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Laches and Prosecution History Estoppel “Ice” Patents to Refrigeration System

May 02, 2001
Jiron, Darren M.

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Last Month at the Federal Circuit - June 2001

Judges: Schall (author), Clevenger, and Bryson

In Altech Controls Corp. v. EIL Instruments, Inc., No. 00-1216 (Fed. Cir. May 2, 2001) (nonprecedential decision), the Federal Circuit affirmed-inpart and reversed-in-part the district court’s judgment in favor of EIL Instruments, Inc. (“EIL”) on Altech Controls Corporation’s (“Altech”) claims of infringement and on EIL’s affirmative defenses of equitable estoppel, laches, and invalidity.

Altech accused EIL of infringing certain claims of U.S Patent Nos. 4,621,776 (“the ‘776 patent”); 4,628,700 (“the ‘700 patent”); and 5,067,326 (“the ‘326 patent”). Each of these patents relates to controllers used in multicompressor, supermarket refrigeration systems. To maintain a constant temperature in a supermarket refrigerator, one or more compressors are turned on or off to achieve the total compressor pressure necessary to maintain the desired temperature. Whereas earlier systemscontrolled the pressure in the refrigeration system using a controller for each compressor, the Altech invention used only a single controller for all of the compressors. Further, the Altech controller minimized wear on the compressors by operating the compressors in a first-in-first-out (“FIFO”) sequence. Thus, when the system needed to decrease capacity, the compressor that had been operating the longest was shut down, and conversely, when the system needed to increase capacity, the compressor that had been off the longest was switched on.

EIL’s allegedly infringing controllers included the RC-48 and the RC-1000. Each model was capable of controlling all the compressors of a refrigeration system; however, neither operated the compressors according to a FIFO sequence.

In response to Altech’s claim of infringement, EIL responded with several affirmative defenses, including equitable estoppel, claiming that Altech misled EIL into believing that it would not be sued for infringement. While the district court had found evidence of misleading conduct arising from a meeting between the inventor of the Altech devices and the CEO of EIL, the Federal Circuit found that the facts did not rise to the level of misleading conduct.

The second affirmative defense that EIL asserted was laches, which required that EIL prove that Altech unreasonably and inexcusably delayed filing suit and that the delay resulted in material prejudice to EIL. The district court ruled in favor of EIL, stating that EIL had met its burden of proof in establishing a defense of laches as to all three disputed patents. The Federal Circuit noted that a presumption of laches arises if a patentee delays bringing suit for more than six years after actual or constructive knowledge of a defendant’s infringing activity. With respect to the ‘776 patent and the ‘700 patent, the Federal Circuit found that, of the two accused EIL devices, laches applied only to the RC-48, which had been in existence more than six years prior the filing of the suit. The Federal Circuit further noted that even though the ‘700 patent had issued less than six years prior to the filing of the suit, EIL was successful in demonstrating economic prejudice. Regarding the ‘326 patent, the Federal Circuit maintained that the district court had failed to offer a specific explanation with respect to laches. Because EIL had conceded infringement of the ‘326 patent, the Federal Circuit reversed and remanded for a determination of damages.

As the third affirmative defense, EIL asserted that claim 24 of the ‘776 patent was invalid because the subject matter of the claim was obvious and had been offered for sale more than one year prior to the filing of the patent application. A jury concluded that claim 24 was not invalid. The jury also found that EIL had failed to prove by clear and convincing evidence that the complete subject matter of claim 24 had been offered for sale. Despite the jury verdicts, the district court had granted EIL’s JMOL motion. On both grounds, the Federal Circuit found substantial evidence supporting the jury’s verdict and, therefore, reversed the district court’s grant of JMOL.

The Federal Circuit affirmed the district court’s judgment of noninfringement. After a Markman hearing to construe the claims of the patents, the district court had granted SJ that the RC-1000 did not literally infringe the claims of the ‘776 or the ‘700 patent. The district court had further held that prosecution history estoppel barred an assertion of infringement of the ‘776 and the ‘700 patents by the RC-1000 under the DOE because the Altech device was limited to a FIFO system. The Federal Circuit agreed that express representations in the prosecution histories limited the device to a FIFO system. The Court ultimately found, however, that in view of the Festo decision, Altech was barred from asserting infringement under the DOE because the claims at issue had been narrowed by amendment for reasons of patentability.