United States: Federal Circuit Confirms The Laches Doctrine As A Viable Defense In Patent Infringement Actions

In an earlier article, we discussed whether the Supreme Court's recent decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014) left intact the doctrine of laches in patent infringement actions.1 The Federal Circuit recently reaffirmed its longstanding application of laches as a defense to patent infringement claims.

On September 18, 2015, in SCA Hygiene Products. v. First Quality Baby Products, the Federal Circuit held in a closely divided 6-5 decision that laches (an unreasonable delay in pursuing a claim to the prejudice of the other party) will remain a defense in patent infringement actions to bar pre-suit damages. Sitting en banc, the Court addressed whether the recent Supreme Court decision in Petrella—that laches cannot bar relief in copyright infringement suits when the claim is brought within the statute of limitations—overruled the Federal Circuit's prior conclusion in A.C. Aukerman Co. v. R.L. Chaides Construction Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc) that the laches doctrine applies in patent law.

This split decision highlighted the tension between the Section 286 damages limitation and the Section 282 laches defense. The majority first concluded that, under Petrella, the six-year damages limitation is functionally equivalent to a statute of limitations. The majority, however, distinguished patent law from copyright law. In light of Congress's silence when codifying the Patent Act in 1952, the majority reasoned that Congress intended to codify the common law that recognized the laches doctrine as part of Section 282. While the majority characterized its opinion as "neither novel, nor a direct response to Petrella," it declined to address this tension and instead reasoned that it lacked the authority to change the scope and applicability of these statutes as established by Congress.

Whereas the entire panel concluded that laches may bar equitable remedies such as injunctive relief, five of the eleven judges dissented from the majority's holding that Congress codified a laches defense in the Patent Act. The dissent criticized the majority's interpretation of Congress's silence, stating instead that the case law does not clearly establish a common law doctrine to support laches' applicability in patent law.

In light of the sharp dissent, it is likely that a petition for Supreme Court review will be filed in the next few months. The continued viability of the laches doctrine, however, currently benefits accused infringers who have invested significantly into the development and commercialization of the accused technology, particularly as a defense against abusive patent litigation by non-practicing entities. In various industries such as high-technology, the laches doctrine serves to deter patent holders who are aware of the potentially infringing product from waiting until substantial innovation has occurred and significant damages have accrued to file suit.

The Majority Opinion

Similarly to its earlier panel opinion in this case, the majority—consisting of Chief Judge Prost and Judges Newman, Lourie, Dyk, O'Malley, and Reyna—first examined 35 U.S.C. § 286, which bars recovery for "any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action." Whereas the parties disputed whether this statute functions as a damages limitations or a statute of limitations, the majority clearly concluded that this is a damages limitation. Under Petrella's analysis of whether Congress has set forth a time period for recovery of damages, the majority concluded that Section 286's six-year limit for damages was functionally equivalent to a statute of limitations.

To differentiate patent law from copyright law, however, the majority then examined Section 282(b), which governs available defenses to claims of patent infringement. Specifically, it highlighted the "catch-all" provision of Section 282(b)(4), which allows defendants to assert "any other fact or act made a defense by this title." Relying upon the statutory language, legislative history, and expert commentary from P.J. Federico, the Court concluded that Congress had intended Section 282 to apply broadly and include laches as a defense.

Turning to the key issue of whether Section 282's laches defense bars legal and equitable remedies or precludes only equitable relief, the majority concluded that laches bars recovery of both. Section 282's statutory language, its legislative history, and contemporary commentary are all silent on this topic. Therefore, the majority's analysis focused upon the scope of common law regarding laches before Congress codified the Patent Act of 1952 and whether Section 282 had preserved this common law. The majority highlighted that the appellate courts had consistently recognized the laches defense against legal relief before 1952. Moreover, when two appellate courts had considered arguments similar to those in the present case—that laches bars only equitable relief, both had held that laches may preclude legal relief as well.2 Concluding that the pre-1952 case law provided strong support, the majority then reasoned that Section 282's laches defense adopted its common law scope and meaning when Congress remained silent on its substance.

