SCOTUS Eliminates Laches Defense in Patent Infringement Suits

SCOTUS Eliminates Laches Defense in Patent Infringement Suits

In SCA Hygiene Products v. First Quality Baby Products, the U.S. Supreme Court held that the equitable doctrine of “laches” does not bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period.

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Applying the Laches Defense to Intellectual Property Disputes

Laches is an equitable defense under which a legal right or claim will not be enforced if a significant delay in asserting the right or claim has prejudiced the opposing party. The rationale behind the doctrine is that sitting on your legal rights for an unreasonable amount of time may be unfair to the defendant. While laches is a frequently asserted affirmative defense, courts often decline to enforce it, particularly within the term of the applicable statute of limitations.

The Court’s recent decision involves the Patent Act’s six-year limit on past patent damages. In 2003, SCA Hygiene Products Aktiebolag and SCA Personal Care, Inc. (collectively, SCA), sent a letter notifying First Quality Baby Products that their adult incontinence products infringed an SCA patent. First Quality responded that its own patent antedated SCA’s patent and rendered it invalid. In 2004, SCA sought reexamination of its patent by the U.S. Patent and Trademark Office (USPTO) considering First Quality’s prior patent. Three years later, the Patent and Trademark Office confirmed the SCA patent’s validity. SCA sued First Quality for patent infringement in 2010. The District Court granted summary judgment to First Quality on the grounds of equitable estoppel and   laches.

In 2014, and while SCA’s appeal was pending, the Supreme Court held that the defense of laches cannot be used to shorten the three-year copyright limitations period set forth in 17 U.S.C. § 507(b). Writing for the Court in Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (2014), Justice Ruth Bader Ginsburg explained that “[i]nviting individual judges to set a time limit other than the one Congress prescribed” would “tug against the uniformity Congress sought to achieve when it enacted § 507(b).”

Supreme Court Rejects Laches as a Defense to Patent Infringement Litigation

The Supreme Court adopted a similar approach in SCA Hygiene Products v. First Quality Baby Products. In fact, Justice Samuel Alito’s majority opinion expressly states: “Petrella’s reasoning easily fits the provision at issue here.”

By a vote of 7-1, the Court concluded that a laches defense is unavailable against a claim for damages brought within Patent Act’s six-year limitations period. “Laches is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill,” Justice Alito wrote. Citing Petrella, Justice Alito further stated 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.” He added: “Applying laches within a limitations period specified by Congress would give judges a ‘legislation-overriding’ role that exceeds the Judiciary’s power.”    

In concluding that laches did not apply, the Supreme Court also rejected the Federal Circuit’s reliance on certain lower court precedent. “In light of the general rule regarding the relationship between laches and statutes of limitations [in our cases], nothing less than a broad and unambiguous consensus of lower court decisions could support the inference that [the Patent Act] codified a very different patent-law-specific rule. No such consensus is to be found.”

Finally, the Supreme Court also continued its trend of refusing to apply legal principles to the Patent Statute at odds with the principles applied to other federal statutes:

Indeed, 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. Neither the Federal Circuit, nor First Quality, nor any of First Quality’s amici has identified a single federal statute that provides such dual protection against untimely claims.

Impact on Patent Litigation

The Court’s decision removing laches as an available defense to patent infringement favors patentees seeking damages. While targets of such suits argue that taking laches off the table will encourage patent holders to wait for damages to accumulate over several years, it is important to highlight that this decision did not eliminate the defense of equitable estoppel. The equitable estoppel doctrine may still be a defense to patent infringement actions where the patent owner had induced the defendant to commit infringements by making misleading statements upon which the defendant has relied.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, David Einhorn, at 201-806-3364.