Petition — Advanced Hydraulics, Inc. v. Otis Elevator Co.

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Juu 30 1975

“WICHEEL RAnAK, JR,CLERK

Ori, 3. 6

IN THE

Supreme Court of the Gnited States

OcTOBER TERM, 1974.

No. 75-165

ADVANCED HYDRAULICS, INC.,

Petitioner,

vs.

OTIS ELEVATOR CO.,

Respondent,

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT.

FRANK R. THIENPONT,

70th Floor Sears Tower,

233 South Wacker Drive,

Chicago, Illinois 60606,

Counsel for Petitioner.

Gunthorp-Warren Printing Company, Chicago e Financial 6-6565

INDEX.

PAGE

ED one 66 65.0065.65.60-06 6eeceebaeees can 1

PE 6 ok cé weed on cbbSVbclbad idcthbdaced des 2

SD ee eed nee Genus ses Wabees Oe 2

The Constitutional Provision Here Involved .......... 2

SE Oe SP ED 6 000-00 655 506605408-600000068 2

measous for Granting the Writ .....cccccccccccccess 3

eee eee errr eT rT 12

Opinion of the Court of Appeals for the Seventh Circuit.. Al

TABLE OF AUTHORITIES.

Constitutional Provision.

The Constitution, Art. I, Section 8 .....ccccccccccces 2

Cases.

Armstrong v. Motorola, 374 F. 2d 764 (7 Cir. 1967) ... 11

Continental Coatings Corp. v. Metco, Inc., 464 F. 2d 1375

af 2 ge Pe een ey re er 8

Costello v. United States, 365 U. S. 265 (1961)........ 5

Drum v. Turner, 219 F. 188 (8 Cir. 1914) .......... 6

Gutierrez v. Waterman S. S. Corp., 373 U. S. 206 (1963) 4

Jenn-Air Corp. v. Penn Ventilator Co., Inc., 464 F. 2d

le ee EE ded odadet oan een es ee cévecedaks 7

Lebold v. Inland Steel Co., 125 F. 2d 369 (7 Cir. 1941) 9

Northern Pacific Railway Co. v. Boyd, 228 U. S. 482

Sy ‘csbeedsone06060sbeucendubeuexesesanss 9

‘i

Shaffer v. Rector Well Equipment Co., 155 F. 2d 344

bs MB | PPPPPeT rere rrreeereerereryere ee

Universal Coin Lock Co. v. American Sanitary Lock Co.,

106 F. 26 781 (7 Cie. 1958) .ncccccccccccccscees

Westco-Chippewa Pump Co. v. Delaware Electric & Supply

Co., 64 F. 24 185 (3 Cie. 1933) .nccccccccscccecs

Miscellaneous.

28 American Jurisprudence 2d ........+eeeeeeeeees

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1974.

ADVANCED HYDRAULICS, INC.,

Petitioner,

vs.

OTIS ELEVATOR CO.,

Respondent,

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT.

Petitioner respectfully prays that a writ of certiorari issue

to review the judgment and opinion of the United States Circuit

Court of Appeals for the Seventh Circuit entered in this pro-

ceeding on May 2, 1975.

OPINIONS BELOW.

The opinion of the United States District Court for the North-

ern District of Illinois, Eastern Division, is reported at .........

F. Supp. —..... , and 183 U. S. P. Q. 797.

The opinion of the Court of Appeals for the Seventh Circuit,

printed in Appendix A, is reported at > , 186

U.S. P. Q. 1.

JURISDICTION.

The judgment of the Court of Appeals for the Seventh Circuit

was entered on May 2, 1975.

Jurisdiction of this Court is invoked under Title 28, U. S.

Code, Section 1254 (1).

QUESTIONS PRESENTED.

1. Does the denial of a valid claim on the grounds of laches

require proof of both (1) lack of diligence by the party against

whom the defense is asserted, and (2) prejudice to the party as-

serting the defense? :

2. Does the denial of a valid claim on the grounds of estoppel

require proof of both (1) misleading activities by the party

against whom the defense is asserted, and (2) reliance by the

party asserting the defense to its damage?

THE CONSTITUTIONAL PROVISION HERE INVOLVED.

Art. 1, Sec. 8. The Congress shall have power . . . To pro-

mote the progress of science and useful arts, by securing for

limited times to authors and inventors the exclusive right to

their respective writings and discoveries.