To support its conclusion that Petrella did not overrule Aukerman's holding, the majority emphasized a significant difference between copyright and patent law with regard to intent. Whereas copyright law considers whether the defendant had access to the work and allows independent creation as a defense to copyright infringement, patent law does not similarly consider an infringer's "innocence." The majority thereby echoed concern from various amici that the absence of independent invention as a defense to patent infringement creates a unique risk for innovation. Without the laches defense, those companies who devote significant resources to develop and commercialize products lack a safeguard against patent holders who delay assertion of infringement claims until significant potential damages accrue.

The majority found consensus with the dissenting judges in its reexamination of Aukerman's holding that laches cannot bar prospective equitable relief. Rejecting Aukerman's bright-line rule that laches may bar only pre-suit relief, the Court concluded that a patentee's delay in asserting its rights may be considered as a factor for awarding a permanent injunction.3 Here, it distinguished the patentee's right to its invention from its right to collect damages accrued during its delay. With regard to royalties, the Court used this opportunity to emphasize the difference between laches and estoppel. As it explained, estoppel may bar all relief, and its application depends on the presence of "misleading and consequent loss." In contrast, laches focuses on the claims' timeliness. Accordingly, absent extraordinary circumstances, district courts may award on-going royalties even when it finds that the patentee has delayed in asserting its rights.

The Dissent

In an opinion joined by Judges Moore, Wallach, Taranto, and Chen, Judge Hughes dissented-in-part from the majority and concluded that laches is not a defense to legal remedy in patent law, particularly in view of Petrella's reiteration of the Supreme Court's longstanding principle that the statute of limitations makes unavailable the laches doctrine.

The dissent argued that the majority had ignored Petrella and placed insufficient emphasis on the statute of limitations of Section 286. Agreeing with the majority that Section 286 substantively functions as a statute of limitations, Judge Hughes reasoned that Congress had thereby enacted a statute of limitations that—under Petrella—makes the laches defense unavailable. The dissent took issue with the majority's analysis that Section 282 codified pre-1952 case law that laches may preclude damages recovery. Instead, it reasoned that Congress's silence on the issue—particularly its lack of any mention to case law or specific equitable defenses in the statute or its legislative history—could only invoke the presumption that it sought to codify a common law principle when that principle was "sufficiently well established." Here, the dissent concluded that the case law did not clearly hold that the laches doctrine could bar legal relief. Specifically, it highlighted several Supreme Court cases decided prior to 1952, which held that laches cannot bar legal relief within a statute of limitations period. In contrast to the majority's reliance upon pre-1952 appellate court decisions in patent cases that made available the laches doctrine, Judge Hughes noted those courts' discretionary ability as courts of equity to dismiss patent infringement claims, particularly because the patentee still could seek damages in a court of law. Therefore, it concluded that—if Congress's silence codified the laches doctrine in patent law—its scope extended to bar equitable relief only, and not legal relief. Emphasizing again its broad interpretation of Petrella to hold that laches cannot bar legal relief when a statute of limitations exists, the dissent cautioned against reliance upon patent-specific policy concerns and case law.

Footnotes

1. Robert E. Colletti and Janice Ye, Laches Remains a Viable Defense to Patent Infringement Actions, available at http://www.flhlaw.com/insights/Detail.aspx?news=9d878146-3479-4a74-beb5-e4ba8d591733&.

2. Both appellate cases were decided before the 1938 merger of law and equity in the federal courts. In Ford v. Huff, 296 F. 652 (5th Cir. 1924), the Fifth Circuit reasoned that, if a defendant could assert laches and equitable estoppel defenses to enjoin infringement claims in a bill in equity, he similarly should be able to plead those defenses in a legal suit. Later, in Banker v. Ford Motor Co., 69 F.2d 665 (3d Cir. 1934), the Third Circuit held that laches may apply to bar both legal and equitable relief. The Third Circuit applied similar reasoning to Ford when the defendant had asserted only laches but not equitable estoppel.

3. The majority concluded that the court has discretion under the framework of eBay Inc. v. MercExchange, L.L.C. to award an injunction when it finds infringement. Id. at 37-38. It reasoned that laches fits within the "balance of the hardships" factor and therefore may foreclose that injunctive relief.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions