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Raising “Laches” (Delay) as a Defense to Patent Infringement Has Now Been Delayed

Posted on May 31, 2017 in Blog

In the recent Supreme Court case, SCA Hygiene Products Aktiebolag, et al. v. First Quality Baby Products, LLC , 137 S. Ct. 954 (2017), the Court ruled that a laches defense to a patent infringement damages is not permitted when the suit is filed within six years of the term set forth in 35 U.S.C.  §286 Time Limitation on Damages: 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. Laches is a defense that prevents a plaintiff’s assertion when there has been unreasonable, prejudicial delay in commencing a lawsuit.

In particular, SCA Hygiene Products Aktiebolag (SCA) informed First Quality Baby Products, LLC (First Quality) that First Quality’s adult incontinence products infringed SCA’s U.S. Patent No. 6,375,646 in October 2003.  First Quality responded that its own patent U.S. Patent No. 5,415,649 pre-dated and thus invalidated SCA’s patent.  SCA then filed a re-examination based on the ‘649 patent, without notifying First Quality, in July 2004 and in March 2007 the PTO upheld SCA’s patent.  SCA then filed a patent infringement suit against First Quality in August 2010, almost seven years after first notifying First Quality of the infringement.  First Quality raised the defense of laches and equitable estoppel (misleading silence, reliance and prejudice) and the district court granted summary judgment thereon. SCA appealed the summary judgment motion to the Federal Circuit and during that period, the Supreme Court issued a ruling in Petrella v. Metro-Goldwyn-Mayer, Inc. 134 S. Ct. (2014). Petrella was a copyright case wherein the Court ruled that the Copyright Act did not permit a laches defense if an infringement claim was filed within 3 years of the infringement in accordance with the Act’s statute of limitations; the Court asserted that permitting a laches defense during the Act’s specified time period would give judges a legislation-overriding role beyond the “Judiciary’s role.”

Nonetheless, the Federal Circuit upheld the district court’s ruling that laches was a permitted defense to First Quality based on prior Federal Circuit case law, one of which, A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Circ. 1992), explained that the six years specified in 35 U.S.C. §286 is a time period that begins with the initiation of the infringement suit and looks backward 6 years for recovering damages; whereas the six years for asserting a laches defense begins with the patentee’s knowledge of infringement and looks forward six years. The fact that both periods are 6 years have nothing to do with each other. A.C. Aukerman, 960 F.2d 1020, 1034.

SCA then requested certiorari with the Supreme Court which interpreted 35 U.S.C. §286 in light of Petrella, asserted that laches is not codified in the defenses available under 35 U.S.C. §282(b), and concluded that laches cannot be raised as a defense against damages where the infringement occurred within the six-year period under §286. Although First Quality had invested hundreds of millions of dollars in the accused technologies before SCA ever brought the infringement suit, the Court did not rule on the equitable estoppel grounds, most likely because the Federal Circuit had remanded those assertions back to the district court because there were genuine issues of material facts in dispute.

At first glance, it may appear that institution of the infringement suit by SCA (August 2010) occurred more than 6 years from First Quality being informed (October 2003) of the infringing products. However, the Court discussed that the event that triggers the running of a statute of limitations (i.e., accrual) is not necessarily when the plaintiff knows of a cause of action; rather, as discussed in Petrella, “a claim ordinarily accrues “when [a] plaintiff has a complete and present cause of action.’”  As such, the implication by the Court was that the accrual event occurred later than October 2003, such that the infringement suit filed by SCA in August 2010 was within the 6 year period.

The take-away is that an infringer is no longer able to rely on a laches defense if the patentee fails to bring a patent infringement lawsuit within 6 years of initially notifying the infringer of the infringing devices or acts; rather, the infringer can only assert the laches defense if the delay period exceeds the 6 year limit. An infringer should therefore rely on an equitable estoppel defense, assuming the facts support that defense, within the 6 year period.

– by Scott M. Slomowitz

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