Supreme Court Will Review SCA Hygiene On Bar Against Patent Case Filing Delays

Reproduced with permission from BNA’s Patent, Trademark & Copyright Journal, 85 PTD 5/3/16, 05/03/2016. Copyright 2016 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com Laches Supreme Court Will Review SCA Hygiene On Bar Against Patent Case Filing Delays s Development: Supreme Court will review whether to allow patent owner to sue for damages for known infringement that occurred more than six years earlier. T he U.S. Supreme Court agreed May 2 to review whether a patent owner can recover damages if it waits more than six years after becoming aware of infringement to file a complaint (SCA Hygiene Prods. AB v. First Quality Baby Prods., LLC, U.S., No. 15-927, review granted 5/2/16). The court granted a petition filed by SCA Hygiene Products AB challenging a 6-5 decision by the U.S. Court of Appeals for the Federal Circuit. The Supreme Court ruled in 2014 that the Copyright Act’s three-year statute of limitations, 17 U.S.C. § 507(b), didn’t bar a complaint filed by an heir to the author of ‘‘Raging Bull’’ despite a 20-year delay from when she was first on notice of Metro-Goldwyn-Mayer Inc.’s infringement. But in the patent case, the Federal Circuit distinguished the ‘‘laches’’ doctrine, which blocks a lawsuit when a plaintiff has waited too long, based on different language in the comparable provision in the Patent Act, 35 U.S.C. § 286. SCA Hygiene Prods. AB v. First Quality Baby Prods. LLC, 807 F.3d 1311, 116 U.S.P.Q.2d 1541 (Fed. Cir. 2015) (90 PTCJ 3266, 9/25/15). The question before the high court does not affect a patent owner’s option to seek an injunction against future infringement no matter how long the delay. On that point, at least, the Federal Circuit chose to ‘‘harmonize’’ patent and copyright law. Tie Goes to Federal Circuit’s View. The result at the high court can’t be predicted. Only four members are required to grant a petition to hear a case. But, as long as the court is deciding with eight members, a 4-4 tie affirms the Federal Circuit’s view. Three of the justices disagreed with the decision in the MGM case, Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 110 U.S.P.Q.2d 1605 (2014) (88 PTCJ 233, 5/23/14). They would oppose a late complaint even with the Copyright Act provision, which is clearer than the comparable language in patent law. If those justices can be counted on to allow a laches defense in this case, alleged infringer First Quality Baby Products LLC only has to convince one other justice that the copyright and patent provisions are sufficiently different that laches applies here—and SCA Hygiene’s complaint came too late. NPEs Most Affected. One practitioner told Bloomberg BNA in an e-mail that the high court’s decision will affect almost every industry. But, ‘‘The impact of a stronger (or weaker) laches defense will fall most heavily on non-practicing entities who primarily assert technology-related patents,’’ Julie Langdon of Dunlap Codding P.C., Chicago, said. The patents affected must be at least six years old and never asserted in an infringement action. ‘‘And,’’ Langdon said, ‘‘those patents are often being asserted by NPEs, or other entities that sit on their rights for years while others in that tech area develop potentially infringing products/methods.’’ Paul A. Ragusa of Baker Botts IP, New York, focused on NPEs, too, but not the ones typically labeled ‘‘patent trolls.’’ ‘‘Universities, research institutions and innovative companies that choose outbound patent licensing as a strategy to generate revenue may see a positive benefit if the Supreme Court reverses and holds that laches no longer applies to patent cases,’’ he said. Under current law, he said, ‘‘Once a patent owner initiates licensing discussions with a potential licensee, the license negotiations should remain both sufficiently continuous and likely to be successful to avoid the potential application of laches.’’ Medinol Petition on Hold. At stake is SCA Hygiene’s claim of infringement of U.S. Patent No. 6,375,646, related to adult incontinence products, against First Quality. SCA Hygiene’s ability to stop further infringement is still an open question at the district court level, but it can’t get damages for past infringement without a high court reversal. SCA Hygiene filed its petition for writ of certiorari Jan. 19 (91 PTCJ 874, 1/29/16). Medical device maker and stent patent holder Medinol Ltd. filed a parallel petition Feb. 2 asking the same question (91 PTCJ 1036, 2/12/16). Medinol’s ability to get a damages award based on Cordis Corp.’s infringement was pending before the Federal Circuit while the appeals court decided SCA Hygiene. Medinol conceded that its appeal was subsequently doomed. It asked the high court to ‘‘grant review of this case either in tandem with, or instead of, SCA.’’ The court was scheduled to consider Medinol’s petition at the same time, but it took no action on it. That likely means that it will dispose of Medinol’s request only after it has decided SCA Hygiene’s case. COPYRIGHT 2016 BY THE BUREAU OF NATIONAL AFFAIRS, INC. ISSN 0148-7965 BNA’s Patent, Trademark & Copyright Journal® Medinol also filed an amicus brief supporting review of SCA Hygiene, as did ART+Com Innovationpool GmbH and Toro Co. The American Intellectual Property Law Association supported SCA Hygiene’s position before the en banc Federal Circuit. Its brief there said that ‘‘differences between patent and copyright law do not provide a rationale for failing to apply the Petrella court’s laches holdings in the context of patent law.’’ Martin J. Black of Dechert LLP, Philadelphia, represents SCA Hygiene. Kenneth P. George of Amster Rothstein & Ebenstein LLP, New York, filed First Quality’s March 22 response. BY TONY DUTRA To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com To contact the editor responsible for this story: Mike Wilczek in Washington at mwilczek@bna.com Text of petition at http://src.bna.com/cbM. 2 5-3-16 COPYRIGHT 2016 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN 0148-7965