Supreme Court Decides the Equitable Defense of Laches is No Longer Valid in Patent Cases
March 23, 2017
The Supreme Court’s recent ruling in SCA Hygiene v. First Quality, has eliminated the long-standing principle of laches in patent cases. On March 21, 2017, in an opinion written by Justice Alito, the Court held that laches cannot be invoked as a defense against a claim for damages brought within the statutory 6-year limitations period.
“Laches” is an unreasonable delay in filing an action. If one waits too long after discovering the infringement, one may be prevented from asserting a right that one would have otherwise been permitted to pursue. It is different from the statute of limitations, which specifically prescribes the amount of time one has to file a claim. In some cases – such as this instance – they may conflict.
In a recent case of Petrella v. Metro-Goldwyn Mayer that involved the Copyright Act, the Court held that a statute of limitations reflects a congressional decision that timeliness is better judged by a hard and fast rule instead of a case-specific judicial determination. Applying laches within a limitations period specified by Congress would give judges a “legislation-overriding” role that exceeds the judiciary’s power.
SCA Hygiene Products Aktiebolag and SCA Personal Care, Inc. (collectively, SCA), manufacture and sell adult incontinence products. In October 2003, SCA sent a letter to respondents (collectively, First Quality), alleging that First Quality was making and selling products that infringed SCA’s rights under U. S. Pat. 6,375,646 (the ’646 patent). First Quality responded that one of its patents—U. S. Patent No. 5,415,649 (Watanabe patent)—antedated the ’646 patent and revealed “the same diaper construction.” As a result, First Quality maintained the ’646 patent was invalid and could not support an infringement claim. SCA sent First Quality no further correspondence regarding the ’646 patent, and First Quality proceeded to develop and market its products.
In July 2004, without notifying First Quality, SCA asked the Patent and Trademark Office (“PTO”) to initiate a reexamination proceeding to determine whether the ’646 patent was valid in light of the Watanabe patent. Three years later, in March 2007, the PTO issued a certificate confirming the validity of the ’646 patent.
In August 2010, SCA filed its patent infringement action against First Quality and First Quality moved for summary judgment based on laches and equitable estoppel. The District Court granted that motion on both grounds. SCA then appealed to the Federal Circuit, but before the Federal Circuit panel issued its decision, the Supreme Court decided the Petrella case. The panel nevertheless held, based on a Federal Circuit precedent that SCA’s claims were barred by laches.
The Federal Circuit en banc reconsidered the precedent, Aukerman in light of Petrella. The en banc court reaffirmed Aukerman’s holding that laches can be asserted to defeat a claim for damages incurred within the 6-year period set out in the Patent Act.
Petrella arose out of a copyright dispute relating to the film Raging Bull. The Copyright Act’s statute of limitations requires a copyright holder claiming infringement to file suit “within three years after the claim accrued.” 17 U. S. C. §507(b). Petrella sought relief for alleged acts of infringement that accrued within that 3-year period, but the lower courts nevertheless held that laches barred her claims. The Court held that laches cannot defeat a damages claim brought within the period prescribed by the Copyright Act’s statute of limitations stating (“[I]n the face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief ”).
Section 286 of the Patent Act provides: “[N]o recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.” By the logic of Petrella, this provision represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.
The Court’s decision overrules patent case law that dates prior to 1938. This decision clearly favors patent owners asserting their patent rights in federal court, by removing an equitable defense that was often raised by alleged infringers.
If you have any questions, please contact us.