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Tanisha Gupta
Mar 24, 202110 min read

What is Estoppel?


When one person has, by his declaration or by his act, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.


The doctrine of estoppel has gained a new dimension in recent years with the recognition of an equitable doctrine of promissory estoppel both by English and Indian courts. According to it, if a promise is made in the expectation that it should be acted upon in the future, and it was in fact acted upon, the party making the promise will not be allowed to back out of it.


Estoppel in Patent Law states that a person can’t simply say one thing and take a position in the US Patent and Trademark Office (USPTO) and then when they go litigate their patent in court, come up with a completely different theory of what a term means or how a particular invention operates.


In Cohen v. Cowles Media Co. 501 US 663 (1991), the Supreme Court recognized promissory estoppel as a "state law doctrine creating legal obligations never explicitly assumed by the parties that are enforceable."

An agreement made by promissory estoppel will typically have the same binding effects on parties that a valid contract would. If a party breaches an obligation created by promissory estoppel, a court can choose to assign either reliance damages or expectation damages.


Types of Estoppels

  • Prosecution History Estoppel - Traditionally, the doctrine of prosecution history estoppel has been utilised as an equitable tool for determining the scope of patent claims. The doctrine bars the patentee from construing its claims in a way that would resurrect subject matter previously surrendered during prosecution of the patent application, and thus prevents a patentee from enforcing its claims against otherwise legally equivalent structures if those structures were excluded by claim limitations added to avoid prior art. The traditional view that depending upon the nature and purpose of an amendment, the doctrine may have a limiting effect within a spectrum ranging from great to small to zero was recently changed by the Federal Circuit. Accordingly, all amendments made for the purpose of patentability are now deemed to have the effect of depriving the inventor of a claim interpretation that includes equivalent structures.

During the patent prosecution or invalidity procedures, applicants or patentees usually make amendments on claims or make statements that limits and narrows the scopes of claims in order to accommodate the patent law. Adding new technical features into the independent claim ——picking technical features from the specification and adding them into the independent claim or using a subordinate claim as a new independent claim is a common manner of amendments in practice, and therefore leads to the change of the scope of the independent claim. It was once believed that if such a change produced an essential effect on the patent right, for example overcoming the lack of novelty or inventive step, then all of the other technical features other than the new added one should be excluded from the scope of the independent claim (i.e., the prosecution history estoppel should be applied).

  • Estoppel by a Matter of Record or Quasi-Record - Once a court has given a judgement, the parties, their representatives, their executors, etc. all are bound by that decision. This doctrine stops the parties to a case, from raising another suit in the same matter or to dispute the facts of the case after the decision has been made by the court. Situations where estoppel by record or quasi record arises are as follows:

  1. Where the dispute between the parties on the facts have been decided upon by the tribunal which was entitled to take decision in the particular case, and when the same dispute arises again in the matter subsequent to the first one, between the same parties;

  2. Where the issue raised between the parties which has been resolved by the judiciary, incidently comes again into question in the subsequent proceedings between the same party.

  3. Where an issue raised on the facts, affecting the status of the person or thing, has been willingly determined in a manner that in the final decision it be included as a substantive part of the judgment in rem of the tribunal that has been setup to decide the particular case. This should take place when the same issue comes directly in question in subsequent civil proceedings between any party whatever.

  • Estoppel by Deed - It is the concept where two parties enter into an agreement by way of a deed as to certain facts. This implies that neither he nor his representatives or any person claiming under him can deny the facts mentioned and agreed in the deed.

  • Estoppel by Pais or Estoppel by Conduct - “Estoppel by Pais means ‘Estoppel in the Country’ or ‘Estoppel before the public’. Estoppel by conduct means when a person through agreement, misrepresentation or negligence makes the other person believe in certain things upon which the other person had taken some action causing a change in their current situation, then the first person cannot deny the veracity of the statements given by him in the latter stages.

  • Estoppel by Negligence - This principle allows one party to claim a right over the property of another party who might not be having the possession of it. This reflects that the person being estopped owes a duty to the other person whom he had led into wrong belief.

  • Estoppel on a Point of Law - The Doctrine of estoppel does not apply to statutes but only to the facts. Estoppel, if applied to the law, would go against public policy and general welfare of the society. The principle of estoppel can never be invoked for the purpose of defeating the provisions of law.

