Supreme Court finds that Laches is No Longer a Defense in Patent Litigation
On March 21, 2017, the Supreme Court in a 7-to-1 decision, ruled that the equitable defense of laches is not available to a patent infringement defendant. Laches is a defense based on lack of diligence on the part of the plaintiff and has been used to block pre-suit damages where there had been unreasonable delay prejudicing the opposing party.
The interaction in question between the parties occurred when SCA Hygiene Products AB sent First Quality Baby Products, LLC a letter in October 2003 alleging that First Quality was making and selling products that infringed SCA’s patent. SCA then requested a reexamination of the patent-at-issue in July 2004 but did not notify First Quality of this request or attempt any other communication. The PTO issued a certificate confirming the validity of the patent 3 years later in 2007. After another 3 years, SCA filed an infringement action in August 2010.
At the district court level, First Quality moved for and was granted summary judgment based on laches and equitable estoppel. Equitable estoppel, which was not before the Supreme Court, is a defense alleging that a misrepresentation of facts has occurred and the defendant relied on that representation to its detriment. The misrepresentation can occur through silence; so it is often alleged that when a defendant does not hear from a patentee complainant for a long period of time that the defendant is led to believe by that silence that there is no longer a dispute.
The case was appealed to the Federal Circuit, which affirmed the district court's finding that SCA's claim was barred by laches. The Federal Circuit issued a rehearing en banc after a copyright case Petrella v. Metro-Goldwyn-Mayer was decided by the Supreme Court in 2014. The Court in Petrella held that laches cannot preclude a claim for damages incurred within the 3-year limitations period in the Copyright Act. The Federal Circuit split 6-to-5 in deciding, despite Petrella, that laches still applied in patent suits because the Patent Act had codified the defense. The Patent Act does not mention laches by name, but its reference to “unenforceability” in Section 282 was determined to include laches.
That decision was then appealed to the Supreme Court, which reversed the en banc Federal Circuit decision. The Court started its legal analysis by reviewing its decision in Petrella where it held that laches as an equitable defense in a copyright case could not “be invoked to bar legal relief” “[i]n the face of a statute of limitations enacted by Congress.” The Court had found that laches was a gap-filling doctrine that was not needed when there was no longer a gap. Congress's enactment of a 3-year copyright statute of limitations therefore eliminates any need for a time limitation based in equity.
The Court found that even though the relevant sections of the Patent Act and Copyright Act are different, the Patent Act's statutory time limitation on damages similarly eliminates any intent or need to recognize a laches defense. Section 286 of the Patent Act provides: “Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.”
The Court noted that “it would be exceedingly unusual, if not unprecedented,” for Congress to have both a statute of limitations and a laches provision that operates within it. The Court therefore eliminated the defense of laches from patent infringement cases. The Court was clear, however, that Congress's enactment of a patent statute of limitations does not preclude an equitable estoppel defense, typically based on delay plus misrepresentation.