The Supreme Court's Denial of Laches as a Defense to Patent Infringement

By: N. Scott Pierce

The Supreme Court recently held, in SCA Hygiene Prods. v. First Quality Baby Prod.,1 that laches cannot preclude a claim for damages incurred within the six-year limitation period specified in 35 U.S.C. § 286.  The Court reasoned that, as in an earlier copyright case, Petrella v. Metro-Goldwyn-Mayer, Inc., 2 decided in 2014, there is a general rule, “often repeated by this Court, that laches cannot be invoked to bar a claim for damages incurred within a limitations period specified by Congress.”3 Therefore, like the three-year limitation specified for copyrights in 17 U.S.C. § 507(b), the Court held that the six-year limitation in 35 U.S.C. § 286 for patents “represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.”4  The Supreme Court stated that, absent evidence of Congressional intent to the contrary, the “generally hard and fast rule” applies.5

35 U.S.C. § 282 establishes a “presumption of validity,” and lists defenses “in any action involving the validity or infringement of a patent …,” which include “noninfringement, absence of liability for infringement or unenforceability.”35 U.S.C. § 286, on the other hand, is a time limitation on damages that states in the first paragraph that, “[e]xcept as otherwise provided by law, no 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.”7 As stated by the Court, “[l]aches is a ‘defense developed by courts in equity’ to protect defendants against ‘unreasonable, prejudicial delay in commencing suit.”  “Damages,” on the other hand, is a remedy originally provided in courts of law.  Courts in equity and law were merged in the United States in 1938.

In this case, SCA Hygiene Products (SCA), the owner of U.S. 6,375,646 (the ‘646 patent), first notified First Quality Products (First Quality) of alleged infringement of its patent in October, 2003.  In August 2010, SCA filed a patent infringement suit against First Quality in the District Court for the Western District of Kentucky.  SCA’s complaint was dismissed by the district court on summary judgment for laches and equitable estoppel.  On appeal of the decision regarding laches, the Federal Circuit held in favor of First Quality.  In a rehearing proceeding conducted en banc, the Federal Circuit concluded that laches was a defense of “unenforceability” listed in 35 U.S.C. § 282, and “barred recovery of legal remedies” to SCA, including damages that accrued within the six-year time limitation prescribed by 35 U.S.C. § 286.  On certiorari, the Supreme Court vacated the decision by the Federal Circuit in part, and remanded the case after holding that “laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by § 286.”8

First Quality, in an attempt to invoke laches as a complete bar to recovery of damages, argued that the time limitation of § 286 was not a “true” statute of limitations, such as is embodied in the copyright act, “because it runs backward from the time of the suit.”9  The Court dismissed this distinction, as well as the reasoning by the Federal Circuit that § 282 creates an exception to § 286 by codifying laches as a defense [of “unenforceability”] to all patent infringement claims.  The Court was loath to violate the “well-established general rule” that “laches” cannot be invoked to bar a claim for damages within the time limitation period specified by Congress, despite the fact that judicial precedent to this effect included no patent cases.10 

Rather, the Court held to the broader “principle application” of laches recited in Petrella, that “‘the principle application’ of laches ‘was, and remains, to claims of an equitable cast for which the legislature has provided no fixed time limitation.’”11  Accordingly, and also relying on Petrella, the Court viewed laches as a “gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.”12  Ultimately, the Court was “not convinced that Congress, in enacting § 282 of the [1952] Patent Act, departed from the general rule regarding the application of laches to damages suffered within the time for filing suit set out in a statute of limitations.”13

Justice Breyer dissented from the majority opinion, mostly in disagreement with the Court’s conclusion that, by virtue of a statute of limitations, there is “no gap to fill.”  Specifically, Justice Breyer was concerned with the opportunity for patentees to wait for a supposed infringer to develop a technology and become heavily invested before suing, thereby enabling patentees to extract the maximum leverage and, therefore, the largest amount of damages possible.  This, for Justice Breyer, was a “gap” to which infringers of copyright are not susceptible by virtue of the manner in which damages are calculated under the Copyright Act.14  For Justice Breyer, unlike patentees in patent lawsuits, which are based on strict liability, copyright holders must show that their work was copied by the defendant, and that establishing the necessary level of proof in copyright suits, therefore, inherently becomes more difficult with time.15

Justice Breyer also took issue with the majority’s dismissal of decisions holding that laches can bar monetary relief in patent law because those decisions were made in courts of equity.  Quoting P.J. Federico, who was the “principal technical drafter” of the 1952 Patent Act, Justice Breyer argued that the Act was meant “to codify ‘equitable defenses such as laches.’”16  Federico, in fact, went further than the statements quoted by Justice Breyer.  In his “Commentary on the New Patent Act,” (Commentary), Federico stated that the word, “unenforceability,” was “added by amendment in the Senate for greater clarity,” and includes, “equitable defenses such as laches, estoppel and unclean hands.”17  Therefore, although the majority did not acknowledge it, by Federico’s account, “unenforceability,” as employed in § 282, was specifically intended to embrace laches. 

