On July 26, 2016, the Commission issued an Opinion in Certain Network Devices, Related Software and Components Thereof (I), Inv. No. 337-TA-944, declining an opportunity to clarify whether a laches defense is available in ITC proceedings. The ITC found a violation of Section 337 based on the infringement of three asserted patents and issued a limited exclusion order and cease and desist order. Of note, the Commission reviewed the Initial Determination (“ID”) findings related to a laches defense and found that the evidence presented falls short of the high burden of demonstrating unreasonable delay, but declined to reach the legal issue of whether laches was available as a defense in the ITC.
Laches, an unreasonable delay in making an assertion or claim, is an equitable defense that has not previously been available in 337 investigations. See, e.g., Certain Sortation Systems, Parts Thereof, and Products Containing Same, Inv. No. 337-TA-460, Initial Determination, at 266, n.20 (Oct. 22, 2002) (the Commission does not recognize laches as a defense under section 337) (reviewed on other grounds); Certain Personal Watercraft and Components Thereof, Inv. No. 337-TA-452, Order No. 54 (Sept. 19, 2001) (precluding the affirmative defense of laches).
In his ID, Administrative Law Judge Shaw found a violation with respect to three asserted patents, and no violation with respect to two other patents. Importantly, the ID analyzes the defense of laches and its availability with respect to Section 337 proceedings after the Federal Circuit’s en banc decision in SCA Hygiene Products v. First Quality Baby Prod., 807 F.3d 1311 (Fed. Cir. 2015). Judge Shaw concluded that laches is still not an available defense in Section 337 proceedings.
The Commission determined to review the ID with respect to laches and requested briefing on whether laches was an available defense at the Commission. After the Commission instituted review of the laches findings, the Supreme Court granted certiorari in the SCA Hygiene case to address the question of whether laches is available as a defense in patent infringement actions seeking an injunction. The Commission declined to reach the legal issue of whether laches was available as a defense at the ITC given the uncertainty of the law. The Commission, however, found that regardless of whether laches was available as a defense at the Commission, the evidence did not meet the high burden to prove unreasonable delay.
The Commission’s Opinion seems to indicate that depending on the outcome of the SCA Hygiene Products v. First Quality Baby Prod. at the Supreme Court, the ITC may reconsider its position about laches not being available in 337 investigations. If the Federal Court decision stands, it is likely that ITC will allow laches as a defense. The Commission’s analysis indicates that, even if allowed, proving laches will not be easy.