Can an Equitable Estoppel Defense Win the Day in Intellectual Property Infringement Cases
This blog post will be the first of a series dealing with this subject. In completing my LLC (Master of Laws) in International Business Transactions at the University of Denver Sturm College of Law, I spent the last 4 1/2 months studying the subject of Intellectual Property rights in an International Business Transactions setting. This series of blogs will be about the International Trade Commission’s treatment of four affirmative defenses over the last ten years: Collateral estoppel, waiver, laches, and acquiesces. The author’s method of research involved reviewing a sampling of 85 International Trade Commission (ITC) decisions issued since January 1, 2005. Most of these cases involved hundreds of filings and some were filed by Fortune 100 companies. What this blog will deal with are the affirmative defenses raised in these cases, the elements of those defenses, and the Administrative Law Judges’ (ALJs’) treatment of those defenses.
The ITC is an administrative agency and the determinations by its ALJs is subject to judicial review by federal, Article III judges. This paper will discuss the instances in which is apparent that the Agency’s decision was overturned by a federal judge. However, the primary purpose of this paper is to discuss the defenses raised and how high the bar for each of those defenses really is. If the filings or pleadings in a particular case is of particular consequence, the paper will discuss them. A great deal of the discussion in those pleadings is very technical and may not serve to illuminate the legal issues. However, the reader should get a sense of how different areas of intellectual property, Patents, trademarks, and copyrights, are more amenable to certain affirmative defenses.
Here are some interesting excerpts from ITC cases I found salient in my research regarding equitable estoppel defenses:
In cases where the allegation concerns participation with a standards setting body and a failure to disclose intellectual property to that body, the standards setting body must have a clear, unambiguous policy concerning disclosure. In the Matter of Certain Laser Bar Code Scanners & Scan Engines, Components Thereof & Products Containing Same Initial Determination on Violation of Section 337 & Recommended Determination on Remedy & Bond, USITC Inv. No. 337-TA-551 (Jan. 29, 2007)
In the absence of affirmative misrepresentations, equitable estoppel in the standard-setting context requires a “misleading silence.” In order for such a “misleading inaction” to rise to the level of equitable estoppel, the inaction must be combined with other facts respecting the relationship or contacts between the parties to give rise to the necessary inference that the claim against the defendant is abandoned. In the Matter of Certain Laser Bar Code Scanners & Scan Engines, Components Thereof & Products Containing Same Initial Determination on Violation of Section 337 & Recommended Determination on Remedy & Bond, USITC Inv. No. 337-TA-551 (Jan. 29, 2007)
Unlike laches, equitable estoppel does not require the passage of an unreasonable *1042 period of time in filing suit. However, the Patent cases which have come before this court involving the issue of a Patentee's inequitable delay in suing have almost invariably raised the defense not only of laches but also of equitable estoppel. In Jamesbury, which was such a case, we stated that equitable estoppel requires:
(1) unreasonable and inexcusable delay in filing suit, (2) prejudice to the infringer, (3) affirmative conduct by the Patentee inducing the belief that it abandoned its claims against the alleged infringer, [later defined to include silence] and (4) detrimental reliance by the infringer. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1041-42 (Fed. Cir. 1992)
The test set out in Jamesbury confusingly intertwines the elements of laches and equitable estoppel and is expressly overruled. Delay in filing suit may be evidence which influences the assessment of whether the Patentee's conduct is misleading but it is not a requirement of equitable estoppel. Even where such delay is present, the concepts of equitable estoppel and laches are distinct from one another. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1042 (Fed. Cir. 1992)
Trade Mark Law
To establish the affirmative defense of estoppel, which may bar all relief on a claim, a respondent must demonstrate: (1) that the trademark owner has engaged in some misconduct that leads the alleged infringer to reasonably believe that the trademark owner will not assert a claim; (2) that the respondent relied on the trademark owner's misconduct; and (3) that the respondent has been materially prejudiced26 based on its reliance. Aukerman, 960 F.2d at 1040. The trademark owner's misconduct “may include specific statements, action, inaction or silence where there was an obligation to speak.” Id. If a respondent points to a complainant's silence or inaction as the basis for its estoppel defense, such “inaction must be combined with other facts respecting the relationship or contacts between the parties to give rise to the necessary inference that the claim against the defendant is abandoned.” Id., at 1042; accord Hemstreet v. Computer Energy Sys. Corp., 972 F.2d 1290, 1295 (Fed. Cir. 1992). However, “[e]ven where the three elements of equitable estoppel are established, the court must also ‘take into consideration any other evidence and facts respecting the equities of the parties in exercising its discretion and deciding whether to allow the defense of equitable estoppel to bar the suit.”’ Certain Sortation Systems, Parts Thereof, And Products Containing Same, Inv. No. 337-TA-460, Commission Opinion at 10 (February 3, 2003) (Sortation Systems), citing Aukerman, 960 F.2d at 1043
The doctrine of apparent authority, also referred to as “agency by estoppel,” includes elements of reliance and prejudice associated with the equitable defense of estoppel. Crinkley v. Holiday Inns. Inc., 844 F.2d 156, 166 (4th Cir. 1988). “[A]gency by estoppel specifically applies to situations where no actual agency relationship exists.” Id.; see Minskoff v. American Express Travel Related Services Co., 98 F.3d 703, 708 (2d Cir. 1996) (discussing proof required to estopp principal from denying apparent authority). Thus, the apparent authority of Deere's dealers arises from manifestations of Deere, as distinguished from the dealers, to third parties and what the third parties reasonably believe from those manifestations. See, e.g., Minskoff, 98 F.3d at 708 (“Apparent authority, then, is normally created through the words and conduct of the principal as they are interpreted by a third party, and cannot be established by the actions or representations of the agent.”); Fennel v. TLB Kent Co., 865 F.2d 498, 502 (2d Cir. 1989); Paul T. Freund Corp. v. Commonwealth Packing Co, 2003 WL 22430162 at *13 (W.D.N.Y. Sept. 26, 2003). The Second Circuit has commented that a principal may be estopped from denying apparent authority where “the principal's intentional or negligent acts, including acts of omission, created an appearance of authority in the agent....” Minskoff, 98 F.3d at 708. In the Matter of Certain Agric. Vehicles & Components Thereof Final Initial & Recommended Determinations, USITC Inv. No. 337-TA-487 (Jan. 13, 2004)
In following blogs we will discuss how this doctrine of equitable estoppel affects copyright infringement cases and other equitable defenses exist for accused infringers in the international business transactions context.