STATEMENT OF THE CASE.

This is a patent infringement action wherein the District Court

awarded summary judgment to respondent without any oral

hearing on the ground of estoppel and laches.

Petitioner had charged respondent with infringement of its

Patent No. 2,647,590 on July 30, 1967. When no answer was

received petitioner continued to press its claim by sending re-

spondent another letter on August 26, 1967. On September 27,

1967 respondent replied in part as follows:

3

“We have investigated this matter and have concluded that

we can find no basis for a determination that any of our

Baker trucks constitute an infringement of any valid claim

of patent 2,647,590. If you persist in your belief that one

or more of our trucks infringe this patent and wish to

describe to us specifically what structure is believed to

constitute the infringement we shall be pleased to review

our decision.”

Relying on respondent’s statement after three months of

investigation that it could find no basis for a determination that

any of its Baker trucks infringed, petitioner perceived no duty to

respond and did not respond any further to this letter.

At about that time petitioner also charged others with in-

fringement of the same patent. In 1968 petitioner brought its

first suit for infringement of the patent against Clark Equipment

Company. A summary judgment was entered in that suit against

Petitioner on April 26, 1971 finding non-infringement. The Sev-

enth Circuit Court of Appeals affirmed on April 30, 1973. In

1972 suits on the same patent were also filed against Hyster

Company and Eaton Corporation.

The present suit was filed on September 26, 1972 prior to

termination of the Clark litigation. The District Court granted

a motion for summary judgment holding that petitioner was

Suilty of laches and estoppel because of the five years delay

between the notice of infringement and filing of suit. The Court

Of Appeals affirmed although respondent made no proof of

damage or prejudice resulting from the delay to support the

laches defense. Furthermore, respondent produced no evidence

that it was misled by petitioner or that it relied on any misleading

Or deceitful activities of petitioner to support its estoppel defense.

REASONS FOR GRANTING THE WRIT.

1. The decision below on the laches issue conflicts with

decisions of the U. S. Supreme Court and various Courts of

Appeal.

4

A valid claim on the grounds of laches requires proof of both

(1) lack of diligence by the party against whom the defense is

asserted, and (2) prejudice to the party asserting the defense.

The fact that petitioner filed this suit five years after its notice

of infringement to respondent was not such a delay as should

preclude petitioner from enforcing its claim. The time element is

the only element upon which respondent can rely to support its

defense of laches and estoppel. One of the critical elements in

a laches defense is that the respondent must prove prejudice or

damage which resulted from the delay, but respondent pro-

duced no evidence to support such prejudice or damage.

Mere lapse of time alone in bringing a patent infringement

suit does not constitute laches. The delay must be inexcusable

and cause prejudice to the respondent, and the respondent must

present adequate proof to that effect before the equitable doctrine

of laches may be invoked against petitioner.

The Court below in ruling that petitioner was guilty of laches

and that the pending litigation against Clark Equipment Co. pro-

vided no excuse for the delay in bringing the suit, failed to con-

sider entirely (as did also the District Court) whether the respond-

ent had proved any prejudice or damage to it as a result of the

delay.

It is clear that the Courts below erred in holding that petitioner

was guilty of laches based solely on its five year delay in filing

suit. This result is contrary to the rule on laches applied by the

Supreme Court as well as the rule applied by other Circuit

Courts of Appeals and even the Seventh Circuit in previous cases.

In Gutierrez v. Waterman S. S. Corp., 373 U. S. 206, 215

(1963) a longshoreman filed his libel action more than a year

after the expiration of the analogous Puerto Rican statute of

limitations. The Supreme Court reversed the First Circuit's

denial of the claim of laches as follows:

“Finally we have concluded that the ruling of the trial

court on laches is not plainly erroneous and should not

have been reversed. The test of laches is prejudice to the

5

other party. Gardner v. Panama R. Co., 342 U. S. 29,

30-31; Cities Service Co. v. Puerto Rico Co., 305 F. 2d 170,

171 (C. A. 1st Cir.) (both unreasonable delay and con-

sequent prejudice.) The trial court having heard the wit-

nesses testify concluded that there was no prejudice. The

Court of Appeals had no warrant to reverse this finding

as plainly erroneous merely because in some way it might

have been more advantageous to respondent to question

the witnesses sooner than it did. Nor can prejudice be

inferred from a variance between the witnesses testimony

and respondent’s written records of the unloading. The

trial court which heard the witnesses was the proper judge

of which evidence was credible; that records differ from

testimony here does not mean that respondent was preju-

diced by delay—it means that respondent was ‘prejudiced’

by the fact finder’s refusal to believe its evidence and no

more.

