Supreme Court to Review (and likely Reject) Laches as a Defense in Patent Infringement Cases

by Dennis Crouch

The Supreme Court has granted SCA Hygeine’s petition for writ of certiorari with merits briefing over the summer and a likely fall 2016 hearing on the question:

Whether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period, 35 U.S.C. § 286.

SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, Supreme Court Docket No. 15-927 (2016).  This case is another patent-copyright parallel and follows the Supreme Court’s 2014 copyright laches case in Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (2014).  In Petrella, the Supreme Court held that laches cannot be used to further shorten the three-year copyright limitations period set forth in 17 U.S.C. § 507(b).  Following Petrella, however, the Federal Circuit rejected the copyright parallels and instead embraced patent law exceptionalism — holding en banc that laches remained a viable defense and can bar infringement claims accruing within the six-year limitations period of 35 U.S.C. § 286. (6-5 holding).

In both patent and copyright cases the issue of laches arises more often than you might think because of the legal treatment of “ongoing” infringement.   Each infringing act is seen as a new act of infringement.  Thus, the six-year limits period starts anew each time a new copy of the infringing product is made, sold, or used.  If someone has been making an infringing product for the past 10 years, the statute would let the patentee them reach back 6 years for damages. Courts often see that result as as problematic when the patentee sits on its rights for so long (and since most civil claims have a shorter period of limitations) and thus apply the laches doctrine to limit collection of back damages even when within the six-year period.

Look for the court to reverse the Federal Circuit’s ruling based upon the historic interplay between equity and law.  As in Petrella, I expect that the court will base its decision on the rule that that laches is a defense to equitable relief but does not limit the recovery of legal damages.  Although Petrella was 6-3, I expect that the dissenters will see the value in linking patent and copyright regimes.

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The court also granted certiorari in Star Athletica v. Varsity Brands – that case focuses on the functionality doctrine in copyright law.  In particular focusing on copyrightability of the stripes and chevrons integrated into cheerleader uniforms. Question presented: What is the appropriate test to determine when a feature of a useful article is protectable under § 101 of the Copyright Act?

The petition outlines the ten-different-tests that folks use to determine whether the work of authorship is capable of being “identified separately from, and … existing independently of, the utilitarian aspects of the article.”

 

31 thoughts on “Supreme Court to Review (and likely Reject) Laches as a Defense in Patent Infringement Cases

  1. I think that the en banc CAFC got SCA Hygeine right, so I am disappointed to see the SCotUS grant cert. I have to agree, however, that the fact that they took the case indicates that they likely intend to efface laches from the list of patent infringement defenses.

    Still and all, it is strange to think that the same court that just decided Kimble v. Marvel on stare decisis grounds can simultaneously think it appropriate to monkey with laches. Laches has been part of the patent law landscape for at least as long as the Brulotte rule. If “this is how it has been for a long time, so we should not change it unless Congress tells us so” rationale can apply to license terms, why not to laches?

    1. A critical procedural aspect of Kimble is that there was a controlling Supreme Court precedent (Brulotte v. Thys Co.) interpreting an Act of Congress. Stare decisis is particularly compelling in such cases, given that Congress is always free to amend the statute in question to supersede the Court’s decision. With laches, the Court never weighed in on Aukerman’s statutory interpretation. The Court gives very little if any stare decisis deference to the longstanding decisions of lower courts.

      1. That is certainly true now, but it is not really how it is supposed to be. As Chief Justice Taft said concerning the doctrine of assignor estoppel, “this Court will not now lightly disturb a rule well settled by forty-five years of judicial consideration and conclusion in [the Circuit Courts of Appeal].” Westinghouse Co. v. Formica Co., 266 U.S. 342, 349 (1924). In other words, it really is the Supreme Court’s own law that it is supposed to respect stare decisis not only of its own decisions, but also of the more long-standing decisions of the circuit courts. Laches has been part of patent law throughout not only all of the CAFC’s era, but going back even before that into the days when patents were adjudicated in the regional circuits. Therefore stare decisis should apply to laches as much as it applies to Brulotte.

      2. Stare decisis is particularly compelling in such cases,

        I disagree Andrew – especially when the Court all but admitted that that earlier decision was wrong.

