Posts Tagged: "SCA Hygiene Products Aktiebolag v. First Quality Baby Products LLC"

Without laches, accused infringers might more frequently invoke declaratory judgment to clear their products and services upfront rather than tolerate a looming threat of suit for years…. The Supreme Court’s recent decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC (Mar. 21, 2017) eliminated the equitable defense of laches in patent cases.  While time will reveal the impact of the SCA decision, elimination of laches, an equitable defense against “unreasonable, prejudicial delay in commencing suit,” Id. at 3 (citing Petrella v. Metro-Goldwyn-Mayer, Inc.(2014), provides greater security to patent owners who assert claims several years after discovering potential infringement.  Conversely, the decision removes one shield—albeit a relatively modest shield—from the accused infringer’s armament of potential defenses. 

The remaining vitality of estoppel as a defense against patent infringement after SCA Hygiene Products is also not a hypothetical question. Indeed, the issue of estoppel remains very much “alive and well” in SCA Hygiene Products. Besides laches, the accused infringer in SCA Hygiene Products, First Quality Baby Products, had moved (not surprisingly) for summary judgment based upon an estoppel defense, which was also granted by the district court. Also not too surprisingly, that portion of the ruling by the district court was reversed and remanded by the Federal Circuit panel on the ground that there were “genuine issues of material fact” to be resolved. The Federal Circuit majority in its en banc ruling also reinstated and preserved the Federal Circuit panel’s reversal and remand of the district court’s grant of summary judgment on the estoppel defense. Finally, in footnote 2, SCOTUS’ decision in SCA Hygiene Products expressly states: “We do not address the Federal Circuit’s reversal of the District Court’s equitable estoppel holding.”

In a strong reversal of the Federal Circuit, the US Supreme Court held in SCA Hygiene Products Aktiebolag v First Quality Baby Products, LLC, No. 15-927 (March 21, 2017), that delay by a patentee will not give rise to a laches defense during the statutory six-year damages period under 35 U.S.C. § 286. Justice Samuel Alito authored the 7–1 majority opinion, extending the court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc. (2014), which held that laches is inapplicable for copyright infringement, a provision similar to Section 286 of the Patent Act… The Supreme Court noted that its determination regarding laches does not preclude a defense based on equitable estoppel…

The fact that laches cannot be used as a defense to a patent infringement action brought during the statute of limitations is most definitely a pro-patent decision. Presently patents are much weaker than they have been at any time over the last 36 years. But patent law has always swung like a pendulum, and this low point will not last forever. Thus, in the wake of the Supreme Court’s decision in SCA Hygiene, patent owners would do well to consider forgoing patent enforcement. Instead, allow infringement to accrue and then sue for infringement in several years when the law may be quite a bit more favorable. After all, patents can last for 20 years, the statute of limitations is six-years, and without a laches defense available to infringers you will be able to seek damages going back six years from whenever you choose to sue.

On Tuesday, March 21st, the U.S. Supreme Court issued a decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, a case which looked at the issue of whether and to what extent the defense of laches may bar a claim for patent infringement brought within the six-year statutory limitations period, as defined by 35 U.S.C. Section 286. In a 7-1 vote, the Supreme Court decided that the equitable defense of laches cannot be invoked against claims for infringement occurring during the statutory period.

The equitable defense of laches has been a useful tool for defendants in intellectual property litigation for over a hundred years, but a recent case in the U.S. Supreme Court could potentially remove the defense in patent infringement cases. In SCA Hygiene Products AB v. First Quality Baby Products LLC, the Supreme Court must decide whether the doctrine of laches bars patent infringement claims filed within the six-year statutory limitation period established under 35 U.S.C. § 286 of the Patent Act… Based on oral arguments, it is expected the Court will reverse the Federal Circuit’s decision and conclude that laches do not apply to patent infringement cases brought within the six-year damages period.

On the heels of a busy term last year, the stage is set for the Supreme Court to review two more important issues regarding utility patents during the October term. The first issue involves one aspect of the Federal Circuit’s decision in Promega Corp. v. Life Technologies Corp., 773 F.3d 1338 (Fed. Cir. 2014) — i.e., whether a party who supplies a single, commodity component of a multi-component invention from the United States can be liable for infringement. The second issue arises from SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 807 F.3d 1311 (Fed. Cir. 2015) (en banc), to determine whether laches remains a viable defense to patent infringement with respect to pre-litigation damages in certain circumstances.

As the Supreme Court prepares to hear arguments for SCA Hygiene Products v. First Quality during the October 2016 term, another laches case, Medinol Ltd. v. Cordis Corp., awaits its chance to be heard before the Court. Medinol, similar to SCA Hygiene, presents the question of whether judges may use the equitable defense of laches to bar legal claims for damages that are timely within the express terms of the Patent Act.

The equitable doctrine of laches has existed in the United States court system since the founding of this country, originating from the English Courts of Equity. Laches has been applied to cases involving patent infringement and has been allowed as a defense by the court in instances at which legal and equitable relief was granted. On May 2, 2016, the Supreme Court granted a petition for certiorari for SCA Hygiene Products v. First Quality Baby Products. While this case could eliminate the defense of laches in patent infringement, it is important to understand where this doctrine came from and how it has been applied in patent law.

Despite the Supreme Court ruling that laches is no defense to a copyright infringement action brought during the statute of limitations, the Federal Circuit ruled laches can bar recovery of legal remedies in patent infringement. The Federal Circuit explained that the 1952 Patent Act codified the common law rule, meaning that laches was codified as a defense under 35 U.S.C. 282.
The Federal Circuit, sitting en banc, followed the common law principle that, ”[w]hen a statute covers an issue previously governed by the common law, [the Court] must presume that Congress intended to retain the substance of the common law.” The Federal Circuit also ruled that laches does not preclude an ongoing royalty.