Laches Defense Denied Where Texas Instruments Failed to Produce Products that Demonstrated Notice During Discovery and Texas Instruments Failed to Make Showing of Economic Prejudice

October 1, 2014

At the end of trial, the Defendant, Texas Instruments Incorporated's ("TI"), pursued its equitable defense of laches, the only remaining issue left in this patent infringement case. The district court conduced an evidentiary hearing on laches at which the district court heard the live testimony of five witnesses and also accepted deposition designations, prior trial testimony, and exhibits to consider separate from the live testimony.

As explained by the district court, "[t]he equitable defense of laches may be available where the plaintiff unreasonably delayed filing its infringement suit. See A.C. Aukerman Co. v. R.L. ChaidesConstr. Co., 960 F.2d 1020, 1032 (Fed. Cir. 1992) (en banc). The defense is applicable where the accused infringer proves two things: (1) 'the plaintiff delayed filing suit for an unreasonable and inexcusable length of time from the time the plaintiff knew or reasonably should have known of its claim against the defendant,' and (2) the defendant suffered material prejudice as a result of the delay Id. at 1032. The defendant must prove delay and prejudice by a preponderance of the evidence. Id. at 1045."

The facts supporting TI's laches defense were emails sent by 3Com employees that TI contended "show that 3Com was on notice that the AR7 chip and the Titan chip infringed the'872 Patent."

However, at the evidentiary hearing, "Plaintiff developed its claim that TI did not disclose either chip during discovery, and thus, that TI should not be able to rely on these chips to prove laches. . . . After this evidence was introduced, TI made no effort to rebut the fact that it did not disclose the two chips it contends establish a basis for its defense of laches. Accordingly, the Court finds that TI did not disclose either the AR7 or the Titan chips during discovery."

As a result, the district court found it would be inequitable to allow TI to rely on either chip as a basis for its laches defense.

The district court then analyzed whether, even if it considered the chips, laches would apply and concluded that although there was delay on the part of the Plaintiff this by itself would not be enough to establish laches because there was no economic prejudice to TI. "If the Court were to consider the AR7 and Titan chips as admissible evidence, the Court would find that 3Com's awareness of the Titan chip establishes 3Com should have known of TI's infringement by August of 2004. As discussed below, however, that alone is not enough for TI to establish laches. "In view of the testimony that TI has never redesigned a product to avoid infringement allegations and TI's unwavering belief that the patents in suit were invalid, the Court concludes that USEI rebutted TI's claim of economic prejudice as a result of the unreasonable delay. After considering all of the evidence, the Court finds that TI did not show by a preponderance of the evidence that TI would have avoided infringement if 3Com, as USEI's predecessor-in-interest had filed suit or provided notice. Aukerman at 906 F.2d at 1033; accord Ecolab, Inc. v. Envirochem, Inc., 264 F.3d 1358, 1372 (Fed. Cir. 2001)."

The district court also concluded that a defense of laches was not available to TI because its hands were "not clean." "If the Court reached this analysis, then the Court would conclude that TI should not benefit from laches because its hands are not clean. As is detailed both in this record and in the proceeding severed out of this case to resolve allegations that TI impermissibly attempted to interfere with USEI's expert (Cause No. 6:14-cv-261), TI engaged in unprofessional conduct that threatened, but fortunately did not affect, the integrity of this litigation. Sitting in equity, the Court cannot countenance such behavior--let alone allow it to benefit from an equitable remedy."

U.S. Ethernet Innovations, LLC v. Texas Instruments Incorporated, Case No. 6:11-cv-491(E.D. Tex. Sept. 18, 2014)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.