The Court of Appeals erred in setting the judgment of

the District Court aside. The judgment of the Court of

Appeals is reversed and the case remanded to the District

Court for further proceedings consistent with this opinion.”

As stated by the Supreme Court, both an unreasonable delay

and actual prejudice to the defendant must be shown before

the plaintiff's otherwise valid claim for relief can be denied.

Another pertinent decision is Costello v. United States, 365

U. S. 265, 282 (1961) wherein plaintiff after a twenty-seven

year delay, brought a denaturalization proceeding against defend-

ant. The Supreme Court cited authority to the effect that laches

could not be brought against a sovereign body but went further

in its opinion to hold as follows with respect to the defense of

laches:

“None of the cases in this Court consider the question of

the application of laches in a denaturalization proceeding.

However, even if we assume the applicability of laches,

we think that the petitioner failed to prove both of the

elements which are necessary to the recognition of the

defense. Laches requires proof of (1) lack of diligence by

the party against whom the defense is asserted, and (2)

6

prejudice to the party asserting the defense. See Galiher v.

Cadwell, 145 U. S. 368, 372; Southern Pacific Co. V.

Bogert, 250 U. S. 483, 488-490; Gardner v. Panama R.

Co., 342 U. S. 29, 31.

“The petitioner alleges lack of diligence in the govern-

ment’s failure to proceed to revoke his certificate within

a reasonable time after his arrest and trial under the 1925

indictment for conspiracy to violate the Prohibition Laws,

or at least within a reasonable time after his admissions

before the federal grand jury in 1939. There is no neces-

sity tc determine the merits of this argument, for the

record is clear that the petitioner was not prejudiced by

the Government’s delay in any way which satisfies this

requisite of laches.”

The Supreme Court in this case makes it perfectly clear that

prejudice must be proven by competent evidence.

The Fifth Circuit in Shaffer v. Rector Well Equipment Co.,

155 F. 2d 344, 346 in reversing the District Court’s holding of

laches sets forth its rule as follows:

“As has been often stated, laches is not determined

solely by the mere passage of time. There must be other

considerations that would make it inequitable for the suit

to be prosecuted, among the most essential of which is a

showing that the defendant has been, or will be, damaged

or prejudiced by the delay.

“The burden of proof to establish the defense of laches

is on the defendant [United Drug Co. v. Ireland, 8 Cir.,

51 F. 2d 226; Kelley v. Boettcher, 8 Cir., 85 F. 55, 62;

Rajah Auto Supply Co. v. Belvedere Screw & Machine Co.,

supra] and the failure of defendant to prove injury or dam-

age to itself—a vital element in the establishment of

laches—would be fatal to such a defense, even if it had

maintained that defense in other respects.”

The Eighth Circuit in Drum v. Turner, 219 F. 188, 198 (8

Cir. 1914) stated the rule on laches as follows:

“Delay and silence within the life of a patent unaccom-

panied by any such acts or silence of the owner as amount

7

to inducing deceit and thereby to an equitable estoppel,

and the evidence fails to satisfy that there have been any

such acts or omissions in this case, will not deprive such

owner of his right to recover for an infringement of the

exclusive right secured to him by the patent. It is no de-

fense to a suit for an injunction and accounting on

account of the continuing trespasses of an infringer that

the latter has been trespassing on the rights of the owner

of the patent for years with impunity.”

The Third Circuit in Westco-Chippewa Pump Co. v. Dela-

ware Electric & Supply Co., 64 F. 2d 185, 186 (3 Cir. 1933)

states the rule on laches as follows:

“Or, to state this in the language of the plaintiff, there are

two elements in laches: (1) lack of diligence on the part

of the plaintiff; and (2) injury to defendant due to the

inaction of the plaintiff.”

The Third Circuit in the above case found that the position of

the defendant had been materially and prejudicially changed

because of the delay and thus affirmed the holding of laches.

