On March 21, 2017, the Supreme Court of the United States handed down a 7-1 decision, delivered by Justice Alito, in SCA Hygiene Products AB v. First Quality Baby Products LLC. The Supreme Court held that in patent infringement cases laches cannot be used as a defense where the alleged infringement occurred within the period prescribed by §286 of the Patent Statute. This decision comes after the recent Supreme Court opinion in Petrella v. Metro-Goldwyn-Mayer, whereby the Supreme Court also limited the use of a laches defense in copyright infringement cases. In Petrella, the Supreme Court held “that laches cannot preclude a claim for damages incurred within the Copyright Act’s 3-year limitations period.”
At common law, the laches doctrine provides a defense to a claim in situations where a plaintiff takes unreasonable delay in filing a claim against the defendant and the delay was prejudicial to the defendant. The Black’s law legal dictionary states such as delay as “delay that works to the disadvantage of another,” and “inexcusable delay coupled with prejudice to the party raising the defense.” In Petrella the Supreme Court characterized the laches defense as “a defense developed by courts of equity” to protect defendants against “unreasonable prejudicial delay in commencing suit.”
Laches can typically be seen in intellectual property cases when a statute does not sufficiently protect a defendant from a plaintiff’s delay. Traditionally, laches defenses have been granted in patent infringement cases when patent owners let a patent ride for six or more years while the technology further develops.
In 2003, SCA Hygiene informed First Quality that they infringed on U.S. Patent No. 6,375,646 (ABSORBENT PANTS-TYPE DIAPER). First Quality responded to SCA and stated the patent in question was invalid. In response, SCA pursued a re-examination proceeding on the patent in 2004 and in 2007; the re-examination confirmed the patent was in fact valid. In 2010, seven years after the original notification was served, SCA filed a lawsuit against First Quality for patent infringement. First Quality moved for summary judgment based on laches and equitable estoppel. Due to the delay in filing the lawsuit, the District Court granted summary judgment in favor of First Quality on both grounds. SCA appealed to the Federal Circuit panel in which they affirmed the District Court’s laches holding. The Federal Circuit reheard the case en banc, due to the ruling of Petrella, which was decided in the midst of this case. The en banc court reaffirmed the original Federal Court’s laches holding and in light of this the Supreme Court granted certiorari.
Based on Petrella’s reasoning, the Supreme Court noted that this case “easily fits the provision at issue here.” Similar to the Copyright Act cited in Petrella, the Supreme Court discussed Section 286 of the Patent Act, which represents Congress’s judgment that “a patentee may recover damages for any infringement committed within six years of the filing of the claim.” First Quality contended that this case differs from Petrella because a true statute of limitations runs forward from the date a cause of action accrues, whereas §286’s limitations period runs backward from the filing of the complaint. The Court stated that First Quality’s argument misunderstands the way in which statutes of limitations work and noted, in Petrella, “[a] claim ordinarily accrues ‘when [a] plaintiff has a complete and present cause of action.’” Some claims may be subject to the “discovery rule”; the limitations period begins when the plaintiff discovers or should have discovered the wrong giving rise to the claim, but that is not a universal feature of statute of limitations. “For these reasons Petrella cannot be dismissed as applicable.”
First Quality further argued that laches falls within §282(b)(1) because laches is a defense based on “unenforceability.” SCA disputed First Quality’s interpretation arguing that “[r]ecognition of laches as a defense . . . does not affect the general enforceability of the patent against others.” The Court agreed they need not decide this question as “it would be exceedingly unusual, if not unprecedented, if Congress chose to include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim.” The Court further stated “laches cannot be invoked to bar a claim for damages incurred within a limitations period specified by Congress.”
Justice Breyer, in his dissenting opinion, stated “[i]n my view, however, the majority has ignored the fact that despite the 1952 Act’s statute of limitations, there remains ‘a gap’ to fill. Laches fills this gap. And for more than a century courts with virtual unanimity have applied laches in patent damages cases”
The 7-1 Supreme Court decision vacated the Federal Circuit’s judgment in part and remanded the case for further proceedings.
Click here to read the full opinion
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