Guest Post by Donald S. Chisum
On December 30, 2014, the Federal Circuit granted en banc review in a case (SCA Hyiene), to consider whether to overrule the 1992 A.C. Aukerman decision, which upheld the defense of laches (unreasonable, prejudicial delay) for patent infringement damage claims, in light of the Supreme Court’s 2014 Petrella decision, which held that laches did not apply to claims for damages for acts of copyright infringement occurring within the Copyright Act’s three year statute of limitations.
For a variety of reasons, it is absolutely clear (to me) that neither the Federal Circuit nor the Supreme Court should alter Aukerman. Here are some of those reasons.
At first blush, the argument for applying the holding and reasoning of Petrella to patent cases to overturn A.C. Aukerman is strong. Petrella reasoned that Congress established three years as a reasonable period for recovering for pre-suit infringements and courts should not “second-guess” Congress in that respect. Similarly, for patents, Congress set a six-year period for recovering for pre-suit infringements. In Petrella, the Supreme Court stated, in general terms, that it had never “approved the application of laches to bar a claim for damages brought within the time allowed by a federal statute of limitations.” It reiterated that it had “never applied laches to bar in their entirety claims for discrete wrongs occurring within a federally prescribed limitations period.” The Section 286 six-year period is not, in technical terms, a “statute of limitations.” Nevertheless, it is a Congressionally prescribed period for recovering for patent infringement.
However, there are stronger arguments for distinguishing patent suits from copyright suits.
First, the history of the Section 286 six year limit for patent infringement damages is considerably different from that of the three year statute of limitations for copyright infringement. Congress added the copyright limitation in 1957 and codified it without change in 1976. There was, apparently, no consistent interpretation of the statute by the lower courts as either permitting or precluding laches; a split arose among the circuits. In contrast, Congress enacted the six-year limitation for patent infringement in 1897. As discussed in Aukerman, the courts continued after 1897 to apply laches in patent suits. In 1952, Congress codified the statute, presumably thereby approving the prior practice. The legislative history states as much, as noted in Aukerman.
Second, unlike the copyright statute as to which there was a split among the circuits, a split the Supreme Court was obliged to resolve, the Federal Circuit has consistently interpreted the patent statute as permitting laches to restrict damages under carefully defined circumstances. The Federal Circuit has virtually exclusive jurisdiction over appeals in patent infringements. Hence, there is no danger of a split arising.
In recent years, the Supreme Court has, with some regularity, repudiated Federal Circuit positions as unsound. Often, the Court found that the Federal Circuit had not adequately considered prior, binding Supreme Court precedent on an issue. Also, Federal Circuit panels decisions reached inconsistent results as to the issue.
None of these criticisms can be fairly directed to the Federal Circuit’s Aukerman decision on laches. Aukerman was an en banc decision, that is, one by the full complement of judges. Judge Helen Nies wrote a thorough, lengthy opinion exploring history, policy and precedent. It was unanimous on the basic issue of the viability of laches as a defense; Judge Plager dissented only in regard to the operation of a presumption. And, the Federal Circuit has consistently followed Aukerman since 1992.
Third attempt (I cannot see the filter catching word…)
In reply to post 7.1.1,
It is less that I missed your point and more that I was making a different point.
Some have called for patent cases to be re-distributed to the circuits (at the appeal level) in order to create some type of ‘bubbling effect’ of split circuit rulings that then highlight those areas of law that the Supreme Court should step into for, um, instilling ‘clarity’ (at least that’s the model).
My point was that the CAFC panels themselves, being made up of competing policy views, already serves that purpose.
Aside from that, I agree completely with your statement of “Even unanimous decisions can be wr0ng” and would add that such tend to be more true the more that “policy” is a judicial driver where statutory law is constitutionally directed to be the driver (that subtle and quick comment from the movie The Paper Chase at the one hour and six minute mark rings in my head).
“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…” 35 USC 286 (EMPHASIS added)
A straightforward reading of 35 USC 286 indicates a bright line rule guaranteeing patentees up to six years damages regardless of equitable considerations like laches. There is no need to overthink the matter in the manner proposed by Chisum. Aukerman conflates equitable issues with legal issues and should therefore be overturned. Besides, Aukerman is abhorrent in view of the 7th Amendment, which ensures that life-tenured judges don’t screw us over by exercising their self-granted discretionary powers of “equity.”
