Aspex Eyewear Inc. v. Clariti Eyewear, Inc., No. 2009-1147, -1162 (Fed. Cir. May 24, 2010).

The district court granted the accused infringer’s motion for dismissal on equitable estoppel grounds based on the patentee’s three years of silence after contacting the accused infringer concerning infringement. The district court denied the accused infringer’s motion to have the case declared “exceptional” and to be awarded attorney fees under 35 U.S.C. § 285. The parties appealed both decisions. The Federal Circuit affirmed, with Judge Rader dissenting.

The patentee argued that the accused infringer did not reasonably believe that the patent would not be enforced, because previous correspondence between the parties did not identify a particular product as infringing, and the patentee did not threaten an immediate lawsuit. The Federal Circuit observed that the correspondence as a whole was reasonably viewed by the accused infringer as a threat despite the use of equivocal language. In light of this threat, the patentee’s silence for three years induced a reasonable belief that the patent would not be enforced. The Federal Circuit also concluded that the last two elements of equitable estoppel were met, and in doing so observed that: (1) the accused infringer “need not prove precisely what alternative path it would have taken, or that every marketing decision was based on reliance on [the patentee’s] silence” in order to show reliance, and (2) the accused infringer need only show a “change of economic position flowing from actions taken or not taken by the patentee” in order to show material prejudice.

The accused infringer argued that because it specifically warned the patentee that equitable estoppel would apply, attorneys fees should be awarded. The Federal Circuit rejected this argument, because “[d]efeat of a litigation position, even on summary judgment, does not warrant an automatic finding that the suit was objectively baseless.” The Federal Circuit also held that because the elements of inequitable conduct were not demonstrated, the district court was “not required to pursue the fee-shifting premises” after granting the motion dismissing the action.

Judge Rader dissented, arguing that other inferences could be made from the evidence presented, and that lingering questions of fact remained.

A copy of the opinion can be found here.