A. C. Aukerman Company v. R. L. Chaides Construction Co.

960 F.2d 1020 (1992)

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Nature of the Case

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Facts

P is the assignee of the '133 and '633 patents, relating to a method and device for forming concrete highway barriers capable of separating highway surfaces of different elevations. In settlement of litigation with Gomaco Corporation, P entered into an agreement in 1977 which made Gomaco a licensee under the patents and required Gomaco to notify P of all those who purchased Gomaco's adjustable slip-forms. D had purchased a slip-form from Gomaco. Counsel for P advised D by letter dated February 13, 1979, that use of the device raised 'a question of infringement and offered D a license. Follow-on letters were sent on March 16 and April 12, 1979. D replied by telephone on April 17, 1979, but was unable to speak with counsel for P. By letter of April 24, 1979, P's counsel advised D that P was seeking to enforce its patents against all infringers. D responded in late April with a note handwritten on P's last letter stating that he felt any responsibility was Gomaco's and that, if P wished to sue D 'for $ 200-$ 300 a year,' P should do so. There was no further correspondence or contact between the parties for more than eight years. D increased its business of forming asymmetrical highway barrier walls. Apparently in 1987, one of P's licensees, Baumgartner, Inc., advised P that D was a substantial competitor for pouring asymmetrical wall in California. P's new counsel sent a letter to D on October 22, 1987, referencing the earlier correspondence, advising that litigation against another company had been resolved, and threatening litigation unless D executed the licenses previously sent within two weeks. On August 2, 1988, P's counsel again wrote explaining more fully P's licensing proposal. On October 26, 1988, P filed suit charging infringement. The court granted summary judgment for D under laches and estoppel. P's delay of more than six years shifted the burden to P to prove that its delay was reasonable and was not prejudicial to D. The court rejected P's proffered excuses and held that the evidence showed prejudice to P in that (1) P would have to pay a license fee on projects it had bid on without having allowed for this normal cost and (2) P might have gone into bankruptcy had it known of its liability for past infringement. It also held that necessary witnesses for D's defense, including the inventor named in the subject patents, were unavailable and that memories of other witnesses had faded. The court placed the burden on D to establish equitable estoppel. The court that P's silence for nearly ten years was sufficiently misleading to constitute bad faith and that P should have notified D of the effect of the otherwise ambiguous June 1, 1979 deadline. D got a summary judgment and P appealed.