The real reason that Chisum does not want Aukerman overturned is because Aukerman cited Chisum’s treatise in support of the decision. Just because Federal Circuit got fooled once before by the treatise on the issue of laches does not mean that the Federal Circuit will be fooled again.
I don’t necessarily disagree, but it seems that the minimum remedy at law–a reasonable royalty–has an inherent equitable component in reasonableness.
Could laches or equitable estoppel therefore operate to lessen the legal remedy, or even reduce it to zero? Copyright, in contrast, has a statutory remedy into which reason doesn’t factor (see RIAA v. Thomas-Rasset)?
Is not minimum a floor and not a ceiling…?
And no, equity does not reduce legal to zero (then everything would be equitable and you risk violating the separation of powers.
Your straightforward reading is backwards. A straightforward reading of 35 USC 286 indicates a bright line rule guaranteeing defendants will pay no more that six years damages. It does not eliminate any bars to recovery, it merely caps the recovery.
The professor’s point about the lack of a split is irrelevant. If the Federal Circuit is wrong as a legal matter, the lack of a circuit split is neither here nor there.
Would ‘panel splits’ serve as a proxy for circuit splits…?
I think you are missing the point. Even unanimous decisions can be wrong. Otherwise, there should not be a mechanism for those against who a unanimous decision has been rendered to file an appeal.
Chisum: In contrast, Congress enacted the six-year limitation for patent infringement in 1897. As discussed in Aukerman, the courts continued after 1897 to apply laches in patent suits. In 1952, Congress codified the statute, presumably thereby approving the prior practice. The legislative history states as much, as noted in Aukerman.
Second, unlike the copyright statute as to which there was a split among the circuits, a split the Supreme Court was obliged to resolve, the Federal Circuit has consistently interpreted the patent statute as permitting laches to restrict damages under carefully defined circumstances. The Federal Circuit has virtually exclusive jurisdiction over appeals in patent infringements. Hence, there is no danger of a split arising.
These are excellent, reasonable arguments for maintaining Aukerman and distinguishing Petrella. I assume – but I haven’t checked – that Aukerman‘s holding did not depend in any way on the existence of laches in copyright within the corresponding “statute of limitations” period in the copyright statute. Such a fact would certainly undercut these otherwise decent arguments.
Obviously it doesn’t hurt the chances for Aukerman‘s continued survival (based on these arguments) that Breyer, Roberts and Kennedy dissented in Petrella, either.
MM, under Supreme Court authority, laches bars equitable remedies, not legal. Under Aukerman, the exact opposite is true.
I have no idea how Aukerman makes any sense whatsoever, and it clearly is not consistent with Supreme Court authority.
That is a fair point, Ned. However, Petrella was not about whether laches could be used to block an injunction or only to avoid damages. Petrella was about whether laches could be raised at all during the running of the statutory time frame. Therefore, a grant of en banc review in light of Petrella does not seem to me like an occasion to ask whether there are confusions in Aukerman that should be cleared up. Rather, it looks like an occasion to remove laches as a defense in patent cases. That would be a mistake (to my mind), just like it was a mistake for the SCotUS to remove laches as a defense in Petrella. I suppose that it would be all to the good if the CAFC were to make clear that laches can be a bar to both legal and equitable actions, but mostly I just want to see that the Petrella errors are not imported into patent law.
Greg, I think the Supreme Court is right — that laches bars an equitable remedy, not a legal remedy.
I am not sure you are reading Aukerman correctly when you speak of barring “actions.” See, n. 15 from Petrella that I quote below in note 5. Barring actions as opposed to remedies is a whole different kettle of fish.
Ned, patent suit laches only bars recovery of pre-suit damages, not post-suit damages or post-suit injunctions. Only the much more rigorous proof of an estoppel can effect recovery of post-suit damages.
Paul, thanks for the clarification. But are there not recent cases that barred all remedies based on laches and not estoppel? Aukerman did not purport to go that far.
Dear Ned,
I agree that (1) laches is an equitable remedy and (2) that ideally laches should be available as a defense against an injunction. I also agree that (3) it was sloppy of me to speak of “actions” in my post above.
