U.S. Supreme Court Limits Laches Defense in Patent Cases

In SCA Hygiene Products AB et al. v. First Quality Baby Products LLC et al., the United States Supreme Court held that laches cannot be invoked as a defense against a claim for patent infringement damages brought within U.S.C §286’s 6-year limitations period.  The U.S. Court of Appeals for the Federal Circuit had previously held in a 6-5 en banc decision that laches should apply in patent cases because U.S.C. §282 of the Patent Act passed in 1952 codified a pre-1952 practice of permitting laches to be asserted against damages claims.  However, in a 2014 copyright decision, Petrella v. Metro-Goldwyn-Mayer Inc., the Supreme Court had previously held that laches cannot be used as a defense in a copyright infringement action brought within the Copyright Act’s three-year statute of limitations period.  Thus, prior to the Supreme Court’s SCA Hygiene Products decision there had been a variation between copyright and patent laws in terms of the availability of a copyright defense.

The patent-in-suit in SCA Hygiene Products is U.S. Patent Number 6,375,646, entitled “Absorbent pants-type diaper,” and relates an absorbent pants-type diaper intended for one-time use which lies sealingly against and shape conformingly to the wearer’s body, while enabling the diapers to support an absorbent pad even when the pad is full of liquid.  In 2004, plaintiff SCA sought reexamination of its patent in light of defendant First Quality’s patent, and in 2007, the Patent and Trademark Office confirmed the SCA patent’s validity.  SCA then sued First Quality for patent infringement in 2010. The District Court granted summary judgment to First Quality on the grounds of equitable estoppel and laches based on the six year delay in filing suit from 2004 to 2010. The Federal Circuit later affirmed the holding en banc, even in light of the Supreme Court’s Petrella’s laches holding for copyright law.  The Supreme Court then took the case on appeal.

In considering the issue, the Supreme Court first stated laches is “a defense developed by courts of equity” to protect defendants against “unreasonable, prejudicial delay in commencing suit.”  The “principal application” of laches “was, and remains, to claims of an equitable cast for which the Legislature has provided no fixed time limitation.”  Laches “is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.”

Moving to Section 286 of the Patent Act the Supreme Court noted the Statute 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.”  Applying Petrella, the Court “infer[ed] that this provision represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.”  The Court continued reasoning “the enactment of a statute of limitations necessarily reflects a congressional decision that the timeliness of covered claims is better judged on the basis of a generally hard and fast rule rather than the sort of case-specific judicial determination that occurs when a laches defense is asserted.  Therefore, applying laches within a limitations period specified by Congress would give judges a legislation-overriding role that is beyond the judiciary’s power.”   Thus, the Court held “laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.”

In reaching its holding, the Court considered and rejected a number of arguments put forth by defendant First Quality, and some of the reasoning the Federal Circuit had previously used.  First, the Court rejected First Quality’s argument that §286 of the Patent Act is not a true statute of limitations because §286 “runs backward from the time of suit.”  The Court reasoned “Petrella cannot be dismissed as applicable only to what First Quality regards as true statutes of limitations.”  While some claims are subject to a “discovery rule” under which the limitations period begins when the plaintiff discovers or should have discovered the injury giving rise to the claim, that is not a universal feature of statutes of limitations.  Instead, “[a] claim ordinarily accrues when [a] plaintiff has a complete and present cause of action.”

Next, the Court considered the Federal Circuit’s reasoning that §282 creates an exception to §286 by codifying laches as a defense to all patent infringement claims, including claims for damages suffered within §286’s 6-year period.  However, the Court again rejected this position, reasoning §282 on its face does not specifically codify a laches defense.  Regardless, the Court continued, “it does not necessarily follow that [a laches] defense may be invoked to bar a claim for damages incurred within the period set out in” a different section of the Statute.  Moreover, the Court reasoned “it would be exceedingly unusual, if not unprecedented” to include both a statute of limitation for damages and a laches defense, and no single federal statute has been identified “that provides such dual protection against untimely claims.”

The Court then moved to the Federal Circuit’s conclusion, and similar argument put forth by First Quality, that by 1952 there was a well established practice of applying laches to such damages claims and that Congress, in adopting §282, must have chosen to codify such a defense.  The Court again rejected this position, finding the case law insufficient to support the suggested interpretation of the Patent Act.  Instead, the Court found the case law stood for “the well-established general rule, often repeated by this Court, that laches cannot be invoked to bar a claim for damages incurred within a limitations period specified by Congress.”

In a lone dissent, Justice Stephen Breyer disagreed, arguing the case law “shows with crystal clarity that Congress intended the statute to keep laches as a defense” and that the language of the statute suggests that as well.  The dissent was concerned that without a laches defense available “a patentee has considerable incentive to delay suit until the costs of switching—and accordingly the settlement value of a claim—are high.”  Justice Breyer also added that he “believe[s] that Petrella too was wrongly decided,” and that this case helps illustrate why he thinks “that Petrella started [the Court] down the wrong track.”