Such prejudicial change of position involved proof that defend-

ant had invested a quarter million dollars in a new factory and

new equipment.

In the case at bar, no such type of proof was presented to

establish a prejudicial change of position.

In the more recent Third Circuit case of Jenn-Air Corp. v.

Penn Ventilator Co., Inc., 464 F. 2d 48 (3 Cir. 1972) the

defendant urged that the delay of four years by Jenn-Air in

bringing suit precluded its collecting damages from the infring-

er-defendant. In ruling that it did not the Court said:

“There is nothing in this record to warrant a ruling of

actual prejudice to this defendant from any delay in plain-

tiff starting his lawsuit against this defendant for its uncon-

scionable infringement of plaintiff's "607 patent through

the years. There was some delay in starting that cause but

there was no harm to defendant in that all that happened

to it was its continuance of counterfeiting and selling its

infringing products. As we held in Sobosle v. United

States Steel Corporation, 359 F. 2d 7, 12 (1966):

‘Laches, of course, requires more than lapse of time; as an

equitable defense it is determined in the light of all the

existing circumstances and requires the delay to be unrea-

sonable and cause prejudice to the adversary.’ ”

In Universal Coin Lock Co. v. American Sanitary Lock Co.,

104 F. 2d 781 (7 Cir. 1939) a patent infringement action in

which there was a delay of ten and one-half years before filing

suit, the Court said:

“Mere delay unaccompanied by anything else will not con-

stitute laches. The delay must be inexcusable and pre-

judicial to the defendant.”

It is clear from the foregoing that the Seventh Circuit's

application of laches without any proof of damage or prejudice

to respondent is in conflict with the rule of this Court as well as

other Courts of Appeal, all of which state that proof of delay

alone is insufficient to establish laches.

2. The decision below on the estoppel issue conflicts with

decisions of the U. S. Supreme Court and the general law of

estoppel.

The Court below said that the facts of this case “require

a decision in favor of Otis under general principles of estoppel”.

It relied principally on Continental Coatings Corp. v. Metco,

Inc., 464 F. 2d 1375 (7 Cir. 1972)* stating:

“As we have indicated, Continental, supra, is controlling.

Here the critical fact, as there, was the failure of Advanced

over a five year period to follow up on its threat of prompt

and vigorous enforcement of its patent. It is, as held in

Continental, therefore estopped.” (A. 7)

The Court further stated:

“The following elements join together to estop Advanced

from enforcing its patent: (1) Advanced threatened im-

* It should be noted that Continental was decided two months after

petitioner’s suit was filed and accordingly was not available as a

guideline.

9

mediate suit but failed to take any action on this threat

for five full years; (2) Advanced failed to respond in any

way to Otis’ request for particulars of the alleged infringe-

ment; (3) there was no notice, actual or constructive, of

any pending litigation regarding the same patent; and

(4) Otis was seriously prejudiced in the loss by death of

a crucial witness.” (A. 8)

As is well known, the general law on estoppel requires preju-

dice brought about by detrimental reliance. There must be

prejudice or a change of position to one’s detriment. In 28 Am

Jur 2d, 710 it is stated:

“The conduct of the party claiming an estoppel must be

considered no less than the conduct of the party to be estop-

ped. As a general rule it is essential to the existence of an

equitable estoppel, or estoppel in pais, that the representa-

tion, whether consisting of words, acts or omissions of the

party against whom the estoppel is asserted, shall have

been believed by the party claiming the benefit thereof, and

that he shall have relied thereon and been influenced and

misled thereby. He must have acted upon the declarations

or conduct of the person sought to be estopped, and not

on his own knowledge or judgment.”

In Northern Pacific Railway Co. v. Boyd, 228 U. S. 482,

509 (1913) the Supreme Court said:

“But the doctrine of estoppel by laches is not one which

can be measured out in days and months, as though it were

a statute of limitations. For what might be inexcusable delay

in one case would not be inconsistent with diligence in

another, and unless the non-action of the complainant oper-

ated to damage the defendant or to induce it to change

its position, there is no necessary estoppel arising from the

mere lapse of time. Townsend v. Vanderworker, 160 U. S.

171, 186.”

