of our position as to extending the Agreement." Fairchild did not communicate with Sony any further about the extension proposal. In other words, Fairchild's last communication with Sony reiterated that the parties had reached no licensing agreement. Indeed, Fairchild expressly asserted that it had not agreed to any extension of the 1979 agreement.
In weighing the first element of equitable estoppel, this court must examine whether Fairchild's silence or inaction amounts to misleading conduct. To establish the first element of equitable estoppel, Sony must show that Fairchild's statements and conduct supported an "inference that [Fairchild] did not intend" to bring an infringement claim against Sony. Meyers v. Asics Corp., 974 F.2d 1304, 1308. (Fed. Cir. 1992) (quoting Aukerman, 960 F.2d at 1042). At most Sony can show silence in the face of Sony's offers to extend the licensing agreement.
The Federal Circuit has discussed examples in which silence combined with other facts does or does not mislead an alleged infringer to reasonably infer that the patentee had foregone pursuit of its patent rights against an alleged infringer. In Meyers v. Brooks Shoe, Inc., the Federal Circuit stated: "We do not believe that a suggestion of infringement coupled with an offer to license followed by silence would suffice to establish equitable estoppel." 912 F.2d 1459, 1464 (Fed. Cir. 1990); see MCV, Inc. v. King-Seeley Thermos Co., 870 F.2d 1568, 1572 (Fed. Cir. 1989) (patentee expressly declined to pursue an infringement claim), Jamesbury, 839 F.2d at 1555 (plaintiff had eight year silence following a letter informing alleged infringer he was infringing plaintiff's patent, and another letter informing him that the matter had been referred to his attorneys); cf. Hottel Corp. v. Seaman Corp., 833 F.2d 1570, 1574-75 (Fed. Cir. 1987) (plaintiff's period of silence did not follow any communication indicating it would take immediate action).
As these Federal Circuit decisions show, silence alone does not amount to misleading conduct. As the Federal Circuit stated in Aukerman, inaction -- "combined with other facts respecting the relationship or contacts between the parties" -- may allow defendant to make the inference that the claim against him has been abandoned. 960 F.2d at 1042; accord ABB Robotics, 52 F.3d at 1064. Thus, silence alone -- even silence over an extended period of time -- does not amount to misleading conduct without notice of infringement or failed licensing negotiations. Aukerman, 960 F.2d at 1042 (citing Continental Coatings Corp., v. Metco, Inc., 464 F.2d 1375, 1379-80 (7th Cir. 1972) ("In each such case the infringement notice was either withdrawn or followed by such a long period of inactivity as to justify an inference of abandonment."); A.C. Aukerman Co. v. Miller Formless Co., 693 F.2d 697, 701 (7th Cir. 1982) ("With a delay of this length [over six years], there has to be something significantly more than continued jousting, at least where there is no real possibility of success on the part of patentee in obtaining the solid type of license it wants."); Jensen v. Western Irrigation & Mfg., Inc., 650 F.2d 165, 169 (9th Cir. 1980) (threats of enforcement followed by long period of silence)). In other words, the active conduct of patentee, beyond mere silence, must also support an inference that patentee did not intend to bring an infringement action against the alleged infringer.
Loral, in this case, has not engaged in conduct which would mislead Sony to infer reasonably that Loral had abandoned any intent to initiate an infringement action. The record shows only an ongoing exchange of proposals to propose an extension of licensing negotiations. See Hemstreet, 972 F.2d at 1295. Thus, the character of the communications between Fairchild and Sony did not amount to misleading conduct. Sony thus had no basis for a reasonable inference that Fairchild had abandoned intentions to use legal remedies.