As acknowledged by the majority, Congress has provided for damage awards in equity courts since 1870 and, since 1897, has imposed  “a 6-year limitations period for damages claims and made that statute applicable in both law and equity.”18  Further, as recited by Justice Breyer, since that time and until the merger of the courts of law and equity in 1938, “nearly all patent litigation – including suits for damages – took place in courts of equity,” and “after the merger of law and equity in 1938, federal courts still applied laches to damages claims.”19  Therefore, it does not seem to be a considerable leap to infer that Federico, when writing his Commentary, and Congress, when including the word “unenforceability” among the defenses listed in 35 U.S.C. § 282, intended not only that laches be embraced within the meaning of that term, but that it would bar claims for damages, such as those under the six-year time limitation on damages of § 286.

As it stands, however, Justice Breyer’s “gap” persists; patent owners can delay enforcement in order to optimize the six-year window available under 35 U.S.C. § 286. 

 

The opinions expressed herein are solely those of the respective author or authors, and do not necessarily represent those of Hamilton Brook Smith Reynolds, or any client or organization.

 

END NOTES

 

1. SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S.Ct. 954 (2017).

2. Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. __, 135 S. Ct. 1962 (2014) (“In the face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief.”)

3. SCA, 137 S. Ct. at 963.

4. Id. at 961.

5. Id. at 960.

6. 35 U.S.C. § 282 states, in part:

(a)  In general – A patent shall be presumed valid.

***

(b)  Defenses – The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:

(1)  Non-infringement, absences of liability for infringement or unenforceability….

7. 35 U.S.C. § 286 states, in part:  “Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to filing of the complaint or counterclaim for infringement in the action.”

8. Id. at 967.

9. SCA, 137 S.Ct. at 961.

10. Id.

[1]1. Id. at 961.

[1]2. Id.

[1]3. Id. at 966.

[1]4. Id. at 968 (Breyer, J., dissenting).

[1]5. Id. (Breyer, J., dissenting).

[1]6. Id. (Breyer, J., dissenting).

[1]7. P.J. Federico, Commentary on the New Patent Act, 75 J. Pat. & Trademark Off. Soc’y. 161, 215 (1993).

[1]8. SCA, 137 S. Ct. at 965.

[1]9. Id. at 970 (Breyer, J., dissenting).

 

 

 

Overview

By: N. Scott Pierce

The Supreme Court recently held, in SCA Hygiene Prods. v. First Quality Baby Prod.,1 that laches cannot preclude a claim for damages incurred within the six-year limitation period specified in 35 U.S.C. § 286.  The Court reasoned that, as in an earlier copyright case, Petrella v. Metro-Goldwyn-Mayer, Inc., 2 decided in 2014, there is a general rule, “often repeated by this Court, that laches cannot be invoked to bar a claim for damages incurred within a limitations period specified by Congress.”3 Therefore, like the three-year limitation specified for copyrights in 17 U.S.C. § 507(b), the Court held that the six-year limitation in 35 U.S.C. § 286 for patents “represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.”4  The Supreme Court stated that, absent evidence of Congressional intent to the contrary, the “generally hard and fast rule” applies.5

35 U.S.C. § 282 establishes a “presumption of validity,” and lists defenses “in any action involving the validity or infringement of a patent …,” which include “noninfringement, absence of liability for infringement or unenforceability.”35 U.S.C. § 286, on the other hand, is a time limitation on damages that states in the first paragraph that, “[e]xcept as otherwise provided by law, no 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.”7 As stated by the Court, “[l]aches is a ‘defense developed by courts in equity’ to protect defendants against ‘unreasonable, prejudicial delay in commencing suit.”  “Damages,” on the other hand, is a remedy originally provided in courts of law.  Courts in equity and law were merged in the United States in 1938.

In this case, SCA Hygiene Products (SCA), the owner of U.S. 6,375,646 (the ‘646 patent), first notified First Quality Products (First Quality) of alleged infringement of its patent in October, 2003.  In August 2010, SCA filed a patent infringement suit against First Quality in the District Court for the Western District of Kentucky.  SCA’s complaint was dismissed by the district court on summary judgment for laches and equitable estoppel.  On appeal of the decision regarding laches, the Federal Circuit held in favor of First Quality.  In a rehearing proceeding conducted en banc, the Federal Circuit concluded that laches was a defense of “unenforceability” listed in 35 U.S.C. § 282, and “barred recovery of legal remedies” to SCA, including damages that accrued within the six-year time limitation prescribed by 35 U.S.C. § 286.  On certiorari, the Supreme Court vacated the decision by the Federal Circuit in part, and remanded the case after holding that “laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by § 286.”8