In Lebold v. Inland Steel Co., 125 F. 2d 369 (7 Cir. 1941)

the Court in discussing estoppel said:

“Estoppel arises only when one has so acted as to mislead

another and the one thus misled has relied upon the action

of the inducing party to his prejudice. Shortly stated, one

10

may not assume a position inconsistent with a former

position to the prejudice of his adversary . . . It is the injury

accruing from inducement or silent acquiescence which

creates the estoppel. . . . Pomeroy, Equity Jurisprudence,

Section 805, says “The conduct must be relied upon by the

other party, and thus relying, he must be led to act upon

it.*** He must in fact act upon it in such a manner as to

change his position for the worse; in other words he must

so act that he would suffer a loss if he were compelled to

surrender or forego or alter what he has done by reason

of the first party being permitted to repudiate his conduct

and to assert rights inconsistent with it’.”

To carry its burden on the estoppel issue, respondent was

required to prove that it was misled and that it was damaged

as a result of reliance on whatever misleading activities petitioner

may have engaged in. Respondent provided no evidence of any of

the traditional elements of estoppel. It did not establish that

petitioner misled it or that it placed any reliance on any supposed

misleading activities of the petitioner. For example, respondent

did not offer any evidence that it had made expenditures for

plant expansion or otherwise expanded its business or made

other monetary commitments in reliance on any activity of

petitioner.

The record discloses no conduct on the part of petitioner

which could have misled respondent into believing that peti-

tioner had abandoned its patent or acquiesced in its use.

Although the Court of Appeals at the end of its opinion

(A. 8) enumerates four elements on which it bases its holding

of estoppel, it is quite apparent that such factors do not satisfy

the elements of an estoppel situation. For example, the Court

of Appeals refers to the death of a crucial witness. This was the

inventor. What does this have to do with estoppel? To say that

the respondent was seriously prejudiced by the death of the in-

ventor is an assumption having no basis. It is just as logical to

assume that petitioner was even more prejudiced by the inventor’s

death, if indeed there was any prejudice at all. The Court of

Appeals further stated that there was no notice, actual or con-

|

11

structive, of any pending litigation regarding the same patent,

referring to the pending Clark litigation. Yet the principal

guideline petitioner had at the time it filed its suit was Armstrong

Vv. Motorola, 374 F. 2d 764 (7 Cir. 1967) which clearly states

that a suit pending to sustain the validity of a patent is notice

to all infringers of the insistence of the patentee upon his claimed

rights. How could the Court of Appeals now penalize petitioner

herein for following the law as the Seventh Circuit had previously

stated it?

Although petitioner’s failure to file suit for five years after

the notice of infringement may be considered in determining

whether estoppel applies, there is no indication in the record that

respondent in any way relied on this delay to its detriment. In

fact, quite the contrary is the case. Respondent in its correspond-

ence indicated that it made a sufficient investigation over a

period of three months and, based on such an investigation,

concluded that the hydraulic elevators of its lift trucks did not

infringe any of the claims of petitioner’s patent. In other words,

respondent relied on its own determination of non-infringement

to continue with its normal activities, and not on any misleading

acts of petitioner.

It becomes clear that the statement by respondent suggesting

that petitioner describe more specifically structures believed to

constitute the infringement was essentially meaningless. At best,

respondent’s suggestion was no more than a “courtesy statement”.

Certainly, it was not a statement which should create an absolute

legal duty on the part of petitioner to recharge respondent with

infringement and produce the severe result of summary iudgment

against petitioner for failure to do so. This is especially true

when the statement is viewed in the overall context of respond-

ent’s letter in which it indicated that its three month investiga-

tion led it to the conclusion that it did not infringe.

It clearly appears that the ingredients the Court of Appeals

combined to add up to estoppel do not meet the standards of the

general law of estoppel as defined by this and other courts.

12

CONCLUSION.

In view of the foregoing it is submitted that a Writ of Certiorari

should issue to review the decision of the Court of Appeals for

the Seventh Circuit in the above entitled cause.

Respectfully submitted,

FRANK R. THIENPONT,

70th Floor Sears Tower,

233 South Wacker Drive,

Chicago, Illinois 60606,

Counsel for Petitioner.

Ai

APPENDIX.

IN THE

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

No. 74-1771

ADVANCED HYDRAULICS, INC.,

Plaintiff-A ppellant,

vs.

Otis ELEVATOR COMPANY,

Defendant-A ppellee.