Moreover the period of silence which constitutes Sony's primary argument for misleading was not so prolonged as to create a misleading impression. In this case, Loral's silence after ambiguous communications lasted about five years. Generally, the longer the delay the stronger the inference becomes. See Aukerman, 960 F.2d at 1044. However, because equitable estoppel is a defense in equity each case varies on its facts as to what constitutes a misleading inference. Therefore, the length of periods of silence, combined with other facts, varies in determining an inference of misleading silence. Studiengesellschaft Kohle, m.b. H. v. Dart Indus., Inc., 726 F.2d 724, 728-29 (Fed. Cir. 1984) (finding that five-year silence alone did not give rise to estoppel); Hemstreet, 972 F.2d at 1295 (noting that negotiations plus six years of silence did not justify a finding of equitable estoppel); Advanced Hydraulics, Inc. v. Otis Elevator Co., 525 F.2d 477, 481 (7th Cir.), cert. denied, 423 U.S. 869, 46 L. Ed. 2d 99, 96 S. Ct. 132 (1975) (explaining that notice of infringement plus five-year silence required finding of estoppel). Therefore, this court finds that Fairchild's conduct did not rise to the level of misleading conduct.
Fairchild's failure to sue Sony for infringement of its foreign patents also does not justify any reasonable reliance by Sony. Fairchild owned patents in Britain, France, and Hong Kong, based on the '674 patent. These foreign patents contained apparatus claims. Failure or refusal to sue on foreign patents has no relevance to the right to sue on United States patents, which are limited to acts of infringement in the United States. This case simply does not feature misleading conduct.
Under the second element of equitable estoppel, the accused infringer must show its substantial reliance on the patentee's misleading conduct. Reliance and prejudice or harm are not the same. To demonstrate reliance, "the infringer must have had a relationship or communication with the plaintiff which lulls the infringer into a sense of security. . . ." in progressing with its business. In other words, the harm must be in direct reliance on patentee's conduct. See Aukerman, 960 F.2d at 1043. Although the evidence indicates that Loral was aware that Sony was probably infringing the '674 patent, Loral had no effective remedy until passage of the 1988 Process Amendments Act. Fairchild's failure to warn Sony earlier of possible infringement does not rise to the level of misleading conduct. Therefore, Sony cannot show reasonable reliance on this conduct.
Lastly, the accused infringer must show that its reliance caused it material prejudice. As with laches, prejudice may take the form of either a change in economic position or a loss of evidence. Id. (citing Advanced Hydraulics, 525 F.2d at 481-82). However, without misleading conduct and reasonable reliance, this court finds that Sony did not show any material prejudice from misleading conduct. The Federal Circuit in Aukerman instructed the trial courts to take into consideration, even where the three elements of equitable estoppel are present, other evidence and facts affecting the equities of the parties in exercising its discretion to allow the equitable estoppel defense. 960 F.2d at 1043. Because Fairchild had no viable cause of action until passage of the 1988 Process Amendments Act, this court denies Sony's request to bar this suit under equitable estoppel.
The court grants Sony's motion for judgment as a matter of law as to infringement of the asserted claims of the '485 and '674 patents. With that ruling, the court also grants Sony's motion for judgment as a matter of law as to inducement to infringe of claim 1 of the '674 patent. The court denies Sony's motion on all other grounds. Additionally, the court finds prosecution history estoppel precludes infringement of the asserted claims of both the '485 and '674 patents under the doctrine of equivalents. Finally, the court finds that neither laches nor equitable estoppel bar recovery in this suit. In the alternative, the court grants Sony's motion for a new trial on infringement of the asserted claims of the '485 and '674 patents under the doctrine of equivalents. The court will enter an order in accordance with this Opinion.
ORDER GRANTING SONY'S MOTION FOR JUDGMENT AS A MATTER OF LAW, FOR A NEW TRIAL, AND ON PROSECUTION HISTORY ESTOPPEL.
For the reasons set forth in the foregoing Opinion of this date, IT IS HEREBY ORDERED as follows:
1. Sony's motion for judgment as a matter of law is granted.
2. In the alternative, Sony's motion for a new trial on the issue of infringement of '674 and '485 patents is granted.
3. Sony's motion on prosecution history estoppel is granted
4. Within five (5) days from the date of this order, the parties shall contact the court to schedule a telephone conference to discuss further proceedings in this matter. The court intends to issue an order certifying this case for immediate appeal pursuant to Fed. R. Civ. P. 54(b).
RANDALL R. RADER, CIRCUIT JUDGE
(Sitting by Designation)
Dated July 12, 1996