The United States Supreme Court in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC eliminated the equitable defense of laches for many patent infringement cases. The ruling followed the reasoning of the Court’s 2014 decision in Petralla v. MGM2, which removed the defense of laches in copyright cases.
In 2003, SCA Hygiene (“SCA”) notified First Quality Baby Products (“First Quality”) that their adult incontinence products infringed an SCA patent. First Quality responded that SCA’s patent is invalid because its own patent antedated SCA’s patent. On a request for Ex Parte Reexam, the USPTO found the claims patentable and in 2010, SCA sued First Quality for patent infringement - almost seven years after SCA first notified First Quality of infringement. The district court granted summary judgment to First Quality on the grounds of equitable estoppel and laches. SCA appealed and while the appeal was pending, the Supreme Court decided Petralla. The Federal Circuit affirmed the district court’s laches holding based on Circuit precedent that permitted laches to be asserted against a claim for damages for patent infringement. 35 U.S.C. § 286.
The Court’s 2014 holding in Petralla rested on both the separation of powers principle and the traditional role of laches in equity. In Petralla, the Court said that a statute of limitations reflects a congressional decision that timeliness is better judged by a hard and fast rule instead of a case-specific judicial determination. The Court further added that a “legislation-overriding role” exceeds the judiciary’s power under the separation-of-powers doctrine. In this case, the Court, following the reasoning in Petralla, held that nothing that Congress has done, since the passage of the Patent Act in 1952, altered the meaning of the laches doctrine and declined to overrule Congress’s judgment on enacting a statute of limitations holding that laches cannot be invoked as a defense against a claim for damages brought under § 286’s six-year limitations period.
Justice Stephen Breyer dissented, stating that under the majority’s ruling a patent holder can unreasonably and prejudicially sit on their rights for many years while the infringer, unaware of his infringement, continues to heavily invest in developing the infringing product.
With this decision, patent owners will be emboldened to bring lawsuits against potential infringers and can wait for 10 or 15 years to file a patent infringement lawsuit and still be able to recover substantial damages for the six years period prior to filing the lawsuit. Defendants accused of patent infringement will have to look into defenses other than laches.