United States: Laches Defense Loses Its Luster In LED Patent Dispute

In determining whether a laches defense applies to thwart a claim of patent infringement, courts must often shine a light upon murky and complicated factual scenarios. A Massachusetts court recently navigated such a scenario in granting the plaintiff's motion for judgment, deciding that the complex web of facts did not support a defense of laches as argued by the defendants.

Plaintiff Boston University (“BU”) is the owner of a patent that covers aspects of gallium nitride (“GaN”) thin films, which are used in light-emitting diode (“LED”) chips. Defendants Everlight and Epistar are closely-connected companies in the business of manufacturing and distributing LED chips and packages. Epistar produces LED chips, which are purchased by Everlight for integration into its LED packages.

In 2012, BU sued Everlight and Epistar alleging infringement of its GaN film patent. After an eleven-day trial, the jury found BU's patent to be valid and infringed by Defendants—and awarded BU damages of approximately $10m. BU thereafter moved for an entry of judgment, and asked the court to impose pre-judgment and post-judgment interest. Defendants countered this motion with a defense of laches, arguing that BU unreasonably delayed filing suit against them and the delay resulted in material economic prejudice.

To decide if laches was applicable, Judge Saris had to unpack a dense set of facts relating to the timing of BU's knowledge of the Defendants' (or their predecessors') infringement of the patent-in-suit. At certain points from 2002 through 2010, the evidence suggests that BU—through its licensing and enforcement partner, Cree—had known of potential infringement by, or had communicated its belief of infringement to, various entities that would be connected to Epistar or Everlight.

For Epistar:

  • In 2002, BU identified United Epitaxy (UE) as producing infringing LEDs; Epistar later merged with UE but discontinued all of UE's products.
  • In 2005, Cree sent a letter to Epitech accusing it of infringement; Epistar later merged with Epitech but discontinued all of Epitech's products.
  • In 2010, Cree met with Epistar to discuss licensing opportunities; it identified the GaN patent but did not accuse Epistar of infringing it.

For Everlight:

  • In 2004, Cree accused Fairchild Semiconductor (a distributor of Everlight LEDs) of infringing the patent; Everlight later acquired the Fairchild LED business.
  • In 2007, Cree met with Everlight and accused it of infringing the patent; Everlight then reached out to Epistar for assistance in defending the infringement allegations.

In view of the above facts, the Court first wrestled with the issue of whether the presumption of laches should apply to each Defendant—as both Defendants relied on a tacking theory to cast BU's knowledge back in time. The Court found that Epistar's tacking theory failed and the presumption of laches did not apply because Epistar could not prove that its predecessors' products were the same or substantially similar as the accused products. With respect to Everlight, however, the Court ruled that the presumption of laches did apply because, in purchasing Fairchild's LED business, Everlight became a successor-in-interest to Fairchild and BU's knowledge of Fairchild's infringement went back to 2004.

Turing to whether a laches defense should apply to relieve Epistar of infringement liability, the Court determined that BU's delay in filing suit—from late 2010 when BU and Epistar discussed licensing, to late 2012 when the suit was filed—was not unreasonable. Judge Saris reasoned that the parties' licensing discussions and BU's pre-suit investigation for the bulk of 2012 were sufficient excuses for the delay. As a result, she declined to explicitly address whether BU's delay resulted in material economic prejudice to Epistar, and found for BU on the issue of laches.

For Everlight, the Court partitioned the period from 2004 to 2012 in determining whether BU's delay was unreasonable. Judge Saris found that because BU was engaged in patent litigation against another entity from Sept. 2006 to March 2009, its delay in filing suit against Everlight was excusable for this three-year window. But, she determined that BU had no acceptable excuse for the remainder of the eight years—and concluded that BU had failed to rebut the presumption of laches on the unreasonable delay prong.

However, Everlight's laches defense burned out on the issue of economic prejudice. First, Everlight claimed that it could have switched from using Epistar LED chips to non-infringing Cree chips—but the evidence showed that the Cree chips were much more expensive and would have required a different LED package design for Everlight's customers. Everlight also argued that it could simply stop purchasing Epistar chips—but such an act would have economically harmed its closely-connected partner. Finally, Judge Saris found that Everlight's reliance on indemnification from Epistar and its belief in non-infringement would have caused Everlight to stay the course and continue using Epistar chips. In light of these facts, the Court dissolved Everlight's laches defense and found for BU.

Judge Saris' opinion illuminates the difficulty that defendants may face in convincing a factfinder that laches applies to their case. While some defendants may consider a laches defense as a beacon of light to combat delayed infringement claims, it should be noted that the facts surrounding laches are almost never crystal-clear.

The case is Trustees of Boston Univ. v. Everlight Electronics Co., Ltd., Civil Action No. 12-11935-PBS, before Chief Judge Patti B. Saris. A copy of the opinion can be found here.

Laches Defense Loses its Luster in LED Patent Dispute

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