Laches Remains a Defense to Legal Relief in Patent Lawsuits: Federal Circuit | Practical Law

Laches Remains a Defense to Legal Relief in Patent Lawsuits: Federal Circuit | Practical Law

In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, a divided en banc panel of the US Court of Appeals for the Federal Circuit held that laches remains a defense to legal relief in patent infringement lawsuit after the US Supreme Court's decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014).

Laches Remains a Defense to Legal Relief in Patent Lawsuits: Federal Circuit

Practical Law Legal Update 1-618-9071 (Approx. 5 pages)

Laches Remains a Defense to Legal Relief in Patent Lawsuits: Federal Circuit

by Practical Law Intellectual Property & Technology
Published on 22 Sep 2015 • USA (National/Federal)
In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, a divided en banc panel of the US Court of Appeals for the Federal Circuit held that laches remains a defense to legal relief in patent infringement lawsuit after the US Supreme Court's decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014).
On September 18, 2015, in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, the US Court of Appeals for the Federal Circuit, sitting en banc, examined whether the laches defense remains a defense that may bar legal remedies in light of the US Supreme Court's recent decision in Petrella v. Metro-Goldwyn-Mayer, Inc. (134 S. Ct. 1962 (2014)) (No. 2013-1564, (Fed. Cir. Sept. 18, 2015)). The Federal Circuit held that:
  • Laches remains a defense to legal relief in a patent infringement lawsuit after Petrella.
  • Courts must weigh any facts concerning laches in evaluating a request for injunctive relief using the eBay Inc. v. MercExchange, LLC framework (547 U.S. 388 (2006)).
  • Absent extraordinary circumstances, laches does not preclude an ongoing royalty award.
SCA Hygiene Products Aktiebolag owns US Patent No. 6,375,646 (the '646 patent), which covers an absorbent diaper for adult incontinence. In October 2003, SCA sent a letter to First Quality Baby Products, LLC explaining that First Quality's adult diapers infringe the '646 patent. In a November 2003 response, First Quality argued that the '646 patent is invalid in light of US Patent No. 5,415,649 (the '649 patent). SCA and First Quality then ceased communications for several years. However, in 2004, SCA requested reexamination of the '646 patent in light of the '649 patent. SCA did not notify First Quality of the reexamination, and in March 2007, the USPTO issued a reexamination certificate confirming the patentability of the '646 patent claims. In the interim, First Quality invested heavily in its adult diaper business.
On August 2, 2010, SCA filed a lawsuit against First Quality alleging infringement of the '646 patent in US District Court for the Western District of Kentucky. After discovery and claim construction, the district court granted First Quality's summary judgment motions as to laches and equitable estoppel. In September 2014, a Federal Circuit panel affirmed the district court's laches opinion, concluding that the Petrella decision did not abolish laches as a legal defense in patent lawsuits. On December 30, 2014, the Federal Circuit granted First Quality's petition for rehearing en banc and asked the parties to brief whether the laches defense:
  • Is applicable to bar a damages claim based on infringements occurring within the six-year damages limitations period in 35 U.S.C. § 286 in light of the Petrella decision, where the Supreme Court held that laches cannot be used to bar Petrella from pursuing a claim for damages brought within the Copyright Act's three-year statute of limitations.
  • Should be available under certain circumstances to bar an entire infringement suit for either damages or injunctive relief.
In the majority en banc decision authored by Chief Judge Prost, the court first considered whether laches is available as a defense to patent infringements occurring within the six-year damages recovery period in Section 286. The court reviewed relevant parts of its prior holding in A.C. Aukerman Co. v. R.L. Chaides Construction Co., specifically that:
  • Laches was codified in 35 U.S.C. § 282 as a defense to a patent infringement claim.
  • The six-year damages limitation period in 35 U.S.C. § 286 and the laches defense are not inherently incompatible.
  • Laches, even though it is an equitable defense, is available to bar legal claims for damages.
  • Laches may only preclude the recovery of pre-filing damages.
(960 F.2d 1020, 1028 (Fed. Cir. 1992).)
The court next summarized the Supreme Court's Petrella decision. For more information on the Petrella decision, see Legal Update, US Supreme Court Rules Laches Does Not Bar "Raging Bull" Copyright Infringement Claim.
The court then concluded that the laches defense can bar the recovery of damages incurred within the six-year limitations period in Section 286, explaining that:
  • Section 286 is a damages limitation.
  • Congress codified a laches defense in 35 U.S.C. § 282(b)(1). The court examined the history of the 1952 Patent Act and concluded that the "broad" and "general" defenses in Section 282(b)(1) codified the laches defense, as noted in a commentary by one of the main authors of the 1952 Patent Act.
  • Section 282's text is unclear whether laches bars recovery of legal relief (such as money damages) or only equitable relief (such as injunctions). The court explained that in these circumstances, when a statute covers an issue previously governed by the common law, a court must presume that Congress intended to retain the substance of the common law (see Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1363 (2012)). The court then noted that nearly every circuit court recognized that laches could be a defense to legal relief prior to 1952. Accordingly, the court found that Congress codified a laches defense that could bar legal remedies when it enacted Section 282 in 1952.
  • No separation of powers concerns exist in this case because the Patent Act codifies both the damages limitation period in Section 286 and the laches defense in Section 282. The court distinguished Petrella because that case involved a judicially-created laches defense, which was not codified in the copyright statute.
  • The copyright infringement involved in Petrella requires evidence of copying. By contrast, patent infringement is a strict liability offense that does not require copying. Accordingly, the court found that this factor also supports retention of laches as a defense to legal remedies in patent cases.
The court next reexamined its holding in Aukerman that laches cannot bar prospective relief. The court rejected Aukerman's bright line rule, holding that:
  • A court may consider evidence of laches in determining whether an injunction is warranted under the eBay framework.
  • Absent egregious circumstances, when injunctive relief is inappropriate, the patentee remains entitled to an ongoing royalty.
A dissent authored by Circuit Judge Hughes argued that the laches defenses cannot bar a claim for damages filed within the six-year statutory limitations period in Section 286.