        I think it closer to the truth with you second comment of “ The Court gives very little if any stare decisis deference to the longstanding decisions of lower courts.” – but that be from hubris more than anything else.

  2. Dennis

    Given the Court’s direction, I tend to agree with your prognosis.

    With that said, if laches is killed, what do you think would become of its big brother – equitable estoppel?

      1. That’s my question: if you have a statute that grants you damages for 6 years retrospectively (286) – regardless of “equitable” considerations – can another form of “equitable” defense preclude you from getting damages prospectively under 284? The answer would seem negative again

        1. I think there is a big difference between laches and equitable estoppel. With laches, the question is simply whether the plaintiff waited too long, to the prejudice of the defendant. But Congress has made its own judgment in this area: if you wait more than six years from particular acts of infringement, you cannot recover for those acts.

          Equitable estoppel is not merely about waiting too long. It also involves misleading conduct on the part of the patentee. The six-year look back statute does not address that situation. So unlike with laches as a legal defense, equitable estoppel does not contravene any Act of Congress.

          1. To integrate Paul’s concern from below though, is “sitting on the sidelines while the damages maximize” a type of “misleading conduct?”

            Another way of thinking about it: are you under an affirmative duty to vigorously and promptly enforce your patent rights (in the face of a developing market), or can you sit back and take note that any right you have is already “out there,” given that patents are published?

            Of course, “notice” still applies, right?

            This might be less “contravening” and more “diametrically opposing” forces…

            And (only a slight) tangent, but also consider that the marking statute was recently eviscerated by the AIA – what (if any) does the action of Congress there speak to this issue?

            1. No, inaction while holding patent rights by itself is not misleading. A potential infringer has no reasonable basis to infer anything from the patentee’s inaction.

              Separately, I don’t see any connection between repealing the qui tam false marketing subsection and this issue.

              1. Pauls point was directly opposite of your statement of “inaction while holding patent rights by itself is not misleading.

                Not (necessarily) taking a side here – just pointing this out.

                1. Even under Aukerman, a valid laches defense cannot be grounded on the notion that the patentee’s inaction mislead the defendant. It must be that an unreasonable delay prejudiced the defendant. Granted that prejudice is presumed >6 years, but it is still necessary for there to be prejudice. Simply being mislead by patentee’s inaction gets you nowhere with laches.

                2. Andrew, you are not addressing the point offered – the point being offered below by Paul is that “unreasonable delay” is defined to be your “inaction.”

                  So your comment about “presumed >6 years” is NOT valid (at least per Paul).

  3. A non-sequitur:

    Look at two patents invalidated the other day under Alice at the ITC:

    link to google.com

    link to google.com

    It’s one thing to have a patent knocked out under 102/103/112. But if even these guys can’t patent new features in their products . . . What is the point of our patent system?

    1. NonSeck, the claim is to processing information to produce information gathered from conventional sources using generic sensors which is then transmitted using generically defined transceiver.

      I do not understand, not in the least, how you do not understand why such a claim has a 101 problem.

      1. I can easily imagine how a court could apply Alice to invalidate these claims.

        What I’m saying is: that’s a bad result. The features covered in these parents are non-obvious (presumably), and they are how these companies compete with each other. I.e., these are very real features, on which consumers make purchasing decisions. If companies like these can’t prevent their competitors from copying features like these, why bother working on new features? Just let your competitor innovate and then copy them.

        (And btw, there are corresponding patents in EP. So it’s not like these are hand-wavy nonsense “business method” features.)

        1. nonseckwetter: these are very real features, on which consumers make purchasing decisions.

          Consumers make “purchasing decisions” based on all kinds of stuff that doesn’t belong in the patent system and never did (and, in many instances, never has).

          If companies like these

          There you go again. What’s “like these” supposed to mean?

          If companies like these can’t prevent their competitors from copying features like these, why bother working on new features?

          LOL. Meanwhile, outside of your tiny bubble, milions of people in American and elsewhere compete for business without being coddled by a broken patent system. Every. Day. Of. The. Week.