Do you expect that when the CAFC takes SCA Hygiene up for review en banc, it is likely to clear up any of the defects in Aukerman that you have highlighted? I guess my lack of enthusiasm here stems from the fact that I do not see that as very likely, in light of the order of en banc review.
When the question for consideration is “does Aukerman still apply post-Petrella?” it seems to me like they are thinking about axing laches altogether, not expanding it to defend against injunctions.
Greg, I don’t know where the votes lie. But Petrella did seem clear that laches could bar an equitable remedy.
Note this question:
“b) In light of the fact that there is no statute of limitations for claims of patent infringement and in view of Supreme Court precedent, should the defense of laches be available under some circumstances to bar an entire infringement suit for either damages or injunctive relief? See, e.g., Lane & Bodley Co. v. Locke, 150 U.S. 193 (1893).”
If you read Bodley, a bill in equity seeking an injunction and other equitable relief, the Supreme Court nonsuited the patent owner — barred the equitable remedy — on the principle that “Courts of equity, it has often been said, will not assist one who has slept upon his rights, and shows no excuse for his laches in asserting them. ”
I see Aukerman being overruled in both its aspects — the pre-suit legal remedy is not barred, but the equitable remedy is.
From Petrella, n. 15,
Even if Dennis is right that the interpretation of the statute was implicitly endorsed by the legislative history, it seems to me that the rule that Aukerman provides is backwards. Laches should bar the equitable remedy, but not the legal remedy.
Petrella cited numbers of Supreme Court cases where laches was held inapplicable to a legal remedy. This was regardless of whether there was a statue limitations. The general principle of these cases is that legal remedies are not barred by laches, but only by statute of limitations.
I think that is the ultimate result is going to see in connection with patent statute. In other words, Aukerman has it 100% backwards.
Finally I would just like to note that a result where laches would bar the remedy of an injunction is consistent with eBay. That the patentee left the infringer alone for a number of years argues against injunction, but not against a free ride. There are good reasons for not bringing suit – and primary among them is that the infringement damages may not justify the cost of a lawsuit. If the infringement grows, a lawsuit may be justified. However, it seems to me that, like eBay, the infringer should only pay an ongoing royalty and not be subject to an injunction which is a far worse result than having to pay a reasonable royalty.
Disclaimer: non-lawyer perspective here.
It seems to me that Prof. C. is advocating for the availability of the laches defense to be contingent upon the legislative history and longstanding court practices rather than upon a textual statutory interpretation. From a policy perspective, this sounds reasonable. However, I for one think that the statutes ought to be clear all on their own. Otherwise, what was the point of enacting a law if it just leaves people wondering what its effect was intended to be?
I thus offer a contrary opinion that if there are two laws drafted similarly that both are drawn to statutes of limitations, then the courts ought to interpret them similarly. If Congress doesn’t like that approach, then they should draft the laws differently. From the perspective of scrutinizing the clarity of the law, it sounds like Congress needs to step in to make explicit what they want.
“Otherwise, what was the point of enacting a law if it just leaves people wondering what its effect was intended to be?”
You can tell a lawyer that a million times and they will never care one whit in today’s society.
Agreed.
And also because they don’t want to risk the USSC slappin them on down (again in just the last few years).
Greetings Professor
I’ve followed your stuff since I first started practicing in the 80s – always very informative and enlightening. I have to say, had this case come up in that era, your reasoning would probably carry the day; but we have a SCOTUS that can’t differentiate between plain words in the patent statutes (101, 103) for g**s sake, so I have little confidence that they can distinguish between public policy arguments germane to copyrights and patents. As in the recent attorneys’ fees discussion which confounded copyrights/patents, they are more than amenable to boil everything down to some bland, generic IP essence.
I do not disagree with anything that Prof. Chisum says above. These are all good arguments as to why Aukerman should be re-affirmed.
That said, I think the real reason why Aukerman should not be questioned following Petrella is that the SCotUS got Petrella wrong. Justice Breyer had the much more convincing argument in Petrella. The CAFC is not obliged to import Petrella‘s errors into the patent context, and therefore, they should not race to do so. It may be that the SCotUS will eventually force the issue and make patent law work less well (as they do so often of late), but there is no reason to mess things up preemptively so as to avoid the eventual slap-down from the SCotUS.
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