The underlying dispute centers on U.S. Patent Nos. 8,589,541 and 9,215,613, both relating to background data technologies. Headwater sued Cellco Partnership d/b/a Verizon Wireless and Verizon Corporate Services Group, Inc. in July 2023, and a jury found willful infringement and awarded $175 million in damages in July 2025. Judge Rodney Gilstrap then held a bench trial on February 4, 2026, to resolve Verizon's equitable defenses of estoppel and waiver.
The relationship between the parties is unusual: Verizon has been an investor in Headwater or its sister entity ItsOn Inc. since at least 2010, first putting in $1.75 million for a 10 percent equity stake and later investing an additional $30 million in ItsOn between 2015 and 2017. Despite that investor relationship, the court found that Headwater's principal, Dr. Gregory Raleigh, began investigating whether Verizon was infringing in 2017 — the same year Verizon was completing its additional investment — and then waited until July 2023 to file suit.
Judge Gilstrap held that the six-year gap was not the product of an incomplete infringement analysis. The court found that Headwater had full knowledge of Verizon's infringement in 2017, when the damages period would have covered less than two years of alleged infringement dating back to February 2016. By waiting until 2023, Headwater could seek the full six-year lookback permitted under 35 U.S.C. § 286. The court found the delay directly attributable to maximizing the damages Headwater could recover, and it rejected Dr. Raleigh's trial testimony that Headwater lacked sufficient knowledge of infringement until 2023.
On the implied waiver standard — conduct so inconsistent with an intent to enforce its rights as to induce a reasonable belief that such right has been relinquished — the court held that Verizon's belief was both reasonable and induced by Headwater. The court noted that Verizon was deprived of the opportunity to seek non-infringing alternatives while "the damages clock, visible only to Headwater, continued to run." The existing investor relationship made that belief more reasonable still, even though the court declined to hold that the investments alone created an affirmative duty to disclose or promptly sue.
The court carefully distinguished its holding from the laches bar the Supreme Court eliminated in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 580 U.S. 328 (2017). Judge Gilstrap held that SCA Hygiene forecloses laches only as a defense to damages, not to underlying liability, and that the implied waiver doctrine survived SCA Hygiene because, as the Supreme Court explained in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), the gravamen of implied waiver is inducement of a reasonable belief — a more exacting standard than the test for laches. The court also found that in both SCA Hygiene and Petrella, the Supreme Court recognized that other forms of equitable relief, besides laches, would remain available.
Verizon's equitable estoppel defense failed on both the investment-era and post-investment conduct. The court held that Verizon's knowledge of Headwater as a company, without knowledge of the specific asserted patents, could in theory support estoppel in certain circumstances, but that Verizon's inference that Headwater would never enforce any patent against it was unreasonable. The 2010 investment agreement expressly permitted Headwater to withhold information about potential conflicts of interest, and the court found that investigating a possible infringement suit against an investor plainly qualified as such a conflict.