Accused Infringer Prevails on Laches Defense

October 6, 2015

By Lora Friedemann

If you sit on your rights as a patent owner, you may lose your claims against infringers. Patent owner Dane Technologies recently learned that lesson the hard way.

Dane invented power-assisted retrievers that collect shopping carts in parking lots. In Dane Technologies, Inc. v. Gatekeeper Systems, Inc., Case No. 12-cv-2730 ADM/JJK, Dane accused competitor Gatekeeper Systems of infringing three U.S. patents relating to its cart-retrieving technology. Gatekeeper moved for summary judgment, arguing that Dane’s claims should be dismissed because Dane waited more than six years to sue.

Dane filed the lawsuit in 2012. Gatekeeper entered the shopping cart retriever market in 2005 when it purchased a line of cart retrieval products. In its due diligence for the purchase, Gatekeeper learned about a letter from Dane providing notice of U.S. Patent No. 6,220,379. As a result of the letter, Gatekeeper negotiated an indemnity provision that required the predecessor to indemnify Gatekeeper against any infringement claim filed by Dane through November 1, 2008.

Laches Is Presumed After Six Years

A presumption of laches exists when a patent holder knew or should have known about an alleged infringement, but delays filing suit for more than six years. Because Gatekeeper demonstrated that Dane knew about the alleged infringement more than six years before the suit was filed, a presumption of laches applied.

Rebutting The Presumption of Laches

A patent holder can rebut the presumption of laches by showing that the delay was reasonable, or that the delay did not prejudice the accused infringer. Dane made both arguments unsuccessfully.

First, Dane argued that the delay was reasonable because it did not have sufficient knowledge of the infringement when it notified Gatekeeper’s predecessor of the ‘379 patent in 2005. Dane’s argument failed because it conflicted with the testimony of Dane’s CEO. In his deposition, the CEO claimed infringement began within the limitations period.

Second, Dane argued that Gatekeeper suffered no prejudice. The Court rejected Dane’s argument and found prejudice to Gatekeeper because Gatekeeper lost the ability to seek indemnification from its predecessor as a result of the delay. If Dane had filed suit before November 1, 2008, Gatekeeper would have had the opportunity to seek indemnification. Dane’s delay, however, “stripped Gatekeeper of its ability to contest the applicability of the indemnification clause.”

Finally, the Court considered Gatekeeper’s “conduct or culpability.” The Court found no evidence of culpable conduct by Gatekeeper, and instead noted that Gatekeeper “did not remain silent when it received Dane’s letters but rather challenged Dane to identify which claims Dane believed Gatekeeper infringed.”

After considering all of the pertinent facts and equities, the Court granted summary judgment to Gatekeeper on the ‘379 patent. The Court denied Gatekeeper’s motion for summary judgment on two other asserted patents because Dane filed suit eighteen months after Gatekeeper began selling the accused products. With respect to those two patents, the Court granted summary judgment for Dane on Gatekeeper’s laches defense.

The Moral? If You Send A Letter Follow Through

What’s the moral of this story for patent owners? Consider the pros and cons of notifying competitors of your patent if you are unable or unwilling to pursue an infringement claim. If you send a letter and allow enough time to pass without asserting your patent, you may eventually lose your rights.

Read Judge Montgomery’s Order here.

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