Appea! from the United States District Court for the Northern

District of Illinois, Eastern Division—No. 72 C 2405

Joseph Sam Perry, Judge.

ARGUED JANUARY 14, 1975—DECIDED May 2, 1975

Before CLARK, Associate Justice (Retired)*, SWYGERT and

PELL, Circuit Judges.

Mr. Justice CLARK: This appeal tests the validity of a

summary judgment entered by the District Court on the ground

of estoppel and laches in a patent infringement suit. It appears

* Associate Justice Tom C. Clark, United States Supreme Court

(Ret.) is sitting by designation.

A2

that a “hydraulic elevator” patent was applied for on February

16, 1951, by one C. A. Anderson, Jr. and was issued to him on

August 4, 1953. In 1967 the patent was assigned to appellant,

Advanced Hydraulics, Inc. (Advanced), and on June 30, 1967,

counsel for Advanced sent out notices of infringement to some

15 companies operating in the field. One such notice, in the

form of a letter, went to the president of appellee, Otis Elevator

Company (Otis), and stated, inter alia:

It has come to our attention that you are making and

selling products which are an infringement of this patent

. various models of fork lift trucks manufactured and

sold by your Baker Division in Cleveland.

I would appreciate hearing from you within the next twenty

(20) days about the consideration you have given this

matter.

If I do not hear from you within that time, we will have

no alternative but to consider proceeding immediately

with appropriate legal action to enjoin you from further

manufacture and to recover appropriate damages for past

infringement.

On July 5, 1967, Otis replied that it was investigating the

charges of infringement and would advise Advanced of the

result. Thereafter on August 26, 1967, counsel for Advanced

again wrote Otis and inquired how Otis was coming in its

investigation, advising that he would be away {.om the office

during the month of September and stating that he was “hope-

ful that by the time I return I will have heard from you.” On

September 27, 1967, Otis replied, advising Advanced’s coun-

sel that the matter had been investigated and that it had found

no infringement. The letter concluded:

If you persist in your belief that one or more of our trucks

infringe this patent and wish to describe to us specifically

what structure is believed to constitute this infringement we

will be pleased to review our decision.

Otis never received any response to this letter nor did it re-

ceive any further details of the infringement from Advanced or

on oe, renee

A3

its counsel between August of 1967 and the filing of the instant

suit in September of 1972.

In 1968, Advanced brought suit for infringement of the

same patent against Clark Equipment Company. In April, 1971,

a summary judgment was entered in that suit against Advanced,

finding non-infringement. This court affirmed. Thereafter, in early

1972, one suit was filed against Hyster Company, which, accord-

ing to counsel, was subsequently settled, and another against

Eaton Corporation. The present suit was filed on September 22,

1972. By that time the patent had expired (August 4, 1970),

and the inventor, C. A. Anderson, Jr. had died (1969).

The District Court in the instant action sustained a motion for

summary judgment on the ground that the long, unexcused de-

lay between notice of infringement and filing of suit and the

resulting damage required a finding that Advanced was guilty

of laches and estoppel, which precluded it from recovery. Our

careful examination of the record leads us to affirm, although we

look with some trepidation on summary judgments in patent

cases. Here, there was no genuine issue of fact and no injustice

could possibly result from a summary judgment.

I.

The law of this Circuit on laches and estoppel is clear. Mere

delay is not sufficient, but where “deferrment of action to en-

force claimed rights is prolonged and inexcusable and operates

to defendant's material prejudice”, laches is “an effectual bar”

to recovery. Boris v. Hamilton Manufacturing Company, 253

F.2d 526, 529 (7th Cir. 1956) (Hastings, J.). Laches is an

equitable doctrine, “not fixed by any unyielding measure but

to be determined in each case under its factual situation . . .” Jd.

Its use is entirely permissible to prevent injustice. Estoppel, on

the other hand, as Judge Lindley once defined it, “arises only

where one has so acted as to mislead another, and the one thus

misled has relied upon the action of the inducing party to his

prejudice.” Lebold v. Inland Steel Co., 125 F.2d 369, 375 (7th

A4

Cir. 1941). Thus as Judge Stevens pointed out in Continental

Coatings Corporation v. Metco, Inc., 464 F.2d 1375, 1379

(1972), “there is indeed an important difference between laches

and estoppel”.