  • Estoppel by Acquiescence - When one party, through a legitimate notice, informs the other party about the facts of a claim, and the other party fails to acknowledge it, that is, neither he/she challenges it nor does refute it within a reasonable period of time. The other party now would be estopped from challenging it or making any counterclaim in the future. The other party is said to have accepted the claim though reluctantly, that is, he/she has acquiesced it.

  • Conflict Estoppel - When one person through his speech or conduct makes the other person believe in a particular thing and induces him to act upon it, he would be estopped from taking any conflicting or contrary or erratic position, which could cause loss to the other party.

  • Collateral Estoppel - The doctrine of collateral estoppel safeguards a criminal from being prosecuted for the same issue as raised in the earlier trial in more than one criminal trial.

  • Equitable estoppel - When a person tries to take a legal action that would conflict with his previously given statements, claims or acts, this legal principle would prohibit him from doing so. So, the plaintiff would be stopped from bringing a suit against the defendant who acted pursuant to the commands of the plaintiff.

In cases involving contracts between U.S. companies, courts frequently allow a nonsignatory to a contract to enforce an arbitration provision in the contract against a signatory when the signatory to the contract relies on the terms of that agreement in asserting its claims against the nonsignatory. On June 1, 2020, the U.S. Supreme Court ruled unanimously that this principle — known as “equitable estoppel” — may also be applied to international contracts governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, because nothing in that Convention conflicts with the enforcement of arbitration agreements by nonsignatories under domestic law equitable estoppel doctrines.


About the Law

  • Trademark Law

In cases involving contracts between U.S. companies, courts frequently allow a nonsignatory to a contract to enforce an arbitration provision in the contract against a signatory when the signatory to the contract relies on the terms of that agreement in asserting its claims against the nonsignatory. On June 1, 2020, the U.S. Supreme Court ruled unanimously that this principle — known as “equitable estoppel” — may also be applied to international contracts governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, because nothing in that Convention conflicts with the enforcement of arbitration agreements by nonsignatories under domestic law equitable estoppel doctrines.

To establish the affirmative defense of estoppel, which may bar all relief on a claim, a respondent must demonstrate: (1) that the trademark owner has engaged in some misconduct that leads the alleged infringer to reasonably believe that the trademark owner will not assert a claim; (2) that the respondent relied on the trademark owner's misconduct; and (3) that the respondent has been materially prejudiced26 based on its reliance. Aukerman, 960 F.2d at 1040. The trademark owner's misconduct “may include specific statements, action, inaction or silence where there was an obligation to speak.” Id. If a respondent points to a complainant's silence or inaction as the basis for its estoppel defense, such “inaction must be combined with other facts respecting the relationship or contacts between the parties to give rise to the necessary inference that the claim against the defendant is abandoned.” Id., at 1042; accord Hemstreet v. Computer Energy Sys. Corp., 972 F.2d 1290, 1295 (Fed. Cir. 1992). However, “even where the three elements of equitable estoppel are established, the court must also ‘take into consideration any other evidence and facts respecting the equities of the parties in exercising its discretion and deciding whether to allow the defense of equitable estoppel to bar the suit.”

The doctrine of apparent authority, also referred to as “agency by estoppel,” includes elements of reliance and prejudice associated with the equitable defense of estoppel. Crinkley v. Holiday Inns. Inc., 844 F.2d 156, 166 (4th Cir. 1988). “Agency by estoppel specifically applies to situations where no actual agency relationship exists.” Id.; see Minskoff v. American Express Travel Related Services Co., 98 F.3d 703, 708 (2d Cir. 1996) (discussing proof required to estopp principal from denying apparent authority). Thus, the apparent authority of Deere's dealers arises from manifestations of Deere, as distinguished from the dealers, to third parties and what the third parties reasonably believe from those manifestations.


Estoppel Case Law

  1. Douglas E. Barnhart, INC. v. CMC Fabricators, INC. (November 2012)

In this appeal from an order denying a motion for an award of an attorney fees, it must decide whether a defendant who defeats a claim for breach of contract but loses a related claim for promissory estoppel is entitled to recover attorney fees when the alleged contract provides the prevailing party in any dispute between the parties shall recover such fees. It is held that such a defendant is entitled to recover the attorney fees reasonably incurred in defeating the breach of contract claim. Therefore, there was a reversal of the trial court’s order and remand for further proceedings.

