A.C. Aukerman Company v. R.L. Chaides Construction Co.
960 F.2d 1020 (1992)
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Rule of Law:
A patentee's delay of more than six years in filing an infringement suit after knowing of the infringement creates a rebuttable presumption of unreasonable delay and material prejudice. This presumption shifts the burden of production to the patentee, but the ultimate burden of persuasion for the laches defense remains with the infringer.
Facts:
- A.C. Aukerman Co. (Aukerman) is the assignee of patents for a method and device used to form concrete highway barriers.
- In 1977, Aukerman licensed Gomaco Corporation, which was contractually required to notify Aukerman of all purchasers of its adjustable slip-forms.
- After Gomaco informed Aukerman that R.L. Chaides Construction Co. (Chaides) had purchased a slip-form, Aukerman's counsel sent a letter to Chaides on February 13, 1979, raising the possibility of infringement and offering a license.
- In late April 1979, Chaides responded with a handwritten note on Aukerman's letter, asserting that any infringement responsibility belonged to Gomaco and suggesting the infringement was minimal ($200-$300 a year).
- Following this exchange, there was no further communication between the parties for over eight years.
- During this period of silence, Chaides significantly increased its business of forming highway barriers and, in the mid-1980s, built a second, allegedly infringing, mold.
- In 1987, an Aukerman licensee informed Aukerman that Chaides had become a substantial competitor, prompting Aukerman to re-establish contact and threaten litigation.
Procedural Posture:
- A.C. Aukerman Co. filed a patent infringement suit against R.L. Chaides Construction Co. in the U.S. District Court for the Northern District of California on October 26, 1988.
- Chaides moved for summary judgment, arguing the suit was barred by the doctrines of laches and equitable estoppel.
- The district court granted summary judgment in favor of Chaides.
- Aukerman, the appellant, appealed the summary judgment ruling to the U.S. Court of Appeals for the Federal Circuit.
- A three-judge panel of the Federal Circuit initially heard the appeal and issued a decision.
- That panel decision was vacated, and the Federal Circuit ordered the case to be reheard in banc by the full court to reconsider the governing principles of laches and equitable estoppel.
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Issue:
Does a patentee's delay of more than six years in filing an infringement suit create a presumption of laches that shifts the ultimate burden of persuasion to the patentee to disprove the defense?
Opinions:
Majority - Nies, Chief Judge
No, a patentee's delay of more than six years in filing an infringement suit creates a presumption of laches that shifts only the burden of production, not the ultimate burden of persuasion, to the patentee. The defense of laches requires proof of two elements: (1) unreasonable and inexcusable delay by the patentee, and (2) material prejudice to the alleged infringer. A delay of six years or more gives rise to a rebuttable presumption of both elements. Under Federal Rule of Evidence 301, this presumption is a 'bursting bubble' that only shifts the burden of going forward with evidence to the patentee. If the patentee produces sufficient evidence to raise a genuine issue of fact regarding either the reasonableness of the delay or the existence of prejudice, the presumption vanishes completely. The ultimate burden to prove laches by a preponderance of the evidence remains at all times with the defendant. The court also clarified that equitable estoppel requires (1) misleading conduct by the patentee, (2) reliance by the infringer, and (3) material prejudice; unlike laches, it does not have a delay element and carries no presumption.
Concurring-in-part-and-dissenting-in-part - Plager, Circuit Judge
This opinion agrees with the majority's clarification of laches and estoppel principles and with the ultimate remand of the case. However, it dissents from the majority's decision to retain the six-year presumption of laches. The presumption is an unnecessarily complex legal fiction, particularly the 'double bursting bubble' concept where rebutting one element (e.g., prejudice) also eliminates the presumption for the other, unrelated element (delay). The law would be simpler and more just if the presumption were abolished entirely, requiring the defendant to prove both elements of laches without a procedural shortcut.
Analysis:
This in banc decision is a landmark ruling that harmonized and clarified the equitable defenses of laches and equitable estoppel in patent law. By firmly establishing the six-year laches presumption as a 'bursting bubble' under FRE 301, the court resolved conflicting precedent and ensured the ultimate burden of proof remains on the accused infringer. The ruling also corrected prior case law by decoupling equitable estoppel from a mandatory 'delay' element, refocusing the inquiry on the patentee's misleading conduct. This provides a clearer, more predictable framework for district courts and has become the foundational modern case for analyzing these defenses in patent litigation.
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