This difference is carried over into the effects that the two

defenses have upon litigation. In a patent suit, the effect of laches

is merely to withhold damages for infringement prior to the

filing of the suit. Estoppel, however, forecloses the patentee from

enforcing his patent, and the infringement suit must fail in toto.

See George F. Meyer Mfg. Co. v. Miller Mfg. Co. 24 F.2d 505,

507 (7th Cir. 1928).

As Judge Stevens said in Continental:

In later cases this circuit has consistently denied the paten-

tee any relief if the evidence of unreasonable and un-

excused delay also disclosed that the patentee’s conduct

had encouraged the belief that the infringer’s business

would be unmolested. [464 F.2d at 1380]

The critical fact in identifying an estoppel situation, Judge

Stevens explained, is that:

(T]he infringement notice threatening prompt and vigorous

enforcement of the patent * * * was then followed by a

period of unreasonable and unexcused delay. Having made

such a threat, the patentee was thereafter estopped to deny

that it was then ready, willing and able to establish the

validity of the patent in court if necessary. Jd.

i.

Contrary to the position of appellant, the existence of other

pending litigation over the patent does not automatically excuse

delay in the bringing of the suit. It is said that Armstrong v.

Motorola, 374 F.2d 764 (7th Cir. 1967), so holds. We think

not. It is true that in Motorola Judge Cummings quotes from

Montgomery Ward & Co. v. Clair, 128 F.2d 878, 883 (8th Cir.

1941) to the effect that:

An inventor is not required to litigate the validity of his

patent against every possible infringer. A suit pending to

AS

sustain the validity of a patent is notice to all infringers of

the insistence of the patentee upon his claimed rights.

However, in both Motorola and Clair, the infringers had actual

notice of the pending litigation, and both holdings are, there-

fore, so limited. Here there was no actual notice to Otis, either

alleged or proven.

It is a misreading of Motorola to view it as decided on the

basis that “other litigation” was pending. It is true that Motorola,

the alleged infringer, was actually notified of a pending case

against RCA on the same patent, but the Motorola result was

based neither on such notice nor on the existence of the RCA

suit. As Judge Cummings specifically held:

Motorola’s estoppel claim failed because it did not rely

upon any inaction of Major Armstrong [the patentee] but

instead decided in late 1941 that it was not infringing his

patents and therefore would not take a license. Accordingly,

the defense of estoppel must fail.

It should be noted that the Motorola appeal did not involve a

laches defense since it had been earlier rejected by the trial

court and was not raised on appeal. The crucial fact in the case,

as indicated in the opinion, was that Motorola, over the years,

had not relied on the delay of the patentee but rather relied solely

on its own determination of non-infringement.

Furthermore, there are decisions before and after Motorola

in this Circuit which refused to excuse laches because of other

pending litigation. See Anchor Stove and Range Co. v. Mont-

gomery Ward Co., 114 F.2d 893, 895 (7th Cir. 1940); Baker

Manufacturing Co. v. Whitewater Mfg. Co., 430 F.2d 1008,

1014-1015 (7th Cir. 1970). In addition, the Sixth Circuit in

American Home Products Corporation v. Lockwood Mfg. Co.,

483 F.2d 1120, 1123 (6th Cir. 1973) rejected the “suggestion

that the existence of other litigation automatically excuses any

delay in bringing suit”, commenting that “it was unable to find

any authority for the proposition that the existence of ‘other liti-

gation’ is a complete bar to the assertion of a laches defense.”

aa

A6

483 F.2d at 1123. We, therefore, conclude that Motorola does

not control here. Moreover, we believe that the better practice

is that notice of “other litigation” must be given to all known

parties who are thought to be infringers; otherwise manifest in-

justice would result.

Il,

Even if, under Motorola and Clair, the existence of “other

litigation” did amount to some sort of constructive notice to

Otis of the intention of Advanced to press its claim, the

peculiar facts of this case would nonetheless require a decision

in favor of Otis under general principles of estoppel. The ex-

change of correspondence between Advanced’s counsel and

Otis is the critical element in the case as far as Otis’ plea of

estoppel is concerned. As we have shown, the initial letter of

Advanced’s counsel threatened immediate legal action, if Otis

sent no reply within 20 days. In reply, Otis did not adopt a

firm non-infringement position. It indicated that it perceived

no infringement in light of the breadth of Advanced’s claims,

but suggested that if Advanced were to supply more specifics as

to its claims, Otis would then re-evaluate its position. Ad-

vanced, however, elected not to reply to the Otis letter, al-

though it had a virtual duty to give some type of answer.’

