Supreme Court Rules That Laches Is Not A Defense To Patent Infringement Damages Claims

Wednesday, March 22, 2017

In Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. (2014), the Supreme Court ruled that the equitable defense of laches is not available when a copyright owner brings a claim for damages under the Copyright Act within the Act’s three-year statute of limitations period. The Court left unresolved whether laches is available in damage claims under the Patent Act. The Court has now settled that open question: Laches is not a defense to patent infringement damage claims filed within the six-year window set forth in 35 U.S.C. §286. SCA Hygiene Products Aktiebolg v. First Quality Baby Products, LLC, No. 15-927 (U.S. Mar. 21, 2017).

In an 7-1 decision written by Associate Justice Samuel Alito, the Court closely followed the reasoning of its earlier Petrella decision. It noted that laches is a common law equitable defense that protects a defendant when the plaintiff’s delay in commencing suit results in prejudice. If, however, a statute creating a cause of action also includes a specific limitations period, then Congress has already decided when a claim is untimely. In those cases, courts are unable to bar an otherwise timely claim based on laches:

The enactment of a statute of limitations necessarily reflects a congressional decision that the timeliness of covered claims is better judged on the basis of a generally hard and fast rule rather than the sort of case-specific judicial determination that occurs when a laches defense is asserted. Therefore, applying laches within a limitations period specified by Congress would give judges a “legislation overriding” role that is beyond the Judiciary’s power. As we stressed in Petrella, “courts are not at liberty to jettison Congress’ judgment on the timeliness of suit.”

Slip op. at 4 (citations omitted).

The Court ruled that although section 286 of the Patent Act is phrased differently than some other limitations provisions, it nonetheless reflects Congress’ judgment on the time limit applicable to damage claims. Section 286 states that in a patent infringement action, “Except 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.” 35 U.S.C. § 286. In effect, the provision allows a plaintiff to collect damages only for infringing conduct that occurred during a six-year window prior to suit. Thus, the Court noted that Section 286 cannot be distinguished from the Copyright Act’s statute of limitation provision at issue in Petrella.

The Court also rejected the argument, which had been adopted by the U.S. Court of Appeals for the Federal Circuit in its decision  below, that laches is a defense codified in 35 U.S.C. § 282(b). Section 282(b) states that defenses in patent infringement cases include “[n]oninfringement, absence of liability for infringement or unenforceability.” After a historical review of past patent decisions, the Court concluded that laches was not a widely-recognized defense to patent infringement actions seeking damages prior to passage of the current patent Act in 1952:

We have closely examined the cases on which the Federal Circuit and First Quality rely, and we find that they are insufficient to support the suggested interpretation of the Patent Act. The most prominent feature of the relevant legal landscape at the time of enactment of the Patent Act was the well-established 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.

Slip op. at 9-10. Thus, the Court held that a claim for damages for patent infringement, brought within six years of the alleged infringing conduct, is not subject to the defense of laches.

Practical Significance:

Although the SCA Hygiene Products decision eliminates laches as a defense against claims for patent infringement damages, it is unlikely to have a profound practical effect in most patent litigation matters. Defendants frequently allege laches as an affirmative defense, but it rarely determines the result. In addition, defendants will be able to raise other equitable arguments to oppose patent infringement claims. Although laches is unavailable, equitable estoppel remains a viable defense in some situations. For example, the Court noted that the “doctrine of equitable estoppel provides protection against some of the problems that First Quality highlights, namely, unscrupulous patentees inducing potential targets of infringement suits to invest in the production of arguably infringing products.” Slip op. at 16. In addition, equitable factors remain central to patent owner claims seeking injunctive relief. In considering whether to grant an injunction, a court must balance the equities favoring the plaintiff and defendant, and a trial court may consider an unreasonable delay in filing suit as a factor in determining appropriate injunctive relief. See Petrella, 134 S. Ct at 1978-79.