          Oh, but I forgot: those are the little people! We can ignore them. They just aren’t as smart as the incredibly clever people who “innovated” (LOL) a “removable device” that keeps track of where you are and what time you go to sleep and wake up. Assuming you’re a human, of course (non-human animals, after all, interact with “removable devices” in completely different ways).

          Just let your competitor innovate and then copy them.

          And then immolate yourself on a mountaintop, because it’s soooo unfair that you have to compete with your competitor on the basis of your ability to efficiently manufacture a working product and sell it! In America, no less! No, the fair thing is for the rich investor class to be gifted with super strong patents on broadly claimed “functionalities” that a ten year old can dream up. Sensor does what? Sensor detects stuff its made to detect? And it saves the information? And transmits it? Wowee zowee, Buck Rogers is stunned be these developments. What next? An “alarm”? Unpossible.

          there are corresponding patents in EP

          Maybe in Africa and Australia, too! So. What.

          1. My interest was caught by the mention of corresponding patents at the EPO. In those four file wrappers lies the story of our times. how things have tightened up, over these last ten years.

            Ten years ago, two patents, 1292217 and 8, went through to issue. On each, Applicant filed a divisional. There, the prosecution, much closer to today, was much stickier. The EPO was minded to refuse, and relented only in the face of determined advocacy at “oral proceedings” letting through to issue only long and tortuously expressed claims. Quite understandably, the EPO is not happy when it refuses an application and leaves a distraught Applicant deprived of its “day in court”. Less of a guilty conscience if it lets Applicant take something, however small, through to issue. After all, with no “presumption of validity” like in the USA, and with no deference after issue to the EPO’s work prior to issue, there is no great harm in the EPO letting Applicant take something little away, in the precious B publication, is there?

            Will there ever be a “day in court” in Europe? With those claims, I very much doubt it.

        2. NonSeck, I read through the specification briefly to see if there is anything new there in terms of technology. It appears that all the sensors were known. There is no invention there. It seems that the data produced by the sensors was known. It further seems that the calculations one could do with that data to produce symptoms or the like were known. There was no invention in any of these methods even alleged, at least as far as I can tell. All the information was known. All calculations using the information were known. There was nothing new.

          I, for the life of me, cannot figure out exactly what in all this was inventive. I am only looking at this from the point of view of 102/103.

          1. Ned,

            Your comments here appear to read on Diehr (you are doing that “only looking at dissected parts” thing again)…

    2. Well, isn’t the point that via alice these aren’t valid a patentable features?

      That’s rhetorical

  4. “Patent law exceptionalism,” that’s the best term you’ve coined in a long time, Dennis. And spot-on accurate in describing the CAFC’s tunnel-visioned approach to everything within its exclusive jurisdiction.

  5. It would still not be parallel to copyright law, because the patent statute six year limit on recovering back damages [before suit suit or notice] is not a statute of limitations or repose. It does not bar a patent suit filed even more than 20 years after the patent owner became aware of the infringement. Many patent suits are filed on old, even expired, patents to recover back damages. [Assuming the “marking” statute has not been violated.]
    However, actual decisions in which patent suit laches is found for LESS that six years of infringement knowledge [before the judicial presumption kicks in] are relatively rare.

    1. Paul, all that may be true, but the general rule from common law is that an equitable defense does not bar a legal remedy. The common law controls until the Supreme Court or Congress say otherwise.

      1. So Ned, your advice to a patent owner who detects an infringer starting up would be to quietly wait until the infringer has built up its business and sold six years worth of infringing products and only then to sue, in order to maximize damages? [Somehow that does not seem desirable to encourage.]

        1. Paul, the are patent owners and then there are patent owners. What each does depends.

          However, I personally believe the Federal Circuit’s view of laches as a bar to a damages remedy was and is wrong and will be overruled.

        2. Assuming they are competitors, no, (if you have a valid patent and think they infringe) you sue so you maintain whatever market share you have and solidify that market share (or increase) – you reap much more profit off of selling your own merch than the small % of the opposing parties sales.

          Now, if you are not competitors, I think I can make a case for (1) approaching them to get a license or (2) wait for 6 years and then sue (if valid patent and they infringe) so as to increase damages (because they are no threat to your line of products).

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