United States: Laches No Longer A Defense To Patent Infringement

While under attack for several years now, the patent infringement defense of laches was dealt a serious, and likely final, blow by the recent Supreme Court case of SCA Hygiene Products AB et al. v. First Quality Baby Products LLC et al., No. 15-927 (U.S. Mar. 21, 2017). Relying largely on analogous copyright law, the Supreme Court held that a claim for damages for patent infringement committed within the six-year statute of limitations cannot be opposed using a laches defense.

Background

This case originated from a letter sent by SCA Hygiene Products (SCA) in 2003 alleging that First Quality Baby Products (First Quality) was infringing one of their patents. First Quality responded to SCA that the patent was invalid. SCA had no other contact with First Quality until it filed a patent infringement lawsuit in 2010.

First Quality prevailed at the District Court on a motion for summary judgement based on laches and equitable estoppel. First Quality then prevailed on appeal and an en banc rehearing at the Court of Appeals for the Federal Circuit. The en banc decision affirmed earlier Federal Circuit precedent barring SCA's claims for damages because of SCA's laches in bringing suit. The en banc Federal Circuit decision cited to Supreme Court precedent allowing the defense of laches to be asserted within the applicable six-year statute of limitations for patent infringement cases. But the decision did not discuss the Supreme Court's decision in Petrella v. Metro-Goldwyn-Mayer, Inc. that eliminated the laches defense for copyright infringement occurring within that applicable statute of limitation.

Supreme Court's analysis – analogizing to Petrella v. Metro-Goldwyn-Mayer, Inc. copyright decision

The Supreme Court vacated the en banc Federal Circuit decision relying primarily on Petrella. The decision first laid out that the doctrine of laches is a shield against untimely claims, as is a statute of limitation. A statute of limitation "reflects a congressional decision" that a bright line rule on the timeliness of a claim is preferable to the "case-specific judicial determination" of a laches defense. SCA Hygiene, Slip Opinion at 4. Relying on the doctrine of the separation of powers, the Supreme Court decision notes that, as explained in Petrella, applying the doctrine of laches to bar a claim within the statute of limitation would allow judges to override legislation. The court quoted the Petrella decision stating "courts are not at liberty to jettison Congress' judgment on the timeliness of suit." Id. The Supreme Court also reiterated from Petrella that the principle of laches developed to address equitable claims for which the Legislature provided no time limitation. To apply the doctrine of laches would therefore clash with the existing statute of limitation provided by the Legislature.

As it has in numerous other situations, the Supreme Court then applied the copyright law principles of Petrella to patent law. The Court rejected First Quality's argument that the patent statute differs from the copyright statute of limitation because the copyright statute of limitation runs from the date the cause of action accrued and the patent statute of limitation runs backward from the time the suit was filed. The Court explained that Petrella addressed this argument and described the copyright statute as a three-year look-back limitation period and reached the conclusion that it is a statute of limitation.

The Supreme Court further explained that the patent statute of limitation is not merely a codification of a laches defense that also allows laches to bar recovery within the six-year time limit. Rather, prior to the enactment of the statute, Supreme Court precedent made it clear that laches could not apply within the term of a statute of limitation. If Congress intended laches to apply within the statute of limitations it would have made this clear in view of the existing contrary Supreme Court precedent.

Implications

First, this case illustrates the continuing close relationship of copyright and patent law in Supreme Court jurisprudence. As both copyright and patent law protection stem from the same Constitutional clause (Article I, Section 8, Clause 8), they have always had a very close history in Supreme Court precedents. While there have been periods of time when the two types of intellectual property law have diverged, this case continues the historical trend of treating the two consistently wherever possible. Arguments that call for treating infringing conduct, defenses, and other aspects of copyright and patent infringement litigation differently would appear to likely face similar fates before this Supreme Court.

Second, as a direct result of this case, the most important take away is that laches is no longer available as a defense to damages claims made for committing acts of infringement within the statute of limitation. In other words, "a patentee may recover damages for any infringement committed within six years of the filing of the claim." SCA Hygiene, Slip Opinion at 6. The result is the complete removal of the laches defense from patent litigation practice. While arguably a long shot under recent case law, this decision should, essentially, remove laches from the patent litigation vocabulary.

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