systems’ alternative invalidity argument. Because a judgment of invalidity is broader than a judgment of noninfringement, allowing invalidity to be argued as an alternative ground for affirmance of the patentee’s appeal would impermissibly enlarge the scope of the noninfringement judgment and exceed the Federal Circuit’s jurisdiction. The Federal Circuit noted that a separate cross-appeal would be the appropriate vehicle for raising invalidity arguments in an appeal of a noninfringement judgment.