SCA Hygiene Products v. First Quality Baby Products:  Supreme Court holds that laches cannot preclude a claim for damages incurred within the Patent Act’s six-year limitations period

In a 7-1 decision issued yesterday, the Supreme Court held that the equitable defense of laches (i.e., delay in filing suit for patent infringement) cannot act as a bar to a claim for patent infringement damages brought within the Patent Act’s six-year statute of limitations.

Background

In October 2003, SCA sent a letter to its competitor, First Quality, contending that First Quality infringed U.S. Patent No. 6,375,646 (the “’646 patent”). First Quality responded that the ’646 patent was invalid in view of prior art. SCA and First Quality thereafter ceased communications, and in July 2004, SCA requested and obtained reexamination of the ’646 patent in view of that prior art. In March 2007, the Patent Office confirmed the patentability of all of the original claims and issued several additional claims.

In August 2010, more than three years after the end of reexamination and more than six years after the original correspondence between the parties, SCA filed a complaint alleging that First Quality infringed the ’646 patent. The district court granted First Quality’s motions for summary judgment of laches, and SCA appealed. In September 2014, a Federal Circuit panel decision affirmed the district court’s ruling on laches. SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 767 F.3d 1339 (Fed. Cir. 2014). The panel specifically rejected SCA’s argument that the Supreme Court’s holding in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014) was contrary to the Federal Circuit’s precedent in A.C. Aukerman Co. v. R.L. Chaides Construction Co., 960 F.2d 1020 (Fed. Cir. 1992) that laches could bar recovery of damages for pre-suit patent infringement. On rehearing en banc, the Federal Circuit issued a sharply divided decision (6-5) holding that laches can still bar pre-suit damages for patent damages, but modifying its rule that laches could not bar prospective relief.

On May 2, 2016, the Supreme Court granted certiorari. Oral argument was held on November 1, 2016.

The Supreme Court’s Ruling

The Court first ruled that, under separation-of-powers principles, laches is an equitable defense that does not apply where there already is a statute of limitations. The Court reasoned that applying laches within a limitations period specified by Congress would give judges a “legislation-overriding” role that is beyond the Judiciary’s power, and that courts cannot ignore Congress’ judgment on the timeliness of suit.

The Court next found that, even though the relevant statutory provisions in the Copyright and Patent Acts are worded differently, the same reasoning should apply to both provisions. The Court thus rejected First Quality’s argument that the statute of limitations specified in § 286 of the Patent Act should be treated differently because it is not a “traditional” statute of limitations. As to the Federal Circuit’s finding that § 282(b)(1) codified laches as a defense under the interpretation of “unenforceability”, the Court noted that it could not identify a single federal statute that provides both a statute of limitations and laches. The Court further asserted that, even assuming that § 282(b)(1) codified laches as a defense, it does not necessarily follow that laches may be invoked to bar a claim for damages incurred within the six-year look-back period.

The Court also rejected the Federal Circuit’s finding that patent cases decided by lower courts prior to the enactment of the Patent Act in 1952 could support an inference that § 282(b)(1) codified a patent-law-specific rule for laches. The Court determined that there were too few such cases to establish a settled national consensus in favor of a laches defense, and that most of the cases cited by the Federal Circuit were brought in courts of equity, not courts of law.

As for the policy arguments in favor of allowing laches as a defense, the Court concluded that it could not overrule Congress’ judgment based on its own policy views.

The Dissenting Opinion

Justice Breyer dissented from the majority, arguing that, for more than a century, courts have applied laches in patent damages cases with “virtual unanimity.” Justice Breyer asserted that, in contrast to “the mountain of authority recognizing laches as a defense,” the majority could not identify a single case from any court of appeals sitting in law or equity before the 1938 merger, or sitting after the merger but before 1952, holding that laches could not bar a patent claim for damages.

Justice Breyer further argued that there are relevant differences between patent and copyright law that will lead to greater hardship for patent defendants, and indicated the Court should be more cautious before adopting changes that disrupt the settled expectations of the inventing community.