  1. Newton Tractor Sales v. Kubota Tractor (April 2009)

Plaintiff-Appellant Newton Tractor Sales, Inc. (Newton), brought suit against defendants, Kubota Tractor Corporation and Michael Jacobson, a local Kubota representative on counts of promissory estoppel, common law fraud and negligent misrepresentation. The circuit court of Fayette County granted summary judgement in favour of Kubota on all 3 counts. The appellate court affirmed. 382 III. App. 3d 1176. Newton then filed a petition for leave to appeal, which allowed pursuant to Supreme Court Rule 315 (210 III. 2d R. 315(a)). On appeal it was asked to determine whether promissory estoppel is a recognised cause of action in Illinois, and if so, whether Newton has sufficiently established a genuine issue of material fact so as to survive Kubota’s motion for summary judgement.

  1. Tuscano v. Greene Music (December 2004)

Joseph Tuscano sued Greene Music for promissory estoppel originating from Greene’s unfulfilled promise of employment, which forced tuscano to resign from an at-will employment position with his former employer. The court awarded Tuscano damages including lost wages based on what Tuscano would have earned from his former employer to the time of his retirement. Greene appeals from the judgement, contending such future wages are impermissible reliance damages and are speculative as a matter of law. Such damages are recoverable on a promissory estoppel theory as long as they are not speculative or remote and are supported by substantial evidence, but they are not available to Tuscano under the evidence in this case. Accordingly, the award of damages to Tuscano for lost future earnings from September 1, 2001, to his retirement and remand the matter to the trial court for retrial limited to the amount of those damages only was vacated. The judgement was affirmed in all other aspects.

  1. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd. (May 2002)

Plaintiff (Festo) owns two patents for a magnetic rodless cylinder, a piston-driven device that uses magnets to move objects in a conveying system. In response to rejection, the prosecution history reveals that both patent applications were amended to reference prior art and new limitations. There were two new limitations: (1) the inventions are to contain a pair of sealing rings, each having a lip on one side, and (2) the outer shell of the device, the sleeve, is to be made of a magnetizable material. Defendant (Shoketsu) then brought a similar device to the market that had a single sealing ring with a two-way lip and a sleeve made of magnetizable alloy. Plaintiff sued for infringement claiming that although there was no literal infringement, Defendant’s device infringed under the doctrine of equivalents because the devices were very similar. Defendant argued that Plaintiff was stopped from presenting this argument because of the prosecution history regarding the patents. The district court held that Plaintiff’s amendments were not made to avoid prior art and did not result in estoppel. The court of appeals reversed and held that by narrowing a claim to secure a patent, the patentee surrenders all equivalents to the amended claim element. Prior decisions held that prosecution history estoppels made a flexible bar, foreclosing some, but not all, claims of equivalence, depending on the reason for the amendment and the changes in the text. Plaintiff appealed.


  1. Walser v. Toyota Motor Sales, U.S.A., INC (December 1994)

The plaintiffs, Paul Martin Walser and Philip Martin McLaughlin, appeal from a jury verdict in this diversity case awarding them $232,131 in damages on their promissory estoppel claim against Toyota Motor Sales. The plaintiffs argue that the district court erred by instructing the jury that the plaintiffs damages on their promissory estoppel claim were limited to out-of pocket expenses. The plaintiffs also argue that the district court erred in declining to award specific performance as an alternative remedy on their promissory estoppel claim, in denying their motion for judgement as a matter of law in their contract claim, in instructing the jury on their contract claim, in requiring to accept payment from Toyota for $.89 less than the amount of damages and interest awarded, in granting summary judgement on their claim under Minnesota Motor Vehicle Sale and Distribution Regulations, and in precluding them from taxing costs prior to a final determination of this case on appeal. This was affirmed.


Conclusion


To sum up, estoppel plays an important role in limiting the legal rights enjoyed by the inventors. The relevant estoppel might be used to set up a cause of action, give a defense to a cause of action or have some other unequivocal impact on evidence causing a claim to succeed or fail.


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References

Keywords: Estoppel, patentability, patent infringement search, patent licensing, patent novelty, patent claim terms, infringement claim charts, patent litigation.

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