First Quality, in an attempt to invoke laches as a complete bar to recovery of damages, argued that the time limitation of § 286 was not a “true” statute of limitations, such as is embodied in the copyright act, “because it runs backward from the time of the suit.”9  The Court dismissed this distinction, as well as the reasoning by the Federal Circuit that § 282 creates an exception to § 286 by codifying laches as a defense [of “unenforceability”] to all patent infringement claims.  The Court was loath to violate the “well-established general rule” that “laches” cannot be invoked to bar a claim for damages within the time limitation period specified by Congress, despite the fact that judicial precedent to this effect included no patent cases.10 

Rather, the Court held to the broader “principle application” of laches recited in Petrella, that “‘the principle application’ of laches ‘was, and remains, to claims of an equitable cast for which the legislature has provided no fixed time limitation.’”11  Accordingly, and also relying on Petrella, the Court viewed laches as a “gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.”12  Ultimately, the Court was “not convinced that Congress, in enacting § 282 of the [1952] Patent Act, departed from the general rule regarding the application of laches to damages suffered within the time for filing suit set out in a statute of limitations.”13

Justice Breyer dissented from the majority opinion, mostly in disagreement with the Court’s conclusion that, by virtue of a statute of limitations, there is “no gap to fill.”  Specifically, Justice Breyer was concerned with the opportunity for patentees to wait for a supposed infringer to develop a technology and become heavily invested before suing, thereby enabling patentees to extract the maximum leverage and, therefore, the largest amount of damages possible.  This, for Justice Breyer, was a “gap” to which infringers of copyright are not susceptible by virtue of the manner in which damages are calculated under the Copyright Act.14  For Justice Breyer, unlike patentees in patent lawsuits, which are based on strict liability, copyright holders must show that their work was copied by the defendant, and that establishing the necessary level of proof in copyright suits, therefore, inherently becomes more difficult with time.15

Justice Breyer also took issue with the majority’s dismissal of decisions holding that laches can bar monetary relief in patent law because those decisions were made in courts of equity.  Quoting P.J. Federico, who was the “principal technical drafter” of the 1952 Patent Act, Justice Breyer argued that the Act was meant “to codify ‘equitable defenses such as laches.’”16  Federico, in fact, went further than the statements quoted by Justice Breyer.  In his “Commentary on the New Patent Act,” (Commentary), Federico stated that the word, “unenforceability,” was “added by amendment in the Senate for greater clarity,” and includes, “equitable defenses such as laches, estoppel and unclean hands.”17  Therefore, although the majority did not acknowledge it, by Federico’s account, “unenforceability,” as employed in § 282, was specifically intended to embrace laches. 

As acknowledged by the majority, Congress has provided for damage awards in equity courts since 1870 and, since 1897, has imposed  “a 6-year limitations period for damages claims and made that statute applicable in both law and equity.”18  Further, as recited by Justice Breyer, since that time and until the merger of the courts of law and equity in 1938, “nearly all patent litigation – including suits for damages – took place in courts of equity,” and “after the merger of law and equity in 1938, federal courts still applied laches to damages claims.”19  Therefore, it does not seem to be a considerable leap to infer that Federico, when writing his Commentary, and Congress, when including the word “unenforceability” among the defenses listed in 35 U.S.C. § 282, intended not only that laches be embraced within the meaning of that term, but that it would bar claims for damages, such as those under the six-year time limitation on damages of § 286.

As it stands, however, Justice Breyer’s “gap” persists; patent owners can delay enforcement in order to optimize the six-year window available under 35 U.S.C. § 286. 

 

The opinions expressed herein are solely those of the respective author or authors, and do not necessarily represent those of Hamilton Brook Smith Reynolds, or any client or organization.

 

END NOTES

 

1. SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S.Ct. 954 (2017).

2. Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. __, 135 S. Ct. 1962 (2014) (“In the face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief.”)

3. SCA, 137 S. Ct. at 963.

4. Id. at 961.

5. Id. at 960.

6. 35 U.S.C. § 282 states, in part:

(a)  In general – A patent shall be presumed valid.

***

(b)  Defenses – The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:

(1)  Non-infringement, absences of liability for infringement or unenforceability….

7. 35 U.S.C. § 286 states, in part:  “Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to filing of the complaint or counterclaim for infringement in the action.”

8. Id. at 967.

9. SCA, 137 S.Ct. at 961.

10. Id.

[1]1. Id. at 961.

[1]2. Id.

[1]3. Id. at 966.

[1]4. Id. at 968 (Breyer, J., dissenting).

[1]5. Id. (Breyer, J., dissenting).

[1]6. Id. (Breyer, J., dissenting).

[1]7. P.J. Federico, Commentary on the New Patent Act, 75 J. Pat. & Trademark Off. Soc’y. 161, 215 (1993).

[1]8. SCA, 137 S. Ct. at 965.

[1]9. Id. at 970 (Breyer, J., dissenting).

 

 

 

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