Digest of SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, No. 2013-1564 (Fed. Cir. Sept. 18, 2015) (precedential). On appeal from W.D. Ky. Before Prost, Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, and Hughes. En banc.
Procedural Posture: The district court granted defendant-alleged infringer’s motion for summary judgment of laches and equitable estoppel. A panel of the CAFC affirmed the district court’s opinion on laches and reversed as to equitable estoppel. Sitting en banc, a divided CAFC held that laches remains a defense to legal relief in a patent infringement suit because it was codified under 35 U.S.C. § 282(b)(1) , adjusted the laches defense to harmonize it with Petrella v. Metro Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), regarding how laches applies to copyright claims, and other Supreme Court precedent, and remanded. CAFC also reinstated the panel opinion’s reversal of the district court’s grant of summary judgment on equitable estoppel and adopted its reasoning.
- Equitable Defenses – Laches: The CAFC concluded that Congress codified a laches defense in 35 U.S.C. § 282(b)(1), and that this defense may bar legal remedies. Nothing in Petrella requires abandonment of this understanding of the statute. Absent any contrary direction from Congress in another statute, § 282 codified whatever laches doctrine existed at common law when Congress enacted the Patent Act in 1952. Following a review of the relevant common law, it is clear that in 1952, laches operated as a defense to legal relief.
The fact that § 286 provides a six-year damages limitations period does not alter the outcome. By codifying a laches defense as well as a time limitation on the recovery of damages in the Patent Act of 1952, Congress settled that both may coexist in patent law. Unlike in Petrella, which concerned copyright’s judicially-created laches defense, there is no separation of powers concern.
- Equitable Defenses – Laches’ Application to Ongoing Relief: The CAFC reexamined the holding in A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) in light of Petrella and eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006). The CAFC rejected Aukerman’s bright line rule that laches may only bar pre-suit damages. In some circumstances, laches, in combination with the eBay factors, may counsel against an injunction. District courts must weigh the facts underlying laches in the eBay framework when considering an injunction.
However, absent extraordinary circumstances, laches does not preclude an ongoing royalty. The principles of equity apply, and equity normally dictates that courts award ongoing royalties despite laches.
Hughes, Moore, Wallach, Taranto, and Chen concurring-in-part, dissenting-in-part:
- Equitable Defenses – Laches’ Application to Ongoing Relief: Judge Hughes would hold that laches is not available as a defense to a claim for damages filed within the limitations period established by § 286. Congress’ decision to create a fixed statutory limitations period in § 286 strongly suggests that it did not intend to codify a defense of laches that further regulates the timeliness of damages claims.