U.S. District Judge Rodney Gilstrap issued the order on April 22, 2026, finding that Headwater’s calculated delay in filing suit against Verizon—despite investigating infringement as early as 2017—induced a reasonable belief by Verizon that the patents would not be enforced. The ruling prevents Headwater from collecting damages or enforcing the patents against Verizon, though a separate jury verdict awarding $175 million in damages against Walmart in the same case remains unaffected.
The patents at issue, U.S. Patent Nos. 8,589,541 and 9,215,613, cover background data technologies. Headwater sued Verizon in July 2023, nearly six years after its principal, Dr. Gregory Raleigh, began investigating potential infringement. A jury had previously found the patents willfully infringed and awarded $175 million in damages, but that verdict applied to the broader litigation against Walmart. The current bench trial focused specifically on Verizon’s equitable defenses of estoppel and waiver.
"Having realized in 2017 that its patents were being infringed, Dr. Raleigh and his corporate entities consciously delayed litigation against Verizon purely to benefit themselves," Gilstrap wrote. "This is conduct done with unclean hands. Equity exists to remedy just such conduct."
The court distinguished its ruling from the Supreme Court’s decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, which precluded laches as a defense to damages. Gilstrap reasoned that SCA Hygiene only barred laches against damages, not underlying liability, and that implied waiver is a distinct equitable doctrine focused on inducing a reasonable belief that rights have been relinquished.
Verizon, which invested $1.75 million in Headwater in 2010 and an additional $30 million in its sister entity ItsOn between 2015 and 2017, argued that Headwater’s silence and delay constituted equitable estoppel and waiver. Gilstrap rejected the equitable estoppel claim, noting that the 2010 investment agreement allowed Headwater to withhold information to avoid conflicts of interest. However, the judge granted the waiver defense based on Headwater’s post-investment conduct, finding that the delay deprived Verizon of the opportunity to seek non-infringing alternatives.
Headwater’s principal, Dr. Gregory Raleigh, testified that the company did not have sufficient knowledge of infringement until 2023. Gilstrap found this testimony unpersuasive, noting that a sophisticated patent-assertion entity would have known the advantages of delaying suit to maximize the damages window permitted under 35 U.S.C. § 286.
The order was signed April 22, 2026, and released to the public on May 19, 2026.