Addressing the seldom-visited issue of equitable estoppel at the appellate level, the U.S. Court of Appeals for the Federal Circuit affirmed in part and reversed in part the district court's grant of summary judgment of estoppel, finding that plaintiff was barred from alleging infringement claims for one patent as against an alleged infringer's successor-in-interest that was on notice four and a half years prior through a demand letter, but was not barred from alleging infringement claims from a related patent that issued after the demand letter. Radio Systems Corp. v. Lalor, Case No. 12-1233 (Fed. Cir., Mar. 6, 2013) (Moore, J.) (Newman, J., concurring in part and dissenting in part).
Plaintiffs Lalor and Bumper Boy, Inc., sent a demand letter to Innotek (the predecessor to defendant Radio Systems) in February 2005 accusing Innotek's UltraSmart electronic dog collar of infringing their patent. Innotek responded two months later that the patent was invalid based on prior art. Bumper Boy did not respond and remained silent for four and a half years.
In December 2005, Bumper Boy filed a continuation-in-part (CIP) of its original patent that in September 2007 matured into a new patent. In November 2009, four and a half years after Bumper Boy's initial demand letter regarding infringement of its first issued patent, Bumper Boy sent a new demand letter to Radio Systems (which had acquired Innotek in 2006) alleging infringement of both the original and CIP patents by the UltraSmart electronic dog collar product and several other Radio Systems products. Radio Systems filed a declaratory judgment action and eventually prevailed on summary judgment on equitable estoppel grounds for the UltraSmart electronic dog collar product and non-infringement for the other products.
On appeal, the Federal Circuit affirmed that equitable estoppel barred Bumper Boy from enforcing the original patent against the UltraSmart collar because the four-and-a-half-year silence following the 2005 demand letter was misleading and Innotek relied on that silence in selling its company to Radio Systems and continuing to sell and expand its product line. The Federal Circuit also confirmed that equitable estoppel protects successors-in-interest of alleged infringement where privity is established—here, Radio Systems acquiring Innotek. However, the Federal Circuit reversed the district court's decision to equitably estop enforcement of the CIP patent, which was never mentioned in—and didn't even exist at the time of—the 2005 demand letter. "Regardless of whether the [CIP] patent claims are supported by the subject matter in the [original] patent—and therefore entitled to claim prior to its filing date—the patents contain claims of a different scope. Quite simply, the [CIP] patent claims could not have been asserted against Innotek or Radio Systems until those claims issued."
Dissenting in part, Judge Newman stated she would apply equitable estoppel to the CIP patent since the subject matter of the specific claims in suit was disclosed and described in the original patent such that they did not draw on any new matter. "The force of equitable estoppel cannot be escaped by including previously disclosed but unclaimed subject matter in a continuation-in-part patent.
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