In High Point SARL v. Sprint Nextel Corp., Appeal No. 2015-1298, the Federal Circuit affirmed the district court’s grant of summary judgment that the doctrine of equitable estoppel precluded prosecution of the lawsuit.
In 1995, Sprint began to build a cellular phone network. Sprint collaborated with AT&T (and its successor, Lucent) and Avaya, who were the original owners of the patents-in-suit at various times, and who also supplied equipment to Sprint for the network. As part of this collaboration, AT&T and Lucent granted licenses for the patents-in-suit to Sprint. Sprint also entered an agreement with three of its equipment vendors, Lucent, Nortel, and Motorola, which contained an understanding that each vendor’s equipment would be interoperable with the others for Sprint’s network. Sprint initially purchased licensed equipment from Lucent, but later purchased unlicensed equipment from companies like Motorola and Nortel.
After High Point acquired the patents in 2008, it immediately asserted them against Sprint. The district court granted Sprint’s motion for summary judgment that equitable estoppel barred the lawsuit reasoning that High Point’s predecessors-in-interest placed Sprint in detrimental reliance by waiting and not asserting patent rights with respect to the unlicensed equipment.
On appeal, High Point argued that equitable estoppel required Sprint to demonstrate that its predecessors-in-interest exhibited bad faith. The Federal Circuit rejected this argument, explaining that equitable estoppel only requires misleading conduct or silence. The Federal Circuit upheld the finding of equitable estoppel based on the silence of High Point’s predecessors-in-interest, who were aware of Sprint’s intent to create a network with equipment from multiple vendors. The Federal Circuit also found detrimental reliance based on testimony that Sprint had several options when building its network and would have acted differently if the threat of litigation was a possibility.