On March 21, 2017, the U.S. Supreme Court ruled that laches, an equitable doctrine that bars lawsuits after unreasonable delays, cannot be used as a defense in patent infringement cases. In SCA Hygiene Products AB et al. v. First Quality Baby Products LLC et al., the High Court vacated the Federal Circuit’s en banc decision, agreeing with SCA that the six-year limitation on patent damages cannot be shortened based on a laches defense.
The decision is an extension of a 2014 Supreme Court ruling effectively eliminating the laches defense in copyright cases (Petrella v. Metro Goldwyn-Mayer, Inc.). Writing for the majority, Justice Samuel Alito, said the reasoning in Petrella was applicable in the patent context.
“By the logic of Petrella, we infer that this provision represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim,” the court wrote.
The case involves a dispute over patents for adult incontinence products. SCA filed its suit against First Quality for infringement of SCA’s patent in the U.S. District Court in August 2010, more than six years after SCA initially complained of infringement in a letter to the defendant. The district court held that the six-year presumption of unreasonable delay for laches applied, and a Federal Circuit panel agreed.
SCA moved for rehearing based on the Supreme Court’s ruling in Petrella, but in a 6-5 en banc ruling in September 2015, the full Federal Circuit found that that Petrella did not bar the laches defense in patent cases. In short, the Supreme Court disagreed, ruling that laches cannot be used as a defense against damages within the six-year period imposed by the Patent Act.
In a dissenting opinion, however, Justice Breyer wrote that case law clearly shows that the statute was intended to keep laches as a defense and that without it, patent owners could delay filing lawsuits unreasonably until infringers invested heavily in developing a product in order to collect more damages.
Why This Matters
This ruling may strengthen patent cases, particularly those brought by non-practicing patent owners (think: patent trolls), who wait to file patent infringement lawsuits while allowing damages to accrue.
Although the High Court also noted that the doctrine of equitable estoppel provides protection against lawsuits brought by “unscrupulous patentees” this decision will force potential infringers to be aware of much older patents and could expose them to greater litigation risks.
Some observers believe ruling will ultimately have far reaching implications for frequent targets of patent infringement lawsuits, particularly technology companies. In the meantime, if your business is faced with or considering pursuing a patent infringement lawsuit, it is essential to seek the advice and counsel of an experienced intellectual property attorney.