In the absence of any further word from Advanced for five

full years, it was natural for Otis to be encouraged to believe

that its business could proceed unmolested. We note that Otis

had been manufacturing hydraulic lift trucks and elevators

since 1943 and its predecessor had done so long before that.

As alleged in its answer, and uncontradicted in the record,

Otis proceeded to make substantial investments in its business

_ 1. Advanced’s original letter spoke only in general terms about

infringements in “various models of fork lift trucks” produced by

Otis. It appears to us that Otis’ request for additional information

about the claimed infringement was reasonable and necessary to a

fair determination by Otis of the nature of the situation, and pro-

duced what may be perceived as a duty to respond.

a a

A7

with relation both to elevators and trucks, and its business

grew extensively between June, 1967 and September 22, 1972.

As we have indicated, Continenial, supra, is controlling.

Here the critical fact, as there, was the failure of Advanced

over a five-year period to follow up on its threat of prompt

and vigorous enforcement of its patent. It is, as held in Con-

tinental, therefore estopped. Advanced would distinguish Con-

tinental on the ground that the length of the delay was not

unconscionably great.? The case at bar, however, is the stronger

of the two. In Continental there was no request for particulars

nor a duty to supply them; the 8-year period of delay was

broken by repeated claims; and the period of complete silence

only lasted three years. Furthermore, prejudice to the alleged

infringer in Continental was simply presumed. See Baker Mfg.

Co. v. Whitewater Mfg. Co., 430 F. 2d 1008, 1009-10 (7th Cir.

1970). The facts here are more compelling.

In addition to the failure of Advanced to give notice of

pending litigation or even to respond to Otis’ September 27,

1967 letter, the record shows that Otis raised an affirmative

defense in the trial court. It contended that Anderson reduced

his invention to practice in 1945, some six years before he filed

his patent application. If true, Anderson would be precluded

from enforcing his patent. See Levinson v. Nordskog, 301 F.

Supp. 589 (C.D. Cal. 1969). In support of its claim, in 1973,

during discovery proceedings, Otis secured a witness, Duncan,

who recalled the crucial date as 1945 but who later, while

the motion for summary judgment was under advisement,

changed his mind and recalled the date to be 1947. Since

Anderson is dead, the crucial witness on this question is un-

available, and Otis is advised that there are no records. Hence,

2. While we have not made an exhaustive search of the cases, two

have come to our notice where the length of delay was less than 5

years: Kimberly Corporation v. Hartley Pen Company, 237 F.2d

294 (9th Cir. 1956), where the period was 4 years, and Continental,

supra, where the period of continuous delay without a claim of in-

fringement, was 3 years.

A8

Advanced’s delay in filing the suit has sorely prejudiced Otis,

and injustice may well result unless the equitable defense of

estoppel is allowed.

The undisputed facts here make up a classic case for the

application of equitable relief. See Gillons v. Shell, 86 F.2d

600 (9th Cir. 1963), where it is said:

A court of equity will refuse relief after inexcusable de-

lay because of the difficulty, if not the impossibility, of

arriving ai a safe and certa.n conclusion as to the truth

of matters in controversy and doing justice between the

parties, where the evidence has been lost or become

obscured through the loss of documents, or through death

of one or more of the participants in the transaction in

suit . . . while the rule requires for its support no element

of estoppel, but is founded on public policy, the fact that

the delay has tended to defeat defendant’s power to prove

his right is an additional reason for its application. [86 F.

2d at 609].

See also Technitrol, Inc. v. Memorex Corp., 376 Fed. Supp. 828,

835 (N. D. Ill. 1974) (suit foreclosed by laches where patent

had expired).

The following elements join together to estop Advanced

from enforcing its patent: (1) Advanced threatened immedi-

ate suit but failed to take any action on this threat for five

full years; (2) Advanced failed to respond in any way to

Otis’ request for particulars of the alleged infringement; (3)

there was no notice, actual or constructive, or any pending

litigation regarding the same patent; and (4) Otis was seriously

prejudiced in the loss by death of a crucial witness.

The judgment is, therefore, affirmed.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit