Recoupment of Monetary Investment Is Not the Only Consideration for Equitable Intervening Rights

| Hans L. Mayer


Before, Lourie, Reyna, and Wallach. Appeal from the U.S. District Court for the Eastern District of Arkansas

Summary: Recoupment of monetary investment is not the sole factor a court must consider, nor a factor that must be weighed more heavily, when determining entitlement to a defense of equitable intervening rights.

In 2002, Morris and Associates, Inc. (“Morris”) sent a demand letter to John Bean Technologies Corp. (“Bean”), asserting that Bean’s patent was invalid and citing prior art in support. Bean did not respond. In 2014, Bean amended claims to the same patent and received a reexamination certificate. Bean filed an infringement suit against Morris six weeks later. Morris filed a motion for summary judgment asserting that Bean’s patent infringement claims were barred by equitable intervening rights and the district court granted the motion. Bean appealed to the Federal Circuit claiming the district court abused its discretion by improperly weighing the equitable intervening rights factors.

The Federal Circuit rejected Bean’s argument that monetary recoupment of investments made prior to the grant of a reexamination certificate should be deemed sufficient to defeat the grant of the equitable remedy and affirmed the district court’s decision. The Federal Circuit noted that recoupment is not the sole objective, nor sole factor for 35 U.S.C. §252 as it relates to protection of “investments made or business commenced,” and that the equitable intervening rights analysis is broader. The Federal Circuit agreed with the district court’s finding that Bean engaged in bad faith by not disputing Morris’ belief that the patent was invalid in 2002, and instead allowing Morris to build its entire business up for over a decade based on the accused product before requesting reexamination. The Federal Circuit also agreed that Morris’ investment was more than just financial because it included research, development, promotion, and good will for over a decade.

Editor: Paul Stewart