SCOTUS: Supreme Court Strikes Down Patent Laches Defense in SCA Hygiene

Authored by Grantland G. Drutchas and James L. Lovsin

As was widely expected from the Justices’ positions at oral arguments, a nearly unanimous Supreme Court today struck down the patent laches doctrine in SCA Hygiene Prods. Aktiebolag, v. First Quality Baby Prods., LLC, 580 U.S. __ (March 21, 2017). In the opinion by Justice Alito, the Supreme Court applied the rationale of its own prior decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), finding that the existence of a six-year statute of limitations in the Patent Act, 35 U.S.C. §286, precluded the application of laches. As such, “laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.” SCA Hygiene at 16.

As the Supreme Court noted, laches is a doctrine that was principally designed for equity courts to provide relief where there is no statute of limitations. Simply put, “[l]aches is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.” Id. at 5. Further, “applying laches within a limitations period specified by Congress would give judges a ‘legislation overriding’ role that is beyond the Judiciary’s power.” Id. at 4.

The Supreme Court noted that there are differences in the wording of the patent and copyright statute of limitations. Id. at 5-8. But such differences failed to establish a different result was appropriate. Id.

The Supreme Court also rejected the Federal Circuit’s argument that §282(b)(1) supports a laches defense, noting that §282(b) does not mention laches, and that a codified statute of limitations and laches doctrine in the same statute would be “exceedingly unusual, if not unprecedented.” Id. at 9.

The Supreme Court analyzed and rejected the lower court precedent which the Federal Circuit relied on to argue that Congress codified a damages-limiting laches defense in enacting §282(b)(1). Id. at 9-16. The Court found that the cases – including pre-1938 equity cases, pre-1938 claims at law, and post-merger of law and equity cases – failed to present a “settled, uniform practice of applying laches to damages” such that Congress could have relied on them in departing from the general laches rules. Id. at 15. “In light of the general rule regarding the relationship between laches and statutes of limitations, nothing less than a broad and unambiguous consensus of lower court decisions could support the inference that §282(b)(1) codifies a very different patent-law-specific rule. No such consensus is to be found.” Id. at 10.

As it telegraphed at oral argument, the Supreme Court is unconcerned that its holding would “permit a patentee to wait until an infringing product has become successful before suing for infringement.” Id. at 5, n. 4. That is a policy outcome and any fix is beyond the role of the judiciary. Id. It noted, however, that “equitable estoppel provides protection from some of the problems,” such an unscrupulous patentee inducing targets to invest in arguably infringing products. Id. at 16.

Justice Breyer voiced the lone dissent, noting that laches filled a gap by precluding patentees from waiting more than a decade to bring a lawsuit, and its abolition may have “harmful and unfair legal consequences.” Id. at 20-21. Justice Breyer also argued that Congress, by including “unenforceability” in § 282(b)(1), meant to permit courts to continue to use laches as a defense, citing “P. Federico’s Commentary on the New Patent Act, 35 U. S. C. A. 1, 55 (West 1954).” Id. at 22.

Decided March 21, 2017

The opinion can be found at https://www.supremecourt.gov/opinions/16pdf/15-927_6j37.pdf

Grantland G. Drutchas, an MBHB partner, has more than 20 years of experience in the practice of intellectual property law, with a particular emphasis on litigation, licensing, and client counseling. drutchas@mbhb.com

James L. Lovsin, an MBHB partner, concentrates his practice on intellectual property matters, including patent litigation and patent preparation and prosecution and counseling. lovsin@mbhb.com

© 2017 McDonnell Boehnen Hulbert & Berghoff LLP

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