Don’t Ask; Don’t Collect Damages

Submitted by patentadmin on Thu, 01/28/2010 - 10:51

If a patentee delays filing suit for an unreasonable and inexcusable length of time from the time he knew or reasonably should have known of his claim against an infringer, and the delay operates to the prejudice or injury of the infringer, the patentee may be barred from recovering any damages which accrued prior to the filing of suit. This is the defense of laches, which is an old Norman French term essentially meaning “sitting on your thumbs.” If the delay is more than six years, there is a presumption of laches, and the burden is shifted to the plaintiff to introduce evidence that the delay was not unreasonable or that the defendant was not prejudiced.

The foregoing notwithstanding, each case is fact-specific. In a recently decided case, the patentee was able to overcome a laches defense, despite a delay of more than thirteen years, during which a defense witness had died and records had been discarded. (Ultimax Cement Manufacturing Corporation et al. v. CTS Cement Manufacturing Company)

In June 2002, Ultimax sued CTS for infringement of two patents related to – what else? – quick-hardening cement. Based upon information obtained in discovery, Ultimax moved to add a count to the complaint, alleging infringement of a third, earlier, patent, which had issued in September 1990. CTS argued that Ultimax had known of its alleged infringement since the date this earlier patent had issued and, therefore, any claim of damages with respect thereto was limited to those accruing after this new count was added to the complaint.

The patentee responded that the invention was such that infringement could not be detected by reverse engineering of accused product and that a private detective hired to investigate the matter has been unable to find any conclusive evidence regarding infringement. The trial court, nevertheless, agreed with the defendant, holding that the patentee was on “inquiry notice” – meaning that he knew or suspected enough to create an affirmative duty to investigate – and that he had not satisfied this duty and his arguments as to a lack of prejudice to the defendant were mere “conclusory assertions.”

The appellate court (C.A.F.C.) reversed. “In the case of a claim limitation whose presence is undetectable in a finished product, it is reasonable that [the patentee] might not have known or been able to find out whether [the accused infringer] infringed. Furthermore, there is a genuine issue as to whether [the patentee] fulfilled his duty to investigate by hiring a private investigator …” The presence of an issue of material issue required that the patentee be afforded a trial on the issue of laches.

THE LESSON TO BE LEARNED: While the time period for laches begins to run only when the patentee reasonably should have known of the infringement, beware of “inquiry notice;” if you suspect infringement, make a reasonable investigation.

Add new comment