The Perils of Patenting the Industry Standard
by William F. Heinze circa 2001
refresher.com!perils
So, you've secured financing, developed a radically new technology, and filed a confidential application for patent protection. Your engineers have even deftly persuaded your competitors to adopt this technology as the new industry-wide standard. Now, just when you thought that your company would be rolling in royalty payments, your patent attorneys tell you that you should have disclosed the patent application. Even worse, they say that it might now be impossible to enforce any resulting patent. How did this happen?
Estoppel and Unclean Hands
The legal term that is used for situations like these, where something prevents the assertion of an otherwise legal right, is "estoppel." When the estoppel arises out of the unfair activities of the party asserting its rights, then the law refers to it as an "equitable estoppel."
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Equitable Estoppel in Patent Disputes
Unfortunately, there aren't many hard and fast rules for determining when a legal defense of unclean hands will succeed. However, courts have provided some general guidelines for applying the doctrine of equitable estoppel in patent disputes.
An equitable estoppel typically arises in these cases when a patent owner makes a misleading communication that it will not enforce its patent, and an infringer reasonably relies upon that communication to continue or expand its business. The communication itself can take almost any form, including conduct or silence, as long as it supports a reasonable inference that the patent will not be enforced. However, in order to show reliance, the infringer must have been lulled into a false sense of security with regard to continuing or expanding its operations. Consequently, silence alone is generally not enough to create an estoppel, unless the patent owner also has some other duty to disclose its patent position.
This duty of disclosure often comes into play during a company's participation in a standards-setting process. For example, the Internet Society's Internet Engineering Task Force ("IETF") has taken responsibility for setting the various technical standards that control the World Wide Web. Proposed standards are submitted by participants, published as Requests for Comments ("RFCs"), and then debated in various forums before they are formally adopted. Like many other standards-setting bodies, the IETF has a written policy (RFC 2026) requiring participants to disclose intellectual property rights that cover their contributions to the standards-setting process. Nonetheless, even without such a formal written policy requiring disclosure, there may still be a duty to disclose relevant intellectual property rights to a standards-setting organization in which your company participates.
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Uncanny! |
