The equitable defense of laches, which operates to bar lawsuits brought after unreasonable periods of delay, just received a death knell in patent infringement cases at the hands of the nation’s highest court.
In a 7-1 decision on Tuesday, March 21, 2017 the United States Supreme Court in SCA Hygiene Products AB et al., v. First Quality Baby Products LLC et al., vacated a Federal Circuit decision preventing a patent infringement lawsuit over an adult diaper manufacturer, after the accused infringer successfully established a laches defense in the lower court. The majority opinion, written by Justice Samuel Alito, held that “laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by [the statute].”
35 U.S.C. § 286 of the U.S. Patent Act allows a patentee to recover damages for infringement committed six years prior to the filing of the complaint. According to the Court, “applying laches within a limitations period specified by Congress would give judges a ‘legislation-overriding’ role that is beyond the judiciary’s power,” running counter to the six-year time period for the recovery of damages set forth in 35 U.S.C. 286. For support, the Court relied on its holding in a 2014 decision, Petrella v. Metro-Goldwyn-Mayer Inc., wherein the Court found that since the Copyright Act contains a three-year statute of limitations during which claims must be brought, laches cannot be used to bar claims for copyright infringement brought within that period.
Justice Stephen Breyer disagreed in SCA Hygiene Products, writing in his dissent that the case law “shows with crystal clarity that Congress intended the statute to keep laches as a defense.” Justice Breyer’s chief concern was that patent owners could “unreasonably and prejudicially” delay filing suit, essentially waiting until the infringer’s product becomes more developed and more valuable before filing suit at a late stage in the infringing product’s life, all in an effort to maximize damages.
On the one hand, SCA Hygiene Products brings a degree of certainty to practitioners, inventors, and businesses with regard to when a patent infringement lawsuit should be filed and the time frame in which a victorious patentee can recover damages for patent infringement. On the other, and as noted by Justice Breyer, SCA Hygiene Products could incentivize patentees to lie in wait before filing a patent infringement suit, in hopes of maximizing a potential damages recovery. What is clear is that the equitable defense of laches—in cases where a federal statute prescribes a time period within which to bring claims—appears to be on its way out.