In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, en banc Fed. Cir., No. 2013-1564, 9/18/2015, the Federal Circuit held, in an en banc 6-5 decision, that laches is available as a defense to a claim of damages for acts of patent infringement, even though 35 U.S.C. § 286 already imposes a 6-year time limit on damages. Furthermore, the court modified its prior rule in A.C. Aukerman Co. v. R.L. Chaides Construction Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc) by holding that laches is available to bar not only pre-suit damages, but also post-suit damages.
The majority’s decision explained that because Congress has codified both a statutory limitation period under 35 U.S.C. § 286, as well as a statutory laches defense under 35 U.S.C. § 282, “there is no room for a judicially-created timeliness doctrine” that would bar the application of laches within the 6-year statutory limitation period of §286. Although §282 does not explicitly mention “laches” as a possible defense, the majority construed the term “unenforceability” in § 282(b)(1) as encompassing the defense of laches and concluded that Congress codified a laches defense in § 282, based on its prior holding in Aukerman.
The dissenting opinion argued that the majority’s decision is inconsistent with the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), which held that the defense of laches is not available to bar damages for copyright infringement claims brought within the Copyright Act’s statutory limitations period. In Petrella, the court held that the statutory limitations period in copyright infringement cases already takes into account delay, and that such codification overrides any judicial power to decide timeliness. The dissent in SCA Hygiene Products similarly argued that the statutory 6-year limitation on patent damages under 35 U.S.C. § 286 evidences a deliberate intent on the part of Congress to replace the equitable defense of laches with an all-encompassing 6-year statute of limitations period, which follows the common-law principle that laches only bars equitable relief, not legal relief, where a statutory limitation period applies.
The majority in SCA Hygiene Products, however, distinguished the statutory scheme governing damages in copyright cases and patent cases. The seemingly anomalous result in SCA Hygiene Products can be explained by differences in the fundamental policy considerations underlying the application of a laches defense in copyright infringement and patent infringement cases. The court reasoned that in copyright cases, infringement requires proof of access in order to support a claim of copying a copyrighted work. Because access to a copyrighted work essentially places a party on notice of the existence of the copyrighted work, the allegedly infringing party is in a better position to evaluate the risks associated with copying and any delay by the copyright owner in bringing suit is therefore less prejudicial.
In contrast, in patent cases, infringement can occur even when the allegedly infringing party is unaware of the patent being asserted, such as when the alleged infringer independently develops the infringing subject matter. Because infringement in patent cases does not require access to or knowledge of the patent owner’s patent, the alleged infringer is exposed to greater liability as a result of any delay on the part of the patent owner in bringing suit. Indeed, the patent owner is in a position to magnify the harm to the alleged infringer by deliberately delaying suit, thereby increasing the period of time during which the infringing activity occurs, thereby increasing the amount of damages. Accordingly, there is arguably a greater need in patent cases for a laches defense to protect the alleged infringer from unreasonable delay in bringing the lawsuit.
This case reflects a long-standing policy that disfavors patent owners who fail to assert their patent rights in a timely manner. Patent owners should, therefore, take reasonable and timely steps to monitor and enforce their patent rights.
