Estoppel: The Bark That Can Bite You

Wealth of Ideas Newsletter, August 2004

In a previous article (June 2004 issue), we wrote about the problem of laches – usually linked with estoppel, but not quite the same thing.

Laches results from a patentee’s failure to take action against an infringer in a reasonable time period (see the full article for more about laches). Estoppel, on the other hand, arises when an action of a patentee causes an accused infringer to believe that the patentee has abandoned any claim against him or will not take action against him. It may result when the patentee threatens to take action – and then fails to follow up.

Estoppel is based on the reasonable reliance of the accused on the patentee’s action. For example, the infringer considers the case closed and makes further investment in plant and equipment.

The most common estoppel scenario is that the patentee writes to the infringer, describing the infringement and requesting that the infringer either “cease and desist” or take a license. The infringer then either ignores the letter or sends back the usual response that they aren’t infringing, and they will consider the matter closed unless they hear back from the patentee. If the patentee then fails to follow up, the infringer – logically – considers the matter finished.

As a consequence of estoppel, the plaintiff may be estopped, i.e. barred, from enforcing his patent against this particular defendant. Patentees can prevent estoppel simply by filing suit – so considering the stakes, why wouldn’t they do so?

Some patent holders put off filing suit in the hopes that damages will accumulate over time. But by waiting and thus exposing themselves to a charge of estoppel when they do file suit, these patent holders actually jeopardize whatever damages they may be entitled to and give the infringer an easy defense.

So if you bark (by informing the infringer of the infringement), you have to bite promptly (by filing suit) – or it will come back to bite you! Just make sure you have a good attorney on your side.